CARSON INC, S-1/A, 1996-10-09

CARSON INC
S-1/A, 1996-10-09
PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 1996

REGISTRATION NO. 333-10191
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- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------
CARSON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

----------------

DELAWARE 2844 06-142-8605
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)

64 ROSS ROAD
SAVANNAH INDUSTRIAL PARK
SAVANNAH, GA 31405
(912) 651-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

DR. LEROY KEITH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
64 ROSS ROAD
SAVANNAH INDUSTRIAL PARK
SAVANNAH, GA 31405
(912) 651-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

----------------

IT IS REQUESTED THAT COPIES OF COMMUNICATIONS BE SENT TO:
LAWRENCE LEDERMAN, ESQ. GERALD S. TANENBAUM, ESQ.
ARNOLD B. PEINADO, III, ESQ. HELENE R. BANKS, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY CAHILL GORDON & REINDEL
ONE CHASE MANHATTAN PLAZA 80 PINE STREET
NEW YORK, NY 10005 NEW YORK, NY 10005
(212) 530-5000 (212) 701-3000
----------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.

----------------

If any of the Securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, check the following box: [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration Statement number of the earlier
effective registration statement for the same offering. [_]
____________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
____________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent offering outside the United
States and Canada (the "International Prospectus"). The two prospectuses are
identical except for the front and back cover pages, the inside front cover
page and the section entitled "Underwriting." The form of U.S. Prospectus is
included herein and is followed by the alternate pages to be used in the
International Prospectus. Each of the alternate pages for the International
Prospectus included herein is labeled "Alternate Page for International
Prospectus." Final forms of each Prospectus will be filed with the Securities
and Exchange Commission under Rule 424(b).
<PAGE>

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED OCTOBER 9, 1996
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS

4,190,000 SHARES

CARSON, INC.

CLASS A COMMON STOCK

-----------
Of the 4,190,000 shares of Class A Common Stock of Carson, Inc. offered
hereby, 2,484,500 shares are being offered by Carson, Inc. (the "Company") and
1,705,500 shares are being offered by the Selling Stockholders. See "Principal
and Selling Stockholders." The Company will not receive any of the proceeds
from the sale of the shares of Common Stock by the Selling Stockholders.

Of the shares being offered hereby, 3,352,000 shares are being offered for
sale initially in the United States and Canada by the U.S. Underwriters and
838,000 shares are being offered for sale initially in a concurrent offering
outside of the United States and Canada by the International Managers. The
initial public offering price and the underwriting discount per share are
identical for both Offerings. Of the shares being offered hereby, 400,000 will
be reserved for sale to certain directors, officers, employees, business
associates and related persons of the Company. See "Underwriting."

Upon consummation of the Offerings, the Company's issued and outstanding
capital stock will consist of 4,190,000 shares of Class A Common Stock offered
hereby, 1,859,677 shares of Class B Common Stock and 8,306,014 shares of Class
C Common Stock, each with a par value of $.01 per share (the "Common Stock").
The Class A Common Stock entitles each holder to one vote per share and the
Class C Common Stock entitles each holder to ten votes per share. The Class B
Common Stock generally is not entitled to vote on any matter submitted for the
vote of stockholders. Immediately after the Offerings, the percentage of the
combined voting power with respect to all matters submitted for the vote of all
stockholders held by holders of the Class A Common Stock, Class B Common Stock
and Class C Common Stock will be 4.8%, 0% and 95.2%, respectively. See
"Description of Capital Stock." Immediately after the Offerings, DNL Partners,
Limited Partnership will have approximately 75.8% of the combined voting power.
See "Principal and Selling Stockholders."

Prior to the Offerings, there has been no public market for the Class A
Common Stock. It is currently anticipated that the initial public offering
price will be between $14.00 and $16.00 per share. For a discussion relating to
the factors to be considered in determining the initial public offering price,
see "Underwriting."

The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "CIC," subject to official notice of issuance.

SEE "RISK FACTORS," BEGINNING ON PAGE 11, FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON
STOCK OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT (1) COMPANY (2) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
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Total(3)............... $ $ $ $
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</TABLE>
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(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the U.S. Underwriters and the International
Managers options, exercisable within 30 days after the date hereof, to
purchase up to an additional 502,800 shares and 125,700 shares of Class A
Common Stock, respectively, solely to cover over-allotments, if any. If
such options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ , respectively.
See "Underwriting."

-----------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Class A Common Stock will be made in
New York, New York on or about , 1996.

-----------

MERRILL LYNCH & CO. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

-----------

The date of this Prospectus is , 1996.
<PAGE>

[ART WORK]

[pictures of models, product advertisements and
packaging, brand names and logos, text as follows:
900 million people of African descent; Carson
products--spanning the globe]

The names Dark & Lovely(R), Dark & Lovely Excelle(R), Dark & Natural(R),
Beautiful Beginnings(R), Reviving Colors(R), and Magic(R) are included among
the registered trademarks of the Company. The names Fail Safe(TM),
DL 2000(TM), Comfort Plus(TM) and Color Care(TM) are the subject of pending
trademark registrations.

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S
CLASS A COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the related notes
thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated or
where the context otherwise requires, (i) all information in this Prospectus
gives effect to the Recapitalization (as defined herein) and assumes no
exercise of the Underwriters' over-allotment options, and (ii) all references
herein to the "Company" refer to Carson, Inc., Aminco, Inc. (the "Predecessor")
and their direct and indirect subsidiaries. Unless otherwise indicated, certain
industry data and data regarding the Company's products in this Prospectus are
based on (i) the December 1995 Combined Food and Drug Store Report (the "Towne-
Oller Report") published by Towne-Oller & Associates, Inc., a market research
organization and a subsidiary of Information Resources Inc., and (ii) a July
1995 report published by Packaged Facts, an independent market research company
that provides market data to consumer products companies and relies on a
variety of information sources including the Towne-Oller Report (the "Packaged
Facts Report"). Towne-Oller's data is based on market samples from food and
drug chain stores, which constitute approximately 20% of the total ethnic
health and beauty aids product distribution channels, and is therefore limited
in scope. While the Company believes these reports to be reliable, the Company
has not independently verified the data contained therein. References herein to
fiscal years refer to the Company's fiscal year ending March 31 in the year
referenced.

THE COMPANY

GENERAL

The Company is a leading manufacturer and marketer in the U.S. retail ethnic
hair care market for African-Americans. The Company believes that it is one of
the leading global manufacturers and marketers of ethnic hair care products for
persons of African descent. The Company's flagship brand, Dark & Lovely, is the
most widely recognized ethnic brand name in the U.S. retail ethnic hair care
market. The Company currently sells over 60 different products under five
principal brand names, including Dark & Lovely, Excelle, Beautiful Beginnings,
Dark & Natural and Magic. The majority of the Company's sales are derived from
four categories of the ethnic health and beauty aids market: hair relaxers and
texturizers, which are used to chemically treat and straighten hair
(constituting approximately 50% of the Company's net sales in fiscal 1996),
hair color, shaving products and hair care maintenance products. The Company's
products are specifically formulated to address the unique physiological
characteristics of hair of persons of African descent, which typically include
curliness and dryness. The Company markets its products in the United States
with its own experienced direct sales force. The Company also currently markets
its products in 60 countries outside of the United States, primarily through
local distributors. In fiscal 1996, approximately 23.8% of the Company's net
sales were derived from sales within these countries.

On August 23, 1995, the Predecessor was acquired (the "Acquisition") by an
investor group for a purchase price of approximately $95 million (inclusive of
transaction costs), funded primarily with Company debt. This investor group
assembled a new management team to focus on enhancing the Company's position in
the ethnic hair care market. Several important initiatives have been undertaken
by the new management, including establishing a manufacturing facility in South
Africa, expanding the in-house direct sales force, selecting a new ethnic-
oriented advertising agency, reinvigorating the product line with new packaging
and accelerating the introduction of new products. The Company experienced a
17.5% increase in net sales from $58.1 million in fiscal 1995 to $68.3 million
in fiscal 1996 and a 45.6% increase in operating income from $8.2 million in
fiscal 1995 to $12.0 million in fiscal 1996.

ETHNIC MARKET LEADERSHIP

3
<PAGE>

products). The Company attributes its leading market position to its strong
brand names, combined with its direct sales force, broad distribution, research
and development capabilities and experienced management team. Because of these
strengths, the Company believes that it has a competitive advantage over both
the companies specializing in products for the ethnic hair care market and the
few general market companies that compete in the ethnic hair care market, but
whose principal resources are targeted to the general health and beauty aids
market.

. Strong brands. The Company currently sells its products under five
principal brand names including Dark & Lovely, Excelle, Beautiful
Beginnings, Dark & Natural and Magic. The Company's flagship brand, Dark
& Lovely, is the most widely recognized ethnic brand name in the U.S.
retail ethnic hair care market for African-Americans. The Company
believes that its brand strength is based upon product quality, properly
targeted advertising, package design, reputation for innovation and
focused commitment to the unique needs of ethnic consumers.

. Experienced Sales Force and Broad Distribution. In April 1995, the
Company established a direct sales force to enhance its ability to
further penetrate existing markets with both current and new products.
The sales force has significant sales experience both with major
consumer product companies and ethnic hair care competitors. The Company
believes that it now has the largest direct sales force serving the U.S.
retail ethnic hair care market. Historically, the Company used
commissioned sales brokers, as is the industry norm, who tended to have
conflicting brand loyalties and provided minimal marketing and sell-
through support. In the United States, the Company benefits from having
its extensive product line distributed broadly through three principal
channels: (i) multi-warehouse chains, including mass merchandisers
(e.g., Wal-Mart, K-Mart), major drug chains (e.g., Walgreens, Revco),
food chains (e.g., Winn Dixie, Kroger) and discount chains (e.g., Family
Dollar, Dollar General), (ii) beauty and barber supply stores ("B&Bs")
such as Alberto-Culver Company's Sally's Beauty Supply stores and
members of the National Beauty Supply Dealers Association, and (iii)
ethnic product distributors.

. Research and Development. The Company believes that its heritage of
technological innovation and its focused research and development
("R&D") effort are important to maintaining its market leadership
position. Three of the ethnic hair care industry's most significant
innovations were introduced by the Company: the first hair color
developed exclusively for hair of persons of African descent (1972), the
first no-lye relaxer, which provided a safe relaxer product for home use
(1978), and the Fail Safe technology for no-lye relaxers (1993), which
eliminates problems associated with imprecise mixing which can make no-
lye products too weak, thereby impacting straightening, or too strong,
leading to hair damage. One of the most significant sources of consumer
complaints in the industry is inconsistent results caused by mixing
errors. The Company believes that its R&D department, led by two
industry experienced chemists with Ph.D.s and including nine other
researchers and technicians, represents the largest R&D effort focused
on the ethnic hair care market.

. Experienced Management Team. In connection with the Acquisition, the
senior management of the Predecessor was replaced. A team of seasoned
senior executives with extensive experience in the ethnic market and
consumer products industry was recruited to build on the Company's
strong position in the global ethnic hair care market. As Chairman and
Chief Executive Officer, Dr. Leroy Keith, former President of Morehouse
College and Director of the Predecessor, entrepreneur and prominent
member of the African-American community, provides the Company with
leadership and vision. Joyce M. Roche, President and Chief Operating
Officer, has over 20 years of experience in the health and beauty aids
industry, including positions as Senior Vice President of Marketing and
Vice President of Global Marketing at Avon Products, Inc. ("Avon") and
Director of Marketing at Revlon, Inc. ("Revlon"). Dennis Smith,
Executive Vice President of Sales, has over 20 years of experience in
the ethnic hair

4
<PAGE>

care industry, including senior management positions with a competitor
and 14 years with the Company. Miriam Muley, Executive Vice President of
Marketing, has over 17 years of consumer products industry experience,
having held marketing positions at Avon, Bristol-Myers Squibb Company's
Clairol division and Johnson & Johnson. This management team has focused
the Company's strategy to further develop the ethnic hair care market
both in the United States and internationally.

GROWTH STRATEGY

The Company believes that it is well positioned to grow both internally and
through acquisitions, in order to enhance its market position in the ethnic
hair care market. The Company intends to achieve its goals by (i) increasing
its share of existing markets, (ii) increasing international expansion, (iii)
leveraging brands into new categories, (iv) targeting the U.S. professional
salon market and (v) capitalizing on selective acquisition opportunities.

. Increase Share of Existing Markets. Product innovation and ongoing
upgrading of existing products are the cornerstone of the Company's
efforts to increase its market share in existing markets. The Company
recently incorporated into all of its relaxer products its latest
innovation in relaxer technology, called Fail Safe, which eliminates the
problem of mixing errors which occur with the in-home use of no-lye
relaxers. The Company's Fail Safe technology assures that the consumer
will not make a mixing error and thereby vary the relaxer strength. The
Company has been on an aggressive schedule of new product introductions
or existing product upgrades during the last several years with over 10
products that have been recently introduced or that will be introduced
during the next six months, including improved Dark & Lovely and Excelle
products, a new shampoo and conditioner to complement the Company's hair
color products and a new Magic mild cream formula shaving product.

. Increase International Expansion. The Company believes it is poised for
growth in markets such as Africa, Brazil and the Caribbean, each of
which has a significant concentration of consumers of African descent.
The Company currently markets its entire product line in over 60
countries worldwide under the same brand names as it uses in the United
States. International sales in fiscal 1996 of $16.3 million represented
23.8% of the Company's fiscal 1996 net sales and increased 48.0%
compared to fiscal 1995.

-- Africa: In fiscal 1996, the Company had sales of approximately $7.7
million to 17 of the 55 African countries. The Company commenced its
own manufacturing operations in South Africa in March 1996 to
support its African strategic initiatives. The Company's key
strategic initiatives to achieve growth throughout the African
continent are to: (i) continue market penetration and expansion of
the core Southern African business; (ii) establish and develop
distribution and/or manufacturing facilities in East Africa and West
Africa; (iii) extend existing product lines to include related
product categories such as cosmetics; and (iv) identify selected
strategic acquisitions.

5
<PAGE>

-- Caribbean: In order to increase sales penetration in the Caribbean
region, the Company recently appointed a Caribbean Sales Manager and
is investigating whether to establish a factory in Jamaica which
would enable the Company to produce in a Caribbean Community and
Common Market (CARICOM) nation, thereby substantially reducing taxes
and tariffs. The Company has sold products into the Caribbean on an
export basis through brokers since before 1975, but expects to
benefit from a more focused local marketing and manufacturing
presence.

. Leverage Brands into New Product Categories. The Company believes that
its flagship Dark & Lovely brand name is transferable to other ethnic
health and beauty aids categories, including cosmetics. According to the
Packaged Facts Report, the cosmetics segment of the U.S. retail ethnic
health and beauty aids market was projected to be approximately $251
million in retail sales in 1995, and is forecasted to grow at 15% per
year until 1999. The Company intends to enter the ethnic cosmetics
market with a product line that is consistent with the positioning of
its ethnic hair care brands. The Company intends to take advantage of
(i) its ability to introduce its consumers to the Dark & Lovely cosmetic
line through inserts in Dark & Lovely relaxer and hair color kits (which
total 11 million units annually), (ii) its strong relationships with its
current customers which will enable it to distribute new cosmetics
products efficiently through the same channels, and (iii) its exclusive
contract manufacturing arrangement with AM Cosmetics, Inc. ("AM
Cosmetics"), a leading low-cost manufacturer of cosmetics. The Company
is engaged in market research and product development and, although no
specific product launch date has been set, expects to enter the ethnic
cosmetics market by the end of 1997.

. Target the U.S. Professional Salon Market. The Company believes that its
R&D expertise and heritage as the technological innovator in the ethnic
hair care market will facilitate its entry into the United States
professional salon market. The Company is developing a new professional
product line under a distinct brand name that will offer certain
technological advantages versus products currently offered in salons, as
well as a complementary line of hair care maintenance products for
exclusive purchase in salons. The Company estimates that there are in
excess of 28,000 African-American hair care salons in the United States
and Company market research indicates that African-American women are
twice as likely as their Caucasian counterparts to patronize salons. The
Company believes that it is well positioned to deliver products to the
salon market, in significant part because many ethnic stylists purchase
their supplies at B&Bs, a distribution channel in which the Company is
well established. Additionally, the Company has successfully entered the
professional salon market internationally through its South African
subsidiary and is implementing a professional salon strategy in other
parts of Africa as well as in Brazil. The Company will use the expertise
gained from its international efforts to create teams of technical
experts to educate salon owners and stylists about the new brand and
provide ongoing training and education on the latest techniques in
ethnic hair care through trade shows, clinics and newsletters. The
Company is engaged in market research and product development and
although no specific launch date has been set, expects to be able to
enter the salon market by the end of 1997.

. Capitalize on Selective Acquisition Opportunities. In addition to
internally generated growth, the Company will consider the selective
acquisition of related brands and businesses which would increase the
Company's market share or expand and complement its product lines. The
Company does not currently have any outstanding agreements, commitments
or understandings to make any acquisitions or enter into any joint
ventures. There can be no assurance that suitable acquisition or joint
venture candidates can be identified, or if an acquisition is completed,
that the operations will be successfully integrated or otherwise not
have an adverse effect on the Company.

6
<PAGE>

BACKGROUND

On August 23, 1995, DNL Savannah Acquisition Corp. ("Acquisition Corp."), a
wholly-owned subsidiary of the Company, acquired all of the stock of the
Predecessor in the Acquisition. Acquisition Corp. was formed by Morningside
Capital Group, L.L.C. ("Morningside"), as financial sponsor, on behalf of an
investor group consisting of DNL Partners, Limited Partnership ("DNL
Partners"), a partnership formed by the principals of Morningside, the lenders
providing the acquisition financing, and certain members of management,
specifically, Dr. Leroy Keith and Mr. Bradford N. Creswell. The Predecessor was
acquired for a purchase price of approximately $95 million (inclusive of
transaction costs), funded primarily with Company debt. See "Use of Proceeds."
The principal shareholder of the Predecessor, Mr. A. Minis, Jr., owned and
controlled the Predecessor since 1951 when he purchased it from its original
founders and owners who had started the business in 1901 with a single
product--Magic shaving powder. The Minis family and certain related trusts and
entities (the "Selling Stockholders") will sell all of their shares of Common
Stock in the Offerings. Concurrent with the Acquisition, Acquisition Corp.
merged into Carson Products Company ("Carson Products").

The Company's equity structure has been altered by the filing of its Amended
and Restated Certificate of Incorporation (the "Recapitalization"). The Company
has effected the conversion of each outstanding share of the Company's former
Class A common stock into 11,370 shares of its newly created Class C Common
Stock and the conversion of each outstanding share of the Company's former
Class B common stock into 11,370 shares of its newly created Class B Common
Stock. After the Recapitalization, holders of Class A Common Stock, Class B
Common Stock and Class C Common Stock have 4.8%, 0% and 95.2% of the combined
voting power of the outstanding shares of Common Stock of the Company. See
"Description of Capital Stock."

Upon the consummation of the Offerings, senior management will own
approximately 6.2% of the total number (including shares held in a voting
trust), and 4.4% of the combined voting power, of the outstanding shares of
Common Stock of the Company. DNL Partners will own approximately 46.1% of the
total number and 75.8% of the combined voting power of the outstanding shares
of Common Stock of the Company.

THE OFFERINGS

The offering of 3,352,000 shares of Class A Common Stock in the United States
and Canada (the "U.S. Offering") and the offering of 838,000 shares of Class A
Common Stock outside the United States and Canada (the "International
Offering") are collectively referred to herein as the "Offerings."

<TABLE>
<S> <C>
Class A Common Stock
offered(a):
By the Company........ 2,484,500 shares
By the Selling Stock-
holders.............. 1,705,500 shares
Total............... 4,190,000 shares
Common Stock to be Out-
standing After the Of-
ferings................ 4,190,000 shares of Class A Common Stock(b)
1,859,677 shares of Class B Common Stock(c)
8,306,014 shares of Class C Common Stock(c)
Total............... 14,355,691 shares of Common Stock(b)

=====
Voting Rights........... The Class A Common Stock and Class C Common Stock vote
as a single class on all matters, except as otherwise
required by law, with each share of Class A Common
Stock entitling its holder to one vote and each share
of Class C Common Stock entitling its holder to ten
votes. The Class B Common Stock generally is not
entitled to vote on any matter submitted for the vote
of stockholders. See "Description of Capital Stock."
</TABLE>

7
<PAGE>

<TABLE>
<S> <C>
Use of Proceeds......... The net proceeds to be received by the Company from the
Offerings (estimated to be $33.7 million based on an
assumed initial public offering price of $15.00 per
share, the midpoint of the estimated range of the
initial public offering price) will be used to repay
certain outstanding indebtedness. The Company will not
receive any proceeds from the sale of shares by the
Selling Stockholders. See "Use of Proceeds."
New York Stock Exchange
Symbol................. "CIC"
</TABLE>
- --------
(a) Of the shares being offered hereby, 400,000 shares of Class A Common Stock
will be reserved for sale to certain directors, officers, employees,
business associates and related persons of the Company. See "Underwriting."
(b) Excludes 400,000 shares of Class A Common Stock reserved for issuance
pursuant to the Company's 1996 Non-Employee Directors Equity Incentive
Program (including 10,500 shares issuable upon the exercise of options to
be granted to the Company's non-employee directors immediately prior to the
consummation of the Offerings). Also excludes 600,000 shares of Class A
Common Stock reserved for issuance pursuant to the Company's 1996 Long-Term
Incentive Plan (including 59,500 shares issuable upon the exercise of
options to be granted to the Company's management immediately prior to the
consummation of the Offerings). The exercise price for the options to be
granted under each of these programs will be the initial public offering
price of the Class A Common Stock.
(c) Each share of Class B Common Stock and Class C Common Stock is convertible
at any time at the option of the holder thereof into one share of Class A
Common Stock and converts automatically into one share of Class A Common
Stock upon transfer to any person other than specified permitted
transferees. The Class C Common Stock will automatically convert to Class A
Common Stock if, at any time, the then outstanding Class C Common Stock
represents less than 9% of the outstanding shares of Common Stock. See
"Description of Capital Stock."

RISK FACTORS

An investment in the Class A Common Stock involves certain risks associated
with the Company's business and the industry in which it competes, including
(i) risks inherent in the Company's growth strategy, (ii) the Company's
dependence on its trademarks in its current and future markets, (iii) increased
risk of disruption of the business because of the concentration of the
Company's manufacturing operations in Savannah, Georgia, (iv) the Company's
reliance on certain of its suppliers, (v) social, political and economic risks
that may affect the Company's foreign operations or cause foreign currency
fluctuations, (vi) competition, (vii) quarterly fluctuations in operating
results, (viii) changes in the retail industry, and (ix) the effect on the
Company of compliance with environmental laws, consumer laws and government
regulation. For a more detailed discussion of these and certain other risks,
see "Risk Factors."

8
<PAGE>

SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA(A)
(IN THOUSANDS, EXCEPT PER SHARE DATA AND FOOTNOTES)

<TABLE>
<CAPTION>
PREDECESSOR COMPANY PREDECESSOR COMPANY
------------------------------- --------------- -------------- --------------
FULL FISCAL YEAR 1996
-----------------------------
YEAR ENDED
MARCH 31, APRIL 1 AUGUST 23, 1995 THREE MONTHS THREE MONTHS
---------------- TO AUGUST 22, TO MARCH 31, ENDED JUNE 30, ENDED JUNE 30,
1994 1995 1995 1996 1995 1996
------- ------- ------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $50,108 $58,126 $26,854 $41,465 $17,271 $18,799
Cost of sales........... 23,622 25,692 11,513 18,629 7,351 8,135
------- ------- ------- ------- ------- -------
Gross profit........... 26,486 32,434 15,341 22,836 9,920 10,664
SG&A expenses........... 21,473 23,134 9,743 14,642 6,545 6,673
Incentive compensation.. 800(b)
Depreciation and amorti-
zation................. 828 1,085 502 1,331(c) 301 629(c)
------- ------- ------- ------- ------- -------
Operating income....... 4,185 8,215 5,096 6,863 3,074 2,562
Interest expense........ 97 136 56 4,487(c) 34 1,826(c)
Other income............ 699 783 1,137(d) 182 328 37
------- ------- ------- ------- ------- -------
Income from continuing
operations before in-
come taxes and changes
in accounting princi-
ples................... 4,787 8,862 6,177 2,558 3,368 773
Provision for income
taxes.................. 1,704 3,174 2,243 1,352 1,230 465
------- ------- ------- ------- ------- -------
Income from continuing
operations before
changes in accounting
principles............. $ 3,083 $ 5,688 $ 3,934 $ 1,206 $ 2,138 $ 308
======= ======= ======= ======= ======= =======
Net income............. $ 1,897 $ 5,438 $ 3,934 $ 1,206 $ 2,138 $ 308
======= ======= ======= ======= ======= =======
Net income per
share(e)............... $ .10 $ .03
======= =======
Weighted average shares
outstanding............ 11,871 11,871
======= =======

<CAPTION>
PREDECESSOR
YEAR ENDED PREDECESSOR COMPANY
MARCH 31, COMBINED THREE MONTHS THREE MONTHS
---------------- YEAR ENDED ENDED JUNE 30, ENDED JUNE 30,
1994 1995 MARCH 31, 1996 1995 1996
------- ------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Capital expenditures.... $ 1,515 $ 979 $ 1,953 $ 263 $ 540
EBITDA(f)............... 5,121 9,053 13,977 3,452 3,185(b)
EBITDA as a percentage
of net sales(f)........ 10.2% 15.6% 20.5% 20.0% 16.9%(b)
<CAPTION>
PREDECESSOR COMPANY
COMBINED THREE MONTHS THREE MONTHS
YEAR ENDED ENDED JUNE 30, ENDED JUNE 30,
MARCH 31, 1996 1995 1996
--------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
PRO FORMA STATEMENT OF OPERATIONS DATA(G):
Net sales............................................. $68,319 $17,271 $18,799
Operating income...................................... 11,426 2,587 2,682(b)
Interest expense...................................... 2,678 674 570
Net income............................................ 5,117 1,236 1,161(h)
Net income per share(i)............................... .36 .09 .08
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------
ACTUAL AS ADJUSTED(J)
------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $14,860 $16,584
Total assets............ 92,246 88,515
Total long-term debt
(excluding current
portion)............... 67,219 32,927
Stockholders' equity.... 10,091 45,539
</TABLE>

(footnotes on following page)

9
<PAGE>

- --------
(a) The period beginning August 23, 1995 reflects data of the Company and its
subsidiaries. The periods prior to and including August 22, 1995 reflect
data of the Predecessor, all of the stock of which was acquired by the
Company on August 23, 1995. See "The Company--Background." Because of the
revaluation of the assets and liabilities acquired and the related impact
to the statement of operations, the financial statements of the Predecessor
for the periods prior to August 23, 1995 are not strictly comparable to
those of the Company subsequent to that date.
(b) The Company recognized $0.8 million of incentive compensation expense
during the quarter ended June 30, 1996 relating to anticipated costs under
certain long-term incentive compensation agreements. Upon completion of the
Offerings, the Company will record additional compensation charges of
approximately $0.6 million (based on the midpoint of the estimated range of
the initial public offering price) principally for final payments under
these awards.
During August 1996, several outside directors and members of senior
management purchased 115,373 and 385,818 shares, respectively, of the
Company's Common Stock. The purchase of such shares by senior management was
financed with $1.3 million (net of discount) in non-interest bearing long-
term full recourse loans from the Company. The Company will record
additional non-cash compensation expense of approximately $6.8 million (with
no associated income tax benefits) during the three months ended September
30, 1996 for the excess of the estimated initial public offering price over
the actual purchase price of such shares and for the shares of Carson South
Africa awarded to certain members of its management. See "Management."
(c) Results for the period from August 23, 1995 to March 31, 1996 include $0.7
million of amortization expense related to acquired goodwill and $4.4
million of interest expense related to debt used to fund the Acquisition.
Results for the three months ended June 30, 1996 include $0.3 million of
amortization expense related to acquired goodwill and $1.8 million of
interest expense related to debt used to fund the Acquisition.
(d) Includes realized gains of $0.8 million recorded by the Predecessor for
investment securities of the Predecessor which were sold prior to the
Acquisition. The cash received from the sale of such investment securities
was used to fund a portion of the consideration for the Acquisition.
(e) Net income per share data has been computed assuming there were 11,871,191
weighted average shares of Common Stock outstanding for the periods
presented, after giving effect to the Recapitalization and shares of
Common Stock purchased by several outside directors and members of senior
management.
(f) EBITDA represents earnings before interest expense, provision for income
taxes, depreciation and amortization, adjusted to exclude investment income
and the pre-tax effect of changes in accounting principles. While EBITDA
should not be construed as a substitute for net income or a better
indicator of liquidity than cash flow from operating activities, which are
determined in accordance with generally accepted accounting principles, it
is included herein to provide additional information with respect to the
ability of the Company to meet its future debt service, capital expenditure
and working capital requirements. EBITDA is not necessarily a measure of
the Company's ability to fund its cash needs.
(g) The unaudited pro forma statements of operations data have been prepared to
give effect to the Acquisition, the Recapitalization, the Offerings and the
application of the net proceeds therefrom, and the refinancing of the
Senior Bank Credit Facility as if these events had occurred on April 1,
1995. See "Unaudited Pro Forma Financial Data."
(h) Excludes extraordinary loss of approximately $3.6 million, net of tax,
which will result from prepayment penalties and the write-off of
unamortized debt discount and deferred financing costs associated with the
repayment of the Senior Bank Credit Facility, the Senior Subordinated
Notes, and the PIK Subordinated Notes.
(i) Pro forma net income per share has been computed assuming there were
14,355,691 weighted average shares of Common Stock outstanding for the
periods presented, after giving effect to the Recapitalization, the
Offerings and 501,191 shares of Common Stock purchased by several outside
directors and members of senior management.
(j) The unaudited as adjusted balance sheet data as of June 30, 1996 has been
prepared to give effect to the purchase of shares of Common Stock by
several outside directors and members of senior management, the Offerings
and the application of the net proceeds therefrom as if these events had
occurred on June 30, 1996. See "Use of Proceeds" and "Capitalization."

10
<PAGE>

RISK FACTORS

Prospective purchasers of the shares of Class A Common Stock offered hereby
should consider carefully all of the information set forth in this Prospectus
and, in particular, should evaluate the following risks in connection with an
investment in the Class A Common Stock being offered hereby.

RISK OF INABILITY TO SUCCESSFULLY IMPLEMENT GROWTH STRATEGY

The Company's growth strategy is to (i) increase its share of existing
markets, (ii) increase international expansion, (iii) leverage brands into new
product categories, (iv) target the U.S. professional salon market and (v)
capitalize on selective acquisition opportunities. The Company's continued
ability to implement its growth strategy successfully will be dependent on
business, financial and other factors beyond the Company's control, including
prevailing economic conditions, changes in consumer preferences and changes in
the competitive environment. There can be no assurance that the Company will
continue to be successful in the implementation of its growth strategy. See
"Selected Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
of the Company included herein.

The Company's ability to anticipate changes in market and industry trends
and to successfully develop and introduce new and enhanced products on a
timely basis will be a critical factor in its ability to grow and remain
competitive. There can be no assurance that new products and product
enhancements will be completed on a timely basis or will enjoy market
acceptance following their introduction. In addition, the anticipated
development schedules for new or improved products are inherently difficult to
predict and are subject to change as a result of shifting priorities in
response to customers' requirements and competitors' new product
introductions. Moreover, the Company expects that it will devote substantial
resources to R&D efforts, including Quality Control. The costs of such efforts
are likely to be expensed as they are incurred, notwithstanding that the
benefits, if any, from such efforts (in the form of increased revenues or
decreased product costs) may not be reflected until subsequent periods. See
"Business--Research and Development and Quality Control."

The Company's growth will be partially dependent upon its ability to
increase its manufacturing capacity. The Company is currently operating at
capacity in its Savannah facility. However, the Company is in the process of
reconfiguring its production lines and expanding its physical space in order
to increase the capacity of the Savannah facility. While the Company believes
its sources of financing are adequate to fund its current level of operations,
the Company will need to seek additional debt or equity financing if it makes
significant expansions or acquisitions. Future growth will be dependent, in
part, upon the capital resources available to the Company from time to time.
There can be no assurance that such additional financing, if required, will be
available in amounts and on terms satisfactory to the Company, if at all. See
"Use of Proceeds" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Another element of the Company's growth strategy is to capitalize on
selective acquisition opportunities. However, there can be no assurance that
suitable acquisition or joint venture candidates can be identified, or that,
if identified, adequate financing sources will be available on terms
satisfactory to the Company. If an acquisition is completed, there can be no
assurance that the operations will be successfully integrated with those of
the Company or that such an acquisition will not otherwise have an adverse
effect on the Company.

If the Company is unable to increase its share of existing and international
markets, leverage brands into new product categories, penetrate the U.S.
professional salon market or capitalize on selective acquisition
opportunities, such failure could have a material adverse effect on the
Company's business, results of operations or financial condition.

DEPENDENCE ON TRADEMARKS FOR CURRENT AND FUTURE MARKETS

The market for the Company's products is significantly dependent upon the
goodwill engendered by its trademarks and trade names. Trademark protection is
therefore material to the Company's business. Although all of the Company's
material trademarks and trade names are registered in the United States and in
the principal

11
<PAGE>

foreign countries in which the Company sells its products, there can be no
assurance that the Company will be successful in asserting trademark or trade
name protection for its significant marks and names in the United States or
other markets, and the costs to the Company of such efforts may be
substantial. See "Business-- Trademarks and Patents."

CONCENTRATED MANUFACTURING OPERATIONS INCREASE RISK OF DISRUPTION

The Company manufactures its products domestically at its facility in
Savannah, Georgia, which includes five manufacturing and warehousing
buildings, and internationally at its recently-acquired facility in Midrand,
South Africa. Any prolonged disruption to the operations of either such
facility, whether due to labor difficulties, destruction of or damage to the
facility, severe weather conditions or other reasons, could have a material
adverse effect on the Company's business, results of operations or financial
condition. For example, hurricanes caused the evacuation of the City of
Savannah for two days during September 1996, resulting in shortfalls in
production at the Company's Savannah facility. The Company maintains business
interruption insurance in an amount which it deems reasonable to cover the
occurrence of such events; however, there can be no assurance that the
proceeds of any such insurance would be sufficient to meet the Company's needs
if such an event were to occur.

RELIANCE ON SUPPLIERS

The Company purchases raw materials from third-party suppliers for use in
its manufacturing operations. The Company does not have any long-term written
contracts with suppliers. Although the Company believes that other suppliers
are available who can produce similar materials and products, there can be no
guarantee that such materials would be available to the Company on an
immediate basis if needed, or at prices similar to those now paid by the
Company. From time to time, the Company has experienced delays in shipments
from suppliers in the ordinary course of operations, but none of such delays
has had a material adverse effect on the Company's business, results of
operations or financial condition. Guanidine carbonate is an essential raw
material used in the manufacturing of no-lye relaxer products and has been
purchased by the Company for over 15 years from the one principal supplier to
all manufacturers of no-lye relaxers, located in Austria. The Company
maintains a stock of guanidine carbonate at its Savannah facility which would
satisfy its requirements for approximately four to six months of future
production. Based on previous testing of alternative guanidine carbonate
supplies, the Company believes that guanidine carbonate of comparable quality
could be made available within this time period from other suppliers on
comparable terms. The failure to timely secure such an alternative source of
guanidine carbonate would have a material adverse effect on the Company's
business, results of operations and financial condition. See "Business--
Manufacturing."

SOCIAL, POLITICAL AND ECONOMIC RISKS AFFECTING FOREIGN OPERATIONS AND EFFECTS
OF FOREIGN CURRENCY FLUCTUATIONS

The Company's products are sold in approximately 60 countries and
territories outside the United States and the Company has a manufacturing
facility in Midrand, South Africa as well as in Savannah, Georgia. For fiscal
1996 and fiscal 1995, approximately 23.8% and 19.6%, respectively, of the
Company's net sales were outside the United States, including domestic exports
and sales by the Company's South African operations. All of the Company's
sales are in dollars with the exception of sales to South Africa, Botswana,
Lesotho, Namibia and Swaziland which are denominated in South African Rand. A
significant component of the Company's business strategy is to expand its
international operations. In March 1996, the Company commenced operations at
its own manufacturing facility in Midrand South Africa, 15 miles north of
Johannesburg. The Company is exposed to the risk of changes in social,
political and economic conditions inherent in foreign operations, including
changes in the laws and policies that govern foreign investment in countries
where it has operations as well as, to a lesser extent, changes in United
States laws and regulations relating to foreign trade and investment. In
addition, the Company's results of operations and the value of its foreign
assets are affected by fluctuations in foreign currency exchange rates, which
may favorably or adversely affect reported earnings and accordingly, the
comparability of period-to-period results of operations. The Company does not
currently engage in hedging activities to minimize its exposure to such
fluctuations. Changes in currency exchange rates may affect the relative
prices at which the Company and foreign competitors sell their products in the
same market. There can be no assurance as to the future effect of any such
changes in social, political and economic conditions on the Company's
business, results of operations or financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"The Company--Corporate Structure."

12
<PAGE>

COMPETITION

The U.S. retail ethnic hair care market for African-Americans is competitive
and highly fragmented with a number of market participants that focus
specifically on this market. Six companies generated approximately 50% of
industry sales in the U.S. retail ethnic hair care market in 1995 with the
remainder being generated by a number of smaller companies, according to the
Towne-Oller Report. Some of the larger companies, such as Soft Sheen Products,
Inc. ("Soft Sheen"), Luster Products and Pro-Line Corp., are privately-owned
and compete only in the ethnic market, as does the Johnson Products subsidiary
of IVAX, Inc., a New York Stock Exchange traded company. However, a few
general market companies, such as Revlon and Alberto-Culver Company, also
produce a limited line of specialized products for the ethnic consumer. In
certain product categories, such as shampoos and hair color, competition also
arises from general market manufacturers such as the Procter & Gamble Company
and Bristol-Myers Squibb Company's Clairol division. Some of the Company's
competitors are general market companies which are larger and have
substantially greater financial and other resources than the Company.
Internationally, the Company's competitors differ from market to market, and
include Revlon, Soft Sheen and several regionally based foreign companies.

Competitive market conditions could materially and adversely affect the
Company's business, results of operations and financial condition if the
Company were required to reduce product prices to remain competitive or
experienced decreased sales volume. The Company plans to increase sales
internationally, particularly in Africa, Brazil and the Caribbean. Expanding
the Company's share of international markets will require the Company to
address competitive factors similar to those it faces in the United States, as
well as comply with any local regulatory requirements.

OPERATING RESULTS MAY FLUCTUATE QUARTERLY

The Company's operating results may vary significantly from quarter to
quarter, in part because of the changes in net sales and costs associated with
changes in the Company's product mix, timing of promotions, changes in
consumer buying patterns, aggressive competition, and the timing of, and costs
related to, any future acquisitions. Historically, the Company has typically
experienced its slowest quarter in the three months ending December 31 of any
given year. The Company's operating results for any particular quarter are not
necessarily indicative of any future results primarily due to the Company's
marketing decisions, including the factors cited above. The uncertainties
associated with new or improved product introductions and market trends may
limit management's ability to accurately forecast short-term results of
operations. Fluctuations caused by variations in quarterly operating results
may adversely affect the market price of the Class A Common Stock.

CHANGES IN THE RETAIL INDUSTRY

The retail industry has periodically experienced consolidation and other
ownership changes. Major retailers in the United States and in foreign markets
may in the future consolidate, undergo restructurings or realign their
affiliations which could decrease the number of stores that sell the Company's
products or increase the ownership concentration within the retail industry.
While such changes in the retail industry to date have not had a material
adverse effect on the Company's business, results of operations or financial
condition, there can be no assurance as to the future effect of any such
changes. See "Business--Distribution and Sales."

COMPLIANCE WITH CONSUMER LAWS AND GOVERNMENT REGULATIONS

The Company is subject to the Food, Drug and Cosmetics Act, the Consumer
Product Safety Act, the Federal Hazardous Substance Act and to the
jurisdiction of the Consumer Product Safety Commission as well as product
safety laws in foreign jurisdictions. Such regulations subject the Company to
the possibility of requirements to repurchase or recall products found to be
defective and the possibility of fines or penalties. The Food and Drug
Administration ("FDA") has promulgated certain regulations concerning product
ingredients, product labeling and product claims. In addition, the Federal
Trade Commission ("FTC") regulates product claims. The Company is subject to
consumer laws in foreign countries where its products are sold, for example,
bilingual packaging requirements (Canada) and new product registration
requirements (Brazil). Existing and future FDA, FTC and foreign regulations
could impact distribution and sales of certain of the Company's products. See
"Business--Consumer Laws, Government and Industry Regulations."

13
<PAGE>

RELIANCE ON KEY MANAGEMENT

The Company's executive officers have extensive experience serving the
consumer products industry and the ethnic market. If, for any reason, key
members of senior management, including Dr. Leroy Keith, Joyce M. Roche,
Dennis E. Smith, Miriam Muley and Bradford N. Creswell, do not continue to be
active in management, the Company's business, results of operations or
financial condition could be adversely affected. Other than Mr. Creswell,
these key senior management employees have employment contracts, which
generally contain non-compete clauses, with the Company as described in
"Management--Compensation of Executive Officers--Employment Agreements", but
there can be no assurance that such individuals will remain with the Company.
Upon the consummation of the Offerings, the Company's senior management will
own approximately 6.2% of the total number (including shares held in a voting
trust), and 4.4% of the combined voting power of the outstanding Common Stock.

RISK ASSOCIATED WITH NEW MANAGEMENT

In connection with the Acquisition, most of the senior management and
members of the Board of Directors of Carson Products were replaced. Although
the new team of senior executives has had extensive experience in the ethnic
market and consumer products industry, each such senior executive, other than
Executive Vice President of Sales, Dennis E. Smith, has been with the Company
for approximately 15 months or less. Also in connection with the Acquisition,
Carson Products increased the number of members serving on its Board of
Directors. In addition, since the Acquisition, Carson Products has expanded
its board by adding new members. Included as new members on the Board of
Directors of Carson Products and the Company are Melvyn Estrin and Abbey
Butler, each of whom was a Co-Chief Executive Officer of Foxmeyer Drug Company
when it filed for protection under Chapter 11 of the U.S. Bankruptcy Code on
August 27, 1996. Although Carson Products has experienced improved operating
results since the new senior management and directors were installed, there
can be no assurance that the new senior management and directors will continue
to maintain or improve upon the Company's current level of performance. See
"Management--Executive Officers and Directors."

CONTROL BY CERTAIN EXISTING STOCKHOLDERS

The Company has three classes of authorized Common Stock, Class A Common
Stock, which is offered hereby, Class B Common Stock, which generally has no
voting rights, and Class C Common Stock. The Class B Common Stock and Class C
Common Stock are convertible into Class A Common Stock at the option of the
holder and will automatically convert to Class A Common Stock upon transfer to
persons other than specified permitted transferees. While holders of Class A
Common Stock are entitled to one vote per share, holders of the Class C Common
Stock are entitled to 10 votes per share. The Class A Common Stock and Class C
Common Stock generally vote together as a single class, with certain limited
exceptions. Immediately after the consummation of the Offerings, DNL Partners
will beneficially own approximately 46.1% of the total shares of Common Stock
and will have 75.8% of the combined voting power of the outstanding Common
Stock. Accordingly, DNL Partners will have sufficient voting power to elect
the Board of Directors of the Company and to control the vote on all matters
submitted to a vote of stockholders, including extraordinary transactions such
as mergers, sales of all or substantially all of the Company's assets or going
private transactions. Such concentration of ownership may have the effect of
delaying or preventing certain types of transactions involving an actual or
potential change in control of the Company, including transactions in which
the holders of the Class A Common Stock might receive a premium on their
shares over prevailing market prices. See "Principal and Selling
Stockholders."

POSSIBLE ADVERSE EFFECT ON MARKET PRICE DUE TO SHARES ELIGIBLE FOR FUTURE SALE
AND ISSUANCE OF ADDITIONAL SHARES

Upon completion of the Offerings, the Company will have 4,190,000 shares of
Class A Common Stock outstanding, 1,859,677 shares of Class B Common Stock
outstanding and 8,306,014 shares of Class C Common Stock outstanding. The
shares of Class A Common Stock sold in the Offering will be freely tradeable
without restriction or further registration under the Securities Act unless
held by an "affiliate" of the Company, as that term is defined under Rule 144
of the Securities Act, which shares will be subject to the resale limitations
of Rule 144. In addition, all existing stockholders have registration rights,
either "demand" or "piggyback", with

14
<PAGE>

respect to the Common Stock held by them. See "Description of Capital Stock--
Registration Rights." Such stockholders have waived all rights to register
securities owned by them in connection with the Offerings. In addition, all
existing stockholders have agreed not to dispose of any shares for a period of
180 days from the date of this Prospectus, or to make any demand for or
exercise any right with respect to the registration of the shares, and the
Company has agreed not to dispose of any shares (other than shares sold in the
Offerings or issuances by the Company of certain employee stock options and
shares covered thereby) for a period of 180 days from the date of this
Prospectus, without the prior written consent of Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch"). Upon expiration of such 180-day
period, 10,165,691 shares will be eligible for sale subject to the resale
limitations of Rule 144 and Rule 144A under the Securities Act. No prediction
can be made as to the effect, if any, that the availability of additional
shares of Common Stock for sale will have on the market price of the Class A
Common Stock. The sale of a substantial number of shares held by the existing
stockholders, whether pursuant to a subsequent public offering or otherwise,
or the perception that such sales could occur, could adversely affect the
market price of the Class A Common Stock and could materially impair the
Company's future ability to raise capital through an offering of equity
securities. See "Shares Eligible For Future Sale" and "Underwriting." At the
request of the Company, the Underwriters have reserved shares to be issued by
the Company and sold to directors, officers, employees, business associates
and related persons of the Company at the initial public offering price. Such
persons will be required to agree not to sell or otherwise dispose of any
shares of Class A Common Stock for a period of 90 days following the date of
this Prospectus. See "Underwriting." Pursuant to its Amended and Restated
Certificate of Incorporation, the Company has the authority to issue
additional shares of Common Stock and shares of one or more series of
preferred stock. The issuance of such shares could result in the dilution of
the voting power of the shares of Class A Common Stock purchased in the
Offerings.

DILUTION

The initial public offering price is substantially higher than the net
tangible book value per share of Common Stock. Investors purchasing shares of
Class A Common Stock in the Offerings will therefore incur immediate and
substantial dilution of $15.06 per share based on an initial public offering
price of $15.00 per share, the midpoint of the estimated range of the initial
public offering price. See "Dilution."

NO PRIOR MARKET FOR CLASS A COMMON STOCK; DETERMINATION OF PUBLIC OFFERING
PRICE

Prior to the Offerings, there has been no public market for the Class A
Common Stock. Although the Company has been approved for listing on the New
York Stock Exchange, there can be no assurance that an active or liquid
trading market for the Class A Common Stock will develop or be sustained. The
initial public offering price of the Class A Common Stock will be determined
by negotiations among the Company, the Selling Stockholders and the
Representatives of the Underwriters and may not be indicative of the market
price for the Class A Common Stock after the Offerings. The market price for
shares of Class A Common Stock may be highly volatile depending on news
announcements and changes in general market conditions. In recent years, the
stock market has experienced extreme price and volume fluctuations. See
"Underwriting."

FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

Certain statements contained in this Prospectus, including in the sections
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" contain "forward-looking" information
(as defined in the U.S. Private Securities Litigation Reform Act of 1995) that
involves risk and uncertainties, including (i) the Company's plans to
introduce new products and product enhancements, (ii) the Company's plans to
expand its international operations in Africa, Brazil and the Caribbean, (iii)
the Company's plans to enter the ethnic cosmetics product category, (iv) the
Company's plans to enter the U.S. professional salon market for ethnic hair
care products, (v) the Company's plans to make selective acquisitions, and
(vi) the Company's marketing, distribution and manufacturing expansion plans.
Actual future results and trends may differ materially depending on a variety
of factors discussed in this "Risk Factors" section and elsewhere in this
Prospectus, including (a) the Company's success in implementing its growth
strategy, including its success in arranging financing where required, (b) the
nature and extent of future competition in the Company's principal marketing
areas, and (c) political, economic and demographic developments in the U.S.,
Africa, Brazil, the Caribbean, Europe and other countries where the Company
now does business or in the future may do business.

15
<PAGE>

COST OF FUTURE COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS MAY BE MATERIAL

The Company is subject to Federal, state, local and foreign environmental
requirements, including those relating to discharges to air, water and land,
the handling and disposal of solid and hazardous waste and the cleanup of
properties affected by hazardous substances. Certain environmental laws, such
as the Comprehensive Environmental Response, Compensation, and Liability Act,
as amended ("CERCLA"), impose strict, retroactive, joint and several liability
upon persons responsible for releases of hazardous substances.

The Company is not aware of any liabilities arising under environmental
requirements, except as would not be expected to have a material adverse
effect on the Company's business, results of operations or financial
condition. However, some risk of environmental liability is inherent in the
nature of the Company's current and former businesses and the Company might in
the future incur material costs to meet current or more stringent compliance,
cleanup or other obligations pursuant to environmental requirements.

The Company has had certain difficulties meeting its permit levels for
various parameters for its wastewater discharge to the City of Savannah's
sewer system resulting in the issuance of notices of violation to the Company
by the City of Savannah. In response, the Company installed pretreatment
equipment, which has reduced the concentrations of many of the constituents of
concern. However, the Company continues to experience difficulty meeting
certain discharge limitations. If the Company cannot either improve the
reliability of its present treatment system, or obtain modifications to its
discharge limits from the sewer authorities, it may be required to install
additional treatment equipment. The Company is working cooperatively with the
City of Savannah to address this issue and has not been nor does it expect to
be fined. However, there can be no guarantee that the Company will not incur
future costs, including but not limited to, fines in connection with waste
water compliance. The costs for installing additional treatment equipment
could be as much as $0.5 million. The Company does not expect the current
costs of environmental compliance to have a material adverse effect on its
business, results of operations or financial condition, however, the potential
costs associated with future environmental compliance obligations could be
substantial. See "Business--Environmental Matters."

16
<PAGE>

THE COMPANY

GENERAL

The Company is a leading manufacturer and marketer in the U.S. retail ethnic
hair care market for African-Americans. The Company believes that it is one of
the leading global manufacturers and marketers of ethnic hair care products
for persons of African descent. The Company's flagship brand, Dark & Lovely,
is the most widely recognized ethnic brand name in the U.S. retail ethnic hair
care market. The Company currently sells over 60 different products under five
principal brand names, including Dark & Lovely, Excelle, Beautiful Beginnings,
Dark & Natural and Magic. The majority of the Company's sales are derived from
four categories of the ethnic health and beauty aids market: hair relaxers and
texturizers, which are used to chemically treat and straighten hair, hair
color, shaving products and hair care maintenance products. The Company's
products are specifically formulated to address the unique physiological
characteristics of hair of persons of African descent, which typically include
curliness and dryness. The Company markets its products in the United States
with its own experienced direct sales force. The Company also currently
markets its products in 60 countries outside of the United States, primarily
through local distributors. The Company believes that in 1995, it had the
number one U.S. retail market position in three of the four ethnic hair care
categories in which it competes (hair relaxers and texturizers, hair color and
shaving products). In addition, the Company believes that the strength of its
competitive position in the ethnic hair care industry is attributable, in
part, to its heritage of technological innovation and its focused R&D effort.

BACKGROUND

The Company (formerly DNL Savannah Holding Corp.) was established in May
1995. On August 23, 1995, Acquisition Corp., a wholly-owned subsidiary of the
Company, acquired all of the stock of the Predecessor from the Minis family
and the Aminco, Inc. ESOP (the "ESOP"). Acquisition Corp. was formed by
Morningside, as financial sponsor, on behalf of an investor group consisting
of DNL Partners, the lenders providing the acquisition financing and certain
members of management, specifically Dr. Leroy Keith and Mr. Bradford N.
Creswell. The purchase price (inclusive of transaction costs) consisted of
approximately $83.2 million in cash, and $11.8 million in junior subordinated
promissory notes (the "Junior Subordinated Notes") bearing interest at 10.0%
and 15.0% of the common stock of the Company which was retained by the
sellers. The Acquisition was financed primarily by debt incurred by the
Company including borrowings of $35.0 million aggregate principal amount under
a Credit Agreement dated as of August 23, 1995 (as amended, the "Senior Bank
Credit Facility"), the issuance of 12.5% Senior Subordinated Notes due 2002
(the "Senior Subordinated Notes") in an aggregate principal amount of $18.0
million, the issuance of 15.0% Subordinated Notes due 2003 (the "PIK
Subordinated Notes") in an aggregate principal amount of $3.0 million and the
issuance of the Junior Subordinated Notes to the sellers in an aggregate
principal amount of approximately $11.8 million, as well as equity
contributions of $12.0 million and $15.2 million of the Predecessor's
available cash. Concurrent with the Acquisition, the following events took
place: (i) two subsidiaries of the Predecessor, Carson Products Company, a
Georgia Corporation, and Aminco, Inc., a Georgia corporation, merged into the
Predecessor; (ii) the Predecessor changed its name to Carson Products Company;
and (iii) Acquisition Corp. merged with Carson Products Company, with Carson
Products as the surviving entity.

The principal shareholder of the Predecessor, Mr. A. Minis, Jr., owned and
controlled the Company since 1951 when he purchased it from its original
founders and owners who had started the business in 1901 with a single
product--Magic shaving powder. In 1985, the Predecessor formed the ESOP, which
was terminated with the Acquisition. The shares of the Company collectively
owned by the Minis family are currently held by a trust established for the
benefit of Mr. Minis, certain Minis family members individually and certain
other affiliated trusts and entities, each of which will sell all of their
shares in the Offerings and consequently will no longer have an ownership
interest in the Company. The Selling Stockholders have agreed that
simultaneously with the closing of the Offerings, the Company will purchase
all of the outstanding Junior Subordinated Notes held by the Selling
Stockholders for a purchase price of approximately $4.7 million to be paid in
cash at the closing of the Offerings. The Company intends to use a portion of
the proceeds from the Offerings to repurchase the Junior Subordinated Notes.
See "Use of Proceeds."

17
<PAGE>

CORPORATE STRUCTURE

The following chart sets forth the corporate structure of the Company.
Except as noted below, each of the Company's direct and indirect subsidiaries
are wholly-owned.*

CARSON, INC.

CARSON PRODUCTS COMPANY

CARSON
SOUTH AFRICA
(73.125% OWNED)

CARSON PRODUCTS
S.A.

- --------
* Does not include inactive subsidiaries.

