An Indianapolis software firm’s $21 million sale last year and a disagreement over how the payout should be distributed have spurred a federal lawsuit.
Eric Tobias, who founded iGoDigital LLC in 2004, says a former contractor is trying to claim more than his agreed-upon share from the sale of the company to ExactTarget Inc., according to an Aug. 14 filing with the U.S. District Court of Southern Indiana.
According to the lawsuit, contractor Kevin Honan helped iGoDigital with sales of its software product. Tobias and Honan verbally agreed in 2007 that Honan would receive a 25-percent payout for iGoDigital if the company was sold—although Honan did not receive an actual equity stake in the firm., according to the suit. The men did not formally sign off on the agreement until 2011.
Muddying the situation is the fact that, two years earlier, Tobias created a second company called iGoDigital Holdings Inc. The same year, iGoDigital LLC was incorporated and became iGoDigital Inc.
Problems emerged after October 2012, when ExactTarget bought both iGoDigital Inc. and iGoDigital Holdings for $21 million. Tobias contends Honan's 25-percent payout is limited to the sale of just iGoDigital Inc., while Honan seeks proceeds from the sale of both companies.
A closing agreement submitted to the court sheds some light on their gains from the buyout—at least for iGoDigital Inc.
Tobias received $11.1 million in cash and stock from iGoDigital Inc.’s sale and Honan netted $3.4 million, according to the agreement. The lawsuit does not provide details on the sale of iGoDigital Holdings.
Honan has since claimed he was entitled to 25 percent of the sale of iGoDigital Holdings, not just iGoDigital Inc., the lawsuit says. Assuming IGoDigital Holdings sold for about $6.5 million, Honan would be seeking another $1.6 million.
The lawsuit does not indicate to what extent Honan has gone to claim the money he says he is owed. Honan has not filed any lawsuits in any Indiana or federal courts.
In filing the suit, Tobias seeks a declaratory judgement from the court that essentially says Honan has no rights to the proceeds from the sale of iGoDigital Holdings.
Tobias did not respond to voicemails seeking comment. His attorney, Jayna Cacioppo of Taft Stettinius & Hollister LLP’s Indianapolis office, declined to comment.
Honan had not filed a response with the federal court as of IBJ deadline. A listed phone number for Honan was not connected.