Rogers Case Profile

Robert A. Creo

IAM ONLINE STORYTELLING CASE PROFILE

Prepared by Robert A. Creo, February 2002

Estate of Rogers v. Doe Travel Accessories Company

PRE-MEDIATION SESSION JOINT SUBMISSION

Claimant is the Estate of Robert M. Rogers, former CFO of Doe Travel Accessories Company. Robert died of natural causes on July, 1, 2001 at age 45. Robert was survived by his wife, Michelle Rogers, age 38, who holds a certificate from the state as a licensed school teacher. They have three children, Tricia, age 9, Robert, age 7, Thomas, age 4. Michelle taught for five years before they married in 1992 and she gave birth to their eldest daughter, Tricia on June 1, 1992.

Robert was the outside CPA for the Company for 5 years before being hired as CFO on July 1, 1998 pursuant to a three year employment contract. The contract provided for a monthly salary of $ 10,000 plus full family health insurance benefits and matching contributions from the Company to a 401K of up to $ 500 per month deducted from Robert salary. In December, 1999, Robert received a $ 15,000 year end bonus which was above and beyond the employment contract requirements.

Robert received stock options at a strike price of $ 2.50 per share in the privately held company according to the following vesting schedule, with a right to exercise only during the six month period before the next vesting date. Failure to timely purchase the options results in them expiring.

July 1, 1998 . . . . . . .. . . 20,000

December 31, 1998 . . . . 20,000

July 1, 1999 . . . . . . . . .. 20,000

December 31, 1999 ...... 20,000

July 1, 2000 . . .. . . . .... 20,000

December 31, 2000 ...... 20,000

July 31, 2000 . . . . . . . . 20,000

December 31, 2000 . . . 20,000

July 1, 2001 . . . . . . . . 20,000

December 31, 2001 . ... 20,000

Robert exercised his right to purchase on July 1, 1998, December 31, 1998, July 1, 1999. He did not exercise his right to purchase the December 31, 1999 stock. There are about 10,000,000 shares outstanding, 5,000,000 of them held by venture capitalists, (ABC Venture Group), and about 300,000 split among several individuals who are in travel related businesses. The rest is held by three generations of members of the Doe family. The patriarch and founder of the Company, Samuel Doe, retired in 1997 and holds 500,000 shares.

Samuel Doe personally lent Robert the money each time to purchase the shares which became vested. Samuel took a note back at an 8% interest rate. There was money paid to Samuel on the notes while Robert was alive but at the time of his death, there was a principal balance owed of about $ 50,000. At the time of the mediation, there is about $ 75,000 due with accrued interest to Samuel personally.

On November 15, 1999, Robert was diagnosed with cancer and began treatment immediately. He was advised that there was an 80% chance of full recovery. He left the premises and John Morris was named Acting CFO by the company that day.

The employment contract provides that Doe Travel Accessories Company may terminate the contract if Robert is disabled from performing “a major portion of his duties” for 180 consecutive days” as determined by the Company “acting reasonably and in good faith.” The contract provides that any modification must be made in writing and signed by both parties.

Robert had a private disability policy from his self-employment as a CPA that provided for a benefit of $ 5,000 per month after a 90 day waiting period regardless of any other income or benefits he was entitled to from other sources. The physician certified Robert as being disabled and unable to perform his regular duties as of November 16, 1999, so Robert began receiving the $ 5,000 in February, 2000 which continued until his death on July 1, 2001.

In February, 2000, Robert’s monthly salary was reduced to $ 5,000 per month. This was continued through December, 2000. Family health benefits were continued through June 30, 2001.

Robert was terminated from his employment effective June 30, 2000 in a meeting held on July 2, 2001 between him and Bruce Doe, President and CEO, and son of Samuel.

There is a memo from Robert dated June 25, 2000 to Bruce Doe, stating that Robert thinks he will be able to return in July to work in 3-5 mornings per week. It also states “I spent all last week in meetings with John Morris and other key personnel to update me” and lists various projects of the Company. A Company computer was placed in Robert’s home in April 2000 by Doe personnel.

