Estate of Paul Mitchell, Deceased, Patrick T. Fujieki, Executor - Page 30

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          JPMS on the Trust's behalf,  alleging  that  Mr.  DeJoria's                 
          compensation was excessive.  The suit was filed in both the                 
          Superior Court for the State of California and the U.S. District            
          Court for the Central District of California.                               
               In response to Mr. Fujieki's allegations of shareholder                
          derivative claims, JPMS formed a Special Litigation Committee (SLC)         
          comprising JPMS' outside directors: Kenin Spivak, Paul Rupert, and          
          David Tisdale.  Among other things, the SLC was to evaluate Mr.             
          Fujieki's allegations to decide whether to pursue the derivative            
          claims on JPMS' behalf.  The SLC hired Towers Perrin as executive           
          compensation consultants to assist the SLC.                                 
               In April 1995, the litigation between the Trust and JPMS was           
          settled; the SLC determined that the settlement agreement was in            
          JPMS' best interests.  The JPMS Board and shareholders, as well as          
          the court, approved the settlement agreement.  Neither the SLC, the         
          JPMS Board, nor the  court  determined  that  Mr.  DeJoria's                
          compensation was unreasonable.                                              
          N.  The Estate Tax Return, Notice of Deficiency, and Petition               
               On its estate tax return, petitioner valued the Trust's                
          interest in the 1,226 shares of JPMS common stock at the moment of          
          decedent's death at $28.5 million.  This figure was based upon a            
          KPMG valuation analysis prepared at Mr. Fujieki's request. (KPMG            
          utilized both the comparable companies and discounted cash-flow             
          analyses.)                                                                  





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