Exhibit 10.2
 
 
 

LICENSE AGREEMENT
 
among
 
AERIN LLC,
 
AERIN LAUDER ZINTERHOFER
 
AND
 
ESTEE LAUDER INC.
 

 
 

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TABLE OF CONTENTS
 
ARTICLE 1.
DEFINITIONS
1
ARTICLE 2.
GRANT
4
2.1
License.
4
2.2
Sublicense
5
2.3
Territory
5
ARTICLE 3.
TERM OF THE AGREEMENT
5
3.1
Initial Term
5
3.2
Renewal Term
5
ARTICLE 4.
AERIN LLC’S AND ALZ’S ASSISTANCE
5
4.1
Development of the Aerin Lifestyle Brand
5
4.2
Development of Licensed Products
6
4.3
PR Participation
6
4.4
Exclusivity
6
4.5
Non-Disparagement
7
4.6
Reputation
7
4.7
Acknowledgment of EL’s Rights
7
4.8
EL Acknowledgment of Aerin LLC’s Rights
7
4.9
Acknowledgment
7
4.10
EL Development and Marketing Team
8
ARTICLE 5.
APPROVALS
8
5.1
Approvals
8
5.2
Licensed Products, Packaging and A&P Materials.
8
ARTICLE 6.
DESIGN AND MANUFACTURING
9
6.1
Marketing Plan.
9
6.2
Overall Commitment to Quality.
9
6.3
Monitoring Program
9
6.4
Compliance with Applicable Laws
10
6.5
Intellectual Property Rights
10
6.6
Development and Manufacture
10
ARTICLE 7.
SALES AND MARKETING
10
7.1
Exploitation
10

 
 
 
 

 
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7.2
Product Development Calendar; Quarterly Meetings
10
7.3
Product Launches
11
7.4
Distribution.
11
7.5
Products for Aerin LLC’s Use and Resale.
11
7.6
Disposal of Seconds
12
7.7
Disposal of Returns
12
ARTICLE 8.
ADVERTISING AND PROMOTION
12
8.1
EL’s Minimum Advertising and Promotion Expenditure
12
8.2
Aerin LLC’s Brand Building Requirements
12
8.3
Public Announcements
12
ARTICLE 9.
ROYALTIES
13
9.1
Royalty Amount.
13
9.2
Royalty Statements
13
9.3
Weekends and Holidays
13
ARTICLE 10.
MANNER OF PAYMENT, INTEREST, BOOKS AND RECORDS, INSPECTION
13
10.1
Manner of Payment
13
10.2
Taxes
14
10.3
Books and Records
14
10.4
Underpayments
14
10.5
Overpayments
14
10.6
Interest
14
ARTICLE 11.
REPRESENTATIONS AND WARRANTIES
15
11.1
Representations and Warranties of EL
15
11.2
Representations and Warranties of Aerin LLC
15
ARTICLE 12.
CONFIDENTIALITY
16
12.1
Confidentiality
16
ARTICLE 13.
INTELLECTUAL PROPERTY
17
13.1
Rights to the Intellectual Property.
17
13.2
Protecting the Licensed Trademarks and Ancillary IP.
18
13.3
Compliance with Notice and Other Requirements
19
13.4
Infringement
19
13.5
Use of Licensed Trademarks on Business Materials
20

 
 
 
 
 

