with Mr. Shields, Mr. Cooper, and Mr. Gallagher. They discussed the possible sale of CBSI to Cincinnati Bell.
On April 29, 1986, SEI, Mr. Cooper, Ms. Harris, First Capital and First Investment entered into an Allocation Agreement. The Allocation Agreement structured how the payments from Cincinnati Bell would be distributed to CBSI's shareholders in the event the sale occurred. Mr. Shields signed that agreement. According to Mr. Shields, however, he believed the Allocation Agreement to be conditional only, and to not create any binding obligation to later agree to the sale of CBSI to Cincinnati Bell.
The Allocation Agreement provided that of the $ 13 million Cincinnati Bell was to pay to CBSI shareholders at closing, First Capital/First Investment would receive $ 10 million and Technology Group would receive $ 3 million. After closing, Cincinnati Bell would make contingent cash payments of approximately $ 7 million, to be divided approximately 25% to First Capital/First Investment and 75% to Technology Group.
According to Mr. Shields, despite his signing of the Allocation Agreement, he objected both to the price and to the sale of CBSI to Cincinnati Bell. Mr. Shields claims he signed the Allocation Agreement merely to "buy time" to convince Mr. Cooper that Metromedia would not be lost as a CBSI customer.
On April 25, 1986 Mr. Shields allegedly telephoned Mr. Cooper to inquire about a possible purchase of Mr. Cooper and Ms. Harris' interest in Technology Group. According to plaintiff, faced with both SEI's offer to buy Mr. Cooper's and Ms. Harris' stock and Mr. Shield's objections to the sale of CBSI to Cincinnati Bell, defendants engaged in threats to prevent Mr. Cooper and Ms. Harris from selling to SEI. Defendants did so to accomplish their goal of "forcing" the sale of CBSI to Cincinnati Bell.
Specifically, plaintiff offers evidence that Don Kilpatrick, a First Bank vice-president who assisted on CBSI matters, had stated that if SEI refused to go along with the sale of CBSI to Cincinnati Bell, defendants would take several actions. Defendants would, in essence, dilute the CBSI stock. Defendants would replace CBSI's management. And defendants would terminate a consulting contract between Mr. Shields and SEI.
On May 28, 1986 Mr. Shields and his attorney met with Mr. Cooper and Robert Schwimmer, a member of the board of directors of CBSI who had been nominated to the board by Technology Group. At that meeting Mr. Shields again sought to purchase the interests of Mr. Cooper and Ms. Harris in CBSI.
According to plaintiff, SEI was simply exercising its right of first refusal under the Stockholders Agreement governing the relationship among SEI, Mr. Cooper and Ms. Harris. Under plaintiff's version of the facts, Mr. Cooper feared that if he sold his stock to plaintiff, defendants would carry through on their threats to dilute CBSI's stock, to replace CBSI's management, and to terminate consulting contracts with plaintiff. On May 29, 1986 SEI made a written offer to Mr. Cooper and Ms. Harris to purchase their interests in CBSI.
On May 30, 1986 Mr. Shields met with Mr. Cooper, Mr. Schwimmer, and Mr. Gallagher to discuss both the sale of CBSI to Cincinnati Bell and SEI's offer to purchase the interests of Mr. Cooper and Ms. Harris in CBSI. Plaintiff claims that at that meeting Mr. Gallagher made several threats. Specifically, Mr. Gallagher threatened that unless SEI consented to the sale of CBSI's stock to Cincinnati Bell:
* SEI's consulting agreement with CBSI would be terminated;