Carson Holdings Limited ("Carson South Africa"), a South African company
incorporated on February 14, 1996, is currently 73.125% owned by Carson
Products. Carson Products (Proprietary) Limited ("Carson Products S.A."), a
South African registered company, wholly-owned by Carson South Africa, serves
as the operating company for the Company's South African operations. On July
3, 1996, Carson South Africa sold 25% of its shares to the public in an
initial public offering on the Johannesburg Stock Exchange, which raised
approximately $4.2 million in net proceeds. At the same time an additional
1.875% of Carson South Africa shares were issued to certain employees,
directors and officers of the Company involved in the South Africa operations.
The net proceeds were used by Carson South Africa to purchase a manufacturing
facility and related equipment as well as to provide funds for the Company's
strategic initiatives in Africa.

Carson Products S.A. has been in operation for the past three years and
manufactures and distributes ethnic hair care products under license from
Carson Products. In-house manufacturing of products, previously carried out
through a contract manufacturer, began in March 1996 and is being phased in
over a one-year period. Pursuant to a distribution agreement with Carson
Products dated May 14, 1996, Carson Products S.A. has the exclusive right to
distribute and sell the Company's entire product line throughout the African
continent and has the right to supply the Company's products to the European
market up to 20% of the Company's budgeted European sales. The initial term of
the agreement expires on April 1, 2001; however, the agreement continues
indefinitely thereafter until terminated by either party upon 12 months
written notice. Carson Products S.A. has a license agreement with Carson
Products whereby Carson Products S.A. has licensed a number of the products of
Carson Products (totalling over 60). In conjunction with the South African
initial public offering, the license agreement was amended to provide that,
commencing on April 1, 1998, Carson Products S.A. will pay to Carson Products
a royalty in the amount of 3.0% of the net sales price of all licensed
products sold. The amount of the royalty increases to 3.5% on April 1, 1999
and 4.0% on April 1, 2000 until the termination of the agreement. The initial
term of the agreement expires on April 1, 1999, however, the agreement
continues indefinitely thereafter until terminated by either party upon 12
months written notice.

The Company's principal executive offices are located at 64 Ross Road,
Savannah Industrial Park, Savannah, GA 31405, and its telephone number is
(912) 651-3400.

18
<PAGE>

USE OF PROCEEDS

The net proceeds to be received from the sale of the 2,484,500 shares of
Class A Common Stock by the Company in the Offerings (after deducting the
underwriting discounts and estimated expenses of the Offerings payable by the
Company) are estimated to be approximately $33.7 million ($42.4 million if the
Underwriters exercise their over-allotment options in full), based on an
assumed initial public offering price of $15.00 per share (which represents
the midpoint of the estimated range of the initial public offering price).
The Company intends to use a portion of such net proceeds, (i) to purchase all
of the $18.0 million aggregate principal amount of the 12.5% Senior
Subordinated Notes due 2002, plus prepayment premium for an aggregate purchase
price of approximately $19.3 million plus accrued and unpaid interest thereon,
(ii) to redeem all of the $3.0 million aggregate principal amount of the 15.0%
PIK Subordinated Notes due 2003, plus prepayment premium for an aggregate
redemption price of approximately $3.6 million plus accrued and unpaid
interest thereon, and (iii) to purchase all of the $11.8 million aggregate
principal amount of the Junior Subordinated Notes, for a purchase price of
$4.7 million, which Junior Subordinated Notes bear interest at a rate of
10.0% per annum and of which $5.0 million aggregate principal amount matures
in August 2000 and approximately $3.4 million aggregate principal amount
matures in each of August 2001 and August 2002. The balance of such net
proceeds along with borrowings under the New Senior Bank Facility will be used
to repay approximately $37.5 million outstanding under the Senior Bank Credit
Facility, which matures in September 2001 and which bears interest at floating
rates based on the prime rate or the Eurodollar rate (the weighted average
interest rate on this indebtedness at June 30, 1996 was 8.4%). The Company
will not receive any proceeds from the sale of shares of Class A Common Stock
by the Selling Stockholders.

DIVIDEND POLICY

Since the Acquisition, the Company has not declared or paid any cash or
other dividends on its Common Stock and does not expect to pay dividends for
the foreseeable future. The Company anticipates that for the foreseeable
future, earnings will be reinvested in the business to finance its growth and
development. The declaration and payment of dividends by the Company are
subject to the discretion of the Board of Directors of the Company (the
"Board"). The Company anticipates entering into a new senior bank facility
(the "New Senior Bank Facility") prior to or simultaneous with the
consummation of the Offerings. The New Senior Bank Facility will restrict the
ability of the Company's subsidiaries to pay dividends or make other
distributions on their common stock to the Company which will limit cash
available at the Company for dividends. Any future determination to pay
dividends will depend on the Company's results of operations, financial
condition, capital requirements, contractual restrictions and other factors
deemed relevant by the Board.

19
<PAGE>

DILUTION

The net tangible book value (deficit) of the Company as of June 30, 1996 was
approximately ($36.2 million) or ($3.19) per share of Common Stock. Net
tangible book value (deficit) per share represents the amount of the Company's
total assets (excluding intangible assets) less its total liabilities, divided
by the number of shares of Common Stock outstanding. In August 1996, several
outside directors and members of senior management bought 501,191 shares of
Common Stock for aggregate consideration of $1.9 million of which $1.6 million
($1.3 million net of discount) was financed with full recourse loans and $0.3
million was paid in cash. After adjusting for this purchase, the net tangible
book value as of June 30, 1996 would have increased $0.16 per share. The pro
forma net tangible book value (deficit) of the Company at June 30, 1996 as
adjusted, would have been approximately ($0.8) million, or ($0.06) per share
of Common Stock, after giving effect to the Offerings and the use of the net
proceeds therefrom and the purchase of shares of Common Stock by several
outside directors and members of senior management. This represents an
immediate increase in net tangible book value of $2.97 per share to the
existing stockholders and an immediate net tangible book value dilution of
$15.06 per share to new investors purchasing shares in the Offerings. The
following table illustrates this dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $15.00
Net tangible book value (deficit) per share at June 30,
1996...................................................... $(3.19)
Increase in net tangible book value per share attributable
to the purchase of shares in August 1996 by several out-
side directors and members of senior management........... .16
Increase in net tangible book value per share attributable
to new 2.97
investors................................................. ------
Pro forma net tangible book value (deficit) per share after the (.06)
Offerings(1).................................................. ------
Dilution per share to new investors............................ $15.06
======
</TABLE>

The following table summarizes, the shares of Common Stock purchased from
the Company, the total consideration paid and the average price per share paid
by the existing stockholders (including the shares purchased in August 1996 by
several outside directors and members of senior management) and new
stockholders, adjusted as of June 30, 1996 to give effect to the sale of
shares of Class A Common Stock offered hereby:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ ------------------- AVERAGE PRICE
AMOUNT PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(2)... 11,871,191 82.7% $10,546,000 22.1% $ 0.89
New investors.............. 2,484,500 17.3% $37,267,500 77.9% $15.00
</TABLE>

- --------
(1) Excludes 400,000 shares of Class A Common Stock reserved for issuance
pursuant to the Company's 1996 Non-Employee Directors Equity Incentive
Program (including 10,500 shares issuable upon exercise of options to be
granted to the Company's non-employee directors immediately prior to the
consummation of the Offerings). Also excludes 600,000 shares of Class A
Common Stock reserved for issuance pursuant to the Company's 1996 Long-
Term Incentive Plan (including 59,500 shares issuable upon the exercise
of options to be granted to the Company's management immediately prior to
the consummation of the Offerings). The exercise price for the options to
be granted under each of these programs will be the initial public
offering price of the Class A Common Stock.

(2) The sale by the Selling Stockholders in the Offerings will cause the
number of shares held by the existing stockholders to be reduced by
1,705,500 shares, or 11.9% of the total number of shares to be
outstanding after the Offerings.

20
<PAGE>

CAPITALIZATION

(IN THOUSANDS, EXCEPT SHARE DATA AND FOOTNOTES)

The following table sets forth the short-term debt and the consolidated
capitalization of the Company at June 30, 1996 after giving effect to the
Recapitalization and as adjusted to give effect to the purchase of shares of
common stock by certain outside directors and members of senior management in
August 1996, the Offerings and the application of the net proceeds therefrom,
and the refinancing of the Senior Bank Credit Facility with the New Senior
Bank Facility. This table should be read in conjunction with the Consolidated
Financial Statements of the Company and accompanying Notes thereto appearing
elsewhere in this Prospectus. See "Use of Proceeds" and "Selected Consolidated
Historical Financial Data."

<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------
AS
ACTUAL ADJUSTED
------- ---------
<S> <C> <C>
Short-term debt (including current portion of
long-term debt)................................ $ 2,510 $ 10
======= ========
Long-term debt:
Senior Bank Credit Facility:
Term loan................................... $29,000 --
Revolving line of credit.................... 7,500 --
New Senior Bank Facility(a):
Term loans.................................. -- $ 25,000
Revolving line of credit.................... -- 7,900
12.5% Senior Subordinated Notes due 2002...... 16,726 (b) --
15.0% PIK Subordinated Notes due 2003......... 2,414 (b) --
10.0% Junior Subordinated Notes due through
2002......................................... 11,552 (b) --
Other......................................... 27 27
------- --------
Total long-term debt........................ 67,219 32,927
------- --------
Stockholders' equity:
Preferred stock, par value $.01 per share,
10,000,000 shares authorized, none issued.... -- --
Class A Common Stock, par value $.01 per
share, 150,000,000 shares authorized, no
shares (actual) and 4,190,000 shares (as
adjusted) issued and outstanding (c)......... -- 42
Class B Common Stock, par value $.01 per
share, 2,000,000 shares authorized, 1,859,677
shares (actual) and 1,859,677 shares (as
adjusted) issued and outstanding............. 19 19
Class C Common Stock, par value $.01 per
share, 13,000,000 shares authorized,
9,510,323 shares (actual) and 8,306,014
shares (as adjusted) issued and outstanding.. 95 83
Paid-in capital............................... 8,557 55,647 (d)(e)
Retained earnings (deficit)................... 1,514 (8,833)(e)(f)(g)
Foreign currency translation adjustment....... (94) (94)
Notes receivable, net of discount............. (1,325)(e)
------- --------
Total stockholders' equity.................. 10,091 45,539
------- --------
Total capitalization...................... $77,310 $ 78,466
======= ========
</TABLE>

(footnotes on following page)

21
<PAGE>

- --------
(a) Prior to or simultaneously with the consummation of the Offerings, the
Company will enter into the New Senior Bank Facility. The New Senior Bank
Facility will include a $15.0 million revolving credit facility subject to
borrowing base limitations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation--Liquidity and Capital
Resources."
(b) Net of unamortized discount of $1,274, $986, and $201 for the Senior
Subordinated Notes, PIK Subordinated Notes, and Junior Subordinated Notes,
respectively.
(c) Does not include 59,500 shares issuable upon exercise of options to be
granted immediately prior to the consummation of the Offerings under the
Company's 1996 Long-Term Incentive Plan having a weighted average exercise
price of $15.00 per share and 10,500 shares issuable upon exercise of
options to be granted immediately prior to the consummation of the
Offerings under the Company's 1996 Non-Employee Directors Equity Incentive
Plan having a weighted average exercise price of $15.00 per share.
(d) Paid-in capital has been increased for the addition of the excess of the
carrying value of the Junior Subordinated Notes (net of related prepaid
interest and deferred financing costs of $1.8 million) over the purchase
price to be paid ($4.7 million). Since the Junior Subordinated Notes are
held by a related party, the gain on extinguishment of debt will be
recorded as a capital transaction.
(e) Retained earnings has been reduced for a compensation charge of $6.8
million (with no associated income tax benefits) as a result of the
purchase of 501,191 shares of common stock by several outside directors
and members of senior management during August 1996. Paid-in capital has
been increased for the compensation charge of $6.8 million and for the
purchase price of $0.3 million and $1.3 million (net of discount) for
shares of Common Stock purchased by such outside directors and members of
senior management, respectively. The purchase of such shares by senior
management was financed with non-interest bearing long-term full recourse
loans from the Company.
(f) Retained earnings has been reduced for the extraordinary loss of
approximately $3.6 million, net of tax, resulting from prepayment
penalties, write-off of unamortized debt discount and deferred financing
costs associated with the repayment of the Senior Bank Credit Facility,
the Senior Subordinated Notes and the PIK Subordinated Notes.
(g) Retained earnings has not been reduced for compensation charges of
approximately $0.6 million principally for cash awards under certain
incentive compensation agreements which will be recorded upon completion
of the Offerings.

22
<PAGE>

UNAUDITED PRO FORMA FINANCIAL DATA

(IN THOUSANDS, EXCEPT PER SHARE DATA AND FOOTNOTES)

The following unaudited pro forma statements of operations for the year
ended March 31, 1996 and the three months ended June 30, 1996 and 1995 give
effect to (i) the Acquisition and (ii) the Offerings including the application
of the net proceeds therefrom, and (iii) the refinancing of the Senior Bank
Credit Facility as if such events had occurred on April 1, 1995.

The unaudited pro forma financial data are based on the historical
consolidated financial statements for the Predecessor and the Company and the
assumptions and adjustments described in the accompanying notes. The unaudited
pro forma statements of continuing operations do not purport to be
representative of the Company's actual results of operations had the events
described above occurred as of the dates indicated or what such results will
be for any future periods. The unaudited pro forma financial data are based
upon assumptions that the Company believes are reasonable and should be read
in conjunction with the Consolidated Financial Statements and accompanying
notes thereto included elsewhere in this Prospectus.

PRO FORMA STATEMENTS OF OPERATIONS

YEAR ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
APRIL 1, AUGUST 23,
1995 TO 1995 TO COMBINED ADJUSTMENTS ADJUSTMENTS PRO FORMA
AUGUST 22, MARCH 31, FISCAL RELATING TO THE RELATING TO THE FISCAL
1995 1996 1996(A) ACQUISITION OFFERINGS 1996
----------- ---------- -------- --------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $26,854 $41,465 $68,319 $68,319
Cost of sales........... 11,513 18,629 30,142 30,142
------- ------- ------- -------
Gross profit.......... 15,341 22,836 38,177 38,177
SG&A expenses........... 9,743 14,642 24,385 $ 266 (b) 24,651
Depreciation and amorti-
zation................. 502 1,331 1,833 745 (c) $ (478)(d) 2,100
------- ------- ------- ------- ------ -------
Operating income...... 5,096 6,863 11,959 (1,011) 478 11,426
Interest expense........ 56 4,487 4,543 3,160 (e) (5,025)(d) 2,678
Other income............ 1,137 182 1,319 (1,068)(f) 251
------- ------- ------- ------- ------ -------
Income before income
taxes.................. 6,177 2,558 8,735 (5,239) 5,503 8,999
Provision for income
taxes.................. 2,243 1,352 3,595 (1,804)(g) 2,091 (g) 3,882
------- ------- ------- ------- ------ -------
Net income.............. $ 3,934 $ 1,206 $ 5,140 $(3,435) $3,412 $ 5,117(h)(i)
======= ======= ======= ======= ====== =======
Net income per share.... $ 0.36(j)
=======
Weighted average shares
outstanding............ 14,356
=======
</TABLE>

23
<PAGE>

THREE MONTHS ENDED JUNE 30, 1996

<TABLE>
<CAPTION>
COMPANY ADJUSTMENTS PRO FORMA
THREE MONTHS RELATING TO THE THREE MONTHS ENDED
ENDED JUNE 30, 1996 OFFERINGS JUNE 30, 1996
------------------- --------------- ------------------
<S> <C> <C> <C>
Net sales......................... $18,799 $18,799
Cost of sales..................... 8,135 8,135
------- -------
Gross profit.................... 10,664 10,664
SG&A expenses..................... 6,673 6,673
Incentive compensation............ 800 800(k)
Depreciation and amortization..... 629 $ (120)(d) 509
------- ------ -------
Operating income................ 2,562 120 2,682
Interest expense.................. 1,826 (1,256)(d) 570
Other income...................... 37 37
------- ------ -------
Income before income taxes........ 773 1,376 2,149
Provision for income taxes........ 465 523 (g) 988
------- ------ -------
Net income........................ $ 308 $ 853 $ 1,161(h)(i)
======= ====== =======
Net income per share.............. $ 0.08(j)
=======
Weighted average shares outstand-
ing.............................. 14,356
=======
</TABLE>

THREE MONTHS ENDED JUNE 30, 1995

<TABLE>
<CAPTION>
PREDECESSOR ADJUSTMENTS ADJUSTMENTS PRO FORMA
THREE MONTHS RELATING TO THE RELATING TO THE THREE MONTHS ENDED
ENDED JUNE 30, 1995 ACQUISITION OFFERINGS JUNE 30, 1995
------------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
Net sales............... $17,271 $17,271
Cost of sales........... 7,351 7,351
------- -------
Gross profit.......... 9,920 9,920
SG&A expenses........... 6,545 $ 160 (b) 6,705
Depreciation and amorti-
zation................. 301 447 (c) $ (120)(d) 628
------- ------- ------ -------
Operating income...... 3,074 (607) 120 2,587
Interest expense........ 34 1,896 (e) (1,256)(d) 674
Other income............ 328 (147)(f) 181
------- ------- ------ -------
Income before income
taxes.................. 3,368 (2,650) 1,376 2,094
Provision for income
taxes.................. 1,230 (895) (g) 523 (g) 858
------- ------- ------ -------
Net income ............. $ 2,138 $(1,755) $ 853 $ 1,236(h)(i)
======= ======= ====== =======
Net income per share.... $ 0.09(j)
=======
Weighted average shares
outstanding............ 14,356
=======
</TABLE>

(footnotes on following page)

24
<PAGE>

- --------
(a) The statement of operations of the Predecessor for the period from April
1, 1995 to August 22, 1995 is combined with the statement of operations of
the Company for the period August 23, 1995 to March 31, 1996.
(b) Adjustment to reflect the pro forma effect of a full year of executive
salary expense increase and management fee arising from the Acquisition.
(c) Adjustment to reflect (i) amortization of goodwill and deferred financing
costs arising from the Acquisition and depreciation expense resulting from
the revaluation of the Company's fixed assets as a result of the
Acquisition, and (ii) the elimination of package design costs amortization
(net of actual costs incurred) resulting from a change from the
Predecessor's policy of capitalizing to the Company's policy of expensing
package design costs as incurred as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 MARCH 31, 1996
------------- --------------
<S> <C> <C>
Goodwill...................................... $ 295 $ 491
Deferred financing costs...................... 136 228
Depreciation expense.......................... (23) (38)
Package design costs.......................... 39 64
----- -----
$ 447 $ 745
===== =====
</TABLE>
(d) Reflects a reduction in amortization of deferred financing costs and
interest expense resulting from the use of net proceeds from the Offerings
to repay $6.1 million of the term loan under the Senior Bank Credit
Facility (and the refinancing of remaining amounts thereunder into the New
Senior Bank Facility), the Senior Subordinated Notes, and the PIK
Subordinated Notes and to repurchase the Junior Subordinated Notes.
(e) Adjustment to reflect interest expense for the entire period presented
related to indebtedness under (i) the Senior Bank Credit Facility, (ii)
the Senior Subordinated Notes (which bear interest of 12.5% per annum),
(iii) the PIK Subordinated Notes (which bear interest of 15.0% per annum),
(iv) the Junior Subordinated Notes (which bear interest of 10.0% per
annum), and amortization of related debt discounts.
(f) Adjustment to eliminate investment income related to investment securities
held by the Predecessor which were sold in connection with the financing
of the Acquisition.
(g) Adjustment to reflect income tax effects of the pro forma adjustments
presented herein based on the statutory tax rate (38%) in effect.
(h) Excludes extraordinary loss of approximately $3.6 million, net of tax,
which will result from prepayment penalties and write-off of unamortized
debt discount and deferred financing costs associated with the repayment
of the Senior Bank Credit Facility, the Senior Subordinated Notes and the
PIK Subordinated Notes.
(i) Excludes the effect of non-cash compensation charges aggregating
approximately $6.8 million (with no associated income tax benefits) to be
recorded during the three months ended September 30, 1996 resulting from
the purchase of shares of Common Stock by several outside directors and
members of senior management during August 1996 and the share awards made
by Carson South Africa to certain members of its management. Also excludes
compensation charges of approximately $0.6 million principally for cash
awards under certain incentive compensation agreements which will be
recorded upon completion of the Offerings.
(j) Net income per share is based on the weighted average shares of Common
Stock outstanding during the period from August 23, 1995 to March 31,
1996. All Common Stock issued prior to the Offerings has been included in
the calculation of Common Stock outstanding as if such shares were
outstanding for the entire period presented. The total weighted average
shares of Common Stock outstanding has been adjusted to give effect to the
Recapitalization, the Offerings and the purchase of shares of Common Stock
by several outside directors and senior management.
(k) The Company recognized $0.8 million of incentive compensation expense
during the quarter ended June 30, 1996 relating to anticipated costs under
certain long-term incentive compensation agreements.

25
<PAGE>

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA (A)
(IN THOUSANDS, EXCEPT PER SHARE DATA AND FOOTNOTES)

Set forth below are selected historical financial data of the Predecessor
and the Company as of the dates and for the periods shown. The selected
historical financial data of the Predecessor as of March 31, 1995 and for the
years ended March 31, 1994 and 1995 and for the period from April 1, 1995
through August 22, 1995 were derived from the audited historical financial
statements of the Predecessor for such periods appearing elsewhere in this
Prospectus. The selected historical financial data of the Predecessor as of
March 31, 1992, 1993, and 1994 and for the periods ended March 31, 1992 and
1993 were derived from audited historical financial statements of the
Predecessor not included in this Prospectus. The selected historical financial
data of the Company as of March 31, 1996 and for the period from August 23,
1995 through March 31, 1996 were derived from the audited historical financial
statements of the Company for such period appearing elsewhere in this
Prospectus. The selected historical financial data of the Predecessor as of
and for the three months ended June 30, 1995 and of the Company as of and for
the three months ended June 30, 1996 are unaudited; however, in the opinion of
management such unaudited data include all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the information
included therein. The results of operations for the three months ended June
30, 1996 are not necessarily indicative of the results for the entire fiscal
year or any other interim period. Because of the revaluation of the assets and
liabilities and related impact to the statement of operations, the financial
statements of the Predecessor for the periods prior to August 22, 1995 are not
strictly comparable to those of the Company subsequent to that date. The
selected historical financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Unaudited Pro Forma Financial Data" and the Consolidated
Financial Statements of the Predecessor and the Company and accompanying notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PREDECESSOR COMPANY PREDECESSOR
--------------------------------------------- ------------ --------------
FULL FISCAL YEAR 1996
-------------------------
<CAPTION>
COMPANY
---------------
YEAR ENDED APRIL 1 AUGUST 23,
MARCH 31, TO 1995 THREE MONTHS
--------------------------------- AUGUST 22, TO MARCH 31, ENDED JUNE 30,
1992 1993 1994 1995 1995 1996 1995
------- ------- ------- ------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $49,947 $49,335 $50,108 $58,126 $26,854 $41,465 $17,271
Cost of sales...................... 21,211 21,585 23,622 25,692 11,513 18,629 7,351
------- ------- ------- ------- ------- ------- -------
Gross profit...................... 28,736 27,750 26,486 32,434 15,341 22,836 9,920
SG&A expenses...................... 20,077 20,316 21,473 23,134 9,743 14,642 6,545
Incentive compensation.............
Depreciation and amortization...... 566 695 828 1,085 502 1,331 (c) 301
------- ------- ------- ------- ------- ------- -------
Operating income.................. 8,093 6,739 4,185 8,215 5,096 6,863 3,074
Interest expense................... 81 115 97 136 56 4,487 (c) 34
Other income....................... 697 916 699 783 1,137(d) 182 328
------- ------- ------- ------- ------- ------- -------
Income from continuing operations
before income taxes and changes in
accounting principles............. 8,709 7,540 4,787 8,862 6,177 2,558 3,368
Provision for income taxes......... 3,104 2,601 1,704 3,174 2,243 1,352 1,230
------- ------- ------- ------- ------- ------- -------
Income from continuing operations
before changes in accounting prin-
ciples............................ 5,605 4,939 3,083 5,688 3,934 1,206 2,138
Income (loss) from discontinued op-
erations, net of tax(e)........... 63 (353) (574)
Loss on disposal of discontinued
operations, net of tax(e)......... (635)
------- ------- ------- ------- ------- ------- -------
Income before cumulative effect of
changes in accounting principles.. 5,668 4,586 1,874 5,688 3,934 1,206 2,138
Cumulative effect of changes in ac-
counting principles, net of tax... 23 (250)
------- ------- ------- ------- ------- ------- -------
Net income......................... $ 5,668 $ 4,586 $ 1,897 $ 5,438 $ 3,934 $ 1,206 $ 2,138
======= ======= ======= ======= ======= ======= =======
Net income per share(f)............ $ .10
=======
Weighted average shares
outstanding(f).................... 11,871
- --------------------------------------------------
=======
THREE MONTHS
ENDED JUNE 30,
1996
---------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $18,799
Cost of sales...................... 8,135
---------------
Gross profit...................... 10,664
SG&A expenses...................... 6,673
Incentive compensation............. 800 (b)
Depreciation and amortization...... 629 (c)
---------------
Operating income.................. 2,562
Interest expense................... 1,826 (c)
Other income....................... 37
---------------
Income from continuing operations
before income taxes and changes in
accounting principles............. 773
Provision for income taxes......... 465
---------------
Income from continuing operations
before changes in accounting prin-
ciples............................ 308
Income (loss) from discontinued op-
erations, net of tax(e)...........
Loss on disposal of discontinued
operations, net of tax(e).........
---------------
Income before cumulative effect of
changes in accounting principles.. 308
Cumulative effect of changes in ac-
counting principles, net of tax...
---------------
Net income......................... $ 308
===============
Net income per share(f)............ $ .03
===============
Weighted average shares
outstanding(f).................... 11,871
- --------------------------------------------------
===============
</TABLE>

26
<PAGE>

BALANCE SHEET DATA:
<TABLE>
<CAPTION>
PREDECESSOR MARCH 31,
-------------------------------
COMPANY PREDECESSOR COMPANY
MARCH 31, JUNE 30, JUNE 30,
1992 1993 1994 1995 1996 1995 1996
------- ------- ------- ------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Working capital......... $14,184 $14,256 $11,653 $15,140 $13,957 $16,364 $14,860
Total assets............ 37,848 37,572 39,209 43,863 88,082 44,555 92,246
Total long-term debt
(excluding current por-
tion).................. 552 288 -- -- 63,778 -- 67,219
Stockholders' equity.... 29,141 30,473 29,699 34,358 9,877 35,928 10,091
</TABLE>
- --------
(a) The period beginning August 23, 1995 reflects data of the Company and its
subsidiaries. The periods prior to and including August 22, 1995 reflect
data of the Predecessor, all of the stock of which was acquired by the
Company on August 23, 1995. See "The Company--Background." Because of the
revaluation of the assets and liabilities acquired and the related impact
to the statement of operations, the financial statements of the
Predecessor for the periods prior to August 23, 1995 are not strictly
comparable to those of the Company subsequent to that date.
(b) The Company recognized $0.8 million of incentive compensation expense
during the quarter ended June 30, 1996 relating to anticipated costs under
certain long-term incentive compensation agreements. Upon completion of
the Offerings, the Company will record additional compensation charges of
approximately $0.6 million (based on the midpoint of the estimated range
of the initial public offering price) principally for final payments under
these awards.

During August 1996, several outside directors and members of senior
management purchased 115,373 and 385,818 shares, respectively, of the
Company's Common Stock. The purchase of such shares by senior management
was financed with $1.3 million (net of discount) in non-interest bearing
long-term full recourse loans from the Company. The Company will record
additional non-cash compensation expense of approximately $6.8 million
(with no associated income tax benefits) during the three months ended
September 30, 1996 for the excess of the estimated initial public offering
price over the actual purchase price of such shares and for the shares of
Carson South Africa awarded to certain members of its management.
(c) Results for the period from August 23, 1995 to March 31, 1996 include $0.7
million of amortization expense related to acquired goodwill and $4.4
million of interest expense related to debt used to fund the Acquisition.
Results for the three months ended June 30, 1996 include $0.3 million of
amortization expense related to acquired goodwill and $1.8 million of
interest expense related to debt used to fund the Acquisition.

Upon completion of the Offerings, the Company will record an extraordinary
loss of approximately $3.6 million, net of tax, which will result from
prepayment penalties and write-off of unamortized debt discount and
deferred financing costs associated with the repayment of the Senior Bank
Credit Facility, the Senior Subordinated Notes and the PIK Subordinated
Notes. See "Use of Proceeds."
(d) Includes realized gains of $0.8 million recorded by the Predecessor for
investment securities of the Predecessor which were sold prior to the
Acquisition. The cash received from the sale of such investment securities
was used to fund a portion of the consideration in the acquisition.
(e) Effective January 31, 1994, the Predecessor discontinued operations of a
subsidiary and sold certain assets of the subsidiary for proceeds of $1.1
million.
(f) Net income per share data has been computed assuming there were 11,871,191
weighted average shares of Common Stock outstanding, after giving effect
to the Recapitalization and 501,191 shares of Common Stock purchased by
several outside directors and members of senior management.

27
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RECENT OPERATING RESULTS

The Company's operating results for the five month period ended August 31,
1996 (prior to any incentive compensation expense) include sales of $32.5
million, operating income of $5.6 million and EBITDA of $6.7 million,
representing an increase of 14.2%, 12.4% and 21.7%, respectively, over such
results for the five month period ended August 31, 1995 (on a combined basis,
before the effect of Acquisition adjustments). The Company does not expect as
great an increase in the operating results for the six month period ended
September 30, 1996 over the six month period ended September 30, 1995 due to
shortfalls in September 1996 production arising from the evacuation of the
City of Savannah and the Company's Savannah manufacturing facility for two
days due to hurricanes.

OVERVIEW

The Company is the leading manufacturer and marketer in the U.S. retail
ethnic hair care market for African-Americans. The Company currently sells
over 60 different products in the United States and 60 other countries under
five principal brand names. The majority of the Company's net sales are
derived from four categories of the ethnic health and beauty aids market: hair
relaxers and texturizers (which constituted approximately 50% of the Company's
net sales in fiscal 1996), hair color, shaving products and hair care
maintenance products. The Predecessor had and the Company currently has a
March 31 fiscal year end. The Company intends to change its fiscal year to a
calendar year beginning on January 1, 1997.

The Company introduced the first no-lye relaxer in the U.S. ethnic retail
hair care market in 1978. This allowed the Company to grow and secure a
significant position in the U.S. ethnic retail hair care market. This growth
continued throughout the 1980s until fiscal 1992. The five-year compounded
annual growth rate in net sales for the period from March 31, 1987 to March
31, 1992 was 9.4%. From fiscal year 1992 to fiscal year 1994, net sales
remained flat and gross margin decreased from 57.5% to 52.9%. The Company
faced competitive pressure during this same time period in the relaxer market,
and responded by reformulating and improving its relaxer products, in addition
to introducing several other product lines. At the same time, the Company
developed and designed new packaging for many of its products and introduced a
new marketing campaign. Additionally, the Company introduced, Beautiful
Beginnings, a children's relaxer, Dark & Natural, a men's texturizer and new
hair care maintenance products. The effect of these competitive responses is
reflected in fiscal 1995 results as net sales increased 16.0% and gross margin
recovered to 55.8%. In fiscal 1996 on a combined basis the growth continued
with a net sales increase of 17.5% and an operating income increase of 45.6%
as compared to fiscal 1995. For the three months ended June 30, 1996 net sales
increased 8.8% and, excluding the effect of an unusual incentive compensation
charge, operating income increased 9.4% and EBITDA increased 15.4% over the
Predecessor three month period ended June 30, 1995.

On August 23, 1995, Acquisition Corp., a wholly-owned subsidiary of the
Company, acquired the stock of the Predecessor from the Minis family and the
ESOP. Acquisition Corp. was formed by Morningside as financial sponsor, on
behalf of an investor group consisting of DNL Partners, the lenders providing
the acquisition financing and certain members of management. The purchase
price consisted of approximately $83.2 million in cash and $11.8 million in
Junior Subordinated Notes bearing interest at 10.0% and 15.0% of the common
stock of the Company retained by the sellers. The Acquisition was financed by
borrowings of $35.0 million aggregate principal amount under the Senior Bank
Credit Facility, the issuance of 12.5% Senior Subordinated Notes in an
aggregate principal amount of $18.0 million, the issuance of 15.0% PIK
Subordinated Notes in an aggregate principal amount of $3.0 million, the
issuance of the Junior Subordinated Notes to the sellers in an aggregate
principal amount of approximately $11.8 million, equity contributions of $12.0
million and $15.2 million of available cash. Concurrent with the Acquisition,
Acquisition Corp. merged into Carson Products Company. In connection with the
Acquisition, the senior management of the Predecessor was replaced and a team
of seasoned senior executives with extensive experience in the ethnic market
and consumer products industry was recruited to build on the Company's strong
position in the global ethnic hair care market.

In fiscal 1996, 23.8% of the net sales of the Company were to customers
outside the United States. The following table presents the combined
Predecessor and Company net sales by geographic region for fiscal 1996:

28
<PAGE>

<TABLE>
<CAPTION>
NET SALES TO: (IN MILLIONS) % OF TOTAL
------------- ------------- ----------
<S> <C> <C>
United States....................................... $52.0 76.2%
Africa.............................................. 7.7 11.3
Europe.............................................. 5.6 8.2
Other international................................. 3.0 4.3
----- -----
$68.3 100.0%
===== =====
</TABLE>

In March 1996, the Company commenced operations at its own manufacturing
facility in Midrand, South Africa, 15 miles north of Johannesburg. Previously,
the Company used a contract manufacturer to produce its products for the
Southern African market.

On July 3, 1996, the Company's South African subsidiary, Carson South
Africa, sold 25.0% of its shares in an initial public offering on the
Johannesburg Stock Exchange. This offering resulted in net proceeds of
approximately $4.2 million. At the same time, Carson South Africa issued
1.875% of its shares to certain employees, officers and directors involved in
the Company's South African operations. As a result of the issuance of these
shares, the Company will reflect in its consolidated statement of operations
for periods subsequent to the share issuance a minority interest in subsidiary
earnings. The amount of the charge to be reflected in this line item will
generally equal Carson South Africa's net income for the applicable period
multiplied by the percentage of the Carson South Africa shares which are not
indirectly owned by the Company. In conjunction with the South African initial
public offering, Carson Products entered into an amendment to its license
agreement with Carson Products S.A., which provides that commencing on April
1, 1998, Carson Products S.A. will pay to Carson Products a royalty in the
amount of 3.0% of the net sales of all licensed products. The amount of the
royalty increases to 3.5% on April 1, 1999 and 4.0% on April 1, 2000 until the
termination of the agreement. The initial term of the agreement expires on
April 1, 1999; however, the agreement continues indefinitely thereafter until
terminated by either party upon 12 months written notice. See "The Company--
Corporate Structure."

With the exception of sales by Carson Products S.A. to South Africa,
Botswana, Lesotho, Namibia and Swaziland which are denominated in South
African Rand, all of the Company's sales are made in U.S. Dollars. The Company
does not view the exposure to Rand exchange rate fluctuations as significant
because the South African subsidiary incurs all of its costs in Rand. Assets
and liabilities of the Company's South African operations are translated for
consolidation purposes from South African Rand into U.S. Dollars at the rate
of currency exchange at the end of the fiscal period. Revenues and expenses
are translated at average monthly prevailing exchange rates. Resulting
translation differences are recognized as a component of stockholders' equity.
Adjustments resulting from translations have historically been immaterial to
the Company's financial statements.

On June 26, 1996, Carson Products made an investment of $3.0 million in
Morningside AM Acquisition Corp., the parent of AM Cosmetics, a leading low-
cost manufacturer of cosmetics. The investment was made through the purchase
of $3.0 million of 12% cumulative, payment-in-kind preferred stock. The
Company's consolidated statement of operations for periods subsequent to June
26, 1996 will include the dividend income from this investment, although
dividends are anticipated to be paid through the issuance of additional
preferred stock. Therefore, it is anticipated that no cash will be generated
from this investment in the near future. In connection with the investment,
Carson Products entered into a management agreement and will enter into
certain related sales agreements and manufacturing agreements with AM
Cosmetics. See "Certain Relationships and Related Transactions--AM Cosmetics."

EFFECT OF THE ACQUISITION ON RESULTS OF OPERATIONS

The consummation of the Acquisition affected the Company's results of
operations following the Acquisition in certain significant respects. The
Acquisition was reflected using purchase accounting with the purchase price
being allocated to the Company's identifiable assets and liabilities based on
fair values at the Acquisition Date. The excess of the purchase price over the
fair value of the Company's identifiable net assets has been classified as
goodwill. Therefore, the depreciation and amortization expense of the Company
are significantly higher than the corresponding amounts for the Predecessor.
Additionally, interest expense increased due to debt used to finance the
Acquisition. The impact of the Acquisition on the Company's results of
operations is discussed below in the comparison of combined fiscal 1996 to
fiscal 1995.

29
<PAGE>

RESULTS OF OPERATIONS

The Acquisition was completed on August 23, 1995. Because of the application
of purchase accounting and the resulting revaluation of the Predecessor's
assets and liabilities and the impact on certain expenses, the financial
statements of the Predecessor for the periods prior to August 23, 1995 are not
strictly comparable to those of subsequent periods. However, the following
table combines historical fiscal 1996 data for the Predecessor and the Company
in order to facilitate discussion of financial results.

STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------
PREDECESSOR COMPANY
COMBINED YEAR THREE MONTHS THREE MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED ENDED
MARCH 31, 1994 MARCH 31, 1995 MARCH 31, 1996 JUNE 30, 1995 JUNE 30, 1996
-------------- -------------- -------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales............... $50,108 $58,126 $68,319 $17,271 $18,799
Cost of sales........... 23,622 25,692 30,142 7,351 8,135
------- ------- ------- ------- -------
Gross profit.......... 26,486 32,434 38,177 9,920 10,664
Selling expenses........ 14,639 17,888 17,047 4,938 4,713
General and administra-
tive
expenses............... 6,834 5,246 7,338 1,607 1,960
Incentive compensation.. -- -- -- -- 800
Depreciation and amorti- 828 1,085 1,833 301 629
zation................. ------- ------- ------- ------- -------
Operating income...... 4,185 8,215 11,959 3,074 2,562
Interest expense........ 97 136 4,543 34 1,826
Investment income....... 591 633 1,134 251 43
Other income (expense), 108 150 185 77 (6)
net.................... ------- ------- ------- ------- -------
Income before taxes..... 4,787 8,862 8,735 3,368 773
Provision for income 1,704 3,174 3,595 1,230 465
taxes.................. ------- ------- ------- ------- -------
Net income (a).......... $ 3,083 $ 5,688 $ 5,140 $ 2,138 $ 308
======= ======= ======= ======= =======
EBITDA.................. $ 5,121 $ 9,053 $13,977 $ 3,452 $ 3,185
DATA AS A PERCENTAGE OF
SALES:
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 47.1 44.2 44.1 42.6 43.3
------- ------- ------- ------- -------
Gross profit.......... 52.9 55.8 55.9 57.4 56.7
Selling expenses........ 29.2 30.8 25.0 28.6 25.1
General and administra-
tive
expenses............... 13.6 9.0 10.7 9.3 10.4
Incentive compensation.. -- -- -- -- 4.3
Depreciation and amorti-
zation................. 1.7 1.9 2.7 1.7 3.3
------- ------- ------- ------- -------
Operating income...... 8.4% 14.1% 17.5% 17.8% 13.6%
======= ======= ======= ======= =======
</TABLE>
- --------
(a) Before effects of discontinued operations and changes in accounting
principles in the years ended March 31, 1994 and 1995.

30
<PAGE>

COMPANY THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO PREDECESSOR THREE MONTHS
ENDED JUNE 30, 1995

Net Sales. Net sales increased from $17.3 million in the three months ended
June 30, 1995 to $18.8 million in the three months ended June 30, 1996, an
increase of 8.8%. In the United States, relaxers and texturizers, hair color
and hair care maintenance products all generated net sales increases. Shaving
products decreased as a result of the shaving products' manufacturing line
being out of service while it was reorganized and moved to another building to
optimize capacity. Carson South Africa continued to demonstrate strong results
with an increase in net sales of 47.2% from $1.5 million in the three months
ended June 30, 1995 to $2.2 million in the three months ended June 30, 1996.
International sales excluding South Africa decreased slightly, primarily as a
result of delayed shipments to Nigeria due to changes in import regulations.

Gross Profit. Gross profit increased from $9.9 million in the three months
ended June 30, 1995 to $10.7 million in the three months ended June 30, 1996,
an increase of 7.5%. This increase was almost entirely the result of the
increase in net sales. Gross margin decreased slightly from 57.4% to 56.7%
during this period, primarily as a result of an addition to the LIFO (last in,
first out) provision recorded in the three months ended June 30, 1996.

Selling Expenses. Selling expenses decreased from $4.9 million in the three
months ended June 30, 1995 to $4.7 million in the three months ended June 30,
1996, a decrease of 4.6%. As a percentage of net sales, selling expenses
decreased from 28.6% to 25.1% during this period. This decrease was due
primarily to the timing of advertising and promotional expenses and, to a
lesser extent, the inclusion of a full quarter in the three months ended June
30, 1996 of the effect of the establishment of an in-house sales organization
and termination of the majority of the Company's sales broker relationships.

General and Administrative Expenses. General and administrative expenses
increased from $1.6 million in the three months ended June 30, 1995 to $2.0
million in the three months ended June 30, 1996, an increase of 22.0%. As a
percentage of net sales, general and administrative expenses increased from
9.3% to 10.4% during this period. This increase in general and administrative
expenses as a percentage of net sales was a function of several factors
relating to the Acquisition and the new management structure. First, the new
management team included the addition of several new senior executives and the
promotion of certain key executives that increased personnel costs by
approximately $0.3 million which management believed were necessary to support
the future growth of the Company. Second, the Company entered into a
management agreement with Morningside which provides strategic consulting
advice to the Company for a fee of $350,000 per annum. Third, travel expenses
increased significantly due to the new management's focus on international
markets which required extensive travel. Finally, bank fees and professional
fees increased due to the new credit agreements relating to the debt incurred
to finance the Acquisition.

Incentive Compensation Expenses. The Company recognized $0.8 million of
incentive compensation expense during the quarter ended June 30, 1996 relating
to anticipated costs under certain long-term incentive compensation
agreements. Upon completion of the Offerings, the Company will record
additional compensation charges of approximately $0.6 million (based on the
midpoint of the estimated range of the initial public offering price)
principally for final payments under these awards. During August 1996, several
outside directors purchased 115,373 shares of Common Stock at approximately
$2.17 per share for an aggregate purchase price of $250,000, and members of
senior management purchased 385,818 shares of Common Stock at approximately
$4.15 per share, for an aggregate purchase price of $1.6 million. The purchase
of such shares by senior management was financed with $1.3 million (net of
discount) in non-interest bearing long-term full recourse loans from the
Company. The Company will record additional non-cash compensation expense of
approximately $6.8 million (with no associated income tax benefits) during the
three months ended September 30, 1996 for the excess of the estimated initial
public offering price over the actual purchase price of such shares and for
the shares of Carson South Africa awarded to certain members of its
management. See "Management."

Depreciation and Amortization. Depreciation and amortization expense
increased from $0.3 million in the three months ended June 30, 1995 to $0.6
million in the three months ended June 30, 1996. As a percentage of net sales,
depreciation and amortization expense increased from 1.7% to 3.3% during this
period. This increase was primarily due to goodwill amortization which
resulted from the application of purchase accounting. The increase in
amortization due to the Acquisition was partially offset by a change in the
way the Company accounts for package design costs. Prior to the Acquisition,
the Predecessor capitalized package design costs and amortized it over a four
year period. Since the Acquisition, the Company has expensed package design
costs as

31
<PAGE>

incurred. The application of purchase accounting related to the Acquisition
did not have a material impact on the Company's depreciation expense.

Operating Income and EBITDA. As a result of the above changes, operating
income decreased from $3.1 million in the three months ended June 30, 1995 to
$2.6 million in the three months ended June 30, 1996, a decrease of 16.7%. As
a percentage of net sales, operating income decreased from 17.8% to 13.6%
during this period. EBITDA decreased from approximately $3.5 million to $3.2
million, a decrease of 7.7% during this period. Excluding the effects of the
incentive compensation charge, operating income and EBITDA increased 9.4% and
15.4% respectively during this period.

Interest expense. Interest expense increased substantially from $0.0 million
in the three months ended June 30, 1995 to $1.8 million in the three months
ended June 30, 1996 as a result of the new debt incurred to finance the
Acquisition.

Other Income; Investment Income. Other income decreased as a result of the
elimination of royalty income associated with the Caribbean. The Company now
handles Caribbean sales through its in-house sales organization. Investment
income decreased because most of the Predecessor's investments were liquidated
in conjunction with the Acquisition.

Provision for Income Taxes. The provision for income taxes decreased from
$1.2 million in the three months ended June 30, 1995 to $0.5 million in the
three months ended June 30, 1996 as a result of the decrease in pre-tax
income. The effective tax rate increased from 36.5% to 60.2% primarily as a
result of goodwill amortization which is not deductible for income tax
purposes.

COMBINED YEAR ENDED MARCH 31, 1996 COMPARED TO PREDECESSOR YEAR ENDED MARCH
31, 1995

Net Sales. Net sales increased from $58.1 million in fiscal 1995 to $68.3
million in fiscal 1996, an increase of 17.5%, as a result of positive market
acceptance of new product formulations and new packaging, and the efforts of
the Company's in-house sales organization which was established in April 1995.
In the United States, relaxers and texturizers, hair color, shaving products
and hair care maintenance products all generated net sales increases. Carson
South Africa continued to show strong growth with an increase in net sales of
84.0% from $3.6 million in fiscal 1995 to $6.7 million in fiscal 1996, a
function of both the rapid expansion of the African market and increasing
market share. International sales excluding sales by Carson South Africa also
increased, primarily due to European sales where the Company increased its
sales representation.

Gross Profit. Gross profit increased from $32.4 million in fiscal 1995 to
$38.2 million in fiscal 1996, an increase of 17.7%. This increase was almost
entirely the result of the increase in net sales. Gross margin increased
slightly from 55.8% to 55.9% during this period.

Selling Expenses. Selling expenses decreased from $17.9 million in fiscal
1995 to $17.0 million in fiscal 1996, a decrease of 4.7% despite an increase
in net sales of 17.5%. As a percentage of net sales, selling expenses
decreased from 30.8% to 25.0% during this period. This decrease was due to the
Company's decision to establish an in-house sales organization and terminate
the majority of its sales broker relationships. In fiscal 1995, brokers were
paid a commission which averaged slightly above 5%. The commission expense was
almost entirely eliminated in fiscal 1996. This savings was offset in part by
an increase in sales salaries and other payroll costs related to the new sales
employees.

General and Administrative Expenses. General and administrative expenses
increased from $5.2 million in fiscal 1995 to $7.3 million in fiscal 1996, an
increase of 39.9%. As a percentage of net sales, general and administrative
expenses increased from 9.0% to 10.7% during this period. The increase in
general and administrative expenses as a percent of net sales was a function
of several factors relating to the Acquisition and the new management
structure. First, the new management team included the addition of several new
senior executives and the promotion of certain key executives that increased
personnel costs by approximately $0.4 million which management believed were
necessary to support the future growth of the Company. Second, the Company
entered into a management agreement with Morningside which provides strategic
consulting advice to the Company for a fee of $350,000 per annum. Third,
travel expenses increased significantly due to the new management's focus on
international markets, including the establishment of the South African
manufacturing

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operations which required extensive travel. Finally, bank fees and
professional fees increased approximately $0.2 million due to the new credit
agreements relating to the debt incurred to finance the Acquisition.

Depreciation and Amortization. Depreciation and amortization expense
increased from $1.1 million in fiscal 1995 to $1.8 million in fiscal 1996. As
a percentage of net sales, depreciation and amortization expense increased
from 1.9% to 2.7% during this period. This increase was due to goodwill
amortization which resulted from the application of purchase accounting. The
increase in amortization due to the Acquisition was partially offset by a
change in the way the Company accounts for package design costs. Prior to the
Acquisition, the Predecessor capitalized package design costs and amortized
them over a four year period. Since the Acquisition, the Company has expensed
package design costs as incurred. The application of purchase accounting
related to the Acquisition did not have a material impact on the Company's
depreciation expense.

Operating Income and EBITDA. As a result of the above changes, operating
income increased from approximately $8.2 million in fiscal 1995 to $12.0
million in fiscal 1996, an increase of 45.6%. As a percentage of net sales,
operating income increased from 14.1% to 17.5% during this period. EBITDA
increased from approximately $9.1 million to $14.0 million, an increase of
54.4% during this period.

Interest expense. Interest expense increased substantially from $0.1 million
in fiscal 1995 to $4.5 million in fiscal 1996 as a result of the new debt
incurred to finance the Acquisition.

Other Income; Investment Income. Other income remained approximately the
same in fiscal 1996 as compared to fiscal 1995. Investment income increased
from $0.6 million in fiscal 1995 to $1.1 million in fiscal 1996 as the
Predecessor realized gains on the liquidation of certain investment
securities.

Provision for Income Taxes. The provision for income taxes increased from
$3.2 million in fiscal 1995 to $3.6 million in fiscal 1996, an increase of
13.3%. This increase occurred despite pre-tax income decreasing from $8.9
million in fiscal 1995 to $8.7 million in fiscal 1996 as a result of goodwill
amortization of $0.7 million in fiscal 1996 which was not deductible for tax
purposes. Accordingly, the effective tax rate increased from 35.8% to 41.2%
during this period.

PREDECESSOR YEAR ENDED MARCH 31, 1995 COMPARED TO PREDECESSOR YEAR ENDED
MARCH 31, 1994

Net Sales. Net sales increased from $50.1 million in fiscal 1994 to $58.1
million in fiscal 1995, an increase of 16.0%. In the United States, net sales
of relaxers and texturizers, hair color, and shaving products all increased,
offset by a nominal decrease in the hair care maintenance category. The
Company's South African subsidiary's sales increased from $1.8 million in
fiscal 1994, the first full fiscal year of South African operations, to
$3.6 million in fiscal 1995, an increase of 105.1%. International sales
excluding South Africa also increased, primarily due to increased European
sales penetration.

Gross Profit. Gross profit increased from $26.5 million in fiscal 1994 to
$32.4 million in fiscal 1995, an increase of 22.5%. Gross margin improved from
52.9% to 55.8% during this period. Several of the product reformulations
completed in fiscal 1995 resulted in lower manufacturing costs. Additionally,
due to new packaging and increased advertising, the Predecessor implemented
the first significant price increase on the Dark & Lovely relaxer kits in
several years.

Selling Expenses. Selling expenses increased from $14.6 million in fiscal
1994 to $17.9 million in fiscal 1995, an increase of 22.2%. This increase was
primarily a result of the increase in net sales since most of the components
of selling expense were directly variable with sales. As a percentage of net
sales, selling expenses increased from 29.2% to 30.8% during this period,
almost entirely attributable to increased advertising.

General and Administrative Expenses. General and administrative expenses
decreased from $6.8 million in fiscal 1994 to $5.2 million in fiscal 1995, a
decrease of 23.2%. As a percentage of net sales, general and administrative
expenses decreased from 13.6% to 9.0% during this period. This decrease was
due primarily to a $1.0 million reduction in compensation paid to the previous
owners, decreased computer training expenses and lower legal costs as a result
of the settlement of law suits in 1994.

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Depreciation and Amortization. Depreciation and amortization expense
increased from $0.8 million in fiscal 1994 to $1.1 million in fiscal 1995. As
a percentage of net sales, depreciation and amortization increased from 1.7%
to 1.9% during this period. This increase was due to higher capitalized
package design cost and higher depreciation expense related to a new
administrative building and finished goods warehouse.

Operating Income and EBITDA. As a result of the above changes, operating
income increased from approximately $4.2 million in fiscal 1994 to $8.2
million in fiscal 1995, an increase of 96.3%. As a percentage of net sales,
operating income increased from 8.4% to 14.1% during this period. EBITDA
increased from approximately $5.1 million to $9.1 million, an increase of
76.8% during this period.

Interest Expense. Interest expense remained approximately the same at $0.1
million in fiscal 1995 as compared to fiscal 1994.

Other Income; Investment Income. Other income and investment income remained
approximately the same in fiscal 1995 as compared to fiscal 1994.

Provision for Income Taxes. The provision for income taxes increased from
$1.7 million in fiscal 1994 to $3.2 million in fiscal 1995, an increase of
86.3%, due to the increase in pre-tax income. The effective tax rate remained
constant at approximately 36% during this period.

Discontinued Operation; Effect of Changes in Accounting Principles. The
charge for the discontinued operation related to the loss on disposal of Fine
Products, a candy manufacturing company that was sold in fiscal 1994. The
effect of changes in accounting principles related to the adoption of FAS
115--"Accounting for Certain Investments in Debt and Equity Securities", FAS
106--"Accounting for Post-retirement Benefits other than Pensions", and FAS
109--"Accounting for Income Taxes" (see Note 1 to the Predecessor's
Consolidated Financial Statements for the years ended March 31, 1994 and 1995
contained elsewhere in this Prospectus).

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Acquisition, the Predecessor's liquidity requirements arose
primarily from working capital needs, especially increases in inventory and
receivables, as well as capital expenditures. The Predecessor maintained lines
of credit totalling $5.0 million but did not use these lines in fiscal 1994 or
1995. The Predecessor maintained substantial balances of cash and marketable
securities which were available for liquidity needs, although cash flow from
operations was historically sufficient to fund the Predecessor's liquidity
requirements.

Upon consummation of the Acquisition, the Company's liquidity requirements
increased significantly due to the debt service requirements associated with
borrowings used to finance the Acquisition. See "The Company--Background."
Under the Senior Bank Credit Facility, the Company maintains a revolving
credit line which matures in July 2001 and provides for borrowings of up to
$10.0 million at a floating rate based upon the Base Rate as defined in the
Senior Bank Credit Facility or the Eurodollar Rate as defined in the same
agreement, subject to the maintenance of a borrowing base. The Company used
$5.0 million of the revolving credit line as part of the financing for the
Acquisition. As of March 31, 1996, the Company had borrowed an additional
$2.5 million under the revolving credit line to finance short term working
capital requirements. The Company had $1.6 million of cash and cash
equivalents on hand at March 31, 1996, and availability under the revolving
credit line of $2.5 million. The Company had $0.9 million of cash and cash
equivalents on hand at June 30, 1996 and availability under the revolving line
of credit of $2.5 million.

At March 31, 1996, the Company did not comply with certain covenants of the
Senior Bank Credit Facility and the Senior Subordinated Notes related to
capital expenditures and net worth. The net worth covenant had originally been
set without regard to the carryover for accounting purposes of predecessor
basis; as a result of such carryover the net worth covenant was amended. The
Company has received waivers of these events of default from the lenders under
the Senior Bank Credit Facility and Senior Subordinated Notes and is currently
in compliance with all such covenants.

