<PAGE>
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d) (1) OR 13(e) (1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
-------------------
CARSON, INC.
(NAME OF SUBJECT COMPANY (ISSUER))
COSMAIR, INC.
CRAYON ACQUISITION CORP.
(NAMES OF FILING PERSONS (OFFERORS))
-------------------
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
145845103
(CUSIP NUMBER OF CLASS OF SECURITIES)
JOHN D. SULLIVAN, ESQ.
GENERAL COUNSEL
COSMAIR, INC.
575 FIFTH AVENUE, NEW YORK, NEW YORK 10017
TELEPHONE: (212) 818-1500
(NAME, ADDRESS AND TELEPHONE NUMBERS OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS)
-------------------
COPY TO:
ELLEN J. ODONER, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153-0119
TELEPHONE: (212) 310-8000
-------------------
CALCULATION OF FILING FEE
<TABLE>
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<S> <C>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$86,822,699 $17,365
</TABLE>
* For purposes of calculating the filing fee only. The filing fee calculation
assumes the purchase of 10,083,485 shares of Class A common stock, par value
$0.01 per share, of Carson, Inc. (the 'Shares'), 5,126,163 Shares issuable
upon conversion of outstanding Class C shares and a maximum of 1,487,025
Shares issuable upon the exercise of outstanding options, at a price of $5.20
per Share, without interest. The amount of the filing fee calculated in
accordance with Regulation 240.0-11 of the Securities Exchange Act of 1934, as
amended, equals 1/50th of one percent of the value of the transaction.
[ ] Check the box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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<S> <C> <C> <C>
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
</TABLE>
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer:
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[x] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
________________________________________________________________________________
<PAGE>
SCHEDULE TO
This Tender Offer Statement on Schedule TO ('Schedule TO') relates to the
offer by Crayon Acquisition Corp., a Delaware corporation (the 'Purchaser') and
a wholly-owned subsidiary of Cosmair, Inc., a Delaware corporation ('Parent'),
to purchase all of the outstanding shares of Class A common stock, par value
$0.01 per share (the 'Shares'), of Carson, Inc., a Delaware corporation (the
'Company'), pursuant to Purchaser's offer to purchase all outstanding Shares at
a price of $5.20 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated March 8, 2000 (the 'Offer to Purchase'), and in the related Letter of
Transmittal (which, together with any supplements or amendments, collectively
constitute the 'Offer'), copies of which are attached as Exhibits (a)(1)(A) and
(a)(1)(B) hereto, respectively. The item numbers and responses thereto below are
in accordance with the requirements of Schedule TO.
ITEM 1. SUMMARY TERM SHEET
The information set forth in the Offer to Purchase under 'Summary Term
Sheet' is incorporated herein by reference.
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ITEM 2. SUBJECT COMPANY INFORMATION
<S> <C>
(a) The name of the subject company is Carson, Inc., a Delaware
corporation. The Company's principal executive offices are
located at 65 Ross Road, Savannah, Georgia 31405 and its
phone number is (912) 651-3400.
(b) The information set forth in the Offer to Purchase under
'Introduction,' Section 1 ('Terms of the Offer; Expiration
Date') and Section 6 ('Price Range of the Shares;
Dividends') is incorporated by reference herein.
(c) The information set forth in the Offer to Purchase in
Section 6 ('Price Range of the Shares; Dividends') is
incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON
(a), (b), (c) This Schedule TO is being filed by Purchaser and Parent. The
information set forth in the Offer to Purchase under
'Introduction,' in Section 9 ('Certain Information
Concerning Purchaser, Parent and Certain Entities Directly
or Indirectly Controlling Parent') and in Schedule I to the
Offer to Purchase is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION
(a)(1)(i-viii, xii) The information set forth in the Offer to Purchase under
'Introduction,' Section 1 ('Terms of the Offer; Expiration
Date'), Section 2 ('Acceptance for Payment and Payment'),
Section 3 ('Procedures for Accepting the Offer and Tendering
Shares'), Section 4 ('Withdrawal Rights'), Section 5
('Certain U.S. Federal Income Tax Consequences'), Section 11
('Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement, the Stockholders Agreement
and other Agreements; Other Matters'), Section 14 ('Certain
Conditions of the Offer') and Section 15 ('Certain Legal
Matters; Required Regulatory Approvals') is incorporated
herein by reference.
(a)(1)(ix) Not applicable.
(a)(1)(x) Not applicable.
(a)(1)(xi) Not applicable.
(a)(2)(i-iv, vii) The information set forth in the Offer to Purchase under
Section 11 ('Purpose of the Offer and the Merger; Plans for
the Company; the Merger Agreement, the Stockholders
Agreement and Other Agreements; Other Matters) is
incorporated herein by reference.
(a)(2)(v) Not applicable.
(a)(2)(vi) Not applicable.
</TABLE>
<PAGE>
<TABLE>
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
<S> <C>
(a) No transactions, other than those described in paragraph
(b), have occurred during the past two years between the
filing person and the Company or any of its affiliates that
are not natural persons.
(b) The information set forth in the Offer to Purchase under
'Introduction,' Section 9 ('Certain Information Concerning
Purchaser, Parent and Certain Entities Directly or
Indirectly Controlling Parent'), Section 10 ('Background of
the Offer; Contacts with the Company') and Section 11
('Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement, the Stockholders Agreement
and Other Agreements; Other Matters') is incorporated herein
by reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
(a) The information set forth in the Offer to Purchase under
'Introduction,' Section 10 ('Background of the Offer;
Contacts with the Company') and Section 11 ('Purpose of the
Offer and the Merger; Plans for the Company; the Merger
Agreement, the Stockholders Agreement and Other Agreements;
Other Matters') is incorporated herein by reference.
(c)(1-7) The information set forth in the Offer to Purchase under
'Introduction,' Section 7 ('Effect of the Offer on the
Market for the Shares; Stock Exchange Listings; Exchange Act
Registration; Margin Regulations'), Section 10 ('Background
of the Offer; Contacts with the Company'), Section 11
('Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement, the Stockholders Agreement
and Other Agreements; Other Matters') and Section 13
('Dividends and Distributions') is incorporated herein by
reference.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information set forth in the Offer to Purchase under
Section 12 ('Source and Amount of Funds') is incorporated
herein by reference.
(b) Not applicable.
(d) Not applicable.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)(b) The information set forth in the Offer to Purchase under
'Introduction', Section 9 ('Certain Information Concerning
Purchaser, Parent and Certain Entities Directly or
Indirectly Controlling Parent'), Section 10 ('Background of
the Offer; Contacts with the Company') and Section 11
('Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement, the Stockholders Agreement
and Other Agreements; Other Matters') is incorporated herein
by reference.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
(a) The information set forth in the Offer to Purchase under
'Introduction' and Section 16 ('Certain Fees and Expenses')
is incorporated herein by reference.
ITEM 10. FINANCIAL STATEMENTS
(a)(b) Because the consideration offered consists solely of cash,
the offer is not subject to any financing condition and the
Offer is for all outstanding Shares, Purchaser believes the
financial condition of Parent, Purchaser and their
affiliates is not material to a decision by a holder of
Shares whether to sell, tender or hold Shares pursuant to
the Offer.
</TABLE>
2
<PAGE>
<TABLE>
ITEM 11. ADDITIONAL INFORMATION
<S> <C>
(a) The information set forth in the Offer to Purchase under
'Introduction,' Section 1 ('Terms of the Offer; Expiration
Date') Section 11 ('Purpose of the Offer and the Merger;
Plans for the Company; the Merger Agreement and Other
Agreements; Other Matters') and Section 15 ('Certain Legal
Matters; Required Regulatory Approvals') is incorporated
herein by reference.
(b) The information set forth in the Offer to Purchase and the
related Letter of Transmittal, copies of which are filed as
Exhibits (a)(1)(A) and (a)(1)(B) hereto, respectively, is
incorporated herein by reference
ITEM 12. EXHIBITS
(a)(1)(A) Offer to Purchase, dated March 8, 2000.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Form of letter to clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(1)(E) Form of letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(1)(G) Summary Advertisement, dated March 8, 2000, appearing in the
Wall Street Journal.
(b) Not applicable.
(d)(1) Agreement and Plan of Merger, dated as of February 25, 2000,
by and among Parent, Purchaser and the Company.
(Incorporated by reference to Exhibit (2) to the Company's
Form 8-K, dated February 25, 2000 (the 'Company 8-K')).
(d)(2) Stockholders Agreement, dated as of February 25, 2000, by
and among Parent, Purchaser, the Company and the holders of
Shares and shares of Class C Common Stock, par value $.01
per share, of the Company ('Class C Shares') parties
thereto. (Incorporated by reference to Exhibit (10.1) of the
Company 8-K.)
(d)(3) Confidentiality Agreement, dated July 24, 1997, as extended,
by and between Parent and the Company.
(d)(4) Exclusivity Agreement, dated as of February 3, 2000, by
and between the Company, and Parent and agreed to by DNL
Partners Limited Partnership (incorporated by reference to
Exhibit (e)(2) to the Schedule 14D-9 filed by the Company
on March 8, 2000 ('Company's Schedule 14D-9')).
(d)(5) Employment Agreement, dated as of February 25, 2000, by
and between Parent and Malcolm R. Yesner (incorporated by
reference to Exhibit (e)(5) to the Schedule 14D-9).
(d)(6) Reimbursement Agreement, dated as of February 25, 2000,
among the Company and certain directors of the Company
(incorporated by reference to Exhibit (e)(9) to the
Schedule 14D-9).
(d)(7) Letter Agreement, dated as of February 25, 2000, among
DNL Partners Limited Partnership and Parent (incorporated
by reference to Exhibit (e)(10) to be filed by amendment
to the Schedule 14D-9).
(d)(8) Form of Indemnity Release between certain officers and
directors of the Company and Parent (incorporated by
reference to Exhibit (e)(11) to be filed by amendment to
the Schedule 14D-9).
(g) Not applicable.
(h) Not applicable.
</TABLE>
3
<PAGE>
SIGNATURE
After due inquiry and to the best of their knowledge and belief, the
undersigned hereby certify as of March 8, 2000 that the information set forth in
this statement is true, complete and correct.
COSMAIR, INC.
By: /S/ ROGER DOLDEN
.................................
Name: Roger Dolden
Title: Executive Vice President,
Chief Administrative Officer
and Secretary
CRAYON ACQUISITION CORP.
By: /S/ ROGER DOLDEN
.................................
Name: Roger Dolden
Title: Vice President and Secretary
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(a)(1)(A) Offer to Purchase, dated March 8, 2000.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Form of letter to clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(1)(E) Form of letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(1)(G) Summary Advertisement, dated March 8, 2000, appearing in the
Wall Street Journal.
(d)(1) Agreement and Plan of Merger, dated as of February 25, 2000,
by and among Parent, Purchaser and the Company.
(Incorporated by reference to Exhibit (2) of the Company
8-K)
(d)(2) Stockholders Agreement, dated as of February 25, 2000, by
and among Parent, Purchaser, the Company and the holders of
Shares and Class C Shares parties thereto. (Incorporated by
reference to Exhibit (10.1) of the Company 8-K)
(d)(3) Confidentiality Agreement, dated July 24, 1997, as extended,
by and between Parent and the Company.
(d)(4) Exclusivity Agreement, dated as of February 3, 2000, by
and between the Company, and Parent and agreed to by DNL
Partners Limited Partnership (incorporated by reference to
Exhibit (e)(2) to the Schedule 14D-9 filed by the Company
on March 8, 2000 ('Company's Schedule 14D-9')).
(d)(5) Employment Agreement, dated as of February 25, 2000, by
and between Parent and Malcolm R. Yesner (incorporated by
reference to Exhibit (e)(5) to the Schedule 14D-9).
(d)(6) Reimbursement Agreement, dated as of February 25, 2000,
among the Company and certain directors of the Company
(incorporated by reference to Exhibit (e)(9) to the
Schedule 14D-9).
(d)(7) Letter Agreement, dated as of February 25, 2000, among
DNL Partners Limited Partnership and Parent (incorporated
by reference to Exhibit (e)(10) to be filed by amendment
to the Schedule 14D-9).
(d)(8) Form of Indemnity Release between certain officers and
directors of the Company and Parent (incorporated by
reference to Exhibit (e)(11) to be filed by amendment to
the Schedule 14D-9).
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL SHARES OF CLASS A COMMON STOCK
OF
CARSON, INC.
AT
$5.20 NET PER SHARE
BY
CRAYON ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY
OF
COSMAIR, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, APRIL 4, 2000 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF FEBRUARY 25, 2000 (THE 'MERGER AGREEMENT'), AMONG COSMAIR, INC.
('PARENT'), CRAYON ACQUISITION CORP. ('PURCHASER'), A WHOLLY-OWNED SUBSIDIARY OF
PARENT, AND CARSON, INC. (THE 'COMPANY'). THE BOARD OF DIRECTORS OF THE COMPANY
UNANIMOUSLY (WITH THREE DIRECTORS ABSTAINING) HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, TAKEN TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS, HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER ALL OF THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES OF THE COMPANY WHICH CONSTITUTES AT LEAST A MAJORITY OF THE
VOTING POWER OF THE COMPANY'S THEN ISSUED AND OUTSTANDING SHARES OF COMMON STOCK
ON A FULLY-DILUTED BASIS. PARENT AND PURCHASER DO NOT CURRENTLY OWN ANY SHARES.
THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER
TO PURCHASE. SEE THE INTRODUCTION AND SECTIONS 1, 14 AND 15.
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares should
either (a) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and mail or
deliver it, together with the certificate(s) representing tendered Shares and
any other required documents, to the Depositary or tender such Shares pursuant
to the procedures for book-entry transfer described in Section 3 or (b) request
his broker, dealer, commercial bank, trust company or other nominee to effect
the transaction for him. A stockholder whose Shares are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
he desires to tender such Shares.
A stockholder who desires to tender his Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the other procedures on a timely basis may tender such Shares by following the
procedures for guaranteed delivery described in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
indicated on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies.
-------------------
The Dealer Manager for the Offer is:
LAZARD FRERES & CO. LLC
March 8, 2000
<PAGE>
SUMMARY TERM SHEET
This summary term sheet is a brief summary of the material provisions of
Crayon Acquisition Corp.'s offer, and is meant to help you understand the offer.
This summary term sheet is not meant to be a substitute for the information
contained in the remainder of this Offer to Purchase, and the information
contained in this summary is qualified in its entirety by the fuller
descriptions and explanations contained in the later pages of this Offer to
Purchase. You are urged to carefully read the entire Offer to Purchase and
related Letter of Transmittal prior to making any decision regarding your
shares.
Q. WHO IS OFFERING TO PURCHASE MY SHARES OF COMMON STOCK OF CARSON, INC.?
A. Crayon Acquisition Corp., a Delaware corporation formed solely to make the
offer, is offering to purchase your Carson shares. We are a wholly-owned
subsidiary of Cosmair, Inc., a Delaware corporation and a wholly-owned
subsidiary of L'Oreal S.A. L'Oreal, based in Paris, is the world's largest
cosmetics company, with 1999 consolidated sales of Euro 10.7 billion. See
'Introduction' and Section 9.
Q. WHAT ARE THE CLASS AND AMOUNT OF COMMON STOCK THAT CRAYON ACQUISITION IS
SEEKING TO PURCHASE?
A. Crayon Acquisition is seeking to purchase all of the outstanding shares of
Class A Common Stock of Carson. See 'Introduction' and Section 9.
Q. HOW MUCH IS CRAYON ACQUISITION OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT,
AND DO I HAVE TO PAY ANY BROKERAGE OR SIMILAR FEES TO TENDER?
A. Crayon Acquisition is offering to purchase the Class A shares at a price of
$5.20 per share, net to the seller in cash, without interest. If you are the
record owner of your shares, you will not have to pay any brokerage or similar
fees. However, if you own your shares through a broker or other nominee, your
broker or nominee may charge you a fee to tender. You should consult your broker
or nominee to determine whether any charges will apply. See 'Introduction' and
Section 9.
Q. WHAT DOES THE BOARD OF DIRECTORS OF CARSON THINK OF THIS OFFER?
A. The Board of Directors of Carson has unanimously (with three directors
abstaining) determined that the merger agreement and the transactions
contemplated by the merger agreement, including the offer and the merger, taken
together, are fair to and in the best interests of Carson's stockholders and has
approved and adopted the merger agreement.
The Board further recommends that stockholders of Carson accept the offer
and tender their shares. See 'Introduction.'
Q. HAVE ANY STOCKHOLDERS ALREADY DECIDED TO TENDER THEIR SHARES?
A. Yes. Certain stockholders, who together own all 5,126,163 outstanding shares
of Class C Common Stock of Carson and 2,875,973 Class A shares, have agreed to
convert their Class C shares into Class A shares and tender all of their
Class A shares in the offer, subject to at least 565,857 additional Class A
shares being tendered in the offer. (The Class C shares are convertible into
Class A shares on a one-for-one basis.) In the event the holders of Class
C shares are not required to so convert these shares, they have agreed to vote
their Class A and Class C shares in favor of the merger and have delivered
proxies in this regard to Cosmair. The Class A and Class C shares subject to the
stockholders agreement represent approximately 52.6% of Carson's outstanding
stock, approximately 48% of Carson's outstanding stock on a fully-diluted basis
(that is, assuming all outstanding stock options are exercised) and
approximately 88% of the total voting power of Carson's outstanding stock. See
'Introduction.'
Q. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
A. You have until 12:00 midnight, New York City time, on Tuesday, April 4, 2000.
See Section 1.
i
<PAGE>
Q. CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
A. We are required to extend the offer for additional periods through July 31,
2000 if any of the conditions of the offer are not satisfied, subject to certain
rights we have to terminate the offer and proceed directly with a merger or, in
certain circumstances, to terminate the merger agreement with Carson. We may
also extend the offer for periods totalling ten business days or less if the
minimum number of shares have been tendered in the offer but less than 90% of
the outstanding shares have been tendered. The offer may also be extended as
required by law. See Section 1.
Q. HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
A. If the offer is extended, we will issue a press release announcing the
extension on the first business morning following the date the offer was
scheduled to expire. See Section 1.
Q. WHAT ARE THE MOST IMPORTANT CONDITIONS TO THE OFFER?
A. The most important conditions to the offer are the following:
that stockholders validly tender and do not withdraw before the expiration of
the offer enough Class A shares to represent at least a majority of the voting
power of Carson's stock on a fully diluted basis.
the expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the South African
competition statute.
A fuller discussion of the conditions to consummation of the offer may be found
in Section 14.
Q. HOW DO I ACCEPT THE OFFER AND TENDER MY SHARES?
A. To tender your shares, you must complete the enclosed Letter of Transmittal
and deliver it, along with your share certificates, to the Depositary prior to
the expiration of the Offer. If you cannot deliver all necessary documents to
the Depositary in time, you may, with the assistance of an Eligible Institution,
deliver to the Depositary, in lieu of the missing documents, the enclosed Notice
of Guaranteed Delivery, provided you are able to fully comply with its terms. If
your shares are held in 'Street' name (i.e., through a broker, dealer or other
nominee), your nominee will tender your shares on your behalf upon your
instruction. See Section 3.
Q. IF I ACCEPT THE OFFER, WHEN WILL I GET PAID?
A. Provided the conditions to the offer are satisfied and Crayon Acquisition
consummates the offer and accepts your shares for payment, you will receive a
check equal to the number of shares you tendered multiplied by $5.20 as promptly
as practicable following the expiration of the offer. Crayon Acquisition expects
that checks will be mailed out promptly following expiration of the offer. See
Section 2.
Q. DOES CRAYON ACQUISITION HAVE THE FINANCIAL RESOURCES TO MAKE THE PAYMENT?
A. Crayon Acquisition's parent corporation, Cosmair, will provide Crayon
Acquisition with sufficient funds to purchase all shares tendered in the offer.
The offer is not conditioned on any financing arrangements. See Section 12.
Q. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION?
A. The receipt of cash by you in exchange for your shares pursuant to the offer,
the merger or upon exercise of appraisal rights is a taxable transaction for
federal income tax purposes and may also be a taxable transaction under
applicable state, local or foreign tax laws. In general, you will recognize
capital gain or loss equal to the difference between your adjusted tax basis in
the shares you tender and the amount of cash you receive for those shares. You
should consult your tax advisor about the particular effect tendering will have
on your shares. See Section 5.
Q. UNTIL WHAT TIME AND HOW CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
A. You may withdraw a portion or all of your tendered shares by delivering
written or facsimile notice to the depositary prior to the expiration of the
offer. Further, if Crayon Acquisition has not agreed to accept your shares for
payment within 60 days of the commencement of the offer, you
ii
<PAGE>
can withdraw them at any time after that 60-day period until Crayon Acquisition
does accept your shares for payment. Once shares are accepted for payment, they
cannot be withdrawn. See Section 4.
Q. WHY IS CRAYON ACQUISITION MAKING THIS OFFER?
A. Crayon Acquisition is making this offer to enable Cosmair to acquire control
of Carson. See 'Introduction' and Section 11.
Q. WHAT WILL HAPPEN TO CARSON?
A. If the offer is consummated, under a merger agreement among Crayon
Acquisition, Cosmair and Carson, provided certain conditions are met, Crayon
Acquisition will be merged with and into Carson, with Carson surviving as a
subsidiary of Cosmair. Further, following the consummation of the offer, the
merger agreement requires Carson to take certain actions so that representatives
of Cosmair will constitute at least a majority of the members of the Board of
Directors of Carson. See Section 11.