 
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13.6
Further Assurances
20
ARTICLE 14.
INSOLVENCY
20
14.1
Effect of Proceeding in Bankruptcy, etc.
20
14.2
Rights Personal
20
14.3
Trustee in Bankruptcy
20
ARTICLE 15.
EXPIRATION AND TERMINATION
21
15.1
EL’s Right to Terminate
21
15.2
Aerin LLC’s Right to Terminate
21
15.3
Effect of Expiration or Termination.
22
ARTICLE 16.
RELATIONSHIP BETWEEN THE PARTIES
23
16.1
No Agency
23
ARTICLE 17.
INDEMNIFICATION AND INSURANCE
23
17.1
Indemnification by EL
23
17.2
Indemnification by Aerin LLC
23
17.3
Insurance.
24
ARTICLE 18.
NOTICES
25
18.1
Manner of Notice
25
ARTICLE 19.
SUSPENSION OF OBLIGATIONS
26
19.1
Suspension of Obligations (Force Majeure)
26
ARTICLE 20.
CHANGE OF CONTROL
26
20.1
Termination in the Event of Change of Control of Aerin LLC or JW Brands LLC
26
20.2
Termination in the Event of Change of Control of EL.
26
ARTICLE 21.
MISCELLANEOUS
27
21.1
Benefit
27
21.2
Entire Agreement; Amendment
27
21.3
Non-Waiver
27
21.4
Assignment by EL
27
21.5
Assignment by Aerin LLC
27
21.6
Non-Solicitation
27
21.7
Severability
28
21.8
Governing Law
28
21.9
Jurisdiction
28

 
 
 
 
 

 
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21.10
Injunction.
28
21.11
Mediation.
28
21.12
Exhibits and Schedules
28
21.13
Headings
28
21.14
Counterparts
29
Signature Block
 
30

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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LICENSE AGREEMENT
 
THIS License Agreement (“Agreement”) is entered into as of the 6th day of April,
2011, by and among AERIN LLC, a Delaware Limited Liability Company, having its
offices  in New York, New York (“Aerin LLC”), and  AERIN LAUDER ZINTERHOFER
(“ALZ”) on the one hand and ESTEE LAUDER INC., a Delaware corporation, having
its offices at 767 Fifth Avenue, New York, New York 10153 (“EL”) on the other,
with reference to the following premises.
 
PREMISES
 
A.           ALZ is the sole owner of Aerin LLC as of the date hereof.
 
B.           Aerin LLC has acquired from JW Brands LLC, a Delaware limited
liability company wholly owned by ALZ (“JW Brands”), certain exclusive rights to
use and authorize the use of the trademark “AERIN” in connection with certain
products and services, including Licensed Products (as defined below).
 
C.           ALZ, Aerin LLC and certain of its Affiliates (whether now existing
or hereafter formed) are committed to developing, marketing and selling, either
directly or through licensees, the Aerin Lifestyle Brand (as defined below).
 
D.           EL and its Affiliate Estee Lauder Cosmetics Ltd. are the owners of,
and have established goodwill in and to, the trademarks ESTEE LAUDER, LAUDER and
EL Logo, among others (collectively the “EL Trademarks”).
 
E.           EL has extensive experience manufacturing, distributing, selling,
advertising and promoting fragrances, cosmetics, skin care products, grooming
products, toiletries and related products with high standards of quality.
 
F.           JW Brands is the owner, and, pursuant to a certain license between
JW Brands and Aerin LLC dated as of December 1, 2010 (the “Master License
Agreement”) Aerin LLC is the exclusive licensee, of the AERIN, A logo, and
related trademarks, which trademarks EL desires to use on and in connection with
the manufacture, distribution, sale, advertising and promotion of Licensed
Products in the Territory (as defined below) and Aerin LLC is willing and has
the authority to grant an exclusive license to EL in that regard, subject to the
terms and conditions set forth below.
 
NOW, THEREFORE, in consideration of these premises and the mutual covenants
herein expressed, and for other good consideration, which the parties hereby
acknowledge, the parties hereby agree as follows.
 
ARTICLE 1. DEFINITIONS
 
1.1  A&P Materials shall mean all labels, tags, tickets, collateral, materials
used in Advertising and Promotion, and all other forms of identification affixed
to or connected with the Licensed Products.
 