The Company intends to use the net proceeds of the Offerings (i) to redeem
$18.0 million aggregate principal amount of the 12.5% Senior Subordinated
Notes due 2002, plus prepayment premium for an aggregate redemption price of
approximately $19.3 million plus accrued and unpaid interest thereon, (ii) to
redeem $3.0 million aggregate principal amount of the 15.0% PIK Subordinated
Notes due 2003, plus prepayment premium for an aggregate redemption price of
approximately $3.6 million plus accrued and unpaid interest thereon, and (iii)
to purchase $11.8 million aggregate principal amount of the Junior
Subordinated Notes for a repurchase price

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of $4.7 million. The balance of the net proceeds, along with borrowings under
the New Senior Bank Facility, will be used to repay all outstanding borrowings
under the Senior Bank Credit Facility.

In conjunction with the Offerings, the Company intends to refinance the
remaining portion of the Senior Bank Credit Facility with borrowings under the
New Senior Bank Facility which is anticipated to include (i) a $15.0 million
term loan A, (ii) a $10.0 million term loan B and (iii) a $15.0 million
revolving credit facility, which will provide more availability than the
current facility. The term loan A and revolving credit facility would bear
interest at the applicable prime rate plus 0.5% or LIBOR plus 2.0% and would
have a final maturity of six years. The term loan B would bear interest at the
applicable prime rate plus 1.0% or LIBOR plus 2.5% and would have a final
maturity of seven years. Management believes that the New Senior Bank Facility
will contain less restrictive covenants compared to the existing facility,
since the Company will be substantially less leveraged following the
Offerings.

In the seven month period since the Acquisition, August 23, 1995 to March
31, 1996, the Company generated $3.3 million in cash flow from operations
adjusted for depreciation and amortization and deferred income taxes. However,
changes in assets and liabilities used $4.5 million of cash. Therefore, net
cash used in operating activities was $1.2 million. The use of cash relating
to changes in assets and liabilities was driven primarily by increases in
accounts receivable and inventory due to the increase in net sales, increases
in other current assets relating to a deposit, and decreases in accrued
expenses primarily relating to the timing of advertising expenditures. These
changes were partially offset by increases in accounts payable relating to the
higher net sales of the Company, higher interest payable relating to the
acquisition debt and decreases in other assets relating to the amortization of
the prepaid interest on the Junior Subordinated Notes.

Net cash used in investing activities (other than to acquire the
Predecessor) for the seven months since the Acquisition was $1.5 million of
capital expenditures. The two largest capital projects involved equipping the
new South African manufacturing facility and reorganizing the shaving powder
production in Savannah to better optimize capacity.

Net cash provided by financing activities (other than to acquire the
Predecessor) for the seven months since the Acquisition totaled $1.5 million
which included additional borrowings under the revolving credit line of $2.5
million and payments on senior term debt of $1.0 million. The net cash flow
for the seven month period since the Acquisition was an outflow of $1.2
million, which, when combined with acquired cash of $2.7 million, results in a
net increase in cash of $1.5 million.

For the three months ended June 30, 1996, the Company generated $1.0 million
in cash flow from operations adjusted for depreciation and amortization.
However, changes in assets and liabilities used $0.6 million in cash.
Therefore, net cash provided by operating activities for the three months
ended June 30, 1996 was $0.4 million. Net cash used in investing activities
during this period totaled $3.5 million including the $3.0 million investment
in the parent of AM Cosmetics and $0.5 million of capital expenditures. Net
cash provided by financing activities totaled $2.5 million resulting from $3.0
million of additional borrowings to fund the investment in the parent of AM
Cosmetics, less a payment on the term loan of $0.5 million. The net decrease
in cash for the three months ended June 30, 1996 was $0.7 million.

The Company's and the Predecessor's capital expenditures for fiscal 1996,
fiscal 1995 and fiscal 1994 were $2.2 million (including package design costs
of $0.2 million), $1.3 million (including package design costs of $0.4
million), and $2.5 million (including package design costs of $1.0 million),
respectively. The Company anticipates that capital expenditures for the twelve
month period ending March 31, 1997 will be approximately $4.3 million, which
includes $1.7 million for the purchase of the South African manufacturing
plant and additional related equipment (the land and buildings were leased as
of March 31, 1996) and the expansion of the Savannah manufacturing and
warehousing facility.

The Company believes that cash flow from operating activities, existing cash
balances and available borrowings under its existing revolving credit facility
or the New Senior Bank Facility will be sufficient to fund working capital
requirements, capital expenditures and debt service requirements in the
foreseeable future.

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BUSINESS

GENERAL

The Company is a leading manufacturer and marketer in the U.S. retail ethnic
hair care market for African-Americans. The Company believes that it is one of
the leading global manufacturers and marketers of ethnic hair care products
for persons of African descent. The Company's flagship brand, Dark & Lovely,
is the most widely recognized ethnic brand name in the U.S. retail ethnic hair
care market. The Company currently sells over 60 different products under five
principal brand names, including Dark & Lovely, Excelle, Beautiful Beginnings,
Dark & Natural and Magic. The majority of the Company's sales are derived from
four categories of the ethnic health aid beauty aids market: hair relaxers and
texturizers, which are used to chemically treat and straighten hair
(constituting approximately 50% of the Company's net sales in fiscal 1996),
hair color, shaving products and hair care maintenance products. The Company's
products are specifically formulated to address the unique physiological
characteristics of hair of persons of African descent, which typically include
curliness and dryness. The Company believes that it has the number one U.S.
retail market position in three of the four ethnic hair care categories in
which it competes (hair relaxers and texturizers, hair color and shaving
products). In addition, the Company believes that the strength of its
competitive position in the ethnic hair care industry is attributable, in
part, to its heritage of technological innovation and its focused R&D effort.

The Company markets its products in the U.S. with its own experienced direct
sales force. The Company currently markets its products in 60 countries
outside of the United States, primarily through local distributors. In fiscal
1996, approximately 23.8% of the Company's net sales were derived from sales
within these countries.

In order to capitalize on new growth opportunities, the Company has
assembled a senior management team of seasoned executives with extensive
experience serving the consumer products industry and the ethnic market. As
Chairman and Chief Executive Officer, Dr. Leroy Keith, former President of
Morehouse College and director of the Predecessor, entrepreneur and prominent
member of the African-American community, provides the Company with leadership
and vision. Joyce M. Roche, President and Chief Operating Officer, has over 20
years of experience in the health aid beauty aids industry, including
positions as Senior Vice President of Marketing and Vice President of Global
Marketing at Avon and Director of Marketing at Revlon. Dennis Smith, Executive
Vice President of Sales, has over 20 years of experience in the ethnic hair
care industry, including senior management positions with a competitor and 14
years with the Company. Miriam Muley, Executive Vice President of Marketing,
has over 17 years of consumer products industry experience, having held
marketing positions at Avon, Bristol-Myers Squibb Company's Clairol division
and Johnson & Johnson, and as a Vice President at Uniworld Group, a leading
advertising agency targeting the African-American market segment.

The Company has recently taken several important initiatives to enhance its
position in the ethnic hair care marketplace. In 1996, the Company's R&D
department finalized the development of several product innovations, including
the Fail Safe and DL 2000 hair relaxer technologies and a full line of hair
care maintenance products. After 20 years of using the same advertising
agency, the Company, in early 1996, appointed a new advertising agency, Don
Coleman & Associates, Inc., which specializes in the African-American market.
The introduction of new and attractive product packaging for many of the
Company's products will be completed in 1996. The in-house sales force formed
in April 1995 was further expanded in 1996 with the addition of several
experienced senior sales executives. In addition, the Company established its
own manufacturing plant in South Africa by acquiring a former Pfizer facility,
and began operations in early 1996. The Company began establishing a
distribution network and training stylists in Brazil in October 1995, through
a strategic alliance with Servico Nacional de Aprendizagem (SENAC), a national
professional services training organization. The Company intends to use Brazil
as a base for expanding to other Central and South American countries.

The Company experienced a 17.5% increase in net sales from $58.1 million in
fiscal 1995 to $68.3 million in fiscal 1996 and a 45.6% increase in operating
income from $8.2 million in fiscal 1995 to $12.0 million in fiscal 1996.

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INDUSTRY OVERVIEW

The U.S. retail ethnic hair care market, principally targeting the distinct
hair care needs of African-Americans, was estimated in the Packaged Facts
Report to be a $1.2 billion retail business in 1995. According to 1995 U.S.
Census Data ("Census Data") published by the U.S. Department of Commerce, the
African-American population was approximately 34 million and represented 12.7%
of the U.S. population. This segment of the U.S. population is projected by
the U.S. Department of Commerce to grow significantly faster than the general
population through the middle of the next century. The personal income of
African-Americans doubled from 1980 to 1990 and their combined purchasing
power was estimated to be approximately $260 billion in 1990, according to the
Census Data. Moreover, the Packaged Facts Report indicates that African-
American consumers generally spend up to three times as much of their
disposable income on health and beauty products as Caucasian consumers.

The Company believes that the U.S. retail ethnic hair care market is highly
fragmented, with six companies generating approximately one half of the sales
in 1995 in this market and the remaining sales generated by a large number of
smaller companies, according to the Towne-Oller Report. Most of the larger
competitors in the ethnic hair care market are privately owned and compete
only in this market. A few general market health and beauty aids companies
produce a limited line of ethnic products.

In addition to the retail segment of the U.S. ethnic hair care market, there
are also professional ethnic hair care salons which the Company estimates to
exceed 28,000 in the United States. According to market research studies
commissioned by the Company in 1990, which have been updated through focus
groups and other internal research conducted by the Company (collectively,
"Company Market Research"), approximately 40% of African-American women
patronize salons exclusively, 40% maintain their hair at home exclusively and
20% switch between salons and home hair care. The professional segment of the
U.S. ethnic hair care market is also highly fragmented, with the leading
competitor being a general market health and beauty aids company. The Company
does not currently participate in the U.S. professional segment but intends to
do so in the near future. See "--Growth Strategy."

On a global scale, the Company currently estimates that there are
approximately 900 million people of African descent outside the United States,
including an estimated 750 million people on the African continent, 100
million people in Brazil, 20 million people in the Caribbean, 10-15 million
people in Europe and 10-13 million people in Central America. The Company's
experience in developing regions such as South Africa, the Caribbean and
Brazil, indicates the percentage of women who patronize salons is dramatically
higher in these developing markets than in developed markets such as the
United States. These women tend to patronize salons because relaxer products
are generally unavailable on a retail basis, professionals have the expertise,
as well as ready access to hot water, which is necessary for effective use of
relaxer products, and the local salon is often a social gathering place for
its patrons. Although there is no independent market data to support the size
of the international market, the Company believes that the international
market is significant. For example, the Company estimates that in Southern
Africa, with a Black population of approximately 100 million, manufacturers of
ethnic hair care products generated approximately $40 million in sales in
1995. Southern Africa refers to Angola, Botswana, Lesotho, Malawi, Mozambique,
Namibia, South Africa, Swaziland, Zambia and Zimbabwe.

The major segments of the ethnic hair care market in which the Company
competes are described below:

. Relaxers and Texturizers. Chemical hair relaxing is the process of
permanently straightening curly hair. Texturizers generally work in a
similar manner as relaxers to loosen curly hair, but do not straighten
the hair completely. The amount of curl in any type of hair is
determined by the abundance of disulfide bonds as well as the shape of
the hair follicle from which the hair emerges, either straight, slightly
curved or curly. Relaxed hair serves as the foundation for and
facilitator of daily hair styling. Consequently, its popularity is not
significantly related to current fashion trends. For the person with
relaxed hair, relaxers represent a basic personal care product, similar
to shampoos and conditioners for the general market. Further, the
continual need for "touch-ups" approximately every six weeks requires
the relaxer user to frequently purchase relaxers and related products.

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According to the Packaged Facts Report, over 50% of African-American
women use chemical relaxers in their hair. For persons of African
descent, chemical relaxation became popular in the 1940's with the
introduction of sodium hydroxide or "lye" relaxer which was the sole
product available until the Company invented and patented "no-lye," or
guanidine carbonate hydroxide relaxers in 1978. In the retail market,
no-lye relaxers are generally sold in kits which include a cream base
component and a chemical activator component, which are mixed together
to create the requisite chemical reaction. One of the most significant
sources of consumer complaints in the industry is inconsistent results
caused by mixing errors. Fail Safe technology, developed by the Company,
eliminates such mixing problems. Although lye relaxers do not require
mixing and tend to work faster than no-lye relaxers, they have a much
higher risk of hair damage and skin irritation than no-lye relaxers.
Until the Company invented no-lye relaxers, relaxing hair was relegated
primarily to salons where it was applied by trained technicians for
safety reasons. The introduction of Dark & Lovely no-lye relaxers by the
Company offered an effective and less expensive in-home alternative
which significantly changed the industry.

In 1995, the U.S. retail ethnic relaxer and texturizer segment was the
largest category of U.S. retail ethnic hair care products, representing
approximately 31% of the U.S. retail ethnic hair care market, according
to the Towne-Oller Report. The relaxer and texturizer market is highly
fragmented with almost 50 brands available; however, according to the
Towne-Oller Report, the top five brands generated almost half of the
sales volume in 1995, with the Company's Dark & Lovely brand having the
largest market share with approximately 14.5% of the total sales in this
segment.

. Hair Color. Hair coloring involves the addition of chemical coloring
agents to the natural pigment of hair, or a lightening or "lifting" of
the natural pigment followed by the addition of color to brighten hair.
The hair of individuals of African descent has more pigment in the hair
cortex than Caucasian hair. This type of hair also has a lower sulfur
content, a slightly lower lipid content and possesses sulfur-containing
bonds that have a different configuration than Caucasian hair. As a
consequence of these characteristics, the pigment in hair of individuals
of African descent reacts to coloring agents differently than Caucasian
hair and chemically relaxed hair will react more quickly to lightening
which can result in a brassy appearance. All of the Company's Dark &
Lovely hair colors are formulated to react appropriately to the hair of
individuals of African descent to ensure the delivery of the intended
color without brassiness.

The three major categories of hair color are: temporary, semi-permanent
and permanent. Temporary hair colors are generally removed from the
hair in the first or second shampooing. Temporary color is only
deposited on the hair surface and for the most part, no chemical
reactions take place, so it is safe to use immediately after relaxing.
Temporary color can only deposit pigment, it cannot lighten the hair
color. Semi-permanent hair colors are more resistant to removal and are
formulated to last from four to six shampoos. They are applied without
peroxide, so they do not change the basic structure of the hair and are
also safe to use immediately after relaxing. Semi-permanent colors are
only designed to add color to the hair. Permanent hair colors produce
the most effective and durable coloration. Due to dye penetration of
the cortex of the hair as well as the addition of peroxide, these
colors can both lighten hair and deposit color. Therefore, permanent
color offers the greatest range of shades. According to the Packaged
Facts Report, approximately one quarter of all African-American women
color their hair, with approximately one half of this group coloring
their hair at home.

In 1995 the U.S. retail ethnic hair color segment represented
approximately 6% of the U.S. retail ethnic hair care market, according
to the Towne-Oller Report. The Company believes that it has the leading
market share in this segment. Three ethnic and two general market
health and beauty aids companies produce hair color product lines
specifically targeted to consumers of African descent.

. Hair Care Maintenance Products. The physiological differences between
the hair of individuals of African descent and Caucasian hair create the
need for a variety of products to treat or "maintain" the hair and
scalp. Hair is lubricated by the sebaceous gland which excretes oil that
flows down and lubricates the hair shaft. While this generally happens
in straight hair and in wavy hair, it is very difficult for oils to
follow the curves and undulations of curly or kinky hair. The lack of
oil causes

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curly or kinky hair to become very dry and brittle, leaving the hair
with a matte, almost dull finish. This condition is the major reason
that hair care maintenance products such as oil sheens, hair dress
conditioners, comb-outs/detanglers and wave products are popular among
individuals of African descent.

Women, children and men of African descent use a variety of products in
order to permanently change the structure of their hair. In most
instances, chemical processes (e.g., relaxing and color treating hair)
leave the hair more dry and brittle than it would be otherwise and can
significantly damage hair if used improperly. Thus there is an even
greater need to condition, replenish and protect hair before, after and
in between treatments. In order to protect the hair, strengthen it and
return it to a soft, shiny condition with a healthy-looking appearance,
the consumer in this market has an even greater need for hair care
maintenance products than her or his general market counterpart.

Numerous ethnic hair care companies and several general market health
and beauty aids companies sell hair care maintenance products to
consumers of African descent.

. Shaving Products. "Razor bumps," known medically as Pseudofolliculitis
Barbae (PFB), is a condition which primarily affects men of African
descent. Razor bumps are both caused and aggravated by shaving due to
the way curly facial hairs grow on these men, because as their beards
grow back after shaving with a razor, the sharp tip of each hair will
continue curling until it grows back into the skin. Razor bumps may lead
to an unpleasant appearance or even permanent disfigurement and can
cause great discomfort during the shaving process. The incidence of men
of African descent who suffer from some degree of razor bumps is
estimated to range from 35% to 40% and, of this group, an estimated 50%
seek some sort of relief, according to reports published by the National
Medical Association, a group of predominantly African-American
physicians. The primary alternative to shaving is using a depilatory
such as the Company's Magic product line. The advantage of depilatories
is that they remove hair chemically by weakening and dissolving the hair
so that it can be easily removed to give a smooth, close, razorless
shave. Because depilatories do not leave sharp tips on the ends of hair,
they reduce the probability that hair will grow back into the skin.

Two companies specializing in men's hair depilation compete in this
market, with the Company dominating this segment.

ETHNIC MARKET LEADERSHIP

The Company's resources are focused primarily on satisfying the unique hair
care needs of individuals of African descent worldwide. The Company believes
that it has the number one U.S. retail market position in three of the four
ethnic hair care categories in which it competes (hair relaxers and
texturizers, hair color and shaving products). The Company attributes its
leading market position to its strong brand names, combined with its direct
sales force, broad distribution, R&D capabilities and experienced management
team. Because of these strengths, the Company believes that it has a
competitive advantage over both the companies specializing in products for the
ethnic hair care market and the few general market companies that compete in
the ethnic hair care market but whose principal resources are targeted to the
general health and beauty aids market.

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brokers, as is the industry norm, who tended to have conflicting brand
loyalties and provide minimal marketing and sell-through support. In the
United States, the Company benefits from having its extensive product
line distributed broadly through three principal channels: (i) multi-
warehouse chains, including mass merchandisers (e.g., Wal-Mart, K-Mart),
major drug chains (e.g., Walgreens, Revco), food chains (e.g., Winn
Dixie, Kroger) and discount chains (e.g., Family Dollar, Dollar
General), (ii) B&Bs such as Alberto-Culver Company's Sally's Beauty
Supply stores and members of the National Beauty Supply Dealers
Association, and (iii) ethnic product distributors. See "--
Distribution."

. Research and Development. The Company believes that its heritage of
technological innovation and its focused R&D effort are important to
maintaining its market leadership position. Three of the ethnic hair
care industry's most significant innovations were introduced by the
Company: the first hair color developed exclusively for hair of persons
of African descent (1972), the first no-lye relaxer, which provided a
safe relaxer product for home use (1978), and the Fail Safe technology
for no-lye relaxers (1993), which eliminates problems associated with
imprecise mixing which can make no-lye products too weak, thereby
impacting straightening, or too strong, leading to hair damage. One of
the most significant sources of consumer complaints in the industry is
inconsistent results caused by mixing errors. The Company believes that
its R&D department, led by two industry experienced chemists with Ph.D.s
and including nine other researchers and technicians, represents the
largest R&D effort focused on the ethnic hair care market.

GROWTH STRATEGY

. Increase Share of Existing Markets. Product innovation and ongoing
upgrading of existing products are the cornerstone of the Company's
efforts to increase its market share in existing markets. The Company
recently incorporated into all of its relaxer products its latest
innovation in relaxer technology, called Fail Safe, which eliminates the
problem of mixing errors which occur with the in-home use of no-lye
relaxers. The Company's Fail Safe technology assures that the consumer
will not make a mixing error and thereby vary the relaxer strength. The
Company believes it has the only no-lye relaxer that can consistently
deliver the same results every time. The Company has been on an
aggressive schedule of new product introductions or existing product
upgrades during the last several years with over 10 products that have
been recently introduced or will be introduced during the next six
months, including the following:

-- Improved Dark & Lovely Relaxer: The Company's flagship line was
upgraded to include its innovative Fail Safe technology.
Simultaneously, conditioning benefits (ultra-conditioning relaxer
base and shampoo) were added to every step of the relaxer system and
the packaging was updated. Company research indicates that the new
product out-performs both the competition and the former Dark &
Lovely product in five key areas: straightening, manageability,
softness, health and shine.

-- Improved Excelle Relaxer: The improved Excelle relaxer brand will
use Fail Safe technology as well as increased moisturizing benefits
to deliver more body and a finished, salon look. The components of
the Excelle kit will be improved and the packaging will be
redesigned and upgraded to a modern, more elegant look.

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-- Excelle Hair Care: An Excelle hair care moisturizing line will be
added at the same time as the Excelle relaxer relaunch. Three
"after-care" products will initially be added, highlighting the
Excelle relaxer product and providing necessary hair care
maintenance items.

-- Dark & Lovely Color Care Shampoo and Conditioner: Traditional
shampoos and conditioners can strip or dull the hair of individuals
of African descent that has been color treated. The Company will
introduce a shampoo and conditioner especially designed to add body
and shine to color-treated hair to complement the Company's hair
color products.

-- Magic Mild Cream Formula: The Company has developed a mild cream
formula which is in a no-mix, easy-to-use form and is targeted to
younger users. The current Magic product line is sold primarily to
older men of African descent.

-- Africa: The Company currently sells to 17 of the 55 African
countries, with fiscal 1996 net sales of approximately $7.7
million, 84% of which was in Southern Africa (Angola, Botswana,
Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland,
Zambia, and Zimbabwe). In Southern Africa the current customer
base, which consists primarily of professional salon owners and
stylists, is serviced through regional distributors and specialty
cash-and-carry wholesale outlets. The Company currently offers
professional training through salons and seminars in order to
educate the professional salon owner or stylist as well as to
differentiate itself from its competitors in South Africa. Retail
product distribution is currently being expanded to mass
merchandisers and other large retail chains in South Africa. The
Company commenced its own manufacturing operations in South Africa
in March 1996 to support its African strategic initiatives. The
Company expects to benefit from the cost and quality advantages of
in-house production going forward. The Company's key strategic
initiatives to achieve growth throughout the African continent are
to: (i) continue market penetration and expansion of the core
Southern African business; (ii) establish and develop distribution
and/or manufacturing facilities in East Africa and West Africa;
(iii) extend existing product lines to include related product
categories such as cosmetics; and (iv) identify selected strategic
acquisitions. Carson South Africa recently sold 25% of its shares
in an initial public offering on the Johannesburg Stock Exchange.
The proceeds of such offering were used to purchase the
manufacturing facility and related equipment as well as to fund the
Company's African strategic initiatives.

-- Brazil: Brazil has a population of approximately 100 million people
of African descent, almost three times the number of people of
African descent as the United States. Moreover, the Company
believes that the ethnic hair care industry in Brazil is
underdeveloped and that the country's improving economy and
demographic trends make this market attractive for the introduction
of the Company's products. The Company began establishing a
distribution network and training stylists in Brazil in October
1995, through a strategic alliance with Servico Nacional de
Aprendizagem (SENAC), a national professional services training
organization. The Company intends to use Brazil as a base for
expanding its products and facilities to other Central and South
American countries.
-- Caribbean: In order to increase sales penetration in the Caribbean
region, the Company recently appointed a Caribbean Sales Manager
position and is investigating whether to establish a factory in
Jamaica which would enable the Company to produce in a Caribbean
Community and Common Market (CARICOM) nation, thereby substantially
reducing taxes and tariffs. The Company has sold products into the
Caribbean on an export basis through brokers since before 1975, but
expects to benefit from a more focused local marketing and
manufacturing presence.

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. Leverage Brands into New Product Categories. The Company believes that
its flagship Dark & Lovely brand name is transferable to other ethnic
health and beauty aids categories, including cosmetics.

-- Cosmetics Market Opportunity: According to the Packaged Facts
Report, the cosmetics segment of the U.S. retail ethnic health and
beauty aids market was projected to be approximately $251 million
in retail sales in 1995, and is forecasted to grow at 15% per year
until 1999. The Company intends to enter the ethnic cosmetics
market with a product line that is consistent with the positioning
of its ethnic hair care brands. The Company intends to take
advantage of (i) its ability to introduce its consumers to the Dark
& Lovely cosmetic line through inserts in Dark & Lovely relaxer and
hair color kits (which total 11 million units annually), (ii) its
strong relationships with its current customers which will enable
it to distribute new cosmetics products efficiently through the
same channels, and (iii) its exclusive contract manufacturing
arrangement with AM Cosmetics, a leading low-cost manufacturer of
cosmetics. See "Certain Relationships and Related Transactions--AM
Cosmetics." The Company is engaged in market research and product
development and, although no specific product launch date has been
set, expects to be able to enter the ethnic cosmetics market by the
end of 1997.

The Company believes that it is well positioned to deliver products to
the salon market, in significant part because many ethnic stylists
purchase their supplies at B&Bs, a distribution channel in which the
Company is well established. Additionally, the Company has successfully
entered the professional salon market internationally through its South
African subsidiary and is implementing this strategy in other parts of
Africa as well as in Brazil. The Company will use the expertise gained
from its international efforts to create teams of technical experts to
educate salon owners and stylists about the new brand and provide
ongoing training and education on the latest techniques in ethnic hair
care through trade shows, clinics and newsletters. The Company is
engaged in market research and product development and although no
specific launch date has been set, expects to be able to enter the salon
market by the end of 1997.

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PRODUCTS

The Company manufactures and markets a variety of products worldwide. The
following table sets forth the Company's principal products, by brand, as of
July 1, 1996.

<TABLE>
<CAPTION>
BRAND PRODUCTS
- -----------------------------------------------------------------------------------------
<C> <S>
Dark & Lovely Relaxers: Creme Relaxer, Regular Strength; Creme Relaxer Plus,
Super Strength
Hair Care Maintenance Products: Corrective Leave-in Condition
Therapy; Pro Therapy Protein Intensive Conditioner; Rich & Natural
Hair Dress Conditioner; Silky Set Conditioning Set & Wrap Lotion;
Quik Freeze Super Shine Spritz;
3-N-1 Plus Detangling/Conditioning Shampoo; Deep Conditioning
Treatment; Restore & Repair Reconstructive Hair Therapy; Styling
Gel; Super Hold Gel; Cholesterol Super Strengthening/Conditioning
Treatment; 24-hr. Therapy Moisture & Shine Replenisher; Ultra
Nourish Vitamin Hair Therapy;
The Restorer Super Strengthening Hot Oil; Healthy Shine Oil Sheen
Spray
Hair Color: Permanent: Jet Black; Natural Black; Brown Sable; Rich
Auburn; Sunset Auburn; Autumn Red; Light Brown; Honey Blonde;
Golden Bronze; Chestnut Blonde; Spicy Cinnamon; Midnight Blue;
Black Ruby; Light Golden Blonde
Reviving Colors Hair Color: Semi-Permanent: Radiant Black; Ebone
Brown; Spiced Auburn; Passion Plum
- -----------------------------------------------------------------------------------------
Excelle Relaxers: Creme Relaxer, Regular Strength; Creme Relaxer Plus,
Super Strength
- -----------------------------------------------------------------------------------------
Beautiful Beginnings Relaxers: Children's Relaxer
Hair Care Maintenance Products: Conditioning Shampoo Plus
Detangler; Leave-In Conditioner Plus Detangler; Natural Oil
Moisturizer Plus Detangler; Scalp Conditioner and Hair Dress
- -----------------------------------------------------------------------------------------
Dark & Natural Texturizers: Texture Enhancer, Regular Strength; Texture Enhancer,
Extra Strength; Texture Enhancer for Short Hair and Fades
Hair Care Maintenance Products: Moisturizing Shampoo; Dry Hair &
Scalp Moisturizer Conditioner; Wave Lotion; Wave & Style Gel
Hair Color: Jet Black; Natural Black; Darkest Brown
Moustache & Beard Color: Jet Black; Natural Black
- -----------------------------------------------------------------------------------------
Magic Shaving Products: Shaving Powder: Gold, Platinum, Blue and Red;
Pre-shave/after-shave lotion; Cream Shave
</TABLE>

. Dark & Lovely. The Dark & Lovely relaxer was introduced in 1978 and
effectively changed the way African-American women could relax their
hair. The introduction of the no-lye technology by the Company
significantly reduced the possibility of hair damage and skin irritation
frequently caused by sodium-based (lye) relaxers. The Dark & Lovely
brand is positioned to appeal to the younger African-American woman who
is looking for a "straight" look.

For more than 20 years, Dark & Lovely Hair Color--the first hair color
formulated specifically for the distinct hair needs of African-American
women--has been the market leader in ethnic hair color. Introduced in
1972, Dark & Lovely Hair Color targets African-American consumers who
are interested in changing and enhancing the appearance of their hair
color. The brand is supported with a complete line of hair care
maintenance products for daily care. In addition, Reviving Colors by
Dark & Lovely offers African-American women a range of semi-permanent
shades to choose from for a subtle change in color. Two new shades will
be introduced in late 1996, offering a total of six shades. A new line
of hair care products, Color Care, will also be launched in autumn of
1996 to address the need to maintain and refresh hair that has been
color-treated.

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. Excelle. This is the Company's premiere brand targeted to the more
mature fashion conscious African-American woman concerned with the
appearance and health of her hair who is trying to achieve a finished
salon look at home. Introduced in 1984, Excelle Salon Performance
relaxer will be relaunched in 1996 with the aim of offering its target
audience healthier looking hair with luxurious body and sheen. The new
Excelle formula has improved relaxing capabilities and natural
ingredients such as aloe vera, vitamin E and protein. The Company
believes that upgraded packaging, a new hair care maintenance product
line and increased advertising will help communicate the brand's
upscale image to consumers.

. Beautiful Beginnings. This brand, targeted to parents of girls aged 5
to 12 years old, achieved the number three position in sales among
children's relaxers within three years of its introduction in 1993.
Beautiful Beginnings is an advanced conditioning Fail Safe relaxer
system for children with an exclusive Comfort Plus pretreatment that
protects sensitive young hair and scalp without inhibiting the
relaxing process. The Company believes Beautiful Beginnings is one of
the safest and gentlest children's relaxer systems available. The
brand is complemented with a complete line of hair care maintenance
products.

. Dark & Natural. This brand is targeted to men of African descent. The
Dark and Natural texturizer product delivers rich, natural-looking
waves. DL 2000 technology, a tension activated process in the Dark &
Natural product line, allows the user to control the amount of
relaxation in his hair through combing. Dark & Natural Hair Color for
men was introduced in 1992 and represents the first hair color
targeted to and developed exclusively for the African-American male.
Dark & Natural hair color products are designed to recapture the
natural color of hair that is dull or graying and produces a richer,
deeper and healthier looking color. The easy-to-mix formula contains
no ammonia and therefore is gentle to men's hair.

. Magic. This brand of shaving products is the top-selling male
depilatory product in the United States and globally among Black men.
On the market since 1901, Magic shaving products are the only
depilatory products endorsed by the National Medical Association for
the treatment and prevention of "razor bumps". A new no-mix cream
targeted to younger African-American men is planned for introduction
in the autumn of 1996.

MARKETING AND PROMOTIONS

The Company believes that understanding the consumer, meeting her or his
needs and delivering on product promises are critical in maintaining the
Company's competitive position. The Company spent an average of approximately
1% of net sales for each of the last two fiscal years on market research, such
as in-home consumer product placements for new products, tracking studies,
concept testing, package testing and advertising testing aimed at improving
its understanding of and effectively targeting its consumer. The Company also
maintains a toll-free telephone number to answer consumer questions and to
gather consumer feedback used to focus the Company's marketing programs.

Over 15% of net sales in fiscal 1996 was allocated to advertising and
consumer promotions. The Company believes that it is the leading advertiser in
the ethnic hair care market, with most of its emphasis on television and
print. The Company regularly advertises in magazines aimed at consumers of
African descent, such as Essence, Ebony, Black Enterprise and Jet, and in
targeted spot advertising on television and cable channels such as Black
Entertainment Television (BET) and engages in promotional activities and in-
store displays to introduce new products or attract new consumers. The Company
also uses its kit packaging format to conduct sampling programs for new
products.

In January 1996, the Company's advertising account was awarded to Don
Coleman & Associates, Inc., considered by the Company to be in the forefront
of ethnic advertising. The previous agency had been in place for over 20
years. A new campaign for the Company's flagship brand, Dark & Lovely,
including television, print, and radio advertising is scheduled for late
autumn of 1996.

The Company is actively involved in numerous public relations and community
relationship events. In 1996, the Company was involved in the Olympics both in
Savannah and Atlanta. In Atlanta, the Company was one of the sponsors of La
Maison Olympique Africaine, The African Olympic House, providing the Company
with an

44
<PAGE>

opportunity to highlight its presence in the global African business
community. The Company's commitment to the African-American community is
demonstrated through several support programs including sponsorship of the
Black Family Reunion Program and a Safe Shelter Program for homeless women and
children and the establishment of the Carson Scholarship Program at
historically Black universities such as Dillard, Hampton and Fisk
Universities. From October to December 1996, the Company, in conjunction with
several leading African-American women's organizations and the Celebrating
Life Foundation, will be promoting awareness of breast cancer among African-
American women. In addition, the Company has committed to donate $0.10 from
the sale of every Dark & Lovely relaxer and hair color unit sold during that
period, up to $150,000, to the Celebrating Life Foundation to help provide
education on breast cancer and make screening available to African-American
women unable to afford the examination.

DISTRIBUTION AND SALES

The Company's customers can be categorized into three principal distribution
channels in the U.S. retail ethnic hair care market, as follows:

. Multi-warehouse Chains. Multi-warehouse chains are groups of stores
operating under the same name that have a number of different
distribution points, warehouses or shipping points. Chains which carry
the Company's products include mass merchandisers (e.g., Wal-Mart, K-
Mart), drug chains (e.g., Walgreens, Revco, CVS, Rite Aid, Duane Reade),
food chains (e.g., Winn Dixie, Kroger), and discount chains (e.g.,
Family Dollar, Dollar General). The chains generally are an important
part of the Company's retail business because of their ability to draw
ethnic customers from a large geographic area. The Company's multi-
warehouse chain customers may purchase the Company's products directly
from the Company, through an ethnic product distributor, or both.

. Beauty & Barber Supply Stores. The Beauty & Barber Supply Stores
("B&Bs") are dominated by the Sally's Beauty Supply retail chain
(Alberto-Culver Company) and the National Beauty Supply Dealers
Association (the "NBSDA"), a large group of independent family-
controlled retail outlets. B&Bs that are members of the NBSDA are
prevalent in the African-American community, typically in retail outlets
in strip shopping malls. B&Bs generally have convenient locations, low
everyday prices, and a wide selection of ethnic products relative to
retail chains.

. Ethnic Product Distributors. Ethnic product distributors are wholesalers
who either place products directly in stores or have a warehouse-to-
warehouse relationship with the major chains. K-Mart is an example of a
chain that has a warehouse-to-warehouse relationship in which K-Mart
obtains the Company's products for certain of its stores through a major
ethnic product distributor in Detroit. The overall importance of this
class of trade has gained increasing significance in recent years.

The combination of multi-warehouse chains, B&Bs and ethnic product
distributors accounted for approximately 87.0% of the Company's domestic net
sales in fiscal 1996. The balance of the Company's net sales during this
period were generated by general market distributors, regional chains and
military exchanges and commissaries. No single Company customer accounted for
more than approximately 8% of the Company's net sales in fiscal 1996.

As the Company develops new stock keeping units (SKUs) for existing product
lines, launches new products and enters new markets in the U.S. ethnic health
and beauty aids sector, the Company believes that its strong, direct
relationships with multi-warehouse chains, B&Bs and ethnic product
distributors will play an increasingly valuable role in maintaining market
share as well as gaining additional shelf space, promotional/advertising space
and store merchandising coverage. The Company has been selected by one of its
multi-warehouse chain customers to be the ethnic category manager for all
ethnic health and beauty aids products carried by such customer. As ethnic
category manager, the Company assists in the development of the customer's
merchandising program for ethnic health and beauty aids products.

45
<PAGE>

The Company's strong relationships with its customers in the various
distribution channels are enhanced by its direct sales force which totals over
30 and is comprised of two divisional managers, eight regional managers and
between three and six sales merchandisers per region, covering the Northeast,
Mid-Atlantic, Mideast and Midwest regions in the Northern Division and the
Mid-South, Southeast, Southwest and Western regions in the Southern Division.
The sales force in each region sells to all of the distribution channels doing
business in its market.

The Company has established distributor relationships in various countries
in international markets. In South Africa, the Company focuses its direct
sales efforts primarily on hair care salons which are serviced through
regional distributors and specialty cash-and-carry wholesale outlets. Retail
product distribution in South Africa is currently being expanded to include
mass merchandisers and other large retail chains.

RESEARCH AND DEVELOPMENT AND QUALITY CONTROL

The Company believes that the strength of its competitive position in the
ethnic hair care industry is attributable, in part, to its heritage of
technological innovation and its focused R&D effort. Three of the ethnic hair
care industry's most significant innovations were introduced by the Company:
the first hair color developed exclusively for African-American hair (1972),
the first no-lye relaxer, which provided a safe relaxer product for home use
(1978), and the Fail Safe technology for no-lye relaxers, which eliminates
problems associated with mixing no-lye relaxer products to obtain the correct
strength (1993). The Company believes that its R&D department, led by two
industry experienced chemists with Ph.D.s and including nine other researchers
and technicians, represents the largest R&D effort focused on the ethnic hair
care market. In 1996, the Company's R&D department finalized the development
of several product innovations, including the Fail Safe and DL 2000 hair
relaxer technologies, as well as a full line of hair care maintenance
products.

The R&D department pursues an aggressive product development schedule and
intends to maintain its leadership in product innovations and technological
improvements. In particular, the R&D department intends to: (i) facilitate the
Company's entry into the U.S. professional salon market with a line of
specially formulated products; (ii) expand the rapidly growing line of Dark &
Natural products; (iii) develop new and innovative hair care maintenance
products; (iv) strengthen the Company's hair color products; (v) and develop
more effective, milder depilatories for both men and women. The R&D
department's agenda also includes the continued review and evaluation of
various packaging alternatives to ensure that the Company's products are
delivered in safe, secure and cost-effective containers. The Company's R&D
costs (principally for new products) for the years ended March 31, 1994, 1995
and 1996 was $0.4 million, $0.3 million and $0.4 million, respectively. The
Company's estimated budget for R&D costs for fiscal 1997 is $0.5 million.
These amounts do not include amounts spent on quality control, analytical
chemistry, microbiology, package testing and consumer products testing.

The R&D department also supervises the Quality Control staff of 13 who
perform extensive safety and quality tests on the Company's products,
including analytical chemistry, microbiology and package testing. The Company
tests its new products with the aid of its four in-house cosmetology
technicians at its on-site salon.

MANUFACTURING

The Company uses a batching process in its manufacturing operations for
virtually all of its products. The batching process begins with chemical
ingredients being mixed in kettles in batch sizes ranging from 2,000 lbs. to
21,000 lbs. The kettles heat, cool, homogenize and blend each batch of
materials according to standard operating procedures (SOPs). The SOPs for each
product are established by the Company's R&D and Quality Control staff and are
periodically reviewed and improved to ensure uniformity and batch-to-batch
conformity with the manufacturing specifications for the product.

The product is then transferred from the kettles into a holding tank or
another type of storage device until it is pumped into a filling machine that
volumetrically fills the liquid or cream into plastic jars, tubes, bottles or
packets. Each container (i.e., jar, tube, bottle or packet) is coded to
identify or track a specific batch. Hair care maintenance products are then
packed in shipping boxes and sent to the finished goods warehouse ready for
shipment to the Company's customers. Certain other products are filled,
capped, labeled, coded and stored temporarily until they are assembled as
components in the relaxer, texturizer or hair color kits.

46
<PAGE>

The Company emphasizes quality and adherence to Good Manufacturing Practices
(according to FDA guidelines) throughout the production operation. Each batch
of finished product is tested by Quality Control staff before it is packaged
and shipped. The Company's quality control measures and standards include
testing raw materials and packaging materials.

The Company purchases raw materials, packaging, and components throughout
the world and reviews the efficiency and quality of its purchasing contracts.
Except as described below, the Company believes that alternate sources of
supplies exist and does not anticipate any significant shortages of, or
difficulty in obtaining, such supplies.

Guanidine carbonate is an essential raw material used in the manufacturing
of no-lye relaxer products and has been purchased by the Company for over 15
years from the one principal supplier to all manufacturers of no-lye relaxers,
located in Austria. The Company maintains a stock of guanidine carbonate at
its Savannah facility which would satisfy its requirements for approximately
four to six months of future production. The Company believes that guanidine
carbonate of comparable quality could be made available within this time
period from other suppliers on comparable terms.

FACILITIES

The Company owns and occupies six buildings on an 11.6-acre tract in
Savannah. The plant, warehouses and offices encompass approximately 225,000
sq. ft. on seven acres of the property, with the remaining 4.6 acres
undeveloped. Four of the buildings are used primarily for warehousing and
storage. The largest building (more than 120,000 sq. ft) houses the
manufacturing equipment for substantially all of the Company's products,
shipping, quality control, the R&D laboratories, customer research and a
professional hair salon which tests new products. The manufacturing and
warehousing space has been expanded seven times since it was originally built
in 1954. The Company is in the process of reconfiguring its production lines
and expanding its physical space in order to increase the capacity of the
Savannah facility. Following the planned capacity increase, the Company
believes that the capacity in the Savannah facility will be adequate for its
needs in the reasonably foreseeable future.

Carson South Africa owns and occupies one building on 4.5 acres in Midrand,
South Africa, 15 miles north of Johannesburg in a developing industrial park
located on the major highway between Johannesburg and Pretoria. The property
was previously occupied by Pfizer as a manufacturing facility and was easily
converted to suit the Company's needs. The building encompasses approximately
40,000 sq. ft. and houses the manufacturing equipment for all products,
shipping and receiving, raw material and finished goods storage, an R&D
laboratory and executive office space. Ample acreage is available for
expansion of the facility. The Company believes that capacity in the South
African facility is adequate for its needs in the reasonably foreseeable
future.

COMPETITION

The U.S. retail ethnic hair care market is competitive and highly fragmented
with a number of market participants that focus specifically on this market.
Six companies generated approximately 50% of industry sales in 1995 with the
remainder being generated by a number of smaller companies, according to the
Towne-Oller Report. Some of the larger companies, such as Soft Sheen, Luster
Products and Pro-Line Corp., are privately-owned and compete only in the
ethnic market, as does the Johnson Products subsidiary of IVAX, Inc., a New
York Stock Exchange traded company. However, a few general market companies,
such as Revlon and Alberto-Culver Company, also produce a limited line of
specialized products for the ethnic consumer. In certain product categories,
such as shampoos and hair color, competition also arises from general market
manufacturers such as the Procter & Gamble Company and Bristol-Myers Squibb
Company's Clairol division. Such general market companies are larger and have
substantially greater financial and other resources than the Company.
Internationally, the Company's competitors differ from market to market, and
include Revlon, Soft Sheen and several regionally based foreign companies.

47
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The Company primarily competes on the basis of brand recognition, product
quality, performance and price. Advertising, promotions, merchandising,
packaging and the timing of new product introductions and line extensions also
have a significant impact on buying decisions and the structure and quality of
the sales force affect product reception, in-store position, display space and
inventory levels in retail outlets.

TRADEMARKS AND PATENTS

The Company owns all of the trademark rights used in connection with its
principal brands both in the United States and in the other countries in which
its products are principally sold. Significant trademarks include: Dark &
Lovely, Dark & Lovely Excelle, Beautiful Beginnings, Dark & Natural and Magic.
The Company utilizes certain proprietary or patented technologies in the
formulation or manufacture of a number of its products; however, the loss of
such proprietary rights would not have a material adverse effect on the
business, results of operations or financial condition of the Company.

CONSUMER LAWS, GOVERNMENT AND INDUSTRY REGULATIONS

The Company is subject to the Food, Drug and Cosmetics Act, the Consumer
Product Safety Act, the Federal Hazardous Substance Act and to the
jurisdiction of the Consumer Product Safety Commission as well as product
safety laws in foreign jurisdictions. Such regulations subject the Company to
the possibility of requirements of repurchase or recall of products found to
be defective and the possibility of fines or penalties. The FDA has
promulgated certain regulations concerning product ingredients, product
labeling and product claims. In addition, the FTC regulates product claims.
The Company is subject to consumer laws in foreign countries where its
products are sold, for example, bilingual packaging requirements (Canada) and
new product registration requirements (Brazil). Existing and future FDA, FTC
and foreign regulations could impact distribution and sales of certain of the
Company's products.

The Company operates under the FDA's Good Manufacturing Practices (GMP)
guidelines and is regulated by the FDA, although its product formulas do not
have to be approved in advance by the FDA. Coloring agents used in the
Company's products may be either Food, Drug & Cosmetic (FD&C) or Drug &
Cosmetic (D&C) classified. Additionally, as a member of the Cosmetics,
Toiletries and Fragrances Association ("CTFA"), the Company agrees to adhere
to Quality Assurance Guidelines as promulgated by CTFA. The Company believes
that it is substantially in compliance with such guidelines and uses such
guidelines as standards for its operational activities. The Company is also
subject to various other Federal, state, local and foreign regulations.
Federal, State and local regulations in the United States that are designed to
protect customers or the environment have had an increasing influence on
product claims, contents and packaging. The Company believes that it is in
substantial compliance with such regulations.

EMPLOYEES

The Company is organized into seven departments--Marketing, R&D (including
Quality Control), Sales, Operations (Production and Materials Management),
Finance, Administration and Human Resources. As of July 1, 1996, the Company
employed approximately 252 persons in Savannah, an additional 30 elsewhere in
the United States and 90 internationally. In the United States, 188 were
hourly personnel and 94 were salaried employees. The Company also utilizes
temporary workers as needed, primarily in manufacturing. An average of 82 such
temporary workers were utilized on a daily basis by the Company during the
quarter ended June 30, 1996. The Company is non-union and believes that its
relationship with employees is good.

LEGAL PROCEEDINGS

The Company is involved in various routine legal proceedings incident to the
ordinary course of its business and believes that the outcome of all pending
legal proceedings, in the aggregate, will not have a material adverse effect
on the business, results of operations or financial condition of the Company.

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ENVIRONMENTAL MATTERS

The Company is subject to various Federal, state, local and foreign
environmental requirements, including those relating to discharges to air,
water and land, the handling and disposal of solid and hazardous waste and the
cleanup of properties affected by hazardous substances. Certain environmental
laws, such as the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended ("CERCLA"), impose strict, retroactive, joint and
several liability upon persons responsible for releases of hazardous
substances.

The Company has had difficulty meeting its permit levels for various
parameters for its wastewater discharge to the City of Savannah's sewer system
resulting in the issuance of notices of violation to the Company by the City
of Savannah. In response, the Company installed pretreatment equipment, which
has reduced the concentrations of many of the constituents of concern.
However, the Company continues to experience difficulty meeting certain
discharge limitations. If the Company cannot either improve the reliability of
its present treatment system, or obtain modifications to its discharge limits
from the sewer authorities, it may be required to install additional treatment
equipment. The Company is working cooperatively with the City of Savannah to
address this issue and has not been nor does it expect to be fined. However,
there can be no guarantee that the Company will not incur future costs,
including but not limited to, fines in connection with waste water compliance.
The costs for installing additional treatment equipment could be as much as
$0.5 million. The Company does not currently expect the costs of environmental
compliance to have a material adverse effect on its business, results of
operations or financial condition.

49
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and Carson Products, and
their ages as of July 1, 1996 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Dr. Leroy Keith......... 57 Chairman of the Board of Directors and Chief Executive Officer
Joyce M. Roche.......... 49 President, Chief Operating Officer, Director
Dennis E. Smith......... 49 Executive Vice President of Sales, Director
Miriam Muley............ 41 Executive Vice President of Marketing
Bradford N. Creswell.... 36 Executive Vice President of Finance and Chief Financial Officer
Lawrence E. Bathgate, 57
II..................... Director
Abbey J. Butler......... 59 Director
Suzanne de Passe........ 49 Director
Melvyn J. Estrin........ 53 Director
James L. Hudson......... 56 Director
John L. Sabre........... 37 Director
Vincent A. Wasik........ 51 Director
Jack Kemp............... 60 Director*
Henry H. Minis.......... 49 Director**
</TABLE>
- --------
* Mr. Kemp resigned from the Board of Directors of Carson Products on August
13, 1996 due to his recent decision to be a candidate for the Vice
Presidency of the United States. Mr. Kemp retains his ownership interest in
the Company. See "--Compensation of Board of Directors--Outside Director
Stock Purchases."

** Mr. Minis is a Director of Carson Products only, and will resign from such
position upon the closing of the Offerings.

Dr. Keith became Chairman and Chief Executive Officer of Carson Products
concurrent with the Acquisition in August 1995 and a Director of the Company
upon its inception in May 1995, and served as Vice President until August
1996. Dr. Keith became Chairman and Chief Executive Officer of the Company in
August 1996. Dr. Keith has served as Chairman of the Board of Directors of AM
Cosmetics since June 1996. He served on the Board of Directors of the
Predecessor from June 1994 to August 1995. Prior to that, he served as
President of Morehouse College from 1987 to 1994. Dr. Keith is a member of the
Board of Directors of Keystone Investment Group, the Mutual Funds Board of
Phoenix Home Life Insurance Company, One to One Partnership, Inc. and the
National Committee for the Performing Arts of the John F. Kennedy Center.

Ms. Roche became President and Chief Operating Officer of Carson Products in
July 1996 and of the Company in August 1996. Prior to July 1996, she held the
position of Executive Vice President of Global Marketing since joining Carson
Products in August 1995. Before joining Carson Products, Ms. Roche was
employed with Avon, Inc. for 19 years where she held the titles of Senior Vice
President of Marketing from 1991 to 1993 and Vice President of Global
Marketing from 1993 to 1994.

Mr. Smith became Executive Vice President of Sales of Carson Products
concurrent with the Acquisition in August 1995 and of the Company in August
1996. Prior to August 1995, he held the position of Vice President of Sales of
Carson Products from 1990 to 1995.

Ms. Muley became Executive Vice President of Marketing of Carson Products in
July 1996 and of the Company in August 1996. Prior to July 1996, she held the
position of Vice President, Marketing since joining Carson Products in April
1996. She was previously employed by Avon from 1992 to 1996 as General
Manager, African-American Business Unit and by Bristol-Myers Squibb's Clairol
division as Product Manager from 1990 to 1992.

Mr. Creswell became Executive Vice President of Finance and Chief Financial
Officer of Carson Products concurrent with the Acquisition in August 1995 and
of the Company in August 1996. He has also served as President of Northwest
Capital, Inc. since 1992. Prior to that time, he was employed as Vice
President, Investment Banking with Bankers Trust Company from 1987 to 1992.

50
<PAGE>

Mr. Bathgate became a Director of the Company upon its inception in May 1995
and of Carson Products in August 1995. He served as Secretary of the Company
from May 1995 to August 1996. He also serves as President and Chief Executive
Officer of Bathgate, Wegener & Wolf, P.A., a law firm with which he has been
affiliated since 1970. Mr. Bathgate is a founder and principal of Morningside,
and has served on the Board of Directors of AM Cosmetics since June 1996. He
also serves on the Board of Trustees of Villanova University, the Board of
Regents of Seton Hall University and served as Finance Chairman of the
Republican National Committee from 1988 to 1992.

Mr. Butler became a Director of Carson Products in June 1996 and of the
Company in August 1996. Mr. Butler currently serves in the following
capacities for the following companies and organizations: FoxMeyer Health
Corporation, Director from 1990, Co-Chairman of the Board of Directors from
1990, Co-Chief Executive Officer from 1990 ; Ben Franklin Retail Stores, Inc.,
Director from 1992 and Co-Chairman of the Board of Directors from 1992; C.B.
Equities Capital Corp., President from 1982 and Director from 1982; FWB
Bancorporation, Director from 1994; CST Entertainment Inc., Director from
1994; UroHealth Systems, Inc., Director from 1995; Cyclone Fence Corp.,
Director from 1995; Phar-Mor, Inc., Director from 1995; The American
University, Trustee from 1986; Starlight Foundation, Director from 1990;
Executive Council of the National Committee for the Performing Arts of the
John F. Kennedy Center, Director from 1989; and President's Advisory Committee
on the Arts, Member from 1992. Mr. Butler is the former Co-Chief Executive
Officer of FoxMeyer Drug Company which filed for protection under Chapter 11
of the U.S. Bankruptcy Code on August 27, 1996.

Ms. de Passe became a Director of Carson Products in June 1996 and of the
Company in August 1996. Ms. de Passe has served as Chief Executive Officer of
de Passe Entertainment since 1991. She currently serves on the Board of
Directors of The American Film Institute and the Los Angeles Opera.

Mr. Estrin became a Director of Carson Products in June 1996 and of the
Company in August 1996. Mr. Estrin currently serves in the following
capacities for the following companies: FoxMeyer Health Corporation, Director
since 1990, Co-Chairman of the Board of Directors from March 1991, Co-Chief
Executive Officer from October 1991; Washington Gas Light Company, Director
from October 1991; Ben Franklin Retail Stores, Inc., Co-Chairman of the Board
of Directors from November 1991, Co-Chief Executive Officer from 1994,
Director from 1991; FWB Bank, Director from August 1993; FoxMeyer Canada,
Inc., Director from February 1995, Co-Chairman of the Board of Directors from
February 1996, Co-Chief Executive Officer from 1995; UroHealth Systems, Inc.,
Director from July 1995; Phar-Mor, Inc., Director from September 1995; and
Centaur Partners, L.P., Managing Partner from 1990. Mr. Estrin has also served
in the following capacities for the following companies and organizations:
University of Pennsylvania, Trustee from 1990 to 1995; and National Capital
Planning Commission, Commissioner from 1993 to 1995. Mr. Estrin is the former
Co-Chief Executive Officer of FoxMeyer Drug Company which filed for protection
under Chapter 11 of the U.S. Bankruptcy Code on August 27, 1996.

Mr. Hudson became a Director of Carson Products in June 1996 and of the
Company in August 1996. Mr Hudson has served as Chairman of JAH Development
Company since 1985. Mr. Hudson served as Chairman of the Board of Trustees of
Morehouse College, and as a member of the Board of the Metropolitan Washington
Airports Authority.

Mr. Sabre became a Director of Carson Products concurrent with the
Acquisition in August 1995 and of the Company in August 1996. He currently
serves as Managing Director of Indosuez Capital, a position he has held since
April 1992. Prior to that, Mr. Sabre was a Vice President at Kidder, Peabody &
Co. from March 1990 to April 1992.

