<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Citadel Holding Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
<PAGE>
CITADEL HOLDING CORPORATION
550 South Hope Street, Suite 1825
Los Angeles, California 90071
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 17, 1999
----------------
To the Stockholders:
The Annual Meeting of Stockholders (the "Annual Meeting") of Citadel Holding
Corporation, a Delaware corporation ("Citadel"), will be held at the Four
Seasons Hotel, 300 So. Doheny Drive, Los Angeles, California 90048 on Friday,
December 17, 1999, at 2:30 p.m., local time, subject to adjournment or
postponement, for the following purposes:
1. To elect four directors to the Board of Directors of Citadel (the
"Board of Directors") to serve until the 2000 Annual Meeting of
Stockholders;
2. To consider and vote upon a proposal for the merger of the Company
with its wholly-owned subsidiary, Citadel Holding Corporation, a Nevada
corporation, which shall be the surviving corporation, for the purpose of
(i) changing the domicile of the Company from Delaware to Nevada and
(ii) implementing a two class stock structure for Citadel; and
3. To transact such other business as may properly come before the Annual
Meeting.
Copies of the Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1998 and a Quarterly Report on Form 10-Q for the three and nine
month periods ended September 30, 1999 are enclosed. Only holders of record of
the voting stock of Citadel on November 4, 1999 will be entitled to notice of,
and to vote at, the Annual Meeting and any adjournment or postponement
thereof. Prior to the voting thereof, a proxy may be revoked by the person
executing such proxy by (i) filing with the Corporate Secretary of Citadel,
prior to the commencement of the Annual Meeting, either a written notice of
revocation or a duly executed proxy bearing a later date or (ii) by voting in
person at the Annual Meeting. Citadel shall make available for examination at
its principal executive offices located at 550 S. Hope St., Suite 1825, Los
Angeles, California 90071, at least ten days prior to the date of the Annual
Meeting, a list of the stockholders entitled to vote at the Annual Meeting.
By order of the Board of Directors,
/s/ S. Craig Tompkins
S. Craig Tompkins
Corporate Secretary
November 22, 1999
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE TO ENSURE THAT YOUR VOTES ARE COUNTED.
<PAGE>
CITADEL HOLDING CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
December 17, 1999
GENERAL INFORMATION
This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation by the Board of Directors (the "Board" or the "Board of
Directors") of Citadel Holding Corporation, a Delaware corporation ("Citadel"
and, collectively with its subsidiaries, the "Company"), of proxies for use at
the 1999 Annual Meeting of Stockholders of Citadel (the "Annual Meeting")
scheduled to be held at the time and place for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. At the Annual Meeting,
stockholders will be asked to (i) elect four directors, and (ii) consider a
proposal to approve an Agreement and Plan of Merger, dated November 19, 1999
(the "Merger Agreement"), between Citadel (sometimes referred to herein as
"CDL-Delaware") and Citadel Holding Corporation, a Nevada corporation which is
a wholly-owned subsidiary of Citadel ("CDL-Nevada"). The Merger Agreement
provides for the merger (the "Merger") of CDL-Delaware with and into CDL-
Nevada, which will be the surviving corporation in the Merger, for the purpose
of (a) changing the domicile of Citadel from Delaware to Nevada and (b)
implementing a two class stock structure for Citadel. In the merger, each
share of Citadel Common Stock (as defined below) will be automatically
converted into 0.8 share of CDL-Nevada Class A Nonvoting Common Stock (the
"Class A Common Stock") and 0.2 share of CDL-Nevada Class B Voting Common
Stock (the "Class B Common Stock" and collectively with the Class A Common
Stock the "CDL-Nevada Common Stock"). No fractional shares of Class A Common
Stock or Class B Common Stock will be issued, and each person who would
otherwise be entitled to receive a fractional share of such stock will instead
be paid in cash ("Fractional Cash Payment") the fair value of such fractional
share as determined in good faith by the Board of Directors of CDL-Nevada, as
the Surviving Corporation, as of the Effective Date.
The Class A Common Stock will have no voting rights, other than the right to
vote as a class on any amendment to the Articles of Incorporation of CDL-
Nevada or on any merger transaction that would change adversely the rights,
privilege or preference of such Class A Common Stock. The holders of Class A
Common Stock and Class B Common Stock will participate pari passu with respect
to dividends. Both the Class A Common Stock and the Class B Common Stock will
be listed on the American Stock Exchange. Copies of the Merger Agreement and
the Articles of Incorporation and the Bylaws of CDL-Nevada are attached hereto
as Exhibits A, B and C. See "Description of CDL-Nevada Capital Stock" for a
more detailed description of the Class A Common Stock and Class B Common
Stock.
Shares represented by properly executed proxies received by Citadel will be
voted at the Annual Meeting in the manner specified therein or, if no
instructions are marked on the enclosed proxy card, "FOR" each of the nominees
for director as identified on such card and, "FOR" the approval of the merger.
Although management does not know of any other matter to be acted upon at the
Annual Meeting, shares represented by valid proxies will be voted by the
persons named on the accompanying proxy card in accordance with their judgment
with respect to any other matters that may properly come before the Annual
Meeting.
Execution of a proxy will not in any way affect a stockholder's right to
attend the Annual Meeting and vote in person, and any person giving a proxy
has the right to revoke it at any time before it is exercised by (i) filing
with the Corporate Secretary of Citadel, prior to the commencement of the
Annual Meeting, a duly executed instrument dated subsequent to such proxy
revoking the same or a duly executed proxy bearing a later date or (ii)
attending the Annual Meeting and voting in person.
<PAGE>
The mailing address of the principal executive offices of Citadel is 550
South Hope St., Suite 1825, Los Angeles, California 90071, and its telephone
number is (213) 239-0540. The approximate date on which this Proxy Statement
and the enclosed proxy card are first being sent to stockholders is November
22, 1999.
Record Date and Voting
Only stockholders of record on the record date, November 4, 1999 (the
"Record Date"), will be entitled to notice of and to vote at the Annual
Meeting. There were outstanding on the Record Date 6,669,924 shares of Citadel
common stock, par value $.01 per share ("Common Stock"). Each share of Common
Stock is entitled to one vote on each matter to be voted on at the Annual
Meeting.
The holders of the majority of the outstanding shares of Citadel Common
Stock, whether present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the Annual Meeting. Abstentions and
broker non-votes (shares held by a broker or nominee which are represented at
the Annual Meeting, but which have not been voted for a specific proposal) are
counted for purposes of determining the presence or absence of a quorum for
the transaction of business.
Directors will be elected by a plurality of the votes of the shares of
Citadel Common Stock present in person or represented by proxy at the Annual
Meeting. With regard to the election of directors, votes may either be cast in
favor of the nominees named herein or be withheld. Votes withheld will not be
counted towards a nominee's achievement of a plurality. Approval of the Merger
requires the affirmative vote of a majority of the votes entitled to be cast
by the holders of the outstanding shares of Common Stock. Since the Merger
requires the affirmative vote of the holders of a majority of the outstanding
Common Stock, abstentions and broker non-votes will have the same effect as a
vote against the Merger.
Management of the Company has been advised that Craig Corporation ("Craig")
and Reading Entertainment, Inc. ("REI") will vote their shares in favor of the
nominees for director identified in these materials and to approve the Merger.
Together, Craig and REI hold approximately 47.9% of the outstanding Common
Stock.
Solicitation of Proxies
The cost of preparing, assembling and mailing the Notice of Annual Meeting
of Stockholders, this Proxy Statement and the enclosed proxy card will be paid
by Citadel. Following the mailing of this Proxy Statement, directors, officers
and regular employees of Citadel may solicit proxies by mail, telephone,
telegraph or personal interview. Such persons will receive no additional
compensation for such services. Brokerage houses and other nominees,
fiduciaries and custodians nominally holding shares of Voting Stock of record
will be requested to forward proxy soliciting material to the beneficial
owners of such shares, and will be reimbursed by Citadel for their reasonable
charges and expenses in connection therewith. Citadel will bear all expenses
incurred in soliciting stockholders.
2
<PAGE>
Proposal No. 1
ELECTION OF DIRECTORS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the shares of Common Stock beneficially owned
as of the Record Date by (i) each director, nominee and executive officer,
(ii) all directors and officers as a group, and (iii) each person known to
Citadel to be the beneficial owner of more than 5% of the Common Stock. Except
as noted, the indicated beneficial owner of the shares has sole voting power
and sole investment power with respect to such shares. An asterisk denotes
beneficial ownership of less than 1%.
<TABLE>
<CAPTION>
Common Stock
--------------------------------------
Amount and Nature Percent
Name and Address of Beneficial Owner of Beneficial Ownership(1) of Class(1)
- ------------------------------------ -------------------------- -----------
<S> <C> <C>
James J. Cotter(2)(3).................. 3,209,779 47.9%
120 North Robertson Boulevard
Los Angeles, CA 90048
S. Craig Tompkins(4)................... -- --
Ronald I. Simon(5)..................... 10,000 *
William C. Soady(5).................... 10,000 *
Alfred Villasenor, Jr.(5).............. 10,000 *
Brett Marsh(5)(6)...................... -- --
Andrzej Matyczynski(5)(7).............. -- --
Craig Corporation(2)(8)................ 3,209,779 47.9%
550 South Hope Street, Suite 1825
Los Angeles, CA 90071
Reading Holdings, Inc., an indirect
wholly owned subsidiary of REI(2)..... 2,113,673 31.5%
30 South Fifteenth Street, Suite 1300
Philadelphia, PA 19102-4813
Private Management Group(9)............ 980,000 14.6%
20 Corporate Park, Suite 400
Irvine, CA 92606
All directors and executive officers as
a group (7 persons)(10)............... 3,239,779 9%
</TABLE>
- --------
* Represents less than 1% of stock outstanding.
The business address for all of the officers and directors listed above is
c/o Citadel Building Corporation, Suite 1825, 550 S. Hope Street, Los Angeles,
California 90071.
(1) Applicable percentage of ownership is based on 6,669,924 shares of Common
Stock outstanding as of the Record Date together with applicable options
for such stockholder. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission, and includes
voting and investment power with respect of shares. Shares subject to
options currently exercisable or exercisable within 60 days of the Record
Date are deemed outstanding for computing the percentage ownership of the
person holding such options, but are not deemed outstanding for computing
the percentage ownership of any other person.
(2) Mr. Cotter is the Chairman of both Craig and REI and a principal
stockholder of Craig. Mr. Tompkins is a Director and the President of
Craig and the Vice Chairman of REI. Craig currently owns approximately 78%
of the voting power of the outstanding capital stock of REI. Craig owns
directly 1,096,106 shares of Citadel Common Stock and Reading owns
directly 2,113,673 shares of Citadel Common Stock. These securities have
been listed as beneficially owned by Mr. Cotter and Craig due to the
relationships between Mr. Cotter, Craig and REI. Mr. Cotter and Mr.
Tompkins disclaim beneficial ownership of Citadel Common Stock owned by
Craig and Reading, and all of Reading securities held by Craig and
Citadel.
3
<PAGE>
(3) Mr. Cotter is the principal stockholder of Craig. He is the beneficial
owner of 2,385,142 shares of Craig Common Stock and 2,021,702 shares of
Craig Class A Common Preference Stock, including 594,940 shares of Craig
Common Stock issuable upon the exercise of outstanding stock options. Mr.
Cotter also is considered the beneficial owner of 617,438 shares of Craig
Common Stock and 720,838 shares of Craig Class A Common Preference Stock
owned by Hecco Ventures, a California general partnership ("Hecco"). Mr.
Cotter is the general partner of a limited partnership which is the
general partner of Hecco, and accordingly has voting and investment power
with respect to these shares. Mr. Cotter is also the beneficial owner of
336,232 shares of Reading Common Stock, consisting of 6,000 shares held in
a profit sharing plan and 320,232 shares issuable upon the exercise of
outstanding options.
(4) Mr. Tompkins owns 2,000 shares of Craig Class A Common Preference Stock in
various retirement accounts for the benefit of Mr. Tompkins and his wife,
and currently exercisable options to acquire 35,000 shares of Craig Class
A Common Preference Stock. Mr. Tompkins and his wife each own 200 shares
of Reading Common Stock in IRA Accounts, and 500 shares of Reading Common
Stock are held in a trust for one of Mr. Tompkins' minor children. Mr.
Tompkins disclaims ownership of the shares held by his wife's IRA Account
and his child's trust. Mr. Tompkins also holds currently exercisable
options to acquire 10,000 shares of Reading Common Stock, and 8,500 shares
of Citadel Common Stock.
(5) Represents shares of Common Stock issuable upon the exercise of stock
options.
(6) Mr. Marsh was granted on November 18, 1999 immediately exercisable options
to acquire 3,000 shares of Common Stock. Mr. Marsh also has options
exercisable within 60 days of the Record Date to acquire 5,000 shares of
Reading Common Stock.
(7) Mr. Matyczynski was granted on November 18, 1999 immediately exercisable
options to acquire 15,000 shares of Common Stock. Mr. Matyczynski also has
options exercisable within 60 days of the Record Date to acquire 15,000
shares of Reading Common Stock.
(8) Craig is the controlling stockholder of Reading, with ownership of
5,165,516 shares of Common Stock and 550,000 shares of Series B
Convertible Preferred Stock, collectively representing approximately 78%
of the voting power of Reading. The foregoing shares of Reading Common
Stock and percentage voting power exclude 4,489,796 shares which may be
acquired upon conversion of the Series B Convertible Preferred Stock.
(9) Based upon Schedule 13-G filed February 11, 1999.
(10) Includes 30,000 shares issuable upon the exercise of stock options which
are exercisable within 60 days of the Record Date.
Nominees For Election
At the Annual Meeting, stockholders of Citadel will be asked to vote on the
election of four directors. The four nominees receiving the highest number of
votes at the Annual Meeting will be elected directors of Citadel.
To fill these four board positions, the enclosed proxy, unless indicated to
the contrary, will be voted "FOR" the nominees listed below (the "Board
Nominees") and on the enclosed proxy card. All directors elected at the Annual
Meeting will be elected to one-year terms and will serve until the 2000 Annual
Meeting of Stockholders and until their respective successors have been duly
elected and qualified.
4
<PAGE>
Set forth below is certain information concerning the Board Nominees:
<TABLE>
<CAPTION>
First
Became
Name Age Current Occupation Director
---- --- ------------------ --------
<C> <C> <S> <C>
James J. Cotter(1)(2)....... 61 Chairman of the Board and Chief 1986
Executive Officer of Citadel,
Chairman of the Board of Craig
Corporation ("Craig"), and
Chairman of the Board of
Reading Entertainment, Inc.
("REI")
William C. Soady(3)(4)...... President of Distribution,
56 Polygram Films 1999
S. Craig Tompkins(2)........ 48 ViceChairman of the Board and 1993
Secretary/Treasurer of Citadel,
President and Director of
Craig, Vice Chairman of the
Board of REI, and Director of
G&L Realty Corp.
Alfred Villasenor, President of Unisure Insurance
Jr.(1)(3)(4)............... 69 Services, Inc. 1987
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Executive Committee.
(3) Member of the Audit Committee.
(4) Member of the Conflicts Committee.
Mr. Cotter was first elected to the Board in 1986, resigned in 1988, and was
re-elected to the Board in June 1991. He was elected Chairman of the Board of
Citadel in 1992, and Chief Executive Officer effective August 1, 1999. Mr.