1.2  Advertising and Promotion shall mean the advertisement, promotion and
marketing of the Licensed Products, including, to the extent used in connection
with the Licensed Products,
 

 
 

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“blow-ins,” retail statement enclosures, scented remit envelopes, sampling,
in-store and point-of-sale visuals and materials, store advertising, in-stock
scented vehicles, scent strips, co-op advertising, store catalogs, promotional
sweepstakes or gifts-with-purchase and the like, demonstrations by floor
salespersons and selling specialists, in-store support/field selling, in-store
design and amortization of counter construction, website design and construction
and other store promotion expenses, pop-up shops, shop-in-shops, direct mail
advertising, print advertising, television-related expenses, radio advertising,
on-line, electronic and wireless advertising, in-store selling locations,
creative and brand development costs, usage rights, general public relations,
in-store testers, displays and other related visual materials, personal
appearances and other forms of promotional advertising currently known or later
invented.
 
1.3  Aerin Lifestyle Brand shall have the meaning assigned to such term in
Section 4.1.
 
1.4  Affiliate shall mean, with respect to any person, any association,
corporation, partnership, joint venture or other entity a majority of whose
issued and voting shares or equity interest is owned or controlled directly or
indirectly by such person, is under common control with such person, or owns or
controls a majority of the voting shares or equity interest directly or
indirectly of such person.  For purposes of this Agreement, ALZ and Aerin LLC
shall not be deemed to be Affiliates of ELC, and ELC and its subsidiaries shall
not be deemed to be Affiliates of ALZ and Aerin LLC.
 
1.5  ALZ Identifiers shall mean ALZ’s name, signature, photograph, image,
likeness, voice, performance, biographical information and/or other indicia of
her identity as mutually agreed.
 
1.6  Ancillary Intellectual Property or Ancillary IP shall mean all copyrights,
design patents and trade dress rights, which exist or which may be created in
the future, in or to the Packaging and A&P Materials for or used in connection
with the Licensed Products.
 
1.7  Annual Period shall mean the period beginning as of the date above through
June 30, 2013, and, thereafter, each twelve-month period beginning on July 1 and
ending on June 30. 
 
1.8  Authorized Distributors shall mean any company or companies (not including
an Affiliate of EL) granted the right by EL or its Affiliates pursuant to the
terms of this Agreement to distribute and sell the Licensed Products in one or
more specific countries in the Territory.
 
1.9  Capsule Cosmetics Collection shall mean a limited line of Cosmetic Products
sold under the Licensed Trademarks whether alone or in conjunction with (or as a
sub-brand of) the Estee Lauder brand.
 
1.10  Core Beauty Products shall mean cosmetics, fragrances, toiletries, skin
care, hair care, gift sets and value sets consisting of any of the foregoing,
beauty accessories and products and services related to all of the foregoing,
all to the extent bearing or sold under the Licensed Trademarks.
 
1.11  Cosmetic Products shall mean Licensed Products that constitute cosmetics
products as that term is understood in the industry, including without
limitation color cosmetics, skin care, toiletries, hair care and beauty
accessories.
 
 

 
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1.12  EL Formulas  shall have the meaning assigned to such term in Section 6.5.
 
1.13  EL Trademarks shall have the meaning assigned to such term in Premise D.
 
1.14     EL’s Travel Policy shall mean the Estee Lauder Companies, Inc. Travel,
Entertainment & Business Expense Policy as amended from time to time.
 
1.15  Fragrance Products shall mean Licensed Products that are primarily
marketed as fragrance products as that term is understood in the industry,
including without limitation, cologne, perfume and fragrance ancillaries.
 
1.16  Gross Sales shall mean the total for any period of the invoiced amount of
Licensed Products shipped by or on behalf of EL or its non-retail Affiliates to
Authorized Distributors, if any, and retailers, before any deductions for
discounts and returns, insurance and freight.
 
1.17  Initial Term shall have the meaning assigned to such term in Section 3.1.
 
1.18  Inventory shall mean EL’s inventory of Licensed Products and related work
in progress (including Licensed Products and work in progress in possession of
EL’s Affiliates, third party manufacturers and sub-contractors).
 
