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Messrs. Mitchell and DeJoria were unable to find anyone willing to
provide financial assistance; thus, they pooled their resources of
$700 to purchase an answering machine, bottles, and caps and hire
an artist to design a logo for their labels. Mr. DeJoria persuaded
a cosmetics laboratory to manufacture the first batch of products
on credit. Instead of the orange and white bottles Mr. Mitchell
had previously used, these products were packaged in white bottles
with Paul Mitchell's name displayed in black lettering down the
side.
At all relevant times, Paul Mitchell products were sold to the
public only through professional hair salons.
1. Structure and Ownership
On March 31, 1980, Messrs. Mitchell and DeJoria formed Paul
Mitchell Systems, Inc. On May 9, 1985, the corporation changed its
name to John Paul Mitchell Systems (JPMS). Messrs. Mitchell and
DeJoria granted JPMS all proprietary and distribution rights to the
hair and skin products that Mr. Mitchell developed (or had
developed under his direction), including the products' trademark,
service mark, or other intellectual property rights.
JPMS' articles of incorporation authorized the issuance of
10,000 shares of common stock. Between March 31, 1980, and April
21, 1989 (the date of Mr. Mitchell's death), JPMS had 2,500 shares
issued and outstanding. Article VII of JPMS' bylaws provided that
any transfer of JPMS stock was subject to a right of first refusal,
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Last modified: May 25, 2011