Cotter is the Chairman and a director of Citadel Agricultural Inc., a wholly
owned subsidiary of Citadel ("CAI"); the Chairman and a member of the
Management Committee of each of the agricultural partnerships which constitute
the principal assets of CAI (the "Agricultural Partnerships"); and the
Chairman and a member of the Management Committee of Big 4 Farming, LLC, an
80%-owned subsidiary of Citadel. From 1988 through January 1993, Mr. Cotter
also served as the President and a director of Cecelia Packing Corporation (a
citrus grower and packer), a company wholly owned by Mr. Cotter, and is the
Managing Director of Visalia, LLC, which holds a 20% interest in each of the
Agricultural Partnerships and in Big 4 Farming, LLC. Mr. Cotter has been
Chairman of the Board of Craig Corporation ("Craig") since 1988 and a director
of that company since 1985. Mr. Cotter has served as a director of Reading
Entertainment, Inc. ("REI" and collectively with its consolidated
subsidiaries, "Reading") (motion picture exhibition and real estate), and its
predecessor since 1990, and as the Chairman of the Board of REI and its
predecessor since 1991. Craig owns approximately 78% of the voting power of
the outstanding securities of REI and the Company owns approximately 5% of the
voting power of REI. Mr. Cotter is also the Executive Vice President and a
director of The Decurion Corporation (motion picture exhibition and real
estate). Mr. Cotter began his association with The Decurion Corporation in
1969. Mr. Cotter has been the Chief Executive Officer and a director of
Townhouse Cinemas Corporation (motion picture exhibition) since 1987. Mr.
Cotter is the General Partner of James J. Cotter, Ltd., a general partner in
Hecco Ventures, a California General Partnership ("Hecco") involved in
investment activities and a stockholder in Craig. Mr. Cotter was also a
director of Stater Bros., Inc. (retail grocery) between 1987 and September
1997.
Mr. Soady was elected to the Board of Directors of the Company on August 24,
1999. Mr. Soady has been President of Distribution, PolyGram Films since 1997.
Mr. Soady has also served as Director of Showscan Entertainment, Inc. from
1994 to present, the Foundation of Motion Picture Pioneers, Inc. from 1981 to
present, the Will Rogers Memorial Fund from 1981 to present and has been a
member of the Motion Picture Academy of Arts & Sciences since 1982.
Mr. Tompkins has been a director of the Company since 1993, was elected Vice
Chairman of the Board in July of 1994, and has served as the
Secretary/Treasurer of the Company since August 1994. From August 1994 until
November 18, 1999, Mr. Tompkins also served as the Principal Accounting
Officer of the Company. Mr. Tompkins was a partner of Gibson Dunn & Crutcher
until March 1993, when he resigned to become President of each of Craig and
REI's predecessor, the Reading Company. Mr. Tompkins has served as a director
5
<PAGE>
of each of Craig and the Reading Company since February 1993 and has served as
a director of REI since its formation in 1996. In January 1997, Mr. Tompkins
resigned as President of REI and was made Vice Chairman of REI. Mr. Tompkins
was elected to the Board of Directors of G&L Realty Corp., a New York Stock
Exchange listed real estate investment trust, in December of 1993, and
currently serves as the Chairman of the Audit and the Strategic Planning
Committees of that REIT. Mr. Tompkins is also President and a director of CAI,
a member of the Management Committee of each of the Agricultural Partnerships
and of Big 4 Farming, LLC, and serves for administrative convenience as an
Assistant Secretary of Visalia, LLC, and Big 4 Ranch, Inc. (a partner with CAI
and Visalia, LLC in each of the Agricultural Partnerships).
Mr. Villasenor is the President and the owner of Unisure Insurance Services,
Incorporated, a corporation which has specialized in life, business life and
group health insurance for over 35 years. He is also a general partner in
Playa del Villa, a California real estate commercial center. Mr. Villasenor is
a director of the John Gogian Family Foundation and a director of Richstone
Centers, a non-profit organization. In 1987, Mr. Villasenor was elected to the
Board of Directors of Citadel and Fidelity and served on the Board of Fidelity
until 1994. Mr. Villasenor also served as a director of Gateway Investments,
Inc. (a wholly owned subsidiary of Fidelity) from June 22, 1993 until February
24, 1995.
Compensation of Directors
Other than the Chairman of the Board, directors who are not officers or
employees of the Company receive, for their services as a director, an annual
retainer of $15,000 plus $1,500, if serving as Committee Chairman, and $800
for each meeting attended in person (or $300 in the case of a telephonic
meeting). The Chairman of the Board receives $45,000 annually. Mr. Tompkins
receives no compensation for his services as an executive officer, but
received director's fees for his service as Vice Chairman in the amount of
$40,000 with respect to 1998. In the first quarter of 1998, Messrs. Cotter and
Tompkins received $200,000 and $50,000, respectively, in bonus compensations.
Effective August 1, 1999, Mr. Cotter was elected to serve as the Company's
Chief Executive Officer. Mr. Cotter receives no compensation in addition to
his directors fees for his service as Chief Executive Officer.
Additionally, pursuant to the Citadel Holding Corporation 1996 Nonemployee
Director Stock Option Plan effective October 1996 (the "1996 Stock Option
Plan"), each director of the Company who is not an employee or officer of the
Company (for purposes of the 1996 Stock Option Plan, the Chairman of the Board
and the Principal Accounting Officer of Citadel are deemed officers of the
Company) shall, upon becoming a member of the Board of Directors,
automatically be granted immediately vested option to purchase 10,000 shares
of Common Stock at an exercise price that is greater or less than the fair
market value (as such term is defined in the 1996 Stock Option Plan) per share
of Common Stock on the date of grant by an amount equal to the amount by which
$3.00 per share is greater or less than the fair market value per share of
Common Stock on the effective date of the 1996 Stock Option Plan (the "Plan
Effective Date"). The non-officer directors who were incumbent on the Plan
Effective Date (Messrs. Simon and Villasenor) received immediately vested
options to purchase 10,000 shares of Common Stock at an exercise price of
$3.00 per share. Mr. Soady received immediately vested options to purchase
10,000 shares of Common Stock at an exercise price of $4.7750 per share, upon
the effective date of his election to the Board of Directors.
Meetings and Committees of the Board of Directors
During the fiscal year ended December 31, 1998, there were two meetings of
the Board of Directors of Citadel. Each of the directors attended at least 80%
of the meetings of the Board of Directors, held after the election of such
individual to the Board.
Citadel currently has standing Audit, Executive, Conflicts and Compensation
Committees. The Board of Directors does not have a nominating committee.
6
<PAGE>
The members of the Audit Committee are William C. Soady and Alfred
Villasenor, Jr. During 1998, the Audit Committee was comprised of Messrs.
Ronald I. Simon and Mr. Villasenor and held one meeting. The Audit committee's
responsibilities are generally to assist the Board in fulfilling its legal and
fiduciary responsibilities relating to accounting, audit and reporting
policies and practices of Citadel and its subsidiaries. The Audit Committee
also, among other things, recommends to the Board the engagement of the
Company's independent accountants; monitors and reviews the quality and
activities of the Company's independent accountants; and, monitors the
adequacy of the Company's operating and internal controls as reported by
management and the independent accountants.
The members of the Executive Committee are James J. Cotter, S. Craig
Tompkins and Alfred Villasenor, Jr. The Executive Committee held no meetings
during 1998. The Executive Committee exercises the authority of the Board of
Directors in the management of the business and affairs of the Company between
meetings of the Board of Directors.
The members of the Conflicts Committee are William C. Soady and Alfred
Villasenor, Jr. The Conflicts Committee was chartered to consider and make
recommendations with respect to all matters as to which one or more directors
may have conflicts of interest. The Conflicts Committee held no meetings
during 1998.
The Compensation Committee is currently comprised of James J. Cotter and
Alfred Villasenor, Jr. The Compensation Committee is responsible for
recommending to the Board of Directors remuneration for executive officers of
Citadel. It is currently Citadel's policy that directors who are executive
officers and whose compensation is at issue are not involved in the discussion
of, or voting on, such compensation.
Vote Required: Recommendation of the Board of Directors
The four nominees receiving the greatest number of votes present in person
or by proxy at the Annual Meeting will be elected to the Citadel Board of
Directors. Craig and Reading have advised Citadel that they intend to vote
3,209,779 shares, representing approximately 47.9% of the outstanding Citadel
Common Stock in favor of the election of the Board Nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE BOARD NOMINEES
LISTED ABOVE.
7
<PAGE>
Proposal No. 2
PROPOSAL TO CHANGE THE STATE OF INCORPORATION
FROM DELAWARE TO NEVADA
The following discussion summarizes certain aspects of the proposal to
approve the Merger and Merger Agreement to change the state of incorporation
of the Company from Delaware to Nevada and to adopt a two class stock
structure. The discussion is qualified in the entirety by reference to the
Merger Agreement, the Articles of Incorporation of CDL-Nevada (the "Nevada
Articles"), and the Bylaws of CDL-Nevada attached hereto as Exhibits A, B, and
C, respectively.
Principal Reasons for Reincorporation in Nevada and Implementation of a Two
Class Stock Structure.
The Board of Directors of the Company believes that the best interests of
the Company and its stockholders will be served by changing the Company's
state of incorporation from Delaware to Nevada. The principal reason for the
reincorporation, over the long term, is to save the Company money. The annual
taxes and fees charged by the State of Nevada are significantly less than
those charged by the State of Delaware. For the fiscal year ending December
31, 1999, the Company anticipates it will be required to pay approximately
$10,000 to the State of Delaware. If the Company reincorporates in Nevada, its
annual fees will be less than $100 per year. This differential will become
substantially greater as the Company's assets grow. By way of example, Craig
Corporation and Reading Entertainment, Inc., the Company's principal
stockholders each pay approximately $150,000 in fees annually for the State of
Delaware.
As a secondary factor, reincorporation in Nevada may also reduce the
likelihood of strike lawsuits against the Company and its directors. The
increasing frequency of claims and litigation directed against directors and
officers has greatly expanded the risks facing directors and officers of
corporations in exercising their respective duties. The amount of time and
money required to respond to such claims and to defend such litigation can be
substantial. It is the Company's desire to reduce these risks to its directors
and officers and to limit situations in which monetary damages can be
recovered against directors so that the Company may continue to attract and
retain qualified directors who otherwise might be unwilling to serve because
of the risks involved. The Company believes that, in general, Nevada law
provides greater protection to directors than Delaware law.
The Delaware General Corporation Law (the "Delaware Law") provides that
every person becoming a director of a Delaware corporation consents to the
personal jurisdiction of the Delaware court. Accordingly, a director can be
personally sued in Delaware, even though such director has no other contacts
with the state. The Nevada Revised Statutes, as amended (the "Nevada
Statutes"), have no similar consent provision and, accordingly, a plaintiff
must show the minimum contacts required generally for a state to have
jurisdiction over a non-resident director. Also, the Nevada Statutes allow the
Company and its officers and directors (if personally sued) to petition the
court to order a plaintiff to post a bond to cover their costs of defense. The
motion can be based upon lack of reasonable possibility that the complaint
will benefit the corporation or a lack of participation by an individual
defendant in the conduct alleged.
As a further factor, the Company's principal stockholders, Craig Corporation
and Reading Entertainment, Inc., have also determined to place before their
stockholders proposals to reincorporate in Nevada. The Board of Directors
believes it is very likely that these proposals will be adopted by the
stockholders of Craig Corporation and Reading Entertainment, Inc., as they
have the support of the principal stockholders of those companies. Since there
is substantial overlap in the management and administration of these three
companies, the administration and management of the company would, in the view
of the Board of Directors, be effected more economically if all three
companies were governed by the same set of corporate laws.
Operating the Company as a Nevada corporation will not interfere with, or
differ substantially from, the present corporate activities of Citadel. As a
Nevada corporation, CDL-Nevada will be governed by the Nevada Statutes,
whereas Citadel is presently governed by the Delaware Law. The Board of
Directors believes that the Nevada Statutes constitute a comprehensive,
flexible legal structure under which to operate. However, because of
differences in the laws of these states, the rights of Citadel's stockholders
will change in several material respects as a result of the Merger. These
matters are discussed in greater detail immediately below.
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Incident to the Merger, the Board of Directors has determined that it would
be in the best interests of the Company and its Stockholders for Citadel to
make use of this opportunity to reclassify Citadel's outstanding equity into
two classes of stock: the Class A Nonvoting Common Stock (the "Class A Common
Stock") and Class B Voting Common Stock (the "Class B Common Stock" and
collectively with the Class A Common Stock, the "CDL Nevada Common Stock").
The CDL-Nevada Common Stock will, subject to the differences between the
Delaware Law and the Nevada Statutes discussed in greater detail below, have
the same rights privileges and preferences as the Citadel Common Stock, except
that the Class A Common Stock will have no voting rights, except for the right
to vote as a separate class with respect to any amendment of the Nevada
Articles or any merger transaction which would have the effect of changing
adversely the rights, privileges and preferences of such Class A Common Stock.
The Class A Common Stock and Class B Common Stock will both be listed on the
American Stock Exchange. The Board of Directors believes that the existence of
a publicly-traded class of non-voting common stock will increase the financial
flexibility of the Company, by allowing it to use such securities to raise
capital or to acquire assets including, without limitation, the stock of other
companies, without diluting the control currently held by the Company's
controlling stockholders, Craig and Reading. The Company, however, has no
specific agreement to issue any Class A Common Stock at the present time. The
reclassification would also permit the Company's controlling stockholders to
reduce their equity interest in the Company without reducing their control.
The Company is advised, however, that neither Craig nor Reading have any
current plan or intention to reduce the amount of their respective ownership
interests in the Company.
The foregoing description of the Class A Common Stock and Class B Common
Stock is subject to the specific terms of the Nevada Articles, a copy of which
is attached as Exhibit B hereto. Stockholders are urged to read all of the
Exhibits attached hereto prior to making a determination as to how to vote.
See "Description of CDL-Nevada Capital Stock" for a more detailed description
of the Class A Common Stock and the Class B Common Stock.
Certain Changes in the Rights of Stockholders Resulting from the Merger and
the Effects Thereof
Although it is impracticable to describe all of the differences between the
corporation laws of Delaware, the state in which Citadel is incorporated, and
the laws of Nevada, the state in which CDL-Nevada is incorporated, the
following is a summary of certain significant differences between the rights
which stockholders have as holders of shares of Citadel's Common Stock, and
those which they would have as holders of shares of Class A Common Stock and
Class B Common Stock.
Stockholder Vote for Certain Matters
Both the Delaware Law and the Nevada Statutes require an affirmative vote of
a majority of the votes entitled to be cast by the holders of the outstanding
stock to approve a merger (other than certain parent-subsidiary mergers) or a
sale, lease or exchange of "all" of a company's assets. While the Delaware Law
also requires a similar affirmative vote of stockholders to approve the sale,
lease or exchange of "substantially" all of the company's assets, the Nevada
Statutes have no such requirement. The Delaware Certificate of Incorporation
(the "Delaware Certificate") is silent on this issue. The Nevada Articles
specifically provide for a stockholder vote in the case of a sale, lease or
exchange of all or substantially all of the assets of CDL-Nevada. Accordingly,
both the Delaware Certificate and Nevada Articles, by operation of law or by
express provision, provide for a majority stockholder vote to approve such
merger transactions, or the sale, lease or exchange of all or substantially
all of the company's assets. The Delaware Law and the Nevada Statutes both
permit a subsidiary corporation to merge into its parent corporation without
approval of stockholders of either corporation, when the parent owns at least
90% of the subsidiary.
Removal of Directors
Under both the Delaware Law and the Nevada Statutes, any director or the
entire board of directors may be removed, with or without cause, upon the vote
of the shares entitled to vote in the election of directors. Under Delaware
Law, a majority vote is required to remove a director. Under the Nevada
Statutes, a director may be
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removed only by the vote of stockholders casting not less than two-thirds of
the votes entitled to be cast with respect to all of the outstanding shares
entitled to vote.
Cumulative Voting
Under both the Delaware Law and the Nevada Statutes, cumulative voting is
not available unless expressly provided for in the certificate or articles of
incorporation. Neither the Delaware Certificate nor the Nevada Articles
provides for cumulative voting.