1.19  Licensed Products shall mean Core Beauty Products and Non-Core Beauty
Products.
 
1.20  Licensed Trademarks shall mean (a) the trademarks set forth in Exhibit A
attached hereto, (b) any other trademark now or in the future associated with JW
Brands, Aerin LLC and/or ALZ, (c) New Secondary Marks (as defined below), and
(d) all variants of any of the foregoing, all as approved by Aerin LLC.
 
1.21  Licensee’s Outlet Stores shall have the meaning assigned to such term in
Section 7.6.
 
1.22  Lifestyle Licensees shall mean any third parties (other than EL or
Affiliates of Aerin LLC) licensed by Aerin LLC to manufacture and sell high-end
lifestyle, accessories and fashion products or services under the Aerin
Lifestyle Brand.
 
1.23  Net Sales shall mean Gross Sales of Licensed Products by EL or its
Affiliates, excluding Sales to Aerin LLC made pursuant to Section 7.6 herein
and/or sales through Licensee’s Outlet Stores, less (to the extent such amounts
were included in Gross Sales) (a) actual credits for returns, (b) actual,
reasonable and customary trade discounts, bonification payments outside the
United States and, to the extent they do not subsidize products other than
Licensed Products, price allowances (excluding advertising allowances and co-op
advertising), (c) actual shipping costs on Internet sales invoiced by EL, and
(d) sales tax, if any.
 
1.24  New Secondary Marks shall mean trademarks to be used as product names on
Licensed Products, such marks subject to the prior approval of Aerin LLC.
 
1.25  Non-Core Beauty Products shall mean cosmetic bags sold empty, tote bags,
and fragranced candles and products and services customarily associated with all
of the foregoing, all to the extent bearing or sold under the Licensed
Trademarks.

 
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1.26  Other Prestige Trademarks shall mean trademarks associated with prestige
lines of lifestyle and other luxury goods of the types, quality and reputation
substantially similar to the lifestyle and other luxury goods sold under the
marks Porthault, Chanel, Hermes, Prada, Armani, Louis Vuitton, Gucci and
Christian Dior as of the date hereof.
 
1.27  Packaging shall mean product packaging for Licensed Products including
primary and secondary packaging as those terms are understood in the industry.
 
1.28  Prestige Retailers shall mean department stores, specialty stores,
store-in-store concessions in department and/or specialty stores, perfumeries,
prestige catalogs, travel retail, Internet, mobile or other digital media
channels of EL or its Affiliates, Aerin LLC or its Affiliates or any of their
respective retail partners and such other distribution channels as determined by
EL in its discretion following consultation with Aerin LLC and consistent with
the high-end image of the brand.
 
1.29  Product Development Calendar shall have the meaning assigned to such term
in Section 7.2.
 
1.30  Product Launch shall mean the availability of Licensed Products at retail.
 
1.31  Renewal Term shall have the meaning assigned to such term in Section 3.2.
 
1.32  Renewal Threshold shall have the meaning assigned to such term in Section
3.2.
 
1.33  Royalty Amount shall have the meaning assigned to such term in Section
9.1.
 
1.34  Sales to Aerin LLC shall have the meaning assigned to such term in Section
7.5.
 
1.35  Term shall mean the Initial Term and any Renewal Terms.
 
1.36  Territory shall have the meaning assigned to such term in Section 2.3.
 
ARTICLE 2. GRANT
 
2.1  License.
 
a.  Subject to the terms and conditions contained herein, Aerin LLC and ALZ
grant to EL during the Term an exclusive license to use the Licensed Trademarks,
ALZ Identifiers and Ancillary IP in connection with the manufacture,
distribution, sale, advertising and promotion of the Core Beauty Products in the
Territory subject to the approval of Aerin LLC, in accordance with Article 5.
 
b.  Subject to the terms and conditions contained herein, Aerin LLC and/or ALZ
grant to EL during the Term a non-exclusive license to use the Licensed
Trademarks, ALZ Identifiers and Ancillary IP in connection with the manufacture,
distribution, sale, advertising and promotion of the Non-Core Beauty Products in
the Territory subject to the approval of Aerin LLC, in accordance with Article
5.
 