Mr. Wasik became Chairman of the Board of Directors and President of the
Company upon its inception in May 1995 and served as such until August 1996.
Mr. Wasik has been a Director of Carson Products since August 1995 and of the
Company since its inception. He became a member of the Board of Directors of
AM Cosmetics in June 1996 and currently serves as President. He is also a
founder and serves as President of Morningside. From 1985 to 1995, Mr. Wasik
served as President of Fidelco Capital Group. He was also President

51
<PAGE>

of Wondercamp Entertainment Company from 1994 to 1995. He served as Chairman
and Chief Executive Officer of National Car Rental Systems, Inc. from December
1986 to January 1992. He is also currently a member of the Board of Directors
of the One to One Partnership, Inc., the National Committee for the Performing
Arts of the John F. Kennedy Center and the Board of Trustees for Boston
College.

Mr. Kemp was a Director of Carson Products from February 1996 to August
1996. Mr. Kemp served as Secretary of Housing and Urban Development for the
United States Government from 1989 to 1992. Mr. Kemp is also a member of the
Board of Directors of Landair, Cyrix Corp., Oracle Corp., Columbus Trust
Realty, American Bankers Insurance Corp., and Worldcorp and has served as Co-
Director of Empower America since 1993.

Mr. Minis served as a Director of the Predecessor from 1978 to August 1995
and is currently a Director of Carson Products. Mr. Minis will resign from
such position upon the closing of the Offerings. He served as Vice President-
International of the Predecessor from April 1988 until August 23, 1995. Prior
to that, he was Export Sales Manager of the Predecessor from June 1981 to
April 1988.

COMPENSATION OF EXECUTIVE OFFICERS

Summary of Cash and Certain Other Compensation. The following table sets
forth in summary form information concerning the compensation for all services
rendered in all capacities to the Company for Dr. Keith, the three other most
highly compensated executive officers of the Company at the end of fiscal
1996, David A. Young (the Predecessor's Chief Executive Officer) and two other
highly compensated executive officers of the Predecessor who served as such
during fiscal 1996 (collectively, the "named executive officers").

SUMMARY COMPENSATION TABLE(A)

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------------------------ ------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND PRINCIPAL FISCAL STOCK OPTIONS/SARS ALL OTHER
POSITION YEAR SALARY BONUS AWARDS (#) OF SHARES COMPENSATION
------------------ ------ ------------------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Leroy Keith(b)...... 1996 $ 190,816 $ 215,000 $ -- -- $ --
Chairman of the Board
and
Chief Executive Officer
Joyce M. Roche(b)....... 1996 117,692 35,000 -- (c) --
President and Chief
Operating Officer
Dennis E. Smith......... 1996 150,405 75,870 -- (c) --
Executive Vice 1995 99,312 19,813 --
President of Sales
Bradford N. 1996 146,681 -- -- -- --
Creswell(b)............
Executive Vice
President of Finance
and
Chief Financial Officer
David A. Young(d)....... 1996 88,039 80,600 197,306 -- 100,000(e)
Former Chief Executive 1995 181,680 15,056 107,472 -- --
Officer
Mario J. de la 1996 147,608 71,364 -- -- --
Guardia(f)............. 1995 155,700 12,583 -- -- --
Former President
H. L. Cornish, Jr.(d)... 1996 55,918 51,760 -- -- 100,000(e)
Former Senior Vice 1995 114,885 9,771 -- -- --
President,
Treasurer and Secretary
</TABLE>
- --------
(a) The summary compensation table does not include the value of perquisites
and other personal benefits made available by the Company. However, no
named executive officer received such compensation in any fiscal year
valued in excess of the lesser of $50,000 or 10% of such officer's total
salary and bonus reported for such fiscal year.
(b) Dr. Keith, Ms. Roche and Mr. Creswell became executive officers of Carson
Products on August 23, 1995 and of the Company on August 14, 1996.
(c) The securities underlying the SARs were shares of the former Class A
common stock of the Company. In August 1996, Ms. Roche surrendered her
SAR, and Mr. Smith surrendered one-half of his SAR, in exchange for the
right to subscribe for 118,713 shares and 59,357 shares of Class C Common
Stock, respectively. See

52
<PAGE>

"Management--Compensation of Executive Officers--Employment Agreements,"
for a discussion of the exercise of such rights and the treatment of Mr.
Smith's remaining SAR.
(d) The employment of Messrs. Young and Cornish was terminated on August 23,
1995 in connection with the Acquisition.
(e) Severance payment made in connection with the Acquisition.
(f) Mr. de la Guardia resigned as President of the Predecessor on August 23,
1995 and retired from Carson Products on December 31, 1995.

Stock Options and Stock Appreciation Rights. No options to purchase stock
were granted during fiscal 1996. The following table sets forth information
concerning the grant of stock appreciation rights ("SARs") to each of the
named executive officers during fiscal 1996.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------------ -------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING SARS GRANTED TO
SARS EMPLOYEES EXERCISE OR EXPIRATION
NAME GRANTED (#)(A) IN FISCAL YEAR BASE PRICE ($/SH) DATE 5% ($) 10% ($)
- ---- -------------- ---------------- ----------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Dr. Leroy Keith......... -- -- -- -- -- --
Joyce M. Roche.......... (b) 23.53% (b) 8/23/05 -- --
Dennis E. Smith......... (b) 23.53% (b) 8/23/05 -- --
Bradford N. Creswell.... -- -- -- -- -- --
David A. Young.......... -- -- -- -- -- --
Mario J. de la Guardia.. -- -- -- -- -- --
H. L. Cornish, Jr....... -- -- -- -- -- --
</TABLE>
- --------
(a) The securities underlying the SARs are shares of the former Class A common
stock of the Company.

(b) In August 1996, Ms. Roche surrendered her SAR, and Mr. Smith surrendered
one-half of his SAR, in exchange for the right to subscribe for 118,713
shares and 59,357 shares of Class C Common Stock, respectively. Both Ms.
Roche and Mr. Smith have exercised such rights. See "Management--
Compensation of Executive Officers--Employment Agreements" for a
discussion of the exercise of such rights and the treatment of Mr. Smith's
remaining SAR.

Option/SAR Exercises and Holdings. No options to purchase Common Stock were
outstanding and no SARs were exercised by the named executive officers during
fiscal 1996.

Long-Term Incentive Plans. No long term incentive plan awards were granted
to the named executive officers during fiscal 1996.

Employment Agreements. Carson Products has entered into employment
agreements with Dr. Keith, Ms. Roche, Mr. Smith and Ms. Muley which agreements
provide for the terms discussed below (the "Employment Agreements"). The
Employment Agreements provide for a term of employment expiring on the third
anniversary of the closing of the Offerings. Under the Employment Agreements,
the annual base salary amounts for Dr. Keith, Ms. Roche, Mr. Smith and Ms.
Muley are $385,000, $260,000, $200,000 and $155,000 respectively. In addition
to such base salary, the Employment Agreements provide for, among other
things: an annual bonus determined under a formula based on specified net
revenue growth, net income, earnings per share and/or stock price growth;
eligibility in any pension and welfare benefit plans (other than certain
profit sharing plans) maintained by Carson Products; a monthly automobile
allowance for Dr. Keith, Ms. Roche and Mr. Smith equal to $1,000, $750 and
$500, respectively; reimbursement for specified relocation expenses, including
without

53
<PAGE>

limitation general relocation payments to Dr. Keith, Ms. Muley and Ms. Roche,
equal to $50,000, $10,000 and $10,000 respectively; and such other fringe
benefits generally provided by Carson Products to its employees.

Carson Products retains the right to terminate the employment of Dr. Keith,
Ms. Roche, Mr. Smith and Ms. Muley, and each such executive officer retains
the right to resign, at any time for any reason. If Carson Products terminates
the employment of any of the executive officers named above for "cause" (as
defined in the Employment Agreements) or with "good reason" (as defined in the
Employment Agreements) such officers will only be entitled to any unpaid base
salary amounts through and including the date of termination. If Carson
Products terminates the officer's employment without cause, the officer will
be entitled to receive severance pay equal to 150% of the officer's base
annual salary (200%, in the case of Mr. Smith). If the officer (other than Mr.
Smith and Ms. Muley) terminates his or her employment with Carson Products for
good reason, the officer will be entitled to receive severance pay equal to
200% of the officer's annual base salary (payable in one lump sum). In the
event of "disability," as defined in the Employment Agreements, Carson
Products may terminate the officer's employment and the officer will thereupon
be entitled to receive 150% (200%, in the case of Mr. Smith) of the officer's
annual base salary (payable in one lump sum).

Pursuant to the Employment Agreements, Ms. Roche, Mr. Smith and Ms. Muley
have purchased 118,713, 59,357 and 59,357 shares, respectively, of the Class C
Common Stock of the Company at a price per share equal to $4.21. The aggregate
purchase price for the shares acquired by each officer was paid in the form of
a non-interest bearing long-term full recourse promissory note. In connection
with such purchase, each officer pledged the shares he or she acquired to the
Company to secure payment of the principal amount of the promissory notes. The
principal amount of the notes will be due and payable on the earlier to occur
of the sale of the shares acquired, termination of employment or the third
anniversary of the date of purchase. The officer may prepay the principal
amount of his or her promissory note at any time and from time to time.

Pursuant to Dr. Keith's agreement, the Company has issued him 341,100 shares
of the Class C Common Stock, which represented at the time of issuance 3% of
the Company's then outstanding common stock. These shares were issued in
consideration for securing the Acquisition. These shares were transferred
immediately after issuance to DNL Partners, as trustee under a certain voting
trust agreement, dated August 23, 1995, by and among DNL Partners, Dr. Keith
and certain other stockholders.

Upon the occurrence of a "triggering event" (as defined in the Employment
Agreement for Mr. Smith), which will include the closing of the Offerings, Mr.
Smith will be entitled to receive, within 90 days after the closing of the
Offerings, a lump sum amount in cash equal to the difference between (i) the
product obtained when (A) the Specified Percentage of the value of the Company
on the closing of the Offerings (reduced by the aggregate underwriting
discount in connection with the Offerings) is multiplied by (B) the Dilution
Percentage, and (ii) the Specified Base Value. The Specified Percentage and
the Specified Base Value (as defined in the Employment Agreement for Mr.
Smith) for Mr. Smith is 0.5%, and $250,000. For purposes of the Employment
Agreement for Mr. Smith, the Dilution Percentage (as defined therein) is equal
to the quotient resulting when (i) the number of shares of all classes of the
Company's Common Stock outstanding on July 31, 1996 is divided by (ii) the
number of shares of all classes of the Company's Common Stock outstanding
immediately after the closing of the Offerings.

The Employment Agreements also provide that Dr. Keith, Ms. Roche, Mr. Smith
and Ms. Muley, while employed by Carson Products and in the case of Mr. Smith
and Ms. Muley, during the period in which Mr. Smith or Ms. Muley,
respectively, is receiving Base Salary (as defined in the Employment
Agreements) payments from Carson Products (regardless as to whether Mr. Smith
or Ms. Muley, respectively, is employed by Carson Products), may not directly
or indirectly (i) own, operate, represent, promote, consult for, control or
participate in the ownership, operation, acquisition or management of any
business manufacturing and/or distributing ethnic hair care products or
cosmetics within a 500-mile radius of Carson Products' headquarters, (ii)
solicit (other than on behalf of Carson Products on any of its affiliates),
divert or take away the business of any customers of Carson Products or any of
its affiliates, or any prospective customers of Carson Products or any of its
affiliates whose business Carson Products or any of its affiliates actively
solicits during such officer's employment with Carson Products, or (iii)
solicit or induce any employee of Carson Products or any of its affiliates to
terminate such employee's employment with Carson Products or such affiliates.

54
<PAGE>

Management Agreement. Carson has entered into a Management Agreement with
Morningside Capital Group, L.L.C. regarding the services of Mr. Wasik. See
"Certain Relationships and Related Transactions--Morningside."

1996 Long-Term Incentive Plan. Prior to the closing of the Offerings, the
Board will establish and approve, and the Company will adopt, the 1996 Long-
Term Incentive Plan (the "1996 Plan"), which will be administered by a
committee of the Board comprised of non-employee directors (the "Committee").
The purpose of the 1996 Plan is to attract, retain and motivate executives and
other key individuals who will make significant contributions to the growth
and overall success of the Company and its subsidiaries and to align the
interests of such executives and individuals with those of the Company's
shareholders.

All salaried employees and consultants of the Company and its subsidiaries
are eligible to participate in the 1996 Plan. The 1996 Plan authorizes the
grant of (i) options to acquire shares of the Class A Common Stock of the
Company intended to qualify as "incentive stock options" under Section 422 of
the Code ("ISOs"), (ii) options to acquire the same that do not, or are not
intended to, so qualify, (iii) restricted shares of the Class A Common Stock,
subject to specified forfeiture risks (the "Restricted Shares"), (iv) stock
appreciation rights ("SARs") based on the Class A Common Stock and payable in
cash or in shares of the new Class A Common Stock, and (v) performance-based
awards, payable in cash or in shares of the Class A Common Stock.

The 1996 Plan authorizes 600,000 shares of the Class A Common Stock (equal
to 4.2% of the aggregate shares of the Common Stock to be outstanding after
the Offerings) for issuance, subject to adjustment in certain circumstances.
The Committee has determined to grant options to the following officers
contemporaneously with the Offerings to acquire the following number of shares
of the Class A Common Stock: Dr. Keith, 7,500, Ms. Roche, 6,000 and Mr. Smith,
4,000, respectively. Additional option grants will be made to other members of
management. The number of shares underlying these grants, in the aggregate,
will be equal to 59,500 shares. The exercise price per share for these options
will be equal to the initial public offering price paid by the public for the
Class A Common Stock. All such options granted to an officer contemporaneously
with the Offerings will be either non-statutory stock options or incentive
stock options, to the extent permitted by Section 422 of the Code, and will
become exercisable by such officer on a cumulative basis in equal installments
at a rate of 33 1/3% per year commencing one year from the date of grant. All
options granted to an officer will be 100% exercisable in the event of a
change in control (as defined in the 1996 Plan) or in the event the optionee
terminates his or her employment due to death, disability (as defined in the
1996 Plan) or retirement (as defined in the 1996 Plan). The exercise price may
be paid in cash or shares of new Class A Common Stock.

Pursuant to the regulations under Section 16(b) of the Exchange Act, so long
as certain conditions are met, an officer receiving an option award may be
able to exercise options that are then exercisable and sell the underlying
shares of the Class A Common Stock on the same day without incurring liability
under such Section 16(b). The ability to exercise options and concurrently
sell the Class A Common Stock obtained upon exercise means that officers face
no investment risk with respect to the shares subject to options, since they
will generally only exercise an option if the market value of the Class A
Common Stock is greater than the exercise price of the option.

No awards may be granted under the 1996 Plan after December 31, 2006.
Restricted shares, performance-based awards and options intended to be ISOs
will be transferable only by will or the laws of descent and distribution.

ISOs granted to any person who is the beneficial owner of more than 10% of
the total combined voting of all classes of stock of the Company or Carson
Products will contain special limitation provisions required by Section 422 of
the Code. Unless otherwise determined by the Committee, no stock option
granted in connection with the 1996 Plan will be exercisable more than ninety
days after the date on which the optionee ceases to perform services for
Carson Products, except that in the event of death, disability or retirement
or a termination after a change of control, options may be exercised for up to
one year after such event. If, however, an optionee ceases to perform services
for Carson Products, any ISO exercised more than three months following the
date the optionee ceases to perform services will be treated as a non-
statutory stock option.

The Committee generally is empowered to interpret the 1996 Plan, prescribe
rules and regulations relating thereto, determine the terms of awards and
other agreements, amend them (in certain cases only with the consent

55
<PAGE>

of the optionee), determine the individuals to whom awards are to be granted,
determine the number of shares subject to each award and the exercise price
thereto, and take all actions in connection with the Plan and the awards
thereunder as the Committee, in its sole discretion, deems necessary or
desirable. In general, the Board may modify, suspend, or terminate the Plan at
any time; provided, however, that any change in the 1996 Plan that may
adversely affect an award previously granted under the Plan requires the
consent of the adversely affected awardee.

The Company submitted the 1996 Plan to its existing stockholders for
approval. The purpose of seeking stockholder approval was to qualify the 1996
Plan for the granting of ISOs. Although options and other awards may be
granted under the 1996 Plan prior to the receipt of such stockholder approval,
the exercisability of such options is contingent upon the receipt of such
stockholder approval.

BOARD OF DIRECTORS

The Company has three classes of directors, which are elected for staggered
terms of three years. The initial terms of each class expire at the annual
meeting of stockholders in 1997 (Class I), 1998 (Class II) and 1999 (Class
III), respectively. Dennis E. Smith, Suzanne de Passe and James Hudson are
Class I directors, Joyce M. Roche, Abbey J. Butler and Melvyn J. Estrin are
Class II directors and Dr. Leroy Keith, Lawrence E. Bathgate, II, John L.
Sabre and Vincent A. Wasik are Class III directors. Each director holds office
until his or her successor is duly elected and qualified or until his or her
resignation or removal, if earlier.

COMMITTEES OF THE BOARD OF DIRECTORS

In connection with the Offerings, the Board will create an Audit Committee,
a Compensation Committee and an Executive Committee of the Board. Following
the Offerings, the Audit Committee will initially be comprised of Messrs.
Butler and Sabre and will be charged with reviewing the Company's annual audit
and meeting with the Company's independent accountants to review the Company's
internal controls and financial management practices. The Compensation
Committee will initially be comprised of Messrs. Butler and Sabre. The
Executive Committee will initially be comprised of Dr. Keith and Messrs.
Bathgate, Butler, Sabre and, Wasik and will have the authority to act on
behalf of the full Board with respect to all matters.

COMPENSATION OF BOARD OF DIRECTORS

1996 Non-Employee Directors Equity Incentive Program. Prior to the closing
of the Offerings, the Board will establish and approve, and the Company will
adopt, the 1996 Non-Employee Directors Equity Incentive Program (the "Outside
Directors Program"). The Outside Directors Program is designed to attract,
retain and motivate individuals who the Company believes are capable of making
significant contributions to the Board and the Company generally, and to align
their interests with those of the shareholders.

The Outside Directors Program authorizes the issuance of up to 400,000
shares of the Class A Common Stock, subject to adjustment in certain
circumstances. Under the Outside Directors Program, each non-employee director
of the Company will receive in connection with the Offerings an option to
acquire 1,500 shares of the Class A Common Stock. The exercise price per share
for these options will be equal to the initial public offering price paid by
the public for the Class A Common Stock. Each such option will become
exercisable upon grant and will expire on the first anniversary of the closing
of the Offerings (if such option is not exercised prior thereto by the non-
employee director grantee). In the aggregate, a total of 10,500 shares of the
Class A Common Stock will underlie such options granted to the seven non-
employee directors of the Company in connection with the closing of the
Offerings.

In addition, pursuant to the Outside Directors Program, each non-employee
director will receive, immediately following each annual meeting of the
Company's stockholders occurring after the closing of the Offerings (i) a
number of shares, subject to certain forfeiture restrictions, of the Class A
Common Stock (the "Outside Director Restricted Shares") equal to the quotient
resulting when $25,000 is divided by the average fair market value of the
Class A Common Stock for the five trading days preceding such annual meeting
(the

56
<PAGE>

"Trading Period"), and (ii) an option to acquire 5,000 shares of the Class A
Common Stock with an exercise price equal to the average fair market value of
the Class A Common Stock for the Trading Period (the "Outside Director
Options").

The Outside Director Restricted Shares will vest and become non-forfeitable
as to one-third of the aggregate shares granted on each of the next succeeding
three anniversaries of the date of grant of such Restricted Shares. If a non-
employee director resigns voluntarily from the Board or is removed therefrom
with "cause" (as defined in the Outside Directors Program), the unvested
Outside Director Restricted Shares held by such non-employee director will be
immediately forfeited and automatically cancelled by the Company.

The Outside Director Options will become exercisable on the first
anniversary of the date of grant of any such option and will expire on the
tenth anniversary of such date (if any such option is not exercised prior
thereto by the non-employee director grantee). If a non-employee director
resigns voluntarily from the Board or is removed therefrom for cause, the
Outside Director Option held by such director, if then unexercisable, will be
immediately forfeited by such director and automatically cancelled by the
Company or, if then exercisable, must be exercised by such non-employee
director within 90 days after any such resignation or removal.

The Outside Directors Program will be administered by the Board or a duly
appointed committee of the Board. The Board (or such committee thereof) will
have the full and final authority to interpret the Outside Directors Program
and to adopt and amend such rules and regulations for the administration of
the Outside Directors Program as the Board or such committee may deem
desirable. In addition, the Board has the right to amend or terminate the
Outside Directors Program, subject to certain restrictions set forth therein.

Outside Director Stock Purchases. Messrs. Kemp and Sabre invested $100,000
and $50,000, respectively, in the former Class A common stock of the Company
and Messrs. Butler, Estrin and Hudson and Ms. de Passe each invested $25,000
in the former Class A common stock. These investments resulted in the
acquisition of 46,139 shares for Mr. Kemp, 23,070 shares for Mr. Sabre, and
11,541 shares each for Messrs. Butler, Estrin, Hudson and Ms. de Passe. Mr.
Kemp's shares will be placed in a blind trust.

57
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock (i) immediately prior to the Offerings and (ii) as
adjusted to reflect the sale of shares of Common Stock pursuant to the
Offerings, by (a) each person or entity known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock,
(b) each of the Company's directors, (c) each of the named executive officers,
(d) all directors and officers of the Company as a group and (e) all other
selling stockholders. Unless otherwise noted in the footnotes to the table,
the persons named in the table have sole voting and investing power with
respect to all shares of Common Stock indicated as being beneficially owned by
them.

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT FOOTNOTES)
CLASS B
COMMON CLASS C COMMON
CLASS A COMMON STOCK STOCK STOCK
----------------------------------------------- ---------------- ------------------
TO BE TO BE OWNED PRIOR OWNED PRIOR
SOLD IN OWNED TO AND TO AND
OWNED PRIOR TO THE AFTER THE AFTER THE AFTER THE
OFFERINGS(A)(B) OFFERINGS OFFERINGS(A)(B) OFFERINGS(A)(B) OFFERINGS (A)(B)
NAME AND ADDRESS OF ------------------ --------- ----------------- ---------------- ------------------
BENEFICIAL OWNERS NUMBER % NUMBER NUMBER % NUMBER % NUMBER %
- ------------------- ---------- ------ --------- ----------------- ---------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DNL
Partners(c).... 0 0 0 0 6,617 80.0%
c/o Morningside
Capital L.L.C.
One Morningside
Drive North,
Suite 200
Westport, CT
06880
Banque
Indosuez(d).... 0 0 0 1,860 100% 0
c/o Indosuez
Capital
1211 Avenue of
the Americas
7th Floor
New York, NY
10036-8701
Minis
Family(e)...... 1,706 100% 1,706 0 0 0
c/o Hunter,
Maclean, Exley
& Dunn, P.C.
200 East St.
Julian St.
P.O. Box 9848
Savannah, Geor-
gia 31401
Morgan Guaranty
Trust
Company(f)..... 0 0 0 0 1,187 14.3%
c/o J.P. Morgan
Investment
Management
522 Fifth Ave-
nue
New York, NY
10036
Dr. Leroy
Keith(g)....... 0 0 0 0 0
Joyce M. Roche.. 0 0 0 0 119 1.4%
Dennis E.
Smith.......... 0 0 0 0 59 0.7%
Bradford N.
Creswell(h).... 0 0 0 0 0
David A. Young.. 0 0 0 0 0
Mario J. de la
Guardia........ 0 0 0 0 0
H. L. Cornish,
Jr............. 0 0 0 0 0
Lawrence E.
Bathgate,
II(i).......... 0 0 0 0 0
Abbey J.
Butler(i)...... 0 0 0 0 13 0.2%
Suzanne de Pas-
se............. 0 0 0 0 13 0.2%
Melvyn J.
Estrin(i)...... 0 0 0 0 13 0.2%
James L.
Hudson(i)...... 0 0 0 0 13 0.2%
John L. Sabre... 0 0 0 0 26 0.3%
Vincent A.
Wasik(c)....... 0 0 0 0 6,617 80.0%
All Directors
and Executive
Officers as a
Group (12 per-
sons).......... 0 0 0 0 6,919 83.3%

<CAPTION>
(IN THOUSANDS, EXCEPT FOOTNOTES)

TOTAL COMMON STOCK
-------------------------------
TO BE VOTING
OWNED POWER
AFTER THE AFTER THE
OFFERINGS(A)(B) OFFERINGS(A)(B)
NAME AND ADDRESS OF --------------- ---------------
BENEFICIAL OWNERS % %
- ------------------- --------------- ---------------
<S> <C> <C>
DNL
Partners(c).... 46.1% 75.8%
c/o Morningside
Capital L.L.C.
One Morningside
Drive North,
Suite 200
Westport, CT
06880
Banque
Indosuez(d).... 13.0% 0%
c/o Indosuez
Capital
1211 Avenue of
the Americas
7th Floor
New York, NY
10036-8701
Minis
Family(e)...... 0% 0%
c/o Hunter,
Maclean, Exley
& Dunn, P.C.
200 East St.
Julian St.
P.O. Box 9848
Savannah, Geor-
gia 31401
Morgan Guaranty
Trust
Company(f)..... 8.3% 13.6%
c/o J.P. Morgan
Investment
Management
522 Fifth Ave-
nue
New York, NY
10036
Dr. Leroy
Keith(g).......
Joyce M. Roche.. 0.8% 1.4%
Dennis E.
Smith.......... 0.4% 0.7%
Bradford N.
Creswell(h)....
David A. Young..
Mario J. de la
Guardia........
H. L. Cornish,
Jr.............
Lawrence E.
Bathgate,
II(i)..........
Abbey J.
Butler(i)...... 0.1% 0.1%
Suzanne de Pas-
se............. 0.1% 0.1%
Melvyn J.
Estrin(i)...... 0.1% 0.1%
James L.
Hudson(i)...... 0.1% 0.1%
John L. Sabre... 0.2% 0.3%
Vincent A.
Wasik(c)....... 46.1% 75.8%
All Directors
and Executive
Officers as a
Group (12 per-
sons).......... 48.2% 79.3%

</TABLE>
- -------
(a) Does not give effect to purchases, if any, by such persons in the
Offerings. Percentage indicates percentage of class, except for the Total
Common Stock column.

(b) Based on 1,705,500, 1,859,677 and 8,306,014 shares of Class A Common
Stock, Class B Common Stock and Class C Common Stock, respectively,
outstanding prior to the Offerings and 4,190,000, 1,859,677 and 8,306,014
shares of Class A Common Stock, Class B Common Stock and Class C Common
Stock, respectively, outstanding after the Offerings, assuming no exercise
of the Underwriters' over-allotment options. Calculation of percentage of
beneficial ownership assumes the exercise of all options and warrants
exercisable within 60 days of the date hereof only by the respective named
stockholder.

58
<PAGE>

(c) Amounts shown represent the aggregate number of shares beneficially owned
by DNL Partners, including 818,640 shares subject to a Voting Trust
Agreement dated August 23, 1995. Pursuant to the Voting Trust Agreement,
DNL Partners was granted full power and authorization to vote the shares
of the members of the DNL Partners Limited Partnership Voting Trust (the
"Voting Trust"), including Dr. Keith and Northwest Capital, Inc., on all
matters. Mr. Wasik has a 99% ownership interest in the general partner of
DNL Partners, DNL Group L.L.C., and therefore is deemed to have voting
and dispositive control as to the shares held by DNL Partners and the
Voting Trust. Messrs. Wasik, Bathgate, Butler, Estrin and Hudson, who
serve as Directors of the Company, are, or have interests in, limited
partners of DNL Partners, including in the case of Messrs. Wasik and
Bathgate, ownership interests in Morningside, one of the limited partners
in DNL Partners.

(d) Includes Indosuez Carson Partners and Indosuez CM II, Inc. Mr. Sabre is a
general partner of Indosuez Carson Partners.

(e) Includes Vango L.P. (Don L. Waters and Russell W. Carpenter, as co-
Trustees, u/a/w Abram Minis, Jr. dated July 15, 1993 as the General
Partner), Henry H. Minis, Marguerite M. Trethewey, James E. Hungerpiller,
James E. Hungerpiller, as Trustee of The James E. Hungerpiller Charitable
Remainder Unitrust--1996 u/a/dtd September 20, 1996, James E.
Hungerpiller, as Trustee of The Edith Hunter Minis Charitable Remainder
Unitrust--1996 u/a/dtd September 20, 1996, and Don L. Waters and Russell
W. Carpenter, as Co-Trustees, u/a/w Abram Minis, Jr. dated July 15, 1993.
Henry Minis was Vice President and Director of the Predecessor for
three years prior to the Acquisition, and has been a Director of Carson
Products since the Acquisition. The shares held by the Minis family will
be converted from Class C Common Stock to Class A Common Stock
immediately prior to the effectiveness of the Registration Statement.

(f) Includes Morgan Guaranty Trust Company, as Trustee of a Commingled
Pension Fund-Multi-Market Special Investment Fund II, Multi-Market
Special Investment Trust Fund of Morgan Guaranty Company of New York and
Morgan Guaranty Trust Company New York as Investment Manager and Agent
for the Alfred P. Sloan Foundation Multi-Market Account.

(g) Excludes 341,100 shares held by the Voting Trust. See Note (c).

(h) Excludes 159,180 shares held by the Voting Trust on behalf of Northwest
Capital, Inc., a company of which Mr. Creswell is the President and a
stockholder. See Note (c).

(i) These directors are, or have direct or indirect interests in, limited
partners of DNL Partners. See Note (c).

59
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MORNINGSIDE

Carson Products and Morningside Capital Group, L.L.C., a Connecticut limited
liability company ("Morningside") entered into a Management Assistance
Agreement dated August 23, 1995 (the "Management Agreement"), pursuant to
which Morningside agreed to supply the services of Vincent A. Wasik (a
principal member of Morningside) to provide advice and assistance with respect
to (i) the formulation of a "strategic direction"; (ii) the formulation of
business plans, capital budgets and financial strategies; (iii) the
formulation of marketing, sales and operational plans; (iv) the evaluation of
investment and acquisition opportunities; and (v) dealings with banks and
other lending institutions. Such services are provided for a fee of $350,000
per year, payable on a monthly basis in advance plus reimbursement for out of
pocket expenses. The Management Agreement provides that Carson Products
indemnify Morningside, its members, employees and agents, including Mr. Wasik,
for all actions, claims, damages and liabilities based upon or arising from
the acceptance of or performance of the obligations of Morningside under the
Management Agreement (other than actions resulting from gross negligence,
willful misconduct or a material breach of the Management Agreement by
Morningside or Mr. Wasik). The termination date of the Management Agreement is
August 23, 1998; however, the term of the agreement shall continue after such
termination date until terminated by not less than 30 days' advance notice by
either party.

Additionally, for the term of the Management Agreement, Morningside has
agreed that neither it nor Mr. Wasik shall directly or indirectly (i) own
(other than through the ownership of five percent (5%) or less of any class of
securities registered under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), manage, operate, represent, promote, consult for,
control or participate in the ownership, operation, acquisition or management
of any business manufacturing and/or distributing ethnic hair care products or
cosmetics within a 500-mile radius of Carson Products' headquarters, or (ii)
solicit (other than on behalf of Carson Products or any of its affiliates),
divert or take away the business of any customers of Carson Products or any of
its affiliates or any prospective customers of Carson Products or any of its
affiliates.

In connection with the Acquisition, Morningside received fees of $500,000
from the Company for arranging and negotiating the financing for the
Acquisition and performing other consulting and financial advisory services
and was reimbursed by the Company for certain related expenses. Under the
Management Agreement, the Company paid Morningside approximately $25,000 in
fiscal 1996 for reimbursement of out-of-pocket expenses. From time to time
Morningside may provide additional financial advisory services to the Company,
for which Morningside will receive usual and customary compensation.

FEES RELATED TO THE ACQUISITION

Northwest Capital, Inc., a corporation in which Bradford N. Creswell serves
as President and is a principal stockholder, was paid $290,000 and received
159,180 shares of the Company's Class C Common Stock from the Company in
connection with financial advisory services related to the Acquisition.
Bathgate, Wegener & Wolf, P.A., a law firm in which Lawrence E. Bathgate, II
serves as President and Chief Executive Officer, was paid approximately
$690,000 for services rendered in arranging the equity investment in the
Company in connection with the Acquisition. Banque Indosuez received fees and
reimbursement of out-of-pocket expenses totalling $1,783,000 in connection
with the Acquisition.

AM COSMETICS

Morningside AM Acquisition Corp., a Delaware corporation ("AM Acquisition"),
entered into a Subscription Agreement dated as of June 26, 1996 (the
"Subscription Agreement") with Carson Products, providing for the purchase by
Carson Products of 300 shares of cumulative Payment in Kind Preferred Shares
(the "PIK Preferred Shares") issued by AM Acquisition, at a price of $10,000
per share. AM Acquisition was formed by Morningside on behalf of an investor
group to acquire the assets of Arthur Matney Co., Inc. ("Matney"). AM
Acquisition created a wholly-owned operating subsidiary, AM Cosmetics, to hold
such

60
<PAGE>

assets and to continue the operations of Matney as a low-cost manufacturer of
cosmetics. AM Cosmetics sells three brands of "budget" cosmetics, one of which
is targeted at the African-American consumer. The PIK Preferred Shares are
non-voting and are entitled to cumulative dividends payable quarterly in
additional PIK Preferred Shares at a rate of 12% per annum. Additionally, the
PIK Preferred Shares are subject to redemption in whole at the option of
Carson Products on or after July 1, 2005, at the stated value per share (which
is $10,000 per share) plus an amount in cash equal to all accrued and unpaid
dividends on the PIK Preferred Shares (the "Redemption Price"), and are
subject to redemption in whole at any time (or in part from time to time if
all dividends accrued and unpaid have been paid for all past dividend periods
and full dividends have been paid or declared and the amount set apart for
payment for the current dividend period) at the option of AM Acquisition at
the same redemption price.

Pursuant to the Subscription Agreement, AM Acquisition agreed on behalf of
itself and its wholly-owned subsidiary, AM Cosmetics, that for a period of
five years commencing on July 1, 1996, (i) AM Cosmetics would not "contract
manufacture" for any other ethnic cosmetics line, (ii) AM Cosmetics will agree
to produce a cosmetics line for Carson Products, as designed and directed by
Carson Products, at AM Cosmetics' cost plus a maximum 25% markup, and (iii) AM
Cosmetics will agree to provide the necessary research and development for
formulations for the ethnic cosmetic product line(s) as determined by Carson
Products, at no additional cost to Carson Products.

Concurrent with its investment in AM Acquisition, Carson Products entered
into a Management Agreement (the "Carson-AM Management Agreement") with AM
Cosmetics, pursuant to which Carson Products agreed to manage the business
operations of, and provide certain other services to AM Cosmetics. Under the
Carson-AM Management Agreement, Carson Products is required to supervise the
production of a detailed business plan and budget for AM Cosmetics each year.
Once the business plan is approved by AM Cosmetics' Board of Directors, Carson
Products will supervise and administer AM Cosmetics within the confines of the
business plan, with the approval of AM Cosmetics' board for any material
deviations. In return for the management and other services it will provide,
Carson Products is entitled to fees equal to 1% of AM Cosmetics' annual net
sales subject to a minimum of $500,000 per annum. The Carson-AM Management
Agreement expires on June 26, 2004 unless terminated earlier, or renewed for
an additional three-year period at AM Cosmetics' option by giving Carson
Products written notice thereof at least 180 days prior to the expiration
date. Either party may terminate the AM Management Agreement by providing the
other party with written notice, at least 360 days in advance if terminated by
Carson Products and 60 days in advance if terminated by AM Cosmetics. The
Company anticipates that to perform its obligations under the Carson-AM
Management Agreement, certain members of senior management of the Company will
devote a portion of their time to assisting the management of AM Cosmetics.

The Carson-AM Management Agreement also provides that the parties may enter
into (i) sales agreements, substantially in the form agreed upon by the
parties which provides for a five percent sales commission on net sales, and
(ii) manufacturing agreements which will include the specifications of each
product, substantially in the form agreed upon by the parties which provides
that AM Cosmetics will be entitled to a 25% profit margin above all costs,
including general administrative costs. The Company is currently negotiating
such a sales agreement, which the Company believes will provide it with the
opportunity to increase its revenues with little additional expense. The
Company believes that it can use its existing relationships with its
distribution channels to expand the sales of AM Cosmetics' products, and that
the Company's sales force will be motivated by the opportunity to earn
additional commissions without lowering their targets for sales of the
Company's products. The Company expects to enter into a manufacturing
agreement with AM Cosmetics in the near future once precise product
specifications have been determined, which the Company believes will provide
it with the basis for launching its own line of cosmetics targeted to women of
African descent under the Dark & Lovely brand name. Pursuant to discussions
among the parties, the Company expects that the manufacturing agreement will
not contain volume requirements or termination rights for AM Cosmetics.

Certain of the principal and management stockholders of the Company have
ownership interests in AM Cosmetics, including Vincent A. Wasik, Dr. Leroy
Keith and Bradford N. Creswell. In addition, Dr. Keith serves as Chairman of
the Board of Directors of AM Cosmetics and Mr. Wasik serves as President.

61
<PAGE>

DESCRIPTION OF CERTAIN INDEBTEDNESS

Simultaneous with the consummation of the Offerings, Carson Products expects
to enter into a new Credit Agreement (the "Credit Agreement") with Banque
Indosuez, as agent and a lender (the "Bank"), and the other lenders party
thereto under which the Bank and the other lenders will provide term loans and
a revolving credit facility to Carson Products, subject to the conditions set
forth therein. The following summary of the New Senior Bank Facility is
subject to, and qualified in its entirety by, the Credit Agreement that will
be filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The Company intends to use a portion of the net proceeds received
from the Offerings, together with borrowings under the New Senior Bank
Facility, to repay all of the outstanding borrowings under the Senior Bank
Credit Facility. See "Use of Proceeds" and "Capitalization."

The New Senior Bank Facility will include (i) a $15.0 million term loan A,
(ii) a $10.0 million term loan B and (iii) a $15.0 million revolving credit
facility, including up to $5.0 million of letters of credit. The aggregate of
the revolving credit facility and the aggregate outstanding letters of credit
may not exceed Carson Product's Borrowing Base, which equals the sum of (i)
80% of Eligible Accounts Receivable and (ii) 50% of Eligible Inventory (each
such term is as defined in the Credit Agreement). The final maturity date for
term loan A, term loan B and the revolving credit facility is expected to be
the last business day of September 2002, 2003 and 2002, respectively. Term
loan A will amortize in equal quarterly installments of $625,000 beginning in
December 1996 and ending in September 2002. Term loan B will amortize in equal
quarterly installments of $25,000 beginning in December 1996 through September
2002 and in equal quarterly installments of $2,350,000 beginning in December
2002 and ending in September 2003.

Borrowings under term loan A, term loan B and the revolving credit facility
will generally bear interest at the Base Rate (as defined in the Credit
Agreement) plus 0.5%, the Base Rate plus 1.0% and the Base Rate plus 0.5%,
respectively, or at the Company's option, the Eurodollar Rate (as defined in
the Credit Agreement) plus 2.0%, the Eurodollar Rate plus 2.5%, and the
Eurodollar Rate plus 2.0%, respectively. Interest on Base Rate borrowings are
payable quarterly in arrears and interest on Eurodollar Rate borrowings are
payable at the end of the applicable interest period and, if such interest
period is in excess of three months, at three month intervals thereafter. If
any borrowings are not repaid when due, the outstanding principal amount of
such borrowings will bear interest at the then applicable rate plus 2.0%.

The Credit Agreement will provide for (i) a commitment fee of 0.5% per annum
on the unutilized portion of the revolving credit facility, payable quarterly
in arrears, (ii) a fee of 2.0% per annum on the maximum amount available to be
drawn under letters of credit, payable quarterly in arrears, and (iii) a
letter of credit issuance fee equal to the greater of (x) 0.25% of the maximum
amount available at any time to be drawn under any letter of credit or (y)
$1,500.

The obligations of Carson Products under the New Senior Bank Facility will
be secured by security interests in all accounts receivable, inventory,
property, plant and equipment and other personal, intellectual and real
property of Carson Products and its subsidiaries, as well as by a pledge of
the capital stock of Carson Products and its subsidiaries. The New Senior Bank
Facility will be guaranteed by the Company and each present and future
subsidiary of Carson Products (other than Carson South Africa and its
subsidiaries). The New Senior Bank Facility will contain customary covenants
with respect to, among other things, (i) maintenance by Carson Products of
certain total interest coverage ratios, fixed charge coverage ratios and
leverage ratios, and (ii) restrictions on the incurrence of additional liens
or indebtedness. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

62
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL MATTERS

The Company has amended and restated its Restated Certificate of
Incorporation to (i) change the authorized capital stock of the Company to
150,000,000 shares of Class A Common Stock, par value $0.01 per share ("Class
A Common Stock"), 2,000,000 shares of Class B Common Stock, par value $0.01
per share ("Class B Common Stock"), 13,000,000 shares of Class C Common Stock,
par value $0.01 per share ("Class C Common Stock"), and 10,000,000 shares of
preferred stock, par value $0.01 per share (the "Preferred Stock"), (ii)
reclassify each outstanding share of Class A Common Stock into 11,370 shares
of its newly created Class C Common Stock and (iii) reclassify each
outstanding share of Class B Common Stock into 11,370 shares of its newly
created Class B Common Stock (the "Amended and Restated Certificate of
Incorporation"). Upon completion of the Offerings, 4,190,000 shares of Class A
Common Stock, 1,859,677 shares of Class B Common Stock and 8,306,014 shares of
Class C Common Stock will be issued and outstanding and no shares of Preferred
Stock will be issued and outstanding. The discussion herein describes the
Company's capital stock, the Amended and Restated Certificate of Incorporation
and Bylaws in effect upon effectiveness of the Registration Statement. The
following summary of certain provisions of the Company's capital stock
describes all material provisions, but does not purport to be complete and is
subject to, and qualified in its entirety by, the Amended and Restated
Certificate of Incorporation and the Bylaws of the Company that are included
as exhibits to the Registration Statement and by the provisions of applicable
law.

Certain provisions described herein may have the effect of impeding
stockholder actions with respect to certain business combinations and the
election of new members to the Board. As such, the provisions could have the
effect of discouraging open market purchases of the Company's Common Stock
because they may be considered disadvantageous by a stockholder who desires to
participate in a business combination or elect a new director.

COMMON STOCK

Dividends. Holders of record of shares of Common Stock on the record date
fixed by the Company's Board are entitled to receive such dividends as may be
declared by the Board out of funds legally available for such purpose, subject
to the rights of the holders of any series of Preferred Stock. No dividends
may be declared or paid in cash or property on any share of any class of
Common Stock, unless simultaneously the same dividend is declared or paid on
each share of the other classes of Common Stock except that if dividends are
declared that are payable in Common Stock or options or warrants to purchase
Common Stock or securities convertible into or exchangeable for Common Stock,
a like dividend or other distribution will also be paid on each other class of
Common Stock, as the case may be, in an equal amount per share.

Voting Rights. Holders of shares of Class A Common Stock and Class C Common
Stock will vote as a single class on all matters submitted to a vote of the
stockholders, with each share of Class A Common Stock entitled to one vote and
each share of Class C Common Stock entitled to ten votes, except as otherwise
provided by law. Holders of shares of Class B Common Stock will not be
entitled to vote on any matter submitted to a vote of the stockholders, except
as otherwise provided by law and except that the holders of the Class B Common
Stock will be entitled to vote as a separate class on any amendment, repeal or
modification of any provision of the Amended and Restated Certificate of
Incorporation that adversely affects the powers, preferences or special rights
of the Class B Common Stock in a manner different from the adverse effect on
the powers, preferences or special rights of the Class A Common Stock. On any
matter on which holders of Class A Common Stock, Class B Common Stock (other
than with respect to matters referred to in the previous sentence) and Class C
Common Stock are entitled to vote, such holders shall vote together as a
single class with each share of Class A Common Stock entitled to one vote and
each share of Class B Common Stock and Class C Common Stock entitled to ten
votes, except as otherwise provided by law. Holders of Common Stock are not
entitled to cumulate votes in the election of Directors.

63
<PAGE>

Pursuant to the Voting Trust Agreement, DNL Partners, as trustee of the
Voting Trust, will vote the shares of Common Stock held in the Voting Trust.
Dr. Keith and Mr. Creswell hold trust certificates in the Voting Trust.

Liquidation Rights. Upon liquidation, dissolution or winding-up of the
Company, the holders of Class A Common Stock are entitled to share ratably
with the holders of Class B Common Stock and Class C Common Stock in all
assets available for distributions after payment in full of creditors and
payment in full to any holders of Preferred Stock then outstanding of any
amount required to be paid under the terms of such Preferred Stock.

Conversion. Each share of Class B Common Stock is convertible at any time,
at the option of its holder, into one share of Class A Common Stock or, prior
to a Triggering Event (as defined below), one share of Class C Common Stock.
Each share of Class C Common Stock is convertible at any time, at the option
of its holder, into one share of Class A Common Stock at any time. In
addition, certain stockholders ("Regulated Holders") that are subject to
regulation under Regulation Y of the Board of Governors of the Federal Reserve
System or the Bank Holding Company Act of 1956, as amended, may convert their
shares of Class C Common Stock into the same number of shares of Class B
Common Stock at any time. The Company is required to notify each Regulated
Holder prior to converting or directly or indirectly purchasing or otherwise
acquiring any shares of Class A Common Stock or Class C Common Stock or taking
any other action affecting the voting rights of the holders of such shares if
such action will increase the percentage of outstanding Class A Common Stock
or Class C Common Stock owned by or controlled by any Regulated Holder. The
Company will defer making any such conversion, purchase or other acquisition
or taking any such other action for a period of 30 days after giving such
notice to allow each such Regulated Holder to make a determination as to
whether it wishes to effect a conversion or take any other action with respect
to the Class A Common Stock or the Class C Common Stock it owns prior to the
expiration of such 30 day period. The Company is prohibited from directly or
indirectly redeeming, purchasing, acquiring or taking any other action
affecting outstanding Class A Common Stock or Class C Common Stock if such
action will increase above 24.9% the percentage of outstanding Common Stock
owned by or controlled by any Regulated Holder and its affiliates.

Each share of Class C Common Stock converts automatically into one share of
Class A Common Stock upon transfer to any person other than a Permitted
Transferee. For purposes hereof, a "Permitted Transferee" means any beneficial
owner of the Class C Common Stock on the date hereof, any affiliate of such
owner, any member of such owner's immediate family, or any trust or foundation
for the benefit of any of the foregoing. In the event that the number of
shares of Class C Common Stock issued and outstanding at any time shall
constitute less than 9% of the total number of shares of Common Stock issued
and outstanding at such time (a "Triggering Event"), then without further act
on the part of the holder of the Class C Common Stock, all shares of Class C
Common Stock then issued and outstanding will be deemed converted into shares
of Class A Common Stock. Additionally, upon the occurrence of a Triggering
Event, the holders of the shares of issued and outstanding Class B Common
Stock will no longer have the option to convert such shares into Class C
Common Stock.

The holders of Common Stock are not entitled to preemptive rights. Certain
stockholders have the right to purchase additional shares of Common Stock
pursuant to (i) a Subscription Agreement dated as of August 23, 1995 between
the Company and the investors set forth in Schedule I thereto (entities
affiliated with Banque Indosuez and Morgan Guaranty Trust Company), and (ii) a
Subscription Agreement dated as of August 23, 1995 between the Company and DNL
Partners. These rights will be waived in connection with the Offerings. The
shares of Common Stock obtained upon the conversion of the Company's former
common stock presently outstanding are, and the shares of Class A Common Stock
offered hereby will be, upon conversion or issuance, validly issued, fully
paid and nonassessable. Pursuant to the Amended and Restated Certificate of
Incorporation, in any merger, consolidation or business combination, the
consideration to be received per share by holders of Class A Common Stock must
be identical to that received by holders of Class B Common Stock and Class C
Common Stock, except that in any such transaction in which voting securities
(or options or warrants to purchase voting securities, or securities
convertible into or exchangeable for voting securities), are distributed, such
voting securities (or options or warrants to purchase voting securities, or of
securities convertible into or exchangeable for, voting securities) may differ
as to voting rights to the extent that voting rights now differ among the
classes

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of Common Stock. Pursuant to the Amended and Restated Certificate of
Incorporation, no class of Common Stock may be subdivided, reclassified or
otherwise changed unless concurrently the other classes of Common Stock are
subdivided, consolidated, reclassified or otherwise changed in the same
proportion and in the same manner.

Except as expressly set forth in the Amended and Restated Certificate of
Incorporation, the rights of the holders of Class A Common Stock, Class B
Common Stock and Class C Common Stock are in all respects identical.

PREFERRED STOCK

The 10,000,000 authorized and unissued shares of Preferred Stock may be
issued with such designations, preferences, limitations and relative rights as
the Company's Board may authorize, including, but not limited to: (i) the
distinctive designation of each series and the number of shares that will
constitute such series; (ii) the voting rights, if any, of shares of such
series; (iii) the dividend payable on the shares of such series, any
restriction, limitation or condition upon the payment of such dividends,
whether dividends shall be cumulative, and the dates on which dividends are
payable; (iv) the prices at which, and the terms and conditions on which, the
shares of such series may be redeemed, if such shares are redeemable; (v) the
purchase or sinking fund provisions, if any, for the purchase or redemption of
shares of such series; (vi) any preferential amount payable upon shares of
such series in the event of liquidation, dissolution or winding-up of the
Company or the distribution of its assets; and (vii) the prices or rates of
conversion at which, and the terms and conditions on which, the shares of such
series may be converted into other securities, if such shares are convertible.
Although the Company has no present intention to issue Preferred Stock, the
issuance of Preferred Stock, or the issuance of rights to purchase such
shares, could discourage an unsolicited acquisition proposal.

CERTAIN PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
AND BYLAWS AND STATUTORY PROVISIONS

The Amended and Restated Certificate of Incorporation and Bylaws contain
certain provisions that could make more difficult the acquisition of the
Company by means of a tender offer, a proxy contest or otherwise.

Board of Directors. The Amended and Restated Certificate of Incorporation
provides that the Board will consist of 10 to 15 Directors, and that the
number of directors may be increased or decreased from time to time in such
manner as may be prescribed in the Bylaws. The Board is classified into three
classes, each of which, after a transitional arrangement, will serve for three
years, with one class being elected each year. All Directors are elected by
the holders of the Class A Common Stock and Class C Common Stock, voting as a
class.

Directors may be removed only for cause and only with the approval of the
holders of at least 80% of the voting power of the then outstanding shares of
capital stock of the Company entitled to vote generally in the election of
directors, voting together as a single class. In addition, the Bylaws provide
that any vacancy on the Board shall be filled only by the remaining directors
then in office, even if the remaining Directors constitute less than a quorum,
and that directors so appointed will serve for the remainder of the term of
the class in which the vacancy occurred rather than until the next annual
meeting of stockholders.

Advance Notice Provisions for Stockholder Nominations and Stockholder
Proposals. The Amended and Restated Certificate of Incorporation requires that
any action required or permitted to be taken by the Company's stockholders
must be effected at a duly called annual or special meeting of stockholders
and such action may not be effected by consent in writing. Additionally, the
Amended and Restated Certificate of Incorporation requires that special
meetings of the stockholders of the Company be called only by the Chairman of
the Board or the Secretary pursuant to a resolution adopted by a majority of
the entire Board, and that advance notice of stockholder nominations for the
election of directors be given in the manner provided in the Bylaws.

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<PAGE>

The Amended and Restated Bylaws provide that stockholders seeking to bring
business before or to nominate directors at any annual meeting of stockholders
must provide timely notice thereof in writing. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the principal
executive offices of the Company not less than 60 days nor more than 90 days
prior to such meeting or, if less than 70 days' notice was given for the
meeting, within ten days following the date on which such notice was given.
The Bylaws also specify certain requirements for a stockholder's notice to be
in proper written form. These provisions restrict the ability of stockholders
to bring matters before the stockholders or to make nominations for directors
at meetings of stockholders.

Amendment to the Charter and Bylaws. The Amended and Restated Certificate of
Incorporation provides that the stockholder vote required to alter, amend, or
repeal the foregoing provisions and certain other provisions of the Amended
and Restated Certificate of Incorporation and the Amended and Restated Bylaws,
or to adopt any provision inconsistent therewith, shall be 80% of the Voting
Stock, voting together as a single class.

Rights to Purchase Stock. The Amended and Restated Certificate of
Incorporation also provides that the Board is authorized to create and issue
rights entitling the holders thereof to purchase from the Company shares of
stock or other securities of the Company or any other corporation. The
creation and issuance of such rights could have the effect of discouraging
third party attempts to acquire the Company.

Section 203 of Delaware Law. Following the consummation of the Offerings,
the Company will be subject to the "business combination" provisions of the
Delaware General Corporation Law. In general, such provisions prohibit a
publicly-held Delaware corporation from engaging in various "business
combination" transactions with any "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless (i) the transaction is approved by the Board
prior to the date the interested stockholder obtained such status, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
"interested stockholder," the "interested stockholder" owned at least 85% of
the voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned by (a) persons who are directors and also
officers and (b) employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer, or (iii) on or subsequent
to such date the "business combination" is approved by the Board and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the "interested stockholder." A "business combination" is defined to include
mergers, asset sales and other transactions resulting in financial benefit to
a stockholder. In general, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years, did own)
15% or more of a corporation's voting stock. The statute could prohibit or
delay mergers or other takeover or change in control attempts with respect to
the Company and, accordingly, may discourage attempts to acquire the Company.
In addition, the Amended and Restated Certificate of Incorporation will
provide that the affirmative vote of at least 80% of the outstanding voting
stock is required for a business combination between the Company or any
subsidiary and the beneficial owner of more than five percent of the
outstanding voting stock unless such transaction (i) has been approved by a
majority of the disinterested directors or (ii) involves a person who, as of
the effectiveness of the Offerings, was the beneficial owner of more than five
percent of the outstanding voting stock.

Limitations on Liability and Indemnification of Officers and Directors. The
Delaware Law provides that a corporation may limit the liability of each
director to the corporation or its stockholders for monetary damages except
for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. The Company's Amended and Restated Certificate of
Incorporation provides that, to the fullest extent permitted by Delaware law,
no director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duties as a
director. The effect of these provisions is to eliminate the rights of the
Company and its stockholders (through

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<PAGE>

stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of fiduciary duty as a director
(including breaches resulting from grossly negligent conduct). This provision
does not exonerate the directors from liability under Federal securities laws
nor does it limit the availability of non-monetary relief in any action or
proceeding against a director. In addition, the Amended and Restated
Certificate of Incorporation provides that the Company shall, to the fullest
extent permitted by Delaware Law, indemnify its officers and directors against
liabilities, cost and expenses as provided by Delaware Law. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or others pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offerings, there has been no public market for the Common
Stock. Future sales of substantial amounts of Common Stock in the public
market could adversely affect market prices of the Class A Common Stock.