Dividends
Under the Delaware Law, a Delaware corporation, subject to any restrictions
contained in its certificate of incorporation, may pay dividends upon the
shares of its capital stock either (i) out of its surplus or (ii) if there is
no such surplus, out of its net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year subject to certain
conditions. Under the Nevada Statutes, a Nevada corporation may make a
distribution to its stockholders, but no distribution may be made if, after
giving it effect (i) the corporation would not be able to pay its debts as
they become due in the usual course of business or (ii) except as otherwise
specifically allowed by the articles of incorporation, the corporation's total
assets would be less than the sum of its total liabilities plus the amount
that would be needed, if the corporation were to be dissolved at the time of
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
Special Meetings of Stockholders
Under the Delaware Law, special meetings of the stockholders may be called
by the board of directors or by such other person or persons as may be
authorized by the certificate of incorporation or by the bylaws. There is no
comparable provision in the Nevada Statutes. The Bylaws of the Company provide
that special meetings may by called by the Chairman of the Board, or the
President, or at the request of a majority of the directors, or on written
request (stating the time, place, and purpose or purposes) of stockholders who
together own or record shares of stock entitling them to cast a majority of
the votes entitled to be cast by the holders of the outstanding stock of all
classes entitled to vote at such meeting. The Bylaws of CDL-Nevada are
identical to those of Citadel on this point.
Stockholder Action by Written Consent
The Delaware Law and the Nevada Statutes both provide that any action
required to be taken at a meeting of stockholders may be taken without a
meeting, if the stockholders consent in writing to the action proposed to be
taken. In both states, such a consent must be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
Inspection of Books and Records
Under the Delaware Law, any stockholder may, for a proper business purpose,
inspect the stockholders list and other books and records. Under the Nevada
Statutes, a stockholder must have owned his shares for at least six months or
represent at least 5% of the outstanding shares in order to be entitled to
inspect the stockholders list. A stockholder must represent at least 15% of
such shares to inspect the financial books of the corporation. Also, such
stockholder must, if requested, provide an affidavit that the inspection is
not for a purpose unrelated to such stockholder's interest in the corporation
as a stockholder.
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Indemnification
The Delaware Law and the Nevada Statutes each specify certain circumstances
when a corporation must, and other circumstances when it may, indemnify its
officers, directors, employees and agents against legal expenses and
liabilities. Both states' provisions are generally the same. Both the Delaware
Law and the Nevada Statutes require, unless ordered by a court, a finding to
be made that the officer, director, employee or agent has met the required
standard of conduct by (i) majority vote of the board of directors for which
the quorum does not consist of parties to the proceeding, or (ii) independent
legal counsel in a written opinion, or (iii) stockholder approval. In
addition, the Delaware Law permits such finding to be made by a committee of
the board of directors consisting of at least one director not party to the
proceedings. The Nevada Statutes have no similar procedure. Neither the
provisions of the Nevada Statutes nor the Delaware Law are exclusive, and both
permit indemnification as provided under any bylaw, agreement, vote of
stockholders or of disinterested directors, or otherwise. Both the Delaware
Bylaws and the Nevada Bylaws require indemnification to the fullest extent
allowable under the Delaware Law and the Nevada Statutes, respectively.
Directors' Liability
The Delaware Law permits a corporation, with the approval of its
stockholders, to eliminate the personal liability of its directors, except for
liability arising in connection with (i) a breach of the duty of loyalty, (ii)
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of the law, (iii) the payment of unlawful dividends and
approval of certain other actions prohibited by law, or (iv) a transaction
from which a director derived an improper personal benefit. The Nevada
Statutes permit a corporation to eliminate or limit the personal liability of
its directors (and officers), except for liability arising in connection with
(i) acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law or (ii) the payment of distributions in violation of the
Nevada Statutes. In both the Delaware Certificate and the Nevada Articles, the
applicable provisions of the respective statutes are restated.
Amendment and Repeal of Bylaws
The Delaware Law provides that the power to adopt, amend or repeal bylaws
shall be in the stockholders unless specifically granted to the directors in
the corporation's certificate of incorporation, in which case the power is
shared. Such a provision in the certificate of incorporation does not limit
the stockholders' power to adopt, amend or repeal bylaws. There is no similar
provision in the Nevada Statutes that expressly requires a grant of power to
the directors in the articles of incorporation in order to adopt bylaws for a
corporation. Rather, the Nevada Statutes provide that the board of directors
of a corporation may make the bylaws, but that such bylaws are subject to
those adopted by the stockholders, if any. Further, although not part of the
Nevada Statutes, an opinion of the Nevada Attorney General also provides that
directors may adopt bylaws for a corporation in the event the stockholders do
not, or stockholders may confer the right to adopt bylaws on directors,
however, stockholders retain the right to adopt bylaws superseding those
adopted by directors. The Delaware Certificate granted to the Board of
Directors the power to adopt, amend, or repeal the bylaws of Citadel except as
and to the extent provided in the bylaws. The Delaware Bylaws provide that the
stockholders may adopt, amend or repeal the bylaws, or any bylaw, by a
majority vote, however, this power is shared with the Board of Directors.
Similarly, the Nevada Articles also authorize the Board of Directors to adopt,
amend and repeal the bylaws, subject to the right of the stockholders to adopt
superceding bylaws.
Stock Repurchases
The Delaware Law provides that a corporation may acquire its own shares. No
purchase of shares may be made when such a purchase would cause any impairment
of the capital of the corporation. Under the Nevada Statutes a corporation may
also acquire its own shares. However, no such purchase can be made if, after
giving effect to the purchase: (i) the corporation would not be able to pay
its debts as they become due in the usual course of business; or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were to be dissolved
at the time of distribution, to satisfy preferential rights (if any) of
stockholders upon dissolution.
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Loans to Employees and Directors
The Delaware Law permits loans or guarantees to any officer or other
employee, including any officer or employee who is a director, whenever, in
the judgement of the directors, such a loan or guarantee may reasonably be
expected to benefit the corporation. The Nevada Statutes do not contain
specific restrictions on loans or guarantees to or for the benefit of any
employee. However, the Nevada Statutes do require that any contract or
transaction between the corporation and an officer or director either (i) must
be approved by a majority vote of the disinterested directors, or a majority
vote of outstanding shares (including shares owned by the interested director
or officer), and in either instance that the officer's or director's interest
in the transaction be made known to the directors and stockholders; or (ii)
must be fair to the corporation.
Appraisal Rights
Under the Delaware Law and the Nevada Statutes, stockholders, in certain
circumstances, have the right to dissent from certain corporate
reorganizations and mergers, provided certain statutory procedures are
followed. A stockholder exercising his right to dissent may demand payment in
cash for his shares equal to their fair value, excluding any appreciation or
depreciation in anticipation of the transaction (although such appreciation or
depreciation may be included in determining fair value if its exclusion would
be unfair). Fair value is determined by an appropriate court upon the petition
of the stockholder.
The Delaware Law provides that stockholders who neither voted in favor of a
merger or consolidation nor consented thereto in writing shall be entitled to
an appraisal by the Court of Chancery of the fair value of the stockholder's
shares. Appraisal rights are available for the shares of any class or shares
of stock of a constituent corporation in a merger or consolidation unless the
shares of such corporation are listed on a national securities exchange, such
as the American Stock Exchange, and the shares are converted in the merger
only into one or a combination of (i) shares of the surviving or resulting
corporation, (ii) shares listed on a national securities exchange, such as the
American Stock Exchange, or held of record by more than 2,000 stockholders,
and/or (iii) cash in lieu of fractional shares.
In addition, the Delaware Law provides that, any corporation may provide in
its certificate of incorporation that appraisal rights will be available for
the shares of any class or series of its stock as a result of an amendment to
its certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially
all of the assets of the corporation. No special appraisal rights are provided
for in the Delaware Certificate.
The Nevada Statutes provide that a stockholder is entitled to dissent from
and obtain payment of the fair market value of his shares in the event of the
following corporate actions: (a) consummation of a plan of merger to which the
domestic corporation is a party (i) if approval by the stockholders is
required for the merger and he is entitled to vote on the merger, or (ii) in
certain circumstances, if the domestic corporation is a subsidiary and is
merged with its parent; (b) consummation of a plan of exchange to which the
domestic corporation is a party as the corporation whose subject owner's
interests will be acquired, if he is entitled to vote on the plan; or (c) any
corporate action taken pursuant to a vote of the stockholders to the extent
that the articles of incorporation, bylaws or a resolution of the board of
directors provide that voting or nonvoting stockholders are entitled to
dissent and obtain payment for their shares. No appraisal rights are available
if the shares of such corporation are listed on a national securities
exchange, such as the American Stock Exchange.
Tender Offers and Takeover Bids
The Delaware Law does not specifically regulate the acquisition of control
of a corporation. The Nevada Statutes contain provisions that apply (unless
the articles of incorporation or bylaws in effect on the 10th day following
the acquisition of a controlling interest provide otherwise) to any
acquisition of a controlling interest in an issuing corporation. An "issuing
corporation" is defined as a corporation which (a) is organized in Nevada, (b)
has 200 or more stockholders, at least 100 of whom are stockholders of record
and residents of Nevada, and
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(c) does business in Nevada. The articles of incorporation or bylaws may
impose stricter requirements on the acquisitions of a controlling interest in
the corporation. Based on current operations, these provisions under the
Nevada Statutes would not apply to CDL-Nevada. Furthermore, the Nevada
Articles include a specific election not to be governed by the Nevada Statutes
pertaining to acquisitions of controlling interest or combinations with
interested stockholders. The Nevada Statutes do not restrict the directors of
an issuing corporation from taking action to protect the interests of the
corporation and its stockholders, including, but not limited to, adopting or
executing plans, arrangements or instruments that deny rights, privileges,
power or authority to a holder of a specified number or percentage of shares
or voting power. Under the Nevada Statutes, therefore, the directors of CDL-
Nevada may have more flexibility in taking actions in response to takeover
bids designed to inhibit such bids. However, no specific provisions relating
to takeovers or designed to prevent takeovers or reduce stockholder democracy
have been included in the Nevada Articles and bylaws other than the above
referenced election.
Size and Classification of the Board of Directors
The Delaware Law provides that the board of directors shall consist of one
or more members. The number of directors shall be fixed by, or in the manner
provided in the bylaws, unless the certificate of incorporation fixes the
number of directors, in which case a change in the number of directors shall
be made only by amendment of the certificate of incorporation. The Delaware
Certificate contains no such provision, and the Bylaws of CDL-Delaware provide
for a board of five directors, which number may be increased or decreased by
the board, provided that the number of directors may not exceed 15. The
Delaware Certificate does not provide for a classified board.
The Nevada Statutes provide that a corporation must have at least one
director, and may provide in its articles of incorporation or its bylaws for a
fixed number of directors or a variable number of directors within a fixed
maximum and minimum, and for the manner in which the number of directors may
be increased or decreased. The Nevada Articles provide that the number of
directors shall be five, however, the number of directors may be increased or
decreased as provided in the bylaws. The Bylaws of CDL-Nevada provide for a
board of five directors, which number may be increased or decreased by the
board. The Nevada Articles and the Bylaws of CDL-Nevada do not provide for a
classified board.
Duties of Directors
The Nevada Statutes expressly allow directors and officers of the
corporation to consider a variety of non-stockholder interests in discharging
their duties to the corporation. The non-stockholder interest include the
interests of the corporation's employees, suppliers, creditors and customers,
the economy of the state and nation, the interest of the community and of
society, and the long-term as well as short-term interests of the corporation
and its stockholders. There is no corresponding provision in the Delaware Law.
However, Delaware courts, in certain instances, have indicated that directors
may consider various constituencies provided there exists some rationally
related benefit to the stockholders.
Business Combinations Involving Interested Stockholders
Section 203 of the Delaware Law restricts certain business combinations
between a Delaware corporation and an "interested stockholder" (in general, a
stockholder owning 15% or more of the outstanding voting stock of such
corporation) or such stockholder's affiliates or associates for a period of
three years following the date on which the stockholder becomes an "interested
stockholder." The restrictions do not apply if (i) prior to an interested
stockholder becoming such, the corporation's board of directors approves
either the business combination or the transaction by which such person became
an interested stockholder, (ii) upon consummation of the transaction, the
interested stockholder owns at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding
shares owned by certain employee stock plans and persons who are both
directors and officers of such corporation), or (iii) at or subsequent to the
time an interested
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stockholder becomes such, the business combination is both approved by the
corporation's board of directors and authorized by the affirmative vote of at
least two-thirds of the outstanding voting stock of the corporation not owned
by the interested stockholder.
Similar to Section 203 of the Delaware Law, Sections 78.4111 to 78.444,
inclusive, of the Nevada Statutes restrict the ability of a resident domestic
corporation to engage in any combination with an interested stockholder for
three years after the interested stockholder's date of acquiring the shares
that cause such stockholder to become an interested stockholder unless the
combination or the purchase of shares by the interested stockholder on the
interested stockholder's date of acquiring the shares that cause such
stockholder to become an interested stockholder is approved by the board of
directors of the resident domestic corporation before that date. If the
combination was not previously approved, the interested stockholder may affect
a combination after the three-year period only if such stockholder receives
approval from a majority of the disinterested shares or the offer meets
certain fair price criteria. For purposes of the foregoing provisions,
"resident domestic corporation" means a Nevada corporation that has 200 or
more stockholders and "interested stockholder" means any person, other than
the resident domestic corporation or its subsidiaries, who is (a) the
beneficial owner, directly or indirectly, of 10% or more of the voting power
of the outstanding shares of the resident domestic corporation or (b) an
affiliate or associate of the resident domestic corporation and at any time
within three years immediately before the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the voting power of the
outstanding shares of the resident domestic corporation. The above provisions
do not apply to any combination involving a resident domestic corporation (i)
whose original articles of incorporation expressly elect not to be governed by
Sections 78.411 to 78.444 of the Nevada Statutes, (ii) which does not, as of
the date of acquiring shares, have a class of voting shares registered with
the Securities and Exchange Commission ("SEC") under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), unless the
corporation's articles of incorporation provide otherwise, (iii) whose
articles of incorporation were amended to provide that the corporation is
subject to the above provisions and which did not have a class of voting
shares registered with the SEC under Section 12 of the Exchange Act on the
effective date of such amendment, if the combination is with an interested
stockholder whose date of acquiring shares is before the effective date of
such amendment or (iv) that amends its articles of incorporation, approved by
a majority of the disinterested shares, to expressly elect not to be governed
by Sections 78.411 to 78.444 of the Nevada Statutes. Such an amendment,
however, would not become effective until 18 months after its passage and
would apply only to stock acquisitions occurring after the effective date of
the amendment. The Nevada Articles expressly elect not to be governed by
Sections 78.411 to 78.444 of the Nevada Statutes.
Preemptive Rights
Under both the Delaware Law and the Nevada Statutes, absent an express
provision in a corporation's certificate or articles of incorporation, a
stockholder does not, by operation of law, possess preemptive rights to
subscribe to an additional issue of stock. Neither the Delaware Certificate
nor the Nevada Articles provide for preemptive rights.
Amendment of Certificate or Articles of Incorporation
Under both the Delaware Law and the Nevada Statutes, a corporation may amend
its certificate or articles of incorporation if the corporation's board of
directors adopts a resolution presenting the proposed amendment and the
amendment is approved by stockholders. An amendment generally requires
approval by the affirmative vote of a majority of the votes entitled to be
cast. In addition, a majority of the shares of each class entitled to vote as
a class must approve the amendment. When the substantial rights of a class of
shares will be affected by an amendment, the holders of those shares are
entitled to vote as a class even if the shares are non-voting shares. When
only one or more series in a class of shares, and not the entire class, will
be adversely affected by an amendment, only the affected series may vote as a
class. Under the Delaware Law, the right to vote as a class may be limited in
certain circumstances. Any provision in the certificate of incorporation that
requires a greater vote than required by law cannot be amended or repealed
except by such greater vote. The Delaware Law provides that, in its resolution
proposing an amendment, the board of directors may insert a provision allowing
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the board of directors to abandon the amendment, without concurrence by
stockholders, after the amendment has received stockholder approval but before
its filing with the Secretary of State. The Nevada Articles include a similar
provision.
Merger--Effective Date
The Merger has been approved by the Company's Board of Directors, which
unanimously recommends a vote in favor of such proposal. If approved by the
stockholders, it is anticipated that the Merger will become effective as soon
as practicable (the "Effective Date") when the Certificate/Articles of Merger
are filed with the Secretary of State of the State of Nevada and the Secretary
of State of the State of Delaware. However, pursuant to the Merger Agreement,
the Merger may be abandoned or the Merger Agreement may be amended (except
that the principal terms may not be amended without stockholder approval)
either before or after stockholder approval has been obtained and prior to the
Effective Date, if, in the opinion of the Board of Directors of the Company,
circumstances arise which make it inadvisable to proceed.
