SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
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(Amendment No. ___)
Carson, Inc.
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(Name of Issuer)
Class A Common Stock, par value $.01 per share
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(Title of Class of Securities)
145845-10-3
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(CUSIP number)
Robert H. Stone
M & A Investments, Inc.
NII Health Care Corporation
5910 North Central Expressway, Suite 1780
Dallas, Texas 75206
(214) 365-7453
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
January 7, 1998
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box [ ].
Note: Six copies of this statement, including exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 145845-10-3 Page 2 of 12
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1 NAME OF REPORTING PERSON/S.S. or I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: M & A Investments, Inc.
Tax Id No. 75-2521295
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS: WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [__]
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF
7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY
8 SHARED VOTING POWER: 0
OWNED BY
EACH
9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH
10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 1,323,107
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [__]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 8.81%
14 TYPE OF REPORTING PERSON: CO
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<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 3 of 12
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1 NAME OF REPORTING PERSON/S.S. or I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: NII Health Care Corporation
Tax Id No. 75-2521298
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS: WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [__]
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF
7 SOLE VOTING POWER: 372,000
SHARES
BENEFICIALLY
8 SHARED VOTING POWER: 0
OWNED BY
EACH
9 SOLE DISPOSITIVE POWER: 372,000
REPORTING
PERSON WITH
10 SHARED DISPOSITIVE POWER: 0
- ------------------ --------- ---------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 372,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [__]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 2.48%
14 TYPE OF REPORTING PERSON: CO
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<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 4 of 12
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Item 1. Security and Issuer
This statement relates to the Class A Common Stock, par value $.01 per
share (the "Common Stock"), of Carson, Inc. ("Carson"), a corporation organized
under the laws of the State of Delaware with its principal executive offices at
64 Ross Road, Savannah Industrial Park, Savannah, Georgia 31405.
Item 2. Identity and Background
(a) This statement is filed by M & A Investments, Inc., a Delaware
corporation ("M&A"), and NII Health Care Corporation, a Delaware corporation
("NIIHCC"; collectively, the "Reporting Persons").
(b) 5910 North Central Expressway, Suite 1780, Dallas, Texas 75206.
(c) The Reporting Persons are both wholly-owned subsidiaries of Avatex
Corporation, a Delaware corporation ("Avatex"). The business address of Avatex
is 5910 North Central Expressway, Suite 1780, Dallas, Texas 75206. The Reporting
Persons were each formed by Avatex as a vehicle through which to make
investments. Avatex is a holding company that, through its subsidiaries, owns
interests in hotels and office buildings, and also owns interests in other
corporations and partnerships. Through Phar-Mor, Inc., its 39.7% owned
subsidiary, Avatex is involved in operating a chain of over 100 discount retail
drugstores devoted to the sale of prescription and over-the-counter drugs,
health and beauty aids and other general merchandise. Attached as Schedule I
hereto and incorporated herein by reference is a list of the directors and
executive officers of Avatex. Schedule I also sets forth the business address
and principal occupation or employment of each individual listed therein.
(d) - (e) During the past five years, neither of the Reporting Persons
nor, to the best of the Reporting Persons' knowledge, any of the persons with
respect to whom information is given in response to this Item 2, has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been 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 or mandating activities subject to, federal or
state securities laws or finding any violations with respect to such laws.
(f) All of the individuals listed on Schedule I hereto are citizens of the
United States.
<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 5 of 12
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Item 3. Source and Amount of Funds or Other Consideration
M&A paid $3,000,000 for an approximate 14% limited partnership interest in
DNL Partners, Limited Partnership (the "Partnership"). See Item 5 below. The
source of such funds was general corporate funds of M&A. The source of the funds
used to purchase the Common Stock beneficially owned by NIIHCC was general
corporate funds of NIIHCC.
