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March 10, 1997

ONBANCorp, Inc., Plaintiff,

The opinion of the court was delivered by: POOLER


 ONBANCorp, Inc. ("ONBANC" or "the bank"), a bank holding company, has accused Seymour Holtzman, a substantial shareholder, of improper proxy solicitation in violation of Section 14(a) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78n(a). In the motion presently before me, ONBANC requests a preliminary injunction ordering Holtzman to (1) make corrective disclosures concerning statements that he made in a press release and cartoons and (2) refrain from violating the filing and informational requirements of the Exchange Act in the future. ONBANC claims that the press release and cartoons are materially false and misleading proxy solicitations. Because ONBANC has not shown that any materials Holtzman has issued or could issue between now and trial on the merits likely would cause the bank or its shareholders irreparable injury, I deny its application.


 ONBANC's charges concern alleged solicitations preliminary to the corporation's 1997 shareholders' meeting but require an understanding of the parties' past dealings, especially those related to ONBANC's 1996 shareholders' meeting.

 On November 22, 1995, ONBANC received eight shareholder proposals for its 1996 annual meeting. The proposals ranged from a request that the board of directors sell the bank to measures altering voting requirements. Berger Decl., Dkt. No. 35, P 21, Exs. 20-27; Garcia Decl., Dkt. No. 46, P 12. Seven of the eight proposals came from Holtzman, Holtzman's relatives, or persons or entities having close ties to Holtzman. Id. However, Berkshire Capital Partners ("Berkshire"), a firm without apparent ties to Holtzman, submitted the eighth proposal, which also called for a sale of ONBANC. Berger Decl. P 21; Garcia Decl. P 12(2).

 By letter dated January 4, 1996, ONBANC's counsel informed the United States Securities and Exchange Commission ("SEC") that the bank proposed to omit all eight shareholder proposals from its proxy statement and requested that the SEC not take enforcement action. Garcia Decl. P 15, Ex. C at 3, 16. With the exception of Berkshire, all of the proposal proponents submitted a joint response that included revised versions of several of the proposals. Id. P 18, Ex. D. Berkshire also opposed omission of its proposal. Id. Ex. E. The SEC rejected most of ONBANC's arguments based in part on the proponents' offer to modify their proposals. Id. Ex. F. However, the SEC did indicate that it would not take enforcement action with respect to proposals made by Seymour and Marc Holtzman. Id. at 5. The SEC determined that Seymour Holtzman's proposal to form a committee to pursue sale of the bank substantially duplicated Berkshire's proposal and that Marc Holtzman's proposal was moot. Id.

 Marc and Seymour Holtzman subsequently withdrew their proposals, and ONBANC included the remaining six proposals in its proxy statement to the shareholders. Berger Decl. P 25. The shareholders defeated Berkshire's proposal to sell the bank. Id. P 26. However, a majority of shareholders voted to pass three proposals. Garcia Decl. P 23; Berger Decl. PP 26-27. One of these proposals did not receive the super-majority required for its passage. Id. The two remaining proposals were precatory and could not be enacted without approval from the board of directors prior to the shareholder vote. Berger Decl. P 27. Finally, ONBANC claims that it was not required to recognize any of the proposals receiving approval from the majority of the shareholders because their proponents did not appear at the annual meeting held April 23, 1996. Id. P 26. ONBANC did, however, announce the results of the voting. Id. P 28.

 On October 8, 1996, Holtzman and his wife sent ONBANC a letter enclosing a stockholder proposal for inclusion in the proxy statement ONBANC would send out for its 1997 shareholders meeting. Compl., Dkt. No. 1, P 2, Ex. A; Answer, Dkt. No. 40, P 2. The proposal requests ONBANC's board to "immediately take the necessary steps to achieve a sale or merger of [ONBANC] on terms that will maximize shareholder value." Compl. Ex. A at 2.

 In his supporting statement, Holtzman stated "we could potentially see the value of our stock in [ONBANC] rise to $ 46.00-$ 58.00 [per share]." Id. at 3. Holtzman estimated the potential value of ONBANC's stock in a sale by multiplying current book value by the percentage over book value received for shares in five other banks (identified by name) that were bought "during the last several years." Id. at 2-3. Holtzman demanded that his proposal be included in the proxy materials for the annual meeting and also demanded a list of shareholders to facilitate shareholder solicitation. Id. at 1,3.

 The press release announced Holtzman's proposal and stated that he was "considering nominating five outside directors with a mandate to sell [ONBANC]." Compl. Ex. B at 1. Holtzman estimated the potential value of ONBANC's stock at sale as he did in the supporting statement sent to ONBANC. Id. at 1-2.

 According to ONBANC, Holtzman's public relations firm sent the release and cartoon to "over thirty newspapers, magazines, wire services and radio and television networks." Berger Decl. P 33.

 ONBANC claims that Holtzman again released the pig cartoon on October 17, 1996, and that this time he labeled two of the pigs with the names "Bob Bennett" and "C.F.O. Berger." Compl. P 35, Ex. C; Berger Decl. P 40. Berger is ONBANC's chief financial officer and Bennett its chairman, president and CEO. Berger Decl. P 1; Bennett Reply Decl., Dkt. No. 53, P 1. Holtzman denies this allegation and claims that he disseminated the labeled cartoon ...

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