ABUSE. Here's how it works in a /real/ startup (I know, because I just went through this):
At hire, I ask founder "what do you think your exit looks like?" He puts it in terms of equity meaning for employees, "I am aiming for at least enough for each employee to purchase a nice home in this area."
A month after hire, at the first scheduled board meeting, I am granted options worth 0.5% of equity in the company, vesting over 4 years (I'm around the 12th employee). I am paid a salary commensurate with the rest of the industry in the area, as well as given full health coverage.
After about 2 years, the company is sold, making my 0.5% worth almost exactly what he said it would be worth, enough to purchase a nice home with cash outright.
Your founder is exploiting you. Don't dawdle dealing with this until you are no longer essential. You should lay it out for him, exactly as-is: you get your equity grant and a pay raise immediately, or you are walking.
Keep in mind, your founder might be trying to exploit you another way, too: he may not be planning an exit at all, or for a very long time. Meaning, equity is worthless (as long as he retains ownership). If he's making a lifestyle business out of this, equity is a big 0. Don't let him grant you equity but keep your wages at stupid levels.
Trust me, once you get bought out, the transition to "someone else runs the show now" is super painful. Even if you are just an employee. Especially if you were the founder.
Getting a buyout like Omnitures is the goal, but it really does feel like selling your soul when it happens. What once made sense and was fun, suddenly is run by clowns and is drudgery.