Item 4. Purpose of Transaction
The Reporting Persons acquired their interests in the Common Stock for
investment purposes. From time to time, the Reporting Persons will evaluate
their position and may determine to acquire additional shares of Common Stock of
Carson (subject to the availability of shares at prices deemed favorable and
other factors) or dispose of shares of the Common Stock of Carson, at any time
and from time to time. Except as stated above, the Reporting Persons have not
formulated any plans or proposals of the type referred to in clauses (a) through
(j) of Item 4 of Schedule 13D, although the Reporting Persons reserve the right
to formulate such plans or proposals in the future.
Item 5. Interest in Securities of the Issuer
(a) M&A. As set forth in the Schedule 13G filed jointly by M&A and NIIHCC,
prior to the date on which Carson became a reporting company under the
Securities Exchange Act of 1934, M&A acquired an approximate 14% limited
partnership interest in the Partnership. According to the Schedule 13G, as
amended, filed by the Partnership, the Partnership beneficially owns 5,798,700
shares of Common Stock of Carson (exclusive of 818,640 shares that are deemed to
be beneficially owned because of a Voting Trust Agreement). The 5,798,700 shares
of Class A Common Stock beneficially owned by the Partnership represent shares
that the Partnership has a right to acquire, at its option, at any time, upon
the conversion in accordance with its terms of 5,798,700 shares of Class C
Common Stock, par value $.01 per share, of Carson. Pursuant to a written letter
agreement, as amended, between M&A and DNL Group, L.L.C. ("DNL"), the general
partner of the Partnership, M&A may request that DNL cause the distribution to
M&A of Common Stock in an amount representing the constructive interest in
Carson then held by M&A through its interest in the Partnership.
The number of shares of Common Stock that may be deemed to be beneficially
owned by M&A through its interest in the Partnership is subject to adjustment as
follows. Under the Partnership's Amended and Restated Agreement of Limited
Partnership, a preferred return (the "Preferred Return") may be made to the
Partnership's partners, including M&A, in an amount equal to 20% per year on the
partner's adjusted capital contribution. In addition, DNL has agreed
<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 6 of 12
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to assign to M&A 11.53% of DNL's general partnership interest in the Partnership
(the "Assignment"), after payment of all Preferred Returns; provided, however,
that M&A remains only a limited partner in the Partnership. Accordingly, the
number of shares of Common Stock that may be deemed to be beneficially owned by
M&A through its interest in the Partnership may fluctuate depending on the
market price per share of Common Stock and the accrual of the Preferred Return.
Because the number of shares of Common Stock that may be deemed to be
beneficially owned by M&A constantly changes, the following calculations are
based on calculations included in the Schedule 13G filed jointly by M&A and
NIIHCC as of December 31, 1997. Assuming a per share market value of $6.6875 as
of December 31, 1997, M&A may be deemed to beneficially own as of December 31,
1997 a total of approximately 1,323,107 shares of Common Stock, composed of (i)
448,598.13 shares of Common Stock attributable to M&A's original investment in
the Partnership, (ii) 212,869.03 shares of Common Stock attributable to M&A's
Preferred Return on such investment, (iii) 472,418.19 shares of Common Stock
attributable to the increase in value of such investment, and (iv) 189,221.18
shares of Common Stock attributable to the Assignment.
NIIHCC. As of the close of business on January 7, 1998, NIIHCC beneficially
owns 372,000 shares of Class A Common Stock.
As previously indicated, the Reporting Persons are each wholly-owned
subsidiaries of Avatex. Abbey J. Butler and Melvyn J. Estrin are Co-Chief
Executive Officers, Co-Chairman of the Board of Directors and shareholders of
Avatex, and are Co-Chief Executive Officers and Co-Chairman of the Board of
Directors of each of the Reporting Persons. Messrs. Butler and Estrin are also
members of the Board of Directors of Carson and, in such capacity, receive
options to purchase Common Stock of Carson. Avatex and the Reporting Persons
hereby disclaim beneficial ownership of shares of Common Stock beneficially
owned by Messrs. Butler and Estrin in their capacity as directors of Carson.
