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KINESOFT DEVELOPMENT CORP. v. SOFTBANK HOLDINGS

February 16, 2001

KINESOFT DEVELOPMENT CORPORATION, PLAINTIFF,
v.
SOFTBANK HOLDINGS INC. AND RONALD D. FISHER, DEFENDANTS.



The opinion of the court was delivered by: Schenkier, United States Magistrate Judge.

      MEMORANDUM OPINION AND ORDER

This is the Court's second summary judgment opinion in this case, which arises out of disputes between plaintiff, Kinesoft Development Corporation ("Kinesoft"), and defendant Softbank Holdings Inc. ("Softbank"), concerning the performance of the terms of a 1995 Shareholders Agreement ("the Shareholders Agreement") and a 1997 Settlement Agreement ("the 1997 Agreement"). In its second amended complaint, Kinesoft alleges breach of the Shareholders Agreement (Count I) and the 1997 Agreement (Count II) by Softbank; breach of fiduciary duty by Softbank (Count IV) and Ronald D. Fisher, the Vice Chairman of Softbank (Count V); and tortious interference with prospective economic advantage by Softbank (Count III). The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332, and venue is proper in this Court under 28 U.S.C. § 1391.*fn1

In its earlier opinion ("Kinesoft I"), the Court granted Kinesoft's motion for summary judgment on Softbank's counterclaim. In this opinion, the Court addresses the motion for summary judgment filed by the defendants (doc. # 47), which seeks a judgment disposing of all five counts of the second amended complaint. For the reasons that follow, defendants' motion is granted in part and denied in part.*fn2

I.

Summary judgment is proper if the record shows that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. See Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1090 (7th Cir. 1999). A genuine issue for trial exists only when the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the evidence is merely colorable or is not significantly probative, summary judgment may be granted. See Liberty Lobby, 477 U.S. at 249-50, 106 S.Ct. 2505; Flip Side Prods., Inc. v. Jam Prods. Ltd., 843 F.2d 1024, 1032 (7th Cir. 1988).

Softbank has complied with Local Rule 56.1(a), which requires a party moving for summary judgment to file a statement of material facts as to which the moving party contends there is no genuine issue. As required, Softbank's statement of material, undisputed facts included "references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph." UNITED STATES DIST. COURT, N. DIST. OF ILL. LR 56.1. All properly supported material facts set forth in a summary judgment motion are deemed admitted unless properly controverted by the opposing party. See id.; see also Corder v. Lucent Techs., Inc., 162 F.3d 924, 927 (7th Cir. 1998); Flaherty v. Gas Research Inst., 31 F.3d 451, 453 (7th Cir. 1994); Waldridge v. American Hoechst Corp., 24 F.3d 918, 921-22 (7th Cir. 1994)

Thus, once Softbank moved for summary judgment, and offered evidentiary materials to support its factual allegations, Kinesoft could not merely rely on its denials in the pleadings to show that a genuine issue of material fact existed. See Shermer v. Illinois Dep't of Transp., 171 F.3d 475, 477 (7th Cir. 1999) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Rather, Kinesoft's obligation is to "come forward with appropriate evidence demonstrating that there [was] a pending dispute of material fact." Waldridge, 24 F.3d at 921; see also Vector-Springfield Properties, Ltd. v. Central Illinois Light Co., Inc., 108 F.3d 806, 809 (7th Cir. 1997). To meet this burden, Kinesoft must counter the evidence submitted by Softbank with materials of "evidentiary quality" (e.g., depositions or affidavits) that create a factual issue. Adler v. Glickman, 87 F.3d 956, 959 (7th Cir. 1996). While the evidence offered need not be in a form that would be admissible at trial, see Liu v. T & H Mach., Inc., 191 F.3d 790, 796 (7th Cir. 1999), the evidence must identify a specific, genuine issue for trial. See Shermer, 171 F.3d at 477.

After careful review of the parties' Rule 56.1 statements, the material facts are set forth below. As will be clear from the discussion, while many of these facts are undisputed, many facts material to certain of plaintiff's claims remain in genuine dispute.*fn3

II.

