This Little Piggy (25) “Good. Cause I’ve made some arrangements.” Nachman pressed a remote control and a wall of curtains retracted, revealing a massive patio with an enormous buffet table overlooking the Hollywood Hills and tuxedo clad waiters poised to serve canapés and champagne. In the center of the patio sat a small stage containing a set of drums initialed “BH,” a shiny saxophone, a bone gray clarinet and a magnificently polished wood bass drum. Three men in their sixties—one white, two black—entered the patio. The white man spoke first. “Sam, thanks for inviting us. Always fun doing a gig here.” “Hey everybody,” said Nachman, “I’d like introduce my friends, jazz legends Buddy Ruck on the drums, Roy Elderidge on sax and Johnny Jones on bass.” Everybody was impressed, even Bob. “The boys are going to play a few tunes.” First came a spirited eighteen-minute version of ‘Alexander’s Ragtime Band’ followed by ‘Stompin’ at the Savoy.’ The musical surprise of the day was Nachman. He was a world-class clarinetist. “Now for a little change of pace,” said Buddy. The foursome began playing a romantic rendition of ‘Moonlight Serenade’ as nine drop-dead gorgeous women stepped onto the patio and selected their partner for the evening. The group danced, drank, played and dined into the wee small hours, and beyond. ########## Part Four: All Good Things Must End Chapter 23. Marc Jacob Melrose IV “BOBBIE BABY, HOW’S OLD JACK DOING?” Bob naively presumed Berger was seeking a gratuitous pat on the cheek. Berger was trolling for information about the Barter Bank spin-off in Astrid’s notebook. He needed to identify his leverage point in Bob’s latest brainchild. “Jack, the stock is holding nicely which is making my negotiations with new acquisition prospects a lot easier. Thanks. Everybody wants a piece of the action.” “Bobbie, glad I could help. So what’s new in that convoluted visionary mind of yours?” said Berger. “Jack, you know I can’t talk about the next round of acquisitions. Scarborough’s all over my ass about leaks.” “Bobbie, that’s fine. I don’t need to know. I was just making conversation. I figure by now you must be getting antsy. Time for a spin-off or something?” Bob became suspicious. “Why would you think that?” “Bobbie, this is Jack. Do I know the man or what?” Berger knew exactly how to unlock Bob’s ego. “Come on Bobbie, there must be something you’re getting ready to spring that nobody else would ever dream of?” “Actually, I have been thinking about a spin-off to increase existing shareholder value and enhance company cash flows.” Berger knew that was bullshit! With thirty-five percent of the outstanding stock, Bob had one thing in mind: get richer. Berger was crafter than Bob realized. Berger knew Bob’s informational scraps could mean millions in his pocket. “Bobbie I’m all ears. Nobody knows how to create value like you. You’re the fucking king, baby.” Bob’s ego was now all mouth. “Jack, I’m playing with the idea of starting a bank that would fund cash-barter transactions. We’ve got so many deals in progress that our appetite for capital has mushroomed. We could also use the bank to fund acquisitions when market conditions are poor and, like in the hospital days, we can finance competitors to expand and legitimize the overall market.” “Very sexy Bobbie. Very sexy.” “That’s what I thought too.” “And old Jack may just have the idea to make it soar. Big time.” “You?” “Bobbie, be nice.” “Come on. Come on.” “Not so fast.” “Okay, what do you want?” “Founder’s equity in the spin-off.” “Like what?” “Like four percent. Like Martin got in the last deal.” “Four percent. You’re crazy! Martin was an ongoing company advisor. You’re talking about some shit ass, one time idea that may or may not work.” “I’m talking about ‘the idea’ that’s gonna guarantee the success of a spin-off financing and bring credibility to the entire fucking operation. As for your so-called advisor Martin, that’s bullshit. I’ve spent more time on ITI than he has. Smuck! I thought you knew.” “Knew what?” “Martin made Ray unload his entire position two months ago. We wired the money to some fucking tax shelter in the Cayman Islands. When was the last fucking time you even talked to the two-faced bastard?” Bob, bitter