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Minnetonka was willing to pay $100 million to acquire all of the
JPMS stock, assuming officers' salaries were revised.9 Mr. DeJoria
insisted on a $125 million acquisition price. Mr. Taylor refused
to raise Minnetonka's bid, and the negotiations were terminated.
In the fall of 1988, Mr. Taylor again approached Messrs.
DeJoria and Mitchell. (At the time, JPMS' sales were in the $65
million range.) Mr. Taylor offered $125 million10 to acquire all
of the JPMS stock. (At this time, Mr. Taylor was unaware that Mr.
Mitchell was seriously ill.) The proposed acquisition price
assumed that: (1) Mr. DeJoria would continue managing JPMS; (2)
Mr. Mitchell would continue promoting the products for at least 18
months to 2 years as a transition period; and (3) both Messrs.
Mitchell and DeJoria would be compensated in salary and stock at a
level paid to officers of other Minnetonka subsidiaries, such as
Calvin Klein.
Mr. DeJoria did not accept Minnetonka's $125 million offer; he
believed that Minnetonka was "just a little short every time".
(Mr. DeJoria represented to Mr. Taylor that he had received from
9 Minnetonka would not have been interested in purchasing
a 49-percent interest in JPMS.
Mr. Taylor regarded the level of compensation for
Messrs. Mitchell and DeJoria as too high; he considered a more
appropriate level of compensation to be in the $500,000 to $1
million range, including performance bonuses.
10 In determining the value of JPMS, Mr. Taylor considered
the company's growth potential. In the fall of 1988, he thought
that JPMS could perhaps double or triple in size within 5 years.
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