Based on a total of 15,020,862 shares of Class A, Class B and Class C
Common Stock outstanding, as set forth in Carson's Form 10-Q dated as of October
19, 1997, (i) as of December 31, 1997, M&A may be deemed to beneficially own
approximately 8.81% of outstanding Common Stock and (ii) as of January 7, 1998,
NIIHCC may be deemed to beneficially own approximately 2.48% of outstanding
Common Stock.
(b) Prior to distribution of the Common Stock owned by the Partnership,
M&A does not have the power to vote or to direct the vote of any shares
beneficially owned by M&A described in subsection (a) of this Item 5 and, except
as described therein, does not have the power to dispose or to direct the
disposition of such shares. Upon such distribution, M&A would have
<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 7 of 12
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sole power to vote or to direct the vote of, and to dispose or to direct the
disposition of, such shares. NIIHCC has sole power to vote or to direct the vote
of, and to dispose or to direct the disposition of, all shares beneficially
owned by NIIHCC described in subsection (a) of this Item 5
(c) No transaction in the Common Stock was effected during the past sixty
days by M&A. The transactions in the Common Stock effected during the past sixty
days by NIIHCC are reflected on Exhibit A hereto. All such transactions were
open market purchases of Common Stock.
(d) Prior to the distribution of the Common Stock owned by the
Partnership, the Partnership has the right to receive and the power to direct
the receipt of dividends from, or the proceeds from the sale of, the Common
Stock that may be deemed to be beneficially owned by M&A.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Prior to the distribution of the Common Stock owned by the Partnership,
under the Partnership's Amended and Restated Agreement of Limited Partnership,
the Partnership is the record owner, for voting purposes and otherwise, of the
Common Stock that may be deemed to be beneficially owned by M&A. Pursuant to a
written letter agreement, as amended, between M&A and DNL, the general partner
of the Partnership, M&A may request that DNL cause the distribution to M&A of
Common Stock in an amount representing the constructive interest in Carson then
held by M&A through its interest in the Partnership.
Item 7. Materials to be Filed as Exhibits
Exhibit A Transactions by NII Health Care Corporation in the Securities
of Carson, Inc. Within the Sixty Day Period Ended January 7,
1998
Exhibit B Supplementary Agreement Dated August 18, 1995, between M & A
Investments, Inc. and DNL Group, L.L.C.
Exhibit C Amendment to Supplementary Agreement Dated October 3, 1996,
between M & A Investments, Inc. and DNL Group, L.L.C.
<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 8 of 12
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: January 8, 1997
M & A INVESTMENTS, INC.
/s/ Grady E. Schleier
By: ------------------------------
Grady E. Schleier
Vice President
NII HEALTH CARE CORPORATION
/s/ Robert H. Stone
By: ------------------------------
Robert H. Stone
Vice President
<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 9 of 12
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF AVATEX CORPORATION
The following information is provided for the directors and executive
officers of Avatex Corporation ("Avatex") listed below: (a) name; (b) business
address; (c) present principal occupation or employment and the name, principal
business and the address of any corporation or other organization in which such
employment is conducted.
(a) Abbey J. Butler, Co-Chairman of the Board and Co-Chief Executive Officer
of Avatex;
(b) 5910 North Central Expressway, Suite 1780, Dallas, Texas 75206 ("Avatex
Address");
(c) Co-Chairman of the Board and Co-Chief Executive Officer of Avatex; Avatex
Address.
(a) Melvyn J. Estrin, Co-Chairman of the Board and Co-Chief Executive Officer
of Avatex;
(b) Avatex Address;
(c) Co-chairman of the Board and Co-Chief Executive Officer of Avatex; Avatex
Address.