and offended, acquiesced. “Okay Jack, if the idea is that good, you have my word. Four percent.” “It just so happens,” said Berger, “I’ve been talking to an old friend, Marc Melrose, Chairman of the prestigious Billingham Trust Company, who told me confidentially he’s looking to explore new challenges. He likes the Barter Bank concept.” “Likes the Barter Bank concept? What the fuck are you talking about? How would he know…” “Bobbie, I’m always looking out for your best interests. With Marc as Chairman and CEO, the Barter Bank offering would fly out the door. Could even be bigger than ITI. You know, like the recent Palm Pilot spin-off from 3 COM.” Bob was intrigued. The idea had merit. “I’d like to meet him. Can you arrange it?” “Consider it done.” “I’ve got one other question.” “Sure Bobbie anything.” “One more time. How the fuck did you know about the Barter Bank?” “Bobbie, if you’re gonna be a dealmaker, you just gotta know your customer!” Berger was not about to reveal his information source. And he was certainly not about to reveal Melrose had discreetly arranged an unsecured $5 million loan for Dominick Marino to expand Norwest’s trading floor, in exchange for a guaranteed $1 million profit on the recent ITI stock run-up. * FIFTY-THREE FLOORS UP on the tip of Manhattan Island, the small planes and helicopters that took off and landed at LaGuardia and Kennedy airports seemed so close you could reach out and touch them. The panoramic view was in a word, grand. The Statue of Liberty, dead ahead, Ellis Island to the right and Manhattan’s five extension bridges to the left—beginning with the Verazzano Narrows to Staten Island and ending with the Queensboro Bridge on 59th. Marc Jacob Melrose IV’s office seemed the stuff of feudal princes and lords. Oversized, 1,200 square feet, and paneled in richly-veined English Satinwood—the kind that had to be imported. Melrose’s enormous, rectangular, black walnut inlaid desk had more draws and brass knobs than a turn-of-century apothecary cabinet. Melrose projected royalty. A full head of neatly groomed shiny gray hair atop the taut, lean figure of an impeccably dressed man who spoke in vague, philosophical terms. “Robert, the concept of a worldwide Barter Bank has a certain savoir fare. A constructive business idea consistent with my publicly declared interest to assist the less fortunate third world economies.” Dollar signs danced in his head. Melrose running the Barter Bank would explode his net worth into the outer reaches of the ozone layer. Melrose also represented a classy solution to his awkward little political problem with Michael. An expert negotiator of a different sort, Melrose sensed Bob’s anxiousness to close a deal. So he teased Bob into a state of frenzied desperation by ponderously meandering through the availability of Somalian sapphires, Ivory Coast gold and Kenyan sugar cane and rubber. “Marc, I’m an intuitive animal by nature. I think we’d make an excellent management team, initially with the Barter Bank and eventually over the entire ITI holding company. Melrose paused, took out a couple of cigars and handed one to Bob. As they lit up, a thick cloud of smoke engulfed them, “Robert, I was under the impression you had an accomplished heir apparent that been with you some time?” “You must be referring to Michael Martini. He’s a nice young man with an advertising background, but he’s simply not CEO material. He and I both recognize that. Your corporate finance experience dwarfs what he could ever accomplish. My thought is we strike a deal to get your feet wet as Chairman, CEO of The Barter Bank, then at the appropriate time we appoint you CEO over the whole enchilada.” “And, what about you?” “Hey, I’ll be content to be honorary Grand Poo-Paa or something. I plan to buy an island—maybe Fiji or Bali---and go bask in the sun. If you need me, I’ll be available via satellite,” smiled Bob. “And, what about Michael?” “Awww, don’t worry about Michael. I’ve made him a rich man. He’s a big boy. You can bring in whoever you want.” Bob had just initiated his fuck Michael plan. It was now Melrose’s turn to close. “Bob, I don’t know. Chairman of Billingham Trust to Chairman of a start-up Barter Bank. Besides, I’m