Co-founder of id Software, John Carmack, was expecting a big payout from ZeniMax Media on the eighth anniversary of the developer’s sale to owner of Bethesda but that payout isn’t forthcoming.
A lawsuit filed in Dallas, Texas alleges that ZeniMax “clearly doesn’t want to pay” the balance of what it owes Carmack.
To offer a bit of clarity, here’s the situation. In 2009 ZeniMax acquired id Software for $150 million. A sum of $45 million was paid in cash when the deal was signed and $40 million was paid to shareholders over the following four years in the form of cash promissory notes.
The remaining $65 million would be distributed in the form of Convertible Promissory Notes which shareholders could use to get cash or ZeniMax common stock.
“Each of the Convertible Promissory Notes permitted their holders to convert the notes to shares of common stock at any time prior to their Maturity Date, which was defined to occur upon the earliest of an initial public offering, a change of control, or the eighth anniversary of the closing of the sale of id Software,” reads the court filing.
At the time of the sale Carmack was the majority shareholder and his promissory note had a face value of more than $45 million. In 2011 he converted half of that amount to ZeniMax common stock and he received a new promissory note to the value of $22 million.
Then in February of this year Carmack submitted written notice to ZeniMax that he would like to convert the balance of his promissory note into common stock. It is alleged that Carmack would sell these share back to ZeniMax at a cost of $45 per share.
A month later on 2nd March ZeniMax responded. “By that letter, ZeniMax made it clear that the company would not voluntarily comply on a timely basis with the conversion notice. The content and tone of the letter also made it clear that ZeniMax was unlikely to comply with its obligations under the shareholders’ agreement by either buying the offered shares or notifying the other shareholders of their right to purchase them,” reads the filing.
Carmack is seeking monetary damages to the tune of $22 million plus recovery of legal fees and a judgement that obligates ZeniMax to purchase Carmack’s common stock at a cost of $45 a share.
And we thought the tussle between Carmack and ZeniMax was over.[Image – CC BY 2.0 QuakeCon]