(a) Hyman H. Frankel, Director of Avatex;
(b) Avatex Address;
(c) Executive Officer of Human Service Group, Inc. and University Research
Corporation; 7200 Wisconsin Avenue, Bethesda, Maryland 20814-4811.
(a) Fred S. Katz, Director of Avatex;
(b) Avatex Address;
(c) President of First Taconic Capital Corporation; 99 Park Avenue, Suite
2230, New York, New York 10016.
(a) William A. Lemer, Director of Avatex;
(b) Avatex Address;
(c) President of Bethesda Avenue Photo, Inc. and Pentagon Concourse Photo,
Inc.; 4823 Bethesda Avenue, Bethesda, Maryland 20814.
(a) Charles C. Pecarro, Director of Avatex;
(b) Avatex Address;
(c) Chief Financial Officer of Human Service Group, Inc. and University
Research Corporation; 7200 Wisconsin Avenue, Bethesda, Maryland
20814-4811.
(a) John L. Wineapple, Director of Avatex;
(b) Avatex Address;
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SCHEDULE 13D
CUSIP No. 145845-10-3 Page 10 of 12
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(c) Principal of First Taconic Capitol Corporation; 99 Park Avenue, Suite
2230, New York, New York 10016.
(a) Edward L. Massman, Senior Vice President and Chief Financial Officer of
Avatex;
(b) Avatex Address;
(c) Senior Vice President and Chief Financial Officer of Avatex; Avatex
Address.
(a) John G. Murray, Vice President -- Finance of Avatex;
(b) Avatex Address;
(c) Vice President -- Finance of Avatex; Avatex Address.
(a) Scott E. Peterson, Vice President - Finance and Controller of Avatex;
(b) Avatex Address;
(c) Vice President - Finance and Controller of Avatex; Avatex Address.
(a) Grady E. Schleier, Vice President and Treasurer of Avatex;
(b) Avatex Address;
(c) Vice President and Treasurer of Avatex; Avatex Address.
(a) Robert H. Stone, Vice President, General Counsel and Secretary of Avatex;
(b) Avatex Address;
(c) Vice President and General Counsel of Avatex; Avatex Address.
<PAGE>
SCHEDULE 13D
CUSIP No. 145845-10-3 Page 11 of 12
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EXHIBIT INDEX
Exhibit
Number Exhibit
A Transactions by NII Health Care Corporation in the Securities
of Carson, Inc. Within the Sixty Day Period Ended January 7,
1998
B Supplementary Agreement Dated August 18, 1995, between M & A
Investments, Inc. and DNL Group, L.L.C.
C Amendment to Supplementary Agreement Dated October 3, 1996,
between M & A Investments, Inc. and DNL Group, L.L.C.
Exhibit A
Transactions by NII Health Care Corporation in the Securities of
Carson, Inc. Within the Sixty Day Period Ended January 7, 1998
<TABLE>
<CAPTION>
Acquisition Date Number of Shares Acquired Price Per Share
<S> <C> <C>
12-16-97 50,000 6.9375
12-19-97 1,200 6.75
12-22-97 8,800 6.75
12-23-97 9,700 6.625
12-29-97 9,400 6.25
12-30-97 10,900 6.625
12-31-97 62,000 6.875
01-05-98 35,500 6.8732
01-06-98 84,500 7.00
01-07-98 100,000 7.00
</TABLE>
Exhibit B
SUPPLEMENTARY AGREEMENT
THIS SUPPLEMENTARY AGREEMENT made this 18th day of August 1995, by
and between:
DNL GROUP L.L.C., a Delaware Limited Liability Company,
with an address at One Morningside Drive North, Suite 200,
Westport, Connecticut 06880,
(hereinafter referred to as "DNL Group");
and
M & A INVESTMENTS, INC., a Delaware Corporation, c/o FoxMeyer Health
Corporation, 1220 Senlac Drive, Carrollton, Texas 75006,
(hereinafter referred to as "M&A"),
(hereinafter sometimes collectively
referred to as "the Parties").