A. The Shareholders Agreement.

On May 25, 1995, Mr. Sills and his former partner, Mark Achler, together with Kinesoft, Softbank and Softbank Corporation (Softbank's parent), entered into the Shareholders Agreement (Defs.' Facts ¶ 6).*fn4 The Shareholders Agreement requires Kinesoft to have a Board of Directors, and provides for the manner of their selection: "[e]ach Shareholder will vote or cause to be voted all shares of Common Stock owned by it for the election of nominees so designated as directors at any annual or special meeting called for such purpose" (Shareholders Agreement § 2(a)). The Shareholders Agreement further provides that "any corporate action" is to be taken by vote of the Board and authorized by no less than a majority of the directors present at any meeting at which a quorum is present or "by written consent of all directors of the Company except as may be otherwise required by paragraph (c) . . . or by law" (Id. at § 2(b)). Section 2(c) of the Shareholders Agreement provides that certain corporate action (e.g., any capital expenditure of $500,000 or more) cannot be taken by Kinesoft unless all (rather than a majority) of the directors present at a Board of Directors meeting vote in favor of that action (Defs.' Ex. 4, at § 2(c)(iii)); (Defs.' Facts ¶ 6). The parties agree that the Shareholders Agreement gives Softbank and Mr. Sills the right to designate persons for election to the Kinesoft Board (Pl.'s Add'l Facts ¶ 76; Defs.' Reply Facts ¶ 76).

The parties have identified five persons who served as members of the Kinesoft Board of Directors at all times relevant to this action. At those times, Mr. Fisher and Dr. T.A. Dolotta were Softbank's designated Directors to the Kinesoft Board (Pl.'s Add'l Facts ¶ 76). Messrs. Sills, Mason and Achler were Kinesoft's designated Directors (Id.). None of these five directors were elected at a formal board meeting (Id.; Defs.' Reply Facts ¶ 76); rather, all five were placed on the Board by a written, "formal unanimous consent of the Board of Directors" (Pl.'s Resp. Facts ¶ 6; Defs.' Reply Facts ¶ 76; Final Pretrial Order, § III(7)). When Kinesoft hired a new president and moved the company from Chicago, Illinois to Austin, Texas, no formal Board meeting was held to approve these acts: the communications all were through e-mails and telephone calls (Pl.'s Add'l Facts ¶ 68).

B. The 1997 Agreement.

On May 25, 1995, Kinesoft and Softbank entered into the "Game Porting Agreement" (Defs.' Facts ¶ 8). Under the terms of that agreement, Softbank was to provide Kinesoft with a certain number of console games to be "ported" to a PC platform; "porting" involves translating pre-existing video games from the console platform to the personal computer platform (Id. ¶¶ 7-8). Kinesoft sued Softbank for breach of the Game Porting Agreement, and Softbank admits now that it did not provide Kinesoft with the agreed upon number of games (Defs.' Facts ¶ 9). That lawsuit was resolved when Softbank and Kinesoft entered into a settlement agreement on June 12, 1997 — the 1997 Agreement that is a subject of this lawsuit (Id. ¶ 9). As consideration for the 1997 Agreement, Kinesoft released all claims against Softbank Corporation under the Game Porting Agreement (Id.).

Under the terms of the 1997 Agreement, Softbank was required to make "Initial" and "Subsequent Advances" to Kinesoft totaling $10 million, as follows: (1) $5 million on June 12, 1997, the date the 1997 Agreement was executed; (2) $2.5 million on April 1, 1998; and (3) $2.5 million on October 1, 1998 (Defs.' Facts ¶ 10). Softbank made each of the Initial and Subsequent Advances on the designated dates (Defs.' Facts ¶ 10).

The June 1997 Agreement also provides that, in certain circumstances, Softbank "shall make available" to Kinesoft up to $15 million in "Capital Advances" (Defs.' Ex. 9, at § 2.01(d)-(e)). Sections 2.01(d) and (e) of the 1997 Agreement pertain to Capital Advances. Because those provisions are central to this case we quote them in full:

(d) In addition to the Advances set forth in paragraphs (a), (b) and (c) above, SOFTBANK shall make available to Kinesoft an aggregate of FIFTEEN MILLION DOLLARS ($15,000,000), which shall be comprised of capital advances ("Capital Advances") to be made by SOFTBANK to Kinesoft in accordance with this subsection (d) and subsection (e) below, from time to time and at Kinesoft's request, for expenses and transactions not in the ordinary course of business and pursuant to the "Business Plan" (as defined below). SOFTBANK's obligation to make Capital Advances is subject to the satisfaction of the conditions set forth in subsection (e) below and is separate from and in addition to its obligations to make the Initial Advance and the Subsequent Advances.
(e) Any request for Capital Advances by Kinesoft shall be governed by the following:
(i) Capital Advances shall be for purposes reasonably calculated to further Kinesoft's pursuit of becoming a leader in the interactive entertainment industry by, among other things, (x) using its technology to engage in the development of game and other interactive titles on behalf of third-party creators and with respect to its own titles, (y) licensing its technologies and proprietary content to others, and (z) publishing its technologies and proprietary content for itself and others (the "Business Plan"). Without limiting the foregoing, the following capital transactions and expenditures shall be deemed to be in furtherance of the Business Plan:
(A) the acquisition of existing companies, divisions, or operations with computer software tools and other key technologies, products, licenses, content, game or other interactive titles, intellectual property or personnel;
(B) the acquisition (by license or otherwise) of computer software tools and other key technologies, products, content, game or other interactive titles, and intellectual property;
(C) extraordinary costs associated with the hiring of key individuals in connection with the development of technologies, content and markets for Kinesoft's products and services; or
(D) the acquisition or establishment of significant infrastructure and/or facilities.
(ii) Kinesoft shall request a Capital Advance by submitting to Softbank a written request therefor in accordance with Section 5.04 (a "Draw Request"), which Draw Request shall set forth: (A) the amount of the requested Advance; (B) a description of the proposed use of the proceeds of such Advance, including information which a prudent corporate director would reasonably request in order to evaluate a proposed corporate action (such as the terms of the proposed transaction and its strategic fit within the Business Plan; information regarding any acquisition target (if applicable) and/or of the technologies, assets, facilities or personnel involved in the transaction; and relevant financial information regarding the expected impact of the transaction on Kinesoft) and (C) the proposed funding date. SOFTBANK shall respond to a Draw Request as soon as practicable under the circumstances, but not later than 20 Business Days following the date of the Draw Request (and not later than 10 Business Days if such Draw Request is for $2,000,000 or less); and, if such Draw Request is approved pursuant to subsection (iii) below make such Capital Advance to Kinesoft at Kinesoft's direction on the requested funding date, in U.S. dollars and in immediately available funds.
(iii) In the case of a Capital Advance in excess of $2,000,000, SOFTBANK shall make the Capital Advance described in the applicable Draw Request upon approval thereof by a majority of the board of directors of Kinesoft, which approval shall include the approval of at least one representative of SOFTBANK on such board. In the case of a Capital Advance of $2,000,000 or less, SOFTBANK shall make the Capital Advance described in the applicable Draw Request upon approval thereof by at least one representative of SOFTBANK on the board of directors of Kinesoft. Capital Advances shall be made by SOFTBANK in connection with transactions which are reasonably calculated to achieve the goals set forth in the Business Plan, including transactions of the type described in subsections (i)(A), (B), (C), and (D) above, and SOFTBANK will not unreasonably withhold or delay funding of any appropriate Draw Request. Kinesoft shall be allowed to draw a Capital Advance under this Agreement notwithstanding that Kinesoft may have other sources of financing therefor or may have other funds available to it.
(iv) if there is a denial of a Draw Request in whole or in part, SOFTBANK shall provide Kinesoft with a detailed explanation of the basis for such denial and the terms upon which SOFTBANK's decision with respect thereto would be reversed.

(Defs.' Ex. 9, at §§ 2.01(d)-(e)) (underlining in original).

Section 5.04 of the 1997 Agreement, which is referred to in Section 2.01(e)(ii), provides the manner that notice is to be given and to whom it is to be directed:

Section 5.04. Notice. All notices, consents or other communications shall be in writing, and shall be deemed to have been duly given and delivered when delivered by hand, or when mailed by registered or certified mail, return receipt requested, postage prepaid, or when received via telecopy, telex or other electronic transmission, in all cases addressed to the party for whom intended at its address set forth below:
If to SOFTBANK: SOFTBANK Holdings Inc.

Attention: Ronald D. Fisher

If to Kinesoft: Kinesoft Development Corp.
Attention: Peter Sills, Chairman and Chief Executive Officer
or such other address as a party shall have designated by notice in writing to the other party given in the manner provided by this Section.

(Pl.'s Ex. A, 1997 Agreement § 5.04) (bold face and underlining in original).

The 1997 Agreement also addresses future amendments, modifications or waivers of its terms:

Section 5.01. Amendments and Waivers. The parties agree to consider proposed amendments or modifications of the terms or provisions of this Agreement but no such proposed amendment shall be binding unless the same shall be in writing and duly executed by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provisions hereof. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof.