Q. WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE SHARES ARE NOT
TENDERED IN THE OFFER?
A. If the offer is consummated, provided certain conditions are met, we will
cause the merger to take place with the approval of stockholders by voting the
Class A shares that we acquire in the offer (which will represent at least a
majority of the voting power of Carson's stock on a fully-diluted basis) in
favor of the merger. If at least 90% of the Class A shares are tendered in the
offer, and all the Class C shares have been converted into Class A shares, we
will cause the merger to take place without stockholder approval.
Q. IF I DO NOT TENDER BUT THE TENDER OFFER IS SUCCESSFUL, WHAT WILL HAPPEN TO MY
SHARES?
A. Even if you do not tender your shares, if the offer is consummated and Crayon
Acquisition merges with Carson, all remaining stockholders of Carson at the time
of the merger, other than those that properly assert appraisal rights, will
receive $5.20 per share in cash for each Class A and Class C share, without
interest.
Even if Crayon Acquisition does not merge with Carson, the number of
stockholders of Carson may be so small that they will no longer be traded on the
New York Stock Exchange or any other national exchange. Also, Carson may cease
to comply with SEC rules governing publicly-held companies. See Section 11.
Q. ARE DISSENTERS RIGHTS AVAILABLE IN EITHER THE OFFER OR THE MERGER?
A. Dissenters rights are not available in the offer. However, if you choose not
to tender and the offer is consummated, dissenters rights will be available in
the merger of Crayon Acquisition and Carson. If you choose to exercise your
dissenters rights, and you comply with the applicable legal requirements, you
will be entitled to payment for your shares based on a fair and independent
appraisal of the market value of your shares. This market value may be more or
less than $5.20 per share.
Q. WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
A. On February 25, 2000, the last trading day before the public announcement of
the execution of the merger agreement, the Class A shares closed on the New York
Stock Exchange at $3.75 per share. On March 7, 2000, the last trading day before
the commencement of the offer, the Class A shares closed on the New York Stock
Exchange at $5.00 per share. Please obtain a recent quotation for your Class A
shares prior to deciding whether or not to tender. See Section 6.
Q. WHO CAN I CALL WITH QUESTIONS?
A. You can call Innisfree M&A Incorporated at (888) 750-5834 with any questions
you may have.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY TERM SHEET............................................... i
INTRODUCTION..................................................... 1
THE TENDER OFFER................................................. 2
1. Terms of the Offer; Expiration Date...................... 2
2. Acceptance for Payment and Payment....................... 3
3. Procedures for Accepting the Offer and Tendering
Shares.................................................. 4
4. Withdrawal Rights........................................ 7
5. Certain U.S. Federal Income Tax Consequences............. 7
6. Price Range of the Shares; Dividends..................... 8
7. Effect of the Offer on the Market for the Shares;
Stock Exchange Listings; Exchange Act Registration;
Margin Regulations...................................... 9
8. Certain Information Concerning the Company............... 10
9. Certain Information Concerning Purchaser, Parent and
Certain Entities Directly or Indirectly Controlling
Parent.................................................. 13
10. Background of the Offer; Contacts with the
Company................................................. 14
11. Purpose of the Offer and the Merger; Plans for the
Company; the Merger Agreement and Other Agreements;
Other Matters........................................... 16
12. Source and Amount of Funds............................... 27
13. Dividends and Distributions.............................. 27
14. Certain Conditions of the Offer.......................... 27
15. Certain Legal Matters; Required Regulatory
Approvals............................................... 29
16. Certain Fees and Expenses................................ 31
17. Miscellaneous............................................ 32
SCHEDULE I Directors and Executive Officers of Purchaser,
Parent and Certain Entities which Directly or Indirectly
Control Parent................................................. 33
</TABLE>
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TO: ALL HOLDERS OF SHARES OF CLASS A
COMMON STOCK OF CARSON, INC.:
INTRODUCTION
Crayon Acquisition Corp., a Delaware corporation ('PURCHASER'), and a direct
wholly-owned subsidiary of Cosmair, Inc., a Delaware corporation ('PARENT'),
hereby offers to purchase all shares of Class A Common Stock, par value $0.01
per share (the 'SHARES'), of Carson, Inc., a Delaware corporation (the
'COMPANY'), at a price of $5.20 per Share (the 'SHARE PRICE'), net to the seller
in cash and without interest thereon, upon the terms and subject to the
conditions contained in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the 'OFFER').
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 25, 2000 (the 'MERGER AGREEMENT'), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, subject to the
satisfaction or waiver of certain conditions, Purchaser will be merged with and
into the Company (the 'MERGER'), with the surviving corporation becoming a
wholly-owned subsidiary of Parent (the 'SURVIVING CORPORATION'). In the Merger,
each outstanding Share (other than Shares held by the Company as treasury stock
and Shares owned by stockholders who have properly exercised their appraisal
rights under Delaware law) will be converted at the effective time of the Merger
(the 'EFFECTIVE TIME') into the right to receive the Share Price, in cash,
without interest and less any required withholding taxes (the 'MERGER
CONSIDERATION').
THE BOARD OF DIRECTORS OF THE COMPANY (THE 'BOARD') UNANIMOUSLY (WITH THREE
DIRECTORS ABSTAINING) HAS DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, TAKEN
TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS
(THE 'STOCKHOLDERS'), HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES
PURSUANT TO THE OFFER.
PaineWebber Incorporated, the Company's financial advisor (the
'PAINEWEBBER'), has delivered to the Company its written opinion, dated
February 18, 2000, that as of the date thereof, the cash consideration to be
received by the Stockholders pursuant to the Offer and the Merger is fair from a
financial point of view to the Stockholders. A copy of the opinion of the
Company Financial Advisor is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the 'SCHEDULE 14D-9')
filed with the Securities and Exchange Commission (the 'COMMISSION') in
connection with the Offer, a copy of which is being furnished to Stockholders
concurrently with this Offer to Purchase.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined in
Section 1 below) that number of Shares (the 'MINIMUM NUMBER OF SHARES') which
would represent at least a majority of the voting power of the Company's common
stock then issued and outstanding on a fully-diluted basis (the 'MINIMUM
CONDITION'). The Offer is also subject to certain other conditions. See
Sections 1, 14 and 15.
To induce Parent and Purchaser to enter into the Merger Agreement, certain
Stockholders who together own all 5,126,163 shares of the Company's Class C
Common Stock, par value $.01 per share (the 'CLASS C SHARES' and, collectively
with the Shares, the 'COMPANY COMMON STOCK'), and 2,875,973 Shares
(collectively, the 'MAJORITY STOCKHOLDERS'), have entered into a Stockholders
Agreement, dated February 25, 2000, with the Company, Parent and Purchaser (the
'STOCKHOLDERS AGREEMENT'). In the Stockholders Agreement, the Majority
Stockholders agreed to convert all of their Class C Shares into Shares and
tender all their Shares in the Offer, subject to at least an additional 565,857
Shares being validly tendered (and not withdrawn) pursuant to the Offer. In the
event the Majority Stockholders are not required to convert their Class C Shares
into Shares pursuant to the Stockholders Agreement, they have agreed to vote all
their Company Common Stock in favor of the Merger and have delivered proxies to
Parent in this regard. Under the Company's Restated Certificate of
Incorporation, Class C Shares are convertible into Shares at any time on a
one-for-one basis and are automatically converted into Shares on a one-for-one
basis if transferred to an unaffiliated third party. The Shares and Class C
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Shares generally vote together as a class, with the Shares having one vote per
share and the Series C Shares having ten votes per share. Collectively, the
Majority Stockholders own shares of Company Common Stock representing
approximately 52.6% of the outstanding Company Common Stock, approximately 48%
of the outstanding Company Common Stock on a fully-diluted basis and
approximately 88% of the voting power of all outstanding Company Common Stock.
The Company has represented and warranted to Parent and Purchaser that, as
of February 25, 2000, 10,083,485 Shares and 5,126,163 Class C Shares,
respectively, were issued and outstanding, 5,126,163 Shares were reserved for
issuance upon conversion of outstanding Class C Shares and 1,487,025 Shares were
reserved for issuance upon exercise of outstanding options under the Company's
1996 Long-Term Incentive Plan and 1996 Non-Employee Directors Equity Incentive
Program (collectively, the 'OPTION PLANS'). Based on this information, Purchaser
believes that the Minimum Condition will be satisfied if a minimum of 8,348,337
Shares are validly tendered and not withdrawn prior to the Expiration Date.
Parent and Purchaser do not currently own any Shares.
The Schedule 14D-9 indicates that, to the best of the Company's knowledge,
all of the Company's executive officers and directors who own Shares and/or
Class C Shares, including those party to the Stockholders Agreement, presently
intend to tender all of their Shares (including Shares to be issued upon
conversion of their Class C Shares) pursuant to the Offer. As indicated above,
the obligation of the parties to the Stockholders Agreement to convert their
Class C Shares and tender their Shares pursuant to the Offer is subject to at
least an additional 565,857 Shares being validly tendered (and not withdrawn )
pursuant to the Offer.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger by the
requisite vote or consent of the holders of Shares and Class C Shares. Under the
Delaware General Corporation Law (the 'DGCL') and the Company's Restated
Certificate of Incorporation, the stockholder vote necessary to approve the
Merger will be the affirmative vote of the holders of Shares and Series C Shares
representing at least a majority of the voting power of all outstanding Shares
and Series C Shares voting together as a single class. As indicated above, the
parties to the Stockholders Agreement have agreed to vote all their Shares and
Series C Shares in favor of the Merger (if they have not previously been
required to convert their Series C Shares and tender their Shares pursuant to
the Offer) and have delivered proxies in this regard to Parent. If Purchaser
acquires at least 90% of the outstanding Shares pursuant to the Offer or
otherwise and all Series C Shares have been converted into Shares, Purchaser
would be able to effect the Merger pursuant to the 'short-form' merger
provisions of Section 253 of the DGCL, without prior notice to, or any action
by, any other Stockholder. In such event, Purchaser intends to effect the Merger
as promptly as practicable following the purchase of Shares in the Offer. See
Section 11.
The Company has represented in the Merger Agreement that it does not have
any stockholder rights plan or 'poison pill.' The Company also has represented
in the Merger Agreement that the approval by the Company's Board of the Merger
and the Merger Agreement is sufficient to render the provisions of Section 203
of the DGCL inapplicable to the Merger Agreement, the Offer, the Stockholders
Agreement or the other transactions contemplated thereby. See Section 15.
The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser will pay all charges and expenses of Lazard
Freres & Co. LLC ('LAZARD FRERES'), as Dealer Manager (in such capacity, the
'DEALER MANAGER'), Chase Mellon Shareholder Services, L.L.C., as Depositary (the
'DEPOSITARY'), and Innisfree M&A Incorporated, as Information Agent (the
'INFORMATION AGENT'), incurred in connection with the Offer. See Section 16.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
satisfaction or waiver of the conditions of the Offer prior to the Expiration
Date (including, if the Offer is extended or amended
2
<PAGE>
as required or permitted by the Merger Agreement, the terms and conditions of
any such extension or amendment), the Purchaser will accept for payment and
thereby purchase all Shares validly tendered and not withdrawn in accordance
with the procedures described in Section 4 on or prior to the Expiration Date
(as hereinafter defined). The term 'EXPIRATION DATE' means 12:00 midnight, New
York City time, on Tuesday, April 4, 2000, unless and until the Purchaser, in
accordance with the Merger Agreement, shall have extended the period of time for
which the Offer is open, in which event the term 'Expiration Date' shall mean
the time and date at which the Offer, as so extended by the Purchaser, shall
expire. In the Merger Agreement, Parent and Purchaser have agreed that if any of
the conditions to the offer are not satisfied, subject to the right of the
parties to terminate the Merger Agreement and to Parent's right to cause the
Company to proceed with the Merger (the exercise of such right by Parent
referred to as the 'MERGER TRIGGER'), Purchaser shall extend the Offer for
additional periods of not more than ten business days each until the earlier of
July 31, 2000, or such time as each such condition has been satisfied or waived.
In addition, Purchaser may extend the Offer (i) on one or more occasions for an
aggregate period of not more than ten business days if any conditions to the
Offer have not been satisfied or waived, or if the Minimum Condition has been
satisfied but less than 90% of the then outstanding Shares have been validly
tendered and not properly withdrawn or (ii) for such period as may be required
by the Commission or applicable law.
Any such extension will be followed as promptly as practicable by public
announcement thereof, to be made no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Securities Exchange Act of 1934, as amended (the 'EXCHANGE ACT'),
which require that material changes be promptly disseminated to holders of
Shares), Purchaser shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a press release
to the Dow Jones News Service.
If, in accordance with the Merger Agreement, Purchaser makes a material
change in the terms of the Offer or waives a material condition to the Offer,
Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, will depend upon the facts and circumstances, including the
materiality, of the changes. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any dealer's soliciting fee, a minimum ten business day period from the date
of such change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if prior to the Expiration Date, Purchaser (with the
approval of the Company as required by the Merger Agreement) decreases the
number of Shares being sought, or increases or decreases the consideration
offered pursuant to the Offer, and if the Offer is scheduled to expire at any
time earlier than the period ending on the tenth business day from the date that
notice of such increase or decrease is first published, sent or given to holders
of Shares, the Offer will be extended at least until the expiration of such ten
business day period. For purposes of the Offer, a 'business day' means any day
other than a Saturday, Sunday or a federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
In the Merger Agreement, the Company has agreed to furnish Purchaser with
the Company's stockholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase and the
related Letter of Transmittal and, if required, other relevant materials will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended in
accordance with the Merger Agreement, the terms and conditions of the Offer as
so extended or amended), Purchaser will purchase, by accepting for payment, and
will pay for, all Shares validly tendered and not withdrawn (as permitted by
Section 4)
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<PAGE>
prior to the Expiration Date, promptly after the Expiration Date, if the
conditions to the Offer described in Section 14 have each been satisfied or
waived, including without limitation the expiration or termination of the
waiting periods applicable to the acquisition of Shares pursuant to the Offer
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
'HSR ACT'), and the South African Competition Act (as defined in Section 15). In
addition, subject to applicable rules of the Commission, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory or governmental approvals specified in
Section 15.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) share
certificates for such Shares ('SHARE CERTIFICATES') or confirmation (a
'BOOK-ENTRY CONFIRMATION') of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company (the 'BOOK-ENTRY TRANSFER
FACILITY'), pursuant to the procedures described in Section 3, (ii) the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message (as defined below)
in connection with a book-entry transfer, and (iii) any other documents required
by the Letter of Transmittal.
The term 'AGENT'S MESSAGE' means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of the Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment pursuant to the Offer. In all cases, upon
the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering Stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
validly tendering Stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER BY REASON OF ANY DELAY IN MAKING
SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering Stockholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures described in Section 3,
such Shares will be credited to an account maintained within the Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration
offered to holders of Shares pursuant to the Offer, such increased consideration
will be paid to all holders of Shares that are purchased pursuant to the Offer,
whether or not such Shares were tendered prior to such increase in
consideration.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of Purchaser's subsidiaries or affiliates the right
to purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve Purchaser of its obligations
under the Offer or prejudice the rights of tendering Stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tender of Shares. Except as set forth below, in order for Shares to be
validly tendered pursuant to the Offer, (i) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses specified
on the back cover of this Offer to Purchase
4
<PAGE>
on or prior to the Expiration Date and either Share Certificates representing
tendered Shares must be received by the Depositary, or such Shares must be
tendered pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case on or
prior to the Expiration Date, or (ii) the guaranteed delivery procedures
described below must be complied with.
The method of delivery of Share Certificates and the Letter of Transmittal
and all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the election and sole risk of the tendering
Stockholder. The Shares will be deemed delivered only when actually received by
the Depositary (including, in the case of a book-entry transfer, by Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
the Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents must, in any case, be transmitted to and received
by the Depositary at one of its addresses specified on the back cover of this
Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure described below must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program, the New York Stock Exchange ('NYSE')
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an 'ELIGIBLE INSTITUTION'), unless the Shares tendered thereby are
tendered (i) by a registered holder of Shares who has not completed either the
box labeled 'Special Payment Instructions' or the box labeled 'Special Delivery
Instructions' on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the Share Certificates,
with the signatures on the Share Certificates or stock powers guaranteed by an
Eligible Institution as provided in the Letter of Transmittal. See Instructions
1 and 5 of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a Stockholder desires to tender Shares pursuant to
the Offer and such Stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or the procedures for book-entry transfer
cannot be completed on a timely basis, such Shares may nevertheless be tendered
if all of the following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, on or prior to the Expiration
Date; and
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<PAGE>
(iii) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the Letter
of Transmittal are received by the Depositary, within three NYSE trading
days after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee by
an Eligible Institution in the form contained in such Notice of Guaranteed
Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time, and will depend upon when Share Certificates or Book-Entry Confirmations
of such Shares are received into the Depositary's account at the Book-Entry
Transfer Facility.
Backup Federal Tax Withholding. Under the federal income tax laws, the
Depositary will be required to withhold 31% of the amount of any payments made
to certain Stockholders pursuant to the Offer. To prevent backup federal income
tax withholding on payments made to certain Stockholders with respect to the
purchase price of Shares purchased pursuant to the Offer, each such Stockholder
must provide the Depositary with his correct taxpayer identification number and
certify, under penalty of perjury, that he is not subject to backup federal
income tax withholding by completing the Substitute Form W-9 included in the
Letter of Transmittal. See Instruction 10 of the Letter of Transmittal.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
Stockholder irrevocably appoints Purchaser and any Purchaser designee, and each
of them, as such Stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such Stockholder's rights with respect to the Shares tendered by such
Stockholder and accepted for payment by Purchaser and with respect to any and
all other Shares and other securities or rights issued or issuable in respect of
such Shares on or after the date of this Offer to Purchase. All such powers of
attorney and proxies shall be considered irrevocable and coupled with an
interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon payment
by Purchaser for the Shares, all powers of attorney and proxies given by such
stockholder with respect to such Shares and such other securities or rights
prior to such payment will be revoked, without further action, and no subsequent
powers of attorney and proxies may be given by such Stockholder (and, if given,
will not be deemed effective). The designees of Purchaser will, with respect to
the Shares for which such appointment is effective, be empowered to exercise all
voting and other rights of such Stockholder as they in their sole discretion may
deem proper at any annual or special meeting of the Stockholders, or any
adjournment or postponement of such meeting. Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the payment for such Shares, Purchaser or its designee must be able to
exercise full voting, consent and other rights with respect to such Shares and
other securities, including voting at any meeting of the Stockholders.
Determination of Validity. All questions as to the form of documents and
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by Purchaser, in its discretion, whose
determination shall be final and binding on all parties. Purchaser reserves the
right to reject any or all tenders determined by it not to be in proper form or
the acceptance of or payment for which may, in the opinion of Purchaser's
counsel, be unlawful. Purchaser also reserves the right (subject to the
provisions of the Merger Agreement) to waive any of the conditions of the Offer
or any defect or irregularity in any tender of Shares of any particular
Stockholder whether or not similar defects or irregularities are waived in the
case of other Stockholders.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed
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<PAGE>
to have been validly made until all defects and irregularities with respect to
such tender have been cured or waived. None of Purchaser, Parent or any of their
affiliates or assigns, if any, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering Stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore accepted for payment as provided herein, may also
be withdrawn at any time after May 6, 2000.
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or Purchaser is unable to accept for payment
or pay for Shares tendered pursuant to the Offer, then, without prejudice to
Purchaser's rights set forth herein, the Depositary may, nevertheless, on behalf
of Purchaser, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering Stockholder is entitled to and duly exercises
withdrawal rights as described in this Section 4. Any such delay will be by an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
specified on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn, and (if Share Certificates have
been tendered) the name of the registered holder of the Shares as set forth in
the Share Certificate, if different from that of the person who tendered such
Shares. If Share Certificates have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such certificates, the
tendering Stockholder must also submit the serial numbers shown on the
particular certificates evidencing the Shares to be withdrawn and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution,
except in the case of Shares tendered for the account of the Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer described in Section 3, the notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares, in which case a notice of withdrawal
will be effective if delivered to the Depositary by any method of delivery
described in the first sentence of this paragraph. Withdrawals of Shares may not
be rescinded. Any Shares properly withdrawn will be deemed not validly tendered
for purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding. None of Purchaser, Parent or any
of their affiliates or assigns, if any, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. The following is a general
summary of certain U.S. federal income tax consequences of the Offer and the
Merger relevant to a beneficial holder of Shares whose Shares are tendered and
accepted for payment pursuant to the Offer or whose Shares are converted to cash
in the Merger (a 'HOLDER'). The discussion is based on the Internal Revenue Code
of 1986, as amended (the 'CODE'), regulations issued thereunder, judicial
decisions and administrative rulings, all of which are subject to change,
possibly with retroactive effect. The following does not address the U.S.
federal income tax consequences to all categories of Holders that may be subject
to special rules (e.g., holders who acquired their Shares pursuant to the
exercise of employee stock options or other compensation arrangements with the
Company, foreign holders, insurance companies, tax-exempt organizations, dealers
in securities and persons who have acquired the Shares as part of a straddle,
hedge, conversion transaction or other integrated investment), nor does it
address the federal income tax consequences to persons who do not hold the
Shares as 'capital assets' within the meaning of Section 1221 of the Code
(generally, property held for investment). Holders should consult their own
7
<PAGE>
tax advisors regarding the U.S. federal, state, local and foreign income and
other tax consequences of the Offer and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or has
Shares converted into the right to receive cash pursuant to the Merger will
recognize gain or loss for federal income tax purposes equal to the difference,
if any, between the amount of cash received and the Holder's adjusted tax basis
in the Shares sold pursuant to the Offer or converted into the right to receive
cash pursuant to the Merger. Gain or loss will be determined separately for each
block of Shares (i.e., Shares acquired at the same cost in a single transaction)
tendered pursuant to the Offer or converted into the right to receive cash
pursuant to the Merger. Such gain or loss will be long-term capital gain or loss
if the Holder has held the Shares for more than one (1) year at the time of the
consummation of the Offer or the Merger. Capital gains recognized by an
individual investor (or an estate or certain trusts) upon a disposition of a
Share that has been held for more than one year generally will be subject to a
maximum tax rate of 20% or, in the case of a Share that has been held for one
year or less, will be subject to tax at ordinary income rates. Certain
limitations apply to the use of capital losses.