W I T N E S S E T H:
WHEREAS, the DNL Group is the General Partner under that certain
Amended and Restated Agreement of Limited Partnership of DNL Partners, a Limited
Partnership, a Limited Partnership of the State of Delaware ("Limited
Partnership Agreement" and/or "Limited Partnership"); and
WHEREAS, the Limited Partnership is the owner of a Fifty-One (51%)
Percent undivided interest in and to any and all of the issued and outstanding
capital stock of DNL Savannah Holdings Corp., a Delaware Corporation (the
"Company"); and
WHEREAS, M&A is a major investor in the said Limited Partnership;
and
WHEREAS, the Parties are desirous of memorializing certain
understandings that have been agreed upon between the DNL Group and M&A.
1
<PAGE>
NOW, THEREFORE, in consideration of the sum of One ($1.00) Dollar
and other good and valuable consideration, in hand paid, each to the other, the
receipt of which is hereby acknowledged, the parties do mutually covenant and
agree as follows:
1. The Parties acknowledge that the purpose of the within Agreement
is to memorialize certain understandings made and agreed upon between the DNL
Group and M&A.
2. IPO. The Parties acknowledge that it is contemplated that there
may be an Initial Public Offering ("IPO") of the capital stock of the Company.
In the event of an IPO, the DNL Group hereby agrees to cause the Partnership to
distribute the capital stock of the Company to each of the Partners of the
Limited Partnership representing the constructive interest in the Company held
by each of the Partners in the Limited Partnership.
3. Transfer of Interest. DNL Group, as General Partner of the
Limited Partnership, hereby agrees to consent to the transfer of any interest
held by M&A in and to the Limited Partnership to any subsidiary, affiliate, or
related entity of M&A.
4. Certain Rights to Seats on the Board of Directors of the Company.
As a major investor in the Limited Partnership, M&A is hereby granted the right
to appoint up to two (2) seats on the Board of Directors of the Company (the
"Representation") upon written request to the DNL Group. Upon written request of
M&A to DNL Group for the said Representation on the Board of Directors of the
Company, the DNL Group shall, within thirty (30) days, convene a special meeting
of the Board of Directors and/or Shareholders, as may be required, and the DNL
Group hereby agrees to vote the Limited Partnership voting interest in the
Company in favor of the Representation requested by M&A.
5. Financial Reports. DNL Group hereby agrees to provide M&A with
copies of any and all financial information and reports that DNL Group provides
to Bank Indosuez/J.P. Morgan, within five (5) business days.
6. Restrictions on Certain Activities of the General Partner.
a. Pledge of Capital Stock. During the term of the Limited
Partnership, the DNL Group, as the General Partner of the Limited Partnership,
hereby agrees not to pledge, mortgage, hypothecate, or otherwise grant a
security interest in, or otherwise dispose of, the capital stock held by the
Limited Partnership in the Company, without the prior consent of the specific
act by two-thirds (2/3rds) in interest of the Limited Partners.
2
<PAGE>
b. Merger. The General Partner shall not, without the prior
consent of the specific act by two-thirds (2/3rds) in interest of the Limited
Partners, cause or permit the Partnership to agree to the merger of the Company
with any third party.
c. Borrowing. The General Partner shall not, without the prior
consent of the specific act by two-thirds (2/3rds) in interest of the Limited
Partners, borrow any money in the name of the Partnership.
7. Conflict Between the Limited Partnership Agreement and the
Supplementary Agreement. The Parties agree that in the event of any conflict
between the terms of the within Supplementary Agreement and the Limited
Partnership Agreement, the terms of the Supplementary Agreement shall prevail.
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands
and seals, or caused these presents to be signed by their proper corporate
officers, and their proper corporate seal to be hereto affixed, the day and year
first above written.
