This is suspiciously like what happened to someone I know very well who dealt with an Idealab! company. Perhaps Bill Gross conducts seminars on how to pull the ol’ contract switcheroo when hooking up talent.
-Ian.
http://www.inside.com/jcs/Story?article_id=18835&pod_id=10
Chris Rock Heaves a Big Suit Back at Z.com — and Idealab, Too Ben Berkowitz 12/20/2000 20:20
See what happens when you start throwing Rocks in court?
On Wednesday, one day after Z.com sued Chris Rock, the actor and comedian struck back with his own lawsuit against the online entertainment provider, as well as its parent company, Idealab.
Rock claims in his Los Angeles Superior Court complaint that Z.com and Idealab approached him in April to provide content to the site and use his celebrity name to promote it and attract other talent. In exchange, Rock claims he was granted the right to purchase 1.75 million shares of common stock in Z.com, at or after its IPO, at $.10 a share and Z.com is obligated to buy back all of the shares at $3-per-share at any time during the third year of the agreement, according to the suit.
”When plaintiff asked about the vulnerability of the ‘.com’ market and the failures of several such companies, defendants’ representatives insisted that Z.com was part of defendant Idealab! and that Idealab! would unconditionally guarantee Z.com’s buy back obligation under the agreement,” the suit states. ”Idealab!’s involvement and affirmative backing is what attracted plaintiff to Z.com and provided the motivation for plaintiff’s eventual execution of the agreement.” Idealab also incubated in GoTo.com, eToys, CitySearch, NetZero and Tickets.com.
When Rock was ready to purchase the 1.75 million shares, however, Z.com and Idealab first delayed discussions on an agreement, and then allegedly had their attorneys change ”certain essential tax language previously negotiated in the agreement,” the suit claims. Rock demanded to have the language changed back, but the defendants prolonged discussions in order to keep Rock’s famous name associated with the Web site as long as possible because the company was facing financial problems, the suit maintains. Indeed, in October, Idealab withdrew its IPO and shuttered two of its companies. As for Z.com, it laid off nearly half of its 100 employees in October.
Rock’s lawsuit claims intentional misrepresentation, breach of contract and other allegations. He is seeking $5,075,000 plus interest. He is being represented by attorneys Stanton L. Stein, and Sarah B. Takasugi of Alschuler Grossman Stein & Kahan.
”It should be … noted that Chris Rock provided Z.Com with his complaint yesterday morning in an attempt to give Z.Com another opportunity to comply with the agreement,” said a statement issued by Rock’s publicists late Wednesday. ”Instead, Z.com filed what Chris Rock regards as a baseless lawsuit to deflect attention away from Z.com’s previously reported financial difficulties.”
Joe DiNunzio, Z.com’s CEO hadn’t seen the suit and couldn’t comment on it specifically. He said, however: ”We believe it is in both parties interest to settle this. We have been disappointed in the inability to conclude these negotiations.” Calls to both internal and external spokespeople for Idealab were not immediately returned.
Z.com’s lawsuit against Rock claims it is owed more than $1 million in repayment of fees given to Rock for the content which was never developed. The first lawsuit, which also names Rock’s company, Chris Rock Enterprises, as a defendant, claims there was a preliminary agreement made on April 6 requiring Z.com to pay Rock $1,075,000, to be repaid within 45 days if a final agreement was not reached by June 30, as, apparently, it wasn’t.