until Franklin lumbered over. Mark then passed up an open shot, dribbled under the basket past an outstretched Franklin, and flicked in a reverse lay-up.
“Winners out,” laughed Mark. Franklin had been stuffed by a thirteen-year-old kid! The boys ran the same play again. Burned once, a determined Franklin turned up his game. Mark couldn’t dribble around him. When he tried to shoot a jumper, Franklin blocked the ball with a vengeance. Matt waved Mark into a brief huddle, “I’ll pass you the ball then go back door on Dad. If Franklin tries to double back, you should have an open shot.”
Sure enough, Matt’s strategy worked, keeping the young boys competitive with men twice their size and three times their age. In the end, Franklin and Victor ultimately lost by a basket, but Franklin scored points with the kids, just as planned. More importantly, he scored big with Sandra. Her apprehensiveness about Franklin’s womanizing began to dissipate as she watched the display of court-side machismo unfold and her sons’ obvious respect for Franklin’s competitiveness. He had passed the smell test.
After the game, the four sweaty bodies jumped into the pool to cool down while Sandra prepared the barbecue with steaks, burgers, wine, and beer.
“Great family, great food, great home.,” said Ryman.
Sandra beamed.
“Who take sare of this place?” asked Ryman.
“Originally, I thought I could,” replied Victo. “But after spending an entire weekend cutting the lawn, common sense took over. Now, we have a part-time staff of three. The fact of the matter is, we could use them full time.” The main house is 200 years old and always needs something, plus the grounds and adult toys are high maintenance.
“Victor,” said Ryman looking straight at Sandra, “I guarantee you’ve worried about stuff like that for the last time.”
Sandra was cooked and done!
Chapter 13
The Employment Contract
Victor’s meeting priorities were different than the others.
Victor, Franklin, Diamond, and Tishman met at Tishman’s office at 5 P.M. to review the SEC filing documents, including Victor’s employment contract, equity agreement, loan note, and other compensation perks.
“Victor,” said Tishman, sounding like consigliere Tom Hagen in a scene from The Godfather, “I’ve spent most of my day working on the language of the equity agreements and the employment contracts that get incorporated into the SEC paperwork. Franklin and Martin are fine with their arrangements, but we need to go over yours to make sure you’re satisfied. As you know, all these documents become part of our filing with the SEC, excluding, of course, our agreements with Martin.
"Let’s review the employment contract first, shall we?” continued Tishman. “A five-year deal with a Year One base of 200,000 increasing to 400,000 in Years Two and Three, and 550,000 in Years Four and Five.”
Victor hesitated as if to feign concern. “Franklin, I’ve been thinking about the proposed Year One base. If it were just me, I could live with it. I understand the long-term rewards. But, as you know, we’ve got a bit of a complication, it’s called Sandra. You saw how we live, what she expects. I think she’d make me bail on the deal rather than permit me to take such a salary cut.”
“I understand,” said Franklin, annoyed but not showing it. “But you’re being granted twenty million founder shares.” Victor had no idea that Franklin had five times that number plus an equal number of options. “Do you have any idea what that’s going to be worth?” continued Franklin. “Assume our stock rises to fifty dollars a share within five years, maybe less. I’ve done that before.”
“Victor, I can appreciate Sandra’s position,” chimed in Tishman, putting on his sincere face. “I’ve been married twice myself.” Victor didn’t know Tishman turned gay after his second wife left for a younger woman. “You must realize that in transactions of this nature, the investing public’s perception of the deal is critically important.
“It’s in the best interest of everybody, particularly you and Franklin as the primary founders, have to be perceived as a frugal management team who understands building shareholder value comes first, personal reward second, particularly in the start-up phase. I might also point out that you do have a generous performance-based annual bonus provision, which will amount to hundreds of thousands per annum.”
“Agreed,” said Victor, getting ready to play cards he didn’t have. “I’ve always believed in delivering first, getting rewarded second. But I’ve been around the block; bonuses are discretionary. Franklin, you understand my dilemma...”
“Okay, okay,” Franklin jumped in. “Let’s not cause Sandra to fret. Bump Victor’s Year One base to $250,000 and adjust the Year Two to Five numbers proportionately.”
~
That settled, Tishman pressed forward. “Let’s move on to the earn-out provision of the contract. Per our previous conversations, your annual bonus will be equal to three percent of the company’s after-tax profits during the duration of your five-year employment contract. The bonus will be payable in ITI stock pegged at the then market price.”
Victor again surprised the boys. “Can somebody explain why Franklin’s bonus formula is completely different?”
“I beg your pardon?” said Tishman, sensing he under-estimated Victor.
“Franklin’s number is five percent. That seems like an appropriate spread between the number-one and number-two guys. But why is his five percent before tax and my 3 percent after-tax?”
“Allyn, is Victor correct?” asked Ryman theatrically. “If he is, that’s not fair.”
Tishman got the message. “I misunderstood the deal. I’ll revise that section.”
“And what about the loan documents?” asked Victor.
Tishman glared at Ryman. “What loan papers?”
“It never occurred to me we needed papers. My word is my bond,” responded Franklin.
“I know that Franklin, but this is about providing our mutual friend the comfort she needs.”
“Gentlemen, will you please explain what’s going on,” said Tishman, flabbergasted at Ryman’s largess. He knew a tax-free loan if audited, would not pass the IRS smell test.
Diamond was also concerned. How was the cash-strapped Ryman going to come up with a quarter of a million dollars in the next thirty to sixty days? “Would you fellows mind if we take a break?” asked Diamond. “Nature calls.” Franklin got the signal. He followed Diamond into the bathroom.
“Franklin, where is this $250,000 pre-offering loan coming from?”
“You.”
“Me? Hardly.”
“Martin, this is not a discussion. I’ve made you millions. I covered your ass during those SEC inquiries. You owe me.”
“And if I refuse?”
“Your ITI founder stock