Upon the closing of the Offerings there will be 4,190,000 shares of Class A
Common Stock, 1,859,677 shares of Class B Common Stock and 8,306,014 shares of
Class C Common Stock outstanding. The shares of Class A Common Stock sold in
the Offerings will be freely tradeable without restriction or further
registration under the Securities Act, unless held by an "affiliate" of the
Company as that term is defined in the Securities Act, which shares will be
subject to the resale limitations of Rule 144. All of the remaining shares
will be "restricted securities" under the Securities Act and may not be sold
unless they are registered or unless an exemption from registration, such as
the exemptions provided by Rule 144 or Rule 144A under the Securities Act, is
available. On , 1996, 10,165,691 restricted shares of Common Stock will be
eligible for sale pursuant to Rule 144, subject to the holding period and
volume limitations described below.

In general, under Rule 144 as currently in effect, a stockholder (or
stockholders whose shares are aggregated) who has beneficially owned shares
constituting "restricted securities" (generally defined as securities acquired
from the Company or an affiliate of the Company in a non-public transaction)
for at least two years, is entitled to sell within any three-month period a
number of shares that does not exceed the greater of one percent of the
outstanding Common Stock or the average weekly trading volume in the Common
Stock during the four calendar weeks preceding the date on which notice of
such sale is filed pursuant to Rule 144. Sales under Rule 144 are also subject
to certain provisions regarding the manner of sale, notice requirements and
the availability of current public information about the Company. A
stockholder (or stockholders whose shares are aggregated) who is not an
affiliate of the Company for at least 90 days prior to a proposed transaction
and who has beneficially owned "restricted securities" for at least three
years is entitled to sell such shares under Rule 144 without regard to the
limitations described above.

Rule 144A provides a nonexclusive safe harbor exemption from the
registration requirements of the Securities Act for specified resales of
restricted securities to certain institutional investors. In general, Rule
144A allows unregistered resales of restricted securities to a "qualified
institutional buyer," which generally includes an entity, acting for its own
account or for the account of other qualified institutional buyers, that in
the aggregate owns or invests at least $100 million in securities of
unaffiliated issuers. Rule 144A does not extend an exemption to the offer or
sale of securities that, when issued, were of the same class as securities
listed on a national securities exchange or quoted on Nasdaq. The shares of
Class B Common Stock and Class C Common Stock outstanding as of the date of
this Prospectus would be eligible for resale under Rule 144A because such
shares, when issued, were not of the same class as any listed or quoted
securities.

All of the Company's existing stockholders, including the officers and
directors of the Company (other than the Selling Stockholders with respect to
the shares included in the Offerings), have agreed, subject to certain
exceptions, that they will not, without the prior written consent of Merrill
Lynch on behalf of the Underwriters,

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<PAGE>

sell or otherwise dispose of any shares of Common Stock for a period of 180
days after the date hereof or make any demand for or exercise any rights with
respect to the registration of the securities. All existing stockholders have
also waived all rights (including demand and "piggyback" registration rights)
to register securities owned by them for such 180 day period and rights to
purchase additional shares of Common Stock in connection with the Offerings.
All of the outstanding shares of Common Stock (other than those sold in the
Offerings) are subject to such agreements. At the request of the Company, the
Underwriters have reserved shares to be issued by the Company to be sold to
directors, officers, employees, business associates and related persons of the
Company at the initial public offering price. Such persons will be required to
agree not to sell or otherwise dispose of any shares of Common Stock for a
period of 90 days following the date of this Prospectus. See "Underwriting."

REGISTRATION RIGHTS

"Piggyback" registration rights will be available for a total of 9,688,151
shares of Common Stock held by members of management and certain other persons
with respect to the registration of Common Stock by the Company under (i) a
Subscription Agreement dated as of August 23, 1995 between the Company and
Indosuez Carson Partners and Indosuez CM II, Inc., (ii) a Subscription
Agreement dated as of August 23, 1995 between the Company and the investors
set forth in Schedule I thereto (entities affiliated with Banque Indosuez and
Morgan Guaranty Trust Company), (iii) a Subscription Agreement dated as of
August 23, 1995 between the Company and DNL Partners, (iv) a Registration
Rights Agreement dated as of August 23, 1995 between the Company and Dr. Leroy
Keith, (v) a Subscription and Registration Rights Agreement between the
Company and the outside directors named therein and (vi) a Subscription and
Registration Rights Agreement between the Company and the members of senior
management named therein, each of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. Such rights are
being waived in connection with the Offering.

In addition, the Company has granted certain stockholders "demand"
registration rights pursuant to the agreements referred to in clauses (i),
(ii) and (iii) of the preceding paragraph. In general, such stockholders may
request registration of their shares at the Company's expense 180 days after
the effective date of the Registration Statement of which this Prospectus is a
part, subject to a minimum amount of the requesting stockholder's shares per
requested registration, and subject to the Company's right to register its own
shares or shares of other requesting stockholders, which may limit the total
number of shares that may be sold in a single offering. However, the Company
is not obligated to register any of such stockholders' shares that may
immediately be sold under Rule 144 in full during any 90 day period. Such
rights are being waived in connection with the Offering.

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS

The following discussion of certain United States federal income and estate
tax consequences of the ownership and disposition of Class A Common Stock
applicable to Non-U.S. Holders has been prepared by Milbank, Tweed, Hadley &
McCloy, special tax counsel to the Company, and all statements of law and
legal conclusions contained in the discussion represent the opinion of
Milbank, Tweed, Hadley & McCloy. In general, a "Non-U.S. Holder" is any holder
other than (i) a citizen or resident of the United States, (ii) a corporation
or partnership created or organized in the United States or under the laws of
the United States or of any state, or (iii) an estate or trust, the income of
which is includable in gross income for United States federal income tax
purposes regardless of its source.

This discussion is based on current law only. This discussion does not
address aspects of United States federal taxation other than income and estate
taxation and does not address all aspects of income and estate taxation, nor
does it consider any specific facts or circumstances that may apply to a
particular Non-U.S. Holder. ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO
CONSULT THEIR TAX ADVISERS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL,
AND NON-UNITED STATES INCOME AND OTHER TAX CONSEQUENCES OF HOLDING AND
DISPOSING OF SHARES OF CLASS A COMMON STOCK.

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An individual may, subject to certain exceptions, be deemed to be a resident
alien (as opposed to a non-resident alien) by virtue of being present in the
United States on at least 31 days in the calendar year and for an aggregate of
at least 183 days during a three year period ending in the current calendar
year (counting for such purposes all of the days present in the current year,
one-third of the days present in the immediately preceding year, and one-sixth
of the days present in the second preceding year). Resident aliens are subject
to U.S. federal tax as if they were U.S. citizens.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively
connected with a trade or business carried on by the Non-U.S. Holder within
the United States, or (ii) if certain income tax treaties apply, attributable
to a permanent establishment in the United States maintained by the Non-U.S.
Holder. Dividends effectively connected with such a United States trade or
business or attributable to such a United States permanent establishment
generally will not be subject to United States withholding tax (if the Non-
U.S. Holder files certain forms, including Internal Revenue Service Form 4224,
with the payor of the dividend) and generally will be subject to United States
federal income tax on a net income basis, in the same manner as if the Non-
U.S. Holder were a resident of the United States. A Non-U.S. Holder that is a
corporation may be subject to an additional branch profits tax at a rate of
30% (or such lower rate as may be specified by an applicable treaty) on the
actual or deemed repatriation from the United States of its "effectively
connected earnings and profits," subject to certain adjustments. To determine
the applicability of a tax treaty providing for a lower rate of withholding,
dividends paid to an address in a foreign country are presumed under the
current interpretation of existing Treasury Regulations to be paid to a
resident of that country absent knowledge to the contrary. However, proposed
Treasury Regulations issued April 15, 1996, if finalized, would eliminate this
presumption with respect to payments made after December 31, 1997. These
proposed Treasury Regulations also would require Non-U.S. Holders to provide
the withholding agent with a beneficial owner withholding certificate to
obtain the benefit of any applicable tax treaty providing for a lower rate of
withholding tax on dividends. The beneficial owner withholding certificate
would contain the Non-U.S. Holders' name, permanent residence address and
taxpayer identifying number ("TIN"), certified by the Internal Revenue Service
(the "Service"). The Service would certify the TIN based on a certificate of
residence issued by the competent authority of the treaty country of which a
Non-U.S. Holder claims to be a resident or on certain documentary evidence
establishing residence in the treaty country. A Non-U.S. Holder that is
eligible for a reduced rate of U.S. withholding tax pursuant to a tax treaty
may obtain a refund of any excess amounts withheld by filing an appropriate
claim for refund with the Service.

SALE OF COMMON STOCK

In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the disposition of such holder's shares
of Class A Common Stock unless (i) the gain is effectively connected with a
trade or business carried on by the Non-U.S. Holder within the United States
or, alternatively, if certain tax treaties apply, attributable to a permanent
establishment in the United States maintained by the Non-U.S. Holder (and in
either such case, the United States branch profits tax may also apply upon
actual or deemed repatriation of the gain if the Non-U.S. Holder is a
corporation); (ii) in the case of Non-U.S. Holder who is a nonresident alien
individual and holds shares of Class A Common Stock as a capital asset, such
individual is present in the United States for 183 days or more in the taxable
year of disposition, and either (a) such individual has a "tax home" (as
defined for United States federal income tax purposes) in the United States
(unless the gain from the disposition is attributable to an office or other
fixed place of business maintained by such Non-U.S. Holder in a foreign
country and such gain has been subject to a foreign income tax equal to at
least 10% of the gain derived from such disposition), or (b) the gain is
attributable to an office or other fixed place of business maintained by such
individual in the United States; (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of United States tax law applicable to certain
United States expatriates whose loss of United States citizenship had as one
of its principal purposes the avoidance of United States taxes; or (iv) the
Company is or has been a United States real property holding corporation (a
"USRPHC") for United States federal income tax purposes (which the Company
does not believe that it is or is likely to become) at any time within the
shorter of the five-year period preceding such disposition or such Non-U.S.
Holder's holding period. If the Company were

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<PAGE>

or were to become a USRPHC, gains realized upon a disposition of Class A
Common Stock by a Non-U.S. Holder which did not directly or indirectly own
more than 5% of the Class A Common Stock during the shorter of the periods
described above generally would not be subject to United States federal income
tax, provided that the Class A Common Stock is "regularly traded" on an
established securities market. The Company intends to make an application to
list the Class A Common Stock on the New York Stock Exchange. Assuming the
application is made and approved, the Company believes that the Class A Common
Stock will be "regularly traded" on an established market.

ESTATE TAX

Class A Common Stock owned or treated as owned by an individual who is not a
citizen or resident (as defined for United States federal estate tax purposes)
of the United States at the time of death will be includable in the
individual's gross estate for United States federal estate tax purposes
(unless an applicable estate tax treaty provides otherwise), and therefore may
be subject to United States federal estate tax.

BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS

The Company must report annually to the Service and to each Non-U.S. Holder
the amount of dividends paid to, and the tax withheld with respect to, each
Non-U.S. Holder. These reporting requirements apply regardless of whether
withholding was reduced or eliminated by an applicable tax treaty. Copies of
this information also may be made available under the provisions of a specific
treaty or agreement with the tax authorities in the country in which the Non-
U.S. Holder resides or is established.

United States backup withholding (which generally is imposed at the rate of
31% on certain payments to persons that fail to furnish the information
required under the United States information reporting requirements) and
information reporting generally will not apply to dividends paid on Class A
Common Stock to a Non-U.S. Holder at an address outside the United States.

If the proceeds of the disposition of Class A Common Stock by a Non-U.S.
Holder are paid over, by or through a United States office of a broker, the
payment is subject to information reporting and to backup withholding unless
the disposing holder certifies as to its name, address and status as a Non-
U.S. Holder under penalties of perjury or otherwise establishes an exemption.
Generally, United States information reporting and backup withholding will not
apply to a payment of disposition proceeds if the payment is made outside the
United States through a non-U.S. office of a non-U.S. broker. However, United
States information reporting requirements (but not backup withholding) will
apply to a payment of disposition proceeds outside the United States if (a)
the payment is made through a non-U.S. office of a broker that is (i) a United
States person for United States federal income tax purposes, (ii) a
"controlled foreign corporation" for United States federal income tax purposes
or (iii) a foreign person 50% or more of whose gross income from certain
periods is effectively connected with a United States trade or business, and
(b) the broker fails to maintain documentary evidence in its files that the
holder is a Non-U.S. Holder or certain conditions are not met.

Backup withholding is not an individual tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded
or credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
Service.

These backup withholding tax and information reporting rules are currently
under review by the United States Treasury Department and proposed Treasury
Regulations issued on April 15, 1996, would modify certain of such rules
generally with respect to payments made after December 31, 1997. Accordingly,
the application of such rules to the Class A Common Stock could be changed.

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UNDERWRITING

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and
Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives (the "U.S. Representatives") of each of the Underwriters named
below (the "U.S. Underwriters"). Subject to the terms and conditions set forth
in a U.S. purchase agreement (the "U.S. Purchase Agreement") among the
Company, each of the Selling Stockholders and the U.S. Underwriters, and
concurrently with the sale of 838,000 shares of Class A Common Stock to the
International Managers (as defined below), the Company, for its own account,
and the Selling Stockholders severally have agreed to sell to the U.S.
Underwriters, and each of the U.S. Underwriters severally has agreed to
purchase from the Company and the Selling Stockholders, the number of shares
of Class A Common Stock set forth opposite its name below.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................
Donaldson, Lufkin & Jenrette Securities Corporation...................
---------
Total............................................................ 3,352,000
=========
</TABLE>

The Company and the Selling Stockholders have also entered into an
international purchase agreement (the "International Purchase Agreement") with
certain underwriters outside the United States and Canada (the "International
Managers" and, together with the U.S. Underwriters, the "Underwriters") for
whom Merrill Lynch International and Donaldson, Lufkin & Jenrette Securities
Corporation are acting as lead managers (the "Lead Managers"). Subject to the
terms and conditions set forth in the International Purchase Agreement, and
concurrently with the sale of 3,352,000 shares of Class A Common Stock to the
U.S. Underwriters pursuant to the U.S. Purchase Agreement, the Company and the
Selling Stockholders have agreed to sell to the International Managers, and
the International Managers severally have agreed to purchase from the Company
and the Selling Stockholders, an aggregate of 838,000 shares of Class A Common
Stock. The initial public offering price per share and the total underwriting
discount per share of Class A Common Stock are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.

In the U.S. Purchase Agreement and the International Purchase Agreement, the
several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Class A Common Stock being sold
pursuant to each such agreement if any of the shares of Class A Common Stock
being sold pursuant to such agreement are purchased. Under certain
circumstances, the commitments of non-defaulting U.S. Underwriters or
International Mangers (as the case may be) may be increased. The closings with
respect to the sale of Class A Common Stock to be purchased by the U.S.
Underwriters and the International Managers are conditioned upon one another.

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<PAGE>

The U.S. Representatives have advised the Company and the Selling
Stockholders that the U.S. Underwriters propose initially to offer the shares
of Class A Common Stock to the public at the initial public offering price set
forth on the cover page of this Prospectus, and to certain dealers at such
price less a concession not in excess of $ per share of Class A Common
Stock. The U.S. Underwriters may allow, and such dealers may allow, a discount
not in excess of $ per share of Class A Common Stock on sales to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.

The Company has granted an option to the U.S. Underwriters, exercisable for
30 days after the date of this Prospectus, to purchase up to an aggregate of
502,800 additional shares of Class A Common Stock at the initial public
offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The U.S. Underwriters may exercise this option only to
cover over-allotments, if any, made on the sale of the Class A Common Stock
offered hereby. To the extent that the U.S. Underwriters exercise this option,
each U.S. Underwriter will be obligated, subject to certain conditions, to
purchase the same percentage of such additional shares of Class A Common Stock
as such U.S. Underwriter's initial amount reflected in the foregoing table
bears to the total number of shares of Class A Common Stock initially offered
by the U.S. Underwriters. The Company also has granted an option to the
International Managers, exercisable for 30 days after the date of this
Prospectus, to purchase up to an aggregate of 125,700 additional shares of
Class A Common Stock to cover over-allotments, if any, on terms similar to
those granted to the U.S. Underwriters.

At the request of the Company, the U.S. Underwriters have reserved for sale,
at the initial public offering price, up to 400,000 shares to be issued by the
Company and offered hereby for directors, officers, employees, business
associates and related persons of the Company. The number of shares of Class A
Common Stock available for sale to the general public will be reduced to the
extent such persons purchase such reserved shares. Any reserved shares which
are not so purchased will offered by the Underwriters to the general pubic on
the same basis as the other shares offered hereby. Such persons will be
required to agree not to sell or otherwise dispose of any shares of Class A
Common Stock, or securities convertible into or exchangeable or exercisable
for Class A Common Stock for a period of 90 days following the date of this
Prospectus.

The Company, its directors and executive officers, the Selling Stockholders
and all other existing stockholders have agreed, subject to certain
exceptions, not to directly or indirectly sell, offer to sell, grant any
option for the sale of or otherwise dispose of any shares of Class A Common
Stock or securities or rights convertible into or exercisable or exchangeable
for Class A Common Stock, without the prior written consent of Merrill Lynch,
on behalf of the Underwriters, for a period of 180 days after the date of this
Prospectus. In addition, all existing stockholders have agreed not to make any
demand for or exercise any rights with respect to the registration of Common
Stock and have waived all rights (including demand and "piggyback"
registration rights) to register securities owned by them for such 180 day
period and rights to purchase additional shares of Common Stock in connection
with the Offerings. See "Shares Eligible for Future Sale."

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted
to sell shares of Class A Common Stock to each other for purposes of resale at
the initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and any dealer to whom they sell shares of Class A Common Stock
will not offer to sell or sell shares of Class A Common Stock to persons who
are non-U.S. or non-Canadian persons or to persons they believe intended to
resell to persons who are non-U.S. or non-Canadian persons, and the
International Managers and any dealer to whom they sell shares of Class A
Common Stock will not offer to sell or sell shares of Class A Common Stock to
U.S. persons or to Canadian persons or to persons they believe intended to
resell to United States or Canadian persons, except in the case of
transactions pursuant to the Intersyndicate Agreement.

72
<PAGE>

the initial public offering price, in addition to prevailing market
conditions, are price-earnings ratios of publicly traded companies that the
Representatives believe to be comparable to the Company, certain financial
information of the Company, the history of, and the prospects for, the Company
and the industry in which it competes, and assessment of the company's
management, its past and present operations, the prospects for, and timing of,
future revenues of the Company, the present state of the Company's
development, and the above factors in relation to market values and various
valuation measures of other companies engaged in activities similar to the
Company. There can be no assurance that an active trading market will develop
for the Class A Common Stock or that the Class A Common Stock will trade in
the public market subsequent to the Offerings at or above the initial public
offering price.

Application has been made to list the Class A Common Stock on the New York
Stock Exchange under the symbol "CIC," subject to official notice of issuance.
In order to meet the requirements for listing of the Class A Common Stock on
that exchange, the U.S. Underwriters have undertaken to sell lots of 100 or
more shares to a minimum of 2,000 beneficial owners.

The Underwriters do not intend to confirm sales of the Class A Common Stock
offered hereby to any accounts over which they exercise discretionary
authority.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act.

Merrill Lynch has been retained to act as financial advisor and provide
investment banking advice to the Company and may be retained in the future to
provide additional investment banking services to the Company. Merrill Lynch
will receive customary fees in connection with such services.

LEGAL MATTERS

The validity of the Class A Common Stock being offered hereby and certain
other legal matters relating to the Offerings will be passed upon for the
Company by Milbank, Tweed, Hadley & McCloy, New York, New York. Certain legal
matters will be passed upon for the Underwriters by Cahill Gordon & Reindel (a
partnership including a professional corporation), New York, New York.

EXPERTS

The financial statements of the Predecessor as of March 31, 1995 and for
each of the two years in the period ended March 31, 1995 included in this
Prospectus and the financial statement schedule for the two years ended March
31, 1995 included in this Registration Statement have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in accounting and auditing.

The consolidated balance sheet as of March 31, 1996 and the consolidated
statements of operations, stockholders' equity and cash flows of the Company
for the period from August 23, 1995 through March 31, 1996 and the
consolidated statements of income, stockholders' equity, and cash flows of the
Predecessor for the period from April 1, 1995 to August 22, 1995 and the
related financial statement schedule have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports appearing herein and
elsewhere in the registration statement, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.

On August 23, 1995 the Company engaged Deloitte & Touche LLP as its
independent public accountants, replacing the Predecessor's independent public
accountants, Price Waterhouse LLP. There were no disagreements with Price
Waterhouse LLP regarding accounting principles or practices, financial
statement disclosure, or auditing scope or procedure during each of the two
fiscal years ended March 31, 1995 and the period from April 1, 1995 to August
22, 1995. Price Waterhouse LLP issued reports without adverse opinions,
disclaimers of opinions, or qualifications or modifications as to uncertainty,
audit scope or accounting principles (other than as required by generally
accepted accounting principles), with respect to the consolidated financial
statements of the Predecessor as of and for the years ended March 31, 1994 and
1995. The decision to change accountants was approved by the Company's Board
of Directors.

73
<PAGE>

AVAILABLE INFORMATION

The Company has filed a Registration Statement on Form S-1 with respect to
the Class A Common Stock being offered hereby with the Commission under the
Securities Act. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are omitted in accordance with the rules and
regulations of the Commission. Statements contained in this Prospectus
concerning the provisions of documents filed with the Registration Statement
as exhibits are necessarily summaries of such documents, and each such
statement is qualified in its entirety by reference to the copy of the
applicable document filed as an exhibit to the Registration Statement. Upon
the consummation of the Offerings, the Company will be subject to the
informational requirements of the Exchange Act and, in accordance therewith,
will file reports and other information with the Commission. The Registration
Statement and the exhibits and schedules thereto filed by the Company with the
Commission, as well as such reports and other information filed by the Company
with the Commission, may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; at its Chicago Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511; and at its New York Regional Office, Seven
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the public reference section of the Commission,
450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates. Such
material may also be accessed electronically by means of the Commission's home
page on the Internet at http://www.sec.gov. The Class A Common Stock is
expected to be listed on the New York Stock Exchange, and copies of such
material will be available for inspection at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005. The Company intends to
furnish to its stockholders annual reports containing audited consolidated
financial statements and a report thereon by the Company's independent
accountants and quarterly reports containing unaudited consolidated financial
data for the first three quarters of each fiscal year.

74
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED FINANCIAL STATEMENTS FOR THE COMPANY
Independent Auditors' Report............................................. F-2
Consolidated Balance Sheet at March 31, 1996............................. F-3
Consolidated Statement of Operations--Period from August 23, 1995 to
March 31, 1996.......................................................... F-4
Consolidated Statement of Changes in Stockholders' Equity--Period from
August 23, 1995 to March 31, 1996....................................... F-5
Consolidated Statement of Cash Flows--Period from August 23, 1995 to
March 31, 1996.......................................................... F-6
Notes to Consolidated Financial Statements............................... F-7
AUDITED FINANCIAL STATEMENTS FOR THE PREDECESSOR
Report of Independent Accountants........................................ F-16
Independent Auditors' Report............................................. F-17
Consolidated Balance Sheet at March 31, 1995............................. F-18
Consolidated Statements of Income--Years Ended March 31, 1994 and 1995
and Period from April 1, 1995 to August 22, 1995........................ F-19
Consolidated Statements of Changes in Stockholders' Equity--Years Ended
March 31, 1994 and 1995 and Period from April 1, 1995 to August 22,
1995.................................................................... F-20
Consolidated Statements of Cash Flows--Years Ended March 31, 1994 and
1995 and Period from April 1, 1995 to August 22, 1995................... F-21
Notes to Consolidated Financial Statements .............................. F-22
UNAUDITED FINANCIAL STATEMENTS FOR THE PREDECESSOR AND THE COMPANY
Consolidated Balance Sheet at June 30, 1996.............................. F-31
Consolidated Statements of Operations--Three Months Ended June 30, 1995
and 1996................................................................ F-32
Consolidated Statements of Cash Flows--Three Months Ended June 30, 1995
and 1996................................................................ F-33
Notes to Consolidated Financial Statements............................... F-34
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors of Carson, Inc.:

We have audited the accompanying consolidated balance sheet of
Carson, Inc. (formerly DNL Savannah Holding Corp.) and its
subsidiaries as of March 31, 1996 and the related consolidated
statements of operations, changes in stockholders' equity, and cash
flows for the period from August 23, 1995 to March 31, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Carson,
Inc. and its subsidiaries as of March 31, 1996 and the results of
their operations and their cash flows for the period from August 23,
1995 to March 31, 1996 in conformity with generally accepted
accounting principles.

Atlanta, Georgia

June 21, 1996 (October 8, 1996 as to Note 14)

F-2
<PAGE>

CARSON, INC.

CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................ $ 1,553
Accounts receivable, net of allowance for doubtful accounts of $531.. 12,611
Inventories.......................................................... 8,663
Other................................................................ 3,094
-------
Total current assets............................................... 25,921
PROPERTY, PLANT, AND EQUIPMENT--Net.................................... 11,986
GOODWILL--Net of accumulated amortization of $688...................... 46,633
OTHER ASSETS........................................................... 3,542
-------
$88,082
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
</TABLE>

<TABLE>
<S> <C>
CURRENT LIABILITIES:
Accounts payable..................................................... $ 3,600
Accrued expenses..................................................... 5,354
Current maturities of long-term debt................................. 3,010
-------
Total current liabilities.......................................... 11,964
LONG-TERM DEBT......................................................... 63,778
OTHER LIABILITIES...................................................... 1,678
DEFERRED INCOME TAXES.................................................. 785
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none
issued.............................................................. --
Common stock:
Class A, voting, $.01 par value, 150,000,000 shares authorized, no
shares issued and outstanding..................................... --
Class B, nonvoting, $.01 par value, 2,000,000 shares authorized,
1,859,677 shares issued and outstanding........................... 19
Class C, voting, $.01 par value, 13,000,000 shares authorized,
9,510,323 shares issued and outstanding........................... 95
Paid-in capital...................................................... 8,557
Retained earnings.................................................... 1,206
-------
Total stockholders' equity......................................... 9,877
-------
$88,082
=======
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

CARSON, INC.

CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM AUGUST 23, 1995 TO MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<S> <C>
NET SALES.............................................................. $41,465
COST OF SALES.......................................................... 18,629
-------
Gross profit......................................................... 22,836
OPERATING EXPENSES:
Selling.............................................................. 9,581
General and administrative........................................... 5,061
Depreciation and amortization........................................ 1,331
-------
15,973
-------
OPERATING INCOME....................................................... 6,863
INTEREST EXPENSE....................................................... 4,487
OTHER INCOME........................................................... 182
-------
INCOME BEFORE INCOME TAXES............................................. 2,558
INCOME TAX PROVISION................................................... 1,352
-------
NET INCOME............................................................. $ 1,206
=======
NET INCOME PER SHARE................................................... $ .10
=======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING............................. 11,871
=======
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

CARSON, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM AUGUST 23, 1995 TO MARCH 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK
---------------------------
CLASS B CLASS C
------------- -------------
PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ------ ------ ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Sale of common stock.... 569 $ 6 5,799 $58 $11,936 $12,000
Issuance of common stock
in connection with
acquisition
of Predecessor......... 1,291 13 2,006 20 2,717 2,750
Carryover of Predecessor
basis.................. 1,705 17 (6,096) (6,079)
Net income.............. $1,206 1,206
----- --- ----- --- ------- ------ -------
BALANCE--March 31,
1996................... 1,860 $19 9,510 $95 $ 8,557 $1,206 $ 9,877
===== === ===== === ======= ====== =======
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

CARSON, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 23, 1995 TO MARCH 31, 1996
(IN THOUSANDS)

<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net income.......................................................... $ 1,206
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization..................................... 1,443
Provision for deferred income taxes............................... 805
Changes in assets and liabilities (excluding effects of acquisi-
tion):
Accounts receivable............................................. (2,385)
Inventories..................................................... (1,586)
Other current assets............................................ (970)
Other noncurrent assets......................................... 617
Accounts payable................................................ 1,360
Accrued expenses................................................ (1,677)
Other liabilities............................................... (28)
-------
Total adjustments............................................. (2,421)
-------
Net cash used in operating activities......................... (1,215)
INVESTING ACTIVITIES:
Acquisition of Predecessor (net of cash acquired)................... (65,300)
Purchases of property, plant, and equipment......................... (1,470)
-------
Net cash used in investing activities......................... (66,770)
FINANCING ACTIVITIES:
Proceeds from long-term borrowings.................................. 58,550
Principal payments on long-term debt................................ (1,012)
Sale of common stock................................................ 12,000
-------
Net cash provided by financing activities..................... 69,538
-------
NET INCREASE IN CASH AND CASH EQUIVALENTS............................. 1,553
CASH AND CASH EQUIVALENTS at August 23, 1995.......................... --
-------
CASH AND CASH EQUIVALENTS at March 31, 1996........................... $ 1,553
=======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.......................................................... $ 3,991
=======
Income taxes...................................................... $ 2,497
=======
Non-cash financing activities:
Long-term debt issued in Acquisition.............................. $11,753
=======
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996

1. ORGANIZATION AND BUSINESS

Carson, Inc. (formerly DNL Savannah Holding Corp. and also referred to
herein as the Company) was established in May 1995 and until August 1995
its operations were de minimus. On August 23, 1995, the Company acquired
all of the outstanding stock of Aminco, Inc. (also referred to as the
Predecessor). Aminco's operations were principally conducted by its wholly
owned subsidiary, Carson Products Company. Subsequent to the acquisition of
Aminco, Carson Products Company was merged into Aminco; the surviving
entity was renamed Carson Products Company. The accompanying financial
statements include the operating results of the Carson Products Company
from the acquisition date.

The Company is the leading manufacturer and marketer in the U.S. retail
ethnic hair care market for African-Americans. The Company is also a
leading global manufacturer and marketer of ethnic hair care products for
persons of African descent. The Company's more than 60 products are
marketed under five principal brand names. Certain of the Company's
international activities are conducted by its South African subsidiary.

The Company's acquisition of the Predecessor for approximately $95 million
in cash (including $6 million for fees and other costs directly associated
with the acquisition) has been accounted for as a purchase. Accordingly,
the purchase price has been allocated to the Predecessor's identifiable
assets and liabilities based on fair values at the acquisition date. The
excess of the purchase price over the fair value of the Predecessor's
identifiable net assets has been classified as goodwill.

The Company borrowed $56 million from various institutions, issued $11.8
million of Junior Subordinated Notes to certain previous shareholders of
the Predecessor, and sold $12 million of its common stock to finance the
acquisition (also see Note 7).

Certain previous shareholders of the Predecessor received 1,705,500 shares
of Class A Common Stock in the acquisition. Such share interest has been
carried over at such shareholders' proportionate equity in the book value
of Aminco (predecessor basis) in accordance with Emerging Issues Task Force
Issue No. 88-16, "Basis in Leveraged Buyout Transactions."

The purchase price of the Predecessor (net of the carryover of the negative
predecessor basis of approximately $6.1 million) has been allocated as
follows (in millions):

<TABLE>
<S> <C>
Current assets (including $17.9 of cash acquired)................... $37.9
Property, plant, and equipment...................................... 10.8
Goodwill............................................................ 47.2
Other assets........................................................ 4.5
Liabilities assumed................................................. (11.4)
-----
$89.0
=====
</TABLE>

In connection with the acquisition and its associated financing, the
Company also issued shares of its common stock to certain lenders and
individuals as follows:

(i)1,187,483 shares of Class C Common Stock and 1,291,177 shares of Class B
Common Stock were issued to lenders at the acquisition date with an
aggregate fair value of approximately $2.4 million and which has been
recorded as debt discount and netted against the carrying value of the
associated debt instrument. Such discount is being amortized using the
interest method over the life of the underlying debt.

F-7
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)

(ii) 818,640 shares of Class C Common Stock were issued to certain
individuals who assisted the Company in securing the acquisition and had a
fair value of approximately $360,000. These shares are being held in a
trust and are subject to certain voting and other restrictions. The fair
value of all shares issued to individuals has been recorded as additional
purchase price.

The fair value of all shares issued above was based on valuations obtained
from a third-party appraiser.

Entities affiliated with certain stockholders of the Company received $1.7
million in cash for their fees associated with assisting the Company with
its purchase of the Predecessor. Also, the Company paid consulting fees of
$219,000 to certain of such affiliated entities during the period from
August 23, 1995 to March 31, 1996.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation--The accompanying financial statements include
the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany transactions and accounts have been eliminated.

Inventories--Inventories in the U.S. are valued at the lower of Last-In,
First-Out (LIFO) cost or market. Inventories of the South African
subsidiary are valued at the lower of First-In, First-Out (FIFO) cost or
market.

Property, Plant, and Equipment--Property, plant, and equipment is recorded
at assigned values or cost less an allowance for depreciation. The Company
capitalizes eligible expenditures with a cost greater than $1,000.
Depreciation is computed using the straight-line method over the following
estimated useful lives:

<TABLE>
<S> <C>
Buildings......................................................... 42 years
Land improvements................................................. 20 years
Machinery and equipment........................................... 12 years
Furniture and fixtures............................................ 10 years
Office equipment.................................................. 8 years
Vehicles.......................................................... 5 years
Information systems............................................... 5 years
</TABLE>

Intangible Assets--Goodwill is amortized over 40 years using the straight-
line method. Debt issue costs are amortized on the interest method over the
life of the related debt. Patents are amortized using the straight-line
method over 17 years. The Company periodically assesses the recoverability
of goodwill based on judgments as to future undiscounted cash flows from
operations.

Income Taxes--Deferred income taxes are recognized for the tax consequences
of "temporary differences" by applying currently enacted statutory rates to
differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities. The effect on deferred taxes of a
change in tax rates is recognized in the results of operations in the
period that includes the enactment date.

Revenue Recognition--Revenue from sales of manufactured goods are
recognized upon shipment to customers.

Research and Development Costs--Research and development costs (principally
for new products) are expensed as incurred and aggregated $250,000 for the
period from August 23, 1995 to March 31, 1996. These costs are included in
general and administrative expenses in the accompanying statement
of operations.

F-8
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)

Self-Insurance--The Company is self-insured for employee medical costs (up
to $35,000 annually per employee) and for product liability claims (up to
$500,000 annually in the aggregate). The Company carries medical and
liability insurance for amounts exceeding the self-insured limits in
medical and product liability claims. Medical claim costs are accrued based
upon the Company's estimates of the aggregate liability for medical claims
incurred using certain actuarial assumptions followed in the insurance
industry and based on Company experience.

Estimates of accrued liabilities for self-insured product liability claims
are based on an evaluation of the merits of individual claims and
historical claims experience; thus, the Company's ultimate liability may
exceed or be less than the amounts accrued. The methods of making such
estimates and establishing the resulting accrued liability are reviewed
continually and any adjustments resulting therefrom are reflected in
current earnings.

Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

Foreign Currency Translation--Assets and liabilities of the Company's South
African operations are translated from South African Rand into U.S. dollars
at the rate of currency exchange at the end of the fiscal period. Revenues
and expenses are translated at average monthly exchange rates prevailing
during the year. Resulting translation differences are recognized as a
component of stockholders' equity. Adjustments resulting from translations
are immaterial to the accompanying financial statements.

Net Income Per Share--Net income per share is computed by dividing net
income by weighted average common shares outstanding. In accordance with
the rules of the Securities and Exchange Commission, all shares of common
stock issued prior to the Company's initial public offering are included in
weighted average shares outstanding as if they were issued at the Company's
formation.

Cash and Cash Equivalents--Cash and investments with maturities of three
months or less when purchased are considered cash and cash equivalents.

Fair Value of Financial Instruments--The carrying values of cash and cash
equivalents, accounts receivable, inventories, accounts payable, and
accrued liabilities approximate fair values due to the short-term
maturities of the instruments.

3. INVENTORIES

Inventories at March 31, 1996 are summarized as follows (in thousands):

<TABLE>
<S> <C>
Raw materials....................................................... $4,562
Work-in-process..................................................... 1,002
Finished goods...................................................... 3,099
------
Total............................................................. $8,663
======
</TABLE>

There were no material differences between inventories valued on a LIFO
basis or their valuation on a FIFO basis at March 31, 1996.

4. OTHER CURRENT ASSETS

Other current assets at March 31, 1996 consist of the following (in
thousands):

<TABLE>
<S> <C>
Prepaid interest (Note 7).......................................... $1,090
Deferred income taxes.............................................. 785
Other.............................................................. 1,219
------
Total............................................................ $3,094
======
</TABLE>

F-9
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)

5. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment at March 31, 1996 is summarized as follows
(in thousands):

<TABLE>
<S> <C>
Land.............................................................. $ 545
Buildings and improvements........................................ 5,427
Machinery and equipment........................................... 5,806
Furniture and fixtures............................................ 277
Construction-in-progress.......................................... 282
-------
12,337
Less accumulated depreciation..................................... 351
-------
Total........................................................... $11,986
=======
</TABLE>

Depreciation expense for property, plant, and equipment was $351,000 for
the period from August 23, 1995 to March 31, 1996.

6. OTHER ASSETS

Other assets at March 31, 1996 are summarized as follows (in thousands):

<TABLE>
<S> <C>
Deferred financing costs........................................... $3,275
Prepaid interest (Note 7).......................................... 433
Patents............................................................ 152
------
3,860
Less accumulated amortization...................................... 318
------
Total............................................................ $3,542
======
</TABLE>

7. LONG-TERM DEBT

Long-term debt at March 31, 1996 is summarized as follows (in thousands):

<TABLE>
<S> <C>
Term loan......................................................... $29,000
Revolving line of credit.......................................... 7,500
Senior Subordinated Notes, interest at 12.5%, due 2002, net of
unamortized discount of $1,307................................... 16,693
Subordinated Notes, interest at 15%, due 2003, net of unamortized
discount of $996................................................. 2,004
Junior Subordinated Notes, interest at 10%, due 2002, net of
unamortized discount of $209..................................... 11,544
Other............................................................. 47
-------
66,788
Less current portion.............................................. 3,010
-------
$63,778
=======
</TABLE>

During August 1995, the Company entered into various borrowing arrangements
in connection with its acquisition of the Predecessor (Note 1). The
principal terms of such arrangements are as follows:

F-10
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)

Term Loan and Revolving Line of Credit--The Company has a $40 million
credit facility (the "Senior Bank Facility") with a commercial bank. This
facility is comprised of a $30 million term loan repayable in quarterly
installments through 2001 and a $10 million revolving line of credit which
expires in July 2001. The Senior Bank Facility requires compliance with
certain financial tests and restricts certain activities including, but not
limited to, capital expenditures, creation of indebtedness, and payment of
dividends by Carson Products Company. Substantially all assets of the
Company, including the stock of its wholly owned subsidiaries, are pledged
as collateral under the Senior Bank Facility.

Borrowings under the Senior Bank Facility bear interest at a base rate as
defined (8.25% at March 31, 1996) plus 1.5% or LIBOR (5.4% at March 31,
1996) plus 3%. The weighted average rate on borrowings under the Senior
Bank Facility was 9.4% for the period from August 23, 1995 to March 31,
1996.

Borrowings under the line of credit are limited to percentages of certain
eligible assets. The line can also be used for letters of credit which,
when issued, reduce availability under the line; no letters of credit were
outstanding at March 31, 1996. At March 31, 1996, the Company had $2.5
million of unused capacity under the line of credit.

Subordinated Notes--The Senior Subordinated Notes, the Subordinated Notes,
and the Junior Subordinated Notes (collectively, the "Subordinated
Financing") are subordinate to debt outstanding under the term loan and
revolving line of credit. The terms of the Subordinated Financing contain
certain cross default provisions with the Senior Bank Facility. The Company
believes that it is not practicable to estimate the fair value of the
Subordinated Financing due to the lack of comparable securities and the
lack of a credit rating of the Company by an established rating agency.

Interest on the Senior Subordinated Notes is payable quarterly in arrears.

Interest on the Subordinated Notes and the Junior Subordinated Notes is
payable semi-annually in arrears and can be paid in cash or, at the
Company's option, by the issuance of additional subordinated notes with
similar terms. The Junior Subordinated Notes were issued to certain former
shareholders of the Predecessor and the Company prepaid interest thereon in
cash aggregating $2.2 million. The effective interest rate for the Senior
Subordinated Notes, Subordinated Notes, and Junior Subordinated Notes was
14.2%, 24.5%, and 10.5%, respectively.

Annual maturities of outstanding indebtedness at March 31, 1996 are as
follows (in thousands):

<TABLE>
<S> <C>
1997............................................................... $ 3,010
1998............................................................... 4,255
1999............................................................... 5,214
2000............................................................... 5,664
2001............................................................... 6,119
Thereafter......................................................... 42,526
-------
$66,788
=======
</TABLE>

At March 31, 1996, the Company did not comply with certain covenants of the
Senior Bank Facility and the Senior Subordinated Notes related to capital
expenditures and net worth. The Company has received waivers of these
events of default from its lenders (Note 14).

F-11
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)
8. ACCRUED LIABILITIES

Accrued liabilities at March 31, 1996 consist of the following (in
thousands):

<TABLE>
<S> <C>
Compensation and benefits.......................................... $2,227
Advertising........................................................ 1,340
Self insurance..................................................... 927
Interest........................................................... 384
Other.............................................................. 476
------
$5,354
======
</TABLE>

9.INCOME TAXES

Income tax expense for the period from August 23, 1995 to March 31, 1996
consists of (in thousands):

<TABLE>
<S> <C>
Current:
Federal.......................................................... $ 204
State............................................................ 33
Foreign.......................................................... 310
------
Total current provision........................................ 547
Deferred:
Federal.......................................................... 609
State............................................................ 114
Foreign.......................................................... 82
------
Total deferred provision....................................... 805
------
Total provision................................................ $1,352
======
</TABLE>

The following is a reconciliation of the statutory tax rate to the
Company's effective tax rate for the period from August 23, 1995 to March
31, 1996:

<TABLE>
<S> <C>
Statutory rate......................................................... 34%
State income taxes (net of federal benefit)............................ 4
Permanent differences (primarily nondeductible goodwill)............... 15
---
Effective rate......................................................... 53%
===
</TABLE>

F-12
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)

The effects of temporary differences which gave rise to the deferred tax
asset and liability at March 31, 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
CURRENT LONG-TERM
------- ---------
<S> <C> <C>
Deferred tax assets related to:
Accrued expenses....................................... $522 $ 826
Allowance for doubtful accounts........................ 199
Package design costs................................... 412
Inventories............................................ 50
Other.................................................. 14
---- ------
785 1,238
Deferred tax liabilities related to:
Inventories............................................ (801)
Property, plant, and equipment......................... (1,222)
------
(2,023)
---- ------
$785 $ (785)
==== ======
</TABLE>

Deferred income taxes were not provided on undistributed earnings of
certain foreign subsidiaries ($1.0 million at March 31, 1996) because such
undistributed earnings are expected to be reinvested indefinitely overseas.
If these amounts were not considered permanently reinvested, additional
deferred taxes of approximately $125,000 would have been provided.

10. EMPLOYEE BENEFIT PLANS

The Company has a profit sharing plan which covers substantially all U.S.
employees. Contributions to the plan are discretionary, as determined by
the Board of Directors. Contributions are made on an annual basis. The
Company contributed $246,000 to the plan for the period from August 23,
1995 to March 31, 1996.

The Company is obligated for retirement benefits to a former employee for
the remainder of his (and his spouse's) life. The expected present value of
this obligation ($1.7 million at March 31, 1996) is classified in other
liabilities in the accompanying balance sheet.

The Company provides postretirement health care benefits to a limited
number of key executives. The accumulated postretirement benefit obligation
("APBO") was $499,000 at March 31, 1996. For measurement purposes, the cost
of providing medical benefits was assumed to increase by 10% in the fiscal
year ended March 31, 1996, decreasing to an annual rate of 8% after March
31, 2000. The medical cost trend rate assumption could have an effect on
amounts reported. For example, an increase of 1% in the assumed rate of
increase would have an effect of increasing the APBO by $78,000 and the net
periodic postretirement benefit cost by $21,000. The weighted average
discount rate used in determining the APBO was 8%. Net periodic
postretirement benefit cost for the period from August 23, 1995 to March
31, 1996 was $9,000.

Certain members of senior management are eligible to receive incentive
compensation based on the future fair market value of the Company in excess
of $50 million subject to five year vesting requirements and payable in
cash in the year 2000 (or earlier upon a public offering or sale of the
Company). No expense was recognized for such incentives during the period
from August 23, 1995 to March 31, 1996 (based on management's estimate of
the Company's fair market value at March 31, 1996. Such estimate of fair
market value was based upon the same methodology and factors used to
determine the purchase price of the Predecessor, i.e. a multiple of annual
cash flow).

F-13
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)

11. COMMITMENTS AND CONTINGENCIES

The Company is a party to lawsuits incidental to its business. Management
believes that the ultimate resolution of these matters will not have a
materially adverse impact on the business or financial condition and
operations of the Company.

12. U.S. AND FOREIGN OPERATIONS

The Company's operations are located in the United States and South Africa.
Financial information by geographic area for the period from August 23,
1995 to March 31, 1996 is as follows (in thousands):

<TABLE>
<S> <C>
Net sales by:
United States:
Domestic...................................................... $31,775
Export........................................................ 5,227
South Africa.................................................... 4,463
-------
$41,465
=======
Operating Profit:
United States................................................... $ 5,861
South Africa.................................................... 1,002
-------
$ 6,863
=======
Identifiable assets (at end of period):
United States................................................... $83,538
South Africa.................................................... 4,404
-------
$87,942
=======
</TABLE>

Transfers of product from the United States to South Africa were not
material during the period presented above. Export sales from the United
States include sales to customers in Europe, the Carribean, and Africa.

The Company is in the process of effecting an initial public offering of
approximately 25% of the common stock of its South African subsidiary. The
subsidiary expects to receive net proceeds of approximately $4.2 million
from this sale (which will result in a gain to the Company of approximately
$2.8 million which will be recorded in paid-in capital upon the completion
of the public offering). Proceeds from the offering will be used by the
subsidiary to acquire a manufacturing facility in South Africa and for
general corporate purposes.

13. FINANCIAL INFORMATION OF CARSON, INC. (PARENT COMPANY)

The assets of Carson, Inc. on an unconsolidated basis consist solely of its
investment in Carson Products Company. During the period from August 23,
1995 to March 31, 1996, the results of operations of Carson, Inc. consisted
solely of its equity in the earnings of Carson Products Company and its
cash flows consisted solely of the cash provided by financing activities of
$12 million from the sale of its common stock and cash used in investing
activities of $12 million for its investment in Carson Products Company.

F-14
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1996 AND FOR THE PERIOD FROM
AUGUST 23, 1995 TO MARCH 31, 1996--(CONTINUED)

14. SUBSEQUENT EVENTS

During August 1996, the long-term incentive compensation agreements (Note
10) were restructured to allow such employees to purchase shares of the
Company's common stock as described below; certain future cash awards under
the restructured agreements are still possible. The Company may record
additional compensation charges through 2000 for possible cash awards under
the restructured agreements.

During August 1996, several outside directors and members of senior
management purchased 501,191 shares of the Company's Common Stock. The
purchase of such shares by senior management was financed with $1.3 million
(net of discount) in non-interest bearing long-term full recourse loans
from the Company. The Company will record additional non-cash compensation
expense of approximately $6.8 million (with no associated income tax
benefits) during the three months ended September 30, 1996 for the excess
of the estimated initial public offering price over the actual purchase
price of such shares.

During August 1996, the Company received waivers of noncompliance with
certain covenants of its various borrowing arrangements from its lenders
(Note 7.)

On October 8, 1996, the Company amended its Certificate of Incorporation to
change the authorized capital stock to Class A Common Stock, Class B Common
Stock, Class C Common Stock, and Preferred Stock (each with a par value of
$.01 per share). Each share of the Company's former Class A Common Stock
was converted into 11,370 shares of newly created Class C Common Stock, and
each share of former Class B Common Stock was converted into 11,370 shares
of newly created Class B Common Stock. These stock conversions have been
given retroactive recognition in the accompanying financial statements.

F-15
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

Directors of Aminco, Inc. and Subsidiaries:

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Aminco, Inc. and its subsidiaries (the "Company") at March 31, 1995, and the
results of their operations and their cash flows for each of the two years in
the period ended March 31, 1995 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

As discussed in Notes 2 and 10 to the financial statements, the Company
changed its methods of accounting for investment securities and accounting for
postretirement benefits other than pensions during the fiscal year ended March
31, 1995. As discussed in Note 6 to the financial statements, the Company
changed its method of accounting for income taxes during the fiscal year ended
March 31, 1994.

PRICE WATERHOUSE LLP

Atlanta, Georgia
May 8, 1995

F-16
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors of Carson, Inc.:

We have audited the accompanying consolidated statements of income, changes
in stockholders' equity, and cash flows of Aminco, Inc. and its subsidiaries
(the "Company") for the period from April 1, 1995 to August 22, 1995. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of operations and cash flows of Aminco,
Inc. and its subsidiaries for the period from April 1, 1995 to August 22, 1995
in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Atlanta, Georgia
August 2, 1996

F-17
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash.............................................................. $ 1,620
Investments available for sale, at market (Note 2)................ 4,699
Accounts receivable (less allowance for doubtful accounts of
$242)............................................................ 10,338
Inventories (Note 3).............................................. 5,980
Other current assets.............................................. 696
-------
Total current assets............................................ 23,333
PROPERTY, PLANT, AND EQUIPMENT--Net of accumulated depreciation
(Note 4)........................................................... 9,696
INVESTMENTS AVAILABLE FOR SALE--At market (Note 2).................. 9,702
OTHER NONCURRENT ASSETS............................................. 1,132
-------
$43,863
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................. $ 2,685
Accrued expenses (Note 7)......................................... 5,508
-------
Total current liabilities....................................... 8,193
OTHER LIABILITIES (Note 9).......................................... 1,312
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS' EQUITY (Notes 8 and 9):
Preferred stock, $10 par value, 700,000 shares authorized, 606,752
issued (liquidation preference of $15,243)....................... 6,068
Common stock, $3 par value, 500,000 shares authorized, 406,699 is-
sued............................................................. 1,220
Additional paid-in capital........................................ 308
Retained earnings................................................. 33,187
Valuation adjustment, investments available for sale, net of in-
come taxes....................................................... 283
-------
41,066
Treasury stock, at cost........................................... (6,708)
-------
34,358
-------
$43,863
=======
</TABLE>

See notes to consolidated financial statements.

F-18
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
MARCH 31, APRIL 1, 1995
--------------- TO
1994 1995 AUGUST 22, 1995
------- ------- ---------------
<S> <C> <C> <C>
NET SALES.................................... $50,108 $58,126 $26,854
COST OF GOODS SOLD........................... 23,622 25,692 11,513
------- ------- -------
Gross margin............................... 26,486 32,434 15,341
EXPENSES:
Selling.................................... 14,639 17,888 7,467
General and administrative................. 6,834 5,246 2,276
Depreciation and amortization.............. 828 1,085 502
------- ------- -------
22,301 24,219 10,245
------- ------- -------
INCOME FROM CONTINUING OPERATIONS............ 4,185 8.215 5,096
OTHER INCOME--Net............................ 108 150 17
INTEREST EXPENSE............................. 97 136 56
------- ------- -------
OPERATING INCOME............................. 4,196 8,229 5,057
INVESTMENT INCOME:
Dividends and interest..................... 396 549 297
Net gain on sales and maturities of invest-
ments..................................... 195 84 823
------- ------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND CHANGES IN ACCOUNTING
PRINCIPLES.................................. 4,787 8,862 6,177
PROVISION FOR INCOME TAXES (Note 6).......... 1,704 3,174 2,243
------- ------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE
CHANGES IN ACCOUNTING PRINCIPLES............ 3,083 5,688 3,934
DISCONTINUED OPERATIONS (Note 11):
Loss from operations of Fine Products (net
of income tax benefit of $314)............ 574 -- --
Loss on disposal of assets of Fine Products
(net of income tax benefit of $354)....... 635 -- --
------- ------- -------
INCOME BEFORE CHANGES IN ACCOUNTING PRINCI-
PLES........................................ 1,874 5,688 3,934
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES--
Net of income taxes (Notes 1, 6, and 10).... 23 (250) --
------- ------- -------
NET INCOME................................... 1,897 5,438 3,934
DIVIDENDS ON PREFERRED STOCK--Declared $2.00
per share in 1994 and 1995.................. 1,113 1,109 554
------- ------- -------
INCOME AVAILABLE TO ALL SHAREHOLDERS......... $ 784 $ 4,329 $ 3,380
======= ======= =======
50% OF INCOME ALLOCABLE TO COMMON STOCK...... $ 392 $ 2,164 $ 1,690
INCOME ALLOCABLE TO PREFERRED STOCK.......... 1,505 3,274 2,244
------- ------- -------
NET INCOME................................... $ 1,897 $ 5,438 $ 3,934
======= ======= =======
</TABLE>

See notes to consolidated financial statements.

F-19
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1994 AND 1995 AND
PERIOD FROM APRIL 1, 1995 TO AUGUST 22, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PREFERRED
STOCK COMMON STOCK ADDITIONAL
-------------- -------------- PAID-IN RETAINED VALUATION ESOP DEBT TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT GUARANTEE STOCK TOTAL
------- ------ ------- ------ ---------- -------- ---------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE--March 31,
1993................... 606,752 $6,068 406,699 $1,220 $187 $28,074 $(552) $(4,524) $30,473
Net income.............. 1,897 1,897
Cash dividends, pre-
ferred stock........... (1,113) (1,113)
Reduction in ESOP debt
guarantee.............. 264 264
Purchase of treasury
stock.................. (1,913) (1,913)
Issuance of treasury
stock.................. 27 64 91
------- ------ ------- ------ ---- ------- ---- ----- ------- -------
BALANCE--March 31,
1994................... 606,752 6,068 406,699 1,220 214 28,858 (288) (6,373) 29,699
Net income.............. 5,438 5,438
Cash dividends, pre-
ferred stock........... (1,109) (1,109)
Reduction in ESOP debt
guarantee.............. 288 288
Purchase of treasury
stock.................. (567) (567)
Issuance of treasury
stock.................. 94 232 326
Unrealized gains on in-
vestments available for
sale, net of income
taxes.................. $283 283
------- ------ ------- ------ ---- ------- ---- ----- ------- -------
BALANCE--March 31,
1995................... 606,752 6,068 406,699 1,220 308 33,187 283 (6,708) 34,358
Net income.............. 3,934 3,934
Cash dividends, pre-
ferred stock........... (554) (554)
Purchase of treasury
stock.................. 296 296
------- ------ ------- ------ ---- ------- ---- ----- ------- -------
BALANCE--August 22,
1995................... 606,752 $6,068 406,699 $1,220 $308 $36,567 $283 $ -- $(6,412) $38,034
======= ====== ======= ====== ==== ======= ==== ===== ======= =======
</TABLE>

See notes to consolidated financial statements.