Appraisal Rights
Holders of the Common Stock will not be entitled to appraisal rights with
regard to the Merger.
Capitalization of CDL-Nevada; Stock Certificates
CDL-Nevada will have authority to issue 100,000,000 shares of Class A
Nonvoting Common Stock, par value $0.01 per share (the "Class A Common
Stock"), 20,000,000 shares of Class B Voting Common Stock, par value $0.01 per
share (the "Class B Common Stock" and collectively with the Class A Common
Stock, the "CDL-Nevada Common Stock"), and 20,000,000 shares of Preferred
Stock, par value $0.01 per share ("CDL-Nevada Preferred Stock"). CDL Delaware
currently has authority to issue 20,000,000 shares of its Common Stock, par
value $0.01 per share, and 5,000,000 shares of Preferred Stock, of which
1,329,144 shares have been designated Series A 3% Cumulative Voting
Convertible Preferred Stock and 1,329,144 shares have been designated Series B
3% Cumulative Voting Convertible Preferred Stock. There are no outstanding
shares of Preferred Stock. The Merger will result in an increase in the number
of shares of Preferred Stock available for issuance by the Company. See
"Description of CDL-Nevada Capital Stock." The Company has no present plan or
arrangement to issue any such additional shares of Preferred Stock.
In the Merger, each share of CDL-Delaware Common Stock will be converted,
without any action on the part of the holder thereof, into 0.8 share of Class
A Common Stock and 0.2 share of Class B Common Stock. No fractional shares of
CDL-Nevada Common Stock will be issued, and each person who would otherwise be
entitled to receive a fractional share of such stock will instead be paid in
cash ("Fractional Cash Payment") the fair value of such fractional share as
determined in good faith by the Board of Directors of CDL-Nevada, as the
Surviving Corporation, as of the Effective Date. All CDL-Nevada stockholders
will have the rights provided in the Nevada Articles and the Nevada Statutes.
See "Certain Changes in the Rights of Stockholders resulting from the Merger
and the Effects Thereof."
After the Merger, certificates that formerly represented shares of CDL-
Delaware Common Stock shall be deemed for all purposes to evidence only the
number of shares of Class A Common Stock and Class B Common Stock into which
such shares of CDL-Delaware Common Stock shall have been converted as provided
above. All stock certificates formerly representing shares of CDL-Delaware
Common Stock shall be exchanged for certificates representing shares of Class
A Common Stock and Class B Common Stock and Fractional Cash Payment for any
fractional interests of such shares. In addition, after the Merger any option
or other right to acquire shares of CDL-Delaware Common Stock that has not
been exercised and has not lapsed shall, by virtue of the Merger and without
any action by the holder thereof, be converted into and become an option or
right to acquire 0.8 share of Class A Common Stock and 0.2 share of Class
Common Stock for each share of CDL-Delaware Common Stock subject to such
options or other right and provided that no option or other right may be
exercised to acquire fractional shares of CDL Common Stock.
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Prior to the Effective Date of the Merger, CDL-Nevada shall deposit with the
ChaseMellon Shareholders Services ("Transfer Agent") stock certificates
representing the CDL-Nevada Common Stock and an adequate amount of cash to pay
for the Fractional Cash Payments (collectively the "Exchange Fund") for
exchange of the shares of stock in CDL-Delaware and CDL-Nevada and payment of
any fractional shares.
Promptly following the Effective Date, the Transfer Agent to mail to each
holder of record of CDL-Delaware Common Stock (i) a letter of transmittal
("Transmittal Letter") for use by the record holder, and (ii) instructions for
the holder of record to use to exchange certificates for CDL-Delaware Common
Stock for certificates for Class A Common Stock and Class B Common Stock and,
if applicable, the Fractional Cash Payment. The Transmittal Letter shall be in
such form and have such additional provisions as CDL-Nevada shall approve and
shall specify that delivery of the CDL-Delaware Common Stock shall be effected
and the risk of loss and title to such shares shall pass only upon delivery of
the original certificates representing the CDL-Delaware Common Stock to the
Transfer Agent. Certificates for CDL-Delaware Common Stock that are
surrendered for exchange shall be forthwith cancelled. No interest will accrue
or be paid on the Fractional Cash Payment. See the Agreement and Plan of
Merger, attached hereto as Exhibit "A," for a discussion of transfers of
ownership of CDL-Delaware Common Stock that are not registered on the records
of the Transfer Agent, requests to issue certificates for Class A Common Stock
or Class B Common Stock in any name other than the name of the registered
holder of the certificate presented for exchange, and lost, stolen or
destroyed certificates of CDL-Delaware Common Stock.
If after six months following the Effective Date any portion of the Exchange
Fund (e.g., the cash for the Fractional Cash Payments and shares of Class A
Common Stock or Class B Common Stock) shall remain with Transfer Agent
unclaimed, then such unused Exchange Fund shall be delivered by Transfer Agent
to CDL-Nevada. Any stockholder who has not exchanged a certificate for CDL-
Delaware Common Stock shall thereafter look solely to CDL-Nevada to obtain
certificates for the Class A Common Stock, Class B Common Stock, the
Fractional Cash Payment and any other dividends or other amounts payable to
such stockholder by virtue of ownership of a certificate of CDL-Delaware
Common Stock and any such payments shall be made without interests.
Notwithstanding the foregoing, CDL-Nevada, the Transfer Agent or any other
person shall be liable to a stockholder for any sum properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
The Common Stock is listed on the American Stock Exchange. After the Merger,
the Class A Common Stock and Class B Common Stock will be listed on the
American Stock Exchange. The Company anticipates that the Class A Common Stock
and the Class B Common Stock will be listed under the symbols CDL. A and
CDL. B, respectively.
Description of CDL-Nevada Capital Stock
General
The authorized capital stock of CDL-Nevada consists of (i) 100,000,000
shares of Class A Common Stock, $0.01 par value; (ii) 20,000,000 shares of
Class B Common Stock, $0.01 par value; and (iii) 20,000,000 shares of
Preferred Stock, $0.01 par value.
16
<PAGE>
CDL-Nevada
Voting Rights. The Class A Common Stock is entitled to a class vote in the
event a proposed amendment to the Nevada Articles or any merger transaction
that would alter or change any preference or any other special right
previously given to the holders of the Class A Common Stock. The Class A
Common Stock has no other voting rights. The Class B Common Stock is entitled
to one vote per share.
Liquidation Rights. The holders of Class A Common Stock and the Class B
Common Stock have the same rights in the event of a liquidation, dissolution
or winding up of CDL-Nevada. In any such event, whether voluntary or
involuntary, before any payment or distribution of the assets of CDL-Nevada
(whether capital or surplus) is made to or set apart for the holders of CDL-
Nevada Common Stock or any class or classes or series of stock or other
securities of CDL-Nevada ranking junior to the CDL-Nevada Common Stock upon
liquidation, dissolution or winding up, and after the payment or distribution
to the holders of any class or classes or series of stock or other securities
of CDL-Nevada ranking prior to the CDL-Nevada Common Stock upon liquidation,
dissolution or winding up, the holders of the CDL-Nevada Common Stock
(together with the holders of any series of Preferred Stock which, pursuant to
the resolution or resolutions of the Board of Directors providing for the
issue of such series, will be entitled to participate therein with the holders
of the CDL-Nevada Common Stock) will be entitled to participate equally, share
for share as if a single class, in any further payment or distribution of the
assets of CDL-Nevada.
Dividends. The holders of the Class A Common Stock and the Class B Common
Stock (together with the holders of any series of Preferred Stock which,
pursuant to the resolution or resolutions of the Board of Directors providing
for the issue of such series, will be entitled to participate therein with the
holders of the CDL-Nevada Common Stock) will be entitled to receive such
dividends and distributions, payable in cash or otherwise, as may be declared
by the Board of Directors. The holders of the Class A Common Stock and the
Class B Common Stock will be entitled to receive such dividends or
distributions as may be paid or made with respect to the CDL-Nevada Common
Stock in equal amounts, share for share, as if a single class of securities.
However, in the event that any dividend is declared on the Class B Common
Stock payable in shares of Class B Common Stock, such dividend will be
declared at the same rate per share on the Class B Common Stock and Class A
Common Stock, but the dividend payable on shares of Class B Common Stock will
be payable in shares of Class B Common Stock and the dividend payable on
shares of Class A Common Stock will be payable in shares of Class A Common
Stock. In addition, if CDL-Nevada in any manner splits, subdivides or combines
the outstanding shares of Class A Common Stock, the outstanding shares of
Class B Common Preference Stock will be split, subdivided or combined in the
same manner proportionately and on the same basis per share, and vice versa.
Other Rights, Preferences and Privileges. Except as to the voting and
dividend rights described above, all shares of Class A Common Stock and Class
B Common Stock will have identical rights, preferences and privileges.
Preferred Stock
No shares of CDL-Nevada Preferred Stock will be issued or outstanding
immediately following the Merger. Shares of Preferred Stock may be issued from
time to time in one or more series; and the Board of Directors, without
further stockholder approval, is authorized to fix the dividend rights and
terms, conversion rights, voting
17
<PAGE>
rights (whole, limited or none), redemption rights and terms, liquidation
preferences, sinking funds and any other rights, preferences, privileges,
limitations and restrictions applicable to each such series of Preferred
Stock. The purpose of authorizing the Board of Directors to determine such
rights and preferences is to eliminate delays associated with a stockholder
vote on specific issuances. The issuance of the Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting
power of the holders of Class B Common Stock, and, under certain
circumstances, make it more difficult for a third party to gain control of
CDL-Nevada; such issuance also could adversely affect the distributions on and
liquidation preference of the CDL-Nevada Common Stock by creating one or more
series of preferred stock with distribution or liquidation preferences senior
to the CDL-Nevada Common Stock.
In the event that shares of the CDL-Nevada Preferred Stock are issued as
convertible securities, convertible into shares of Class A Common Stock or
Class B Common Stock, the holders of Class A Common Stock or Class B Common
Stock may experience dilution. CDL-Nevada has no present plan or arrangement
to issue any Preferred Stock.
Indebtedness of the Company
All indebtedness of the Company outstanding on the Effective Date will be
assumed by CDL-Nevada in connection with the Merger.
Certain Federal Income Tax Consequences
The Company's management believes that, for federal income tax purposes:
1. No gain or loss will be recognized by Citadel, CDL-Nevada or
stockholders of Citadel by reason of the consummation of the Merger;
2. Each stockholder's tax basis in the CDL-Nevada capital stock into
which his CDL-Delaware capital stock is converted will be the same as the
tax basis of the CDL-Delaware capital stock held by him immediately prior
to the consummation of the Merger; and
3. A stockholder who holds the CDL-Delaware capital stock as a capital
asset will include in his holding period for CDL-Nevada capital stock the
period during which he held CDL-Delaware Capital Stock.
No information is provided herein as to the state, local or foreign tax
consequences of the Merger. The federal income tax discussion set forth above
is for general information only. Each stockholder is urged to consult his own
tax advisor as to these and any other tax consequences of the Merger.
Vote Required; Recommendation of Board
Approval of Proposal No. 2 requires the affirmative vote of majority of the
votes entitled to be cast by the holders of the Company's outstanding Common
Stock. Citadel has been advised by Craig and Reading that they intend to vote
3,209,779 shares of Common Stock owned by them, representing approximately
47.9% of the outstanding Common Stock, in favor of the approval of the Merger.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
MERGER.
18
<PAGE>
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
Executive Officers
The names of the executive officers of Citadel, other than James J. Cotter
and S. Craig Tompkins, nominees for director, together with certain
information regarding them, are as follows:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Brett Marsh................................ 52 Vice President of Real Estate
Andrzej Matyczynski........................ 47 Chief Financial Officer
</TABLE>
Brett Marsh has been with the Company since 1993 and is responsible for the
real estate activities of the Company. Prior to joining the Company, Mr. Marsh
was the Senior Vice President of Burton Property Trust, Inc., the U.S. real
estate subsidiary of The Burton Group PLC. In this position, Mr. Marsh was
responsible for the real estate portfolio of that company.
Mr. Andrzej Matyczynski became the Chief Financial Officer of the Company
effective November 19, 1999. On that date, Mr. Matyczynski also became the
Chief Financial Officer of the Company's affiliate, Craig Corporation, and the
Chief Administrative Officer of its subsidiary, Reading Entertainment, Inc.
Prior to joining the Company, Mr. Matyczynski was the Finance Director of
Beckman Coulter, Inc. Mr. Matyczynski was associated with Beckman Coulter and
its predecessors for more than the past twenty years and also served as a
director of certain Beckman Coulter subsidiaries.
Summary Compensation Table
The officers of Citadel during 1998 included Steve Wesson, S. Craig Tompkins
and Brett Marsh. The Summary Compensation Table sets forth the compensation
earned for the years ended December 31, 1998, 1997 and 1996 by each of the
most highly compensated executive officers of the company whose compensation
exceeded $100,000 in all capacities in which they served.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------- ------------
Securities
Underlying
Stock
Name and Principal Other Annual Options All Other
Position Year Salary Bonus Compensation(1) Granted Compensation
------------------ ---- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Steve Wesson(3).......... 1998 $200,000 $ 50,000 (1) -- --
President and Chief 1997 $185,000 $ 80,000 (1) (2) --
Executive Officer 1996 $175,000 $100,000 (1) -- --
Brett Marsh.............. 1998 $152,500 -- (1) -- --
Director of Real Estate 1997 $150,000 $ 30,000 (1) (2) --
1996 $130,000 $ 10,000 (1) -- --
</TABLE>
- --------
(1) Excludes perquisites if the aggregate amount thereof is less than $50,000,
or 10% of salary plus bonus, if less.
(2) During 1997, Mr. Wesson and Mr. Marsh, who provide services to REI
pursuant to a consulting agreement between Citadel and REI, were named
officers of a wholly-owned subsidiary of REI. Mr. Wesson and Mr. Marsh
received options to acquire 20,000 and 10,000 shares, respectively, of REI
Common Stock at an exercise price of $12.875 per share. The options held
by Mr. Wesson have expired.
(3) Mr. Wesson resigned as President and Chief Executive Officer effective
August 1, 1999 and currently serves as a consultant to the Company.
Option/SAR Grants In Last Fiscal Year
No options were granted in 1998.
19
<PAGE>
Aggregated Option/SAR In Last Fiscal Year and Fiscal Year-End Option/SAR
Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised in-
Unexercised the-Money
Options/SARs Option/SARs at
Shares at 12/31/98 12/31/98 (#)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable(2)
- ---- ------------ ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Steve Wesson(1)......... N/A N/A 33,000/0 $41,168
Alfred Villasenor, Jr... N/A N/A 10,000/0 $ 9,375
Ronald I. Simon......... N/A N/A 10,000/0 $ 9,375
</TABLE>
- --------
(1) In September 1999, the Company purchased Mr. Wesson's options for a cash
payment of approximately $66,000.
(2) Based upon $3.9375 per share.
Employment Contracts and Change in Control Agreements
Citadel and Steve Wesson entered into an Executive Employment Agreement,
effective as of August 4, 1994 (the "Employment Agreement"). The term of the
Employment Agreement was two years subject to automatic renewal for subsequent
one-year terms, unless either party gave notice of non-renewal. That agreement
has been terminated.
On June 27, 1990, the Board authorized Citadel to enter into indemnity
agreements with its then current as well as future directors and officers.
Since that time, Citadel's officers and directors have entered such
agreements. Under these agreements, Citadel agrees to indemnify its officers
and directors against all expenses, liabilities and losses incurred in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil or criminal, administrative or investigative, to
which any such officer or director is a party or is threatened to be made a
party, in any manner, based upon, arising from, relating to or by reason of
the fact that he is, was, shall be or shall have been an officer or director,
employee, agent or fiduciary of Citadel. Each of the current Citadel directors
has entered into an indemnity agreement with Citadel. Similar agreements also
exist between Citadel's subsidiaries and the officers and directors of such
subsidiaries.