(Pl.'s Ex. A, 1997 Agreement § 5.01) (bold face and underlining in original). Finally, the 1997 Agreement also contains a merger and integration clause, which provides as follows:

Section 5.02. Entire Agreement. This Agreement, together with the Release, sets forth the entire understanding of the parties with respect to the subject matter hereof. Any previous agreement or understandings between the parties regarding the subject matter hereof are merged into and superseded by this Agreement and the Release.

(Id., § 5.02) (bold face and underlining in original).

C. Prior Requests for Capital Advances.

Prior to the summer of 1999, Kinesoft made three requests for Capital Advances that Softbank approved — although only two requests were actually funded (Defs.' Facts ¶¶ 20-22). We address each of those requests for Capital Advances in chronological order.

On May 20, 1997, Kinesoft initiated its first request for a Capital Advance by sending an e-mail to Mr. Fisher seeking $250,000 to pay for "extraordinary" expenses relating to hiring (Defs.' Facts ¶ 20; Defs.' Ex. 17). Although there was no proposed funding date included in the initial e-mail (Pl.'s Add'l Facts ¶ 70), Mr. Fisher did not deny the request on that basis. Instead, he noted that a Capital Advance could not be made until the 1997 Agreement was signed (Defs.' Facts ¶ 20; Defs.' Ex. 17). That agreement was signed on June 12, 1997, and by a letter dated June 24, 1997, Kinesoft confirmed the request for a Capital Advance. In the June 24, 1997 letter, Kinesoft asked that the funding be provided immediately (Defs.' Facts, Ex. 9). Thereafter, Softbank approved the request and made the Capital Advance for $250,000 (Defs.' Facts ¶ 20).

In the fall of 1997, Kinesoft initiated a second request for a Capital Advance: this one for approximately $6.5 million to fund the acquisition of two PC games being developed by third parties (Defs.' Facts ¶ 21; Defs.' Ex. 18). On behalf of Softbank, Mr. Fisher and Mr. Mason requested further financial information about these acquisitions (Defs.' Facts ¶ 21). On December 3, 1997, after receiving additional information, Mr. Fisher approved the request (Defs.' Facts ¶ 21; Defs.' Ex. 18). However, Kinesoft's Board of Directors never voted on approval of this request (Pl.'s Add'l Facts ¶ 71), and the funds were never advanced because the Kinesoft acquisition opportunity became unavailable (Defs.' Facts ¶ 21; Defs.' Reply Facts ¶ 71). As with the May 1997 request, Kinesoft's initial request for the $6.5 million advance did not contain a proposed funding date (Pl.'s Add'l Facts ¶ 71; Pl.'s Ex. Q). However, Softbank did not deny the request for a Capital Advance on that basis: rather, in response to that request, Softbank requested (and Kinesoft provided) specific funding dates (Defs.' Reply ¶ 71; Defs.' Ex. 18).

On or about May 1, 1998, Kinesoft initiated a third request for a Capital Advance by sending an e-mail to Mr. Fisher seeking $1.32 million for "capital equipment expenditures" to be made in two installments (Defs.' Facts ¶ 22; Pl.'s Ex. 20). Again, Kinesoft's request did not include a proposed funding date; and this time, the request also did not include a description of the proposal, but it did list the equipment Kinesoft sought to purchase (Pl.'s Add'l Facts ¶ 72). Softbank sought no further details concerning the proposed acquisition. However, in an e-mail dated May 11, 1998, Kinesoft specifically requested that Softbank advance the funds within 30 days of Kinesoft's request (Defs.' Reply Facts ¶ 72; Defs.' Ex. 20). On that same date, Softbank approved the request for a Capital Advance (and the proposed 30-day funding date), and subsequently advanced the first installment of approximately $998,000 (Defs.' Facts ¶ 22). The second installment was never paid because Kinesoft withdrew the request for the balance of that Capital Advance (Id.).

D. The Introduction of Mr. Levy Into The Relationship.

On October 27, 1998, Mr. Fisher contacted Mr. Jordan Levy about assisting Softbank in its dealings with Kinesoft. Mr. Levy was a significant shareholder of Softbank Corporation and "two or three Softbank funds." (Pl.'s Ex. K, Levy Dep., at 22, 25-26).