F-20
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

CONSOLIDATED STATMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
MARCH 31, APRIL 1, 1995
---------------- TO
1994 1995 AUGUST 22, 1995
------- ------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................. $ 1,897 $ 5,438 $ 3,934
Adjustments to reconcile net income to net
cash provided by operating activities:
Stock issued for compensation............ 91 326
Depreciation and amortization............ 1,020 1,085 502
Cumulative effect of accounting change,
net of income taxes..................... (23) 250 62
Provision (benefit) for deferred income
taxes................................... (145) 25
Loss on disposal of Fine Products........ 989
Loss on sale of assets................... 101
Net gain on sales of investments......... (195) (84) (823)
Gain on sale of trademark................ (328) (299)
(Decrease) increase in cash due to
changes in:
Accounts receivable.................... (800) (1,275) (588)
Inventories............................ (607) 467 190
Other current assets................... (675) 313 (546)
Other noncurrent assets................ 150 172 (630)
Accounts payable....................... 399 755 (732)
Accrued expenses....................... 1,813 479 1,688
Other liabilities...................... (465) 29 (77)
------- ------- -------
Total adjustments.................... 1,224 2,243 (853)
------- ------- -------
Net cash provided by operating activ-
ities............................... 3,121 7,681 3,081
INVESTING ACTIVITIES:
Purchases of investments................... (12,055) (15,704) (6,760)
Proceeds from sale of assets of Fine Prod-
ucts...................................... 1,073
Proceeds from sale of trademark............ 328 299
Proceeds from sales and maturities of in-
vestments................................. 10,520 12,498 21,428
Purchase of property, plant, and equip-
ment...................................... (1,515) (979) (483)
Package design costs....................... (984) (356) (244)
Proceeds from sale of property, plant, and
equipment................................. 5 108
------- ------- -------
Net cash (used in) provided by investing
activities................................. (2,633) (4,237) 14,049
FINANCING ACTIVITIES:
Dividends paid, preferred stock............ (1,113) (1,109) (554)
Purchases of treasury stock................ (1,913) (567) (296)
Checks outstanding......................... 1,043 (1,043)
------- ------- -------
Net cash used in financing activi-
ties................................ (1,983) (2,719) (850)
------- ------- -------
NET INCREASE (DECREASE) IN CASH.............. (1,495) 725 16,280
CASH--Beginning of period.................... 2,390 895 1,620
------- ------- -------
CASH--End of period.......................... $ 895 $ 1,620 $17,900
======= ======= =======
</TABLE>

See notes to consolidated financial statements.

F-21
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include the accounts of Aminco, Inc.
and subsidiaries (the "Company"). The principal subsidiaries are Aminco,
Inc. (a Georgia corporation), Carson Products Company ("Carson Products"),
and Carson South Africa ("Carson-South Africa"). Carson Products is a
manufacturer and marketer of ethnic health and beauty-aid products. Carson-
South Africa, a subsidiary formed on May 18, 1993, is a foreign subsidiary
which distributes ethnic health and beauty-aid products, produced under
contract, in the southern cone of Africa. Fine Products Company, a
subsidiary which manufactured and distributed candy products, is inactive;
the majority of its assets were sold in 1994 (see Note 11).

Significant accounting policies followed by the Company are summarized
below:

a. Consolidation--The consolidated financial statements include the
accounts of the Company. All significant intercompany transactions and
balances have been eliminated in the consolidation.

b. Changes in Accounting Principles--As discussed in Note 2, the Company
adopted Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("FAS 115"), effective April
1, 1994, the first day of the year ended March 31, 1995.

As discussed in Note 10, the Company adopted Financial Accounting
Standard No. 106 "Accounting for Postretirement Benefits Other than
Pensions" ("FAS 106"), effective April 1, 1994, the first day of the
year ended March 31, 1995.

As discussed in Note 6, the Company adopted Financial Accounting
Standard No. 109, "Accounting for Income Taxes" ("FAS 109"), effective
April 1, 1993, the first day of the year ended March 31, 1994. The
adoption of FAS 109 changed the Company's method of accounting for
income taxes from the deferred method ("APB 11") to an asset and
liability approach.

c. Revenue Recognition--Revenues from sales of manufactured goods are
recognized as these goods are shipped to customers. Net export sales
aggregated $5,918,000, $7,383,000, and $4,467,000 or 11.8%, 12.7%, and
16.6% of net sales for the years ended March 31, 1994 and 1995 and the
period from April 1, 1995 to August 23, 1995, respectively.

d. Investments Available for Sale--In conjunction with the adoption of FAS
115, management has classified all investments as available for sale.
Investments available for sale are carried at estimated fair value with
unrealized gains and losses, net of deferred income taxes, recorded as a
separate component of shareholders' equity.

Investments available for sale, current, include money market funds and
U.S. Treasury securities which mature within one year. These assets are
retained to meet the Company's current cash operating requirements.

F-22
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)

Investments available for sale, noncurrent, include money market funds,
U.S. Treasury securities, corporate bonds, foreign investments,
marketable equity securities, and other long-term investments primarily
consisting of precious metals. Most of these assets are managed by an
investment advisor and are assets which management currently intends to
hold to meet future obligations related to the Carson Employee Stock
Ownership Plan ("ESOP") upon the retirement of employees. U.S. Treasury
securities included in investments available for sale, noncurrent,
mature at various times during the period through March 1, 1999.

In determining gains and losses, the specific identification method is
used to determine the cost of investments.

e. Inventories--Inventories are valued at the lower of cost (last-in,
first-out method) ("LIFO") or market.

f. Depreciation and Amortization--Depreciation of property and equipment is
computed on the straight-line method for financial reporting purposes
and accelerated methods for income tax purposes over estimated useful
lives ranging from three to forty-five years. Goodwill, formulae,
trademarks, and package design costs of $1,128,000 at March 31, 1995,
net of accumulated amortization, are included in other noncurrent assets
in the accompanying balance sheet and are amortized on a straight-line
method over estimated useful lives ranging from four to twenty years.

g. Advertising--Advertising costs are expensed as incurred by the Company.
Advertising costs, included in selling expense in the accompanying
income statements, aggregated $4,922,000, $7,181,000, and $3,501,000 for
the years ended March 31, 1994 and 1995 and the period from April 1,
1995 to August 22, 1995, respectively.

h. Statements of Cash Flows--Supplemental disclosures of cash flows
information follows (in thousands):

<TABLE>
<CAPTION>
PERIOD
FROM
YEAR ENDED APRIL 1,
MARCH 31, 1995 TO
------------- AUGUST 22,
1994 1995 1995
------ ------ ----------
<S> <C> <C> <C>
Cash paid during the year for:
Interest........................................ $ 176 $ 136 $ 56
Income taxes.................................... 1,602 2,654 457
Stock issued for compensation..................... 91 326 --
</TABLE>

i. Research and Development Costs--Research and development costs
(principally for new products) are expensed as incurred and aggregated
$404,000, $323,000, and $160,000 for the years ended March 31, 1994 and
1995 and the period from April 1, 1995 to August 22, 1995, respectively,
and are included in general and administrative expenses in the
Consolidated Statements of Income.

2. INVESTMENTS AVAILABLE FOR SALE

Effective April 1, 1994, the Company adopted FAS 115. The effect of the
adoption was to increase investments available for sale by $186,000 for net
unrealized gains, reduce the net deferred tax asset by $69,000, calculated
using an effective tax rate of 37%, and to increase shareholders' equity by
$117,000. For the year ended March 31, 1995, investments available for sale
increased by an additional $263,000 for

F-23
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)
net unrealized gains, the net deferred tax asset decreased by an additional
$97,000, and shareholders' equity increased by $166,000 to $283,000.

The aggregate cost and market values of investments available for sale
carried at fair market value as of March 31, 1995 were as follows (in
thousands):

<TABLE>
<CAPTION>
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
------ ---------- ---------- ------
<S> <C> <C> <C> <C>
Investments available for sale, cur-
rent:
Money market funds................. $3,718 $3,718
U.S. Treasury securities........... 957 $ 24 981
------ ----- ------
Total current.................... $4,675 $ 24 $4,699
====== ===== ======
Investments available for sale,
noncurrent:
Money market funds................. $ 376 $ 376
U.S. Treasury securities........... 3,528 $ 8 $ (54) 3,482
Corporate bonds.................... 752 14 766
Foreign investments................ 1,263 (119) 1,144
Marketable equity securities....... 2,862 704 (31) 3,535
Other.............................. 496 (97) 399
------ ----- ----- ------
Total noncurrent................. $9,277 $ 726 $(301) $9,702
====== ===== ===== ======
</TABLE>

For the year ended March 31, 1994, proceeds from the sales and maturities
of investment securities were $10,520,000, resulting in gross realized
gains of $195,000 and no gross realized losses. For the year ended March
31, 1995, proceeds from the sale and maturities of investments available
for sale were $12,498,000, resulting in gross realized gains of $100,000
and gross realized losses of $16,000.

For the period from April 1, 1995 to August 22, 1995, proceeds from the
sale and maturity of investments available for sale were $21,428,000,
resulting in gross realized gains of $1,029,000 and gross realized losses
of $206,000.

3. INVENTORIES

The components of inventories at March 31, 1995 are summarized as follows
(in thousands):

<TABLE>
<S> <C>
Raw materials...................................................... $3,403
Work-in-process.................................................... 909
Finished goods..................................................... 3,081
LIFO reserve....................................................... (1,413)
------
$5,980
======
</TABLE>

If valued on the first-in, first-out ("FIFO") method, inventories would
have been $1,413,000 higher as of March 31, 1995. Income before income
taxes would have been $600,000 and $85,000 higher for the years ended March
31, 1994 and 1995, respectively.

During the period from April 1, 1995 to August 22, 1995, inventory
quantities were reduced which resulted in a liquidation of LIFO inventory
layers carried at lower costs which prevailed in prior years. The effect of
this liquidation was to decrease cost of goods sold by $399,000 and to
increase net income by approximately $240,000.

F-24
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)

4. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment at March 31, 1995 is summarized as follows
(in thousands):

<TABLE>
<S> <C>
Buildings and improvements......................................... $7,367
Machinery and equipment............................................ 6,397
Furniture and fixtures............................................. 327
Construction-in-progress........................................... 125
------
14,216
Less accumulated depreciation...................................... 5,138
------
9,078
Land............................................................... 618
------
$9,696
======
</TABLE>

Depreciation expense for property, plant, and equipment was $678,000,
$679,000, and $322,000 for the years ended March 31, 1994 and 1995 and for
the period from April 1, 1995 to August 22, 1995, respectively.

5. LINES OF CREDIT

At March 31, 1995, the Company had lines of credit totaling $5,000,000 with
banks. Interest is payable at the prime rate. There were no borrowings
under lines of credit during the years ended March 31, 1994 and 1995. The
prime rate at March 31, 1995 was 9%.

6. INCOME TAXES

In April 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). The adoption
of FAS 109 changes the Company's method of accounting for income taxes from
the deferred method APB 11 to an asset and liability approach. Previously,
the Company deferred the past tax effects of timing differences between
financial reporting and taxable income. The asset and liability approach
requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of other assets and liabilities.

The difference at April 1, 1993 between deferred taxes accounted for under
APB 11 and deferred taxes accounted for under FAS 109 resulted in a benefit
of $23,000 and is reflected in the accompanying income statement for the
year ended March 31, 1994 as the effect of a change in accounting
principle.

F-25
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)

The provision for income taxes is summarized as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
MARCH 31, APRIL 1, 1995
-------------- TO
1994 1995 AUGUST 22, 1995
------ ------ ---------------
<S> <C> <C> <C>
Provision for income taxes on continuing
operations:
Current:
Federal............................. $1,678 $2,760 $1,744
State............................... 162 294 333
Foreign............................. 9 95 104
------ ------ ------
1,849 3,149 2,181
Deferred:
Federal............................. (135) 23 52
State............................... (10) 2 10
------ ------ ------
(145) 25 62
------ ------ ------
1,704 3,174 2,243
Benefit for income taxes on discontinued
operations:
Loss from operations on Fine Prod-
ucts................................. (314)
Loss on disposal on Fine Products..... (354)
------
(668)
Benefit for adoption of FAS 106......... (147)
------ ------ ------
Net provision for income taxes...... $1,036 $3,027 $2,243
====== ====== ======

The following is a reconciliation of the statutory tax rate to the Company's
effective tax rate:

<CAPTION>
YEAR ENDED PERIOD FROM
MARCH 31, APRIL 1, 1995
-------------- TO AUGUST 22,
1994 1995 1995
------ ------ ---------------
<S> <C> <C> <C>
Statutory rate.......................... 34.0% 34.0% 34.0%
State income taxes (net of federal bene-
fit)................................... 4.0 4.0 4.0
Other items............................. (2.4) (2.2) (1.7)
------ ------ ------
Effective rate.......................... 35.6% 35.8% 36.3%
====== ====== ======
</TABLE>

F-26
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)

The effects of the temporary differences which gave rise to deferred tax
assets and liabilities at March 31, 1995 are as follows (in thousands):

<TABLE>
<CAPTION>
CURRENT LONG-TERM
------- ---------
<S> <C> <C>
Deferred tax assets related to:
Accrued expenses....................................... $312
Allowance for doubtful accounts........................ 78
Deferred compensation.................................. $640
Other.................................................. 15 153
---- ----
405 793
Deferred tax liabilities related to:
Property, plant, and equipment......................... (694)
Other.................................................. (111) (167)
---- ----
(111) (861)
---- ----
$294 $(68)
==== ====
</TABLE>

Deferred income taxes were not provided on undistributed earnings of
certain foreign subsidiaries because such undistributed earnings have been
immaterial and are expected to be reinvested indefinitely overseas.

The current deferred tax assets of $294,000 at March 31, 1995 are included
in the accompanying financial statements in other current assets. The long-
term deferred tax liabilities of $68,000 at March 31, 1995 are included in
other liabilities.

7. ACCRUED EXPENSES

Accrued expenses at March 31, 1995 consist of (in thousands):

<TABLE>
<S> <C>
Compensation and benefits.......................................... $2,532
Advertising........................................................ 1,355
Self-insurance..................................................... 818
Other.............................................................. 803
------
$5,508
======
</TABLE>

F-27
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)

8.CAPITAL STOCK

<TABLE>
<CAPTION>
MARCH 31, 1995
--------------
<S> <C>
Preferred stock ($10.00 par):
Number of shares:
Authorized............................................... 700,000
=======
Issued................................................... 606,752
=======
Common stock ($3.00 par):
Number of shares:
Authorized............................................... 500,000
=======
Issued................................................... 406,699
=======
Treasury stock:
Number of shares:
Preferred................................................ 52,461
=======
Common................................................... 84,445
=======
Cost (in thousands):
Preferred................................................ $ 1,344
Common................................................... 5,364
-------
$ 6,708
=======
Liquidation preference of preferred shares outstanding (in
thousands).................................................. $15,243
=======
</TABLE>

Seven hundred thousand shares of preferred stock are authorized with the
first 675,000 shares designated as Series A. The voting rights and dividend
rights of the preferred stock other than Series A will be determined by the
Company's Board of Directors when and if they are issued.

Dividends on the Series A preferred stock at an annual rate of $2 are
payable in preference to dividends on shares of regular common stock.
Series A preferred stock participates as a class in any further dividends
and receives 50% of such further dividends, with the remaining 50% being
attributed to common stock. The Series A preferred stock is redeemable at
the option of the Company at a price of $27.50 per share. Upon redemption,
no current or accumulated dividends shall be paid. No dividends can be paid
on common stock until all current Series A preferred dividends, as well as
dividends in arrears, have been satisfied.

There are no dividends in arrears on Series A preferred stock at March 31,
1995. Votes per share are 15 for Series A preferred stock and one for
common stock.

9.STOCK AND OTHER COMPENSATION PLANS

Carson Products has a defined contribution profit sharing plan covering
substantially all Carson Products employees. Contributions to the plan,
which are discretionary, are determined by the Board of Directors and
funded annually. Profit sharing contributions were $220,000, $190,000, and
$176,000 in the years ended March 31, 1994 and 1995 and for the period from
April 1, 1995 to August 22, 1995, respectively.

F-28
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)

The Company has entered into a deferred compensation agreement with an
officer who retired in 1991 which provides for annual benefits equal to a
percentage of his average salary for the two years preceding his
retirement. Such benefits continue for as long as he or his spouse shall
live. The Company has accrued an amount equal to the present value of the
computed future payments under the agreement ($1,241,000 at March 31,
1995), which is classified in other liabilities in the accompanying balance
sheet.

During the years ended March 31, 1994 and 1995, respectively, the Company
issued, from treasury stock, 1,100 and 1,210 shares of common stock with an
independently-appraised value of $91,000 and $107,000 to a key executive in
accordance with his employment agreement. Additional shares may be issued
in future years contingent upon continued employment.

During the year ended March 31, 1995, the Company issued 2,460 shares of
common stock with an appraised value of $219,000 to a major shareholder
employed by the Company.

During the year ended March 31, 1985, Carson Products established an ESOP
which covers substantially all Carson Products employees. In February 1985,
the ESOP borrowed $2,000,000 from a bank and acquired 232,410 shares of the
Company's common stock from certain existing shareholders. Under the loan
agreement, the Company guaranteed the loan and was obligated to make annual
contributions sufficient to enable the ESOP to repay the loan, including
interest. This obligation of the ESOP was recorded in the Company's
accounts as a liability and as a reduction of shareholders' equity. The
liability and the reduction of shareholders' equity were both decreased
when the ESOP made payments on the loan. The liability was paid in full by
February 1995. The Company made contributions to the ESOP of $298,000 and
$254,000 for the years ended March 31, 1994 and 1995, respectively.

10.POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Carson Products provides postretirement health care benefits to a limited
number of key executives who meet applicable eligibility requirements.
Effective April 1, 1994, the first day of the year ended March 31, 1995,
Carson Products adopted FAS 106 which requires accrual of the expected cost
of providing postretirement benefits to these executives and their spouses
during the years that the executives provide services and become eligible
for benefits. Prior to April 1, 1994, Carson Products expensed the costs of
health care benefits provided to retirees in the period in which these
costs were paid.

The cumulative effect of this change in accounting principle was a one-time
charge of $397,000 before taxes, or $250,000 net of tax benefits calculated
at an estimated effective tax rate of 37%.

At March 31, 1995, Carson Products recorded a liability of $420,000
representing the accumulated postretirement benefit obligation (APBO) for
retirees and active executives. This liability was calculated using the
following assumptions.

<TABLE>
<S> <C>
Discount rate.......................................................... 8%
Healthcare cost trend rate:
First five years..................................................... 10%
Next five years...................................................... 8%
Thereafter........................................................... 6%
</TABLE>

The medical cost trend rate assumption could have an effect on amounts
reported. For example, an increase in 1% in the assumed rate of increase
would have an effect of increasing the APBO by $53,000 and the net
postretirement benefit cost by $14,000. The cost of the benefits for the
year ended March 31, 1995 and the period April 1, 1995 to August 22, 1995,
primarily relating to interest cost, was approximately $32,000 and $10,000,
respectively.

F-29
<PAGE>

AMINCO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994 AND 1995 AND FOR THE PERIOD
FROM APRIL 1, 1995 TO AUGUST 22, 1995--(CONTINUED)

11.DISPOSAL OF FINE PRODUCTS

Effective January 31, 1994, the Company discontinued operations of Fine
Products and sold certain assets of Fine Products, to include inventories,
fixed assets, and trademarks for proceeds of $1,073,000. The Company
incurred losses from operations of approximately $574,000, net of tax
benefits of $314,000 for the year ended March 31, 1994. Additionally,
during fiscal year 1994, the Company recorded a loss on the sale of certain
assets of Fine Products of approximately $635,000, net of tax benefits of
approximately $354,000.

12.COMMITMENTS AND CONTINGENCIES

The nature of the Company's business results in a certain amount of
litigation. Accordingly, the Company is a party (as plaintiff and
defendant) to lawsuits incidental to its business. Management believes that
the ultimate resolution of these matters will not have a material adverse
effect on the business, financial condition, results of operations or cash
flows of the Company.

F-30
<PAGE>

CARSON, INC.

CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 1996
(IN THOUSANDS)

<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 867
Accounts receivable (less allowance for doubtful accounts of
$641)........................................................ 14,169
Inventories................................................... 10,177
Other current assets.......................................... 2,090
-------
Total current assets........................................ 27,303
PROPERTY, PLANT, AND EQUIPMENT--Net of accumulated deprecia-
tion........................................................... 12,337
INVESTMENT...................................................... 3,000
GOODWILL........................................................ 46,335
OTHER........................................................... 3,271
-------
$92,246
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.............................................. $ 3,678
Accrued expenses.............................................. 6,255
Current maturities of long-term debt.......................... 2,510
-------
Total current liabilities................................... 12,443
LONG-TERM DEBT.................................................. 67,219
DEFERRED INCOME TAXES........................................... 827
OTHER LIABILITIES............................................... 1,666
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock............................................... --
Common stock.................................................. 114
Paid-in capital............................................... 8,557
Retained earnings............................................. 1,514
Foreign currency translation adjustment....................... (94)
-------
Total stockholders' equity.................................. 10,091
-------
$92,246
=======
</TABLE>

See notes to consolidated financial statements.

F-31
<PAGE>

CARSON, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 1995 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------- -------
THREE MONTHS ENDED
JUNE 30,
-------------------
1995 1996
----------- -------
<S> <C> <C>
NET SALES.................................................................................................. $17,271 $18,799
COST OF GOODS SOLD......................................................................................... 7,351 8,135
------- -------
Gross profit........................................................................................... 9,920 10,664
EXPENSES:
Selling.................................................................................................. 4,938 4,713
General and administrative............................................................................... 1,607 1,960
Incentive compensation................................................................................... 800
Depreciation and amortization............................................................................ 301 629
------- -------
6,846 8,102
------- -------
OPERATING INCOME........................................................................................... 3,074 2,562
INTEREST EXPENSE........................................................................................... 34 1,826
OTHER INCOME (EXPENSE)..................................................................................... 77 (6)
INVESTMENT INCOME:
Dividends and interest................................................................................... 157 43
Net gain on sales and maturities of investments.......................................................... 94
------- -------
INCOME BEFORE INCOME TAXES................................................................................. 3,368 773
PROVISION FOR INCOME TAXES................................................................................. 1,230 465
------- -------
NET INCOME................................................................................................. $ 2,138 $ 308
======= =======
NET INCOME PER SHARE....................................................................................... $ .03
=======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING................................................................. 11,871
=======
</TABLE>

See notes to consolidated financial statements.

F-32
<PAGE>

CARSON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 1995 AND 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------- -------
THREE MONTHS ENDED
JUNE 30,
-------------------
1995 1996
----------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................................................................... $2,138 $ 308
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.......................................................................... 301 682
Net gain on sales and maturities of investments........................................................ (94)
Foreign currency translation adjustment................................................................ (94)
Provision for deferred income taxes.................................................................... 43
(Decrease) increase in cash due to changes in:
Accounts receivable.................................................................................. (1,166) (1,558)
Inventories.......................................................................................... (27) (1,514)
Other current assets................................................................................. 291 1,004
Other noncurrent assets.............................................................................. (3) 271
Accounts payable..................................................................................... (900) 78
Accrued expenses..................................................................................... 26 1,157
Other liabilities.................................................................................... (4) (12)
------ ------
Total adjustments.................................................................................. (1,576) 57
------ ------
Net cash provided by operating activities.......................................................... 562 365
INVESTING ACTIVITIES:
Investment in AM Cosmestics.............................................................................. (3,000)
Purchases of investments................................................................................. (1,109)
Proceeds from sales of maturities of investments......................................................... 1,037
Purchase of property, plant, and equipment............................................................... (263) (540)
Package design costs..................................................................................... (169)
------ ------
Net cash used in investing activities................................................................ (504) (3,540)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt................................................................. 3,000
Principal payment on long-term debt...................................................................... (511)
Dividends paid on preferred stock........................................................................ (277)
Purchases of treasury stock.............................................................................. (297)
------ ------
Net cash provided by (used in) financing activities.................................................. (574) 2,489
------ ------
NET DECREASE IN CASH AND CASH EQUIVALENTS.................................................................. (516) (686)
CASH AND CASH EQUIVALENTS--Beginning of period............................................................. 1,620 1,553
------ ------
CASH AND CASH EQUIVALENTS--End of period................................................................... $1,104 $ 867
====== ======
</TABLE>

See notes to consolidated financial statements.

F-33
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 1995 AND 1996

1. INTERIM FINANCIAL STATEMENTS

The interim financial statements presented herein include the accounts of
the Predecessor (Aminco, Inc.) as of and for the three months ended June
30, 1995 and of the Company as of and for the three months ended June 30,
1996. In the opinion of management, the unaudited condensed consolidated
financial statements reflect all normal recurring adjustments necessary for
a fair statement of the results of the interim periods. The results for the
three months ended June 30, 1996 are not necessarily indicative of the
results to be obtained for the entire fiscal year or any other interim
period. Because of the revaluation of assets and liabilities and related
impact to the statement of operations, the financial statements of the
Predecessor for the periods prior to August 22, 1995 are not strictly
comparable to those of the Company subsequent to that date. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting
principles have been omitted from these condensed consolidated financial
statements pursuant to applicable rules and regulations of the Securities
and Exchange Commission. These financial statements should be read in
conjunction with the audited Consolidated Financial Statements and the
notes thereto of the Company and Predecessor included elsewhere in this
Prospectus.

2. INVENTORIES

Inventories at June 30, 1996 are summarized as follows (in thousands):

<TABLE>
<S> <C>
Raw materials...................................................... $ 5,587
Work-in-process.................................................... 1,692
Finished goods..................................................... 2,898
-------
$10,177
=======
</TABLE>

3. INVESTMENT IN AM COSMETICS

On June 26, 1996, the Company purchased $3.0 million of 12% cumulative,
payment-in-kind preferred stock of the parent of AM Cosmetics, a leading
low-cost manufacturer of cosmetics, at par value. Certain owners of the
Company are also owners of AM Cosmetics. In connection with the investment,
the Company entered into a management agreement and will enter into certain
related sales agreements and manufacturing agreements with AM Cosmetics.

4. PUBLIC OFFERING OF SOUTH AFRICAN SUBSIDIARY

In July 1996, the Company's South African subsidiary sold 25% of its shares
in an initial public offering on the Johannesburg Stock Exchange. The
subsidiary received net proceeds of approximately $4.2 million from this
sale (which resulted in a gain to the Company of approximately $2.8 million
which will be recorded in paid-in capital during the three months ended
September 30, 1996). In conjunction with this public offering, the Company
entered into an amendment to its license agreement with its South African
subsidiary which provides that commencing on April 1, 1998, its South
African subsidiary will pay the Company a royalty in the amount of 3.0% of
the net sales price of all licensed products. The amount of the royalty
increases to 3.5% on April 1, 1999 and 4.0% on April 1, 2000 until the
termination of the agreement.

F-34
<PAGE>

CARSON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 1995 AND 1996--(CONTINUED)

5. POSSIBLE INITIAL PUBLIC OFFERING

The Company is in process of pursuing an initial public offering of its
common stock. Should such an offering be completed, the Company anticipates
that it will use its proceeds to repay certain indebtedness. This repayment
will result in an extraordinary loss to be recorded at that time currently
estimated to be approximately $3.6 million (net of tax) for prepayment
penalties and the write-off of unamortized debt discount and deferred issue
costs.

6. EMPLOYEE BENEFITS

The Company recognized $800,000 of compensation expense during the quarter
ended June 30, 1996 relating to anticipated costs under certain equity-
based long-term incentive compensation arrangements (in light of the
contemplated initial public offering, such awards and compensation expense
are based upon the fair market value of the Company at the time of the
initial public offering). Such arrangements were awarded originally as
stock appreciation rights ("SARs"). During July 1996 some of the SARs were
amended and converted into accelerated, immediately exercisable stock
purchase rights, on a complete or partial basis, as agreed to by the
Company and the awardee. The SARs entitled the holder to a specified value
(determined as a percentage of the Company's equity value) over a fixed
base value subject to five year vesting requirements (or earlier upon a
public offering or sale of the Company). Upon amendment and conversion, the
SAR rights were cancelled (and replaced with the accelerated, immediately
exercisable stock purchase rights referred to above). These rights have a
fixed purchase price equal in amount to the cancelled SAR's fixed base
value. As a result of the fact that not all SARs were amended and converted
into these accelerated stock purchase rights, future payment of cash awards
under the remaining SAR arrangements are still possible. The Company may
record additional compensation charges through 2000 for possible cash
awards under the remaining SAR arrangements. Should the Company complete
the initial public offering of its common stock, such cash awards would be
payable and the Company would record additional compensation charges of
approximately $600,000 at that time (based on the midpoint of the estimated
range of the initial public offering price) for payments under SAR
arrangements.

During August 1996, several outside directors and members of senior
management (pursuant to the stock purchase rights described above)
purchased 501,191 shares of the Company's Common Stock. The purchase of
such shares by senior management was financed with $1.3 million (net of
discount) in non-interest bearing long-term full recourse loans from the
Company. The Company will record additional non-cash compensation expense
of approximately $6.5 million (with no associated income tax benefits)
during the three months ended September 30, 1996 for the excess of the
estimated initial public offering price over the actual purchase price of
such shares. In connection with the South African offering (Note 4), the
Company also issued shares of the subsidiary to certain members of its
management; the Company will record compensation expense of approximately
$.3 million for these share awards.

F-35
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CON-
NECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PRO-
SPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET
FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HERE-
OF.
----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 11
The Company............................................................... 17
Use of Proceeds........................................................... 19
Dividend Policy........................................................... 19
Dilution.................................................................. 20
Capitalization............................................................ 21
Unaudited Pro Forma Financial Data........................................ 23
Selected Consolidated Historical Financial Data........................... 26
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 28
Business.................................................................. 36
Management................................................................ 50
Principal and Selling Stockholders........................................ 58
Certain Relationships and Related Transactions............................ 60
Description of Certain Indebtedness....................................... 62
Description of Capital Stock.............................................. 63
Shares Eligible for Future Sale........................................... 67
Certain United States Federal Tax Considerations for Non-United States
Holders.................................................................. 68
Underwriting.............................................................. 71
Legal Matters............................................................. 73
Experts................................................................... 73
Available Information..................................................... 74
Index to Financial Statements............................................. F-1
</TABLE>

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

4,190,000 SHARES

[LOGO]

CARSON, INC.

CLASS A COMMON STOCK

----------------

PROSPECTUS

----------------

MERRILL LYNCH & CO.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION

4,190,000 SHARES

CARSON, INC.

CLASS A COMMON STOCK

-----------
Of the 4,190,000 shares of Class A Common Stock of Carson, Inc. (the
"Company") offered hereby, 2,484,500 shares are being offered by the Company
and 1,705,500 shares are being offered by the Selling Stockholders. See
"Principal and Selling Stockholders." The Company will not receive any of the
proceeds from the sale of the shares of Common Stock by the Selling
Stockholders.

Of the shares being offered hereby, 838,000 shares are being offered for sale
initially outside of the United States and Canada by the International Managers
and 3,352,000 shares are being offered for sale initially in a concurrent
offering in the United States and Canada by the U.S. Underwriters. The initial
public offering price and the underwriting discount per share are identical for
both Offerings. Of the shares being offered hereby, 400,000 will be reserved
for sale to certain directors, officers, employees, business associates and
related persons of the Company. See "Underwriting."

Upon consummation of the Offerings, the Company's issued and outstanding
capital stock will consist of 4,190,000 shares of Class A Common Stock offered
hereby, 1,859,677 shares of Class B Common Stock and 8,306,014 shares of Class
C Common Stock, each with a par value of $.01 per share (the "Common Stock").
The Class A Common Stock entitles each holder to one vote per share and the
Class C Common Stock entitles each holder to ten votes per share. The Class B
Common Stock generally is not entitled to vote on any matter submitted for the
vote of stockholders.Immediately after the Offerings, the percentage of the
combined voting power with respect to all matters submitted for the vote of all
stockholders held by holders of the Class A Common Stock, Class B Common Stock
and Class C Common Stock will be 4.8%, 0% and 95.2%, respectively. See
"Description of Capital Stock." Immediately after the Offerings, DNL Partners,
Limited Partnership and its affiliates will have approximately 75.8% of the
combined voting power with respect to all matters submitted for the vote of all
stockholders. See "Principal and Selling Stockholders."

The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "CIC," subject to official notice of issuance.

SEE "RISK FACTORS," BEGINNING ON PAGE 11, FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON
STOCK OFFERED HEREBY.
-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
- ----------------------------------------------------------------------------------------------
Total(3)............... $ $ $ $
- ----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the International Managers and the U.S.
Underwriters options, exercisable within 30 days after the date hereof, to
purchase up to an additional 125,700 shares and 502,800 shares of Class A
Common Stock, respectively, solely to cover over-allotments, if any. If
such options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ , respectively.
See "Underwriting."

-----------

MERRILL LYNCH INTERNATIONAL DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

-----------

The date of this Prospectus is , 1996.
<PAGE>

UNDERWRITING

Merrill Lynch International ("Merrill Lynch") and Donaldson, Lufkin &
Jenrette Securities Corporation are acting as representatives (the
"International Representatives") of each of the International Managers named
below (the "International Managers"). Subject to the terms and conditions set
forth in an international purchase agreement (the "International Purchase
Agreement") among the Company, each of the Selling Stockholders and the
International Managers, and concurrently with the sale of 3,352,000 shares of
Class A Common Stock to the U.S. Underwriters (as defined below), the Company,
for its own account, and the Selling Stockholders severally have agreed to
sell to the International Managers, and each of the International Managers
severally has agreed to purchase from the Company and the Selling
Stockholders, the number of shares of Class A Common Stock set forth opposite
its name below.

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Merrill Lynch International.........................................
Donaldson, Lufkin & Jenrette Securities Corporation.................
-------
Total.............................................................. 838,000
=======
</TABLE>

The Company and the Selling Stockholders have also entered into a U.S.
purchase agreement (the "U.S. Purchase Agreement") with certain underwriters
in the United States and Canada (the "U.S. Underwriters" and, together with
the International Managers, the "Underwriters") for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Donaldson, Lufkin & Jenrette
Securities Corporation are acting as representatives (the "U.S.
Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of 838,000 shares of Class
A Common Stock to the International Managers pursuant to the International
Purchase Agreement, the Company and the Selling Stockholders have agreed to
sell to the U.S. Underwriters, and the U.S. Underwriters severally have agreed
to purchase from the Company and the Selling Stockholders, an aggregate of
3,352,000 shares of Class A Common Stock. The initial public offering price
per share and the total underwriting discount per share of Class A Common
Stock are identical under the International Purchase Agreement and the U.S.
Purchase Agreement.

In the International Purchase Agreement and the U.S. Purchase Agreement, the
several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Class A Common Stock being sold
pursuant to each such agreement if any of the shares of Class A Common Stock
being sold pursuant to such agreement are purchased. Under certain
circumstances, the commitments of non-defaulting International Managers or
U.S. Underwriters (as the

71
<PAGE>

case may be) may be increased. The closings with respect to the sale of Class
A Common Stock to be purchased by the International Managers and the U.S.
Underwriters are conditioned upon one another.

The International Representatives have advised the Company and the Selling
Stockholders that the International Managers propose initially to offer the
shares of Class A Common Stock to the public at the initial public offering
price set forth on the cover page of this Prospectus, and to certain dealers
at such price less a concession not in excess of $ per share of Class A
Common Stock. The International Managers may allow, and such dealers may
allow, a discount not in excess of $ per share of Class A Common Stock on
sales to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.

The Company has granted an option to the International Managers, exercisable
for 30 days after the date of this Prospectus, to purchase up to an aggregate
of 125,700 additional shares of Class A Common Stock at the initial public
offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The International Managers may exercise this option
only to cover over-allotments, if any, made on the sale of the Class A Common
Stock offered hereby. To the extent that the International Managers exercise
this option, each International Manager will be obligated, subject to certain
conditions, to purchase the same percentage of such additional shares of Class
A Common Stock as such International Manager's initial amount reflected in the
foregoing table bears to the total number of shares of Class A Common Stock
initially offered by the International Managers. The Company also has granted
an option to the U.S. Underwriters, exercisable for 30 days after the date of
this Prospectus, to purchase up to an aggregate of 502,800 additional shares
of Class A Common Stock to cover over-allotments, if any, on terms similar to
those granted to the International Managers.

The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the International Managers and the U.S. Underwriters are permitted
to sell shares of Class A Common Stock to each other for purposes of resale at
the initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and any dealer to whom they sell shares of Class A Common Stock
will not offer to sell or sell shares of Class A Common Stock to persons who
are non-U.S. or non-Canadian persons or to persons they believe intended to
resell to persons who are non-U.S. or non-Canadian persons, and the
International Managers and any dealer to whom they sell shares of Class A
Common Stock will not offer to sell or sell shares of Class A Common Stock to
U.S. persons or to Canadian persons or to persons they believe intended to
resell to United States or Canadian persons, except in the case of
transactions pursuant to the Intersyndicate Agreement.

Each International Manager has agreed that (i) it has not offered or sold,
and will not for a period of six months following consummation of the Offering
offer or sell, in the United Kingdom by means of any document, any shares of
Common Stock offered hereby, other than to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances that do not constitute an offer to the public within the meaning
of the Public Offers of Securities Regulations 1995, (ii) it has complied with
and will comply with all applicable

72
<PAGE>

provisions of the Financial Services Act 1986 with respect to anything done by
it in relation to the shares of Common Stock in, from, or otherwise involving
the United Kingdom and (iii) it has only issued or passed on and will only
issue or pass on to any person in the United Kingdom any document received by
it in connection with the issue of the shares of Common Stock if that person
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995, as amended, or is a
person to whom the document may otherwise lawfully be issued or passed on.

Prior to the Offerings, there has been no public market for the Class A
Common Stock of the Company. The initial public offering price will be
determined through negotiations among the Company, the Selling Stockholders
and the U.S. Representatives and the Lead Managers. Among the facts considered
in determining the initial public offering price, in addition to prevailing
market conditions, are price-earnings ratios of publicly traded companies that
the Representatives believe to be comparable to the Company, certain financial
information of the Company, the history of, and the prospects for, the Company
and the industry in which it competes, and assessment of the company's
management, its past and present operations, the prospects for, and timing of,
future revenues of the Company, the present state of the Company's
development, and the above factors in relation to market values and various
valuation measures of other companies engaged in activities similar to the
Company. There can be no assurance that an active trading market will develop
for the Class A Common Stock or that the Class A Common Stock will trade in
the public market subsequent to the Offerings at or above the initial public
offering price.

Application has been made to list the Class A Common Stock on the New York
Stock Exchange, under the symbol "CIC," subject to official notice of
issuance. In order to meet the requirements for listing of the Class A Common
Stock on that exchange, the U.S. Underwriters have undertaken to sell lots of
100 or more shares to a minimum of 2,000 beneficial owners.

The Underwriters do not intend to confirm sales of the Class A Common Stock
offered hereby to any accounts over which they exercise discretionary
authority.

Purchasers of the Common Stock offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practices of the
country of purchase, in addition to the offering price set forth on the cover
page hereof.

The Company and the Selling Stockholders have agreed to indemnify the
International Managers and the U.S. Underwriters against certain liabilities,
including liabilities under the Securities Act.

Merrill Lynch, Pierce, Fenner & Smith Incorporated has been retained to act
as financial advisor and provide investment banking advice to the Company and
may be retained in the future to provide additional investment banking
services to the Company. Merrill Lynch, Pierce, Fenner & Smith Incorporated
will receive customary fees in connection with such services.

LEGAL MATTERS

EXPERTS

73
<PAGE>

AVAILABLE INFORMATION

74
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CON-
NECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PRO-
SPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH
IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

IN THIS PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE UNITED STATES DOLLARS.
----------------

TABLE OF CONTENTS

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

4,190,000 SHARES

[LOGO]

CARSON, INC.

CLASS A COMMON STOCK

----------------

PROSPECTUS

----------------

MERRILL LYNCH INTERNATIONAL

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is an itemization of all estimated expenses incurred or
expected to be incurred by the Registrant in connection with the issuance and
distribution of the securities being registered hereby, other than
underwriting discounts and commissions.

<TABLE>
<CAPTION>
ITEM AMOUNT
---- ------
<S> <C>
SEC Registration Fee............................................. $ 27,759
NASD Filing Fee.................................................. 9,104
NYSE Listing Fee................................................. 92,000
Blue Sky Filing Fees and Expenses................................ 35,000
Printing and Engraving Costs..................................... 250,000
Transfer Agent Fees.............................................. 7,500
Legal Fees and Expenses.......................................... 750,000
Accounting Fees and Expenses..................................... 245,000
Miscellaneous.................................................... 83,637
----------
Total........................................................ $1,500,000
==========
</TABLE>

All amounts are estimated except for the SEC Registration Fee and the NASD
filing fee.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is incorporated under the laws of the State of Delaware. Section
145 of the General Corporation Law of the State of Delaware ("Section 145")
provides that a Delaware corporation may indemnify any person who is, or is
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of
the fact that such person was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the corporation's best interests and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that his conduct was
illegal. A Delaware corporation may indemnify any person who is, or is
threatened to be made, a party to any threatened, pending or completed action
or suit by or in the right of the corporation by reason of the fact that such
person was a director, officer, employee or agent of such corporation, or is
or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees) actually and reasonably incurred
by such person in connection with the defense or settlement of such action or
suit, provided such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the corporation's best interests except
that no indemnification is permitted without judicial approval if the officer
or director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
which such officer or director has actually and reasonably incurred.

The Company's Amended and Restated Certificate of Incorporation provides for
the indemnification of directors and officers of the Company to the fullest
extent permitted by Section 145. In that regard, the Amended and Restated
Certificate of Incorporation provides that the Company shall indemnify any
person who was or is a

II-1
<PAGE>

party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director or officer of such
corporation, or is or was serving at the request of such corporation as a
director, officer or member of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of such corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Indemnification in connection with an action or suit by or in the
right of such corporation to procure a judgment in its favor is limited to
payment of settlement of such an action or suit except that no such
indemnification may be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the indemnifying corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine that, despite
the adjudication of liability but in consideration of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.

In addition, the by-laws of the Company provide that the Company shall
indemnify to the full extent authorized by law any person made or threatened
to be made a party to an action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he, his testator
or intestate is or was a director, officer, employee or agent of the Company
or is or was serving, at the request of the Company, as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise.

The Company has purchased an insurance policy effective upon consummation of
the Offerings covering indemnification of directors and officers of the
Registrant against certain liabilities arising under the Securities Act that
might be incurred by them in such capacities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Pursuant to three subscription agreements dated August 23, 1995, the Company
issued the following securities (as reclassified pursuant to the
Recapitalization) in connection with the Acquisition:

<TABLE>
<CAPTION>
NAME NO. OF SHARES CLASS/TYPE PAR VALUE CONSIDERATION
---- ------------- ---------- --------- -------------
<C> <C> <C> <C> <S>
Indosuez Carson Partners 568,500 Class B Common Stock $.01 $1,000,000 cash
Indosuez CM II, Inc. 460,485 Class B Common Stock $.01 cash and financing
services rendered by
Banque Indosuez
Indosuez CM II, Inc. 830,692 Class B Common Stock $.01 cash and financing
services rendered by
Banque Indosuez
Morgan Guaranty Trust 949,986 Class C Common Stock $.01 cash and financing
Company, as Trustee of a services rendered
Commingled Pension Fund-
Multi-Market Special Investment
Fund II;
Multi-Market Special Investment 118,748 Class C Common Stock $.01 cash and financing
Trust Fund of Morgan Guaranty services rendered
Company of New York;
Morgan Guaranty Trust Company 118,748 Class C Common Stock $.01 cash and financing
of New York as Investment services rendered
Manager and Agent for the
Alfred P. Sloan Foundation
Multi-Market Account
DNL Partners, Limited Partners 5,798,700 Class C Common Stock $.01 $11,000,000 cash
</TABLE>

Additionally, pursuant to the Stock Purchase Agreement dated as of May 31,
1995, as amended, the Minis Family received 1,705,000 shares of Class A Common
Stock for a $5 million reduction in the cash purchase price for the
Acquisition. In connection with services performed in connection with the
Acquisition, Dr. Leroy Keith received 341,100 shares, Northwest Capital
received 159,180 shares and other individuals received 318,360 shares. The
issuances cited above were exempt from registration under the Securities Act
pursuant to Section 4(2) of the Securities Act.

II-2
<PAGE>

In connection with management employment agreements, the Company issued the
following securities:

<TABLE>
<CAPTION>
NAME NO. OF SHARES CLASS/TYPE PAR VALUE CONSIDERATION
---- ------------- ---------- --------- -------------
<S> <C> <C> <C> <C>
Joyce M. Roche 118,713 Class C Common Stock $.01 services rendered and
promissory note
Dennis E. Smith 59,357 Class C Common Stock $.01 services rendered and
promissory note
Miriam Muley 59,357 Class C Common Stock $.01 services rendered and
promissory note
John P. Brown, Jr. 59,357 Class C Common Stock $.01 services rendered and
promissory note
Dr. Donald Cowsar 29,678 Class C Common Stock $.01 services rendered and
promissory note
Arthur P. Gnann 29,678 Class C Common Stock $.01 services rendered and
promissory note
Sharon Davis 29,678 Class C Common Stock $.01 services rendered and
promissory note
</TABLE>

The issuances cited above were exempt from registration under the Securities
Act pursuant to Rule 701 of the Securities Act.

The Company also issued the following securities to certain outside
directors:

<TABLE>
<CAPTION>
NAME NO. OF SHARES CLASS/TYPE PAR VALUE CONSIDERATION
---- ------------- ---------- --------- -------------
<S> <C> <C> <C> <C>
John L. Sabre 23,070 Class C Common Stock $.01 $50,000 cash
Melvyn J. Estrin 11,541 Class C Common Stock $.01 $25,000 cash
Abbey J. Butler 11,541 Class C Common Stock $.01 $25,000 cash
Suzanne de Passe 11,541 Class C Common Stock $.01 $25,000 cash
James L. Hudson 11,541 Class C Common Stock $.01 $25,000 cash
Jack Kemp 46,139 Class C Common Stock $.01 $100,000 cash
</TABLE>

The issuances cited above were exempt from registration under the Securities
Act pursuant to Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S> <C>
**1.1 Form of U.S. Purchase Agreement..............................................
**1.2 Form of International Purchase Agreement.....................................
3.1 Amended and Restated Articles of Incorporation of the Registrant.............
3.2 By-laws of Registrant........................................................
**4 Form of Common Stock Certificate.............................................
**5 Opinion of Milbank, Tweed, Hadley & McCloy...................................
**8 Opinion of Milbank, Tweed, Hadley & McCloy re tax matters....................
**9 Voting Trust Agreement.......................................................
**10.1 Employment Agreement dated as of August 23, 1995, as amended as of July 31,
1996 between Carson Products Company and Dr. Leroy Keith....................
**10.2 Employment Agreement dated as of June 7, 1995, as amended as of July 31,
1996, between Carson Products Company and Joyce M. Roche....................
**10.3 Employment Agreement dated as of June 7, 1995, as amended as of July 31,
1996, between Carson Products Company and Dennis E. Smith...................
10.4 Employment Agreement dated as of April 1, 1996, as amended July 31, 1996,
between Carson Products Company and Sharon A. Davis.........................
**10.5 Employment Agreement dated as of June 7, 1995, as amended July 31, 1996,
between Carson Products Company and John P. Brown, Jr. .....................
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
**10.6 Employment Agreement dated as of June 22, 1995, as amended July 31, 1996,
between the Carson Products Company and Dr. Donald Cowsar...................
**10.7 Employment Agreement dated as of September 1, 1995, as amended July 31,
1996, between Carson Products Company and Arthur P. Gnann III...............
**10.8 Employment Agreement dated as of September 1, 1995, as amended July 31,
1996, between Carson Products Company and Allena Lee-Brown..................
10.9 Employment Agreement dated as of March 11, 1996, as amended July 31, 1996,
between Carson Products Company and Miriam Muley............................
**10.10 Management Assistance Agreement dated as of August 23, 1995 between Carson
Products Company and Morningside Capital Group L.L.C. ......................
**10.11 Management Agreement dated as of June 26, 1996 between Carson Products
Company and AM Cosmetics, Inc. .............................................
**10.12 Subscription Agreement dated as of June 26, 1996 between Carson Products
Company and Morningside AM Acquisition Corp. ...............................
**10.13 Carson, Inc. 1996 Long Term Incentive Plan...................................
**10.14 Carson, Inc. 1996 Non-Employee Director's Equity Incentive Program...........
**10.15 Subscription Agreement dated as of August 23, 1995 by and among the
Registrant and Investors set forth in Schedule I............................
**10.16 Subscription Agreement dated as of August 23, 1995 by and among the
Registrant and DNL Partners, Limited Partnership............................
**10.17 Subscription Agreement dated as of August 23, 1995 by and among the
Registrant, Indosuez Carson Partners and Indosuez CM II, Inc. ..............
**10.18 Subscription and Registration Rights Agreement dated as of August 15, 1996
between the Registrant and the individuals (outside directors) named
therein.....................................................................
**10.19 Subscription and Registration Rights Agreement dated as of August 15, 1996
between the Registrant and the individuals (members of Senior Management)
named therein...............................................................
**10.20 Licensing Agreement dated April 7, 1994, as amended May 14, 1996 between
Carson Products Company and Carson Products Company S.A. (Proprietary)
Limited.....................................................................
**10.21 Distribution Agreement dated May 14, 1996 between Carson Products Company
and Carson Products Company S.A. (Proprietary) Limited......................
**10.22 Promissory note between Joyce Roche and the Registrant.......................
**10.23 Promissory note between John P. Brown and the Registrant.....................
**10.24 Promissory note between Dennis Smith and the Registrant......................
**10.25 Promissory note between Donald Cowsar and the Registrant.....................
**10.26 Promissory note between Arthur P. Gnann, III and the Registrant..............
**10.27 Promissory note between Sharon A. Davis and the Registrant...................
**10.28 Pledge Agreement dated August 13, 1996 between Arthur P. Gnann, III and the
Registrant..................................................................
**10.29 Pledge Agreement dated August 13, 1996 between Sharon A. Davis and the
Registrant..................................................................
**10.30 Pledge Agreement dated August 13, 1996 between Dr. Donald Cowsar and the
Registrant..................................................................
**10.31 Pledge Agreement dated August 13, 1996 between John P. Brown Jr. and the
Registrant..................................................................
**10.32 Pledge Agreement dated August 13, 1996 between Miriam Muley and the
Registrant..................................................................
**10.33 Pledge Agreement dated August 13, 1996 between Joyce Roche and the
Registrant..................................................................
**10.34 Pledge Agreement dated August 13, 1996 between Dennis Smith and the
Registrant..................................................................
**10.35 Form of New Senior Bank Facility (including exhibits)........................
**11 Computation of earnings per share............................................
**16 Letter regarding Change in Certifying Accountant from Price Waterhouse
LLP. .......................................................................
**21 Subsidiaries of the Registrant...............................................
23.1 Consent of Deloitte & Touche LLP.............................................
23.2 Consent of Deloitte & Touche LLP.............................................
23.3 Consent of Price Waterhouse LLP..............................................
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S> <C>
**23.4 Consent of Milbank, Tweed, Hadley & McCloy
(included in its opinions filed as Exhibits 5 and 8 hereto).................
**24 Powers of Attorney (included on signature pages hereto)......................
**27 Financial Data Schedule......................................................
</TABLE>
- --------

**Previously filed.

(b) Financial Statement Schedules.

Schedule II--Valuation and Qualifying Accounts

All other schedules have been omitted as they are inapplicable, or the other
information is included in the financial statements.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes to provide the Underwriters
at the Closing specified in the Purchase Agreements Certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel that matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

II-5
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT AMENDMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN NEW YORK, NEW
YORK, ON THIS 8TH DAY OF OCTOBER, 1996.

CARSON, INC.

/s/ Bradford N. Creswell
By: _________________________________
Name: Bradford N. Creswell
Title: Executive Vice President of
Finance, Chief Financial
Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement Amendment has been signed by the following persons in
the capacities and on the dates indicated.