Compensation Committee Interlocks and Insider Participation
Mr. Cotter is the Chairman of the Board of Craig and REI. Mr. Cotter is a
member of the Compensation Committee of the Company. Mr. Tompkins is President
of Craig and a Director of Craig and REI.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers, directors
and persons who own more than 10% of the Company's Common Stock to file
reports to ownership and changes in ownership with the SEC. The SEC rules also
requires such reporting persons to furnish the Company with a copy of all
Section 16(a) forms they file.
Based solely on a review of the copies of the forms which the Company
received and written representations from certain reporting persons, the
Company believes that, during the fiscal year ended December 31, 1998, all
filing requirements applicable to its reporting persons were complied with.
Compensation Committee Report on Executive Compensation
The report of the Compensation Committee of the Board of Directors with
respect to executive compensation shall not be deemed incorporated by
reference by any general statement incorporating by reference
20
<PAGE>
this Proxy Statement into any filing under the Securities Act of 1933, as
amended (the "Securities Act"), or under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), except to the extent that Citadel
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Compensation Committee of the Board of Directors of the Company for the
fiscal year ended December 31, 1999 was composed of James J. Cotter and Alfred
Villasenor, Jr. The Compensation Committee, is principally responsible for
reviewing the performance of, and determining the compensation for the
executive officers of the Company. The Company's executive compensation
program is designed to attract and retain talented executives and motivate
them to achieve the business objectives of the Company that the Board of
Directors believes will enhance stockholder value.
The Company's current compensation strategy is to supplement the executive
officer's base level compensation with periodic cash bonuses in recognition of
individual performance, and from time to time, grant stock options designed to
link the executives' long term compensation to appreciation in stockholder
value. Specific components of the compensation of executive officers are as
follows:
Base Salary: The base salary of the Chief Executive Officer of the Company
with respect to 1998 was set in accordance with his Employment Agreement. It
is anticipated that in the event the base salaries of other executive officers
are to be set, such base salaries will be established upon a general review by
the Compensation Committee of comparable compensation for positions requiring
similar skills and capabilities and will reflect the performance of the
officer in fulfilling his or her duties. Base salary does not directly reflect
the financial performance of the Company.
Bonus: The Company may award officers an annual bonus in an amount to be
determined by the Compensation Committee. The Compensation Committee will
consider such factors as it deems appropriate in determining such bonuses. As
previously discussed, the Employment Agreement of Citadel's former Chief
Executive Officer provide for a minimum annual bonus of $50,000, which was
paid in 1998.
Amounts earned during 1998 by the Steve Wesson and Brett Marsh are shown in
the Summary Compensation Table. In 1998, Messrs. Cotter and Tompkins were paid
bonuses of $200,000 and $50,000, respectively. The amount of Messrs. Cotter
and Tompkins' bonuses reflected, among other things, the successful completion
of the Reading Preferred Stock acquisition and the successful completion of
the acquisition of the Big 4 Properties. No other bonuses were paid with
respect to 1998, other than the minimum bonus of $50,000 paid to Mr. Wesson
pursuant to his Employment Agreement. The bonus to Mr. Cotter was reviewed and
approved by the Compensation Committee with Mr. Cotter abstaining.
James J. Cotter
Alfred Villasenor, Jr.
21
<PAGE>
Performance Graph
The following line graph below shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Exchange Act, except to the extent Citadel specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the Exchange Act.
The following line graph compares the cumulative total stockholder return on
Common Stock from December 31, 1993 through December 31, 1998 against the
cumulative total return of the Center for Research in Securities Prices
("CRSP") Total Return Index for the (i) New York Stock Exchange
("NYSE")/American Stock Exchange ("AMEX")/NASDAQ Stock Market Index (U.S.
companies) and (ii) the cumulative total return of the Company's current peer
group, the CSRP Total Return Index for NYSE/AMEX/NASDAQ Companies in the SIC
Group Code 6510-6519 (US Companies) (Real Estate Operators (Except Developers)
and Lessors). Peer group returns have been weighted by the market
capitalization of the individual peers. The graph assumes a $100 dollar
investment on December 31, 1993 and reinvestment of all dividends on a daily
basis.
FIVE YEAR CUMULATIVE RETURN
AMONG CITADEL COMMON, MARKET INDEX AND PEER INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
STOCK
CITADEL MARKET PEER
Measurement Period COMMON INDEX INDEX
- --------------------- ---------- --------- ----------
<S> <C> <C> <C>
12/31/93 $100.00 $100.00 $100.00
12/31/94 $ 21.30 $ 99.50 $101.30
12/31/95 $ 20.20 $135.70 $130.00
12/31/96 $ 23.40 $164.50 $149.70
12/31/97 $ 36.20 $215.30 $161.90
12/31/98 $ 33.50 $265.80 $159.00
</TABLE>
The graph assumes a one hundred dollar ($100) investment on December 31, 1993
and reinvestment of dividends on the date such dividends were declared.
22
<PAGE>
Certain Transactions
Reading Investment Transaction
In October 1996, Citadel and its wholly-owned subsidiary, Citadel
Acquisition Corp., Inc. ("CAC"), closed a transaction with Craig and Reading
pursuant to which CAC contributed cash in the amount of $7 million to REI in
exchange for (i) 70,000 shares of Series A Preferred Stock of REI, (ii) the
granting to Citadel of an option, exercisable at any time until 30 days after
REI files its Annual Report on Form 10-K for the year ended December 31, 1999,
to exchange all or substantially all of its assets for shares of REI Common
Stock, subject to certain contractual limitations and (iii) the granting of
certain demand and piggy-back registration rights with respect to REI Common
Stock received on the conversion of the Series A Preferred Stock or on such
asset exchange. During 1998, 1997 and 1996, Citadel received dividend income
of $455,000, $455,000 and $95,000, respectively, from REI with respect to REI
Series A Preferred Stock.
Transactions with Craig Corporation and Reading Entertainment, Inc.
Commencing August 1995, Citadel began renting corporate office space from
Craig on a month-to-month basis and engaged Craig to provide Citadel with
certain administrative services. During fiscal 1998, $96,000 was paid to Craig
for such rent and services. In additional, Citadel provided real estate
consulting services to Reading during fiscal 1998, 1997 and 1996, for which
Citadel was paid $398,000, $240,000 and $169,000, respectively.
Issuance of Common Stock to Craig Corporation for a Note Receivable
On April 11, 1997, Craig exercised its warrant to purchase 666,000 shares of
the Company's common stock at an exercise price of $3.00 per share or $1.998
million. Such exercise was consummated by delivery by Craig of its secured
promissory note (the "Craig Secured Note") in the amount of $1.998 million,
secured by 500,000 shares of REI Common Stock owned by Craig. Interest is
payable quarterly in arrears at the prime rate (amounting to 7.75% at December
31, 1998) computed on a 360 day-year. Principal and accrued but unpaid
interest is due upon the earlier of April 11, 2002 or 120 days following the
Company's written demand for payment. The Craig Secured Note may be prepaid,
in whole or in part, at any time by Craig without penalty or premium. During
1998 and 1997, Craig paid interest to Citadel of approximately $165,000 and
$125,000, respectively, pursuant to the terms of the Craig Secured Note.
Agricultural Activities
In 1997, the Company entered into a series of transactions which resulted in
the acquisition by the Company of (i) a 40% equity interest in each of three
general partnerships (the "Agricultural Partnerships") formed to acquire from
the Prudential Insurance Company of America ("Prudential") approximately 1,580
acres of agricultural land located in the Central Valley of California (the
"Big 4 Properties"), and (ii) an 80% equity interest in a newly-formed farm
operating company, Big 4 Farming, LLC ("Farming"), created to farm the Big 4
Properties for the Agricultural Partnerships. The Big 4 Properties were
acquired for a total purchase price of $6.75 million plus reimbursement of
certain cultural costs through the closing (which cultural costs amounted to
approximately $831,000). The acquisition was financed by a ten-year purchase-
money mortgage loan from Prudential in the amount of $4.05 million (the
"Prudential Loan") and by drawdowns in the amount of $831,000 under a $1.2
million crop finance line of credit from the Company to the Agricultural
Partnerships (the "Crop Financing"). The Prudential Loan bears interest at
7.70%, provides for quarterly payment of interest, and provided certain levels
of capital investment are achieved, calls for principal amortization payments
of $200,000 per year commencing January 2002. The Crop Financing accrues
interest, payable quarterly, at the rate of prime plus 100 basis points, and
was due and payable in August 1998. Upon the expiration of the Crop Financing,
the Company increased the line of credit to $1,850,000 for an additional
twelve months under the same terms and conditions. In December 1998, the
Agricultural Partnerships suffered a devastating freeze which resulted in a
loss of substantially all of its 1998-1999 corp. As a consequence of the
freeze, the Agricultural Partnerships have no funds, other than partner
contributions with which to repay the drawdowns on the Line of Credit.
Furthermore,
23
<PAGE>
the Agricultural Partnerships generally have no source of funding, other than
its partners, for the cultural expenses needed for production of the 1999-2000
crop, as well as the funding of a crop planting program on the undeveloped
acreage. In addition, to the $1,850,000 line of credit, it is estimated that
the Agricultural Partnerships will need additional cash in the amount of
$1,500,000 in order to cover cultural costs for its 1999-2000 crop year and
approximately $125,000 in order to complete the planting program through the
end of the year. In addition, during 1999 the Company agreed to guarantee the
obligations of the Agricultural Partnerships under certain equipment leases,
up to $220,000. Big 4 Ranch, Inc., which was spun off to the Company's
stockholders in December 1997, has no funds with which to make contributions
to the Agricultural Partnerships. Subsequent to year end, the Company and
Visalia have continued to fund, on an 80/20 basis, (i) the Agricultural
Partnerships operating and crop costs, and (ii) the cost of the new trees to
be used in the planting program. No revenue is expected to be realized by the
Agricultural Partnerships until the 1999-2000 crop is harvested and sold.
Each of the Agricultural Partnerships has three partners: Citadel
Agriculture, Inc., a wholly owned subsidiary of Citadel ("CAI"), which has a
40% interest in each of the partnerships; Big 4 Ranch, Inc. ("BRI"), which
although formed as a wholly owned subsidiary of Citadel, was spun-off to the
shareholders of Citadel following the formation of the partnerships and prior
to the acquisition of the Big 4 Properties, and Visalia LLC ("Visalia"), a
limited liability company controlled by James J. Cotter and owned by Mr.
Cotter and certain members of his family. Farming is owned 80% by the Company
and 20% by Visalia. BRI was initially capitalized with $1.2 million from
Citadel and, in addition, has a three-year $200,000 line of credit from
Citadel, providing for interest at prime plus 200 basis points. No drawdowns
have been made to date under this line of credit.
Craig and Reading, as stockholders of Citadel, received BRI shares in the
spin-off in proportion to their interests in Citadel. During 1998, Craig and
Reading purchased additional shares in BRI, increasing their ownership to
approximately 49%. In addition, during 1998, Cecelia Packing, owned by Mr.
Cotter, and a trust for the benefit of one of Mr. Tompkin's children, each
acquired from a single seller shares representing an additional 1.6% of the
outstanding shares of BRI, or 3.2% of such shares in the aggregate. Certain
officers and directors of Craig and Reading are officers, directors or
management committee members of CAI, BRI, Farming and/or the Agricultural
Partnerships. Mr. James J. Cotter is the Chairman and Chief Executive Officer
of the Company, the Chairman of each of CAI, Craig and REI, and is also
Chairman of the management committees of Farming and of each of the
Agricultural Partnerships. Mr. Tompkins is the Vice Chairman and a Director of
each of Citadel and REI, the President and a Director of Craig, the
Secretary/Treasurer of Citadel, the President of CAI and a member of the
management committees of Farming and of each of the Agricultural Partnerships.
As an administrative convenience, Mr. Tompkins also serves as an assistant
secretary of BRI and Visalia, for which he receives no compensation. Mr.
Edward Kane, a director of REI, served as Chairman and President of BRI and a
member of the Management Committee of each of the Agricultural Partnerships
until October 1998, at which time he was succeeded by Mr. Gerard Laheney, a
Director of Craig. Mr. William Gould, a Director of Craig, is also a Director
of BRI. Ms. Margaret Cotter, a Director of Craig, the daughter of James J.
Cotter, a limited partner in Hecco and a member in Visalia is also the
Secretary, Treasurer and Principal Accounting Officer and a Director of BRI, a
member of Visalia and the Vice President of Cecelia. During 1998, Mr. Gould,
Ms. Cotter and Mr. Kane received approximately $2,000, $4,000 and $11,000,
respectively, on an annual basis for such services to BRI. Ms. Ellen Cotter is
the Vice President Business Affairs of Craig and REI, the daughter of James J.
Cotter, a limited partner in Hecco and a member in Visalia.
Citadel owns stock representing a 15.62% interest in Gish Biomedical, Inc.,
a publicly traded company whose securities are quoted on the NASDAQ National
Market ("Gish"). The stock was acquired principally between March and July
1999. On September 15, 1999, James J. Cotter Jr., the son of James J. Cotter,
was elected to the Board of Directors of Gish. The Directors of Gish currently
serve without compensation.
24
<PAGE>
CITADEL'S RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche have been the independent certified public accountants for
Citadel since 1983 and have been selected by Citadel to continue to serve as
the accountants for Citadel for the remainder of 1999. Representatives of
Deloitte & Touche will attend the Annual Meeting with an opportunity to make a
statement if they desire to do so and will be available to respond to
questions.
AVAILABILITY OF CERTAIN DOCUMENTS
Copies of Citadel's Annual Report on Form 10-K for its fiscal year ended
December 31, 1998 and Quarterly Report on Form 10-Q for the three and nine
months ended September 30, 1999 are enclosed.
STOCKHOLDERS PROPOSALS
Any stockholder, who in accordance with and subject to the provisions of the
proxy rules of the SEC, wish to submit for inclusion in the Proxy Statement
relating to the Company's 2000 Annual Meeting of stockholders must deliver
such proposal to the Company at its principal office on or before July 25,
2000. If the Company is not notified of a stockholder proposal by October 8,
2000, the proxies held by management of the Company may confer discretionary
authority to vote against such stockholder proposal, even though such proposal
is not discussed in the Proxy Statement relating to the 2000 Annual Meeting.
The Board of Directors will consider written nominations for directors from
stockholders. Nominations for the election of directors made by the
stockholders of the Company must be made by written notice delivered to the
Secretary of the Company at the Company's principal executive offices not less
than 120 days prior to the first anniversary of the immediately preceding
annual meeting of stockholders at which directors are elected. Such written
notice must set forth, among other things, the name, age, address and
principal occupation or employment of such nominee, the number of shares of
the Company's Common Stock owned by such nominee and such other information as
is required by the proxy rules of the SEC with respect to a nominee of the
Board of Directors. Nominations not made in accordance with the foregoing
procedure will not be valid.
25
<PAGE>
OTHER MATTERS
At the time of preparation of this Proxy Statement, the Board of Directors
of Citadel was not aware of any other matters to be brought before the Annual
Meeting. However, if any other matters are properly presented for action, it
is the intention of the persons named in the accompanying proxy to vote on
such matters in accordance with their judgment.
By order of the Board of Directors,
/s/ S. Craig Tompkins
-----------------------------------
S. Craig Tompkins
Corporate Secretary
Los Angeles, California
November 22, 1999
26
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated November 18, 1999, is by and
between Citadel Holding Corporation, a Delaware corporation ("CDL-Delaware"),
and Citadel Holding Corporation, a Nevada corporation ("CDL-Nevada" and,
together with CDL-Delaware, the "Constituent Corporations").