Holders who receive cash pursuant to the exercise of appraisal rights with
respect to their Shares generally will be subject to the same treatment as that
described above for Holders who receive cash for Shares pursuant to the Offer
and Merger.
6. PRICE RANGE OF THE SHARES; DIVIDENDS. According to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 (the 'COMPANY'S
1998 ANNUAL REPORT'), the Shares are traded on the NYSE under the symbol 'CIC.'
The following table presents, for the periods indicated, the high and low sale
prices for the Shares as reported by Bloomberg L.P.:
<TABLE>
<CAPTION>
SHARES
------------------
HIGH LOW
---- ---
<S> <C> <C>
1998
First Quarter.............................................. $10.1250 $5.8750
Second Quarter............................................. 10.7500 5.7500
Third Quarter.............................................. 7.8125 1.5000
Fourth Quarter............................................. 5.0000 1.8750
1999
First Quarter.............................................. 5.1250 2.7500
Second Quarter............................................. 4.3750 2.5000
Third Quarter.............................................. 3.5000 2.5000
Fourth Quarter............................................. 4.3750 2.6250
2000
First Quarter (through March 7, 2000)...................... 5.0000 2.8750
</TABLE>
On February 25, 2000, the last full day of trading prior to the announcement
of the Merger, the last sales price for the Shares as reported by Bloomberg L.P.
was $3.75 per Share. On March 7, 2000, the last full day of trading prior to the
commencement of the Offer, the last reported sales price for the Shares as
reported by Bloomberg L.P. was $5.00 per Share. STOCKHOLDERS ARE URGED TO OBTAIN
A CURRENT MARKET QUOTATION FOR THE SHARES.
According to the Company's 1998 Annual Report and subsequent reports filed
with the Commission pursuant to the Exchange Act, the Company did not declare or
pay any cash dividends with respect to the Shares during any of the periods
indicated in the table. In the Company's 1998 Annual Report, the Company stated
its expectation that earnings would be retained in the future and that no cash
dividends would be paid to its stockholders for the foreseeable future. Under
the terms of the Merger Agreement, the Company is not permitted to declare or
pay dividends with respect to the Shares without the prior written consent of
Parent, and Parent does not intend to consent to any such declaration or
payment.
8
<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE
LISTINGS; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
Effect of the Offer on the Market for the Shares. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public. The purchase of Shares pursuant to the
Offer can also be expected to reduce the number of holders of Shares.
NYSE Quotation. The Shares are traded through the NYSE. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the requirements of the NYSE for continued listing and may, therefore, be
delisted from the exchange. According to the NYSE's published guidelines, the
NYSE would consider delisting the Shares if, among other things, the number of
publicly-held Shares (excluding Shares held by officers, directors, their
immediate families and other concentrated holdings of 10% or more) were less
than 600,000, there were less than 1,200 holders of at least 100 shares or the
aggregate market value of the publicly-held Shares were less than $5 million.
The Company has advised that, as of February 25, 2000, there were 10,083,485
Shares outstanding, 13,245 Shares held in the Company's treasury, and
approximately 123 holders of record of such Shares. If, as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of the NYSE for continued listing and the listing of Shares is
discontinued, the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares (which Purchaser intends to cause the
Company to seek if it acquires control of the Company and the Shares no longer
meet the NYSE listing requirements), it is possible that the Shares would trade
on another securities exchange or in the over-the-counter market and that price
quotations for the Shares would be reported by such exchange or through the
National Association of Securities Dealers Automated Quotation System or other
sources. The extent of the public market for the Shares and availability of such
quotations would, however, depend upon such factors as the number of holders
and/or the aggregate market value of the publicly-held Shares at such time, the
interest in maintaining a market in the Shares on the part of securities firms,
the possible termination of registration of the Shares under the Exchange Act
and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application by the Company to the
Commission if the Shares are not listed on a 'national securities exchange' and
there are fewer than 300 record holders of Shares. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its Stockholders and the Commission
and would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) and the requirements of furnishing a
proxy statement in connection with stockholders' meetings pursuant to
Section 14(a), no longer applicable to the Company. If the Shares are no longer
registered under the Exchange Act, the requirements of Rule 13e-3 under the
Exchange Act with respect to 'going private' transactions would no longer be
applicable to the Company. Furthermore, the ability of 'affiliates' of the
Company and persons holding 'restricted securities' of the Company to dispose of
such securities pursuant to Rule 144 promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. If, as a result of the purchase
of Shares pursuant to the Offer or the Merger, the Company is no longer required
to maintain registration of the Shares under the Exchange Act, the Purchaser
intends to cause the Company to apply for termination of such registration. See
Section 11.
Margin Regulations. The Shares are currently 'margin securities' under the
regulations of the Board of Governors of the Federal Reserve System (the
'FEDERAL RESERVE BOARD'), which have the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares for the purpose of
buying, carrying or trading in securities ('PURPOSE LOANS'). Depending upon
factors such as the number of record holders of the Shares and the number and
market value of publicly held Shares, following the purchase of Shares pursuant
to the Offer, the Shares might no longer constitute 'margin securities' for
purposes of the Federal Reserve Board's margin regulations and, therefore, could
no longer be used as collateral for Purpose Loans made by brokers. In addition,
if registration of the Shares under the Exchange Act is terminated, the Shares
will no longer constitute 'margin securities.'
9
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY. According to the Company's
1998 Annual Report, the Company is a Delaware corporation with its principal
executive offices located at 64 Ross Road, Savannah Industrial Park, Savannah,
Georgia 31405 and its telephone number is (912) 651-3400.
According to the Company's 1998 Annual Report, the Company believes that it
is one of the leading global manufacturers and marketers of ethnic hair care
products for people of color. The Company' flagship brand, Dark & Lovely, is the
most widely recognized ethnic brand name in the United States retail ethnic hair
care market. The Company currently sells over 100 different products
specifically formulated to address the unique physiological characteristics of
people of color under seventeen principal brand names, including Dark & Lovely,
Excelle, Beautiful Beginnings, Dark & Natural, Magic, Let's Jam, Gentle
Treatment, Ultra Sheeen, Sta-Sof-Fro, Posner, Ultra Star, Moxie, Soft `n Free,
Classy Curl, Curly Perm, Afro Sheen, and Dermablend. The majority of the
Company's net sales have historically been derived from hair relaxers and
texturizers, which are used to chemically treat and straighten hair, hair color,
men's depilatory products and hair care maintenance products, primarily for
people of color. The Company's hair care products are specifically formulated to
address the unique physiological characteristics of hair of persons of African
descent, which typically include curliness and dryness.
According to the Company's 1998 Annual Report, in May 1998 the Company sold
29.1 million of its shares of Carson Holdings Limited ('CARSON SOUTH AFRICA'),
and Carson South Africa issued an additional 10.25 million shares, as a result
of which the Company indirectly owns approximately 52.5% of the stock of Carson
South Africa.
Selected Financial Information. Presented below is certain consolidated
financial information with respect to the Company, excerpted or derived from the
Company's 1998 Annual Report and its Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, each as filed with the Commission pursuant to
the Exchange Act. More comprehensive financial information is included in such
reports and in other documents filed by the Company with the Commission. The
following summary is qualified in its entirety by reference to such reports and
other documents and all of the financial information (including any related
notes) contained therein. Such reports, documents and financial information may
be inspected and copies may be obtained from the Commission in the manner
described below.
10
<PAGE>
CARSON, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED DECEMBER 31,
SEPTEMBER 30, -------------------
1999 1998 1997
---- ---- ----
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Profits:
Net sales.............................................. $130,730 $150,706 $109,631
Cost of sales.......................................... 62,285 84,509 50,510
-------- -------- --------
Gross Profit....................................... 68,445 66,197 59,121
Marketing and selling expenses............................. 34,176 42,692 27,007
AM Cosmetics sales commissions............................. -- 1,452 1,151
General and administrative expenses........................ 20,453 31,196 18,344
General and administrative -- fees paid to Morningside..... 262 350 370
Loss on sale of business................................... -- 13,994 --
Restructuring charges...................................... 500 5,751 --
Incentive compensation, directors and management........... -- -- --
-------- -------- --------
Operating expenses................................. 55,391 95,435 46,872
Other operating income-cumulative effect of change in
accounting for subsidiary income......................... -- 890 --
-------- -------- --------
Operating income (loss)............................ 13,054 (28,348) 12,249
Gain on sale of subsidiary stock........................... -- 49,140 --
Interest expense........................................... (13,143) (13,649) (6,444)
Loss on write-off of investment............................ -- (3,768) --
Other income, net.......................................... 2,361 3,383 780
Other income, AM Cosmetics management fee and dividend..... -- 223 900
-------- -------- --------
Income before income taxes, minority interest and
extraordinary items...................................... 2,272 6,981 7,485
Provision for income taxes................................. (1,731) (4,299) (2,779)
-------- -------- --------
Income (loss) before minority interest and extraordinary
items.................................................... 541 2,682 4,706
Minority interest in earnings of subsidiary................ (1,937) (2,718) (952)
-------- -------- --------
Income (loss) before extraordinary items................... (1,396) (36) 3,754
Extraordinary items, net of income taxes................... -- 127 (2,086)
-------- -------- --------
Net income (loss).................................. $ (1,396) $ 91 $ 1,668
-------- -------- --------
-------- -------- --------
Basic and diluted income (loss) per common share:
Before extraordinary items............................. $ (0.09) $ 0.00 $ 0.25
Extraordinary item, net of income taxes................ -- 0.01 (0.14)
-------- -------- --------
Net income (loss).................................. $ (0.09) $ 0.01 $ 0.11
-------- -------- --------
-------- -------- --------
Weighted average common shares outstanding................. 15,130 14,986 15,003
-------- -------- --------
-------- -------- --------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------------
1999 1998 1997
---- ---- ----
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
BALANCE SHEET DATA
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 20,606 $ 28,706 $ 14,043
Accounts receivable less allowances of $5,811 (1999),
$6,457 (1998) and $3,881 (1997)...................... 41,614 38,953 28,148
Inventories............................................ 27,212 22,825 24,861
Restricted cash........................................ -- 4,500 --
Other current assets................................... 1,179 669 832
-------- -------- --------
Total current assets............................... 90,611 95,653 67,884
Property, plant and equipment, net......................... 38,025 35,765 22,202
Investment in AM Cosmetics................................. -- -- 3,587
Intangibles, net of accumulated amortization of $9,553
(1999) $6,174 (1998) and $3,737 (1997)................... 126,410 129,183 100,385
Other assets............................................... 6,689 6,862 7,366
-------- -------- --------
Total assets....................................... $261,735 $267,463 $201,424
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 14,711 $ 12,584 $ 8,567
Due for A&J Cosmetics.................................. -- 6,355 5,416
Accrued expenses....................................... 15,315 19,306 7,413
Income taxes payable................................... 1,220 2,508 1,544
Current maturities of long-term debt................... -- 126 --
-------- -------- --------
Total current liabilities.......................... 31,246 40,879 22,940
Long-Term Debt............................................. 136,723 133,423 103,623
Due for A&J Cosmetics...................................... -- -- 4,088
Other liabilities.......................................... 3,299 3,345 1,742
Minority Interest in Subsidiary............................ 22,617 20,656 7,500
Commitments and contingencies.............................. -- -- --
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares
authorized, none outstanding......................... -- --
Common stock:
Class A, voting, $.01 par value, 150,000,000 shares
authorized, 9,977,550 shares issued as of
September 30, 1999 and 7,926,485 and 5,033,248
shares issued as of December 31, 1998 and 1997,
respectively......................................... 100 79 50
Class B, nonvoting, $.01 par value, 2,000,000 shares
authorized, 0 shares issued and outstanding as of
September 30, 1999 and 1,859,677 shares issued and
outstanding as of December 31, 1998 and 1997......... -- 19 19
Class C, voting, $.01 par value, 13,000,000 shares
authorized, 5,274,312, issued as of September 30,
1999, and 5,334,700 and 8,127,937 shares issued as of
December 31, 1998 and 1997, respectively............. 53 53 81
Paid-in capital............................................ 1,526 80,970 69,022
Accumulated deficit........................................ (5,316) (3,920) (4,011)
Accumulated other comprehensive losses..................... (6,938) (6,495) (2,170)
Notes receivable from shareholders, net of discount........ (1,238) (1,209) (1,353)
Treasury stock, 13,245 shares of Class A common stock as of
September 30, 1999, December 31, 1998 and 1997 and 28,969
shares of Class C common stock as of September 30, 1999
and December 31, 1998.................................... (337) (337) (107)
-------- -------- --------
Total stockholders' equity......................... 67,850 69,160 61,531
-------- -------- --------
Total liabilities and stockholders' equity................. $261,735 $267,463 $201,424
-------- -------- --------
-------- -------- --------
</TABLE>
12
<PAGE>
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. This information included
profit and loss statements which projected for the Company and its subsidiaries,
on a consoldiated basis, (i) for the fiscal year ending December 31, 2000, net
sales of approximately $210.59 million and operating income of approximately
$32.353 million, and (ii) for the fiscal year ending December 31, 1999, net
sales of approximately $173.095 million and operating income of approximately
$17.012 million.
The information in the preceding paragraph was prepared by the Company
solely for internal use and not for publication or with a view to complying with
the published guidelines of the Commission regarding projections or with the
guidelines established by the American Institute of Certified Public Accountants
and is included in this Offer to Purchase only because it was furnished to
Parent. The foregoing information is 'forward-looking' and inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, including industry performance, general business and
economic conditions, changing competition, adverse changes in applicable laws,
regulations or rules governing environmental, tax or accounting matters and
other matters. The Company has advised Parent that although the Company believes
the assumptions used in preparing this information were reasonable when made,
such assumptions are inherently subject to significant uncertainties and
contingencies which are impossible to predict and beyond the Company's control.
Accordingly, there can be no assurance, and no representation or warranty is
made, that actual results will not vary materially from those reflected in the
forecasts described above. The inclusion of this information should not be
regarded as an indication that Parent, Purchaser, the Company or anyone who
received this information considered it a reliable prediction of future events,
and this information should not be relied on as such. None of Parent, Purchaser
nor Parent's financial advisor, Lazard Freres, assumes any responsibility for
the validity, reasonableness, accuracy or completeness of the projections, and
the Company has made no representation to Parent or Purchaser regarding the
forecasts described above. The forecasts have not been adjusted to reflect the
effects of the Offer and the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such information also should be obtainable by mail, upon payment of
the Commission's customary charges, by writing to the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a website on the internet at http://www.sec.gov that contains reports,
proxy statements and other information relating to the Company which have been
filed via the Commission's EDGAR System.
9. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT AND CERTAIN ENTITIES
DIRECTLY OR INDIRECTLY CONTROLLING PARENT. Purchaser, a Delaware corporation,
was organized to acquire all of the outstanding Shares pursuant to the Offer and
the Merger and has not conducted any unrelated activities since its
organization. All of the outstanding capital stock of Purchaser is owned
directly by Parent, a wholly-owned subsidiary of L'Oreal S.A., a corporation
(societe anonyme) organized under the laws of the Republic of France
('L'OREAL'). Parent is L'Oreal's principal operating subsidiary in North
America. The principal executive offices of Purchaser and Parent are located at
575 Fifth Avenue, New York, New York 10017.
L'Oreal, based in Paris, is the world's largest cosmetics company, with 1999
consolidated sales of Euro 10.7 billion. Operating in over 150 countries,
L'Oreal Group companies manufacture and market such well known brands as
L'Oreal, Lancome, Maybelline, Laboratoires Garnier, Redken 5th Ave NYC, Soft
Sheen, Biotherm, Helena Rubinstein and the fragrances of Ralph Lauren, Giorgio
Armani and Paloma Picasso. In 1998, Parent acquired Soft Sheen Products, Inc.
('SOFT SHEEN'), expanding L'Oreal's
13
<PAGE>
worldwide effort to address the special hair needs of ethnic consumers. The
principal executive offices of L'Oreal are located at 41, rue Martre, 92117
Clichy, France. Gesparal S.A., a corporation (societe anonyme) organized under
the laws of the Republic of France ('GESPARAL'), holds 53.7% of L'Oreal's
capital and 70.57% of the voting rights of its shares. The remaining shares of
Parent are publicly held and listed on the Paris Stock Exchange. Gesparal is a
holding company whose principal executive offices are located at 41, rue Martre,
92117 Clichy, France. Madame Liliane Bettencourt and her family hold 51% of
Gesparal's capital and voting rights, with the remaining capital and voting
rights held by Nestle S.A., an international food company headquartered in
Switzerland.
Except as described in this Offer to Purchase, during the last five years,
none of Purchaser, Parent, L'Oreal, Gesparal or, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I hereto (i) has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, Federal or state securities
laws or finding any violation of such laws. The name, business address, present
principal occupation or employment, five year employment history and citizenship
of each director and executive officer of Purchaser, Parent, L'Oreal and
Gesparal are set forth in Schedule I hereto.
Except as described in this Offer to Purchase, (i) none of Gesparal,
L'Oreal, Parent, Purchaser or, to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I hereto or any associate or
majority-owned subsidiary of any such person, beneficially owns or has a right
to acquire any equity security of the Company and (ii) none of Gesparal,
L'Oreal, Parent, Purchaser or, to the best knowledge of Parent and Purchaser,
any of the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days. On
February 7, 2000, Roger Dolden, an executive officer of Parent and Purchaser,
sold all 500 shares owned by him (which had been acquired in early 1997 at an
average cost of $11.84 per Share) for $3 7/8 per Share (a total of $1,937) in a
transaction on the NYSE.
Except as described in this Offer to Purchase, (i) none of Gesparal,
L'Oreal, Parent, Purchaser or, to the best knowledge of Parent and Purchaser,
any of the persons listed in Schedule I has any contract, arrangement,
understanding or relationship (whether or not legally enforceable) with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer of the voting of any such securities, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or the giving or withholding of proxies and (ii) there have been no contacts,
negotiations or transactions between Gesparal, L'Oreal, Parent, and Purchaser or
any of their respective subsidiaries or, to the best knowledge of Parent and
Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and
the Company or any of its directors, officers or affiliates, on the other hand,
that are required to be disclosed pursuant to the rules and regulations of the
Commission.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In late July 1997,
at the initiation of Parent, representatives of Parent and Parent's financial
advisor, Lazard Freres, met with two members of the Executive Committee of the
Company's Board of Directors and a former financial advisor to the Company to
explore an acquisition of the Company. On July 24, 1997, in preparation for this
meeting, Parent entered into a confidentiality agreement for the purpose of
receiving non-public information with respect to the Company; the agreement also
contained two-year standstill provisions.
In autumn 1997, Parent, through Lazard Freres, conveyed to the Company's
former financial advisor that Parent was not interested in pursuing an
acquisition of the Company.
In February 1999, a representative of PaineWebber contacted a representative
of Parent to suggest that Parent reconsider acquiring the Company. On March 10,
1999, Parent entered into an agreement with the Company in which Parent
reaffirmed its confidentiality and standstill obligations (collectively with the
July 24, 1997 agreement, the 'Confidentiality Agreement'). Representatives of
the Company and PaineWebber made a management presentation to representatives of
Parent and Lazard Freres, who then conducted certain follow-up due diligence.
Shortly after the meeting, Lazard Freres conveyed to PaineWebber that Parent was
not interested in pursuing an acquisition of the Company.
14
<PAGE>
In late summer 1999, a representative of PaineWebber contacted a
representative of Parent to suggest that Parent again consider acquiring the
Company.
In September and early October 1999, representatives of Parent and Lazard
Freres had several meetings and discussions with representatives of the Company
and PaineWebber, respectively. During one of these meetings, the Company made an
updated management presentation to Parent.
From late October through early December, representatives of Parent and
Lazard Freres conducted due diligence regarding the Company, including
discussions with the Company's senior management and, in the case of Parent,
plant visits.
On January 4, 2000, PaineWebber sent a letter to Parent requesting a
non-binding indication of interest for the acquisition of the Company. The
Company's legal counsel, Milbank, Tweed, Hadley & McCloy LLP, provided Parent
with a proposed form of Merger Agreement and a proposed form of Stockholders
Agreement indicating that holders of a portion of the Series C Shares
representing a majority of the voting power of all Company Common Stock would
agree to support the transaction.
On January 7, 2000, Parent, through Lazard Freres, advised representatives
of PaineWebber that Parent was chiefly interested in acquiring the Company's
international operations. PaineWebber responded that the Company's strong
preference was to seek to sell the entire company.