WITNESS: DNL GROUP, L.L.C.,
A Limited Liability Company
By:
Vincent A. Wasik, Manager
ATTEST: M&A INVESTMENTS, INC.,
A Delaware Corporation
By:
John G. Murray, Asst. Treas.
Exhibit C
AMENDMENT TO SUPPLEMENTARY AGREEMENT
AMENDMENT TO THE SUPPLEMENTARY AGREEMENT (the "Amendment") is made and
entered into to be effective as of October 3, 1996, by and between DNL Group,
L.L.C., a Delaware Limited Liability Company located at One Morningside Drive
North, Suite 200, Westport, Connecticut 06880 (hereinafter referred to as "DNL
Group") and M&A INVESTMENTS INC., a Delaware corporation located at 1220 Senlac
Drive, Carrollton, Texas 75006 (hereinafter referred to as "M&A Investments"),
(hereinafter sometimes collectively referred to as "the Parties").
W I T N E S S E T H:
WHEREAS, the DNL Group is the General Partner in DNL Partners, a
Delaware Limited Partnership (the "Limited Partnership") pursuant to that
certain Amended and Restated Agreement of Limited Partnership of DNL Partners,
dated as of August 23, 1995 (the "Limited Partnership Agreement"); and
WHEREAS, the Parties entered into a Supplementary Agreement dated as
of August 18, 1995 (the "Supplementary Agreement"); and
WHEREAS, the Parties desire to amend the Supplementary Agreement and
memorialize certain understandings that have been agreed upon between DNL Group
and M&A Investments.
NOW, THEREFORE, for and in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the adequacy of which is
hereby acknowledged, the Parties do mutually covenant and agree as follows:
1. Amendment of Paragraph 2. Paragraph 2 of the Supplementary
Agreement is hereby amended by deleting the second sentence in the paragraph in
its entirety and replacing it with the following: "In the event of any IPO, M&A
Investments may at any time following 180 days after the consummation of the IPO
their request, in writing to DNL Group, that DNL Group cause the distribution
to M&A Investments of shares of the capital stock of the Company in an amount
representing the constructive interest in the company then held by M&A
Investments through its interest in the Limited Partnership, including M&A
Investments' interests as a limited partner and as assignee of DNL Group under
the Assignment dated August 18, 1995 between the Parties. If, at any time after
M&A Investments has received shares of the capital stock of the Company pursuant
to the preceding sentence (the "M&A Shares"), the Limited Partnership (a)
exercises its registration
<PAGE>
rights with respect to all or a portion of the shares of the capital stock of
the Company held by the Limited Partnership (the "Partnership Shares") in
accordance with that certain Subscription Agreement dated as of August 23, 1995
by and between the Company and the Limited Partnership (the "DNL Subscription
Agreement"), or (b) has the opportunity to exercise its piggyback registration
rights under the DNL Subscription Agreement and M&A Investments requests that
such piggyback rights be exercised with respect to all or a portion of the M&A
Shares, then DNL Group shall, upon the written request of M&A Investments,
either (x) cause an amount of the M&A Shares (the "Registrable M&A Shares") to
be included in such registration of the Partnership Shares, in which case the
number of Registrable M&A Shares shall not exceed the total number of M&A Shares
then held by M&A Investments multiplied by a fraction, the numerator of which is
the number of Partnership Shares to be included in such registration and the
denominator of which is the total number of Partnership Shares then held by the
Limited Partnership, or (y) if the Partnership Shares are not being so
registered, cause the Registrable M&A Shares to be registered pursuant to the
exercise of the Limited Partnership's piggyback registration rights. The
Registrable M&A Shares shall be subject to the terms of any such registration as
specified in the DNL Subscription Agreement (including, without limitation, any
cutback of such shares) with the same effect as if they were held by the Limited
Partnership, and M&A Investments agrees to pay its pro rata portion of the
expenses of such registration based on the number of Registrable M&A Shares
included in such registration.