RECITALS
WHEREAS, the offices of each of the Constituent Corporations are located at
550 South Hope Street, Suite 1825, Los Angeles, California 90071; and
WHEREAS, CDL-Delaware is a corporation duly organized and validly existing
under the laws of the State of Delaware and has authorized capital stock
consisting of 20,000,000 shares of Common Stock, par value $.01 per share
("CDL-Delaware Common Stock"), of which 6,669,924 shares are issued and
outstanding, and 5,000,000 shares of Serial Preferred Stock, par value $.01
per share ("Preferred Stock"), none of which shares are outstanding; and
WHEREAS, CDL-Nevada is a corporation duly organized and validly existing
under the laws of the State of Nevada and has authorized capital stock
consisting of 100,000,000 shares of Class A Non-Voting Common Stock, par value
$.01 per share ("CDL-Nevada Class A Common Stock"), none of which shares are
issued and outstanding, 20,000,000 shares of Class B Voting Common Stock, par
value $.01 per share ("CDL-Nevada Class B Common Stock"), of which 100 shares
are outstanding, and 20,000,000 shares of Preferred Stock, par value $.01 per
share ("CDL-Nevada Preferred Stock"), none of which shares are outstanding;
and
WHEREAS, all of the outstanding CDL-Nevada Class B Common Stock is owned by
CDL-Delaware; and
WHEREAS, CDL-Delaware and CDL-Nevada desire to enter into this Agreement and
Plan of Merger as a reorganization pursuant to 368(A)(1)(F) of the Internal
Revenue Code of 1986, as amended; and
WHEREAS, the respective Boards of Directors of each of CDL-Delaware and CDL-
Nevada have approved this Agreement and Plan of Merger and directed that it be
submitted to the respective shareholders of CDL-Delaware and CDL-Nevada for
adoption;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein and in accordance with the laws of the States of Delaware and
Nevada, the parties hereto agree that CDL-Delaware shall be merged with and
into CDL-Nevada (the "Merger"), that CDL-Nevada shall be the surviving
corporation (the "Surviving Corporation") in the Merger, and that the terms
and conditions of the Merger shall be as follows:
ARTICLE 1
MERGER OF CDL-DELAWARE INTO CDL-NEVADA
Section 1.1 At the Effective Date (as defined below), CDL-Delaware shall be
merged with and into CDL-Nevada, which shall be the Surviving Corporation, and
CDL-Nevada shall continue its corporate existence under the laws of the State
of Nevada.
Section 1.2 If the proposal to approve this Agreement and Plan of Merger is
adopted by the affirmative vote of at least a majority of the votes entitled
to be cast on such proposal by the holders of outstanding shares of CDL-
Delaware Common Stock, the Constituent Corporations shall as promptly as
practicable execute and file with the Secretary of State of Delaware and the
Secretary of State of Nevada a Certificate or Articles of Merger and such
supporting documents as may be required to effect the Merger. The date of such
filings with such Secretaries of State shall be the Effective Date of the
Merger.
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ARTICLE 2
EXCHANGE OF SHARES
Section 2.1 At the Effective Date, each outstanding share of CDL-Delaware
Common Stock shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become 0.8 share of CDL-Nevada
Class A Common Stock and 0.2 share of CDL-Nevada Class B Common Stock, and all
shares of CDL-Delaware Common Stock held in Treasury by CDL-Delaware shall be
canceled. No factional shares of CDL-Nevada Class A Common Stock or CDL-Nevada
Class B Common Stock shall be issued, and each person who would otherwise be
entitled to receive a fractional share of such stock shall instead be paid in
cash ("Fractional Cash Payment") the fair value of such factional share as of
the Effective Date and as determined in the good faith by the Board of
Directors of CDL-Nevada, as the Surviving Corporation.
Section 2.2 At the Effective Date, each share of CDL-Nevada Class B Common
Stock held by CDL-Delaware immediately prior thereto shall be canceled and
retired without payment of any consideration therefor.
Section 2.3 After the Effective Date, all of the outstanding certificates
formerly representing shares of CDL-Delaware Common Stock shall be deemed for
all purposes to evidence only the number of shares of CDL-Nevada Class A
Common Stock and CDL-Nevada Class B Common Stock into which such shares of
CDL-Delaware Common Stock shall have been converted as provided in Section
2.1. All stock certificates formerly representing shares of CDL-Delaware
Common Stock shall be exchanged as described in Section 2.5 below for
certificates representing shares of CDL-Nevada Class A Common Stock and CDL-
Nevada Class B Common Stock as aforesaid and shall be paid the Fractional Cash
Payment for any fractional interests of such shares.
Section 2.4 At the Effective Date, any option or other right to acquire
shares of CDL-Delaware Common Stock that has not been exercised and has not
lapsed shall, by virtue of the Merger and without any action by the holder
thereof, be converted into and become an option or right to acquire 0.8 share
of CDL-Nevada Class A Common Stock and 0.2 share of CDL-Nevada Class B Common
Stock for each share of CDL-Delaware Common Stock subject to such options or
other right and provided that no option or other right may be exercised to
acquire fractional shares of CDL-Nevada Common Stock.
Section 2.5
(a) On or prior to the Effective Date, CDL-Nevada shall deposit with the
ChaseMellon Shareholders Services ("Transfer Agent") stock certificates
representing the CDL-Nevada Class A Common Stock and CDL-Nevada Class B Common
Stock for exchange in accordance with this Section 2.5. In addition, the
Constituent Corporations will deposit with the Transfer Agent an adequate
amount of cash to pay for the Fractional Cash Payments that could result from
the exchange of CDL-Delaware and CDL-Nevada stock. The cash for the Fractional
Cash Payment and the certificates for CDL-Nevada Class A Common Stock and CDL-
Nevada Class B Common Stock are hereinafter collectively referred to as the
"Exchange Fund".
(b) Promptly following the Effective Date, CDL-Nevada shall cause the
Transfer Agent to mail to each holder of record of CDL-Delaware Common Stock
(i) a letter of transmittal ("Transmittal Letter") for use by the record
holder, and (ii) instructions for the holder of record to use to exchange
certificates for CDL-Delaware Common Stock for certificates for CDL-Nevada
Class A Common Stock and CDL-Nevada Class B Common Stock and, if applicable,
the Fractional Cash Payment. The Transmittal Letter shall be in such form and
have such additional provisions as CDL-Nevada shall approve and shall specify
that delivery of the CDL-Delaware Common Stock shall be effected and the risk
of loss and title to such shares shall pass only upon delivery of the original
certificates representing the CDL-Delaware Common Stock to the Transfer Agent.
(c) Upon surrender of a certificate for CDL-Delaware Common Stock for
exchange together with the Transmittal Letter duly executed by the holder of
record, such holder shall be entitled to receive certificates representing
shares of CDL-Nevada Class A Common Stock and CDL-Nevada Class B Common Stock
and the Fractional Cash Payment in accordance with Section 2.1 above and the
certificates so surrendered shall be forthwith cancelled. No interest will
accrue or be paid on the Fractional Cash Payment. In the event a transfer of
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ownership of CDL-Delaware Common Stock has occurred that is not registered on
the records of the Transfer Agent, the exchange of stock and the Fractional
Cash Payment may only be made if documents and other evidence to effect such
transfer is submitted to and approved by Transfer Agent and CDL-Nevada along
with evidence that any applicable transfer taxes or other fees have been paid
in full. If any certificate for CDL-Nevada Class A Common Stock or CDL-Nevada
Class B Common Stock is to be issued in any name other than the name of the
registered holder of the certificate presented for exchange, then a condition
for the issuance of such certificate(s) will be that the party requesting the
exchange pay all transfer or other fees required for the issuance of such
certificate or shall establish to the satisfaction of the Transfer Agent and
CDL-Nevada that such tax or fees has been paid or is not applicable.
(d) On and after the Effective Date, no shares of CDL-Delaware Common Stock
shall be transferred except as described in this Section 2.5.
(e) If after six months following the Effective Date any portion of the
Exchange Fund (e.g., the cash for the Fractional Cash Payments and shares of
CDL-Nevada Class A Common Stock or CDL-Nevada Class B Common Stock) shall
remain with Transfer Agent unclaimed, then such unused Exchange Fund shall be
delivered by Transfer Agent to CDL-Nevada. Any stockholder who has not
exchanged the certificate for CDL-Delaware Common Stock as provided in this
Section 2.5 shall thereafter look solely to CDL-Nevada to obtain certificates
for the CDL-Nevada Class A Common Stock, CDL-Nevada Class B Common Stock, the
Fractional Cash Payment and any other dividends or other amounts payable to
such stockholder by virtue of ownership in stock in CDL-Delaware or CDL-Nevada
and any such payments shall be made without interests. Notwithstanding the
foregoing, none of CDL-Nevada, the Transfer Agent or any other person shall be
liable to a stockholder for any sum properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(f) In the event a certificate representing shares of CDL-Delaware Common
Stock has been lost, stolen or destroyed, the holder of record of such
certificate and/or the person claiming to be the beneficial owner of such
certificate shall deliver an affidavit in a form approved by CDL-Nevada
attesting to the fact that the certificate has been lost, stolen or destroyed
and, if required by CDL-Nevada, shall post a bond in such amount as CDL-Nevada
may direct as indemnity against any claim that may be made against it and/or
the Transfer Agent. Only after the receipt of such affidavit and bond, if
required, will CDL-Nevada deliver the Exchange Fund for such lost, stolen or
destroyed certificate as provided in this Section 2.5.
ARTICLE 3
ARTICLES, BYLAWS AND CORPORATE GOVERNANCE OF SURVIVING CORPORATION
Section 3.1 The Articles of Incorporation of CDL-Nevada in effect on the
Effective Date shall be the Articles of Incorporation of the Surviving
Corporation following the Merger until amended as provided by law.
Section 3.2 The Bylaws of CDL-Nevada in effect on the Effective Date shall
be the Bylaws of the Surviving Corporation until amended as provided by law.
Section 3.3 From the Effective Date, the directors and officers of CDL-
Delaware as of the Effective Date shall serve as the directors and officers of
the Surviving Corporation following the Merger until removed or replaced as
provided by the Bylaws of the Surviving Corporation.
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ARTICLE 4
LEGAL AND FINANCIAL EFFECTS OF MERGER
From the Effective Date, the Merger shall have the effects provided by
Delaware and Nevada law. Without limiting the generality of the foregoing,
upon the Effective Date, the separate existence of CDL-Delaware shall cease,
CDL-Delaware shall be merged with and into CDL-Nevada, with CDL-Nevada as the
Surviving Corporation, and the Surviving Corporation, without any further deed
or action, shall possess all assets and property of every description, and
every interest therein, wherever located, and all rights, privileges,
immunities, powers, franchises, and authority (of a public as well as of a
private nature), of each of the Constituent Corporations and all obligations
belonging to or due each of the Constituent Corporations. Title to any real
estate, or any interest therein, vested in each Constituent Corporation shall
not revert or in any way be impaired by reason of the Merger. The Surviving
Corporation shall be liable for all of the obligations of each Constituent
Corporation. Any claim existing, or action or proceeding pending, by or
against either Constituent Corporation may be prosecuted to judgment, with
right of appeal, as if the Merger had not taken place or the Surviving
Corporation may be substituted in the place of such Constituent Corporation.
All rights of creditors of each Constituent Corporation shall be preserved
unimpaired, and all liens upon the property of either Constituent Corporation
shall be preserved unimpaired, but only on the property affected by such liens
immediately before the Effective Date. Whenever a conveyance, assignment,
transfer, deed, or other instrument or act is necessary to vest property or
rights in the Surviving Corporation, the officers of the respective
Constituent Corporations shall execute, acknowledge, and deliver such
instruments and do such acts. For such purposes, the existence of the
Constituent Corporations and the authority of their respective officers are
continued, notwithstanding the Merger.
ARTICLE 5
CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THE MERGER
The obligations of the parties to this Agreement and Plan of Merger are
subject to the fulfillment and satisfaction, at or prior to the Effective
Date, of each of the following conditions, any one or more of which may be
waived by CDL-Delaware by a writing directed to CDL-Nevada:
Section 5.1 All actions required by law to have been taken by the Boards of
Directors and shareholders of the Constituent Corporations shall have been
duly and validly taken.
Section 5.2 CDL-Nevada shall have received approval of the listing of the
CDL-Nevada Class A Common Stock and CDL-Nevada Class B Common Stock for
trading on the American Stock Exchange.
ARTICLE 6
MISCELLANEOUS
Section 6.1 This Agreement and Plan of Merger may be terminated by the Board
of Directors of CDL-Delaware and the Merger abandoned at any time prior to the
Effective Date whether before or after submission to or approval by the
shareholders of the Constituent Corporations. Without limiting the generality
of the foregoing, in the event the Transfer Agent requests that the
Constituent Corporations deposit more than $200,000 to cover the potential
total amount of Fractional Cash Payments or CDL-Delaware determines that such
payments could exceed $200,000, then the Board of Directors of CDL-Delaware
may elect to terminate the Agreement and Plan of Merger at any time prior to
the Effective Date whether before or after submission to or approval by the
shareholders of the Constituent Corporations.
Section 6.2 Any provision of this Agreement and Plan of Merger may be waived
at any time by the party which is, or whose shareholders are, entitled to the
benefits thereof and this Agreement and Plan of Merger may
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be amended or supplemented at any time prior to the Effective Date by the
Board of Directors of the Constituent Corporations. After approval hereof by
the shareholders of CDL-Delaware, no amendment shall be made which (a) alters
or changes the amount or kind of shares of CDL-Nevada to be received on
conversion of shares of CDL-Delaware Common Stock as provided in Section 2.1
hereof, (b) alters or changes any term of the Articles of Incorporation of the
Surviving Corporation to be effected by the Merger as provided in Section 3.1
hereof, or (c) alters or changes any of the terms and conditions of this
Agreement and Plan of Merger if such alteration or change would adversely
affect the rights of shareholders of CDL-Delaware, without the further
approval of such shareholders.
Section 6.3 This Agreement and Plan of Merger shall be governed by and
interpreted in accordance with the laws of the State of Nevada.
Section 6.4 This Agreement and Plan of Merger may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall together constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed as of the date first stated above by their duly
authorized officers.
CITADEL HOLDING CORPORATION,
a Delaware corporation
By:__________________________________
James J. Cotter, President
CITADEL HOLDING CORPORATION,
a Nevada corporation
By:__________________________________
S. Craig Tompkins, President
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Exhibit B
CERTIFICATE OF AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
CITADEL HOLDING CORPORATION
A Nevada Corporation
This Certificate of Amendment and Restatement (this "Certificate") is filed
on behalf of Citadel Holding Corporation, a corporation organized under the
laws of the State of Nevada (the "Corporation"), pursuant to Sections 78.380
and 78.403 of the Nevada Revised Statutes ("NRS"), and its incorporator does
hereby certify:
1. That the signor of this Certificate is the original sole incorporator
of the Corporation.
2. That the original Articles of Incorporation of the Corporation were
filed in the Office of the Nevada Secretary of State on October 28, 1999.
3. That as of the date of this Certificate, no stock of the Corporation
has been issued.
4. That the Articles of Incorporation of the Corporation are hereby
amended as follows:
4.1 Number of Authorized Shares; Par Value. The aggregate number of shares
which the Corporation shall have authority to issue is one hundred forty
million (140,000,000) shares to be designated respectively as "Class A Non-
Voting Common Stock," "Class B Voting Common Stock" and "Preferred Stock"
divided as follows:
(a) Class A Non-Voting Common Stock. The total number of authorized
shares of Class A Non-Voting Common Stock shall be one hundred million
(100,000,000) shares with the par value of $.01 per share.
(b) Class B Voting Common Stock. The total number of authorized shares of
Class B Voting Common Stock shall be twenty million (20,000,000) shares
with the par value of $.01 per share.
(c) Preferred Stock. The total number of authorized shares of Preferred
Stock shall be twenty million (20,000,000) shares with the par value of
$.01 per share.
(d) Increase or Decrease in Authorized Shares. The total number of
authorized shares of Class A Non-Voting Common Stock, Class B Voting Common
Stock or Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote.