On January 14, 2000, Parent, through Lazard Freres, submitted a written
non-binding indication of interest in acquiring the entire Company at a price of
$5.00 per Share. Parent indicated that its proposal was subject to the
satisfactory completion of due diligence. Parent also indicated that it expected
the Company and its affiliates would negotiate exclusively with Parent and cease
soliciting other bids until March 15, 2000 and, that during this period, Parent
expected to complete due diligence, negotiate a definitive Merger Agreement and
Stockholders Agreement and secure an acceptable arrangement for the continuation
of the Company's top management. Lazard Freres subsequently confirmed to
PaineWebber that Parent's bid was subject to reduction to reflect the estimated
cost, above 101% of principal amount, of retiring the Company's senior
subordinated bonds.
On January 21, 2000, PaineWebber sent a letter to Parent requesting that
Parent submit a firm and final offer to acquire the Company by January 27, 2000.
In response, Parent, through Lazard Freres, orally reaffirmed its $5.00 per
Share bid and indicated the bid would not be subject to reduction to reflect the
estimated bond retirement cost.
On or about January 31, 2000, Parent, through its legal counsel, Weil,
Gotshal & Manges LLP, furnished to the Company a mark-up of the Company's
proposed forms of Merger Agreement and Stockholders Agreement. Among the changes
requested by Parent were (i) adding the Minimum Condition to the Offer,
(ii) requiring that all holders of Series C Shares enter into the Stockholders
Agreement, (iii) providing Parent with the Merger Trigger in the event the
Minimum Condition was not met and (iv) expanding the definition of 'material
adverse change'.
On February 1, 2000, PaineWebber indicated to Parent, through Lazard Freres,
that the Company would be willing to enter into a one-week exclusivity agreement
if Parent increased its bid to $5.25 per Share and withdrew its request to
expand the definition of 'material adverse change'.
Also on February 1, 2000, Parent and its legal counsel began a series of
discussions with the Company and its legal counsel to negotiate the terms and
conditions of the Merger Agreement and the Stockholders Agreement, other than
price.
On February 2, 2000, Parent agreed to increase its bid to $5.25 per Share,
subject to confirmatory due diligence, as long as the Company agreed to expand
the 'material adverse change' definition and the Company entered into an
exclusivity agreement through February 16, 2000.
On February 3, 2000, Parent, the Company and DNL Partners Limited
Partnership ('DNL'), the Company's largest stockholder, entered into an
exclusivity agreement (the 'Exclusivity Agreement'), which provided that,
through midnight on February 14, 2000, the Company would afford Parent and its
affiliates reasonable access to complete their due diligence review of the
Company and the Company would negotiate exclusively with Parent and not solicit
other bids.
During this period, representatives of Parent and its affiliates conducted
additional due diligence regarding the Company. In addition, Parent and Malcolm
Yesner, the Company's chief executive officer,
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reached agreement on the terms of an employment agreement with Parent (the
'YESNER EMPLOYMENT AGREEMENT'), to be effective upon consummation of the Offer,
under which Mr. Yesner would serve as president of the Company's U.S. operating
subsidiary, Carson Products, for an initial term of two years, subject to
renewal. (Under his existing employment agreement with the Company, Mr. Yesner
would be entitled to terminate his employment agreement immediately upon the
change of control and receive severance pay and non-competition payments.)
L'Oreal also reached agreements to ensure continuity of management at Carson
South Africa.
As a result of its continuing due diligence, Parent, through its legal
counsel, conveyed to the Company that it would be a condition to Parent entering
into the Merger Agreement that the Company settle all disputes with a former
affiliate, AM Cosmetics Corp. ('AM'), including pending litigation and
arbitration proceedings, on terms satisfactory to Parent, and that certain
directors and/or officers of the Company who had previously been directors
and/or officers of AM release the Company from potential indemnification
obligations related to their roles with AM (the 'INDEMNITY RELEASES'). Parent
indicated to the Company that the financial terms of a draft settlement
agreement between the Company and AM would be acceptable to it. Under this
draft, the Company would have paid AM $650,000 and surrendered shares of AM
preferred stock held by the Company. On February 18, 2000, the Company, through
its legal counsel, advised Parent that AM had indicated it was unwilling to
grant releases in form and scope acceptable to the Company and Parent unless the
cash settlement payment was increased to $2,000,000. The Company acknowledged to
Parent that, to the extent the Company bore the proposed $1,350,000 increase in
the cash settlement payment, Parent's acquisition cost would be effectively
increased. The Company also acknowledged to Parent that, based on its prior
negotiations with Parent, it was aware that Parent would be unwilling to bear
any of such increase. Finally, the Company advised Parent that, to induce Parent
to proceed with the transaction, DNL was willing to bear a portion of the
increase. After discussion among their financial advisors, the Company, Parent
and DNL agreed that DNL would directly contribute $531,492 of the increased
settlement payment out of the proceeds it would receive pursuant to the first to
occur of the Offer or the Merger and the Offer price would be reduced by $0.05
per Share, an amount corresponding to the remaining $818,508 of the increased
settlement payment (approximately $150,773 of which would be effectively borne
by DNL as the holder of approximately 18.4% of the Company Common Stock on a
fully diluted basis excluding out-of-the-money options).
Between February 18, 2000 and February 25, 2000, the Company negotiated the
terms of the Settlement Agreement, including the related releases, with AM.
Parent indicated that it would not be willing to proceed with the transaction
unless the releases became unconditional, and all pending litigation and
arbitration proceedings were dismissed with prejudice, immediately upon signing
and any portion of the cash settlement payment not paid upon signing would be
deferred until the earlier of the consummation of the Merger or July 31, 2000,
the scheduled termination date of the Merger Agreement. These provisions
ultimately were incorporated into the Settlement Agreement.
On Friday, February 25, 2000, the Company completed negotiating the
Settlement Agreement, releases and related documentation with AM in a manner
satisfactory to the Company and Parent and Parent and the Company completed
negotiating the Merger Agreement and Stockholders Agreement. Later that evening,
the Settlement Agreement, the Merger Agreement, the Stockholders Agreement, the
Yesner Employment Agreement and the Indemnity Releases were executed by all
relevant parties (including, in the case of the Stockholders Agreement, all
holders of Series C Shares).
The Merger was publicly announced prior to the opening of trading on the
NYSE on Monday, February 28, 2000.
On March 8, 2000, Purchaser commenced the Offer.
11. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT, THE STOCKHOLDERS AGREEMENT AND OTHER AGREEMENTS; OTHER MATTERS. The
purpose of the Offer and the Merger is to enable Purchaser to acquire control
of, and the entire equity interest in, the Company. The Offer is intended to
increase the likelihood that the Merger will be effected promptly. The purpose
of the Merger is to acquire all outstanding Shares not acquired pursuant to the
Offer or otherwise.
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Parent intends, as soon as possible after consummation of the Offer and in
accordance with the Merger Agreement, to obtain representation on the Company's
Board of Directors proportionate to its then Share ownership.
Parent and L'Oreal believe the acquisition of the Company will enable them
to build further on the significant progress achieved in the ethnic beauty
market following the acquisition of Soft Sheen in 1998. The acquisition is a
further strategic step to enhance the L'Oreal Group's position in ethnic
categories both in the United States and on a global basis, notably in the
African region, which accounts for approximately 25% of the Company's sales.
Upon successful completion of the Offer, Elebelle (PTY) Ltd., L'Oreal's
wholly-owned South African subsidiary, will make an offer equivalent to Rand
2.50 per share for the 47.5% minority interest in Carson South Africa, which is
listed on the Johannesburg Stock Exchange. The completion of this offer will be
subject to the approval of the South African Competition Commission.
Except as noted in this Offer to Purchase, Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of assets, involving the Company or any of its subsidiaries or any other
material changes in the Company's capitalization, dividend policy, corporate
structure or business.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement and
is qualified in its entirety by reference to the full text of the Merger
Agreement filed with the Commission as an exhibit to the Schedule TO and
incorporated herein by reference. The Merger Agreement may be examined, and
copies obtained, as described in Section 8 above.
The Offer. The Merger Agreement provides for the commencement of the Offer.
Purchaser may not make any changes in the terms and conditions of the Offer
which (i) decrease the amount per Share paid pursuant to the Offer, (ii) change
the form of consideration to be paid in the Offer, (iii) reduce the number of
Shares sought to be purchased in the Offer, (iv) impose conditions to the Offer
in addition to those included as part of the Merger Agreement, (v) extend the
expiration date of the Offer, except as permitted in the Merger Agreement, or
(vi) otherwise alter or amend any term of the Offer in any manner adverse to the
Stockholders.
The Merger Trigger. If at the then scheduled expiration date of the Offer,
the Minimum Condition has not been satisfied, Parent and Purchaser shall have
the right to terminate the Offer and, by written notice given within five
business days following termination (the 'ELECTION PERIOD'), require that they
and the Company comply with the provisions of the Merger Agreement regarding the
obtaining of Stockholder approval of the Merger as soon as practicable
thereafter. If Parent and Purchaser have not given such notice prior to the end
of the Election Period, then the Company shall have the right, by written notice
given within five business days after the end of the Election Period, to invoke
the Merger Trigger, in which case the Company, Parent and Purchaser shall comply
with such provisions as soon as practicable thereafter.
Board Representation. The Merger Agreement provides that, subject to the
applicable provisions of applicable law and the Company's certificate of
incorporation, promptly upon payment by Purchaser for Shares pursuant to the
Offer, and from time to time thereafter, (i) Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, as will
give Parent representation on the Board equal to the product of (x) the number
of directors on the Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (y) the percentage that the
aggregate voting power of such number of Shares so purchased bears to the
aggregate voting power of all shares of Company Common Stock then outstanding
(such number being, the 'BOARD PERCENTAGE'), and (ii) the Company will, upon
request by Parent, promptly satisfy the Board Percentage by (x) using reasonable
efforts to secure the resignations of such number of directors as is necessary
to enable Parent's designees to be elected or appointed to the Board, or failing
that, (y) increasing the size of the Board and will use its best efforts to
cause Parent's designees promptly to be so elected or appointed.
Following the election of any Parent's designees pursuant to the Merger
Agreement and prior to the Effective Time, any amendment of the Merger Agreement
or the certificate of incorporation or
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bylaws of the Company, any termination of the Merger Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser or waiver of any of the
Company's rights thereunder shall require the concurrence of a majority of the
directors of the Company then in office who neither are Parent's designees nor
are employees of the Company or any of its subsidiaries ('Independent
Directors'). The Merger Agreement provides that if there are fewer than two
Independent Directors, the remaining Independent Director shall designate a
person to fill such vacancy or, if there are no Independent Directors, the other
directors shall designate two persons to fill such vacancies.
Consideration to be paid in the Merger. The Merger Agreement provides that,
upon the terms and subject to the conditions of the Merger Agreement, at the
Effective Time, Purchaser will be merged with and into the Company in accordance
with the DGCL.
At the Effective Time, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than treasury stock
and stock owned by Parent and its subsidiaries to be canceled and other than
dissenting shares) shall be converted into the right to receive in cash the
Share Price without any interest thereon, less any required withholding taxes,
upon surrender and exchange of a certificate representing such shares of Company
Common Stock. At the Effective Time, each share of the common stock, par value
$.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into and become one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation (as defined in the Merger Agreement), which will thereupon become a
direct, wholly-owned subsidiary of Parent. All shares of Company Common Stock
that are owned by the Company or any wholly-owned subsidiary of the Company as
treasury stock and all shares of Company Common Stock owned by Parent, Purchaser
or any wholly-owned subsidiary of Parent shall be canceled and retired and shall
cease to exist, and no stock of Parent or other consideration shall be delivered
in exchange therefor. The Merger will become effective upon the filing of a
certificate of merger with the Secretary of State of the State of Delaware or at
such time thereafter as is provided in the certificate of merger.
Shares of Company Common Stock will not be converted into or represent a
right to receive the Share Price for each such share if the holder thereof has
not voted in favor of the Merger or consented thereto in writing, has perfected
its right to an appraisal of its shares pursuant to the DGCL and has not
effectively withdrawn or lost such right to appraisal (a 'DISSENTING
STOCKHOLDER'). A Dissenting Stockholder shall be entitled only to such rights as
are granted by the applicable provisions of the DGCL, except that any Shares
held by a Dissenting Stockholder at the Effective Time who shall, after the
Effective Time, withdraw the demand for appraisal or shall have lost the right
of appraisal, in either case pursuant to the DGCL, shall be deemed to be
converted into, as of the Effective Time, the right to receive the Share Price
for each such share.
Option Plans. Pursuant to the Merger Agreement, each holder of an option to
purchase a Share outstanding at the Effective Time under the Option Plans,
whether or not then exercisable, shall, in full settlement thereof, receive an
amount (subject to any applicable withholding tax) in cash in respect of each
Share subject to such option (the 'OPTION AMOUNT') equal to the difference
between the Share Price and the per Share exercise price of such option, to the
extent such difference is a positive number. Each holder of a restricted Share
outstanding under the Option Plans which has not fully vested as of the
Effective Time shall, in full settlement thereof, receive an amount in cash in
respect of each such restricted Share equal to the Share Price.
Approval of Stockholders. The Merger Agreement provides that the Company
will prepare and file with the Commission a proxy statement as soon as
reasonably practicable after the first to occur of the acceptance for payment of
and payment for Shares pursuant to the Offer or the Merger Trigger, and the
Company will use its best efforts to have the proxy statement cleared by the
Commission. If required by applicable law in order to consummate the Merger, the
Company will, through its Board, duly call, give notice of, convene and hold a
meeting of the Stockholders for the purpose of voting on the adoption of the
Merger Agreement as soon as reasonably practicable after the acceptance for
payment of and payment for Shares pursuant to the Offer. At such meeting, Parent
will, and will cause its subsidiaries to, cause all Shares purchased pursuant to
the Offer and all other shares of the Company Common Stock owned by Parent or
any such subsidiary to be voted in favor of the adoption of the Merger
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Agreement. In the event that Purchaser will acquire at least 90% of the then
outstanding Shares pursuant to the Offer and no Class C Shares will then remain
outstanding, the parties will, subject to the conditions in the Merger Agreement
and at the request of Purchaser, take all necessary and appropriate action to
cause the Merger to become effective in accordance with Section 253 of the DGCL,
as soon as reasonably practicable after such acquisition, without a meeting of
the Stockholders.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties to the Merger Agreement,
which shall not survive the Merger. These include, without limitation,
representations and warranties by the Company as to corporate existence and
power, authority relative to the Merger Agreement and the transactions
contemplated thereby, governmental consents and approvals, non-contravention,
capitalization, public filings, financial statements, information supplied,
absence of certain changes or undisclosed material liabilities, litigation,
taxes, employee benefit and labor matters, compliance with applicable laws,
finders' fees, environmental matters, antitakeover statutes, intellectual
property, properties and defaults under contracts. Parent (with respect to
itself and Purchaser) has also made certain representations and warranties with
respect to, among other things, as to corporate existence and power, authority
relative to the Merger Agreement and the transactions contemplated thereby,
governmental consents and approvals, non-contravention, information supplied,
finders' fees and financing arrangements.
Conduct of Business Until the Merger. The Merger Agreement provides that the
Company and its subsidiaries will conduct their respective businesses only in,
and neither the Company nor any such subsidiary will take any action except in,
the ordinary course consistent with past practice. The Merger Agreement further
provides that, without limiting the generality of the foregoing, (i) the Company
and its subsidiaries will use all commercially reasonable efforts to preserve
intact in all material respects their present business organizations and
reputation, to keep available the services of their key officers and employees,
to maintain their assets and properties in good working order and condition,
ordinary wear and tear excepted, to maintain insurance on their tangible assets
and businesses in such amounts and against such risks and losses as are
currently in effect, to preserve in all material respects their relationships
with customers and suppliers and others having significant business dealings
with them and to comply in all material respects with all laws and orders of all
Governmental or Regulatory Authorities applicable to them, and (ii) the Company
will not do, and will not permit any of its subsidiaries to do, any of the
following:
amend or propose to amend its certificate or articles of incorporation or
bylaws (or other comparable corporate charter documents);
(w) declare, set aside or pay any dividend on or make other distributions
in respect of any of its capital stock, except for the declaration and
payment of dividends by a wholly-owned subsidiary of the Company solely to
its parent corporation, (x) split, combine, reclassify or take similar
action with respect to any of the capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, (y) adopt a plan of
complete or partial liquidation or resolutions providing for or authorizing
such liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (z) directly or indirectly
redeem, repurchase or otherwise acquire any shares of its capital stock or
any Option (as defined in the Merger Agreement) with respect thereto;
issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or any Option with respect thereto
(other than (x) the issuance of Shares upon exercise of Class C Shares
outstanding on the date of the Merger Agreement or options outstanding on
the date of the Merger Agreement under the Option Plans and (y) the
issuance by a wholly-owned subsidiary of its capital stock to its parent
corporation), or modify or amend any right of any holder of outstanding
shares of capital stock or options with respect thereto;
acquire (by merging or consolidating with, or by purchasing an equity
interest in or a portion of the assets of, or by any other manner) any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire
any assets other than inventory and other assets to be sold or used in the
ordinary course of business consistent with past practice;
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other than dispositions in the ordinary course of its business consistent
with past practice of assets which are not, individually or in the
aggregate, material to the Company and its subsidiaries taken as a whole,
sell, lease, grant any security interest in or otherwise dispose of or
encumber any of its assets or properties;
except to the extent required by applicable law, (x) permit any change in
(A) any investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating any
bad debt, contingency or other reserve for accounting, financial reporting
or tax purposes or (y) permit any material change in any pricing, marketing
or purchasing practice or policy or make or revoke any tax election or
settle or compromise any tax liability, or change (or make a request to any
taxing authority to change) its tax or accounting methods, policies,
practice or procedures, except as required by generally accepted accounting
principles;
(x) incur any indebtedness for borrowed money or guarantee any such
indebtedness other than in the ordinary course of its business consistent
with past practice under existing credit facilities (net of any amounts of
any such indebtedness discharged during such period), or (y) voluntarily
purchase, cancel, prepay or otherwise provide for a complete or partial
discharge in advance of a scheduled repayment date with respect to, or
waive any right under, any indebtedness for borrowed money;
enter into, adopt, amend (except as may be required by applicable law) or
terminate any Company Employee Benefit Plan (as defined in the Merger
Agreement), or other agreement, arrangement, plan or policy between the
Company or one of its subsidiaries and one or more of its directors,
officers or employees, or increase in any respect the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or arrangement in effect as of the date of the Merger
Agreement;
make any capital expenditures or commitments for additions to plant,
property or equipment constituting capital assets in excess of $25,000
individually or $250,000 in the aggregate;
make any change in the lines of business in which it participates or is
engaged; or
enter into any contract, commitment or arrangement to do or engage in any
of the foregoing.
As of the date on which Parent's designees constitute at least a majority of
the Board (the 'CONTROL DATE'), all agreements between the Company and any of
its subsidiaries, on the one hand, and any Stockholders or affiliates of any
Stockholders, on the other hand, shall be terminated without any liability to
the Company or its subsidiaries or any amounts being or becoming due thereunder
through the Control Date, except as set forth in the disclosure schedule to the
Merger Agreement.
No Solicitation. The Merger Agreement provides that, prior to the Effective
Time, (a) neither the Company nor any of its subsidiaries will, and the Company
will use its best efforts to cause their respective representatives not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to Stockholders) with respect to a merger,
consolidation or other business combination including the Company or any of its
subsidiaries or any acquisition or similar transaction (including, without
limitation, a tender or exchange offer) involving the purchase of (i) all or any
significant portion of the assets of the Company and its subsidiaries taken as a
whole or (ii) the outstanding shares of any class of Company Common Stock or any
capital stock of Carson South Africa or any other subsidiary (any such proposal
or offer being hereinafter referred to as an 'ALTERNATIVE PROPOSAL'), or engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person or group relating to an Alternative
Proposal (excluding the transactions contemplated by the Merger Agreement), or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal; (b) the Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties with respect
to any of the foregoing, and it will take the necessary steps to inform such
parties of its obligations under the Merger Agreement; and (c) the Company will
notify Parent promptly if any such inquiries, proposals or offers are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it or any of such
persons or groups, and will identify the party making such
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inquiry, proposal, offer or request and, if an offer has been received, will
describe the material terms thereof, except to the extent such notification
would, in the written opinion of the Company's outside counsel, cause the
Company or the Board to be in violation of any applicable law, regulation or
governmental order, except that nothing contained in the foregoing shall
prohibit the Board from, to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Alternative Proposal.
Settlement Agreement and Related Matters. The Merger Agreement provides that
the Company shall not amend or otherwise modify (i) the Settlement Agreement,
(ii) the related mutual releases entered into in connection therewith,
(iii) the letter agreement dated as of February 25, 2000 (the 'REIMBURSEMENT
AGREEMENT') by and among the Company and certain directors of the Company and
agreed to and accepted by DNL, or (iv) the letter agreement dated as of
February 25, 2000 by and between Parent and DNL without, in any case, the prior
written consent of Parent.
The Company will not make, permit or cause to be made (i) any prepayment of
amounts owing by Carson Products Company under the Settlement Agreement if as a
result of such prepayment there would occur any breach of or default (or an
event that with notice or lapse of time or both would become a default) under,
or if such payment would result in the creation of any lien pursuant to, any
contract to which the company or any of its subsidiaries is a party or by which
any of their respective assets is bound, or (ii) any early reimbursement payment
under the Reimbursement Agreement without, in either case, the prior written
consent of Parent.