In his first overture to Mr. Levy, Mr. Fisher stated as follows: . . as you know we still have an investment in Kinesoft. The games business is not an area that I understand particularly well, and I am concerned about the ongoing level of investment in the Company. I also think that based on the history I am too "understanding" of their problems (read I need a hard-ass!). Is this something that you would be interested in helping me on?

(Pl.'s Ex. H: 10/27/98 Fisher e-mail to Levy). Mr. Levy indicated his willingness to help, and on October 30, 1998, Mr. Fisher asked Mr. Levy to "join the [Kinesoft] Board and represent Softbank's interests" for the purpose of helping Softbank "figure out where the company is really headed and whether there is any hope of realizing any value from it" (Pl.'s Ex. H: 10/30/98 Fisher e-mail to Levy). On November 2, 1998, Mr. Levy wrote to indicate his agreement to Mr. Fisher's request, and stated his understanding of what his role could entail: "I just want everyone to know that I am taking on the Harvey Keitel role in Pulp Fiction vs being the one who brought this baby to Softbank. I will do everything that I can to help them get successful" (Id.: 11/02/98 Levy e-mail to Fisher).*fn5

Mr. Fisher responded that Softbank intended to "honor" its "funding obligations under the 1997 Agreement," but he harbored concerns over whether Kinesoft could achieve the goal of its Business Plan: that is, to become a "leader in the interactive entertainment industry" (Pl.'s Ex. I: 04/26/99 Fisher e-mail to Sills). In that e-mail, Mr. Fisher also reiterated his desire to have Mr. Levy serve on Kinesoft's Board:

We will certainly honor our funding obligations under the 1997 Agreement. We would not unreasonably withhold funding we had agreed to advance. However, this commitment was to achieve Kinesoft's Business Plan to become a leader in the interactive entertainment industry. The obligation is to fund . . . transactions reasonably calculated to achieve the goals in the Business Plan.
We are, of course, willing to review in good faith future requests for capital as contemplated by the Agreement. Nevertheless, we have reservations whether Kinesoft can realistically be a potential leader in the interactive entertainment industry. If not, any proposed transaction will [sic] fail the test of being reasonably calculated to achieve this goal. I thought you should know of our reservations now rather than later if we have to turn down requests for capital. I would also like to designate Jordan as Softbank's official Board member for Kinesoft. In this way we can be sure that we handle any requests that you have as expeditiously as possible.
You also apparently misunderstood Jordan's suggestion that you consider investing in the Internet. We are certainly not urging you to take one course or another. We both believe strongly in the potential for Internet ventures. Jordan was trying to be constructive in indicating what he would do with unused capital.

(Id.). Mr. Sills testified that, after he received the April 26, 1999 e-mail, he "believed that Jordan Levy was on the Board of Directors by virtue of the April 26, 1999 e-mail from Ronald Fisher, and began to treat him as such" (Pl.'s Add'l Facts ¶ 78; Pl.'s Ex. O, Sills Aff. ¶ 10).

E. The Digital Anvil Proposal.

On August 6, 1999, Mr. Sills and Mr. Spitzer flew to Buffalo, New York for a planned meeting with Mr. Levy (Answer ¶ 22; Pl.'s Add'l Facts ¶ 81-82). Mr. Levy knew that Messrs. Sills and Spitzer planned to ask for a Capital Advance (Pl.'s Add'l Facts ¶ 81; Pl.'s Ex. D, Sills Dep., at 504-06; Defs.' Reply Facts ¶ 81; Pl.'s Ex. K, Levy Dep., at 204-05), although he did not know in advance of the meeting the details of the proposed use of the funds (Pl.'s Add'l Facts ¶ 81).*fn6

During the August 6 meeting, Mr. Sills and Mr. Spitzer presented to Mr. Levy a proposal to obtain a Capital Advance from Softbank to fund a joint business venture with Digital Anvil, an established company (Pl.'s Add'l Facts ¶ 81). In exchange for $5 million capital to be supplied by Kinesoft, Digital Anvil offered Kinesoft the opportunity to gain early access to the "Playstation 2" development through Digital Anvil's connections with Sony (Pl.'s Add'l Facts ¶¶ 81-82; Defs.' Ex. 29, at S0012-S0015). According to the plan advanced by Mr. Sills and Mr. Spitzer at this meeting, Kinesoft sought to form a new company with Digital Anvil, to be called "NewCo," which would create games for Playstation 2 (Pl.'s Ex. U: 8/9/99 Levy e-mail to Fisher). The "talking document" that comprised the written Digital Anvil proposal made to Mr. Levy did not contain a "proposed funding date" (Defs.' Facts ¶ 33).*fn7