4.2 Class A Non-Voting Common Stock Voting Rights. Class A Non-Voting Common
Stock shall have no voting rights; provided, however, that the holders of the
Class A Non-Voting Common Stock will be entitled to vote as a separate class
on any amendments to the Articles of Incorporation or any merger which would
adversely affect their rights, privileges or preferences, or any liquidation
or dissolution in which such holders would receive securities with rights,
privileges and preferences less beneficial than those held by them as holders
of Class A Non-Voting Common Stock.
4.3 Class B Voting Common Stock Voting Rights. The holders of the Class B
Voting Common Stock shall be entitled to one vote per one share of Class B
Voting Common Stock on all matters submitted to the stockholders of the
Corporation for a vote.
4.4 Other Rights, Preferences and Privileges of Class A Non-Voting Common
Stock and Class B Voting Common Stock. Except as otherwise specifically set
forth herein with respect to voting, all shares of Class A Non-Voting Common
Stock and Class B Voting Common Stock shall have the same rights, preferences
and privileges with respect to dividends, distributions, or any liquidation or
dissolution of the Corporation.
4.5 Preferred Stock. The Preferred Stock may be issued at any time or from
time to time, in any one or more series, and any such series shall be
comprised of such number of shares and may have such voting powers,
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whole or limited, or no voting powers, and such designations, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including liquidation preferences, as
shall be stated and expressed in the resolution or resolutions of the board of
directors of the Corporation, the board of directors being hereby expressly
vested with such power and authority to the full extent now or hereafter
permitted by law.
5. That the text of the Amended and Restated Articles of Incorporation of
the Corporation is hereby amended and restated by this Certificate to read in
full as follows:
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CITADEL HOLDING CORPORATION
A NEVADA CORPORATION
I, the Undersigned, being the original incorporator herein named, for the
purpose of forming a corporation under Chapter 78 of the Nevada Revised
Statutes (the "NRS"), to do business both within and without the State of
Nevada, do make and file these Articles of Incorporation hereby declaring and
certifying that the facts herein stated are true:
ARTICLE I
NAME
The name of the corporation is Citadel Holding Corporation (the
"Corporation").
ARTICLE II
RESIDENT AGENT AND REGISTERED OFFICE
The name and address of the Corporation's resident agent for service of
process is Kummer Kaempfer Bonner & Renshaw, 3800 Howard Hughes Parkway,
Seventh Floor, Las Vegas, Nevada 89109.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the NRS.
ARTICLE IV
CAPITAL STOCK
4.1 Number of Authorized Shares; Par Value. The aggregate number of shares
which the Corporation shall have authority to issue is one hundred forty
million (140,000,000) shares to be designated respectively as "Class A Non-
Voting Common Stock," "Class B Voting Common Stock" and "Preferred Stock"
divided as follows:
(e) Class A Non-Voting Common Stock. The total number of authorized
shares of Class A Non-Voting Common Stock shall be one hundred million
(100,000,000) shares with the par value of $.01 per share.
(f) Class B Voting Common Stock. The total number of authorized shares of
Class B Voting Common Stock shall be twenty million (20,000,000) shares
with the par value of $.01 per share.
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(g) Preferred Stock. The total number of authorized shares of Preferred
Stock shall be twenty million (20,000,000) shares with the par value of
$.01 per share.
(h) Increase or Decrease in Authorized Shares. The total number of
authorized shares of Class A Non-Voting Common Stock, Class B Voting Common
Stock or Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote.
4.2 Class A Non-Voting Common Stock Voting Rights. Class A Non-Voting Common
Stock shall have no voting rights; provided, however, that the holders of the
Class A Non-Voting Common Stock will be entitled to vote as a separate class
on any amendments to the Articles of Incorporation or any merger which would
adversely affect their rights, privileges or preferences, or any liquidation
or dissolution in which such holders would receive securities with rights,
privileges and preferences less beneficial than those held by them as holders
of Class A Non-Voting Common Stock.
4.3 Class B Voting Common Stock Voting Rights. The holders of the Class B
Voting Common Stock shall be entitled to one vote per one share of Class B
Voting Common Stock on all matters submitted to the stockholders of the
Corporation for a vote.
4.4 Other Rights, Preferences and Privileges of Class A Non-Voting Common
Stock and Class B Voting Common Stock. Except as otherwise specifically set
forth herein with respect to voting, all shares of Class A Non-Voting Common
Stock and Class B Voting Common Stock shall have the same rights, preferences
and privileges with respect to dividends, distributions, a liquidation of the
Corporation or otherwise.
4.5 Preferred Stock. The Preferred Stock may be issued at any time or from
time to time, in any one or more series, and any such series shall be
comprised of such number of shares and may have such voting powers, whole or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including liquidation preferences, as
shall be stated and expressed in the resolution or resolutions of the board of
directors of the Corporation, the board of directors being hereby expressly
vested with such power and authority to the full extent now or hereafter
permitted by law.
ARTICLE V
DIRECTORS
The business and affairs of the Corporation shall be managed by or under the
direction of the board of directors, which initially shall consist of one
director. Provided that the Corporation has at least one director, the number
of directors may at any time or times be increased or decreased as provided in
the bylaws; provided, however that the number of directors shall not exceed
ten. The name and address of the initial member of the board of directors is
as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
S. Craig Tompkins........................ c/o Craig Corporation
550 South Hope Street, Suite 1825
Los Angeles, California 90071
</TABLE>
ARTICLE VI
BYLAWS
In furtherance and not in limitation of the powers conferred upon the board
of directors of the Corporation by the NRS, the board of directors shall have
the power to alter, amend, change, add to and repeal, from time to time, the
bylaws of the Corporation, subject to the rights of the stockholders entitled
to vote with respect thereto to alter, amend, change, add to and repeal the
bylaws adopted by the directors of the Corporation.
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ARTICLE VII
ELECTION OF DIRECTORS
Unless the bylaws of the Corporation provide for the division of the
directors into classes and except as may otherwise be provided in the bylaws
of the Corporation, all directors shall be elected to hold office until their
respective successors are elected and qualified, or until their earlier
resignation or removal, at the annual meeting of the stockholders, whether
telephonic or not, within or without the State of Nevada or by written consent
and such election need not be by written ballot.
ARTICLE VIII
SALE OF ASSETS
In furtherance of the powers conferred on the stockholders of the
Corporation by the NRS, the stockholders of the Corporation shall have the
power to vote on any proposed sale of substantially all of the Corporation's
assets.
ARTICLE IX
AMENDMENT OF ARTICLES OF INCORPORATION
In the event the board of directors of the Corporation determines that it is
in the Corporation's best interest to amend these Articles of Incorporation,
the board of directors shall adopt a resolution setting forth the proposed
amendment and declaring its advisability and submit the matter to the
stockholders entitled to vote thereon for the consideration thereof in
accordance with the provisions of the NRS and these Articles of Incorporation.
In the resolution setting forth the proposed amendment, the board of directors
may insert a provision allowing the board of directors to later abandon the
amendment, without concurrence by the stockholders, after the amendment has
received stockholder approval but before the amendment is filed with the
Nevada Secretary of State.
ARTICLE X
INCORPORATOR
The name and address of the incorporator of the Corporation is Elizabeth A.
Savage, Kummer Kaempfer Bonner & Renshaw, 3800 Howard Hughes Parkway, Seventh
Floor, Las Vegas, Nevada 89109.
ARTICLE XI
ACQUISITIONS OF CONTROLLING INTEREST
The Corporation elects not to be governed by the provisions of Chapters
78.378 to 78.3793, inclusive, of the NRS pertaining to acquisitions of
controlling interest.
ARTICLE XII
COMBINATIONS WITH INTERESTED STOCKHOLDERS
The Corporation elects not to be governed by the provisions of Chapters
78.411 to 78.444, inclusive, of the NRS pertaining to combinations with
interested stockholders.
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ARTICLE XIII
DIRECTORS' AND OFFICERS' LIABILITY
A director or officer of the Corporation shall not be personally liable to
this Corporation or its stockholders for damages for breach of fiduciary duty
as a director or officer, but this Article shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or (ii) the
unlawful payment of distributions. Any repeal or modification of this Article
by the stockholders of the Corporation shall be prospective only, and shall
not adversely affect any limitation on the personal liability of a director or
officer of the Corporation for acts or omissions prior to such repeal or
modification.
In Witness Whereof, the undersigned has executed this Certificate of
Amendment and Restatement as of the day of , 1999.
---------------------------------------
Elizabeth A. Savage, Incorporator
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Exhibit C
BYLAWS
OF
CITADEL HOLDING CORPORATION
A Nevada Corporation
ARTICLE I
STOCKHOLDERS
Section 1 Annual Meeting
Annual meetings of the stockholders, commencing with the year 2000, shall be
held each year within 150 days of the end of the fiscal year on the third
Thursday in May if not a legal holiday, and if a legal holiday, then on the
next secular day following at ten o'clock a.m., or such other date and time as
may be set by the Board of Directors from time to time and stated in the
notice of the meeting, at which the stockholders shall elect by a plurality
vote a Board of Directors and transact such other business as may properly be
brought before the meeting.
Section 2 Special Meetings
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute or by the Articles of Incorporation, may be
called by the Chairman of the Board or the President, and shall be called by
the Chairman of the Board or President at the written request of a majority of
the Board of Directors or at the written request of stockholders owning
outstanding shares representing a majority of the voting power of the
Corporation. Such request shall state the purpose or purposes of such meeting.
Section 3 Notice of Meetings
Written notice of stockholders meetings, stating the place, date and hour
thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given to each stockholder entitled to
vote thereat at least ten days but not more than sixty days before the date of
the meeting, unless a different period is prescribed by statute. Business
transacted any special meeting of the stockholders shall be limited to the
purpose or purposes stated in the notice.
Section 4 Place of Meetings
All annual meetings of the stockholders shall be held in the County of Los
Angeles, State of California, at such place as may be fixed from time to time
by the Board of Directors, or at such other place within or without the State
of Nevada as the directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 5 Stockholder Lists
The officer who has charge of the stock ledger of the Corporation shall
prepare and make, not less than ten nor more than sixty days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any proper purpose germane to the meeting, during ordinary business hours
for a period not less than ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be
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held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 6 Quorum; Adjourned Meetings
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the Articles of Incorporation.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have the power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 7 Voting
Except as otherwise provided by statute or the Articles of Incorporation or
these Bylaws, and except for the election of directors, at any meeting duly
called and held at which a quorum is present, a majority of the votes cast at
such meeting upon a given matter by the holders of outstanding shares of stock
of all classes of stock of the Corporation entitled to vote thereon who are
present in person or by proxy shall decide such matter. At any meeting duly
called and held for the election of directors at which a quorum is present,
directors shall be elected by a plurality of the votes cast by the holders
(acting as such) of shares of stock of the Corporation entitled to elect such
directors.
Section 8 Proxies
At any meeting of the stockholders any stockholder may be represented and
vote by a proxy or proxies appointed by an instrument in writing. In the event
that any such instrument in writing shall designate two or more persons to act
as proxies, a majority of such persons present at the meeting, or, if only one
shall be present, then that one shall have and may exercise all of the powers
conferred by such written instrument upon all of the persons so designated
unless the instrument shall otherwise provide. No proxy, proxy revocation or
power of attorney to vote shall be used at a meeting of the stockholders
unless it shall have been filed with the secretary of the meeting; provided,
however, nothing contained herein shall prevent any stockholder from attending
any meeting and voting in person. All questions regarding the qualification of
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided by the inspectors of election who shall be appointed by the Board
of Directors, or if not so appointed, then by the presiding officer of the
meeting.
Section 9 Action Without Meeting
Any action which may be taken by the vote of the stockholders at a meeting
may be taken without a meeting if authorized by the written consent of
stockholders holding at least a majority of the voting power, unless the
provisions of the statutes governing the Corporation or of the Articles of
Incorporation require a different proportion of voting power to authorize such
action in which case such proportion of written consents shall be required.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have
not consented in writing.
Section 10 Certain Limitations
The Board of Directors shall not, without the prior approval of the
stockholders, adopt any procedures, rules or requirements which restrict a
stockholders right to (i) vote, whether in person, by proxy or by written
consent; (ii) elect, nominate or remove directors; (iii) call a special
meeting; or (iv) to bring new business before the stockholders, except as may
be required by applicable law.
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ARTICLE II
DIRECTORS
Section 1 Management of Corporation
The business of the Corporation shall be managed by its Board of Directors
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Articles of Incorporation or
by these Bylaws directed or required to be exercised or done by the
stockholders.
Section 2 Number, Tenure, and Qualifications
The number of directors which shall constitute the whole board shall be
five. The number of directors may from time to time be increased or decreased
to not less than one nor more than ten by action of the Board of Directors.
The directors shall be elected by the holders of shares entitled to vote
thereon at the annual meeting of the stockholders and, except as provided in
Section 4 of this Article, each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
Section 3 Chairman and Vice Chairman of the Board
The directors may elect one of their members to be Chairman of the Board of
Directors. The Chairman shall be subject to the control of and may be removed
by the Board of Directors. The Chairman shall perform such duties as may from
time to time be assigned to him by the Board of Directors.
Section 4 Vacancies; Removal
Vacancies in the Board of Directors, including those caused by an increase
in the number of directors, may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and
each director so elected shall hold office until his successor is elected at
an annual or a special meeting of the stockholders. The holders of no less
than two-thirds of the outstanding shares of stock entitled to vote may at any
time peremptorily terminate the term of office of all or any of the directors
by vote at a meeting called for such purpose or by written consent filed with
the Secretary or, in his absence, with any other officer. Such removal shall
be effective immediately, even if successors are not elected simultaneously.
A vacancy or vacancies in the Board of Directors shall be deemed to exist in
case of the death, resignation or removal of any directors, or if the
authorized number of directors be increased, or if the stockholders fail at
any annual or special meeting of stockholders at which any director or
directors are elected to elect the full authorized number of directors to be
voted for at that meeting.
If the Board of Directors accepts the resignation of a director tendered to
take effect at a future time, the Board or the stockholders shall have power
to elect a successor to take office when the resignation is to become
effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5 Annual and Regular Meetings
Annual and regular meetings of the Board of Directors shall be held at any
place within or without the State of Nevada which has been designated from
time to time by resolution of the Board of Directors or by written consent of
all members of the Board of Directors. In the absence of such designation,
annual and regular meetings shall be held at the registered office of the
Corporation. Regular meetings of the Board of Directors may be held without
call or notice at such time and at such place as shall from time to time be
fixed and determined by the Board of Directors.
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Section 6 First Meeting
The first meeting of each newly elected Board of Directors shall be held at
such time and place as shall be fixed by the vote of the stockholders at the
annual meeting and no notice of such meeting shall be necessary to the
directors in order legally to constitute the meeting, provided a quorum is
present. In the event of the failure of the stockholders to fix the time and
place of such first meeting, or in the event such meeting is not so held, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors,
or as shall be specified in a written waiver signed by all of the directors.
Section 7 Special Meetings
Special meetings of the Board of Directors may be called by the Chairman of
the Board of Directors or the President upon notice to each director, either
personally or by mail or by telegram. Upon the written request of a majority
of the directors, the Chairman of the Board or the President shall call a
special meeting of the Board to be held within two days of the receipt of such
request and shall provide notice thereof to each director, either personally
or by mail or by telegram.
Section 8 Business of Meetings
The transactions of any meeting of the Board of Directors, however called
and noticed or wherever held, shall be as valid as though had at a meeting
duly held after regular call and notice, if a quorum be present, and if,
either before or after the meeting, each of the directors not present signs a
written waiver of notice, or a consent to holding such meeting, or an approval
of the minutes thereof. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Section 9 Quorum; Adjourned Meetings
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as hereinafter provided.
Every act or decision done or made by a majority of the directors present at a
meeting duly held at which a quorum is present shall be regarded as the act of
the Board of Directors, unless a greater number is required by law or by the
Articles of Incorporation. Any action of a majority, although not at a
regularly called meeting, and the record thereof, if assented to in writing by
all of the other members of the Board shall be as valid and effective in all
respects as if passed by the Board of Directors in a regular meeting.
A quorum of the directors may adjourn any directors meeting to meet again at
a stated day and hour; provided, however, that in the absence of a quorum, a
majority of the directors present at any directors' meeting, either regular or
special, may adjourn from time to time, without notice other than announcement
at the meeting, until a quorum is present.
