Estate of Paul Mitchell, Deceased - Page 9




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               To a degree, the 1989 advertising campaign (which was shot in          
          November or December 1988) still focused on Mr. Mitchell.  However,         
          Mr. DeJoria and JPMS began shifting emphasis away from Mr. Mitchell         
          as an individual and towards the products themselves.                       
               During the latter part of Mr. Mitchell’s illness, Messrs.              
          DeJoria and Mitchell discussed Mr. DeJoria’s future compensation.           
          Mr. DeJoria promised Mr. Mitchell that in the event of Mr.                  
          Mitchell’s death, he would reduce his management fee from $15               
          million to $10 million for JPMS’s fiscal year ending July 31, 1990.         
          However, Mr. DeJoria’s $2 million salary for that year was to               
          remain intact.                                                              
              Mr. Mitchell died on April 21, 1989, at the age of 53.                 
               As of April 21, 1989, the common stock of JPMS was owned as            
          follows:                                                                    
                                   Number of Shares         Percent                   
          Mr. DeJoria                   1,250          50.00                          
          The trust                     1,226               49.04                     
          Ms. Braa1                     16                  0.64                      
          Angus Mitchell1               8                    0.32                     
          Total                       2,500                100.00                     
               1    Ms. Braa and Angus Mitchell, Mr. Mitchell’s son, acquired         
          their shares by gift from Mr. Mitchell.                                     
               On June 29, 1989, Patrick Fujieki, trustee of the trust, and           
          Michaeline Re2 were elected to the JPMS board.  (The board thus             


               2    Ms. Re, an attorney, joined JPMS on Jan. 1, 1989, as              
          vice president and general counsel, to oversee the correction of            
          certain operational problems.  On Mar. 1, 1989, she became JPMS’s           
                                                             (continued...)           





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