 
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c.  Any rights not expressly granted hereunder are reserved by Aerin LLC and
ALZ, as the case may be.
 

2.2  Sublicense.  No right for EL to sublicense is granted with respect to the
Licensed Trademarks, ALZ Identifiers and Ancillary IP for the manufacture of
Licensed Products, except that EL may authorize an Affiliate of EL and/or a
third party to use the Licensed Trademarks, ALZ Identifiers and Ancillary IP in
the manufacture of Licensed Products on behalf of and solely for sale to EL
and/or its Affiliates.
 
2.3  Territory.  The territory covered by this Agreement (the “Territory”) shall
be worldwide.
 
ARTICLE 3. TERM OF THE AGREEMENT
 
3.1  Initial Term.  The initial term of this Agreement will commence as of the
date hereof and continue for five (5) Annual Periods (the “Initial Term”),
unless sooner terminated in accordance with the terms of this Agreement.
 
3.2  Renewal Term.
 
a.  This Agreement shall automatically renew for three (3) additional five (5)
year periods (each a “Renewal Term”), provided that:  (1) EL does not give
written notice of its intent not to renew at least twelve (12) months before the
end of the Initial Term or the then-current Renewal Term (as applicable); and
(2) Net Sales for the final Annual Period of the then current term (i)(a) are
reasonably projected  to equal or exceed the applicable Renewal Threshold (as
defined below) or (b) as of six (6) months before the end of the applicable
Term, are reasonably projected  to equal at least 50% of the Renewal Threshold
and (ii) no later than such time, EL elects to cure any shortfall by paying to
Aerin LLC (within 45 days of the end of the final Annual Period) royalty on the
difference between the Renewal Threshold amount and actual Net Sales for such
Annual Period (the “Cure Payment”) (such election being deemed to occur where
clause (1) is satisfied).  The percentage to be used in calculating such royalty
shall be determined by calculating the weighted average of the royalty paid by
EL to Aerin LLC during the final Annual Period.  For purposes of this provision,
the “weighted average” shall be calculated as follows: total Royalty Amount paid
by EL during final Annual Period divided by total Net Sales during final Annual
Period.
 
b.  The “Renewal Threshold” for the first Renewal Term shall be fifteen million
dollars ($15,000,000). Provided that Aerin LLC business has commercialized at
least three (3) third party licenses for the manufacture, sale and distribution
of the Aerin Lifestyle Brand (for avoidance of doubt, excluding the license with
EL), the Renewal Threshold for the second and third Renewal Terms shall be
increased as follows:  the Renewal Threshold for the second Renewal Term shall
be twenty million dollars ($25,000,000) and the Renewal Threshold for the third
Renewal Term shall be thirty million dollars ($30,000,000).
 
ARTICLE 4. AERIN LLC’S AND ALZ’S ASSISTANCE
 
4.1  Development of the Aerin Lifestyle Brand.  Within eighteen (18) months of
execution hereof, Aerin LLC shall use commercially reasonable efforts, either
directly or in cooperation with an Affiliate of Aerin LLC, to develop and,
directly or through Lifestyle Licensees,
 

 
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manufacture and sell commercially reasonable quantities of products and services
other than Core Beauty Products under some or all of the Licensed Trademarks
(the “Aerin Lifestyle Brand”).    All such products and services shall meet the
quality standards set forth in Section 6.2(a).  The parties hereto agree that
“commercially reasonable quantities” shall mean at least one line of products
(such as eyewear, accessories and/or home products).  Under no circumstances
shall the resources of EL and/or its Affiliates be used to develop, manufacture,
market and/or sell the Aerin Lifestyle Brand.
 