Notice of the time and place of holding an adjourned meeting need not be
given to the absent directors if the time and place are fixed at the meeting
adjourned.
Section 10 Committees
The Board of Directors may, by resolution adopted by a majority of the whole
Board, designate one or more committees of the Board of Directors, each
committee to consist of at least one or more directors of the Corporation
which, to the extent provided in the resolution, shall have and may exercise
the power of the Board of Directors in the management of the business and
affairs of the Corporation and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power to amend the Articles of Incorporation, to
adopt an agreement or plan of merger or consolidation, to recommend to the
stockholders a sale, lease or exchange of all or substantially all of the
Corporation's assets, to
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recommend to the stockholders dissolution or revocation of dissolution, or to
amend these Bylaws, and, unless the resolution or the Articles of
Incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined
from time to time by the Board of Directors. The Board may designate one or
more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. The members of
any such committee present at any meeting and not disqualified from voting
may, whether or not they constitute a quorum, unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any
absent or disqualified member. At meetings of such committees, a majority of
the members or alternate members shall constitute a quorum for the transaction
of business, and the act of a majority of the members or alternate members at
any meeting at which there is a quorum shall be the act of the committee.
The committees, if required by the Board, shall keep regular minutes of
their proceedings and report the same to the Board of Directors.
Section 11 Action Without Meeting; Telephone Meetings
Any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board of Directors or
of such committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board or committee.
Nothing contained in these Bylaws shall be deemed to restrict the powers of
members of the Board of Directors, or any committee thereof, to participate in
a meeting of the Board or committee by means of telephone conference or
similar communications equipment whereby all persons participating in the
meeting can hear each other.
Section 12 Special Compensation
The directors may be paid their expenses of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director as fixed by
the Board of Directors. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE III
NOTICES
Section 1 Notice of Meetings
Whenever, under the provisions of the Articles of Incorporation or
applicable law or these Bylaws, notice is required to be given to any director
or stockholder, it shall not be construed to mean personal notice, but such
notice may be given in writing, by mail, addressed to such director or
stockholders, at his address as it appears on the records of the Corporation,
postage prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice to directors may
also be given by telegram.
Notices of meetings of stockholders shall be in writing and signed by the
President or a Vice-President or the Secretary or an Assistant Secretary or by
such other person or persons as the directors shall designate. Such notice
shall state the purpose or purposes for which the meeting is called and the
time and the place, which may be within or without this State, where it is to
be held. Personal delivery of any notice to any officer of a corporation or
association, or to any member of a partnership, shall constitute delivery of
such notice to such corporation, association or partnership. In the event of
the transfer of stock after delivery of such notice of and prior to the
holding of the meeting it shall not be necessary to deliver or mail notice of
the meeting to the transferee.
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Section 2 Effect of Irregularly Called Meetings
Whenever all parties entitled to vote at any meeting, whether of directors
or stockholders, consent, either by a writing on the records of the meeting or
filed with the secretary, or by presence at such meeting and oral consent
entered on the minutes, or by taking part in the deliberations at such meeting
without objection, the doings of such meeting shall be as valid as if had at a
meeting regularly called and noticed, and at such meeting any business may be
transacted which is not excepted from the written consent or to the
consideration of which no objection for want of notice is made at the time,
and if any meeting be irregular for want of notice or of such consent,
provided a quorum was present at such meeting, the proceedings of said meeting
may be ratified and approved and rendered likewise valid and the irregularity
or defect therein waived by a writing signed by all parties having the right
to vote at such meeting; and such consent or approval of stockholders may be
by proxy or attorney, but all such proxies and powers of attorney must be in
writing.
Section 3 Waiver of Notice
Whenever any notice whatever is required to be given under the provisions of
the statutes, the Articles of Incorporation or these Bylaws, a waiver thereof
in writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE IV
OFFICERS
Section 1 Election
The officers of the Corporation shall be elected annually at the first
meeting by the Board of Directors held after each annual meeting of the
stockholders and shall be a President, one or more Vice Presidents, a
Treasurer and a Secretary, and such other officers with such titles and duties
as the Board of Directors may determine, none of whom need be directors. The
President shall be the Chief Executive Officer, unless the Board designates
the Chairman of the Board as Chief Executive Officer. Any person may hold one
or more offices and each officer shall hold office until his successor shall
have been duly elected and qualified or until his death or until he shall
resign or is removed in the manner as hereinafter provided for such term as
may be prescribed by the Board of Directors from time to time.
Section 2 Chairman of the Board
The Board of Directors at its first annual meeting after each annual meeting
of the stockholders may choose a Chairman of the Board from among the
directors of the Corporation. The Chairman of the Board shall preside at
meetings of the stockholders and the Board of Directors and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
Section 3 President
The President shall be the chief operating officer of the Corporation, shall
also be a director and shall have active management of the business of the
Corporation. The President shall execute on behalf of the Corporation all
instruments requiring such execution except to the extent the signing and
execution thereof shall be expressly designated by the Board of Directors to
some other officer or agent of the Corporation.
Section 4 Vice-President
The Vice-President shall act under the direction of the President and in the
absence or disability of the President shall perform the duties and exercise
the powers of the President. The Vice-President shall perform such other
duties and have such other powers as the President or the Board of Directors
may from time to time prescribe. The Board of Directors may designate one or
more Executive Vice-Presidents or may otherwise
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specify the order of seniority of the Vice-Presidents. The duties and powers
of the President shall descend to the Vice-Presidents in such specified order
of seniority.
Section 5 Secretary
The Secretary shall act under the direction of the President. Subject to the
direction of the President, the Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record the
proceedings. The Secretary shall perform like duties for the standing
committees when required. The Secretary shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
President or the Board of Directors.
Section 6 Assistant Secretaries
The Assistant Secretaries shall act under the direction of the President. In
order of their seniority, unless otherwise determined by the President or the
Board of Directors, they shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time prescribe.
Section 7 Treasurer
The Treasurer shall act under the direction of the President. Subject to the
direction of the President, the Treasurer shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the President or the Board of Directors, taking proper vouchers for
such disbursements, and shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all transactions as Treasurer and of the financial
condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of such person's office and for the restoration to the Corporation, in
case of such person's death, resignation, retirement or removal from office,
of all books, papers, vouchers, money and other property of whatever kind in
such person's possession or under such person's control belonging to the
Corporation.
Section 8 Assistant Treasurers
The Assistant Treasurers in the order of their seniority, unless otherwise
determined by the President or the Board of Directors, shall, in the absence
or disability of the Treasurer, perform the duties and exercise the powers of
the Treasurer. They shall perform such other duties and have such other powers
as the President or the Board of Directors may from time to time prescribe.
Section 9 Compensation
The salaries and compensation of all officers of the Corporation shall be
fixed by the Board of Directors.
Section 10 Removal; Resignation
The officers of the Corporation shall hold office at the pleasure of the
Board of Directors. Any officer elected or appointed by the Board of
Directors, or any member of a committee, may be removed at any time, with or
without cause, by the Board of Directors by a vote of not less than a majority
of the entire Board at any meeting thereof or by written consent. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise shall be filled by the Board of Directors for the unexpired portion
of the term.
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Any director or officer of the Corporation, or any member of any committee,
may resign at any time by giving written notice to the Board of Directors, the
Chairman of the Board, the President, or the Secretary of the Corporation. Any
such resignation shall take effect at the time specified therein or, if the
time is not specified, then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective.
ARTICLE V
CAPITAL STOCK
Section 1 Certificates
Every stockholder shall be entitled to have a certificate signed by the
Chairman or Vice Chairman of the Board of Directors, the President or a Vice-
President and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned
by such person in the Corporation. If the Corporation shall be authorized to
issue more than one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other
special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights, shall be set forth
in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such stock; provided, however, that
except as otherwise provided in NRS 78.242, in lieu of the forgoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock,
a statement that the Corporation will furnish without charge to each
stockholder who so requests, the designations, preferences and relative,
participating, optional or other special rights of the various classes or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
If a certificate is signed (1) by a transfer agent other than the
Corporation or its employees or (2) by a registrar other than the Corporation
or its employees, the signatures of the officers of the Corporation may be
facsimiles. In case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall cease to be such officer before such
certificate is issued, such certificate may be issued with the same effect as
though the person had not ceased to be such officer. The seal of the
Corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
Section 2 Surrendered; Lost or Destroyed Certificates
The Board of Directors or any transfer agent of the Corporation may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost
or destroyed upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors (or
any transfer agent of the Corporation authorized to do so by a resolution of
the Board of Directors) may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate
or certificates, or the owner's legal representative, to advertise the same in
such manner as it shall require and/or give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.
Section 3 Regulations
The Board of Directors shall have the power and authority to make all such
rules and regulations and procedures as it may deem expedient concerning the
issue, transfer, registration, cancellation and replacement of certificates
representing stock of the Corporation.
Section 4 Record Date
The Board of Directors may fix in advance a date not exceeding sixty days
nor less than ten days preceding the date of any meeting of stockholders, or
the date for the payment of any distribution, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect,
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or a date in connection with obtaining the consent of stockholders for any
purpose, as a record date for the determination of the stockholders entitled
to notice of and to vote at any such meeting, and any adjournment thereof, or
entitled to receive payment of any such distribution, or to give such consent,
and in such case, such stockholders, and only such stockholders as shall be
stockholders of record on the date so fixed, shall be entitled to notice of
and to vote at such meeting, or any adjournment thereof, or to receive payment
of such dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record
date fixed as aforesaid.
Section 5 Registered Owner
The Corporation shall be entitled to recognize the person registered on its
books as the owner of shares to be the exclusive owner for all purposes
including voting and distribution, and the Corporation shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE VI
GENERAL PROVISIONS
Section 1 Registered Office
The registered office of the Corporation shall be in the County of Clark,
State of Nevada. The principal office of the Corporation shall be located in
the County of Los Angeles, State of California.
The Corporation may also have offices at such other places both within and
without the State of Nevada as the Board of Directors may from time to time
determine or the business of the Corporation may require.
Section 2 Checks; Notes
All checks or demands for money and notes of the Corporation shall be signed
by such officer or officers or such other person or persons as the Board of
Directors may from time to time designate.
Section 3 Fiscal Year
The fiscal year of the Corporation shall be fixed by resolution of the Board
of Directors.
Section 4 Stock of Other Corporations or Other Interests
Unless otherwise ordered by the Board of Directors, the President, the
Secretary, and such other attorneys or agents of the Corporation as may be
from time to time authorized by the Board of Directors or the President, shall
have full power and authority on behalf of the Corporation to attend and to
act an vote in person or by proxy at any meeting of the holders of securities
of any corporation or other entity in which the Corporation may own or hold
shares or other securities, and at such meetings shall possess and may
exercise all the rights and powers incident to the ownership of such shares or
other securities which the Corporation, as the owner or holder thereof, might
have possessed and exercised if present. The President, the Secretary or other
such attorneys or agents may also execute and deliver on behalf of the
Corporation, powers of attorney, proxies, consents, waivers and other
instruments relating to the shares or securities owned or held by the
Corporation.
Section 5 Corporate Seal
The corporation will have a corporate seal, as may from time to time be
determined by resolution of the Board of Directors. If a corporate seal is
adopted, it shall have inscribed thereon the name of the corporation and the
words "Corporate Seal" and "Nevada." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
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Section 6 Annual Statement
The Board of Directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by a vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
Section 7 Dividends
Dividends upon the capital stock of the Corporation, subject to the
provision of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock
of the Corporation, subject to the provisions of the Articles of
Incorporation.
Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the directors from
time to time, in their absolute and sole discretion, think proper as a reserve
or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property or the Corporation, or for such other
purpose or purposes as the directors believe to be in the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 8 Conflicts of Interest
In the event of any proposed transaction which would result in the merger of
the Corporation with or into any other company or entity, or the sale,
dividend, spin-off or transfer of all or substantially all of the assets of
the Corporation, whether in one or more related transactions (a "Covered
Transaction"), such Covered Transaction shall require the approval of a two-
thirds majority of the Board of Directors after a review and written report of
the terms and fairness of such transaction have been conducted and prepared by
a special committee of the Board appointed to conduct such review. Such
special committee shall consist of not less than two directors and shall be
composed entirely of directors who are neither employees, directors, officers,
agents or appointees or representatives of any company or entity affiliated
with any party to the Covered Transaction, other than the Corporation. Such
special committee is authorized to retain such professional advisors,
including investment bankers, attorneys, and accountants as it may determine,
in its sole discretion, to be appropriate under the circumstances.
ARTICLE VII
INDEMNIFICATION
Section 1 Indemnification of Officers and Directors, Employees and Agents
The Corporation shall indemnify its officers, Directors, employees and
agents to the full extent permitted by the Nevada Revised Statutes.
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Section 2 Insurance
The Board of Directors may cause the Corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
or as its representative in a partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred in
any such capacity or arising out of such status, whether or not the
Corporation would have the power to indemnify such person.
Section 3 Further Bylaws
The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to provide at
all times the fullest indemnification permitted by the laws of the State of
Nevada.
ARTICLE VIII
AMENDMENTS
Section 1 Amendments by Stockholders
The Bylaws may be amended by the stockholders at any annual or special
meeting of the stockholders by a majority vote, provided notice of intention
to amend or repeal shall have been contained in the notice of such meeting.
Section 2 Amendments by Board of Directors
The Board of Directors at any regular or special meeting by a majority vote
may amend these Bylaws, including Bylaws adopted by the stockholders, but the
stockholders may from time to time specify particular provisions of the Bylaws
which shall not be amended by the Board of Directors.
CERTIFICATE OF SECRETARY
I, the Undersigned, hereby certify that I am the duly elected and qualified
Secretary of Citadel Holding Corporation, a Nevada corporation (the
"Company"), and that the foregoing Bylaws, consisting of pages (including
cover page and table of contents), constitute the code of Bylaws of the
Company as duly adopted by the unanimous written consent of the Board of
Directors as of , .
IN WITNESS WHEREOF, I have hereunto subscribed my name this day of
1999.
_____________________________________
, Secretary
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PROXY PROXY
CITADEL HOLDING CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 17, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes all prior proxies and constitutes and
appoints James J. Cotter and S. Craig Tompkins, and each or any of them,
proxies of the undersigned, with full power of substitution, to vote all of
the shares of Citadel Holding Corporation (the "Company") which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
the Company to be held at 2:30 p.m., local time, on December 17, 1999 at the
Four Seasons Hotel, 300 So. Doheny Drive, Los Angeles, California 90048 for
the following purposes and any adjournment or postponement thereof, as
follows:
(Continued on reverse side)
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Please mark [X]
your votes as
indicated in
this example
In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment thereof.
1. ELECTION OF DIRECTORS FOR WITHHOLD AUTHORITY TO
all nominees listed vote for all nominees
below (excepted as below.
marked to the
contrary below.)
[_] [_]
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE THE MERGER [_] [_] [_]
AGREEMENT BETWEEN THE COMPANY
AND CITADEL HOLDING CORPORATION,
A NEVADA CORPORATION.
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the following list: James J. Cotter, William
C. Soady, Alfred Villasenor, Jr., and S. Craig Tompkins.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF A CHOICE IS NOT SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR AND FOR EACH OF THE ABOVE
PROPOSALS.
THIS PROXY SHOULD BE DATED, SIGNED BY THE SHAREHOLDER EXACTLY AS SUCH
STOCKHOLDER'S NAME APPEARS ON SUCH STOCKHOLDER'S STOCK CERTIFICATE AND
RETURNED PROMPTLY TO THE COMPANY C/O CHASE MELLON SHAREHOLDER SERVICES, IN THE
ENCLOSED ENVELOPE. PERSONS SIGNING IN AS A BENEFICIARY CAPACITY SHOULD SO
INDICATE.
Signature ______________________________________________________________________
Please sign name(s) exactly as registered) (if there are co-owners, both should
sign)
______________________________________________________ Dated: _____________,1999
Telephone Number
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