SIGNATURE TITLE DATE

/s/ Dr. Leroy Keith* Chairman of the October 8, 1996
- ------------------------------------- Board and Chief
DR. LEROY KEITH Executive Officer
(Principal
Executive Officer)

/s/ Bradford N. Creswell Executive Vice October 8, 1996
- ------------------------------------- President of
BRADFORD N. CRESWELL Finance and Chief
Financial Officer
(Principal
Financial Officer)

/s/ Arthur P. Gnann, III* Vice President of October 8, 1996
- ------------------------------------- Finance and
ARTHUR P. GNANN, III Comptroller
(Principal
Accounting Officer)

II-6
<PAGE>

SIGNATURE TITLE DATE

/s/ Lawrence E. Bathgate, II* Director October 8, 1996
- -------------------------------------
LAWRENCE E. BATHGATE, II

/s/ Abbey J. Butler* Director October 8, 1996
- -------------------------------------
ABBEY J. BUTLER

/s/ Suzanne de Passe* Director October 8, 1996
- -------------------------------------
SUZANNE DE PASSE

/s/ Melvyn J. Estrin* Director October 8, 1996
- -------------------------------------
MELVYN J. ESTRIN

/s/ James L. Hudson* Director October 8, 1996
- -------------------------------------
JAMES L. HUDSON

/s/ Joyce M. Roche* Director October 8, 1996
- -------------------------------------
JOYCE M. ROCHE

/s/ John L. Sabre* Director October 8, 1996
- -------------------------------------
JOHN L. SABRE

/s/ Dennis E. Smith* Director October 8, 1996
- -------------------------------------
DENNIS E. SMITH

/s/ Vincent A. Wasik Director October 8, 1996
- -------------------------------------
VINCENT A. WASIK

/s/ Vincent A. Wasik
*By _________________________________
VINCENT A. WASIK
ATTORNEY-IN-FACT

II-7
<PAGE>

SCHEDULE II

CARSON, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1994 AND 1995
AND THE PERIODS ENDED AUGUST 22, 1995 AND MARCH 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------------------------ -----------------
YEAR ENDED
-----------------------------
PERIOD FROM PERIOD FROM
APRIL 1, 1995 AUGUST 23, 1995
MARCH 31, 1994 MARCH 31, 1995 TO AUGUST 22, 1995 TO MARCH 31, 1996
-------------- -------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts:
Balance, beginning of
period............... $265 $206 $242 $358
Addition--provisions
charged to income.... 361 629 158 329
Deduction--accounts
written off as
uncollectible........ (420) (593) (42) (156)
---- ---- ---- ----
Balance, end of peri-
od................... $206 $242 $358 $531
==== ==== ==== ====
</TABLE>
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
**1.1 Form of U.S. Purchase Agreement..............................................
**1.2 Form of International Purchase Agreement.....................................
3.1 Amended and Restated Articles of Incorporation of the Registrant.............
3.2 By-laws of Registrant........................................................
**4 Form of Common Stock Certificate.............................................
**5 Opinion of Milbank, Tweed, Hadley & McCloy...................................
**8 Opinion of Milbank, Tweed, Hadley & McCloy re tax matters....................
**9 Voting Trust Agreement.......................................................
**10.1 Employment Agreement dated as of August 23, 1995, as amended as of July 31,
1996 between Carson Products Company and Dr. Leroy Keith....................
**10.2 Employment Agreement dated as of June 7, 1995, as amended as of July 31,
1996, between Carson Products Company and Joyce M. Roche....................
**10.3 Employment Agreement dated as of June 7, 1995, as amended as of July 31,
1996, between Carson Products Company and Dennis E. Smith...................
10.4 Employment Agreement dated as of April 1, 1996, as amended July 31, 1996,
between Carson Products Company and Sharon A. Davis.........................
**10.5 Employment Agreement dated as of June 7, 1995, as amended July 31, 1996,
between Carson Products Company and John P. Brown, Jr. .....................
**10.6 Employment Agreement dated as of June 22, 1995, as amended July 31, 1996,
between the Carson Products Company and Dr. Donald Cowsar...................
**10.7 Employment Agreement dated as of September 1, 1995, as amended July 31,
1996, between Carson Products Company and Arthur P. Gnann III...............
**10.8 Employment Agreement dated as of September 1, 1995, as amended July 31,
1996, between Carson Products Company and Allena Lee-Brown..................
10.9 Employment Agreement dated as of March 11, 1996, as amended July 31, 1996,
between Carson Products Company and Miriam Muley............................
**10.10 Management Assistance Agreement dated as of August 23, 1995 between Carson
Products Company and Morningside Capital Group L.L.C. ......................
**10.11 Management Agreement dated as of June 26, 1996 between Carson Products
Company and AM Cosmetics, Inc. .............................................
**10.12 Subscription Agreement dated as of June 26, 1996 between Carson Products
Company and Morningside AM Acquisition Corp. ...............................
**10.13 Carson, Inc. 1996 Long Term Incentive Plan...................................
**10.14 Carson, Inc. 1996 Non-Employee Director's Equity Incentive Program...........
**10.15 Subscription Agreement dated as of August 23, 1995 by and among the
Registrant and Investors set forth in Schedule I............................
**10.16 Subscription Agreement dated as of August 23, 1995 by and among the
Registrant and DNL Partners, Limited Partnership............................
**10.17 Subscription Agreement dated as of August 23, 1995 by and among the
Registrant, Indosuez Carson Partners and Indosuez CM II, Inc. ..............
**10.18 Subscription and Registration Rights Agreement dated as of August 15, 1996
between the Registrant and the individuals (outside directors) named
therein.....................................................................
**10.19 Subscription and Registration Rights Agreement dated as of August 15, 1996
between the Registrant and the individuals (members of Senior Management)
named therein...............................................................
**10.20 Licensing Agreement dated April 7, 1994, as amended May 14, 1996 between
Carson Products Company and Carson Products Company S.A. (Proprietary)
Limited.....................................................................
**10.21 Distribution Agreement dated May 14, 1996 between Carson Products Company
and Carson Products Company S.A. (Proprietary) Limited......................
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
**10.22 Promissory note between Joyce Roche and the Registrant.......................
**10.23 Promissory note between John P. Brown and the Registrant.....................
**10.24 Promissory note between Dennis Smith and the Registrant......................
**10.25 Promissory note between Donald Cowsar and the Registrant.....................
**10.26 Promissory note between Arthur P. Gnann, III and the Registrant..............
**10.27 Promissory note dated between Sharon A. Davis and the Registrant.............
**10.28 Pledge Agreement dated August 13, 1996 between Arthur P. Gnann, III and the
Registrant..................................................................
**10.29 Pledge Agreement dated August 13, 1996 between Sharon A. Davis and the
Registrant..................................................................
**10.30 Pledge Agreement dated August 13, 1996 between Dr. Donald Cowsar and the
Registrant..................................................................
**10.31 Pledge Agreement dated August 13, 1996 between John P. Brown Jr. and the
Registrant..................................................................
**10.32 Pledge Agreement dated August 13, 1996 between Miriam Muley and the
Registrant..................................................................
**10.33 Pledge Agreement dated August 13, 1996 between Joyce Roche and the
Registrant..................................................................
**10.34 Pledge Agreement dated August 13, 1996 between Dennis Smith and the
Registrant..................................................................
**10.35 Form of New Senior Bank Facility (including exhibits)........................
**11 Computation of earnings per share............................................
**16 Letter regarding Change in Certifying Accountant from Price Waterhouse
LLP. .......................................................................
**21 Subsidiaries of the Registrant...............................................
23.1 Consent of Deloitte & Touche LLP.............................................
23.2 Consent of Deloitte & Touche LLP.............................................
23.3 Consent of Price Waterhouse LLP..............................................
**23.4 Consent of Milbank, Tweed, Hadley & McCloy
(included in its opinions filed as Exhibits 5 and 8 hereto).................
**24 Powers of Attorney (included on signature pages hereto)......................
**27 Financial Data Schedule......................................................
</TABLE>
- --------

**Previously filed.

<PAGE>

EXHIBIT 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

CARSON, INC.

1. The name of the corporation (which is hereinafter referred to
as the "Corporation") is "Carson, Inc."

2. The original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on May 10, 1995
under the name DNL Savannah Holding Corp. A Restated Certificate of
Incorporation of the Corporation was filed with the Secretary of State of the
State of Delaware on August 22, 1995 under the name DNL Savannah Holding Corp.
A Certificate of Amendment of Restated Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware on
August 14, 1996, which Certificate of Amendment changed the name of the
Corporation to Carson, Inc.

3. This Amended and Restated Certificate of Incorporation has been
duly proposed by resolutions adopted and declared advisable by the Board of
Directors of the Corporation, duly adopted by written consent of the
stockholders of the Corporation in lieu of a meeting and vote and duly executed
and acknowledged by the officers of the Corporation in accordance with the
provisions of Sections 103, 228, 242 and 245 of the General Corporation Law of
the State of Delaware (the "GCL") and, upon filing with the Secretary of State
in accordance with Section 103, shall thenceforth supersede the original
Certificate of Incorporation, as previously restated and amended, and shall, as
it may thereafter be amended in accordance with its terms and by law, be the
Amended and Restated Certificate of Incorporation of the Corporation.

4. Upon the filing (the "Effective Time") of this Amended and
Restated Certificate of Incorporation pursuant to the GCL, (i) each share of the
Corporation's Class A Common Stock, par value $.01 per share, issued and
outstanding immediately prior to the Effective Time ("Old Class A Common Stock")
shall be reclassified as and changed into 11,370 validly issued, fully paid, and
non-assessable shares of Class C Common Stock authorized by Article FOURTH of
the Amended and Restated Certificate of Incorporation ("New Class C Common
Stock") (totalling 10,011,512.4 shares of New Class C Common Stock), and (ii)
each share of the Corporation's Class B Common Stock, par value $.01 per share,
issued and outstanding immediately prior to the Effective Time ("Old Class B
Common Stock") shall be
<PAGE>

reclassified as and changed into 11,370 validly issued, fully paid, and non-
assessable shares of Class B Common Stock authorized by Article FOURTH of the
Amended and Restated Certificate of Incorporation ("New Class B Common Stock")
(totalling 1,859,667.20 shares of New Class B Common Stock"), without any action
on the part of the holder thereof (the "Reclassification"). Each certificate
that theretofore represented a share or shares of Old Class A Common Stock or
Old Class B Common Stock shall thereafter represent that number of shares of New
Class C Common Stock or New Class B Common Stock, respectively, into which the
share or shares of Old Class A Common Stock or Old Class B Common Stock, as
applicable, represented by such certificate shall have been reclassified.

5. The text of the Certificate of Incorporation of the
Corporation, as previously restated and amended, is hereby amended and restated
to read in its entirety as follows:

FIRST: The name of the corporation is Carson, Inc. (hereinafter
referred to as the "Corporation").

SECOND: The address of the Corporation's registered office in the
State of Delaware is The Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, County of New Castle. The name of its registered
agent at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (hereinafter referred to as the "GCL").

FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is One hundred seventy-five million (175,000,000)
shares, consisting of (i) One hundred fifty million (150,000,000) shares of
Class A Common Stock, par value $.01 per share (hereinafter referred to as the
"Class A Common Stock"), (ii) two million (2,000,000) shares of Class B Common
Stock, par value $.01 per share (hereinafter referred to as the "Class B Common
Stock"), (iii) thirteen million (13,000,000) shares of Class C Common Stock, par
value $.01 per share (hereinafter referred to as the "Class C Common Stock", and
collectively with the Class A Common Stock and the Class B Common Stock, the
"Common Stock"), and (iv) ten million (10,000,000) shares of preferred stock,
par value $.01 per share (hereinafter referred to as the "Preferred Stock").
The designation, relative rights, preferences and limitations of the Preferred
Stock and the Common Stock are as follows:

<PAGE>

(a) Preferred Stock.
---------------

The Board of Directors of the Corporation (hereinafter referred to as
the "Board of Directors") is hereby expressly authorized at any time, and from
time to time, to create and provide for the issuance of shares of Preferred
Stock in one or more series and, by filing a certificate pursuant to the GCL
(hereinafter referred to as a "Preferred Stock Designation"), to establish the
number of shares to be included in each such series, and to fix the
designations, preferences and relative, participating, optional or other special
rights of the shares of each such series and the qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors,
including, but not limited to, the following:

(A) the designation of (by distinguishing number, letter or title) and
the number of shares constituting such series, which number the Board of
Directors may thereafter (except as otherwise provided in the Preferred
Stock Designation) increase or decrease (but not below the number of shares
of such series then outstanding);

(B) the dividend rate for the payment of dividends on such series, if
any, the conditions and dates upon which such dividends shall be payable,
the preference or relation which such dividends, if any, shall bear to the
dividends payable on any other class or classes of or any other series of
capital stock, and whether such dividends, if any, shall be cumulative or
non-cumulative;

(C) whether the shares of such series shall be subject to redemption by
the Corporation, and, if made subject to such redemption, the times, prices
and other terms and conditions of such redemption;

(D) the terms and amount of any sinking fund provided for the purchase
or redemption of the shares of such series;

(E) the amounts payable on the preferences, if any, of shares of the
series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation;

(F) whether or not the shares of such series shall be convertible into
or exchangeable for shares of any other class or classes, or any other
series of any class or classes, of capital stock of, or any other security
of, the Corporation or any other corporation, and, if provision be made for
any such conversion or exchange, the times, prices,
<PAGE>

rates, adjustments and any other terms and conditions of such conversion or
exchange;

(G) the extent, if any, to which the holders of the shares of such
series shall be entitled to vote as a class or otherwise with respect to
the election of directors or otherwise;

(H) the restrictions, if any, on the issue or reissue of shares of the
same series or of any other class or series;

(I) the amounts payable on and the preferences, if any, of the shares of
such series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; and

(J) any other relative rights, preferences and limitations of that
series.

(b) Common Stock.
------------

The Class A Common Stock, Class B Common Stock and Class C Common
Stock shall be subject to the express terms of any series of Preferred Stock set
forth in the Preferred Stock Designation relating thereto.

(i) Voting Rights.
-------------

(A) Each share of Class A Common Stock shall be entitled to one vote on
all matters submitted to the vote of the stockholders of the Corporation.
Each share of Class C Common Stock shall be entitled to ten votes on all
matters submitted to the vote of the stockholders of the Corporation.

(B) Holders of shares of Class A Common Stock and Class C Common Stock
will vote as a single class on all matters submitted to a vote of the
stockholders.

(C) Except as otherwise required by law or expressly provided herein,
each holder of Class B Common Stock shall not be entitled to vote on any
matter submitted to a vote of the stockholders of the Corporation. The
holders of Class B Common Stock shall be entitled to vote as a separate
class on any amendment, repeal or modification of any provision of this
Amended and Restated Certificate of Incorporation that adversely affects
the powers, preferences or special rights of the Class B Common Stock in a
manner different from the adverse effect on the powers, preferences or
special rights of the Class A Common Stock or the Class C Common Stock.
<PAGE>

(D) On any matter on which the holders of Class A Common Stock,
Class B Common Stock (other than as provided in the second sentence of
subparagraph (b)(i)(C) of this Article FOURTH) and Class C Common Stock are
entitled to vote, such holders shall vote together as a single class with
each share of Class A Common Stock being entitled to one vote and each
share of Class B Common Stock and Class C Common Stock being entitled to
ten votes, except as otherwise required by law. Holders of Common Stock
shall not be entitled to cumulate votes in the election of Directors.

(ii) Common Stock Conversion Rights.
------------------------------

(A) In accordance with the terms of subparagraphs (b)(ii)(C) and
(b)(ii)(D) of this Article FOURTH, (I) each share of Class B Common Stock
is convertible, at the option of its holder, into one share of Class A
Common Stock or, subject to the provisions of subparagraph (b)(vi)(C) of
this Article FOURTH, one share of Class C Common Stock at any time and (II)
each share of Class C Common Stock is convertible, at the option of its
holder, into one share of Class A Common Stock at any time.

(B) Upon compliance with the provisions of this subparagraph (b)(ii)(B),
any Regulated Stockholder (as hereinafter defined) shall be entitled to
convert, at any time and from time to time, any and all of the shares of
Class C Common Stock held by such holder into the same number of shares of
Class B Common Stock.

(I) As used herein, (x) "Regulated Stockholder" means (a) any
stockholder that is subject to the provisions of Regulation Y of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 225)
or any successor to such regulation ("Regulation Y"), so long as such
stockholder shall hold, and only with respect to, any Class C Common
Stock, Class B Common Stock or Class A Common Stock, or shares issued
upon conversion of such stock, (b) any Affiliate (as hereinafter
defined) of a Regulated Stockholder that is a transferee of any Class
C Common Stock, Class B Common Stock or Class A Common Stock, so long
as such Affiliate shall hold, and only with respect to, any such
shares of stock or shares issued upon conversion of such shares and
(c) an individual, partnership, joint venture, corporation,
association, trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof (a "Person"), to which a Regulated Stockholder or any of its
Affiliates has transferred any Class C Common Stock, Class B Common
Stock or Class A Common
<PAGE>

Stock, so long as such transferee shall hold, and only with respect
to, any shares of such stock transferred by such stockholder or
Affiliates or any shares issued upon conversion of such shares but
only if such Person is (or any Affiliate of such Person is) subject to
the provisions of Regulation Y or such shares are deemed controlled by
the transferor pursuant to Section 2(g)(3) of the Bank Holding Company
Act of 1956, as amended (the "BHCA"); and (y) "Affiliate" means, with
respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person;
for the purpose of the foregoing definition, the term "control"
(including with correlative meanings, the terms "controlling",
"controlled by", and "under common control with") as used with respect
to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.

(II) The Corporation shall not convert or directly or indirectly
purchase or otherwise acquire any shares of Class C Common Stock or
Class A Common Stock or take any other action affecting the voting
rights of the holders of such shares, if such action will increase the
percentage of outstanding Class C Common Stock or Class A Common Stock
owned by or controlled by any Regulated Stockholder (other than the
stockholder which requested that the Corporation take such action, or
which otherwise waives in writing its rights under this subparagraph
(II)) unless the Corporation gives written notice (the "First Notice")
of such action to each Regulated Stockholder. The Corporation will
defer making any such conversion, purchase or other acquisition or
taking any such other action for a period of 30 days (the "Deferral
Period") after giving the First Notice in order to allow each such
Regulated Stockholder to determine whether it wishes to convert the
Class C Common Stock or take any other action with respect to the
Class C Common Stock or the Class A Common Stock it owns, controls or
has the power to vote, and if any such Regulated Stockholder then
elects to convert any shares of the Class C Common Stock, it shall
notify the Corporation in writing within 20 days of the issuance of
the First Notice, in which case the Corporation shall (x) promptly
notify from time to time each other Regulated Stockholder holding
shares of Class C Common Stock or Class A Common Stock of each such
proposed conversion by a Regulated Stockholder, and (y) effect the
conversion requested by all Regulated Stockholders in
<PAGE>

response to the notices given pursuant to subparagraph (D) below at
the end of the Deferral Period or as soon thereafter as is reasonably
practicable. Notwith-standing anything to the contrary contained in
this Amended and Restated Certificate of Incorporation, the
Corporation will not directly or indirectly redeem, purchase, acquire
or take any other action affecting outstanding Class C Common Stock or
Class A Common Stock if such action will increase above 24.9% the
percentage of outstanding Common Stock owned by or controlled by any
Regulated Stockholder and its Affiliates (other than a stockholder
which waives in writing its rights under this subparagraph (II)).

(C) Upon compliance with the provisions of subparagraph (b)(ii)(D)
below, (I) any holder of shares of Class B Common Stock shall be entitled
to convert, at any time and from time to time, any and all shares of Class
B Common Stock into the same number of shares of Class C Common Stock, (II)
any holder of shares of Class B Common Stock shall be entitled to convert,
at any time and from time to time, any and all shares of Class B Common
Stock into the same number of shares of Class A Common Stock, and (III) any
holder of shares of Class C Common Stock shall be entitled to convert, at
any time and from time to time, any and all shares of Class C Common Stock
into the same number of shares of Class A Common Stock; provided, however,
-------- -------
that no holder of any shares of Class B Common Stock shall be entitled to
convert any such shares into shares of Class C Common Stock or Class A
Common Stock, and the Corporation shall not be required to record any such
conversion, to the extent that, as a result of such conversion, such holder
and its Affiliates, directly or indirectly, would own, control or have the
power to vote a greater number of shares of Class C Common Stock or Class A
Common Stock or other securities of any kind issued by the Corporation than
such holder and its Affiliates shall be permitted to own, control or to
have the power to vote under any law, regulation, rule or other requirement
of any governmental authority at the time applicable to such holder or its
Affiliates unless such conversion is in connection with the consummation of
the disposition of such shares of Class C Common Stock or Class A Common
Stock, as the case may be, pursuant to an effective registration statement
under the Securities Act of 1933, as amended.

If the Corporation shall in any manner subdivide (by stock split,
reclassification, stock dividend or otherwise) or combine (by reverse stock
split, reclassification or otherwise) the outstanding shares of the Class C
Common Stock, Class B Common Stock or Class A Common Stock, the outstanding
shares of the other classes shall be
<PAGE>

proportionately subdivided, reclassified or combined, as the case may be,
and effective provision shall be made for the protection of all conversion
rights hereunder. In case of any reorganization, reclassification or
change of shares of Class C Common Stock, Class B Common Stock or Class A
Common Stock (other than a change in par value, or from par value to no par
value as a result of a subdivision or combination), or in case of any
consolidation of the Corporation with one or more other corporations or a
merger of the Corporation with another entity (other than a consolidation
or merger in which the Corporation is the continuing corporation and which
does not result in any reclassification or change of outstanding shares of
Class C Common Stock, Class B Common Stock or Class A Common Stock), or in
case of any sale, lease or other disposition to another entity (other than
a wholly-owned subsidiary of the Corporation) of all or substantially all
of the assets of the Corporation, each holder of a share of Class C Common
Stock or Class B Common Stock shall have the right at any time thereafter,
so long as the conversion right hereunder with respect to such share of
Class C Common Stock or Class B Common Stock would exist had such event not
occurred, to convert such share into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reorganization, reclassification, change, consolidation, merger, sale,
lease or other disposition by a holder of the number of shares of Class A
Common Stock into which such shares of Class C Common Stock or Class B
Common Stock, as the case may be, might have been converted immediately
prior to such reorganization, reclassification, change, consolidation,
merger, sale, lease or other disposition. In the event of such
reorganization, reclassification, change, consolidation, merger, sale,
lease or other disposition, effective provision shall be made in the
certificate of incorporation of the resulting or surviving corporation or
otherwise for the protection of the conversion right of the shares of Class
C Common Stock or Class B Common Stock that shall be applicable, as nearly
as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of the shares of Class
C Common Stock or Class B Common Stock into which such shares of Common
Stock might have been converted immediately prior to such event. The
Corporation shall not have the power to be a party to any merger,
consolidation or recapitalization pursuant to which any holder of shares of
Common Stock would be required to take (x) any voting securities, the
voting provisions of which would cause such holder to violate any law,
regulation or other requirement of any governmental body of the United
States of America or any political subdivision thereof, applicable to such
holder or (y) any securities convertible into voting securities, the voting
provisions of which if
<PAGE>

such conversion took place would cause such holder to violate any law,
regulation or other requirement of any governmental body of the United
States of America or any political subdivision thereof, applicable to such
holder other than securities which are specifically provided to be
convertible only in the event that such conversion may occur without any
such violation.

(D) To convert (I) Class C Common Stock into Class A Common Stock or
(II) Class B Common Stock into Class C Common Stock or Class A Common
Stock, as the case may be, as provided in this subparagraph (b)(ii) of this
Article FOURTH, a holder must: (w) deliver written notice to the
Corporation (or, if a conversion agent has been designated, to such agent);
(x) surrender the Common Stock certificate to the officer or agent
designated by the Corporation, in a written notice to such person, as
conversion agent or if no such officer or agent is so designated, to the
Corporation (the "Common Stock Conversion Agent"); (y) if the shares are
being issued in a name other than that of the holder, furnish appropriate
endorsements and transfer documents if required by the registrar for the
Corporation's stock or the Common Stock Conversion Agent; and (z) if the
shares are being issued in a name other than that of the holder, pay any
transfer tax or similar tax if required by subparagraph (E) below. Except
in the case of a conversion subject to subparagraph (II) of subparagraph
(B) above, the date on which the holder of Common Stock satisfies all of
the foregoing requirements (w) through (y) is the conversion date. In the
case of a conversion subject to subparagraph (II) of subparagraph (B)
above, the conversion shall be deemed effective upon expiration of the
Deferral Period referred to therein, and, at such time, the person(s) in
whose name or names any certificate(s) evidencing the converted shares are
to be issued upon such conversion shall be deemed to have become the
holder(s) of record of the converted shares. As soon as practicable, the
Corporation shall deliver through the Common Stock Conversion Agent a
certificate for the number of shares of Common Stock issuable upon the
conversion. The person or persons in whose name the certificate or
certificates are registered shall be treated as a stockholder or
stockholders of record on or after the conversion date. If less than all
the shares represented by the Common Stock certificate are being converted,
a new stock certificate representing the unconverted shares shall be
promptly issued by the Corporation to the holder thereof.

(E) If a holder converts shares of Common Stock, the Corporation shall
pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Class B Common Stock or Class C Common Stock, as the
case may be,
<PAGE>

upon such conversion. However, the holder shall pay any such tax which is
due if and because the shares are issued in a name other than that of such
holder.

(F) The Corporation shall reserve out of its authorized but unissued
Class C Common Stock, Class B Common Stock and Class A Common Stock and its
Class C Common Stock, Class B Common Stock and Class A Common Stock held in
treasury sufficient shares of Class C Common Stock, Class B Common Stock
and Class A Common Stock to permit the conversion of all Common Stock
pursuant to this subparagraph (b)(ii). All shares of Class C Common Stock,
Class B Common Stock and Class A Common Stock issued upon such conversion
shall be fully paid and non-assessable.

Shares of Class C Common Stock and Class B Common Stock that are
converted into shares of the other classes shall thereupon be canceled,
shall cease to be issued shares and shall to the extent thereof increase
the number of authorized but necessary shares of such first class.

(G) Notwithstanding any other provision of this subparagraph (b)(ii),
the Corporation shall be entitled to rely for all corporate purposes
exclusively and without independent verification and without regard to any
other information of which it may at any time have knowledge upon the most
recent certification it shall at any time have received from any holder as
to (1) whether or not such holder is a Regulated Stockholder, (2) the
number of shares of Class A Common Stock, Class B Common Stock or Class C
Common Stock owned or controlled by such holder, (3) the number of shares
of Common Stock owned or controlled by such holder and its Affiliates, (4)
whether or not any conversion proposed by such holder would result in such
holder and its Affiliates, directly or indirectly, owning, controlling or
having the power to vote a greater number of shares of Common Stock issued
by the Corporation than such holder and its Affiliates shall be permitted
to own, control or have the power to vote under any law, regulation, rule
or other requirement of any governmental authority at the time applicable
to such holder or its Affiliates and (5) whether or not any proposed
merger, consolidation or recapitalization referred to in the last sentence
of subparagraph (C) above of which the Corporation has given such holder at
least thirty (30) days' prior written notice would result in a violation
referred to in such sentence. The Corporation shall promptly provide any
information reasonably requested by any holder to enable such holder to
certify as to the matters referred to in clauses (4) and (5) above. If the
Corporation shall not have received a certification as to any of the
matters referred to in clauses (1) through (5) above from any holder, the
<PAGE>

Corporation shall be entitled to assume for all corporate purposes, without
independent verification and without regard to any other information of
which it may have knowledge, that (1) such holder is not a Regulated
Stockholder, (2) such holder does not own or control any shares of Class A
Common Stock, Class B Common Stock or Class C Common Stock other than
shares owned of record by such holder, (3) such holder and its Affiliates
do not own or control any shares of Common Stock other than shares owned of
record by such holder, (4) any conversion proposed by such holder will not
result in such holder and its Affiliates, directly or indirectly, owning,
controlling or having the power to vote a greater number of shares of
Common Stock issued by the Corporation than such holder and its Affiliates
are permitted to own, control or have the power to vote under any law,
regulation, rule or other requirement of any governmental authority at the
time applicable to such holder or its Affiliates, and (5) such merger,
consolidation or recapitalization will not result in such a violation,
respectively.

(iii) Liquidation Rights. In the event of any liquidation,
------------------
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, the assets of the Corporation shall be available for
distribution, ratably, to the holders of Class A Common Stock, Class B Common
Stock and Class C Common Stock share and share alike, after payment in full of
creditors and payment in full to any holders of Preferred Stock then outstanding
of any amount required to be paid under the terms of the Preferred Stock.

(iv) Dividend Rights. The holders of Class A Common Stock, Class B
---------------
Common Stock and Class C Common Stock shall be entitled to receive dividends
when and as declared by the Board of Directors of the Corporation out of funds
legally available therefor, subject to the rights of the holders of any series
of Preferred Stock. Any such dividends shall be payable on shares of Class A
Common Stock, Class B Common Stock and Class C Common Stock share and share
alike; provided that no dividends shall be payable, with respect to the Class A
--------
Common Stock, Class B Common Stock or Class C Common Stock, in either shares of
Class A Common Stock, Class B Common Stock or Class C Common Stock, or options,
warrants or rights to acquire such stock, or securities convertible into or
exchangeable for such stock, unless the shares, options, warrants, rights or
------
securities so payable are payable, with respect to Class A Common Stock, Class B
Common Stock or Class C Common Stock, in shares of, or options, warrants or
rights to acquire or securities convertible into or exchangeable for, Class A
Common Stock, Class B Common Stock or Class C Common Stock of the same type upon
which the dividend is being paid.
<PAGE>

(v) Transfer Restriction; Change of Control of Holders.
--------------------------------------------------

(A) Except as provided in subparagraph (b)(v)(D) of this Article FOURTH,
no person holding record ownership of shares of Class C Common Stock may
transfer, and the Corporation shall not register the transfer of, such
shares of Class C Common Stock, except to a Permitted Transferee of such
holder. For the purposes hereof, a "Permitted Transferee" means any holder
of Class C Common Stock who beneficially owned Class C Common Stock as of
October 10, 1996, any Affiliate of such holder, any member of such holder's
immediate family, or any trust or foundation for the benefit of any of the
foregoing.

(B) Notwithstanding anything to the contrary set forth herein, but
subject to the provisions of subparagraph (b)(v)(D) of this Article FOURTH,
in the event of any direct or indirect transfer of beneficial ownership of
any shares of Class C Common Stock which, had such transfer also been a
transfer of record ownership of such shares of Class C Common Stock, would
not have been to a Permitted Transferee, each share of Class C Common Stock
transferred shall be deemed, without further act on the part of the holder
thereof or the Corporation, to be converted into one share of Class A
Common Stock, and stock certificates formerly representing each share of
Class C Common Stock shall thereupon and thereafter be deemed to represent
such number of shares of Class A Common Stock as equals the number of
shares of Class A Common Stock into which such shares of Class C Common
Stock could be converted pursuant to the terms hereof.

(C) Notwithstanding anything to the contrary set forth herein, any event
which would result in the automatic conversion of shares of Class C Common
Stock into shares of Class A Common Stock shall not result in such
conversion if, after such event, the record holder of such shares of Class
C Common Stock is a corporation, limited liability company or partnership
as to which, with respect to the shares of Class C Common Stock held by
such corporation, limited liability company or partnership, any Permitted
Transferee of the holder of Class C Common Stock prior to such event has,
directly or indirectly, both investment power (which includes the power to
dispose, or direct the disposition of, such shares of Class C Common Stock)
and voting power (which includes the power to vote, or direct the voting
of, such shares of Class C Common Stock); provided that no transaction or
--------
event intended to avoid the automatic conversion provision of this
subparagraph (b)(v) of Article FOURTH shall in any event be entitled to the
benefit of this subparagraph (b)(v)(C) of Article FOURTH.
<PAGE>

(D) Notwithstanding anything to the contrary set forth herein, any
holder of Class C Common Stock may pledge such holder's shares of Class C
Common Stock to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for any indebtedness or other obligation of any person;
provided that, even if such shares are registered in the name of the
--------
pledgee or its nominee (which registration is hereby expressly permitted
and shall not be considered a transfer hereunder), such shares shall remain
subject to the provisions of this subparagraph (b)(v) of Article FOURTH.
In the event that such pledged shares of Class C Common Stock (the "Pledged
Stock") are foreclosed upon, each share of such Pledged Stock shall be
deemed, without further act on the part of the holder thereof or the
Corporation, to be converted into one share of Class A Common Stock, and
stock certificates formerly representing one share of Class C Common Stock
shall thereupon and thereafter be deemed to represent such number of shares
of Class A Common Stock as equals the number of shares of Class A Common
Stock into which such shares of Class C Common Stock could be converted
pursuant to the terms hereof upon the earlier of (i) if the pledgor is
contesting the foreclosure on such shares of Pledged Stock, 30 days after
the date on which the foreclosure on such Pledged Stock becomes final and
non-appealable or (ii) if the pledgor is not contesting the foreclosure on
such shares of Pledged Stock, 30 days after the date on which such Pledged
Stock is foreclosed upon; provided, that the Pledged Stock shall not be
--------
automatically converted as provided in this subparagraph (b)(v)(D) of
Article FOURTH hereof as a result of such foreclosure if, prior to
expiration of either such 30-day period, the Pledged Stock shall be
transferred by the pledgee or the purchaser in such foreclosure to a holder
of Class C Common Stock or one or more Permitted Transferees of a holder of
Class C Common Stock.

(E) Notwithstanding anything to the contrary herein, the Corporation
shall not register the transfer of any shares of Class C Common Stock,
unless the transferee and the transferor of such Class C Common Stock have
furnished such affidavits and other proof as the Corporation may reasonably
request to establish that such proposed transferee is a Permitted
Transferee. In addition, upon any purported transfer of shares of Class C
Common Stock not permitted hereunder, each share of Class C Common Stock
purported to be so transferred shall be deemed, without further act on the
part of the holder thereof or the Corporation, to be converted into one
share of Class A Common Stock, and stock certificates formerly representing
shares of Class C Common Stock shall thereupon and thereafter be deemed to
represent such number of shares of Class A Common Stock as equals the
number of shares of Class
<PAGE>

A Common Stock into which such shares of Class C Common Stock could be
converted pursuant to the terms hereof, and the Corporation shall register
such shares of Class A Common Stock in the name of the person to whom such
shares of Class C Common Stock were purported to be transferred.

(F) The Corporation shall include on the certificates for shares of
Class C Common Stock a legend referring to the restrictions on transfer and
registration of transfer imposed by this subparagraph (b)(v) of Article
FOURTH.

(vi) Automatic Conversion.
--------------------

(A) In the event the aggregate number of shares of Class C Common Stock
issued and outstanding at any time shall constitute less than nine percent
(9%) of the total number of shares of Common Stock issued and outstanding
at such time, then, without any further act on the part of any holder
thereof or the Corporation, each share of Class C Common Stock then issued
and outstanding shall be converted automatically into one share of Class A
Common Stock, and stock certificates formerly representing each share of
Class C Common Stock shall thereupon and thereafter be deemed to represent
such number of shares of Class A Common Stock as equals the number of
shares of Class A Common Stock into which such shares of Class C Common
Stock could be converted pursuant to the terms hereof. For purposes of the
immediately preceding sentence, any shares of Class C Common Stock
repurchased or otherwise acquired by the Corporation and not subsequently
sold or otherwise transferred by the Corporation shall no longer be deemed
"outstanding" from and after the date of repurchase. Any event set forth
in subparagraph (b)(v) or (vi) of this Article FOURTH pursuant to which
shares of Class C Common Stock have been automatically converted into
shares of Class A Common Stock is hereafter referred to as an "Event of
Automatic Conversion."

(B) Conversion pursuant to an Event of Automatic Conversion shall be
deemed to have been effected at the time the Event of Automatic Conversion
occurred (the "Conversion Time"). The person entitled to receive the
shares of Class A Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of Class A
Common Stock at and as of the Conversion Time, and the rights of such
person as a holder of shares of Class C Common Stock with respect to the
shares of Class C Common Stock that have been converted, shall cease and
terminate at and as of the Conversion Time.

Class B Common Stock will no longer have the option to convert such shares
into Class C Common Stock pursuant to subparagraph (b)(ii) of this Article
FOURTH.

FIFTH: The Board of Directors is hereby authorized to create and
issue, whether or not in connection with the issuance and sale of any of its
stock or other securities or property, rights entitling the holders thereof to
purchase from the Corporation shares of stock or other securities of the
Corporation or any other corporation, recognizing that, under certain
circumstances, the creation and issuance of such rights could have the effect of
discouraging third parties from seeking, or impairing their ability to seek, to
acquire a significant portion of the outstanding securities of the Corporation,
to engage in any transaction which might result in a change of control of the
Corporation or to enter into any agreement, arrangement or understanding with
another party to accomplish the foregoing or for the purpose of acquiring,
holding, voting or disposing of any securities of the Corporation. The times at
which and the terms upon which such rights are to be issued will be determined
by the Board of Directors and set forth in the contracts or instruments that
evidence such rights. The authority of the Board of Directors with respect to
such rights shall include, but not be limited to, determination of the
following:

(A) the initial purchase price per share or other unit of the stock or
other securities or property to be purchased upon exercise of such rights;

(B) provisions relating to the times at which and the circumstances under
which such rights may be exercised or sold or otherwise transferred, either
together with or separately from, any other stock or other securities of
the Corporation;

(C) provisions which adjust the number or exercise price of such rights
or amount or nature of the stock or other securities or property receivable
upon exercise of such rights in the event of a combination, split or
recapitalization of any stock of the Corporation, a change in ownership of
the Corporation's stock or other securities or a reorganization, merger,
consolidation, sale of assets or other occurrence relating to the
Corporation or any stock of the Corporation, and provisions restricting the
ability of the Corporation to enter into any such transaction absent an
assumption by the other party or parties thereto of the obligations of the
Corporation under such rights;

(D) provisions which deny the holder of a specified percentage of the
outstanding stock or other securities of
<PAGE>

the Corporation the right to exercise such rights and/or cause the rights
held by such holder to become void;

(E) provisions which permit the Corporation to redeem or exchange such
rights, which redemption or exchange may be within the sole discretion of
the Board of Directors, if the Board of Directors reserves such right to
itself; and

(F) the appointment of a rights agent with respect to such rights.

Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of at least
80 percent of the voting power of the then outstanding Voting Stock (as defined
below), voting together as a single class, shall be required to amend, repeal or
adopt any provision inconsistent with this Article FIFTH. For the purposes of
this Amended and Restated Certificate of Incorporation, "Voting Stock" shall
mean the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors.

SIXTH: (A) In furtherance, and not in limitation, of the powers
conferred by law, the Board of Directors is expressly authorized and empowered:

(i) to adopt, amend or repeal the Bylaws of the Corporation, provided,
--------
however, that any Bylaws adopted by the Board of Directors under the powers
-------
hereby conferred may be altered, amended or repealed by the Board of
Directors or by the stockholders having voting power with respect thereto,
provided further, that in the case of amendments by stockholders, the
-------- -------
affirmative vote of the holders of at least 80 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal the Bylaws; and

(ii) from time to time to determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the
accounts and books of the Corporation, or any of them, shall be open to
inspection of stockholders; and, except as so determined, or as expressly
provided in this Amended and Restated Certificate of Incorporation or in
any Preferred Stock Designation, no stockholder shall have any right to
inspect any account, book or document of the Corporation other than such
rights as may be conferred by law.

(B) The Corporation may in its Bylaws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by law.
<PAGE>

(C) Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class, shall be required to amend,
repeal or adopt any provision inconsistent with this Article SIXTH or to adopt,
amend or repeal the Bylaws of the Corporation.

SEVENTH: (A) Subject to the rights of the holders of any series of
Preferred Stock or any other series or class of stock as set forth in this
Amended and Restated Certificate of Incorporation to elect additional directors
under specified circumstances or to consent to specific actions taken by the
Corporation, any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing in lieu of a meeting of such stockholders.

(B) Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this Amended and
Restated Certificate of Incorporation to elect additional directors under
specified circumstances, a special meeting of the holders of stock of the
Corporation entitled to vote on any business to be considered at any such
meeting may be called only by the Chairman of the Board of the Corporation, and
shall be called by the Secretary of the Corporation at the request of the Board
of Directors pursuant to a resolution adopted by a majority of the total number
of directors which the Corporation would at the time have if there were no
vacancies (the "Whole Board").

(C) Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the affirmative vote of at least
80 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend, repeal or adopt any
provision inconsistent with this Article SEVENTH.

EIGHTH: (A) Subject to the rights of the holders of any series of
Preferred Stock or any other series or class of stock as set forth in this
Amended and Restated Certificate of Incorporation to elect additional directors
under specified circumstances, the Board shall consist of 10 to 15 directors,
and may be increased or decreased from time to time, in such a manner as may be
prescribed by the Bylaws of the Corporation.

(B) Unless and except to the extent that the Bylaws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
<PAGE>

(C) The directors, other than those who may be elected by the holders
of any series of Preferred Stock or any other series or class of stock as set
forth in this Amended and Restated Certificate of Incorporation, shall be
divided into three classes as nearly equal in number as possible, and designated
as Class I, Class II and Class III. Class I directors shall be initially
elected for a term expiring at the 1997 annual meeting of stockholders, Class II
directors shall be initially elected for a term expiring at the 1998 annual
meeting of stockholders, and Class III directors shall be initially elected for
a term expiring at the 1999 annual meeting of stockholders. Members of each
class shall hold office until their successors are elected and qualified. At
each succeeding annual meeting of the stockholders of the Corporation, the
successors of the class of directors whose term expires at that meeting shall be
elected by a plurality vote of all votes cast at such meeting to hold office for
a term expiring at the annual meeting of stockholders held in the third year
following the year of their election, and until their successors are elected and
qualified.

(D) Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this Amended and
Restated Certificate of Incorporation to elect additional directors under
specified circumstances, any director may be removed from office at any time,
but only for cause and only by the affirmative vote of the holders of at least
80 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class.

(E) Advance notice of stockholder nominations for the election of
directors shall be given in the manner provided in the Bylaws of the
Corporation.

(F) Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this Amended and
Restated Certificate of Incorporation to elect additional directors under
specified circumstances, vacancies resulting from death, resignation,
retirement, disqualification, removal from office or other cause, and newly
created directorships resulting from any increase in the authorized number of
directors, may be filled only by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors, and
directors so chosen shall hold office for a term expiring at the annual meeting
of stockholders at which the term of office of the class to which they have been
elected expires and until such director's successor shall have been duly elected
and qualified. No decrease in the number of authorized directors constituting
the Whole Board shall shorten the term of any incumbent director.

(G) Notwithstanding anything contained in this Amended and Restated
Certificate of Incorporation to the contrary, the
<PAGE>

affirmative vote of the holders of at least 80 percent of the voting power of
the then outstanding Voting Stock, voting together as a single class, shall be
required to amend, repeal or adopt any provisions inconsistent with this Article
EIGHTH.

NINTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the GCL or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment or repeal of this Article NINTH shall adversely affect any right or
protection of a director of the Corporation existing hereunder in respect of any
act or omission occurring prior to such amendment or repeal.

TENTH: Except as may be expressly provided in this Amended and
Restated Certificate of Incorporation, the Corporation reserves the right at any
time and from time to time to amend, alter, change or repeal any provision
contained in this Amended and Restated Certificate of Incorporation or a
Preferred Stock Designation, and any other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed herein or by law, and all powers, preferences
and rights of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Amended and Restated
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article TENTH, provided, however,
-------- -------
that no Preferred Stock Designation shall be amended after the issuance of any
shares of the series of Preferred Stock created thereby, except in accordance
with the terms of such Preferred Stock Designation and the requirements of law.
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by its Chairman and attested
by its Secretary and has caused its corporate seal to be hereunto affixed, this
7th day of October, 1996.

CARSON, INC.

By: /s/ Leroy Keith
----------------------
Name: Dr. Leroy Keith
Title: Chairman

Attest: /s/ John P. Brown, Jr.
-------------------------
Name: John P. Brown, Jr.
Title: Secretary

<PAGE>

EXHIBIT 3.2

RESTATED BYLAWS

CARSON, INC.
<PAGE>

TABLE OF CONTENTS
-----------------

Page
----
ARTICLE I

Office and Records

Section 1.1 Delaware Office........................ 1
Section 1.2 Other Offices.......................... 1
Section 1.3 Books and Records...................... 1

ARTICLE II

Stockholders

Section 2.1 Annual Meeting......................... 1
Section 2.2 Special Meetings....................... 1
Section 2.3 Notice of Meetings..................... 2
Section 2.4 Quorum................................. 2
Section 2.5 Voting................................. 3
Section 2.6 Proxies................................ 3
Section 2.7 Notice of Stockholder Business and
Nominations.......................... 3
Section 2.8 Inspectors of Elections; Opening and
Closing the Polls.................... 6
Section 2.9 List of Stockholders................... 7
Section 2.10 No Stockholder Action by Written
Consent.............................. 7

ARTICLE III

Directors

Section 3.1 General Powers......................... 8
Section 3.2 Number, Tenure and Qualifications...... 8
Section 3.3 Vacancies and Newly Created
Directorships........................ 8
Section 3.4 Resignation............................ 9
Section 3.5 Removal................................ 9
Section 3.6 Meetings............................... 9
Section 3.7 Quorum and Voting...................... 10
Section 3.8 Written Consent of Directors in Lieu
of a Meeting......................... 10
Section 3.9 Compensation........................... 10
Section 3.10 Committees of the Board of Directors... 10
<PAGE>

ARTICLE IV

Officers

Page
----

Section 4.1 Elected Officers....................... 11
Section 4.2 Election and Term of Office............ 11
Section 4.3 Resignation and Removal................ 12
Section 4.4 Compensation and Bond.................. 12
Section 4.5 Chairman of the Board.................. 12
Section 4.6 President.............................. 12
Section 4.7 Vice Presidents........................ 13
Section 4.8 Treasurer.............................. 13
Section 4.9 Secretary.............................. 13
Section 4.10 Assistant Treasurers................... 13
Section 4.11 Assistant Secretaries.................. 14
Section 4.12 Delegation of Duties................... 14

ARTICLE V

Indemnification and Insurance

Section 5.1 Right to Indemnification............... 14
Section 5.2 Right to Advancement of Expenses....... 15
Section 5.3 Right of Indemnitee to Bring Suit...... 15
Section 5.4 Non-Exclusivity of Rights.............. 16
Section 5.5 Insurance.............................. 16
Section 5.6 Indemnification of Employees and Agents
of the Corporation................... 16
Section 5.7 Contract Rights........................ 16

ARTICLE VI

Stock

Section 6.1 Certificates........................... 17
Section 6.2 Transfers of Stock..................... 17
Section 6.3 Lost, Stolen or Destroyed Certificates. 17
Section 6.4 Stockholder Record Date................ 18

ARTICLE VII

Seal

Section 7.1 Seal................................... 18
<PAGE>

ARTICLE VIII

Waiver of Notice

Page
----

Section 8.1 Waiver of Notice....................... 19

ARTICLE IX

Checks, Notes, Drafts, Audits

Section 9.1 Checks, Notes, Drafts, Etc............. 19
Section 9.2 Audits................................. 19

ARTICLE X

Amendments

Section 10.1 Amendments............................ 20
<PAGE>

RESTATED BYLAWS

CARSON, INC.

ARTICLE I

Office and Records
------------------

Section 1.1 Delaware Office. The principal office of the Corporation
----------- ---------------
in the State of Delaware shall be located in the City of Wilmington, County of
New Castle, and the name and address of its registered agent is The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware.

Section 1.2 Other Offices. The Corporation may have such other
----------- -------------
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.

Section 1.3 Books and Records. The books and records of the
----------- -----------------
Corporation may be kept at the Corporation's principal executive offices in
Savannah, Georgia or at such other locations outside the State of Delaware as
may from time to time be designated by the Board of Directors.

ARTICLE II

Stockholders
------------

Section 2.1 Annual Meeting. The annual meeting of stockholders of
----------- --------------
the Corporation shall be held on such date, at such time and at such place as
may be fixed by the Board of Directors.

Section 2.2 Special Meetings. A special meeting of the holders of
----------- ----------------
stock of the Corporation entitled to vote on any business to be considered at
any such meeting may be called only by the Chairman of the Board of the
Corporation, and shall be called by the Secretary of the Corporation at the
request of the Board of Directors pursuant to a resolution adopted by a majority
of the total number of directors which the Corporation would at the time have if
there were no vacancies (the "Whole Board"). The Board of Directors may
designate the place of meeting for any special meeting of the stockholders, and
if no such designation is made, the place of meeting shall be the principal
executive offices of the Corporation.
<PAGE>

Section 2.3 Notice of Meetings. Whenever stockholders are required
----------- ------------------
or permitted to take any action at a meeting, unless all stockholders entitled
to vote are present or unless notice is waived as provided in Section 8.1 of
these Restated Bylaws, a written notice of the meeting shall be given which
shall state the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.

Unless otherwise provided by law, and except as to any stockholder
duly waiving notice, the written notice of any meeting shall be given personally
or by mail, not less than ten (10) nor more than sixty (60) days before the date
of the meeting to each stockholder entitled to vote at such meeting. If mailed,
notice shall be deemed given when deposited in the mail, postage prepaid,
directed to the stockholder at his or her address as it appears on the records
of the Corporation. Any previously scheduled meeting of the stockholders may be
postponed by resolution of the Board of Directors upon public notice given prior
to the time previously scheduled for such meeting of stockholders.

When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If, however, the adjournment is for more than thirty (30)
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.

Section 2.4 Quorum. Except as otherwise provided by law or by the
----------- ------
Amended and Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") or by these Restated Bylaws, at any meeting of
stockholders the holders of a majority of the voting power of the outstanding
shares of the Corporation entitled to vote generally in the election of
directors (the "Voting Stock"), either present or represented by proxy, shall
constitute a quorum for the transaction of any business at such meeting, except
that when specified business is to be voted on by a class or series voting as a
class, the holders of a majority of the shares of such class or series shall
constitute a quorum for the transaction of such business. The chairman of the
meeting or a majority of the voting power of the shares of Voting Stock so
represented may adjourn the meeting from time to time, whether or not there is
such a quorum (or in the case of specified business to be voted on as a class or
<PAGE>

series, the chairman or a majority of the shares of such class or series so
represented may adjourn the meeting with respect to such specified business).
No notice of the time and place of adjourned meetings need be given except as
provided in the last paragraph of Section 2.3 of these Restated Bylaws. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.

Section 2.5 Voting. Whenever directors are to be elected at a
----------- ------
meeting, they shall be elected by a plurality of the votes cast at the meeting
by the holders of stock entitled to vote. Whenever any corporate action, other
than the election of directors, is to be taken by vote of stockholders at a
meeting, it shall, except as otherwise required by law or by the Certificate of
Incorporation or by these Restated Bylaws, be authorized by a majority of the
votes cast with respect thereto at the meeting by the holders of stock entitled
to vote thereon.

Except as otherwise provided by law, or by the Certificate of
Incorporation, each holder of record of stock of the Corporation entitled to
vote on any matter at any meeting of stockholders shall be entitled to one vote
for each share of such stock standing in the name of such holder on the stock
ledger of the Corporation on the record date for the determination of the
stockholders entitled to vote at the meeting.

Upon the demand of any stockholder entitled to vote, the vote for
directors or the vote on any other matter at a meeting shall be by written
ballot, but otherwise the method of voting and the manner in which votes are
counted shall be discretionary with the presiding officer at the meeting.

Section 2.6 Proxies. Each stockholder entitled to vote at a meeting
----------- -------
of stockholders may authorize another person or persons to act for him or her by
proxy, but no such proxy shall be voted or acted upon after three (3) years from
its date, unless the proxy provides for a longer period. Every proxy shall be
signed by the stockholder or by his duly authorized attorney. Such proxy must
be filed with the Secretary of the Corporation or his or her representative at
or before the time of the meeting.

Section 2.7 Notice of Stockholder Business and Nominations.
----------- ----------------------------------------------

(A) Annual Meeting of Stockholders.
------------------------------

(1) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to
<PAGE>

be considered by the stockholders may be made at an annual meeting of
stockholders (a) pursuant to the Corporation's notice of meeting delivered
pursuant to Section 2.3 of these Restated Bylaws, (b) by or at the direction of
the Chairman of the Board or the Board of Directors pursuant to a resolution
adopted by a majority of the Whole Board or (c) by any stockholder of the
Corporation who is entitled to vote at the meeting with respect to the election
of directors or the business to be proposed by such stockholder, as the case may
be, who complies with the notice procedures set forth in clauses (2) and (3) of
paragraph (A) of this Section 2.7 and who is a stockholder of record at the time
such notice is delivered to the Secretary of the Corporation as provided below.

(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this Section 2.7, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such business must be a proper
subject for stockholder action under the Delaware General Corporation Law (the
"GCL"). To be timely, a stockholder's notice shall be delivered to the
Secretary of the Corporation at the principal executive offices of the
Corporation not less than sixty (60) days nor more than ninety (90) days prior
to the first anniversary of the preceding year's annual meeting; provided,
--------
however, that in the event that the date of the annual meeting is advanced by
- -------
more than thirty (30) days, or delayed by more than sixty (60) days, from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the ninetieth (90th) day prior to such annual meeting and not
later than the close of business on the later of the sixtieth (60th) day prior
to such annual meeting or the tenth (10th) day following the day on which public
announcement of the date of such meeting is first made. Notwithstanding
anything herein to the contrary, if less than seventy (70) days' notice was
given for such annual meeting, a stockholder's notice shall be timely if
delivered to the Secretary of the Corporation at the principal executive offices
of the Corporation not more than ten (10) days following the date on which such
notice was given. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business that the stockholder proposes
to bring before the meeting, a
<PAGE>

brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.

(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Section 2.7 to the contrary, in the event that the number of
directors to be elected to the Board of Directors is increased and there is no
public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least eighty
(80) days prior to the first anniversary of the preceding year's annual meeting,
a stockholder's notice required by paragraph (A)(2) of this Section 2.7 shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary of
the Corporation at the principal executive offices of the Corporation not later
than the close of business on the tenth (10th) day following the day on which
such public announcement is first made by the Corporation.

(B) Special Meeting of Stockholders. Only such business shall be
-------------------------------
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting pursuant to Section
2.3 of these Restated Bylaws. Nominations of persons for election to the Board
of Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (i) by or at
the direction of the Chairman of the Board or the Board of Directors pursuant to
a resolution adopted by a majority of the Whole Board or (ii) by any stockholder
of the Corporation who is entitled to vote at the meeting with respect to the
election of directors, who complies with the notice procedures set forth in this
paragraph (B) and who is a stockholder of record at the time such notice is
delivered to the Secretary of the Corporation as provided below. Nominations by
stockholders of persons for election to the Board of Directors may be made at
such a special meeting of stockholders if the stockholder's notice as required
by paragraph (A)(2) of this Section 2.7 shall be delivered to the Secretary of
the Corporation at the principal executive offices of the Corporation not
earlier than the ninetieth (90th) day
<PAGE>

prior to such special meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such special meeting or the tenth
(10th) day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.

(C) General. (1) Only persons who are nominated in accordance with
-------
the procedures set forth in this Section 2.7 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 2.7.

(2) Except as otherwise provided by law, the Certificate of
Incorporation or this Section 2.7, the chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 2.7 and, if any proposed nomination or business is not in
compliance with this Section 2.7, to declare that such defective nomination or
proposal shall be disregarded.

(3) For purposes of this Section 2.7, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

(4) Notwithstanding the foregoing provisions of this Section 2.7, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.7. Nothing in this Section 2.7 shall be deemed to
affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy materials with respect to a meeting of stockholders pursuant
to Rule 14a-8 under Exchange Act.

Section 2.8 Inspectors of Elections; Opening and Closing the Polls.
----------- ------------------------------------------------------

(A) The Board of Directors by resolution shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the meeting
and make a written report thereof. One or more persons may be
<PAGE>

designated as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate has been appointed to act, or if all inspectors or
alternates who have been appointed are unable to act, at a meeting of
stockholders, the chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before discharging his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspectors shall have the duties prescribed by the GCL.

(B) The chairman of the meeting shall fix and announce at the meeting
the time of the opening and the closing of the polls for each matter upon which
the stockholders will vote at a meeting.

Section 2.9 List of Stockholders. The officer who has charge of the
----------- --------------------
stock ledger of the Corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.

The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section or the books of the Corporation, or to vote in person or by proxy at any
meeting of stockholders.

Section 2.10 No Stockholder Action by Written Consent. Subject to
------------ ----------------------------------------
the rights of the holders of any series of preferred stock, par value $.01 per
share, of the Corporation (the "Preferred Stock") or any other series or class
of stock as set forth in the Certificate of Incorporation to consent to specific
actions taken by the Corporation, any action required or permitted to be taken
by the stockholders of the Corporation must be taken at an annual or special
meeting of the stockholders and may not be taken by any consent in writing by
such stockholders.
<PAGE>

ARTICLE III

Directors
---------

Section 3.1 General Powers. The business and affairs of the
----------- --------------
Corporation shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these Restated Bylaws
expressly conferred upon it, the Board of Directors may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by law or
by the Certificate of Incorporation or by these Restated Bylaws required to be
exercised or done by the stockholders.