2. Amendment of Paragraph 4. Paragraph 4 of the Supplementary
Agreement is hereby deleted in its entirety; provided that M&A's current
representatives on the Company's Board of Directors shall be permitted to serve
the remainder of their terms.
3. Lock Up Letter. M&A Investments agrees to execute a lock up
letter with respect to its interests, direct or indirect, in the Company,
substantially in the form attached hereto as Exhibit 1. and deliver such letter
to the addressees at or prior to the date of pricing of the IPO.
4. Pledge Transfer or Disposition. M&A Investments represents that
as of the date hereof, no pledge, transfer or other disposition has been made by
M&A Investments of its limited partnership interest in the Limited Partnership.
M&A Investments agrees to notify DNL Group of its intention to pledge or
transfer to any person or otherwise dispose of its limited partnership interest
in the Limited Partnership, at least five days in advance of such pledge,
transfer or other disposition, in writing to the address given in the
introductory paragraph hereto. To the extent that M&A Investments pledges,
transfers or otherwise disposes of its interest in the Limited Partnership, such
pledge, transfer or other disposition is subject to the terms of the Amendment
and the lock up letter referred to in paragraph 3 hereof.
<PAGE>
5. Certain Terms. Certain terms used herein and not otherwise
defined herein shall have their respective meanings set forth in the
Supplementary Agreement or the Limited Partnership Agreement.
6. Remaining Provisions. Except as amended hereby, the Limited
Partnership Agreement and the Supplementary Agreement shall continue in full
force and effect.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused these presents to
be signed by their proper corporate officers the day and year first above
written
DNL GROUP, L.L.C.
A Limited Liability Company
By:
Kevin J. Rogan, Senior Vice President
M&A INVESTMENTS, INC.
A Delaware Corporation
By:
Vincent A. Wasik, Manager
<PAGE>
Exhibit 1
October 3, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
and
Donaldson, Lufkin & Jenrette Securities Corporation,
as Representatives of the several
Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
Merrill Lynch International
Donaldson, Lufkin & Jenrette Securities Corporation
as Lead Managers of the several
International Managers named in
the within-mentioned International
Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Carson, Inc.
64 Ross Road
Savannah, Georgia 31405
Re: Proposed Public Offering by Carson, Inc.
Dear Sirs:
The undersigned, a limited partner of DNL Partners, Limited Partnership
("DNL Partners") which is the largest stockholder of Carson, Inc., a Delaware
corporation (the "Company"), understands that (a) Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") propose to enter into the U.S.
Purchase Agreement (the "U.S. Purchase Agreement") with the Company and the
Selling Shareholders listed on Schedule B to such U.S. Purchase Agreement and
(b) Merrill Lynch International and DLJ propose to enter into the International
Purchase Agreement (the "International Purchase Agreement", and together
1
<PAGE>
with the U.S. Purchase Agreement, the "Purchase Agreements") with the Company
and the Selling Shareholders listed on Schedule B to such International Purchase
Agreement; each providing for the public offering of shares (the "Securities")
of the Company's Class A Common Stock, par value $.01 per share (the "Common
Stock"). In recognition of the benefit that such an offering will confer upon
the undersigned as a limited partner of DNL Partners, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each Underwriter and Manager to be
named in each of the Purchase Agreements and the Company that, during a period
of 180 days from the date of the Purchase Agreements, the undersigned will not,
without the prior written consent of Merrill Lynch and the Company, (i) directly
or indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of or otherwise dispose of or transfer any shares
of the Company's Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or file any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise; provided,
however, that nothing herein shall be deemed to prohibit the undersigned's
pledge of its limited partnership interest in DNL Partners to Credit Lyonnais
New York Branch, as contemplated by the Letter dated September 19, 1996 from DNL
Group, L.L.C. to the undersigned.
Very truly yours,
M&A INVESTMENTS, INC.
By:
Name:
Title:
2