4.2  Development of Licensed Products.  EL shall develop all product formulas,
package designs, creative materials, and, if applicable New Secondary Marks for
Licensed Products in consultation and cooperation with Aerin LLC.  Promptly
after execution hereof Aerin LLC shall designate ALZ and members of its design
staff to collaborate with EL personnel to develop Licensed Products (including
Packaging) and A&P Materials.  All Licensed Products (including Packaging) and
all A&P Materials shall be approved by Aerin LLC in accordance with Article
5.  ALZ and the appropriate officer of Aerin LLC shall be invited to attend and
participate in all material meetings related to the design of Licensed Products
and Packaging and/or the creation of A&P Materials and, on reasonable request,
shall receive periodic updates related to the foregoing. EL shall pay all
reasonable travel expenses in connection with ALZ’s obligations under this
Section 4.2 in compliance with EL’s Travel Policy at the level of a Division
Head (as that term is used in EL’s Travel Policy) provided that ALZ’s air and
hotel accommodations will be consistent with ALZ’s past usage when traveling on
EL business and, if possible, consistent with EL’s Travel Policy.
 
4.3  PR Participation.  The parties agree that the participation of ALZ is
necessary for the promotion of the Licensed Products.  ALZ shall appear at
mutually agreeable events related to the promotion of Licensed Products, and,
subject to ALZ’s professional availability, shall make no less than ten (10)
personal appearances during each Annual Period during which there is a Product
Launch of:  (1) any line of Licensed Products that EL is required to launch
under the Agreement; and/or (2) any Additional Product that EL agrees to launch.
Such personal appearances may include appearances at store launches, interviews,
press conferences and other media events.  EL shall pay all reasonable travel
expenses in connection with ALZ’s obligations under this Section 4.3 in
compliance with EL’s Travel Policy at the level of a Division Head provided that
ALZ’s air and hotel accommodations will be consistent with ALZ’s past usage when
traveling on EL business and, if possible, consistent with EL’s Travel Policy.
 
4.4  Exclusivity.  During the Term, Aerin LLC and ALZ shall not authorize or
permit the use of the Licensed Trademarks, ALZ Identifiers or Ancillary IP on
behalf of any cosmetics or skin care company or on or in connection with any
product or service that constitutes a Core Beauty Product and directly or
indirectly competes with the current products of EL and/or its
Affiliates.  Moreover, Aerin LLC and ALZ shall not render any creative services,
give any testimonials or endorsements in any advertising in any medium, or
engage in any marketing, advertising, and/or promotional activities on behalf of
any cosmetics or skin care company or on or in connection with any product or
service that constitutes a Core Beauty Product or competes with the current
products of EL and/or its Affiliates.  For avoidance of doubt, nothing herein is
intended to preclude Aerin LLC, ALZ and/or Lifestyle Licensees from any such
activities related to Non- Core Beauty Products, or to preclude charitable
endeavors or participating in industry panels, publications, events and
conferences.
 

 
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4.5  Non-Disparagement.  During the Term and for two (2) years thereafter, no
party shall, directly or indirectly, make any public statement or representation
regarding its or his/her opinion of the other(s), or its Affiliates or their
products in which such person disparages such persons or products, other than
statements contained in and relevant to any claim or defense contained in a
pleading filed in connection with a court, arbitral or mediation proceeding
between the parties to enforce or judicially construe this Agreement or
otherwise involving the parties hereto, or which may be required by
law.  Nothing herein shall preclude either party from making true statements of
fact.
 