Section 3.2 Number, Tenure and Qualifications. The number of
----------- ---------------------------------
directors shall be fixed from time to time exclusively pursuant to a resolution
adopted by a majority of the Whole Board, but shall consist of not more than 15
nor less than 10 directors. The directors shall be divided into three classes
as nearly equal in number as possible, and designated as Class I, Class II and
Class III. Class I directors shall be initially elected for a term expiring at
the 1997 annual meeting of stockholders, Class II directors shall be initially
elected for a term expiring at the 1998 annual meeting of stockholders and Class
III directors shall be initially elected for a term expiring at the 1999 annual
meeting of stockholders. Members of each class shall hold office until their
successors shall have been duly elected and qualified. At each succeeding
annual meeting of stockholders of the Corporation, the successors of the class
of directors whose term expires at that meeting shall be elected by a plurality
vote of all votes cast at such meeting to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the year of
their election, and until their successors are elected and qualified.

Section 3.3 Vacancies and Newly Created Directorships. Unless the
----------- -----------------------------------------
Board of Directors otherwise determines, vacancies resulting from death,
resignation, retirement, disqualification, removal from office or other cause,
and newly created directorships resulting from any increase in the authorized
number of directors, may be filled only by the affirmative vote of a majority of
the remaining directors, though less than a quorum of the Board of Directors,
and directors so chosen shall hold office for a term expiring at the annual
meeting of stockholders at which the term of office of the class to which they
have been elected expires and until such director's successor shall have been
duly elected and qualified. No decrease in the number of authorized directors
constituting the Whole Board shall shorten the term of any incumbent director.
<PAGE>

Section 3.4 Resignation. Any director may resign at any time upon
----------- -----------
written notice to the Corporation. Any such resignation shall take effect at
the time specified therein or, if the time be not specified, upon receipt
thereof, and the acceptance of such resignation, unless required by the terms
thereof, shall not be necessary to make such resignation effective.

Section 3.5 Removal. Any director may be removed from office at any
----------- -------
time, but only for cause and only by the affirmative vote of the holders of at
least 80 percent of the voting power of the then outstanding Voting Stock,
voting together as a single class.

Section 3.6 Meetings. Meetings of the Board of Directors, regular or
----------- --------
special, may be held at any place within or without the State of Delaware.
Members of the Board of Directors, or of any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting by such means shall constitute presence in person
at such meeting. An annual meeting of the Board of Directors shall be held at
the same place and immediately following each annual meeting of stockholders,
and no further notice thereof need be given other than this Bylaw. The Board of
Directors may, by resolution, fix times and places for additional regular
meetings of the Board of Directors and no further notice of such meetings other
than such resolution need be given. A special meeting of the Board of Directors
shall be held whenever called by the Chairman of the Board, the President, or by
a majority of the Whole Board, at such time and place as shall be specified in
the notice or waiver thereof. The person or persons authorized to call special
meetings of the Board of Directors may fix the place and time of the meetings.
Notice of any special meeting shall be given to each director at his or her
business or residence in writing or by telegram or by telephone communication.
If mailed, such notice shall be deemed adequately delivered when deposited in
the United States mails so addressed, with postage thereon prepaid, at least
five (5) days before such meeting. If by telegram, such notice shall be deemed
adequately delivered when the telegram is delivered to the telegraph company at
least twenty-four hours before such meeting. If by facsimile transmission, such
notice shall be transmitted at least twenty-four hours before such meeting. If
by telephone, the notice shall be given at least twelve hours prior to the time
set for the meeting. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of
<PAGE>

Directors need be specified in the notice of such meeting, except for amendments
to these Restated Bylaws as provided under Section 10.1 of these Restated
Bylaws.

Section 3.7 Quorum and Voting. A whole number of directors equal to
----------- -----------------
at least a majority of the Whole Board shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if there
be less than a quorum, a majority of the directors present may adjourn the
meeting from time to time, and no further notice thereof need be given other
than announcement at the meeting which shall be so adjourned. Except as
otherwise provided by law, by the Certificate of Incorporation, or by these
Restated Bylaws, the vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.

Section 3.8 Written Consent of Directors in Lieu of a Meeting. Any
----------- -------------------------------------------------
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board of Directors or of such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or of such committee.

Section 3.9 Compensation. Directors may receive compensation for
----------- ------------
services to the Corporation in their capacities as directors or otherwise in
such manner and in such amounts as may be fixed from time to time by the Board
of Directors.

Section 3.10 Committees of the Board of Directors. The Board of
------------ ------------------------------------
Directors may from time to time, by resolution passed by majority of the Whole
Board, designate one or more committees, each committee to consist of one or
more directors of the Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. The resolution of the
Board of Directors may, in addition or alternatively, provide that in the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he, she or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to
<PAGE>

all papers which may require it, except as otherwise provided by law. Unless
the resolution of the Board of Directors expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Any such committee may adopt rules governing
the method of calling and time and place of holding its meetings. Unless
otherwise provided by the Board of Directors, a majority of any such committee
(or the member thereof, if only one) shall constitute a quorum for the
transaction of business, and the vote of a majority of the members of such
committee present at a meeting at which a quorum is present shall be the act of
such committee. Each such committee shall keep a record of its acts and
proceedings and shall report thereon to the Board of Directors whenever
requested so to do. Any or all members of any such committee may be removed,
with or without cause, by resolution of the Board of Directors, passed by a
majority of the Whole Board.

ARTICLE IV

Officers
--------

Section 4.1 Elected Officers. The elected officers of the
----------- ----------------
Corporation shall be a Chairman of the Board, a President, a Secretary and a
Treasurer, and may also include one or more Vice Presidents, one or more
Assistant Secretaries and one or more Assistant Treasurers. All officers chosen
by the Board of Directors shall each have such powers and duties as generally
pertain to their respective offices, subject to the specific provisions of this
Article IV, together with such other powers and duties as from time to time may
be conferred by the Board of Directors or any committee thereof. The Chairman
of the Board shall be chosen from among the directors. Any number of such
offices may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity. The Board of
Directors may appoint, and may delegate power to appoint, such other officers,
agents and employees as it may deem necessary or proper, who shall hold their
offices or positions for such terms, have such authority and perform such duties
as may from time to time be determined by or pursuant to authorization of the
Board of Directors.

Section 4.2 Election and Term of Office. The elected officers of the
----------- ---------------------------
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Subject to
Section 4.3 of these Restated Bylaws, each officer shall hold
<PAGE>

office until his or her successor shall have been duly elected and shall have
qualified or until his or her death or until such officer shall resign.

Section 4.3 Resignation and Removal. Any officer may resign at any
----------- -----------------------
time upon written notice to the Corporation. Any elected officer may be removed
by a majority of the members of the Whole Board, with or without cause, at any
time. The Board of Directors may delegate such power of removal as to officers,
agents and employees not elected by the Board of Directors. Such removal shall
be without prejudice to a person's contract rights, if any, but the appointment
of any person as an officer, agent or employee of the Corporation shall not of
itself create contract rights for compensation by virtue of such appointment
beyond the date of such officer's death, resignation, removal or the election of
such officer's successor, whichever event shall first occur, except as otherwise
provided in an employment contract or an employee plan.

Section 4.4 Compensation and Bond. The compensation of the officers
----------- ---------------------
of the Corporation shall be fixed by the Board of Directors, but this power may
be delegated to any officer in respect of other officers under his or her
control. The Corporation may secure the fidelity of any or all of its officers,
agents or employees by bond or otherwise.

Section 4.5 Chairman of the Board. The Chairman of the Board shall
----------- ---------------------
preside at all meetings of stockholders and of the Board of Directors. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Corporation, shall make reports to the Board of Directors and the
stockholders and shall perform all duties incidental to such office which may be
required by law and all such other duties as are properly required by the Board
of Directors. Except where by law the signature of the President is required,
the Chairman of the Board shall possess the same power as the President to sign
all certificates, contracts and other instruments of the Corporation which may
be authorized by the Board of Directors. The Chairman of the Board shall see
that all orders and resolutions of the Board of Directors and of any committee
thereof are carried into effect.

Section 4.6 President. The President shall act in a general
----------- ---------
executive capacity and shall assist the Chairman of the Board in the
administration and operation of the Corporation's business and general
supervision of its policies and affairs. The President shall, in the absence of
or because of the inability to act of the Chairman of the Board, perform all
duties of the Chairman of the Board and preside at all meetings of
<PAGE>

stockholders and of the Board of Directors. The President may sign, alone or
with the Secretary or any other proper officer of the Corporation authorized by
the Board of Directors, certificates, contracts and other instruments of the
Corporation as authorized by the Board of Directors.

Section 4.7 Vice Presidents. Each Vice President shall have such
----------- ---------------
powers and perform such duties as the Board of Directors, the Chairman of the
Board or the President may from time to time prescribe. In the absence or
inability to act of the President, unless the Board of Directors shall otherwise
provide, the Vice President who has served in that capacity for the longest time
and who shall be present and able to act, shall perform all the duties and may
exercise any of the powers of the President.

Section 4.8 Treasurer. The Treasurer shall have charge of all funds
----------- ---------
and securities of the Corporation, shall endorse the same for deposit or
collection when necessary and deposit the same to the credit of the Corporation
in such banks or depositaries as the Board of Directors may authorize. He or
she may endorse all commercial documents requiring endorsements for or on behalf
of the Corporation and may sign all receipts and vouchers for payments made to
the Corporation. He or she shall have all such further powers and duties as
generally are incident to the position of Treasurer or as may be assigned to him
or her by the Chairman of the Board, the President or the Board of Directors.

Section 4.9 Secretary. The Secretary shall record all the
----------- ---------
proceedings of the meetings of the stockholders, directors, and any committee
thereof in a book to be kept for that purpose and shall also record therein all
action taken by written consent of directors in lieu of a meeting. He or she
shall attend to the giving and serving of all notices of the Corporation. He or
she shall have custody of the seal of the Corporation and shall attest the same
by his or her signature whenever required. He or she shall have charge of the
stock ledger and such other books and papers as the Board of Directors may
direct, but he or she may delegate responsibility for maintaining the stock
ledger to any transfer agent appointed by the Board of Directors. He or she
shall have all such further powers and duties as generally are incident to the
position of Secretary or as may be assigned to him or her by the President, the
Chairman of the Board or the Board of Directors.

Section 4.10 Assistant Treasurers. In the absence or inability to
------------ --------------------
act of the Treasurer, any Assistant Treasurer may perform all the duties and
exercise all the powers of the
<PAGE>

Treasurer. An Assistant Treasurer shall also perform such other duties as the
Treasurer or the Board of Directors may assign to him or her.

Section 4.11 Assistant Secretaries. In the absence or inability to
------------ ---------------------
act of the Secretary, any Assistant Secretary may perform all the duties and
exercise all the powers of the Secretary. An Assistant Secretary shall also
perform such other duties as the Secretary or the Board of Directors may assign
to him or her.

Section 4.12 Delegation of Duties. In case of the absence of any
------------ --------------------
officer of the Corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors may confer for the time being the
powers or duties, or any of them, of such officer upon any other officer or upon
any director.

ARTICLE V

Indemnification and Insurance
-----------------------------

Section 5.1 Right to Indemnification. Each person who was or is made
----------- ------------------------
a party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
or a person of whom he or she is the legal representative is or was a director
or an officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of any other corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to any employee benefit plan (hereinafter an "indemnitee"), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the GCL, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, excise taxes or penalties under
the Employee Retirement Income Security Act of 1974, as amended, and amounts
paid or to be paid in settlement) reasonably incurred by such indemnitee in
connection therewith; provided, however, that
-------- -------
<PAGE>

except as provided in Section 5.3 with respect to proceedings seeking to enforce
rights to indemnification, the Corporation shall indemnify any such indemnitee
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors.

Section 5.2 Right to Advancement of Expenses. The right to
----------- --------------------------------
indemnification conferred in Section 5.1 shall include the right to be paid by
the Corporation the expenses (including attorneys' fees) incurred in defending
any such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the GCL requires, an
-------- -------
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Section 5.2 or otherwise.

Section 5.3 Right of Indemnitee to Bring Suit. If a claim under
----------- ---------------------------------
Section 5.1 or Section 5.2 is not paid in full by the Corporation within thirty
(30) days after a written claim has been received by the Corporation, except in
the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the indemnitee may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim.
If successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by the indemnitee
to enforce a right to indemnification hereunder (but not in a suit brought by
the indemnitee to enforce a right of an advancement of expenses) it shall be a
defense that, and (ii) in any suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met any applicable standard for indemnification set forth in
the GCL. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of such action
<PAGE>

that indemnification of the indemnitee is proper in the circumstances because
the indemnitee has met the applicable standard of conduct set forth in the GCL,
nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel or stockholders) that the indemnitee has
not met such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article V or otherwise shall be on the
Corporation.

Section 5.4 Non-Exclusivity of Rights. The right to indemnification
----------- -------------------------
and the advancement of expenses conferred in this Article V shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, provision of
these Restated Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.

Section 5.5 Insurance. The Corporation may maintain insurance, at
----------- ---------
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the GCL.

Section 5.6 Indemnification of Employees and Agents of the
----------- ----------------------------------------------
Corporation. The Corporation may, to the extent authorized from time to time by
- -----------
the Board of Directors, grant rights to indemnification, and rights to the
advancement of expenses, to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article V with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.

Section 5.7 Contract Rights. The rights to indemnification and to
----------- ---------------
the advancement of expenses conferred in Section 5.1 and Section 5.2 shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
<PAGE>

ARTICLE VI

Stock
-----

Section 6.1 Certificates. Certificates for stock of the Corporation
----------- ------------
shall be in such form as shall be approved by the Board of Directors and shall
be signed in the name of the Corporation by the Chairman of the Board, the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary. Such certificates may be sealed
with the seal of the Corporation or a facsimile thereof. Any of or all the
signatures on a certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he or she were such officer, transfer agent or
registrar at the date of issue.

Section 6.2 Transfers of Stock. Transfers of stock shall be made
----------- ------------------
only upon the books of the Corporation by the holder, in person or by duly
authorized attorney, and on the surrender of the certificate or certificates for
the same number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the authenticity
of the signature as the Corporation or its agents may reasonably require. The
Board of Directors shall have the power to make all such rules and regulations,
not inconsistent with the Certificate of Incorporation and these Restated Bylaws
and the GCL, as the Board of Directors may deem appropriate concerning the
issue, transfer and registration of certificates for stock of the Corporation.
The Board of Directors may appoint one or more transfer agents or registrars of
transfers, or both, and may require all stock certificates to bear the signature
of either or both.

Section 6.3 Lost, Stolen or Destroyed Certificates. The Corporation
----------- --------------------------------------
may issue a new stock certificate in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed certificate
or his or her legal representative to give the Corporation a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate. The Board of Directors may require such owner to
satisfy other reasonable requirements as it deems appropriate under the
circumstances.
<PAGE>

Section 6.4 Stockholder Record Date. In order that the Corporation
----------- -----------------------
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.

If no record date is fixed by the Board of Directors, (l) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
date on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held, and (2) the
record date for determining stockholders for any other purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.

A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
- -------- -------
adjourned meeting.

Only such stockholders as shall be stockholders of record on the date
so fixed shall be entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend or other
distribution, or to exercise such rights in respect of any such change,
conversion or exchange of stock, or to participate in such action, as the case
may be, notwithstanding any transfer of any stock on the books of the
Corporation after any record date so fixed.

ARTICLE VII

Seal
----

Section 7.1 Seal. The seal of the Corporation shall be circular in
----------- ----
form and shall bear, in addition to any other emblem or device approved by the
Board of Directors, the name of the Corporation, the year of its incorporation
and the words "Corporate Seal" and "Delaware". The seal may be used by
<PAGE>

causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.

ARTICLE VIII

Waiver of Notice
----------------

Section 8.1 Waiver of Notice. Whenever notice is required to be
----------- ----------------
given to any stockholder or director of the Corporation under any provision of
the GCL or the Certificate of Incorporation or these Restated Bylaws, a written
waiver thereof, signed by the person or persons entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. In the case of a stockholder, such waiver of notice may
be signed by such stockholder's attorney or proxy duly appointed in writing.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be specified
in any written waiver of notice.

ARTICLE IX

Checks, Notes, Drafts, Audits
-----------------------------

Section 9.1 Checks, Notes, Drafts, Etc. Checks, notes, drafts,
----------- ---------------------------
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as the
Board of Directors or a duly authorized committee thereof may from time to time
designate.

Section 9.2 Audits. The accounts, books and records of the
----------- ------
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board of Directors, and
it shall be the duty of the Board of Directors to cause such audit to be made
annually.
<PAGE>

ARTICLE X

Amendments
----------

Section 10.1 Amendments. These Restated Bylaws may be amended, added
------------ ----------
to, rescinded or repealed at any meeting of the Board of Directors or of the
stockholders, provided that notice of the proposed change was given in the
--------
notice of the meeting and, in the case of the Board of Directors, in a notice
given no less than twenty-four hours prior to the meeting; provided, however,
-------- -------
that, in the case of amendments by stockholders, notwithstanding any other
provisions of these Restated Bylaws or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any affirmative
vote of the holders of any particular class or series of stock required by law,
the Certificate of Incorporation or these Restated Bylaws, the affirmative vote
of the holders of at least 80 percent of the voting power of the then
outstanding shares of Voting Stock, either present or represented by proxy,
voting together as a single class, shall be required to alter, amend or repeal
any provision of these Restated Bylaws.

<PAGE>

Exhibit 10.4

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of April 1, 1996, by and between Carson Products
Company, a Delaware Corporation (the "Company"), and Sharon A. Davis
("Executive").

WITNESSETH:
----------

WHEREAS, Executive currently serves as Vice President - Operations of
the Company; and

WHEREAS, the Company wishes to retain the services of Executive from
and after the date hereof (the "Effective Date"), and Executive wishes to
continue in the service of the Company from and after the Effective Date, on the
terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:

1. Term of Covered Employment. The term of Executive's employment
--------------------------
covered under this Agreement (the "Term of Covered Employment") shall commence
on the Effective Date and shall end on the third anniversary of the Effective
Date (the "Expiration Date"), unless terminated earlier under Section 5.

2. Employment and Duties. Subject to the terms and conditions
---------------------
hereinafter set forth, during the Term of Covered Employment, the Company shall
employ Executive, and Executive shall serve, as Vice President - Operations of
the Company. In such capacity, Executive shall perform the duties the duties
and responsibilities assigned by the Company, and such performance shall be
Executive's principal activity to which she shall devote substantially all of
her working hours. Executive shall report to the Chief Executive Officer of the
Company.

3. Compensation and Benefits.
-------------------------

3.1 Compensation. For all services to be rendered during the Term of
------------
Covered Employment, the Company shall pay Executive a salary ("Base Salary") of
$90,000 per annum, payable bi-weekly in arrears. In addition, for each fiscal
year of the Company ending within the Term of Covered Employment, Executive
shall receive a bonus (the "Bonus") in an amount equal to (i) thirty percent
(30%) of the Base Salary if the "base case" objectives (but not the "anticipated
case" objectives) for such fiscal year as specified in the business plan
attached as Appendix A hereto (as the same may be supplemented from time to
time) are met, and (ii) fifty percent (50%) of her Base Salary if the
"anticipated case" objectives for such fiscal year as specified in said business
plan are met. The Bonus shall be paid in a single lump sum no later than 120
days after the end of the fiscal year for which the applicable objectives have
been met.

3.2 Pension and Welfare Plans. During the Term of Covered
-------------------------
Employment, Executive shall also be eligible to participate in any pension and
welfare plans maintained by the Company for its employees, subject to the
requirements of applicable law.

3.3 Fringe Benefits. During the Term of Covered Employment,
---------------
Executive shall receive any fringe benefits generally provided by the Company to
its employees.
<PAGE>

4. Long-Term Incentive Award. In the event a "Triggering Event", as
-------------------------
hereinafter defined, occurs while Executive is employed by the Company
(including any such employment following the expiration of the Term of Covered
Employment), the Company shall pay Executive, within 90 days after such
Triggering Event, a lump sum amount in cash equal to one-quarter of one percent
(0.25%) of the value of DNL Savannah Holding Corp., a Delaware corporation ("DNL
Holding"), the parent corporation of the Company, or any successor thereto, at
the time of such Triggering Event, minus $125,000. A "Triggering Event" means
-----
the earliest to occur of (i) an initial public offering of the common stock of
DNL Holding (or any successor thereto), (ii) a sale of substantially all of the
stock or assets of DNL Holding or the Company (or any successor thereto), or
(iii) the fifth anniversary of the Effective Date. For purposes of this Section
4, the value of DNL Holding (or any successor thereto) at the time of the
Triggering Event means (x) if the Triggering Event is the initial public
offering of the common stock of DNL Holding (or any successor thereto), the
value determined on the basis of the price set for the sale of such common stock
to the public in such initial public offering, as established by the managing
underwriters to such public offering, (y) if the Triggering Event is the sale of
substantially all of the stock or assets of DNL Holding or the Company (or any
successor thereto), the price being paid by the acquiror of such stock or
assets, and (z) if the Triggering Event is the fifth anniversary of the
Effective Date, the value established as of such date under a valuation of DNL
Holding (or any successor thereto) conducted by an independent appraiser.

5. Termination of Employment. Notwithstanding any other provision of
-------------------------
this Agreement, but subject to the notice provisions contained in this Section
5, the Company retains the right to terminate Executive's employment, and
Executive retains the right to resign from employment with the Company, at any
time and for any reason.

5.1 Termination for Cause. The Company may terminate Executive's
---------------------
employment with the Company for "Cause" (as hereinafter defined) in the manner
specified in this Section 5.1. In the event that on or after the Effective Date
and prior to the Expiration Date, the Company terminates Executive's employment
with the Company for Cause, the Term of Covered Employment shall end on the date
of such termination (which shall be the date specified in the notice described
in this Section 5.1) and Executive shall be entitled only to any unpaid amount
of Base Salary for her employment with the Company through and including the
date of such termination. In any event, Executive shall not be entitled to
receive any amount of Base Salary with respect to any period following the date
of such termination, or any portion of the Bonus for the fiscal year of the
Company in which such date of termination occurs.

For purposes of this Agreement, termination for "Cause" means
termination by the Company due to Executive's gross dereliction of her duties
under this Agreement, including without limitation, her refusal to follow or
gross neglect of the directions of the Chief Executive Officer of the Company or
any other executive of the Company senior to Executive, or any willful
misconduct by Executive that is materially injurious to the Company, or the
indictment of Executive for a felony involving moral turpitude.

2
<PAGE>

circumstances constituting Cause for such termination. Executive shall be given
the opportunity within 30 days after receiving such notice to meet with the
Board to explain why Cause for such termination does not exist. Within 15 days
after any such meeting, the Board shall give Executive its final decision
regarding whether Cause exists. If the Board's final decision is that Cause
exists, Executive's employment with the Company shall be terminated under this
Section 5.1 pursuant to the Notice of Termination as of the date of termination
specified in such Notice. If the Board's final decision is that Cause does not
exist, Executive's employment with the Company shall not be terminated under
this Section 5.1.

5.2 Resignation. Executive may resign from employment with the
-----------
Company by giving the Company written notice of such resignation, which notice
shall specify the date of resignation, which shall not be earlier than 30 days
after the date such written notice is given to the Company. In the event of
Executive's resignation on or after the Effective Date and prior to the
Expiration Date, the Term of Covered Employment shall end on the date of
resignation (which shall be the date specified in Executive's notice of
resignation), and Executive shall be entitled only to any unpaid amount of Base
Salary for her employment with the Company through and including such date of
resignation. Executive shall not be entitled to receive any amount of Base
Salary with respect to any period following such date of resignation, or any
portion of the Bonus for the fiscal year of the Company in which such date of
resignation occurs.

5.3 Termination Other Than For Cause. The Company may terminate
--------------------------------
Executive's employment with the Company other than for Cause by giving Executive
written notice of such termination, which notice shall specify the date of such
termination, which shall not be earlier than 30 days after such written notice
is given to Executive. In the event that on or after the Effective Date and
prior to the Expiration Date Executive's employment with the Company is
terminated by the Company other than for Cause, the Term of Covered Employment
shall end upon such specified date of termination and the Company shall pay
Executive, within 15 days after such date of termination, an additional lump sum
amount equal to 150% of one year's Base Salary. Executive shall not be eligible
to participate in any of the Company's employee benefit plans following such
date of termination of employment, except as may be required by applicable law.

5.4 Termination Due to Death or Disability. The Company may
--------------------------------------
terminate Executive's employment with the Company due to "Disability", as
hereinafter defined, by giving Executive written notice of such termination,
which notice shall specify the date of such termination, which shall not be
earlier than 30 days after such written notice is given to Executive. If on or
after the Effective Date and prior to the Expiration Date Executive's employment
with the Company is terminated due to Disability, or if during such period
Executive dies, the Term of Covered Employment shall end upon such specified
date of termination or date of death, as applicable, and the Company shall pay
Executive, or her beneficiary or estate, as the case may be, within 15 days
after such date of termination or death, an additional lump sum amount equal to
150% of one year's Base Salary.

For purposes of this Agreement, "Disability" means Executive's
inability to perform her duties under this Agreement for a period of at least
six consecutive months because of medically determinable physical or mental
impairment, as determined by a physician mutually agreeable to Executive and the
Company. If Executive and the Company are unable to agree on such a physician,
each shall appoint one physician and those two physicians shall appoint a third
physician who shall make such a determination.

3
<PAGE>

6. Non-Competition; Non-Solicitation. While Executive is employed by
---------------------------------
the Company (including any period of such employment following the expiration of
the Term of Covered Employment), and during the period in which Executive is
receiving payment of Base Salary from the Company (regardless of whether or not
Executive is then employed by the Company), Executive shall not directly or
indirectly (i) own, manage, operate, represent, promote, consult for, control or
participate in the ownership, operation, acquisition or management of any
business which manufactures and/or distributes ethnic hair care products or
cosmetics within a 500-mile radius of the Company's headquarters, (ii) solicit
(other than on behalf of the company or any of its affiliates), divert or take
away the business of any customers of the Company or any of it affiliates, or
any prospective customers of the Company or any of its affiliates whose business
the Company or any of its affiliates is actively soliciting, or has actively
solicited, during Executive's employment with the Company with whom Executive
had any material personal contract, or (iii) solicit or induce any employee of
the Company or any of its affiliates to terminate such employee's employment
with the Company or such affiliate. It is expressly acknowledged that a breach
of this covenant may result in irreparable harm to the Company for which there
is no adequate remedy at law and that, therefore, in the event of such a breach,
the Company shall be entitled to obtain injunctive relief restraining Executive
from engaging in activities prohibited by this Section 6 or any other relief as
may be required to specifically enforce this covenant.

7. Confidentiality. While employed by the Company and at all times
---------------
thereafter, Executive shall maintain the confidentiality of all information of
and relating to, and all material of, the Company and its affiliates that have
not been made available to the public (other than by reason of a reach by
Executive of her obligations under this Section 7) and shall not, without the
Company's prior written permission, disclose to any person outside of the
Company and its affiliates any such information or material. Without limiting
the foregoing sentence, such information and material shall include pricing
plans and price policies, business plans, sales forecasts, research and
development, formulas, procedures and the identity of customers and suppliers
and the terms upon which the Company or any of its affiliates deals with them.
Upon termination of employment with the Company, Executive shall return to the
Company all property in her possession, whether or not containing confidential
information, including but not limited to originals and copies of any written
documents, drawings and reports, diskettes and other storage media, belonging to
the Company or any of its affiliates or received from the Company or any of its
affiliates. It is expressly acknowledged that breach of this covenant may
result in irreparable harm to the Company for which there is no adequate remedy
at law and that, therefore, in the event of such a breach, the Company shall be
entitled to obtain injunctive relief restraining Executive from engaging in
activities prohibited by this Section 7 or any other relief as may be required
to specifically enforce this covenant.

8. Taxes. The Company shall be entitled to deduct and withhold from
-----
all amounts payable under this Agreement all applicable Federal, state and local
taxes which the Company determines are required by law to be deducted and
withheld.

9. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be given by hand delivery to the party
receiving such notice or by certified mail, return receipt requested, postage
prepaid, addressed as follows:

If to Executive: Sharon A. Davis
c/o Carson Products Company
71 A Ross Road
Savannah, Georgia 31405

4
<PAGE>

If to Company: Carson Products Company
71 A Ross Road
Savannah, Georgia 31405
Attention: Chief Executive Officer

or to such other address as either party shall have furnished to the other party
in writing as the address to send future notices and communications in
accordance herewith. Any notice or communications shall be deemed given when
actually received by the party who is its intended recipient.

10. Severability. If any provision of this Agreement is held to be
------------
invalid under applicable law, such provision shall be ineffective only to the
extent of such invalidity, and the remaining provisions of this Agreement shall
be unimpaired.

11. Waivers. The waiver by either party of a breach of any provision
-------
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of such provision, or as a waiver of any other provision of
this Agreement.

12. Assignability. The Company may assign its rights and obligations
-------------
hereunder to any of its affiliates, or to any successor of the Company;

provided, that this Agreement shall, without further action of the Company,
- --------
automatically be assumed by the surviving entity in any merger transaction or
transactions to which the Company is a party. Executive may not assign any of
her rights, duties, obligations or interests hereunder to any other person
without the prior express written consent of the Board of Directors of the
Company.

13. Entire Agreement. This instrument contains the entire agreement
----------------
of the parties with respect to, and supersedes all prior agreements relating to,
Executive's employment with the Company.

14. Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced under, the laws of the State of Georgia.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

Carson Products Company

By______________________________
Leroy Keith
Chairman & CEO

_____________________________
Sharon A. Davis

5
<PAGE>

Appendix A

Business Plan

Executive Level Bonus Targets for FY 1997
-----------------------------------------

Anticipated Case Base Case
---------------- ---------

Sales $80.3 million $75.5 million
EBIDTA $20.8 million $15.8 million

6
<PAGE>

CARSON PRODUCTS COMPANY
P.O. Box 22309
Savannah, Georgia 31403-2309

July 31, 1996

PERSONAL AND CONFIDENTIAL
- -------------------------

Ms. Sharon A. Davis
c/o Carson Products Company
71A Ross Road
Savannah, Georgia 31405

Re: Employment Agreement Modification
---------------------------------

Dear Sharon:

I am pleased to advise you that the Board of Directors of Carson Products
Company (the "Company") has agreed to modify your employment agreement, dated as
of April 1, 1996, with the Company (the "Employment Agreement") to (i) extend
your term of employment thereunder, (ii) convert your stock-based long-term
incentive opportunity into the right to purchase Class A Common Stock of the
Company, and (iii) effect certain other changes thereto.

Accordingly, the Employment Agreement is hereby modified, effective as of
the dates set forth below, as follows:

1. Effective as of the closing of the Offerings (as that term is defined
in the Form S-1 Registration Statement filed by Carson, Inc. under the
Securities Act of 1933), Section 1 of the Employment Agreement is hereby amended
by deleting it in its entirety and replacing it with a new Section 1 to read in
its entirety as follows:

"1. Term of Covered Employment. The term of Executive's
--------------------------
employment covered under this Agreement (the "Term of Covered Employment")
shall commence on the Closing Date end shall end on the third anniversary
of the closing of the Offerings, as that term is defined in the Form
<PAGE>

- 2 -

S-1 Registration Statement filed by Carson, Inc. under the Securities Act
of 1933, (the "Expiration Date"), unless earlier terminated under Section 5
of this Agreement."

2. Effective as of [the date hereof], Section 3.1 of the Employment
Agreement is hereby amended by deleting it in its entirety and replacing it with
a new Section 3.1 to read as follows:

"3.1 Compensation. For all services to be rendered during the
------------
Term of Covered Employment, the Company shall pay Executive a salary
("Base Salary") of $90,000 per annum, payable bi-weekly in arrears.
In addition, for each fiscal year of the Company ending within the
Term of Covered Employment, Executive shall receive a bonus (the
"Bonus") in an amount equal to (i) thirty percent (30%) of Base Salary
if the "base case" objectives (but not the "anticipated case"
objectives) for that fiscal year, as specified by the Board (as
defined in Section 5.1 of this Agreement), or a committee thereof, are
achieved, or (ii) fifty percent (50%) of Base Salary if the
"anticipated case" objectives for that fiscal year, as specified by
the Board (or a committee thereof) are met. The objectives utilized
in determining the Bonus shall be net revenue growth, net income,
earnings per share and/or stock price growth, each as defined by the
Board (or a committee thereof) in its sole discretion. A lesser
percentage of Base Salary may be paid hereunder if one or more, but
not all, of the targeted objectives for a fiscal year are achieved.
If the "base case" objectives are met, the value of the Bonus, if any,
shall be paid seventy-five percent (75%) in a single lump sum cash
payment and twenty-five percent (25%) in shares of restricted stock of
Carson, Inc. If the "anticipated case" objectives are met, the value
of the Bonus, if any, shall be paid fifty percent (50%) in a single
lump sum cash payment and fifty percent (50%) in shares of restricted
stock of Carson, Inc. Such restricted stock shall vest as to one-
third (1/3) of the aggregate number of shares delivered to Executive
on each of the first three anniversaries of the date of payment of the
Bonus (if Executive is employed by the Company on such dates). The
Bonus shall be paid no later than 120 days after the end of the fiscal
year for which the applicable objectives have been met."

3. Effective as of the date hereof, Section 4 of the Employment
Agreement is hereby amended by deleting it in its entirety and replacing it with
a new Section 4 to read as follows:
<PAGE>

- 3 -

"4. Stock Purchase Right. Executive shall have the right to
--------------------
acquire 2.6102 shares of Carson, Inc.'s Class A Common Stock at a per share
purchase price equal to the fair market value per hare of the Class A
Common Stock on the date of purchase, as determined by the Board (as
defined in Section 5.1 of this Agreement). Executive may satisfy the
aggregate purchase price for the shares of the Class A Common Stock by
tendering cash or a promissory note (in the form attached hereto as Exhibit
1). If Executive elects to tender such a promissory note, Executive shall
execute and deliver a pledge agreement, in the form attached hereto as
Exhibit 2, pursuant to which Executive shall pledge the purchased shares of
the Class A Common Stock acquired to Carson, Inc. to secure payment of such
promissory note. As a condition of any such purchase, Executive shall also
execute and deliver a shareholders agreement, if required by the Company or
Carson, Inc., and a registration rights agreement (in the form attached
hereto as Exhibit 3)."

4. Effective as of the date hereof, Appendix A to the Employment
Agreement is hereby deleted in its entirety.

5. Except as expressly modified herein, the Employment Agreement
shall remain in full force and effect in accordance with its terms and
provisions as the same are set forth on the date hereof.

Please indicate your acceptance of and agreement to the above
modifications by signing this modification agreement in the space provided
below.

CARSON PRODUCTS COMPANY

By:___________________________
Name:
Title:

AGREED TO AND ACCEPTED:

____________________________
Sharon A. Davis

<PAGE>

Exhibit 10.9

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of March 11, 1996, by and between Carson Products
Company, a Georgia corporation (the "Company"), and Miriam Muley ("Executive").

WITNESSETH:
----------

WHEREAS, the current owners of all of the outstanding capital stock of
Aminco, Inc., the parent of the Company, have entered into a Stock Purchase
Agreement dated as of May 11, 1995 (the "Stock Purchase Agreement") with DNL
Savannah Acquisition Corp., a Delaware Corporation ("DNL"), under which such
shareholders shall sell, and DNL shall purchase, all of the outstanding capital
stock of Aminco, Inc.; and

WHEREAS, the Company wishes to retain the services of Executive from April
8, 1996, and Executive wishes to be employed in the service of the Company from
April 8, 1996, on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:

1. TERM OF COVERED EMPLOYMENT. The term of Executive's employment covered
--------------------------
under this Agreement (the "Term of Covered Employment") shall commence on April
8, 1996 and shall end on the third anniversary of that date (the "Expiration
Date"), unless terminated earlier under Section 5.

2. EMPLOYMENT AND DUTIES. Subject to the terms and conditions hereinafter
---------------------
set forth, during the Term of Covered Employment, the Company shall employ
Executive, and Executive shall serve, as Vice President, Marketing.

In such capacity, Executive shall perform the duties and responsibilities
assigned by the Company, and such performance shall be Executive's principal
activity to which she shall devote substantially all her working hours.
Executive shall report to the Executive Vice President, Global Marketing.

3. COMPENSATION AND BENEFITS.
-------------------------

3.1 Compensation. For all services to be rendered during the Term of
------------
Covered Employment, the Company shall pay Executive a salary ("Base Salary") of
$140,000 per annum, payable bi-weekly in arrears. In addition, for each fiscal
year of the Company ending within the Term of Covered Employment, Executive
shall receive a bonus (the "Bonus") in an amount equal to (i) thirty percent
(30%) of her Base Salary if the "base case" objectives (but not the "anticipated
case" objectives) for such fiscal year as specified in the business plan
attached as Appendix A hereto are met, and (ii) fifty percent (50%) of her Base
Salary if the "anticipated case" objectives for such fiscal year as specified in
the business plan attached as Appendix A hereto are met. The Bonus shall be
paid
<PAGE>

in a single lump sum no later than 120 days after the end of the fiscal year for
which the applicable objectives have been met.

3.2 Pension and Welfare Plans. During the Term of Covered Employment,
-------------------------
Executive shall also be eligible to participate in any pension and welfare plans
maintained by the Company for its employees, subject to the requirements of
applicable law.

3.3 Fringe Benefits.
---------------

(a) Relocation Expenses/Allowance. The Company shall reimburse
-----------------------------
Executive for all expenses incurred by her in relocating to Savannah,
Georgia or its vicinity. The Company shall reimburse Executive for
all travel and temporary lodging expenses incurred by her prior to her
commencement of employment with the Company including two spouse
accompanied trips to Savannah, Georgia to secure her new permanent
residence in Savannah, Georgia or its vicinity. In addition the
Company shall pay Executive $10,000 as a general relocation allowance,
$12,000 per annum education allowance and weekly travel between
Warwick, New York and Georgia from April 8 through June 30, 1996 and
temporary housing expenses up to June 30, 1996.

(b) Other Fringe Benefits. During the Term of Covered Employment,
---------------------
Executive shall receive any fringe benefits generally provided by the
Company to its employees.

4. LONG-TERM INCENTIVE AWARD. In the event a "Triggering Event", as
-------------------------
hereinafter defined, occurs while Executive is employed by the Company
(including any such employment following the expiration of the Term of Covered
Employment), the Company shall pay Executive, within 90 days after such
Triggering Event, a lump sum amount in cash equal to one-half of one percent
(0.5%) of the value of Aminco, Inc. (or any successor thereto) at the time of
such Triggering Event, minus $250,000. A "Triggering Event" means the earliest
to occur of (i) an initial public offering of the common stock of Aminco, Inc.
(or any successor thereto), (ii) a sale of substantially all of the stock of the
assets of Aminco, Inc. (or any successor thereto), or (iii) the fifth
anniversary of the Closing Date. For purposes of this Section 4, the value of
Aminco, Inc. (or any successor thereto) at the time of the Triggering Event
means (x) if the Triggering Event is the initial public offering of the common
stock of Aminco, Inc. (or any successor thereto), the value determined on the
basis of the price set for the sale of such common stock to the public in such
initial public offering, as established by the managing underwriters to such
public offering, (y) if the Triggering Event is the sale of substantially all of
the stock or assets of Aminco, Inc. (or any successor thereto), the price being
paid by the acquiror of such stock or assets, and (z) if the Triggering Event is
the fifth anniversary of the Closing Date, the value established as of such date
under a valuation of Aminco, Inc. (or any successor thereto) conducted by an
independent appraiser.

5. TERMINATION OF EMPLOYMENT. Notwithstanding any other provision
-------------------------
of this Agreement, but subject to the notice provisions contained in this
Section 5, the Company retains the right to terminate Executive's employment,
and Executive retains the right to resign from employment with the Company, at
any time and for any reason.

2
<PAGE>

Employment shall end on the date of such termination (which shall be the
date specified in the notice described in this Section 5.1) and Executive
shall be entitled only to any unpaid amount of Base Salary for her
employment with the Company through and including the date of such
termination. In any event, Executive shall not be entitled to receive any
amount of Base Salary with respect to any period following the date of such
termination, or any portion of the Bonus for the fiscal year of the Company
in which such date of termination occurs.

For purposes of this Agreement, termination for "Cause" means
termination by the Company due to Executive's gross dereliction of her
duties under this Agreement, including, without limitation, her refusal to
follow or gross neglect of the directions of the Chief Executive Officer of
the Company or the Executive Vice President, Global Marketing or any other
executive of the Company senior to Executive, or any willful misconduct by
Executive that is materially injurious to the Company, or the indictment of
Executive for a felony involving moral turpitude.

To terminate Executive for Cause, the Company shall give a written notice
of such termination to Executive ("Notice of Termination"), which notice
shall have been authorized by a vote of the majority of the Company's Board
of Directors (the "Board") and shall specify the date of such termination,
which shall not be earlier than the date on which notice is given to the
Executive. Such notice shall be given to Executive no later than 10 days
after a member of the Board (other than Executive) has actual knowledge of
the events or circumstances which purportedly constitute Cause for such
termination, and shall specify the particular act or acts, or failure to
act, or other events or circumstances constituting Cause for such
termination. Executive shall be given the opportunity within 30 days after
receiving such notice to meet with the Board to explain why Cause for such
termination does not exist. Within 15 days after any such meeting, the
Board shall give Executive its final decision regarding whether Cause
exists. If the Board's final decision is that Cause exists, Executive's
employment with the Company shall be terminated under this Section 5.1
pursuant to the Notice of Termination as of the date of termination
specified in such Notice. If the Board's final decision is that Cause does
not exist, Executive's employment with the Company shall not be terminated
under this Section 5.1.

5.2 Resignation. Executive may resign from employment with the
-----------
Company by giving the Company written notice of such resignation, which
notice shall specify the date of resignation, which shall not be earlier
than 30 days after the date such written notice is given to the Company.
In the event of Executive's resignation after the Start Date and prior to
the Expiration Date, the Term of Covered Employment shall end on the date
of resignation (which shall be the date specified in Executive's notice of
resignation), and Executive shall be entitled only to any unpaid amount of
Base Salary for her employment with the Company through and including such
date of resignation. Executive shall not be entitled to receive any amount
of Base Salary with respect to any period following such date of
resignation, or any portion of the Bonus for the fiscal year of the Company
in which such date of resignation occurs.

3
<PAGE>

executive, within 15 days after such date of termination, an additional
lump sum amount equal to 150% of one year's Base Salary. Executive shall
not be eligible to participate in any of the Company's employee benefit
plans following such date of termination of employment, except as may be
required by applicable law.

5.4 Termination Due to Death or Disability. The Company may
--------------------------------------
terminate Executive's employment with the Company due to "Disability", as
hereinafter defined, by giving Executive written notice of such
termination, which notice shall specify the date of such termination, which
shall not be earlier than 30 days after such written notice is given to
Executive. If on or after the Start Date and prior to the Expiration Date
Executive's employment with the Company is terminated due to Disability, or
if during such period Executive dies, the Term of Covered Employment shall
end upon such specified date of termination or date of death, as
applicable, and the Company shall pay Executive, or her beneficiary or
estate, as the case may be, within 15 days after such date of termination
or death, an additional lump sum amount equal to 150% of one year's Base
Salary.

For purposes of this Agreement, "Disability" means Executive's
inability to perform her duties under this Agreement for a period of at
least six consecutive months because of medically determinable physical or
mental impairment, as determined by a physician mutually agreeable to
Executive and the Company. If Executive and the Company are unable to
agree on such a physician, each shall appoint one physician and those two
physicians shall appoint a third physician who shall make such a
determination.

6. NON-COMPETITION; NON-SOLICITATION. While Executive is employed
---------------------------------
by the Company (including any period of such employment following the expiration
of the Term of Covered Employment), and during the period in which Executive is
receiving is receiving payments of Base Salary from the Company (regardless of
whether or not Executive is then employed by the Company), Executive shall not
directly or indirectly (i) own, manage, operate, represent, promote, consult
for, control or participate in the ownership, operation, acquisition or
management of any business which manufactures and/or distributes ethnic hair
care products or cosmetics within a 500-mile radius of the Company's
headquarters, (ii) solicit (other than on behalf of the Company or any of its
affiliates), divert or take away the business of any customers of the Company or
any of its affiliates, or any prospective customers of the Company or any of its
affiliates whose business the Company is actively soliciting, or has actively
solicited, during Executive's employment with the Company with whom Executive
had any material personal contact, or (iii) solicit or induce any employee of
the Company or any of its affiliates to terminate such employee's employment
with the Company or such affiliate. It is expressly acknowledged that a breach
of this covenant may result in irreparable harm to the Company for which there
is no adequate remedy at law and that, therefore, in the event of such a breach,
the Company shall be entitled to obtain injunctive relief restraining Executive
from engaging in activities prohibited by this Section 6 or any other relief as
may be required to specifically enforce this covenant.

7. CONFIDENTIALITY. While employed by the Company and at all times
---------------
thereafter, Executive shall maintain the confidentiality of all information of
and relating to, and all material of, the Company and its affiliates that have
not been made available to the public (other than by reason of a breach by
Executive of her obligations under this Section 7) and shall not, without the
Company's prior written permission, disclose to any person outside of the
Company and its affiliates any such information or material. Without limiting
the foregoing sentence, such information and material shall include pricing
plans and price policies, business plans, sales forecasts, research and
development, formulas, procedures and the identity of customers and suppliers
and the terms upon which the

4
<PAGE>

Company or any of its affiliates deals with them. Upon termination of
employment with the Company, Executive shall return to the Company all property
in her possession, whether or not containing confidential information, including
but not limited to originals and copies of any written documents, drawings and
reports, diskettes and other storage media, belonging to the Company or any of
its affiliates or received from the Company or any of its affiliates. It is
expressly acknowledged that a breach of this covenant may result in irreparable
harm to the Company for which there is no adequate remedy at law and that,
therefore, in the event of such a breach, the Company shall be entitled to
obtain injunctive relief restraining Executive from engaging in activities
prohibited by this Section 7 or any other relief as may be required to
specifically enforce this covenant.

8. TAXES. The Company shall be entitled to deduct and withhold from
-----
all amounts payable under this Agreement all applicable Federal, state and local
taxes which the Company determines are required by law to be deducted and
withheld.

9. NOTICES. All notices and other communications under this
-------
Agreement shall be in writing and shall be given by hand delivery to the party
receiving such notice or by certified mail, return requested, postage prepaid,
addressed as follows:

If to Executive: Ms. Miriam Muley
6 Arthur's Court
Warwick, New York 10990

If to the Company: Carson Products Company
71 A Ross Road
Savannah, Georgia 31405
Attention: Chief Executive Officer

or to such other address as either party shall have furnished to the other party
in writing as the address to send future notices and communications in
accordance herewith. Any notice or communication shall be deemed given when
actually received by the party who is its intended recipient.

10. SEVERABILITY. If any provision of this Agreement is held to be
------------
invalid under applicable law, such provision shall be ineffective only to the
extent of such invalidity, and the remaining provisions of this Agreement shall
be unimpaired.

11. WAIVERS. The waiver by either party of a breach of any provision
-------
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of such provision, or as a waiver of any other provision of
this Agreement.

12. ASSIGNABILITY. The Company may assign its rights and obligations
-------------
hereunder to any of its affiliates, or to any successor of the Company.
Executive may not assign any of her rights, duties, obligations or interests
hereunder to any other person without the prior express written consent of the
Board of Directors of the Company.

13. ENTIRE AGREEMENT. This instrument contains the entire agreement
----------------
of the parties with respect to, and supersedes all prior agreements relating to,
Executive's employment with the Company.

14. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed and enforced under, the laws of the State of Georgia.

5
<PAGE>

15. EFFECTIVENESS OF AGREEMENT. This Agreement shall be and become
--------------------------
effective as of the Closing Date, provided, that if the Stock Purchase Agreement
--------
is terminated, this Agreement shall be cancelled and be of no force or effect.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

Carson Products Company

By:____________________________
Roy Keith
Chairman & CEO

_________________________
Mariam Muley

6
<PAGE>

CARSON PRODUCTS COMPANY
P.O. Box 22309
Savannah, Georgia 31403-2309

July 31, 1996

PERSONAL AND CONFIDENTIAL
- -------------------------

Ms. Miriam Muley
6 Arthur's Court
Warwick, New York 10990

Re: Employment Agreement Modification
---------------------------------

Dear Miriam:

I am pleased to advise you that the Board of Directors of Carson Products
Company (the "Company") has agreed to modify your employment agreement, dated as
of March 11, 1996, with the Company (the "Employment Agreement") to (i) extend
your term of employment thereunder, (ii) increase your base salary, (iii)
convert your stock-based long-term incentive opportunity into the right to
purchase Class A Common Stock of the Company, and (iv) effect certain other
changes thereto.

Accordingly, the Employment Agreement is hereby modified, effective as of
the dates set forth below, as follows:

"1. Term of Covered Employment. The term of Executive's
--------------------------
employment covered under this Agreement (the "Term of Covered Employment")
shall commence on the Closing Date and shall end on the third anniversary
of the closing of the Offerings, as that term is defined in the Form
<PAGE>

- 2 -

S-1 Registration Statement filed by Carson, Inc. under the Securities Act
of 1933, (the "Expiration Date"), unless earlier terminated under Section 5
of this Agreement."

2. Effective as of [the date hereof], Section 3.1 of the Employment
Agreement is hereby amended by deleting it in its entirety and replacing it with
a new Section 3.1 to read as follows:

"3.1 Compensation. For all services to be rendered during the
------------
Term of Covered Employment, the Company shall pay Executive a salary
("Base Salary") of $155,000 per annum, payable bi-weekly in arrears.
In addition, for each fiscal year of the Company ending within the
Term of Covered Employment, Executive shall receive a bonus (the
"Bonus") in an amount equal to (i) thirty percent (30%) of Base Salary
if the "base case" objectives (but not the "anticipated case"
objectives) for that fiscal year, as specified by the Board (as
defined in Section 5.1 of this Agreement), or a committee thereof, are
achieved, or (ii) fifty percent (50%) of Base Salary if the
"anticipated case" objectives for that fiscal year, as specified by
the Board (or a committee thereof) are met. The objectives utilized
in determining the Bonus shall be net revenue growth, net income,
earnings per share and/or stock price growth, each as defined by the
Board (or a committee thereof) in its sole discretion. A lesser
percentage of Base Salary may be paid hereunder if one or more, but
not all, of the targeted objectives for a fiscal year are achieved.
If the "base case" objectives are met, the value of the Bonus, if any,
shall be paid seventy-five percent (75%) in a single lump sum cash
payment and twenty-five percent (25%) in shares of restricted stock of
Carson, Inc. If the "anticipated case" objectives are met, the value
of the Bonus, if any, shall be paid fifty percent (50%) in a single
lump sum cash payment and fifty percent (50%) in shares of restricted
stock of Carson, Inc. Such restricted stock shall vest as to one-
third (1/3) of the aggregate number of shares delivered to Executive
on each of the first three anniversaries of the date of payment of the
Bonus (if Executive is employed by the Company on such dates). The
Bonus shall be paid no later than 120 days after the end of the fiscal
year for which the applicable objectives have been met."

3. Effective as of the date hereof, Section 3.2 of the Employment
Agreement is hereby amended by adding at the end thereof the following proviso:

", provided, however, that, unless otherwise determined by the Company
-------- -------
and Carson, Inc., Executive shall not be eligible to
<PAGE>

- 3 -

participate in any profit-sharing plan maintained, sponsored or
contributed to by the Company or Carson, Inc. that is intended to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as
amended."

4. Effective as of the date hereof, Section 4 of the Employment
Agreement is hereby amended by deleting it in its entirety and replacing it with
a new Section 4 to read as follows:

"4. Stock Purchase Right. Executive shall have the right to
--------------------
acquire 5.2205 shares of Carson, Inc.'s Class A Common Stock at a per share
purchase price equal to the fair market value per hare of the Class A
Common Stock on the date of purchase, as determined by the Board (as
defined in Section 5.1 of this Agreement). Executive may satisfy the
aggregate purchase price for the shares of the Class A Common Stock by
tendering cash or a promissory note (in the form attached hereto as Exhibit
1). If Executive elects to tender such a promissory note, Executive shall
execute and deliver a pledge agreement, in the form attached hereto as
Exhibit 2, pursuant to which Executive shall pledge the purchased shares of
the Class A Common Stock acquired to Carson, Inc. to secure payment of such
promissory note. As a condition of any such purchase, Executive shall also
execute and deliver a shareholders agreement, if required by the Company or
Carson, Inc., and a registration rights agreement (in the form attached
hereto as Exhibit 3)."

5. Effective as of the date hereof, Appendix A to the Employment
Agreement is hereby deleted in its entirety.

6. Except as expressly modified herein, the Employment Agreement
shall remain in full force and effect in accordance with its terms and
provisions as the same are set forth on the date hereof.

Please indicate your acceptance of and agreement to the above
modifications by signing this modification agreement in the space provided
below.

CARSON PRODUCTS COMPANY

By:___________________________
Name:
Title:
AGREED TO AND ACCEPTED:

____________________________
Miriam Muley

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT
AND REPORT ON SCHEDULE

Board of Directors
Carson, Inc.
Savannah, Georgia

We consent to the use in this Registration Statement of Carson, Inc. (the
"Company") on Form S-1 of our report with respect to Carson, Inc. dated June 21,
1996 appearing in the Prospectus, which is a part of this Registration
Statement, and to the reference to us under the heading "Experts" in such
Prospectus.

Our audit of the consolidated financial statements for the period from August
23, 1995 to March 31, 1996 referred to in our aforementioned report also
included the financial statement schedule of the Company for the period from
August 23, 1995 to March 31, 1996, listed in Item 16. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audit. In our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

DELOITTE & TOUCHE LLP

Atlanta, Georgia
October 8, 1996

<PAGE>

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT
AND REPORT ON SCHEDULE

Board of Directors
Carson, Inc.
Savannah, Georgia

We consent to the use in this Registration Statement of Carson, Inc. (the
"Company") on Form S-1 of our report with respect to Aminco, Inc. dated August
2, 1996 appearing in the Prospectus, which is a part of this Registration
Statement, and to the reference to us under the heading "Experts" in such
Prospectus.

Our audit of the consolidated financial statements of Aminco, Inc. for the
period from April 1, 1995 to August 22, 1995 referred to in our aforementioned
report also included the financial statement schedule of Aminco, Inc. for the
period from April 1, 1995 to August 22, 1995, listed in Item 16. This financial
statement schedule is the responsiblity of the Company's management. Our
responsibility is to express an opinion based on our audit. In our opinion, such
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP

Atlanta, Georgia
October 8, 1996

<PAGE>

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 No. 333-10191 of our report dated May 8, 1995
relating to the financial statements of Aminco, Inc., and subsidiaries, which
appears in such Prospectus. We also consent to the application of such report to
the Financial Statement Schedule for the two years ended March 31, 1995 listed
under Item 16(b) of this Registration Statement when such schedule is read in
conjunction with the financial statements referred to in our report. The audits
referred to in such report also included the schedule. We also consent to the
reference to us under the heading "Experts" in such Prospectus.

PRICE WATERHOUSE LLP

Atlanta, Georgia
October 8, 1996