Employee Benefit Plans. The Merger Agreement provides that Parent will cause
the Company Employee Benefit Plans (other than equity-based plans and incentive
compensation) in effect at the date of the Merger Agreement to remain in effect
until the first anniversary of the Effective Time or, to the extent such Company
Employee Benefit Plans are not continued, Parent will maintain until such date
benefit plans (other than equity-based plans and incentive compensation) which
are not materially less favorable, in the aggregate, to the employees covered by
such Company Employee Benefit Plans, except that the foregoing shall not be
construed to require the Company or the Surviving Corporation to continue any
specific plan or the employment of any employee or group of employees. Parent
will, and will cause the Surviving Corporation to, honor without modification
all employee severance plans (or policies) and employment and severance
agreements of the Company or any of its subsidiaries in existence on the date of
the Merger Agreement.
Indemnification and Insurance. The Merger Agreement provides that, except as
otherwise provided in the Indemnity Releases, from and until the sixth
anniversary of the Effective Time and for so long thereafter as any claim for
indemnification asserted on or prior to such date has not been fully
adjudicated, Parent shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, a
director or officer of the Company or any of its subsidiaries (the 'INDEMNIFIED
PARTIES') against (i) all losses, claims, damages, costs and expenses (including
reasonable attorneys' fees), liabilities, judgments and settlement amounts that
are paid or incurred in connection with any claim, action, suit, proceeding or
investigation (whether civil, criminal, administrative or investigative and
whether asserted or claimed prior to, at or after the Effective Time) that is
based on, or arises out of, the fact that such Indemnified Party is or was a
director or officer of the Company or any of its subsidiaries and relates to or
arises out of any action or omission occurring at or prior to the Effective Time
('INDEMNIFIED LIABILITIES'), and (ii) all Indemnified Liabilities based on, or
arising out of, or pertaining to the Merger Agreement or the transactions
contemplated thereby, in each case to the full extent a corporation is permitted
under applicable law to indemnify its own directors or officers; provided that
the Surviving Corporation shall not be liable for any settlement of any claim
effected without its written consent, which consent shall not be unreasonably
withheld; and provided, further, that the Surviving Corporation shall not be
liable for any Indemnified Liabilities which occur as a result of the gross
negligence or willful misconduct of any Indemnified Party.
Without limiting the foregoing, in the event that any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Party
(whether arising prior to or after the Effective Time), (x) the Surviving
Corporation will pay expenses in advance of the final disposition of any such
claim, action, suit, proceeding or investigation to each Indemnified Party to
the full extent permitted by
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applicable law; (y) the Surviving Corporation will pay all reasonable fees and
expenses of counsel for the Indemnified Parties promptly as statements therefor
are received; and (z) the Surviving Corporation will use all commercially
reasonable efforts to assist in the defense of any such matter.
Except to the extent required by law, until the sixth anniversary of the
Effective Time, Parent will not take any action so as to amend, modify or repeal
the provisions for indemnification of directors, officers or employees contained
in the certificates or articles of incorporation or bylaws (or other comparable
charter documents) of the Surviving Corporation and its Subsidiaries in such a
manner as would adversely affect the rights of any individual who shall have
served as a director, officer or employee of the Company or any of its
Subsidiaries prior to the Effective Time to be indemnified by such corporations
in respect of their serving in such capacities prior to the Effective Time.
The Surviving Corporation shall, until the sixth anniversary of the
Effective Time and for so long thereafter as any claim for insurance coverage
asserted on or prior to such sixth anniversary has not been fully adjudicated,
cause to be maintained in effect the policies of directors' and officers'
liability insurance maintained by the Company and its subsidiaries as of the
date hereof (or policies of at least the same coverage and amounts containing
terms that are no less advantageous to the insured parties) with respect to
claims arising from facts or events that occurred on or prior to the Effective
Time; provided that in no event shall the Surviving Corporation be obligated to
expend in order to maintain or procure insurance coverage pursuant to this
paragraph any amount per annum in excess of 200% of the aggregate premiums
payable by the Company and its subsidiaries for the current fiscal year for such
purpose.
Expenses. The Merger Agreement provides that whether or not the Offer or the
Merger is consummated, all costs and expenses incurred in connection with the
Merger Agreement and the transactions contemplated thereby will be paid by the
party incurring such cost or expense.
Conditions of the Merger. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger if the Offer has been consummated is subject
to the satisfaction of the following conditions: (a) unless the Merger may be
consummated as a short-form merger pursuant to the DGCL, the Merger Agreement
shall have been adopted by the requisite vote of the Stockholders under the
DGCL; (b) any waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated; (c) no law or
order which has the effect of making illegal or otherwise restricting,
preventing or prohibiting consummation of the Offer or the Merger or the other
transactions contemplated by the Merger Agreement or the Stockholders Agreement
shall be in effect; and (d) Purchaser shall have accepted for payment and paid
for all Shares validly tendered and not withdrawn pursuant to the Offer, except
that neither Parent nor Purchaser may invoke this condition if, in breach of the
Merger Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer.
The obligation of each party to effect the Merger if the Merger Trigger is
invoked is subject to the fulfillment, at or prior to the Closing, of the
conditions set forth in clauses (a) through (c) above and also the conditions
set forth in clauses (a) through (e) of Section 14.
Termination of the Merger Agreement. Subject, in the case of the Company, to
the concurrence of a majority of the Independent Directors, the Merger Agreement
may be terminated, and the Merger may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger Agreement by the
Stockholders:
By mutual written agreement of the Company and Parent duly authorized by
action taken by or on behalf of their respective boards of directors;
By either the Company or Parent upon notification to the non-terminating
party:
(i) at any time after July 31, 2000 if, on or prior to such date,
either (x) the purchase of Shares pursuant to the Offer shall not have
occurred and such failure shall not have been caused by a breach of
the Merger Agreement by the terminating party and the Merger Trigger
shall not have been invoked or (y) the Merger Trigger shall have been
invoked and the Merger shall have not been consummated and such
failure shall not have caused by a breach of the Merger Agreement by
the terminating party;
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(ii) if the Offer shall have terminated or expired in accordance
with its terms without Purchaser having accepted for payment and paid
for any Shares pursuant to the Offer, except that Parent may not
terminate the Merger Agreement for this reason if Purchaser's
termination of, or failure to accept for payment or pay for any Shares
tendered pursuant to, the Offer does not follow the occurrence, or
failure to occur, as the case may be, of any condition to the Offer
(other than the Minimum Condition) or if Parent or Purchaser is
otherwise in breach of the terms of the Offer or the Merger Agreement;
or
(iii) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order making
illegal or otherwise restricting, preventing or prohibiting the Merger
or the other transactions contemplated by the Merger Agreement or the
Stockholders Agreement and such order shall have become final and
nonappealable;
By the Company if there has been a material breach of any representation,
warranty, covenant or agreement on the part of Parent or Purchaser set
forth in the Merger Agreement, which breach is not curable or, if curable,
has not been cured within 60 days following receipt by Parent of notice of
such breach from the Company; or
By Parent if, prior to the purchase of Shares pursuant to the Offer or, if
the Merger Trigger has been invoked, the Merger, there has been a breach of
any representation, warranty, covenant or agreement on the part of the
Company set forth in the Merger Agreement, which breach (A) would give rise
to the failure of a condition to the Offer set forth in clauses (c) and (d)
of Section 14 and (B) is not curable or, if curable, has not been cured
within 60 days following receipt by the Company of notice of such breach
from Parent.
If the Merger Agreement is validly terminated by either the Company or
Parent, the Merger Agreement will forthwith become null and void and there will
be no liability or obligation on the part of Company or Parent except for
willful breach of its representations, warranties, covenants or agreements
contained in the Merger Agreement.
Amendment. Subject to the concurrence of a majority of Independent
Directors, any provision of the Merger Agreement may be amended, supplemented or
modified by or on behalf of the respective boards of directors of Parent,
Purchaser and the Company at any time prior to the Effective Time, whether prior
to or after the approval of the Stockholders shall have been obtained, but after
such adoption and approval only to the extent permitted by applicable law. No
such amendment, supplement or modification shall be effective unless set forth
in a written agreement executed by Parent, Purchaser and the Company.
Waiver. Subject to the concurrence of a majority of Independent Directors,
at any time prior to the Effective Time Parent, Purchaser and the Company, by
action taken by or on behalf of its board of directors, may to the extent
permitted by applicable law, (i) extend the time for the performance of any of
the obligations of other acts of the other parties, (ii) waive any inaccuracies
in the representations and warranties of the other parties or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties. No such extension or waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party extending the time
of performance or waiving any such inaccuracy or non-compliance.
STOCKHOLDERS AGREEMENT
The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions and is qualified in its entirety by reference to the full text of the
Stockholders Agreement filed with the Commission as an exhibit to Schedule TO
and incorporated herein by reference. The Stockholders Agreement may be
examined, and copies obtained, as described in Section 8 above.
Tender of Shares. Upon at least 565,857 Shares being validly tendered in
(and not withdrawn from) the Offer, each holder of Class C Shares shall convert
all of their Class C Shares into Shares, and (provided that the Offer has not
been amended in a manner adverse to such Stockholder) all of the Majority
Stockholders shall validly tender (and not withdraw) all of their respective
Shares pursuant to
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and in accordance with the terms of the Offer. Each Majority Stockholder is
entitled to receive the highest price paid by Purchaser pursuant to the Offer,
the Merger or otherwise.
Voting. Each Majority Stockholder hereby agrees that, until the first to
occur of the Effective Time or termination of the Stockholders Agreement, at any
meeting of the Stockholders, however called, or in connection with any written
consent of the Stockholders, each Majority Stockholder will vote (or cause to be
voted) its shares of Company Common Stock; (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other actions contemplated by the Merger
Agreement and the Stockholders Agreement and any actions required in furtherance
thereof; (ii) against any action, any failure to act or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or the
Stockholders Agreement; and (iii) except as otherwise agreed to in writing in
advance by Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (B) a sale, lease or
transfer of a material amount of assets of the Company or its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (C)(1) any change in a majority of the persons who constitute
the board of directors of the Company; (2) any change in the present
capitalization of the Company or any of its subsidiaries or any amendment of the
Company's or any of its subsidiaries' certificate of incorporation or bylaws (or
comparable organizational documents); (3) any other material change in the
Company's or any of its subsidiaries' corporate structure or business; or
(4) any other action involving the Company or its subsidiaries which is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone or adversely affect the Merger and the transactions contemplated by the
Stockholders Agreement and the Merger Agreement. Each Majority Stockholder has
further agreed not to enter into any agreement or understanding with any person
or entity the effect of which would be to violate the provisions and agreements
described above.
Irrevocable Proxy. Each Majority Stockholder executed and delivered to
Parent an Irrevocable Proxy (the 'PROXY') appointing Purchaser as the attorney
and proxy with full power of such Majority Stockholder's rights (including all
voting and other rights) with respect to the shares of capital stock of the
Company owned or acquired by such Majority Stockholder. The Proxies will
terminate on July 31, 2000, the date of termination of the Stockholders
Agreement, if the Effective Time has not occurred by that date.
Representations, Warranties, Covenants and Other Agreements. In the
Stockholders Agreement, each of the Majority Stockholders has made certain
representations, warranties and covenants, including with respect to (i)
ownership of Shares, (ii) authority to enter into and perform its obligations
under the Stockholders Agreement, (iii) the absence of liens and encumbrances on
and in respect of Shares, (iv) restrictions on the transfer of Shares and (v)
the waiver of its appraisal rights. Each Majority Stockholder has agreed that,
until the earlier of the Effective Time or termination of the Stockholder
Agreement in accordance with its terms, it will not, in its capacity as such,
directly or indirectly initiate, solicit or encourage (including by way of
furnishing information) or respond to any inquiries or the making of any
proposal by any person or entity (other than Parent or any affiliate of Parent)
with respect to the Company that constitutes an Alternative Proposal. Each
Majority Stockholder agreed to immediately cease and terminate any existing
activities, discussions or negotiations with any person or entity with respect
to any such proposals and shall promptly inform Parent if any such inquiry or
proposal or offer is received or any information is requested from or any
negotiations or discussions are sought to be initiated or continued with such
Majority Stockholder, and will identify the party making such inquiry, proposal,
offer or request and, if an offer has been received, will describe the material
terms of such offer.
CONFIDENTIALITY AGREEMENT
The following is a summary of the material terms of the Confidentiality
Agreement and is qualified in its entirety by reference to the full text of the
Confidentiality Agreement filed with the Commission
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as an exhibit to the Schedule TO and incorporated herein by reference. The
Confidentiality Agreement may be examined, and copies obtained, as set forth in
Section 8 of this Offer to Purchase.
Pursuant to the Confidentiality Agreement, Parent agreed to provide, among
other things, for the confidential treatment of discussions with the Company
regarding a possible transaction and the exchange of certain confidential
information concerning the Company. Parent further agreed that, until July 24,
1999, Parent would not, without the prior written approval of the Company's
Board of Directors, (a) acquire or agree, offer, seek or propose to acquire
ownership of (i) the Company or any of its assets or businesses, (ii) any
securities issued by the Company, or (iii) any rights or options to acquire such
ownership, in a business combination transaction; (b) engage in any solicitation
of proxies with respect to any securities issued by the Company; (c) form, join
or in any way participate in a 'group' (within the meaning of the Exchange Act)
with respect to any securities issued by the Company; (d) otherwise seek or
propose to influence or control the Board of Directors, management or policies
of the Company (e) take any action that could reasonably be expected to require
the Company to make a public announcement regarding any of the foregoing types
of matters; (f) enter into discussions, negotiations, arrangements or
understandings with any third party with respect to any of the foregoing; or
(g) request the Company or its representatives to amend or waive any of these
restrictions.
EXCLUSIVITY AGREEMENT
The following is a summary of the material terms of the Exclusivity
Agreement. This summary is not a complete description of the terms and
conditions and is qualified in its entirety by reference to the full text of the
Exclusivity Agreement filed with the Commission as an exhibit to Schedule TO and
incorporated herein by reference. The Exclusivity Agreement may be examined, and
copies obtained, as described in Section 8 above.
Pursuant to the Exclusivity Agreement, the Company, subject to certain
exceptions, agreed to negotiate exclusively with Parent with respect to a
possible acquisition of the Company until February 14, 2000, and to afford
Parent and its affiliates reasonable access to complete their due diligence
review of the Company. DNL also agreed to be bound by the terms of the
exclusivity arrangement contained in the Exclusivity Agreement.
YESNER EMPLOYMENT AGREEMENT
The following is a summary of the material terms of the Yesner Employment
Agreement and is qualified in its entirety by reference to the full text of the
Yesner Employment Agreement filed with the Commission as an exhibit to the
Schedule TO and incorporated herein by reference. The Yesner Employment
Agreement may be examined, and copies obtained, as set forth in Section 8 of
this Offer to Purchase.
Pursuant to the Yesner Employment Agreement, Mr. Yesner will serve as the
President of Carson Products, and as an officer of Parent. The Yesner Employment
Agreement has an initial term of 24 months commencing upon the earlier to occur
of the completion of the Offer or the effective date of the Merger (the 'INITIAL
TERM'). At the end of the Initial Term, the Yesner Employment Agreement will
remain in effect for additional one-year terms unless either party has given
written notice to the other party 90 days prior to the expiration. Mr. Yesner
will receive an annual base salary of $375,000 through December 31, 2000,
$420,000 for the period January 1, 2001 through December 31, 2001 and not less
than $420,000 for the period from January 1, 2002 through the remainder of the
Initial Term. This base salary may be increased, but not decreased, by Parent at
any time.
Mr. Yesner will receive a guaranteed bonus of $150,000 for Parent's 2000
fiscal year and for the remainder of the term of employment will be eligible to
receive, in the sole discretion of Parent, an annual bonus of up to 30% of Mr.
Yesner's base salary at such time. Mr. Yesner is also entitled to the payment of
a retention bonus of $2,250,000 (the 'RETENTION BONUS') following the earliest
to occur of (i) the expiration of the Initial Term (provided Mr. Yesner is
employed by Parent on the last day thereof), (ii) Mr. Yesner's death or
disability and (iii) the termination of Mr. Yesner's employment without 'Cause'
or for 'Good Reason' (each as defined in the Yesner Employment Agreement).
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Mr. Yesner will participate in Parent's Stock Incentive Plan maintained for
the benefit of the senior executives of Parent. Parent will credit $100,000 to
Mr. Yesner's phantom stock account for the 2000 fiscal year and for each
successive completed fiscal year of employment Parent will credit Mr. Yesner's
account with an amount equal to Mr. Yesner's annual bonus actually awarded in
such year.
The Yesner Employment Agreement provides that if Mr. Yesner is terminated
without 'Cause' or resigns for 'Good Reason' Mr. Yesner will receive the
following: (i) the sum of his remaining base salary, (ii) any bonus payment Mr.
Yesner would have received had he worked the balance of the Initial Term or, if
applicable, during the balance of any renewal term, (iii) the Retention Bonus if
the Yesner Employment Agreement is terminated within the Initial Term, (iv)
continuation of certain health and welfare benefits, and (v) any other
compensation and benefits as may be provided in accordance with any applicable
plans, programs or agreements of Parent. The Yesner Employment Agreement also
provides that if Mr. Yesner is terminated for 'Cause' or resigns without 'Good
Reason', Mr. Yesner will not be entitled to any additional compensation, except
for any compensation or benefits as may be provided in accordance with any
applicable plans, programs or agreements of Parent.
The Yesner Employment Agreement provides that Mr. Yesner will not compete,
directly or indirectly, within any geographic area in which Parent or its
affiliates are doing business for a period of three years following the date of
Mr. Yesner's termination for any reason (the 'RESTRICTION PERIOD'). In
consideration of such restriction, Mr. Yesner will receive the following: (i)
during the first two years of the Restriction Period a payment of $500,000 per
year and (ii) during the last year of the Restriction Period a payment of
$400,000. If Mr. Yesner voluntarily terminates his employment (other than due to
disability or for 'Good Reason') during the Initial Term, Purchaser may elect to
waive the non-compete provisions in the Yesner Employment Agreement, in which
case, Parent would not be liable to pay any amounts during the Restriction
Period.
Upon the commencement of the Initial Term, the Yesner Employment Agreement
will supersede Mr. Yesner's current employment arrangements with the Company.
OTHER MATTERS
Statutory Requirements. In general, under the DGCL, a merger of two Delaware
corporations requires the adoption of a resolution by the Board of Directors of
each of the corporations desiring to merge approving an agreement of merger
containing provisions with respect to certain statutorily specified areas and
the approval of such agreement of merger by the stockholders of each corporation
by the affirmative vote of the holders of a majority of all of the outstanding
shares of stock entitled to vote on such matter. Assuming that the number of
Shares outstanding on a fully-diluted basis does not increase from the number
outstanding on February 25, 2000 and that the Minimum Condition is satisfied,
upon consummation of the Offer Purchaser would own sufficient Shares to enable
it to satisfy the stockholder approval requirement to approve the Merger.
Purchaser intends to seek to consummate the Merger with the Company as promptly
as practicable after consummation of the Offer.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company would
have certain rights under Section 262 of the DGCL to dissent and demand
appraisal of, and payment in cash of the fair value of, their Shares. Such
rights, if the statutory procedures were complied with, could lead to a judicial
determination of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than, or in addition
to, the price paid in the Offer and the market value of the Shares, including
asset values and the investment value of the Shares. The value so determined
could be more or less than the purchase price per Share pursuant to the Offer or
the consideration per Share to be paid in the Merger. THE FOREGOING SUMMARY OF
THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE DGCL DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO
EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE PRESERVATION AND EXERCISE OF
DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
DGCL.
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'Going Private' Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain 'going private' transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. However,
Rule 13e-3 would be inapplicable if (i) the Shares are deregistered under the
Exchange Act prior to the Merger or other business combination or (ii) the
Merger or other business combination is consummated within one year after the
purchase of the Shares pursuant to the Offer and the amount paid per Share in
the Merger or other business combination is at least equal to the amount paid
per Share in the Offer. If applicable, Rule 13e-3 requires, among other things,
that certain financial information concerning the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
the consummation of the transaction.
12. SOURCE AND AMOUNT OF FUNDS. The Offer and the Merger are not subject to
any financing condition. The total amount of funds required by Purchaser and
Parent to consummate the Offer and the Merger, to pay related fees and expenses
and to retire outstanding indebtedness of the Company which may become due as a
result of the Offer and the Merger is estimated to be approximately $235
million. Purchaser expects to obtain these funds in the form of capital
contributions and/or loans from Parent. Parent expects to obtain these funds
from an existing U.S. commercial paper program and/or uncommitted short-term
lines of credit with commercial banks, all of which are guaranteed by L'Oreal.
Parent expects that it will refinance short-term borrowings utilized to
consummate the Offer and the Merger substantially from capital contributions
from L'Oreal.
13. DIVIDENDS AND DISTRIBUTIONS. In the Merger Agreement, the Company has
agreed not to declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its capital stock, except for dividends by a
wholly owned subsidiary of the Company to the Company or another wholly owned
subsidiary of the Company; or, directly or indirectly, to redeem, repurchase or
otherwise acquire, issue, deliver or sell, any additional Shares (other than
issuances of Shares upon conversion of Class C Shares or pursuant to the
exercise of options under the Option Plans), or any shares of any other class of
capital stock, or any securities convertible into or exchangeable for, or
rights, warrants or options, of any kind, to acquire, any capital stock.
