This sounds like a great case of baseball bat to the knees, then. Seriously, how are you supposed to deal with a situation like this without resorting to at least a threat of violence?
One may handle this as follows:
Plan a meeting with the head guy of this company. Discuss how you feel about the situation and that you intend on pursuing a contract with the other company. Now here is the kicker, after he gets off work, have some fellas send a meesage that he needs to let you go or else. I know this isn't very practical, but he is the one who wants it this way.