not sure it would be appropriate to burden a young company with my kind of compensation requirements.” “Why don’t you let me worry about that,” said Bob with an air of braggadocio. “What’re we talking about?” “Well my total package is in the $950,000 range. But I can live on less, assuming the equity position justifies the reduction.” “What do you need?” Marc paused. “Bob, I’m really not a negotiator.” “I’m not asking you to negotiate. I just want to know what’s the minimum you need to maintain your lifestyle. You’ve got to be satisfied or it doesn’t make any sense.” “Well, assuming I have about thirty-five percent of the deal, Marion and I can probably get by on sixty thousand dollars a month or so. That’s about seven hundred thousand a year.” Melrose nailed Bob right into a corner. “Not a problem. With a hundred million dollar raise, nobody will blink an eye at those numbers. Not with your track record.” Marc wasn’t finished. “I assume we are talking about a seat on the Board?” “Obviously.” “There are a few other details.” “How about the lawyers handle the details? They’ve got to justify their retainer somehow,” smiled Bob. “How long before you’re ready to go to market?” said Melrose. “I would guess about sixty to ninety days.” “That would provide an adequate time frame to conclude matters here,” said Melrose, who unbeknownst to Bob had his own urgency to close the deal. The Billingham auditors were excruciatingly close to uncovering over forty high-risk Melrose-approved unsecured international loans, which had earned him millions in finders fees cleverly buried in a complex maze of offshore corporations. Melrose also knew from Berger that Bob had personal cash flow problems. “So, Jack tells me you’re part owner of The Aspen Club. Great facility. My wife Marion and I have stayed there a few times.” “Thanks. But frankly, it’s a huge black hole. When cash flow didn’t matter, losing a couple of hundred thousand a month was no big deal. Plus I got to hob knob with celebs from all over the world. Right now however, until the ITI registration period is over, I’m drawing heavily on my personal assets.” “I had no idea,” said Marc. “Could the Club use a working capital line? Perhaps I could introduce you to one of my friendly loan officers?” Marc figured he had enough time left for one or two more unsecured loans. While this one had no finder’s fee per se, he planned to leverage the introduction when the lawyers got around to the final details. * THE MELROSE EMPLOYMENT CONTRACT meeting at Delano Mondrain Hudson resembled opening night at the Metropolitan Opera House. Bob, Tom Kugle and Christine, the sexy paralegal assigned to Kugle after Edleberg’s sudden departure, represented ITI. The Melrose entourage included two lawyers, Sol Lieberman and Manny Poltakin, his accountant Rebus Barton III and longtime administrative assistant Gertrude Raintone (pronounced ‘Raan-tone’). Kugle thought the size of the Melrose entourage a bit odd since Bob had billed this as a ‘final details’ meeting. “Bob, where’s Michael?” whispered Kugle. “I left him home. He’s not involved in the Barter Bank. It’s way over his head.” Translation? Bob was becoming increasingly paranoid about Michael’s growing influence with Sam, Fred, Al and Phil Scarborough. Melrose was not only his ticket to a successful Barter Bank spin-off, but he was personal management insurance. Once Melrose was on board, Bob was confident he’d gain the respect of everyone, just as he had in prior businesses. If and when Michael got too big for his britches, Bob planned to dump the man he made wealthy. Kugle smelled a rat. He just had no idea how big it was. Lieberman assumptively took charge of the meeting as he distributed copies of Melrose’s employment agreement. “Tom, since the basic compensation and equity percentages have been previously agreed between Marc and Bob, I thought the most efficient use of everyone’s time might be to focus on section twelve, captioned ‘other considerations.’” Kugle almost had a cardiac arrest as he glanced at the paragraph entitled ‘base compensation.’ Five years, starting at $750,000 and rising a $150,000 per annum to $1.5 million. The equity positions were equally staggering: thirty-five percent of the spin-off pre-dilution plus 1,400,000 ITI stock options at a strike price of five dollars. “Fellas, before we begin, I was wondering if I could have a few words with my client?” said Kugle. As they left the conference room and headed to Kugle’s office, Bob immediately went on the offensive, “What the hell is this all about?’ “Bob, as your attorney, I must advise you the numbers you’ve supposedly agreed are reckless and irresponsible. No startup pays seven hundred and fifty thousand dollar bases. If you think we have SEC problems now, wait till they see this. In my opinion, they are going to…” “In your opinion…in your opinion,” said Bob, eyes bulging out of his beet-red head. “Fuck you and your opinion! What has that gotten me so far except three million dollars in legal fees? Remember what you told me about the last offering…‘We should have no trouble clearing the SEC, they’re not that busy right now’…so much for your fucking opinion.” Bob and Kugle stood face-to-face like two heavyweight boxers at a weigh-in. “Melrose’s name brings instant credibility to the deal. The Street will love it. That alone will pay for his salary,” blurted an irate Bob. “He’s also insurance the SEC can’t pull that ‘related party’ bullshit.’” “Bob,” said Kugle talking to Bob’s nose, “You think life is a series of shortcuts. One continuous promotion. Well its not! Do you think, everybody’s …” “Listen, you little shit, I invented this fucking company. Nobody’s going to tell me what to do. In case you didn’t notice, you work for me. I’m not paying you big fees so you can cover your ass with the SEC! So let’s get back into the conference room and wrap this baby up!” screamed Bob. “Bob,’ said Melrose moments later, awash in integrity, “I want to be straight up with you, because that’s the only way partners should operate. I’ve added a few items we didn’t discuss previously.” “Such as?” said Bob. “Marion insists on a five million dollar life insurance policy.” “Done. Next,” said Bob. “I’ve added a disability income policy.” “How much is the premium?” “Sixteen thousand dollars.” “Jesus Christ!” Point after point Bob acquiesced. Kugle noticed the quirky option award language. An initial grant of 1,500,000 ITI options at half market, in effect a signing bonus of $14 million. Tom leaned over to Goldstrom, “This option award is incredible, one million five hundred thousand shares with a strike price at half current market. I’m not even sure that’s legal without Board approval?” Goldstrom glared at Kugle, as if to say, “what board?” * TWO DAYS LATER a beaming Goldstrom watched Melrose signed a mountain of personal agreements ‘including but not limited to’ his employment contract, equity agreements and life insurance and disability insurance applications. With an exaggerated gesture, Melrose placed a period after his last signature. “Well, I guess that makes it official, we are now partners in crime,” smiled Melrose, peering over his tiny granny reading glasses. “Marc, I’ll have John get the press release ready,” said Bob. “Woahhh, hang on,” said Melrose. “Bob, that’s a bit premature. I would feel much more comfortable knowing the financing was completed.” “It is,” said Bob. “With all due respect, I’d rather be a little more conservative….you know…the banker in me.” Bob couldn’t bullshit Melrose; he’d been around the block too many times. Melrose tried to dance around Bob’s obvious disappointment by fueling his ego. “You mentioned ‘John would prepare the press release.’ Who is John?” “Oh, he’s my internal jack-of-all-trades. He assists me on everything from acquisition identification to press releases to sharpening the pencils.” Melrose paused, slowly lit a big cigar and tilted his chair back. “You’re kidding. You don’t have a public relations agency?” “Marc, at this stage, I’m not sure…” Melrose placed the cheese in the trap. “With your track record, you should command significant media exposure. That can only be good for the stock price. As we discussed, the Barter Bank’s success depends upon exposure to business leaders. That means befriending the Wall Street Journal.” “The Journal? I can’t imagine they’re about to give our little company…”
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