If, on or after the date of the Merger Agreement, the Company declares or
pays any dividend on the Shares or any distribution (including, without
limitation, the issuance of additional Shares pursuant to a stock dividend or
stock split, the issuance of other securities or the issuance of rights for the
purchase of any securities) with respect to the Shares that is payable or
distributable to Stockholders of record on a date prior to the transfer into the
name of Purchaser or its nominees or transferees on the Company's stock transfer
records of the Shares purchased pursuant to the Offer, and if Shares are
purchased in the Offer, then, without prejudice to Purchaser's rights under
Section 14, (i) the purchase price per Share payable by Purchaser pursuant to
the Offer shall be reduced by the amount of any such cash dividend or cash
distribution and (ii) any such non-cash dividend, distribution, issuance,
proceeds or right to be received by the tendering Stockholders shall (a) be
received and held by the tendering Stockholders for the account of Purchaser and
will be required to be promptly remitted and transferred by each tendering
Stockholder to the Depositary for the account of Purchaser, accompanied by
appropriate documentation of transfer or (b) at the direction of Purchaser, be
exercised for the benefit of Purchaser, in which case the proceeds of such
exercise will promptly be remitted to Purchaser. Pending such remittance and
subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such non-cash dividend, distribution, issuance,
proceeds or right and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof, as determined by Purchaser in its
sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer or the Merger Agreement, Purchaser shall not be required to accept for
payment, or subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) of the Exchange Act (relating to Purchaser's obligation
to pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for, and may (subject to any such rule or regulation) delay the
acceptance for payment of any tendered Shares, and may (except as provided in
the Merger Agreement) amend or terminate
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the Offer as to any Shares not then paid for, if (i) at the Expiration Date, the
Minimum Condition has not been satisfied or any waiting period applicable to the
transactions contemplated by the Merger Agreement and the Stockholders Agreement
under the HSR Act and the South African Competition Act shall not have expired
or terminated or (ii) at any time on or after February 25, 2000 and before the
Expiration Date, any of the following events shall have occurred and remain in
effect:
(a) there shall have been any law or order promulgated, entered,
enforced, enacted, issued or deemed applicable to the Offer, the Merger or
the Stockholders Agreement by any court of competent jurisdiction or other
competent Governmental or Regulatory Authority which (1) prohibits, or
imposes any material limitations on, Parent's or Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of
any portion of their or the Company's businesses or assets which is material
to the business of all such entities taken as a whole, or compels Parent or
Purchaser (or their respective Subsidiaries or affiliates) to dispose of or
hold separate any portion of their or the Company's business or assets which
is material to the business of all such entities taken as a whole,
(2) prohibits, restrains or makes illegal the acceptance for payment,
payment for or purchase of Shares pursuant to the Offer or the consummation
of the Merger, (3) imposes material limitations on the ability of Purchaser
or Parent (or any of their respective Subsidiaries or affiliates)
effectively to acquire or to hold or to exercise full rights of ownership of
the shares of Company Common Stock purchased pursuant to the Offer,
including, without limitation, the right to vote such shares of Company
Common Stock on all matters properly presented to the Company's stockholders
or (4) imposes material limitations on the ability of Purchaser or Parent
(or any of their respective Subsidiaries or affiliates) effectively to
control in any material respect any material portion of the business or
assets of the Company and its subsidiaries taken as a whole;
(b) there shall be threatened, instituted or pending any action, suit or
proceeding brought by a Governmental or Regulatory Authority challenging the
acquisition by Parent or Purchaser of shares of Company Common Stock or
otherwise seeking to restrain or prohibit the making or consummation of the
Offer, the Merger or the Stockholders Agreement or seeking to result in any
of the consequences referred to in clauses (1) through (4) of paragraph (a)
above;
(c) the representations and warranties made by the Company in the Merger
Agreement that are subject to, or qualified by, 'Company Material Adverse
Effect' or other materiality qualification shall not be true and correct, or
the representations and warranties made by the Company in the Merger
Agreement that are not so qualified shall not be true and correct in any
respect which could reasonably be expected to have a Company Material
Adverse Effect, in either case as of the date of the consummation of the
Offer as though made on and as of such date or, in the case of
representations and warranties made as of a specific date earlier than the
date of the consummation of the Offer, on and as of such earlier date;
(d) the representation and warranty made by the Company in the Merger
Agreement with respect to effectiveness of, and the nonexistence of a
breach, violation or default under, the Settlement Agreement, and the
related mutual releases entered into in connection therewith, shall not be
true and correct in any respect as of the date of the consummation of the
Offer as though made on and as of such date, or there shall be instituted or
pending any action, suit or proceeding challenging the validity or
enforceability of such releases, the Settlement Agreement or any of the
transactions contemplated thereby;
(e) the Company shall not have performed and complied with, in all
material respects, each agreement and covenant required by the Merger
Agreement to be performed or complied with by it; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms.
The Merger Agreement defines 'Company Material Adverse Effect' as any
failures, changes or effects which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material adverse effect on
the business, financial condition or results of operations of the Company and
its Subsidiaries taken as a whole and/or of Carson South Africa and its
Subsidiaries taken as a whole. The Merger Agreement defines 'Governmental or
Regulatory Authority' as any court,
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tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, the European Union or other supranational
body, any foreign country or any domestic or foreign state, county, city or
other political subdivision. The Merger Agreement defines 'Subsidiary', with
respect to any party, as any corporation or other organization, whether
incorporated or unincorporated, of which more than 50% of either the equity
interests in, or the voting control of, such corporation or other organization
is, directly or indirectly through Subsidiaries or otherwise, beneficially owned
by such party and includes, without limitation, Carson South Africa.
The foregoing conditions are for the sole benefit of Parent and Purchaser,
may be asserted by Parent and Purchaser regardless of the circumstances giving
rise to any such condition and, subject to the terms and conditions of the
Merger Agreement, may be waived by Parent and Purchaser, in whole or in part at
any time and from time to time in the sole discretion of Parent and Purchaser.
The failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as
described in Section 14 or this Section 15, based on information provided by the
Company, none of the Company, Purchaser or Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares by Parent or Purchaser pursuant to the Offer, the Merger
or otherwise, or any approval or other action by any governmental,
administrative or regulatory agency or authority, domestic or foreign, that
would be required prior to the acquisition of Shares by Purchaser pursuant to
the Offer, the Merger or otherwise. Should any such approval or other action be
required, Purchaser and Parent presently contemplate that such approval or other
action will be sought, except as described below under 'State Antitakeover
Statutes.' While, except as otherwise described in this Offer to Purchase,
Purchaser does not presently intend to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of, or other substantial
conditions complied with, in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment, or pay
for, any Shares tendered. See Section 14 for certain conditions to the Offer,
including conditions with respect to governmental actions.
Federal Reserve Board Regulations. Regulations G, U and X (the 'MARGIN
REGULATIONS') of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. The financing of the Offer
will not be directly or indirectly secured by the Shares or other securities
which constitute margin stock. Accordingly, all financing of the Offer will be
in full compliance with the Margin Regulations.
State Antitakeover Statutes. Section 203 of the DGCL, in general, prohibits
a Delaware corporation, such as the Company, from engaging in a 'Business
Combination' (defined as a variety of transactions, including mergers) with an
'Interested Stockholder' (defined generally as a person that is the beneficial
owner of 15% or more of the outstanding voting stock of the subject corporation)
for a period of three years following the date that such person became an
Interested Stockholder unless, prior to the date such person became an
Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. In the Merger Agreement the
Company has represented that, by virtue of the approval of the Company's Board
of Directors, the provisions of Section 203 of the DGCL are not applicable to
the Merger, the Merger Agreement or any of the transactions contemplated by the
Merger Agreement.
29
<PAGE>
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
officers or principal places of business in such states. In Edgar v. MITE Corp.,
the Supreme Court of the United States (the 'SUPREME COURT') invalidated on
constitutional grounds the Illinois Business Takeover statute, which, as a
matter of state securities law, made certain corporate acquisitions more
difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining stockholders. The state law before the Supreme Court was by its terms
applicable only to corporations that had a substantial number of stockholders in
the State and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and, except as described above with respect to Section 203
of the DGCL, neither Parent nor Purchaser has attempted to comply with any state
antitakeover statute or regulations. Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer and nothing in this Offer to Purchase or any action taken in connection
with the Offer is intended as a waiver of such right. If it is asserted that any
state antitakeover statute is applicable to the Offer and an appropriate court
does not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer or may be
delayed in consummating the Offer. In such case, Purchaser may not be obligated
to accept for payment, or pay for, any Shares tendered pursuant to the Offer.
See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the 'ANTITRUST DIVISION') and the Federal Trade
Commission (the 'FTC') and certain waiting period requirements have been
satisfied.
Parent and the Company filed their Notification and Report Forms with
respect to the Offer under the HSR Act on March 7, 2000. The waiting period
under the HSR Act with respect to the Offer will expire at 11:59 p.m., New York
City time, on March 22, 2000, unless early termination of the waiting period is
granted. However, the Antitrust Division or the FTC may extend the waiting
period by requesting additional information or documentary material from Parent
or the Company. If such a request is made, such waiting period will expire at
11:59 p.m., New York City time, on the tenth day after substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Therefore, any
further extension of the waiting period may occur only with the consent of
Parent. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
The relevant governmental agency may also seek to prevent the consummation of
the transaction as discussed below. Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period requirements
imposed by the HSR Act with respect to the Offer have been satisfied. See
Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws of transactions such as Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after Purchaser's
acquisition of Shares, the Antitrust Division or the FTC could take such action
under the Antitrust Laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares pursuant to the
Offer or otherwise seeking divestiture of Shares acquired by Purchaser or
divestiture of substantial assets of Parent or its subsidiaries. Private
parties, as well as state governments, may also bring legal action under the
Antitrust Laws under certain circumstances. There can be no assurance that a
challenge the Offer or other acquisition of Shares by
30
<PAGE>
Purchaser on antitrust grounds will not be made or, if such a challenge is made,
of the result. See Section 14 for certain conditions to the Offer, including
conditions with respect to litigation and certain governmental actions.
As used in this Offer to Purchase, 'Antitrust Laws' mean and include the
Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal
Trade Commission Act, as amended, and all other federal and state statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines, and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade.
South African Competition Law. The Offer and the Merger are subject to the
Competition Act No. 89 of 1998 ('the South African Competition Act'), which
provides that certain change of control transactions having an effect within the
Republic of South Africa require the approval of, and the filing of certain
information with, the South African Competition Commission (the 'Competition
Commission') and the satisfaction of certain waiting period requirements.
A notification of the Merger was filed with the Competition Commission on
March 6, 2000. The Competition Commission must, within 30 days after receiving
the notice, either (i) approve the merger by issuing a clearance certificate;
(ii) approve the merger subject to any conditions; (iii) prohibit implementation
of the merger; or (iv) issue an extension certificate to extend the period in
which it can consider the proposed merger by a period not exceeding 60 days.
If the Competition Commission has not taken any action within the initial
30-day or 60-day extension period, it will be deemed to have approved the
Merger.
If the Competition Commission prohibits the Merger or approves the Merger
subject to any conditions, the parties may appeal to the Competition Tribunal
within 15 days after the Commission's decision in the matter. There is the
possibility of a further appeal to the Competition Appeal Court, although this
has not yet been constituted. No party to a merger may implement the merger
until it has received the approval of the Competition Commission or the
Competition Tribunal as the case may be. Private parties who can show an
interest in the matter, as well as the South African Minister of Trade and
Industry and affected trade unions, may also participate in the merger
proceedings.
There can be no assurance that a challenge to the Merger on competition
grounds will not be made or, if such a challenge is made, of the result.
16. CERTAIN FEES AND EXPENSES. Lazard Freres is acting as Dealer Manager in
connection with the Offer and is acting also as financial advisor to Parent in
connection with the proposed acquisition of the Company. Parent has agreed to
pay Lazard Freres for its services the following fees: (i) a cash fee in the
amount of $100,000 payable upon the execution of the engagement letter, dated
March 30, 1999, between Parent and Lazard Freres, (ii) a cash fee in the amount
of $150,000 payable upon the earlier of the execution of a definitive agreement
with respect to a transaction whereby Parent or one or more of Parent's
affiliates acquires control of all or a substantial portion of the assets of the
Company or a substantial equity interest in the Company and the commencement of
a tender offer and (iii) a cash fee equal to $2,500,000 payable at the closing
of any such transaction, to which amount the fees paid by Parent pursuant to
clauses (i) and (ii) above shall be credited. Parent has agreed to reimburse
Lazard Freres for all out-of-pocket expenses incurred by Lazard Freres, which
expenses, other than legal expenses, shall not exceed $50,000 without the prior
consent of Parent. In addition, Parent has agreed to indemnify Lazard Freres
against certain liabilities and expenses in connection with the proposed
acquisition, including liabilities under the federal securities laws. Lazard
Freres and its affiliates have from time to time rendered, and continue to
render, various investment banking services to Parent and its affiliates for
which they are paid customary fees. In the ordinary course of its business,
Lazard Freres and its affiliates may actively trade in the Shares for their own
account and for the account of their customers and, accordingly, may at any time
hold a long or short position in the Shares.
Innisfree M&A Incorporated has been retained by Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, e-mail and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners. The Information Agent will receive
customary compensation for its services in connection with the Offer, will be
reimbursed for its
31
<PAGE>
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses, including liabilities under the federal securities
laws.
In addition, Chase Mellon Shareholder Services, L.L.C. has been retained as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive customary
compensation for its services in connection with the Offer, will be reimbursed
for its reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith.
Except as described above, Purchaser will not pay any fees or commissions to
any broker, dealer or other person (other than the Information Agent and the
Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies and other nominees will, upon
request, be reimbursed by Purchaser for customary clerical and mailing expenses
incurred by them in forwarding materials to their customers.
17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares residing in any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the securities, blue sky or other laws of such jurisdiction.
However, Purchaser may, in its discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of Purchaser by the Dealer Manager or one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
Purchaser has filed with the Commission the Schedule TO, together with
exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Schedule TO and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
office of the Commission in the same manner as described in Section 8 with
respect to information concerning the Company.
No person has been authorized to give any information or to make any
representation on behalf of Purchaser not contained in this Offer to Purchase or
in the Letter of Transmittal and, if given or made, any such information or
representation must not be relied upon as having been authorized. Neither the
delivery of the Offer to Purchase nor any purchase pursuant to the Offer shall,
under any circumstances, create any implication that there has been no change in
the affairs of Purchaser or the Company since the date as of which information
is furnished or the date of this Offer to Purchase.
CRAYON ACQUISITION CORP.
March 8, 2000
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER,
PARENT, L'OREAL AND GESPARAL
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, citizenship, present principal
occupation or employment and material occupation, positions, offices or
employment for the past five years of each director and executive officer of
Purchaser. Unless otherwise indicated below, the business address of each such
person is 575 Fifth Avenue, New York, New York 10017.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS CITIZENSHIP EMPLOYMENT HISTORY
---------------- ----------- ------------------
<S> <C> <C>
Guy Peyrelongue .................... France Director and President. See Part B.
Roger Dolden........................ United Kingdom Director, Vice President and
Secretary. See Part B.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, citizenship, present principal
occupation or employment and material occupation, positions, offices or
employment for the past five years of each director and executive officer of
Parent. Unless otherwise indicated below, the business address of each such
person is 575 Fifth Avenue, New York, New York 10017. Unless otherwise indicated
below, each individual has held his position for more than the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS CITIZENSHIP EMPLOYMENT HISTORY
---------------- ----------- ------------------
<S> <C> <C>
Lindsay Owen-Jones ................. United Kingdom Director and Chairman of the Board.
See Part C. See Part C and D.
Guy Peyrelongue..................... France Director, President and
Chief Executive Officer. See
Part A.
Michel Somnolet .................... France Director. See Part C.
See Part C.
Francois Dalle ..................... France Director. See Part C and D.
See Part C.
Pascal Castres Saint-Martin......... France Director, L'Oreal Group Executive
Vice President and Vice-President in
charge of Administration and Finance
(1997-1999), Vice President in
charge of Administration and Finance
(1991-1997).
Roger Dolden........................ United Kingdom Executive Vice President, Chief
Administrative Officer and Secretary
(1999 to date), Senior Vice
President and Chief Financial
Officer (1991-1999). See Part A.
Robert Niles........................ United States Senior Vice President, Human
Resources (1997 to date), Helene
Curtis-Senior Vice President,
President, International
(1991-1997).
John Penicnak....................... United States Senior Vice President, Corporate
Scientific.
Gilles Deucher...................... France Senior Vice President, Manufacturing
(1998 to date), L'Oreal-Senior Vice
President, Manufacturing Operations,
Europe (1996-1998).
</TABLE>
33
<PAGE>
C. DIRECTORS AND EXECUTIVE OFFICERS OF L'OREAL
The following table sets forth the name, citizenship, present principal
occupation or employment and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
L'Oreal. Unless otherwise indicated below, (i) each individual has held his or
her positions for more than the past five years and (ii) the business address of
each person is 41, rue Martre, 92117 Clichy Cedex, France.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS CITIZENSHIP EMPLOYMENT HISTORY
---------------- ----------- ------------------
<S> <C> <C>
Lindsay Owen-Jones.................. United Kingdom Chairman of the Board and Chief
Executive Officer. Director of L'Air
Liquide, BNP (Banque Nationale de
Paris), Lafarge and
Sanofi-Synthelabo. See Part B and D.
Jean-Pierre Meyers.................. France Vice-Chairman of the Board.
Director of Nestle S.A. See Part D.
Marc Ladreit de Lacharriere ........ France Director. Chairman of the Board and
Fimalac Chief Executive Officer of Fimalac.
97, rue de Lille Chairman of Fitch-Ibca, Director of
75007 Paris (France) Canal+, Casino, Euris, Groupe Andre
and Groupe Flo.
Helmut Maucher ..................... Germany Director. Chairman of the Board and
Nestle S.A. Chief Executive Officer of Nestle
Avenue Nestle, 55 S.A., Director of Bayer AG and
CH 1800 Vevey (Switzerland) Deutsche Bahn AG. See Part D.
Francois Dalle ..................... France Director. President and Founder of
Villa Clairefontaine l'Institut de l'Entreprise and of
14, Chemin du Nant d'Argent l'Association Entreprise et Progres,
CH 1223 Cologny (Switzerland) President of the review Humanisme et
Entreprise. See Part B and D.
Guy Landon.......................... France Director. Honorary Chairman and
Board Member of the European Center
for Continuing Education.
Olivier Lecerf ..................... France Director. Board Member and Honorary
8, rue Guy de Maupassant Chairman of Lafarge.
75016 Paris (France)
Michel Somnolet..................... France Director. Vice President in charge
of Administration and Finance.
Representative of L'Oreal on the
Board of Directors of Sanofi-
Synthelabo. Executive Vice
President, Chief Operating Officer
and Secretary of Cosmair
(1991-1999). See Part B.
Liliane Bettencourt................. France Director. See Part D.
Edouard de Royere .................. France Director. Chairman of the Board and
L'Air Liquide S.A. Chief Executive Officer of L'Air
75, quai d'Orsay Liquide (1985 to 1995), Honorary
75007 Paris (France) Chairman to date. Director of L'Air
Liquide, Danone, KBL, Michelin,
Sodexho, Solvay and Facom. President
of ANSA (Association Nationale des
Societes par Actions).
Francoise Bettencourt Meyers........ France Director. See Part D.
Peter Brabeck-Letmathe ............. Austria Director. General Manager (1992 to
Nestle S.A. 1997) then Chief Executive Officer
Avenue Nestle, 55 of Nestle S.A. (1997 to date).
CH 1800 Vevey (Switzerland) Director of Credit Suisse Groupe.
See Part D.
Francisco Castaner Basco ........... Spain Director. General Manager of Nestle
Nestle S.A. S.A. (1997 to date). See Part D.
Avenue Nestle, 55
CH 1800 Vevey (Switzerland)
</TABLE>
34
<PAGE>
D. DIRECTORS AND EXECUTIVE OFFICERS OF GESPARAL
The following table sets forth the name, citizenship, present principal
occupation or employment and material occupation, positions, offices or
employment for the past five years of each director and executive officer of
Gesparal. Unless otherwise indicated below, (i) each individual has held his or
her positions for more than the past five years and (ii) the business address of
each person is 41, rue Martre, 92117 Clichy Cedex, France.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS CITIZENSHIP EMPLOYMENT HISTORY
---------------- ----------- ------------------
<S> <C> <C>
Andre Bettencourt................... France Chairman of the Board and Chief
Executive Officer.
Francois Dalle ..................... France Vice-Chairman of the Board.
See Part C. See Part B and C.
Helmut Maucher ..................... Germany Vice-Chairman of the Board.
See Part C. See Part C.
Liliane Bettencourt ................ France Vice-Chairman of the Board.
See Part C.
Jose Daniel ........................ Spain Director. General Manager of Nestle
Nestle S.A. S.A. (1979 to 1997), Chairman of the
Avenue Nestle, 55 Board and Chief Executive Officer of
CH 1800 Vevey (Switzerland) Nestle Spain.
Francoise Bettencourt Meyers........ France Director. See Part C.
Jean-Pierre Meyers.................. France Director. See Part C.
Lindsay Owen-Jones.................. United Kingdom Director. See Part B and C.
Peter Brabeck-Letmathe ............. Austria Director. See Part C.
See Part C.
Francisco Castaner Basco ........... Spain Director. See Part C.
See Part C.
</TABLE>
35
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses listed below:
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C Services, L.L.C.
P.O. Box 3301 120 Broadway, 13th Floor 85 Challenger Road
South Hackensack, NJ 07606 New York, New York 10271 Ridgefield Park, New Jersey 07660
Attn: Reorg. Dept. Attn: Reorg. Dept. Attn: Reorg. Dept.
