Estate of Paul Mitchell, Deceased - Page 4




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               From 1984 until April 1989, Mr. Mitchell served as president           
          of JPMS; Mr. DeJoria served as chairman of the board, chief                 
          executive officer, chief financial officer, and secretary.                  
               JPMS adopted a fiscal year ending July 31.  Beginning with the         
          fiscal year ended July 31, 1984, the corporation elected subchapter         
          S status for Federal income tax purposes.                                   
               As of April 21, 1989, the stock in JPMS had not been                   
          registered under any securities law; moreover, neither Mr. DeJoria          
          nor Mr. Mitchell had ever contemplated such a registration or a             
          public offering of JPMS’s common stock.                                     
               JPMS products were sold only through professional salons.  Mr.         
          Mitchell was the heart of JPMS’s connection to hair stylists, who           
          were the foundation for JPMS’s marketing strategy of promoting and          
          selling products that Mr. Mitchell developed.  Mr. Mitchell was             
          JPMS’s creative trendsetter, and his hair sculpting technique               
          revolutionized hair styling.  Mr. Mitchell was the focal point of           
          JPMS’s advertising.  In 1986, JPMS began using photographs of Mr.           
          Mitchell in its advertising.                                                
               Mr. DeJoria ran the daily operations at JPMS, making all               
          management decisions and having all managers reporting directly to          
          him.  Mr. Mitchell, however, had the last word on all policy                
          matters.                                                                    
               JPMS was known for its styling products.  Over the years, JPMS         
          developed into a major force in the hair care industry, with brand          






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