blocks totalling over 330,000 shares from Jeffries & Co., a brokerage house, at a price of $21, and some on the open market.  By February 1984, Gearhart had apparently become apprehensive about Smith's activities and retained counsel and an investment banker.  In addition, it began to discuss these activities with Smith, seeking to obtain a standstill agreement or otherwise to deflect Smith's apparent acquisition project.  Smith was not cooperative.


7
By early April, Gearhart rightly concluded that Smith had thrown down the gauntlet.  The tempo picked up:  in the first week of that month Smith bought over a quarter-million Gearhart shares on the open market at prices between $25 and $27 per share.  By April 10, when it filed an amended 13(d) disclosure statementowning up at last to a purpose to continue its acquisition program "by tender offer or otherwise," it had obtained a 26.5 percent position in Gearhart.  Two days later, Smith made a firm offer to purchase a block of well over a million shares of Gearhart from Kemper Financial Services, Inc.  The transaction was consummated on April 16, at a time when--as the trial court concluded--an oral standstill agreement was in effect between Smith and Gearhart.  With this, Smith had acquired over one third of Gearhart's outstanding common stock.  Gearhart brought suit on April 18 in both state and federal court seeking to abort the Smith charge.


8
That same day, the Gearhart board authorized the issuance and sale of a large amount of subordinated debentures