By Facsimile Transmission
(for Eligible Institutions only):
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[INNISFREE LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers call collect: (212) 750-5833
CALL TOLL-FREE: (888) 750-5834
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
(CALL COLLECT) (212) 632-6717
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS A COMMON STOCK
OF
CARSON, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 8, 2000
OF
CRAYON ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY
OF
COSMAIR, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, APRIL 4, 2000, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
ChaseMellon Shareholder Reorganization Department ChaseMellon Shareholder
Services, L.L.C. 85 Challenger Road Services, L.L.C.
Reorganization Department Mail Drop -- Reorg Reorganization Department
P.O. Box 3301 Ridgefield Park, NJ 07660 120 Broadway
South Hackensack, 13th Floor
NJ 07606 New York, NY 10271
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile By Telephone:
(201) 296-4860
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SPECIFIED
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SPECIFIED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Carson, Inc. if
certificates for Shares (as such term is defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined in Instruction 2 below) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at the Book-Entry Transfer Facility (as
defined in and pursuant to the procedures described in the Offer to Purchase).
Stockholders who deliver Shares by book-entry transfer are referred to herein as
'Book-Entry Stockholders and other stockholders who deliver shares are referred
to herein as 'Certificate Stockholders.'
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedures described in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: .............................................
Account Number: ............................................................
Transaction Code Number: ...
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s): ............................................
Window Ticket No. (if any): ................................................
Date of Execution of Notice of Guaranteed Delivery: ........................
Name of Institution which Guaranteed Delivery: .............................
If delivered by Book-Entry Transfer, check box: [ ]
Name of Tendering Institution: ..............................................
Account Number: .............................................................
Transaction Code Number: ...
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
TOTAL SHARES
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Share certificates delivered
to the Depositary are being tendered hereby. See Instruction 4.
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS CONTAINED
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Crayon Acquisition Corp., a Delaware
corporation ('PURCHASER') and a wholly-owned subsidiary of Cosmair, Inc., a
Delaware corporation ('PARENT'), the above-described shares of Class A common
stock, par value $0.01 per share (the 'SHARES'), of Carson, Inc., a Delaware
corporation (the 'COMPANY'), pursuant to Purchaser's offer to purchase all
outstanding Shares at a price of $5.20 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions contained
in the Offer to Purchase, dated March 8, 2000, and in this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the 'OFFER'). The undersigned understands that Purchaser
reserves the right to transfer or assign, in whole at any time, or in part from
time to time, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the
<PAGE>
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer. Receipt of the Offer is hereby
acknowledged.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of February 25, 2000 (the 'MERGER AGREEMENT'), among Parent, Purchaser and
the Company.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to, and any and all claims in respect of or
arising or having arisen as a result of the undersigned's status as a holder of,
all the Shares that are being tendered hereby (and any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect thereof on or after February 25, 2000 (collectively,
'DISTRIBUTIONS')) and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares (and all Distributions), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver certificates for such Shares (and any and all Distributions), or
transfer ownership of such Shares (and any and all Distributions) on the account
books maintained by the Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of Purchaser, (ii) present such Shares (and any and all Distributions)
for transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
and all Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints each designee of Purchaser as the attorney-in-fact and proxy of the
undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, all of the
Shares (and any and all Distributions) tendered hereby and accepted for payment
by Purchaser. This appointment will be effective if and when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment shall, without further
action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Shares (and any and all
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if given,
will not be deemed effective). Purchaser reserves the right to require that, in
order for Shares or other securities to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the 'EXCHANGE ACT'), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will not
be subject to any adverse claims. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Merger Agreement, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances described in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated herein in the box entitled 'Special Payment
Instructions,' please issue the check for the purchase price of all Shares
purchased and/or return any certificates for Shares not tendered or accepted for
payment in the name(s) of the registered holder(s) appearing above under
'Description of Shares Tendered.' Similarly, unless otherwise indicated under
'Special Delivery Instructions,' please mail the check for the purchase price of
all Shares purchased and/or return any certificates for Shares not tendered or
not accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under 'Description of
Shares Tendered.' In the event that the boxes entitled 'Special Payment
Instructions' and 'Special Delivery Instructions' are both completed, please
issue the check for the purchase price of all Shares purchased and/or return any
certificates evidencing Shares not tendered or not accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
in the box entitled 'Special Payment Instructions,' please credit any Shares
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that Purchaser has no obligation, pursuant to the
'Special Payment Instructions,' to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.
<PAGE>
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for
the purchase price of Shares accepted for
payment (less the amount of any federal
income and backup withholding tax required
to be withheld) is to be issued in the name
of someone other than the undersigned, if
certificates for Shares not tendered or not
accepted for payment are to be issued in the
name of someone other than the undersigned
or if Shares tendered hereby and delivered
by book-entry transfer that are not accepted
for payment are to be returned by credit to
an account maintained at the Book-Entry
Transfer Facility other than the account
indicated above.
Issue check and/or Share certificate(s) to:
Name: ......................................
(PLEASE PRINT)
Address: ...................................
(INCLUDE ZIP CODE)
............................................
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY
NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry
transfer and not purchased to the Book-Entry
Transfer Facility account:
............................................
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for
Shares not tendered or not accepted for
payment and/or the check for the purchase
price of Shares accepted for payment (less
the amount of any federal income and backup
withholding tax required to be withheld) is
to be sent to someone other than the
undersigned or to the undersigned at an
address other than that shown under
'Description of Shares Tendered.'
Mail check and/or Share certificates to:
Name: ......................................
(PLEASE PRINT)
Address: ...................................
(INCLUDE ZIP CODE)
............................................
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
<PAGE>
<TABLE>
<S> <C>
IMPORTANT -- SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
............................................................
............................................................
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ..............................................., 2000
(Must be signed by registered holder(s) exactly as name(s)
appear(s) on the Share certificate(s) or on a security
position listing or by person(s) authorized to become
registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor,
administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or
representative capacity, please provide the following
information and see Instruction 5.)
Name(s): ...................................................
...................................................
(PLEASE PRINT)
Name of Firm: ..............................................
Capacity (full title): .....................................
(SEE INSTRUCTION 5)
Address: ...................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ............................
Taxpayer Identification or
Social Security Number: ....................................
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ......................................
Name(s): ...................................................
...................................................
(PLEASE PRINT)
Title: .....................................................
Name of Firm: ..............................................
Address: ...................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ............................
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has (have) completed either
the box entitled 'Special Payment Instructions' or the box entitled 'Special
Delivery Instructions' on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an 'Eligible Institution'). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of the
Company either if Share certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures described herein and in Section 3 of the
Offer to Purchase. In order for Shares to be validly tendered pursuant to the
Offer, (i) this Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry delivery of Shares, and any
other documents required by this Letter of Transmittal must be received by the
Depositary at one of its addresses specified on the back cover of the Offer to
Purchase on or prior to the Expiration Date and either Share certificates
representing tendered Shares must be received by the Depositary, or such Shares
must be tendered pursuant to the procedure for book-entry transfer described
herein and in Section 3 of the Offer to Purchase and a Book-Entry Confirmation
must be received by the Depositary, in each case on or prior to the Expiration
Date, or (ii) the guaranteed delivery procedures described herein and in
Section 3 of the Offer to Purchase must be complied with.
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's Share certificates are not immediately available or time will not
permit all required documents to reach the Depositary on or prior to the
Expiration Date, or the procedures for book-entry transfer cannot be complied on
a timely basis, such Shares may nevertheless be tendered if all of the following
guaranteed delivery procedures described herein and in Section 3 of the Offer to
Purchase are duly complied with.
Pursuant to such guaranteed delivery procedures, (i) such tender is made by
or through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, is received by the Depositary, as provided below, on or prior to the
Expiration Date and (iii) the Share certificates (or a Book-Entry Confirmation)
representing all tendered Shares, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required by the
Letter of Transmittal are received by the Depositary, within three New York
Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery.
The term 'AGENT'S MESSAGE' means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of the Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING THE SHARES, THIS LETTER
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER. THE SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE>
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under 'Description of
Shares Tendered' is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares that are to be tendered in the box entitled 'Number of Shares
Tendered.' In any such case, new certificate(s) for the remainder of the Shares
that were evidenced by the old certificates will be sent to the registered
holder, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the Expiration Date or the termination
of the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution as described in Instruction 1 hereto.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person or
otherwise) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption therefrom
is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of, and/or
Share certificates for Shares not accepted for payment or not tendered are to be
issued in the name of and/or returned to, a person other than the signer of this
Letter of Transmittal or if a check is to be sent, and/or such certificates are
to be returned, to a person other than the signer of this Letter of Transmittal,
or to an address other than that shown above, the appropriate boxes on this
Letter of Transmittal should be completed. Any stockholder(s) delivering Shares
by book-entry transfer may request that
<PAGE>
Shares not purchased be credited to such account maintained at the Book-Entry
Transfer Facility as such stockholder(s) may designate in the box entitled
'Special Payment Instructions.' If no such instructions are given, any such
Shares not purchased will be returned by crediting the account at the Book-Entry
Transfer Facility designated above as the account from which such Shares were
delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address and phone number specified at
the end of this Letter of Transmittal.
9. WAIVER OF CONDITIONS. Subject to the Merger Agreement, Purchaser reserves
the absolute right in its sole discretion to waive, at any time or from time to
time, any of the specified conditions of the Offer, in whole or in part, in the
case of any Shares tendered.
10. BACKUP WITHHOLDING. UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY
WILL BE REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN
STOCKHOLDERS PURSUANT TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING ON PAYMENTS MADE TO CERTAIN STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER
MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER
('TIN') AND CERTIFY, UNDER PENALTY OF PERJURY, THAT HE IS NOT SUBJECT TO BACKUP
FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN
THE LETTER OF TRANSMITTAL.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, most corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed 'Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9' for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has (have) been lost, destroyed or stolen, the stockholder
should promptly notify the Depositary by checking the box immediately preceding
the special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax laws, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his social security number. If a tendering stockholder
is subject to backup withholding, such stockholder must cross out item (2) of
Part 2 (the Certification box) on the Substitute Form W-9. If the Depositary is
not provided with the correct TIN, the stockholder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such stockholder with respect to Shares purchased pursuant to the Offer
may be subject to backup withholding.
Certain stockholders (including, among others, most corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, should furnish their TIN, write 'Exempt' on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
income tax. Rather, the amount of the backup withholding can be credited against
the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding of federal income tax on payments made to
certain stockholders with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form contained herein certifying that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed 'Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9' for additional guidance on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, such
stockholder should write 'Applied For' in the space provided for in the TIN in
Part 1, and sign and date the Substitute Form W-9. If 'Applied For' is written
in Part 1 and the Depositary is not provided with a TIN within sixty (60) days,
the Depositary will withhold 31% on all payments of the purchase price until a
TIN is provided to the Depositary.
<PAGE>
<TABLE>
<S> <C> <C> <C>
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C
- --------------------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE --------------------------------
BOX AT RIGHT AND CERTIFY BY SIGNING AND Social Security Number
DATING BELOW. (If awaiting TIN
write 'Applied For')
OR
-------------------------------
Employer Identification Number
(If awaiting TIN write
'Applied For')
------------------------------------------------------------------------------------
SUBSTITUTE PART 2 -- CERTIFICATE -- Under penalties of perjury, I certify that:
FORM W-9 (1) The number shown on this form is my correct Taxpayer Identification Number (or I
am waiting for a number to be issued for me), and
DEPARTMENT OF THE (2) I am not subject to backup withholding because: (a) I am exempt from backup
TREASURY INTERNAL withholding, or (b) I have not been notified by the Internal Revenue Service (the
REVENUE SERVICE 'IRS') that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
------------------------------------------------------------------------------------
PAYOR'S REQUEST FOR CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
TAXPAYER IDENTIFICATION notified by the IRS that you are currently subject to backup withholding because of
NUMBER ('TIN') under-reporting interest or dividends on your tax returns. However, if after being
notified by the IRS that you are subject to backup withholding, you receive another
notification from the IRS that you are no longer subject to backup withholding, do not
cross out such item (2). (Also see instructions in the enclosed Guidelines)
------------------------------------------------------------------------------------
SIGNATURE ............... , DATE .............. , 2000 PART 3 -- Awaiting TIN [ ]
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
<TABLE>
<S> <C> <C>
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has not been issued
to me, and either (1) I have mailed or delivered an application to receive a Taxpayer
Identification Number to the appropriate Internal Revenue Service Center or Social Security
Administration Officer or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number to the Depositary by the
time of payment, 31% of all reportable payments made to me thereafter will be withheld, but that
such amounts will be refunded to me if I provide a certified Taxpayer Identification Number to
the Depositary within sixty (60) days.
Signature ..................................... Date ...................................., 2000
</TABLE>
<PAGE>
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at its address and telephone number specified
below:
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Banks and Brokers call collect: (212) 750-5833
CALL TOLL FREE: (888) 750-5834
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
CALL COLLECT: (212) 632-6717
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF CLASS A COMMON STOCK
OF
CARSON, INC.
TO
CRAYON ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY
OF
COSMAIR, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, APRIL 4, 2000, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a form substantially equivalent to
it, must be used to accept the Offer (as defined below) if certificates
representing shares of Class A common stock, par value $0.01 per share (the
'Shares'), of Carson, Inc., a Delaware corporation (the 'Company'), are not
immediately available, if the procedure for book-entry transfer cannot be
completed prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase), or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date. This form may be delivered by hand,
transmitted by facsimile transmission or mailed to the Depositary. See
Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
ChaseMellon Shareholder Reorganization Department ChaseMellon Shareholder
Services, L.L.C. 85 Challenger Road Services, L.L.C.
Reorganization Department Mail Drop -- Reorg Reorganization Department
P.O. Box 3301 Ridgefield Park, NJ 07660 120 Broadway
South Hackensack, NJ 07606 13th Floor
New York, NY 10271
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile By Telephone:
(201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SPECIFIED ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SPECIFIED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an 'Eligible Institution'
under the instructions to such Letter of Transmittal, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Crayon Acquisition Corp., a Delaware
corporation ('Purchaser'), and a wholly-owned subsidiary of Cosmair, Inc., a
Delaware corporation ('Parent'), upon the terms and subject to the conditions
contained in Purchaser's Offer to Purchase, dated March 8, 2000 (the 'Offer to
Purchase'), and the related Letter of Transmittal (which, together with any
amendments and supplements thereto, constitute the 'Offer'), receipt of which is
hereby acknowledged, the number of shares indicated below of Class A common
stock, par value $0.01 per share (the 'Shares'), of Carson, Inc., a Delaware
corporation (the 'Company'), pursuant to the guaranteed delivery procedures
described in Section 3 of the Offer to Purchase.
Number of Shares:...........................................................
Certificate Nos. (if available):
............................................................................
............................................................................
Check box if Shares will be tendered by book-entry transfer: [ ]
Account Number: ...........................................................
Dated:................................................................, 2000
Name(s) of Record Holder(s): ..............................................
............................................................................
............................................................................
PLEASE PRINT
Address(es):................................................................
............................................................................
............................................................................
ZIP CODE
Area Code and Tel. No.:
............................................................................
............................................................................
Signature(s): .............................................................
............................................................................
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program
or the Stock Exchange Medallion Program, guarantees to deliver to the
Depositary either certificates representing the Shares tendered hereby, in
proper form for transfer, or confirmation of book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, in
each case with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message, and any other documents required by the Letter of
Transmittal, within three New York Stock Exchange trading days after the
date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the same time period stated
herein. Failure to do so could result in a financial loss to such Eligible
Institution.
<TABLE>
<S> <C>
Name of Firm: ............................... ..............................................
AUTHORIZED SIGNATURE
Address: .................................... Name: .......................................
PLEASE PRINT
............................................. Title: ......................................
ZIP CODE
Area Code & Tel. No: ........................ Date:..................................., 2000
</TABLE>
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL SHARES OF CLASS A COMMON STOCK
OF
CARSON, INC.
AT
$5.20 NET PER SHARE
BY
CRAYON ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY
OF
COSMAIR, INC.
-----------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, APRIL 4, 2000, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
March 8, 2000
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated March 8,
2000 (the 'OFFER TO PURCHASE'), and the related Letter of Transmittal (which,
together with any amendments and supplements thereto, collectively constitute
the 'OFFER') in connection with the offer by Crayon Acquisition Corp., a
Delaware corporation ('PURCHASER') and a wholly-owned subsidiary of Cosmair,
Inc., a Delaware corporation ('PARENT'), to purchase all outstanding shares of
Class A common stock, par value $0.01 per share (the 'SHARES'), of Carson, Inc.,
a Delaware corporation (the 'COMPANY'), at a purchase price of $5.20 per Share,
net to you in cash, without interest thereon (the 'SHARE PRICE'). WE ARE THE
HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
ENCLOSED LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions contained in the Offer.
Your attention is invited to the following:
1. The offer price is $5.20 per Share, net to you in cash, without
interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously (with three
directors abstaining) approved and adopted the Merger Agreement (as defined
in the Offer to Purchase) and the transactions contemplated thereby,
including the Offer and the Merger (as defined in the Offer to
Purchase), determined that the Offer and the Merger are advisable and fair
to and in the best interests of, the Company's stockholders and recommends
that the Company's stockholders accept the Offer and tender all of their
Shares pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 midnight, New York
City time, on Tuesday, April 4, 2000, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the Expiration Date (as
defined in the Offer to Purchase) that number of Shares which would
represent at least a majority of the voting power of the Company's common
stock then issued and outstanding on a fully-diluted basis. The Offer is
also subject to certain other conditions contained in the Offer to Purchase.
See the Introduction and Sections 1, 14 and 15 of the Offer to Purchase.
<PAGE>
6. Any stock transfer taxes applicable to the transfer and sale of
Shares to Purchaser pursuant to the Offer will be paid by Purchaser, except
as otherwise provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form attached to
this letter. An envelope to return your instructions to us is enclosed. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the attachment to this letter. Your instructions should
be forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share certificates for, or of Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to, such Shares,
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)),
and any other documents required by the Letter of Transmittal. Accordingly,
payment might not be made to all tendering stockholders at the same time, and
will depend upon when Share certificates or Book-Entry Confirmations of such
Shares are received into the Depositary's account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase).
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL SHARES OF CLASS A COMMON STOCK
OF
CARSON, INC.
AT
$5.20 NET PER SHARE IN CASH
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated March 8, 2000 and the related Letter of Transmittal in
connection with the Offer by Crayon Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Cosmair, Inc., a Delaware corporation, to
purchase all outstanding shares of Class A common stock, par value $0.01 per
share (the 'Shares') of Carson, Inc., a Delaware corporation, at a price of
$5.20 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions in the Offer to Purchase and related Letter
of Transmittal.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions contained in the
Offer.
Number of Shares to Be Tendered*
.............................. Shares
Dated: ....................... , 2000
.....................................
.....................................
SIGNATURE(S)
.....................................
.....................................
PRINT NAME(S)
.....................................
.....................................
ADDRESS(ES)
.....................................
AREA CODE AND TELEPHONE NUMBER
.....................................
TAX ID OR SOCIAL SECURITY NUMBER
- ---------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE>
LAZARD FRERES & CO. LLC
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
OFFER TO PURCHASE FOR CASH
ALL SHARES OF CLASS A COMMON STOCK
OF
CARSON, INC.
AT
$5.20 NET PER SHARE
BY
CRAYON ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY
OF
COSMAIR, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, APRIL 4, 2000, UNLESS THE OFFER IS EXTENDED.
March 8, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Crayon Acquisition Corp., a Delaware corporation
('PURCHASER'), and a wholly-owned subsidiary of Cosmair, Inc., a Delaware
corporation ('PARENT'), to act as Dealer Manager in connection with Purchaser's
offer to purchase all outstanding shares of Class A common stock, par value
$0.01 per share (the 'SHARES'), of Carson, Inc., a Delaware corporation (the
'COMPANY'), at a price of $5.20 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions contained in the
Offer to Purchase, dated March 8, 2000 (the 'OFFER TO PURCHASE'), and in the
related Letter of Transmittal (which, together with any amendments and
supplements thereto, constitute the 'OFFER') enclosed herewith. Please furnish
copies of the enclosed materials to those of your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) that number of Shares which would represent at least a
majority of the voting power of the Company's common stock then issued and
outstanding on a fully-diluted basis. The Offer is also subject to the other
conditions contained in the Offer to Purchase. See the Introduction and
Sections 1, 14 and 15 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated March 8, 2000;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be delivered
to the Depositary, or if the procedures for book-entry transfer cannot be
completed, by the Expiration Date;
4. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
<PAGE>
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C. (the 'DEPOSITARY').
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and thereby purchase all Shares
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (i) share
certificates for such Shares, or timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company,
pursuant to the procedures described in Section 2 of the Offer to Purchase, (ii)
a properly completed and duly executed Letter of Transmittal (or a properly
completed and manually signed facsimile thereof) or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary, the Dealer Manager and the Information
Agent, as described in the Offer to Purchase) for soliciting tenders of Shares
pursuant to the Offer. Purchaser will, however, upon request, reimburse brokers,
dealers, commercial banks and trust companies for customary mailing and handling
costs incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, APRIL 4, 2000, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the instructions contained in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
described in Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent at its address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
LAZARD FRERES & CO. LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS WILL CONSTITUTE YOU THE
AGENT OF PURCHASER, PARENT, THE COMPANY, THE INFORMATION AGENT, THE DEALER
MANAGER, THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED)
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payor.