The parties agree that Kinesoft presented Mr. Levy with a binder of materials explaining the Digital Anvil proposal, and that Messrs. Levy, Sills and Spitzer discussed that proposal and the materials at length (Pl.'s Add'l Facts ¶ 82). However, the parties dispute whether the proposal made by Kinesoft at the August 6, 1999 meeting can be labeled a "Draw Request" under the terms of the 1997 Agreement (Defs.' Reply Facts ¶ 81). And, the parties dispute precisely what Mr. Levy said in response to Kinesoft's proposal during that meeting.

Kinesoft offers evidence (by the deposition testimony of Mr. Sills and Mr. Spitzer) that at the meeting, Mr. Levy stated as follows (Pl.'s Add'l Facts ¶ 82):

(a) Kinesoft would have no further access to the funds for the Digital Anvil deal or any other deal or use. The nature of the use and/or deal was totally irrelevant.
(b) Softbank had no further interest in Kinesoft or the business Kinesoft was in.
(c) It was through no fault of Kinesoft, but Kinesoft no longer had the right partner — Softbank had basically just changed its mind and was now focused solely and exclusively on the Internet.
(d) Masayoshi Son had requested that Levy be a "prick" in dealing with Kinesoft and that he needed someone to be a "prick" with Kinesoft in order to get what he wanted.
(e) The problem was not just Kinesoft, but that Softbank was moving quickly to divest itself of all of its non-Internet holdings because it was going to be a "pure" Internet company.
(f) Softbank has turned an investment of tens of millions of dollars in Yahoo! into billions of dollars. This is what Softbank is interested in, not the business Kinesoft is in.
(g) Softbank had rights under the Shareholders Agreement and would be exercising them. Softbank did not have to honor its commitments of funding since Kinesoft was not a leader in interactive entertainment, and Softbank had discretionary power over the spending of more than $500,000 by Kinesoft and would not approve any such expenditures going forward.
(h) If Peter Sills took $5 million out of the company and bought out Softbank's interest, he could do whatever he wanted with the company.
(i) If Peter Sills did not like it, what was he going to do, sue Softbank, a huge multinational concern? Softbank's power in the industry is great and it is much better to be its friend than its enemy. If Peter Sills elected to sue Softbank, he would have to do so with his own funds, . . . .

Softbank asserts that Mr. Levy merely informed Messrs. Sills and Spitzer that he did not think that Kinesoft's "potential transaction with Digital Anvil was advisable because he believed that Kinesoft ought to focus on its `core business,'" and he did not believe that the Digital Anvil deal was "a good strategy for a small company with a limited number of key executives" (Defs.' Reply ¶ 82). Softbank denies most of the statements attributed to Mr. Levy at the meeting, and specifically denies that Mr. Levy said at this meeting that Softbank had no interest in Kinesoft; instead, Softbank asserts that Mr. Levy "merely observed that Softbank's business had `shifted towards the Internet'" (Id.). Finally, Softbank concedes that Mr. Levy "suggested to Mr. Sills that, under the right circumstances, it might be sensible for Kinesoft to purchase Softbank's equity investment in Kinesoft," but denies that Mr. Levy told Mr. Sills that Kinesoft should buy out Softbank's interest for $5 million (Id.).

After his meeting with Messrs. Sills and Spitzer, Mr. Levy sent an e-mail to Mr. Fisher summarizing the Kinesoft proposal (Pl.'s Add'l Facts ¶ 83). The parties disagree as to whether Mr. Levy's August 9, 1999 e-mail forwarded to Mr. Fisher a "Draw Request" by Kinesoft for capital to fund the Digital Anvil venture (Defs.' Reply Facts ¶ 83). The August 9 e-mail states in relevant part:

I met with Peter Sills and Ron Spitzer in Buffalo last Friday. They have been speaking with me over the last several weeks about [sic] [their] entry into the Playstation 2 gaming business. They have a proposal to enter into a joint venture with Digital Anvil . . . to form a[n]ew company to produce a Playstation 2 game . . .

The deal would be a $5MM commitment as follows:

A. [P]ay NewCo $250,000 for Playstation 2 ...

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