The revenues and pre-tax profit for fiscal years ending September 30th were as follows:

1997 $ 35,000,000 Net Income $ 3,300,000

1998 40,000,000 Net Income $ 4,100,000

1999 45,000,000 Net Income $ 4,300,000

2000 54,000,000 Net Income $ 5,300,000

2001 50,000,000 Net Income $ 4,600,000

The Company has $ 28,000,000 in debt from an acquisition led by Robert shortly after he began employment which closed July 1, 1999.

PLAINTIFF TRICIA ROGERS CONFIDENTIAL FACTS

You are very bitter and angry. Robert gave up his successful CPA practice based upon lots of promises and assurances from the Doe family. Then, in his time of greatest need, they dumped him. You believe the stress of losing his job was a major set-back and that contributed to his death. He seemed to be improving before the astounding news of his termination.

Following the death of Robert, you received $ 1,000,000 in life insurance he had purchased while being self-employed that he maintained on his own while at Doe.

You know that Robert went into work many days around lunch time during the spring before he was terminated. You are aware, however, that he did not do his usual reports nor meet with lenders, the venture capitalists or senior management during the period of his Chemo and radiation treatments.

You paid for the shares and paid lots of interest to the Doe family, who are all filthy rich. They received $ 35,000,000 for the 50% interest they sold to the venture people. You need the money much more than they do, since you have three young children. You financial advisor told you he thinks the shares could be valued between $ 3- $ 4 per share based upon the Ibsen Minority evaluation method. There is no market for the shares, you want the additional shares which would have vested if the full contract had been completed. You have the ownership of the vested shares and intend to be a thorn in the side of Doe Travel, if necessary.

Before Robert became ill, you and he were specifically told by Samuel Doe many times that the loan Notes did not have to be repaid until the Doe went public and the Rogers family became rich.

After your lawyer outlines the case to the mediator, asserting that Robert had “broken” the 180 consecutive day period by working, you open the joint session with a strong statement attacking Doe Travel and the Doe family. You emphasize their insensitivity and unfair treatment of Robert after he became ill.

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Estate of Rogers v. Doe Travel Accessories Company

DEFENDANT BRUCE DOE CONFIDENTIAL FACTS

You are very bitter and angry. Robert quit his struggling CPA practice based upon full knowledge of the situation of the Company and the Doe family. He was a family friend and very sophisticated financially. You are insulted by allegations that you mistreated him. You do not believe the stress of losing his job was a major set-back that contributed to his death.

You continued medical benefits and ½ salary for 6 months beyond termination out of the goodness of your heart. While Robert was ill, he directed the reduction in salary since he was receiving the disability benefits and had no loss of income. This was all oral.

You do know from conversations with Robert while he was ill that he had maintained a life insurance policy of $ 1,000,000 he had purchased while being self-employed. The continued ownership of the vested shares by Tricia is not desirable but there are other minority shareholders already. This amounts to less than one (1%) of the outstanding shares.

You know that Robert did not come back to work since the card swipe system utilized to access and exit the premises does not show him there on any occasions for more than short time, except for a three hour time period one day the last week in June. John Morris did all the duties that used to be done by Robert. All reports were completed and signed by him without running them by Robert while he was ill. There are no pieces of paper generated from Robert other than the last memo. There are, however, some incriminating email communications between Robert and your own Assistant, Kim. They were having an affair when he became ill and Robert did meet her for lunch a number of times while he was off ill. You confronted Kim with the email which was uncovered during the investigation to respond to the lawsuit. You have no desire to disclose this to Tricia or to otherwise make this public.

Before Robert became ill, you do remember specifically that your father, Samuel Doe said many times that the loan Notes did not have to be repaid until the Doe went public. Samuel does not really care if he is re-paid, provided the lawsuit is settled. He would like closure on this matter.

The IPO never happened and revenues were down before the September 11th terrorist attacks. Things can only get worse in the short-term for the travel business. Almost all of the luggage is partially made in Ski Lanka and Taiwan, so the geo-political scene has you very concerned. The acquisition led by Robert has been a negative for the Company which is now saddled with debt. You do not believe that the shares are worth more than $ 1 to $ 2 each.

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