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL
SECURITY
number of --
- ------------------------- ---------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the
first individuals on
the account (1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint
funds, either
person (1)
4. Custodian account of a minor The minor (2)
(Uniform Gift to Minors Act
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the minor
(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent
designated ward, minor, or person (3)
incompetent person
7. a. The usual revocable The grantor-
savings trust account trustee (1)
(grantor is also
trustee)
b. So-called trust account The actual owner (1)
that is not a legal or
valid trust under State
law
8. Sole proprietorship account The owner (4)
</TABLE>
<TABLE>
<CAPTION>
Give the
For this type of account: EMPLOYER
IDENTIFICATION
number of --
- ------------------------- ---------------------
<S> <C>
9. A valid trust, estate or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.) (5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a state or local
government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
A corporation.
A financial institution.
An organization exempt from tax under section 501(a), an individual retirement
plan or a custodial account under Section 403(b)(7).
The United States or any agency or instrumentality thereof.
A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
An international organization or any agency or instrumentality thereof.
A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
A real estate investment trust.
A common trust fund operated by a bank under section 584(a).
An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
An entity registered at all times under the Investment Company Act of 1940.
A foreign central bank of issue.
PAYMENTS NOT GENERALLY SUBJECT TO BACKUP WITHHOLDING
Payment of dividends and patronage dividends not generally subject to backup
withholding include the following:
Payments to nonresident aliens subject to withholding under section 1441.
Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
Payments of patronage dividends where the amount renewed is not paid in money.
Payments made by certain foreign organizations.
Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payor's trade or business and you have not provided your
correct taxpayer identification number to the payor.
Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
Payments described in section 6049(b)(5) to non-resident aliens.
Payments on tax-free covenant bonds under section 1451.
Payments made by certain foreign organizations.
Payments made to a nominee.
EXEMPT PAYEE DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE 'EXEMPT ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 604lA(a),
6045 and 6050A.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payors must be given the numbers whether or not recipients are
required to file tax returns. Payors must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payor. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payor, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDER. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated
March 8, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal,
and is being made to all holders of Shares. The Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction or any administrative
or judicial action pursuant thereto.
NOTICE OF OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
CARSON, INC.
AT
$5.20 NET PER SHARE
BY
CRAYON ACQUISITION CORP.
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
COSMAIR, INC.
Crayon Acquisition Corp., a Delaware corporation ("Purchaser") and a direct
wholly-owned subsidiary of Cosmair, Inc., a Delaware corporation ("Parent"), is
offering to purchase all outstanding shares of Class A common stock, par value
$0.01 per share (the "Shares"), of Carson, Inc., a Delaware corporation (the
"Company"), at a price of $5.20 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated March 8, 2000, and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer"). Parent is a wholly-owned subsidiary of L'Oreal S.A. Tendering
stockholders will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares pursuant to the Offer. The purpose of the Offer
is to acquire for cash as many outstanding Shares as possible as a first step in
acquiring the entire equity interest in the Company. Following consummation of
the Offer, Purchaser intends to effect the merger described below.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, APRIL 4, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES WHICH CONSTITUTES AT LEAST A MAJORITY OF THE VOTING POWER OF
THE COMPANY'S THEN ISSUED AND OUTSTANDING SHARES OF COMMON STOCK ON A
FULLY-DILUTED BASIS.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 25, 2000 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that after the
purchase of Shares pursuant to the Offer, subject to the satisfaction or waiver
of certain conditions, Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving the Merger as a direct, wholly-owned
subsidiary of Parent. At the effective time of the Merger, each outstanding
Share (other than Shares owned by the Company or any subsidiary of the Company,
and shares owned by stockholders who have properly exercised their appraisal
rights under Delaware law) will be converted into the right to receive $5.20 in
cash, or any greater amount paid pursuant to the Offer, without interest.
Concurrently with the execution of the Merger Agreement, Parent, Purchaser
and the Company entered into a Stockholders Agreement, dated February 25, 2000
(the "Stockholders Agreement"), with the holders of all outstanding shares of
Class C common stock of the Company, par value $.01 per share (the "Class C
Shares"), and 2,875,973 Shares (collectively, the "Majority Stockholders"),
pursuant to which such Majority Stockholders have agreed, subject to at least an
additional 565,857 Shares being validly tendered (and not withdrawn) pursuant to
the Offer, to convert their Class C Shares into Shares and validly tender (and
not to withdraw) all of their Shares in the Offer, which Shares collectively
represent approximately 48% of the Company's outstanding common stock on a
fully-diluted basis and approximately 88% of the total voting power of the
Company's outstanding common stock.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") UNANIMOUSLY (WITH THREE
DIRECTORS ABSTAINING) HAS DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, TAKEN
TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS,
HAS APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER ALL OF THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased Shares validly tendered as, if and when Purchaser
gives oral or written notice to the Depositary (as defined in the Offer to
Purchase) of Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases upon the terms and subject to the conditions of the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering stockholders whose Shares have
theretofore been accepted for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) share certificates for such Shares or a timely Book-Entry
Confirmation (as defined in Section 2 of the Offer to Purchase) with respect to
such Shares and (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in Section 2 of the Offer to Purchase) and (iii)
any other documents required by the Letter of Transmittal. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY
PURCHASER BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Tuesday, April 4, 2000, unless and until Purchaser, in accordance with the terms
of the Offer and the Merger Agreement, shall have extended the period of time
for which the Offer is open, in which event the term "Expiration Date" shall
mean the time and date at which the Offer, as so extended by Purchaser, shall
expire (provided, however, that without the Company's consent, the Expiration
Date will not be extended beyond July 31, 2000). Purchaser shall not have any
obligation to pay interest on the purchase price for tendered Shares whether or
not Purchaser exercises its right to extend the period of time during which the
Offer is open. Any such extension will be followed by a public announcement
thereof by no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares. Without limiting the manner in which Purchaser may choose to make any
public announcement, Purchaser shall have no obligation to publish, advertise,
or otherwise communicate any such public announcement other than by issuing a
release to the Dow Jones News Service or as otherwise may be required by law.
Except as otherwise provided in the Offer to Purchase, tenders of Shares
made pursuant to the Offer are irrevocable. Shares tendered pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment as provided in the Offer to Purchase, may also
be withdrawn at any time after May 6, 2000. For a withdrawal to be effective, a
written or facsimile transmission notice of withdrawal must be timely received
by the Depositary at one of its addresses set forth on the back cover of the
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder, if different from that of the
person who tendered such Shares. If certificates evidencing Shares have been
delivered or otherwise identified to the Depositary, then prior to the physical
release of such certificates, the tendering stockholder must also submit the
serial numbers shown on the particular certificates evidencing the Shares to be
withdrawn, and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, as defined in Section 3 of the Offer to Purchase
(except in the case of Shares tendered for the account of the Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3 of the Offer to Purchase, the notice
of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility (as defined in Section 2 of the Offer to Purchase)
to be credited with the withdrawn Shares. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by Purchaser, in its sole discretion, whose determination shall be final and
binding. Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 of the
Offer to Purchase.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and, if
required, any other relevant materials will be mailed to record holders of
Shares and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or in the name of whose nominees,
appear on the Company's stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares by Purchaser.
The information required to be disclosed by paragraph (d)(1) of Rule 14d-6
under the Exchange Act is contained in the Offer to Purchase and is incorporated
herein by reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, Letter of Transmittal and
other tender offer documents may be directed to the Information Agent as set
forth below, and copies will be furnished promptly at Purchaser's expense.
Questions or requests for assistance may be directed to the Information Agent or
the Dealer Manager. Neither Purchaser nor Parent will pay any fees or
commissions to any broker or dealer or other person (other than the Depositary,
the Dealer Manager and the Information Agent) in connection with the
solicitation of tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[INNISFREE LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
BANKS AND BROKERS CALL COLLECT: (212) 750-5833
ALL OTHERS CALL TOLL-FREE: (888) 750-5834
The Dealer Manager for the Offer is:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza New York, New York 10020
(CALL COLLECT) (212) 632-6717
March 8, 2000
<PAGE>
Exhibit (d)(3)
CARSON, INC.
c/o Morningside Capital Group, L.L.C.
One Morningside Drive, North, Suite 200
Westport, CT 06880
July 24, 1997
Cosmair, Inc.
575 Fifth Avenue
New York, NY 10017
Attn: John D. Sullivan
Ladies and Gentlemen:
You have requested certain information relating to Crayon, Inc., a Delaware
corporation (the 'Company'), and its subsidiaries in connection with your
consideration of a possible negotiated transaction between the Company and/or
its stockholders and you (a 'Transaction').
As a condition to the furnishing of the requested information to you and
your Representatives (as defined below), you agree that (i) all information
relating to the Company and its subsidiaries furnished by or on behalf of the
Company to you or Representatives, whether prior to or after your acceptance of
this letter and irrespective of the form of communication, or learned by you in
connection with visits to the Company's facilities, in connection with your
consideration of a Transaction (such information, together with notes,
memoranda, summaries, analyses, compilations and other writings relating thereto
or based thereon prepared by you or your Representatives being referred to
herein as the 'Evaluation Material') will be kept strictly confidential,
(ii) the Evaluation Material will not be used in any way detrimental to the
Company or its stockholders and (iii) the Evaluation Material will be used
solely for the purpose of determining the desirability of a Transaction;
provided, however, that the Evaluation Material may be disclosed to any of
your Representatives who need to know such information for the purpose of
assisting you in evaluating a Transaction (it being understood that such
Representatives will be informed by you of the contents of this agreement and
that, by receiving such information, such Representatives are agreeing to be
bound by this agreement). The term 'Evaluation Material' does not include
information which (i) is or becomes generally available to the public other than
as a result of disclosure by you or your Representatives, (ii) becomes available
to you or any of your Representatives on a non-confidential basis from a source
other than the Company or its affiliates or Representatives or (iii) is or has
been independently developed by you or your
<PAGE>
Representatives without reference to any Evaluation Material, provided that
neither you nor any of your Representatives is aware that such source is under
an obligation (whether contractual, legal or fiduciary) to the Company to keep
such information confidential. For purposes hereof, the 'Representatives' of any
entity means such entity's directors, officers, employees, legal and financial
advisors, accountants and other agents and representatives. You will be
responsible for any breach of this agreement by any of your Representatives and
agree to take all reasonable measures to restrain your Representatives from
prohibited or unauthorized disclosure or use of Evaluation Material.
In addition, you agree that, except with the prior written consent of the
Company or as required or permitted by this agreement, you will not, and you
will direct your Representatives not to, make any release to the press or other
public disclosure concerning either (i) the existence of this letter or that the
Evaluation Material has been made available to you or (ii) in the event that the
Company or any of its Representatives engages in discussions or negotiations
with you or your Representatives, the fact that discussions or negotiations are
taking place concerning a possible Transaction, or any of the terms, conditions
or other facts with respect to any such possible Transaction, including the
status thereof, except for such public disclosure as may be necessary, in the
opinion of your outside counsel, for you not to be in violation of or default
under any applicable law, regulation, stock exchange rule or governmental order.
If you propose to make any disclosure based upon such an opinion, you will
deliver the text of the proposed disclosure as far in advance of its disclosure
as is reasonably practicable, and will in good faith consult with and consider
the suggestions of the Company and its Representatives concerning the nature and
scope of the information you propose to disclose.
If you or any of your Representatives are requested in any judicial or
administrative proceeding or by any governmental or regulatory authority to
disclose any Evaluation Material, you will (i) give the Company prompt notice of
such request so that the Company may seek an appropriate protective order and
(ii) consult with the Company as to the advisability of taking legally available
steps to resist or narrow such a request. You will use reasonable efforts to
cooperate with the Company, at the Company's expense, in the Company's attempt
to obtain such an order. If in the absence of a protective order you are
nonetheless compelled to disclose Evaluation Material, the Company agrees that
you may make such disclosure without liability hereunder, provided that you give
the Company written notice of the information to be disclosed as far in advance
of its disclosure as is practicable and, upon the Company's request and at its
expense, use your reasonable efforts to obtain
<PAGE>
hereto. You hereby acknowledge that you may be disqualified from participating
in a Transaction if you fail to comply with the procedures and restrictions set
forth in this paragraph and the following two paragraphs.
As a further condition to the furnishing of the Evaluation Material, unless
specifically requested in writing in advance by the Company's Board of
Directors, neither you nor any of your affiliates or associates (as such terms
are defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended
(the '1934 Act')) will, and you and they will not assist or encourage others
(including by providing financing) to, directly or indirectly, for a period of
two (2) years from the date of this agreement (i) acquire or agree, offer, seek
or propose (whether publicly or otherwise) to acquire ownership (including but
not limited to beneficial ownership (as defined in Rule 13d-3 under the 1934
Act)) of (x) the Company or any of its assets or businesses, (y) any securities
issued by the Company or (z) any rights or options to acquire such ownership
(including from a person other than the Company), whether by means of a
negotiated purchase of securities or assets, tender or exchange offer, merger or
other business combination, recapitalization, restructuring or other
extraordinary transaction (a 'Business Combination Transaction'), (ii) engage in
any 'solicitation' of 'proxies' (as such terms are used in the proxy rules
promulgated under the 1934 Act, but disregarding clause (iv) of Rule 14a-1(1)(2)
and including any exempt solicitation pursuant to Rule 14a-2(b)(1) or (2)), or
form, join or in any way participate in a 'group', (as defined under the 1934
Act), with respect to any securities issued by the Company, (iii) otherwise seek
or propose to influence or control the Board of Directors, management or
policies of the Company, (iv) take any action that could reasonably be expected
to require the Company to make a public announcement regarding any of the types
of matters referred to in clause (i), (ii) or (iii) above, or (v) enter into any
discussions, negotiations, agreements, arrangements or understandings with any
third party with respect to any of the foregoing. You also agree during such
period not to request the Company or any of its Representatives to amend or
waive any provision of this paragraph (including this sentence). Notwithstanding
the foregoing, you shall have the right for a 60-day period after the date
hereof to deliver a written proposal for a Business Combination Transaction to
the Chairman of the Executive Committee of the Company so long as you make no
public disclosure concerning such proposal or take any other action that could
reasonably be expected to require the Company to make a public disclosure
regarding such proposal. You hereby acknowledge that neither you nor any of
your associates nor, to your knowledge without making independent inquiry, any
of your affiliates is on the date hereof the beneficial owner of any shares of
capital stock of the Company.
<PAGE>
If, during the 90-day period after the date hereof, the Company enters into
an agreement with an unrelated third party which restricts the ability of such
third party to make a proposal for or engage in a Business Combination
Transaction with the Company that is in any way less restrictive than the
provisions of the immediately preceding paragraph, then the immediately
preceding paragraph shall be deemed to be automatically amended to conform with
such less restrictive provisions of the third party agreement. The Company will
promptly notify you of the terms of any such less restrictive third party
agreement.
You further agree that, for a period of two years from the date hereof,
neither you nor any of your affiliates will solicit to employ or employ any
officer or management employee of the Company or any of its subsidiaries, so
long as they are employed by the Company or any of its subsidiaries, without
obtaining the prior written consent of the Company. The term 'solicit to employ'
does not include general solicitations of employment not specifically directed
towards employees of the Company and its subsidiaries.
It is expressly understood by the parties hereto that this agreement is not
intended to, and does not, constitutes an agreement to consummate a Transaction
or to enter into a definitive Transaction agreement, and neither the Company nor
you will have any rights or obligations of any kind whatsoever with respect to a
Transaction by virtue of this agreement or any other written or oral expression
by either party hereto or their respective Representatives unless and until a
definitive agreement relating thereto between the Company and you is executed
and delivered, other than for the matters specifically agreed to herein. You
further acknowledge that (i) the Company and its Representatives shall be free
to negotiate with any other person and enter into a definitive agreement with
regard to a Transaction without prior notice to you or any other person,
(ii) the Company reserves the right to reject any and all proposals made by you
or any of your Representatives with regard to a possible Transaction and to
terminate any discussions or negotiations with you at any time and
(iii) neither the Company nor any of its affiliates or Representatives nor any
third party with whom the Company enters into any agreement for, or completes, a
Business Combination Transaction shall have any liability to you arising out of
or relating to such a Business Combination Transaction (other than any liability
arising under a definitive Transaction agreement with you in accordance with the
terms thereof).
You and the Company acknowledge and agree that money damages would not be a
sufficient remedy for any breach of any provision of this agreement by the
other, and that in addition to all other remedies which any party hereto may
have, each party
<PAGE>
reasonable assurances that confidential treatment will be accorded to such
information.
If at any time you decide that you do not wish to proceed with a Transaction
or, if earlier, upon the request of the Company, you will promptly (and in no
event later than five (5) business days after such request) redeliver or cause
to be redelivered to the Company all copies of the Evaluation Material furnished
to you by or on behalf of the Company and destroy or cause to be destroyed all
Evaluation material prepared by you or any of your Representatives.
Notwithstanding the return or destruction of the Evaluation material, you and
your Representatives will continue to be bound by your obligations hereunder.
Although the Company will endeavor to include in the Evaluation Material
information it believes to be relevant to the Evaluation of a Transaction, you
hereby acknowledge that neither the Company nor any of its affiliates or
Representatives makes any representation or warranty, express or implied, as to
the accuracy or completeness of any of the Evaluation material. You agree that
neither the Company nor any of its affiliates or Representatives will have any
liability to you or your Representatives resulting from use of any of the
Evaluation Material.
You hereby acknowledge that you are aware (and that your Representatives who
have been apprised of this agreement and your consideration of a Transaction
have been, or upon becoming as appraised will be, advised) of the restrictions
imposed by federal and state securities laws on a person possessing material
nonpublic information about a company. In this regard, you hereby agree that
which you are in possession of material nonpublic information with respect to
the Company and its subsidiaries, you will not purchase or sell any securities
of the Company, or communicate such information to any third party, in violation
of any such laws.
In consideration for access to the Evaluation Material which you have
requested, you agree not to initiate or maintain contract (other than in the
ordinary course of business) with any officer, director, employee or agent of
the Company or any of its subsidiaries regarding its business, operations,
prospectus, finances or any other material pertaining to the Company or to any
proposed Transaction, other than the individuals listed on Schedule I hereto. It
is understood that such individuals will arrange for appropriate contracts for
due diligence purposes. It is further understood that all (i) communications
regarding a possible Transaction, (ii) requests for additional information,
(iii) requests for facility tours or management meetings and (iv) discussions or
questions regarding procedures, will be submitted or directed to one of the
individuals listed on Schedule I
<PAGE>
6
will be entitled to specific performance and injunctive or other equitable
relief as a remedy for any such breach. No failure or delay by any party herein
in exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
This agreement (i) contains the sale and entire agreement between the
parties with respect to the subject matter hereof, (ii) may be amended, modified
or waived only by a separate written instrument duly executed by or on behalf of
the Company and you, and (iii) shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflicts of
laws principles thereof.
If the foregoing correctly sets forth our agreement with respect to the
matters set forth herein, please so indicate by signing two copies of this
agreement and returning one of such signed copies to us for our signature,
whereupon this agreement will constitute our binding agreement with respect to
the matters set forth herein.
Very truly yours,
CARSON, INC.
By: /s/ VINCENT A. WASIK
______________________________________
Name: Vincent A. Wasik
Title: Chairman of Executive Committee
Accepted and agreed to as of
the date first written above:
COSMAIR, INC.
By: /s/ ROGER DOLDEN
_____________________________________
Name: Roger Dolden
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
SCHEDULE I
Contacts for Due Diligence
Vincent A. Wasik
Lawrence E. Bathgate II
S. Garrett Stonehouse
<PAGE>
CARSON, INC.
c/o Morningside Capital Group, L.L.C.
One Morningside Drive, North, Suite 200
Westport, CT 06880
March 10, 1999
Cosmair, Inc.
575 Fifth Avenue
New York, NY 10017
Attn: John D. Sullivan
Ladies and Gentlemen:
Reference is made to the letter agreement dated July 24, 1997 (the 'Letter
Agreement') between Carson, Inc. (the 'Company') and Cosmair, Inc. ('Cosmair').
Capitalized terms used herein without definition shall have their meanings set
forth in the Letter Agreement.
As a condition to the Company's furnishing you and your Representatives with
certain information relating to the Company and its subsidiaries in connection
with your consideration of a possible Transaction, you hereby reaffirm your
agreements and obligations (including those with respect to the use and
confidentiality of Evaluation Material) set forth in the Letter Agreement, which
shall remain in full force and effect in accordance with its terms except as
specifically provided below. Your obligations set forth in the ninth paragraph
of the Letter Agreement shall continue in force until July 24, 1999, at which
time they will terminate in accordance with the terms of the Letter Agreement.
Your obligations set forth in the eleventh paragraph of the Letter Agreement
shall be extended beyond the original termination date until the second
anniversary of the date of this letter.
If you are in agreement with the foregoing, please do indicate by signing
two copies of this letter in the space provided below and returning one of such
signed copies to us for our signature, whereupon this letter will constitute our
binding agreement with respect to the matters set forth herein.
Very truly yours,
CARSON, INC.
By: /s/ Vincent A. Wasik
------------------------
Vincent A. Wasik
Chairman of the Executive
Committee
ACKNOWLEDGED AND AGREED:
COSMAIR, INC.
By: /s/ ROGER DOLDEN
--------------------------------------
Name: Roger Dolden
Title: Senior Vice President and Chief
Financial Officer