4.6  Reputation.  ALZ’s conduct shall be with due regard to public conventions
and morals, and ALZ has not and shall not commit any act that, in EL’s
reasonable judgment, has a materially adverse effect on the goodwill associated
with the Licensed Trademarks and/or EL Trademarks.  If (i) ALZ’s obligation
under the preceding sentence is breached or (ii) ALZ dies, ceases to be active
in Aerin LLC, or suffers a material disability that impairs her ability to
provide creative services hereunder or in connection with the Aerin Lifestyle
Brand for a period of six (6) months, EL, in its sole discretion, may terminate
this Agreement on no less than three (3) months written notice to Aerin LLC,
such notice to be provided no later than thirty (30) days following the date
that EL has actual knowledge of the applicable trigger for termination.
 
4.7  Acknowledgment of EL’s Rights.  Aerin LLC and ALZ acknowledge EL’s rights
in and to the EL Trademarks including without limitation the LAUDER name and
trademark.  Aerin LLC and ALZ shall not authorize the use of or use in any
manner (whether or not constituting a trademark use), including without
limitation as part of a domain name, on products or in marketing, advertising
and/or promotional materials and/or to sell the Aerin Lifestyle Brand or other
products or services, the EL Trademarks, including without limitation, the
LAUDER name, the name AERIN LAUDER or the phrase AERIN BY AERIN LAUDER, in each
case, without prior written consent of both the CEO and Executive Chairman of
the Estee Lauder Companies Inc(“ELC”) in their sole discretion, ELC to provide
such approval or disapproval within twenty (20) business days after receipt of
such request in writing.  Each proposed use shall be considered on a case by
case basis and approval by ELC of a particular use shall not be construed as
approval of future uses that differ from a previously approved use in a material
respect.  Notwithstanding the foregoing, nothing herein is intended to prevent
ALZ from using the “Aerin Lauder” name in a strictly personal capacity.  (By way
of example, to identify herself as the founder or principal of Aerin LLC.)
 
4.8  EL Acknowledgment of Aerin LLC’s Rights.  EL acknowledges the rights of JW
Brands and Aerin LLC in and to the Licensed Trademarks including without
limitation the AERIN name and trademark, and EL and its Affiliates shall not use
in any manner (whether or not constituting a trademark use), including without
limitation on products or in marketing, advertising and/or promotional
materials, the Licensed Trademarks (including without limitation the AERIN name
and trademark) except as expressly permitted by this Agreement.
 
4.9  Acknowledgment.  Each of Aerin LLC and ALZ, on the one hand, and EL, on the
other, acknowledge that without the foregoing acknowledgments in Sections 4.7
and 4.8, respectively, the other parties hereto would not have entered into this
Agreement.
 

 
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4.10  EL Development and Marketing Team.  Within 30 (thirty business days of the
date hereof, EL shall identify to Aerin LLC the key members of the development,
marketing and sales team for the Licensed Products, and in connection therewith
shall consider in good faith any suggestions that Aerin LLC may have regarding
the members of such team.
 
ARTICLE 5. APPROVALS
 
5.1  Approvals. The parties agree that the timely submission and review of
approval requests are important to the successful and timely execution of the
contemplated business plans and that each party shall undertake to use all
reasonable business efforts to review and provide timely review and feedback
with respect to such approval requests.  A submission for approval so submitted
will be deemed approved unless Aerin LLC delivers a notice of disapproval within
ten (10) business days after receipt of the request from EL.
 
5.2  Licensed Products, Packaging and A&P Materials.
 
a.  Aerin LLC and EL shall consult with each other at the concept stage in the
development of a line of Licensed Products for each Product Launch and Aerin LLC
shall collaborate with EL in the development of such items, and have the right
to approve all Licensed Products (including Packaging) and A&P Materials.
 
b.  After the concept stage and design components for each Product Launch have
been approved by Aerin LLC, EL shall prepare prototype samples of each Licensed
Product comprising such Product Launch and, upon reasonable request, shall
deliver to Aerin LLC two prototype samples of each such Licensed Product for
inspection and approval at the times provided in the Product Development
Calendar.
 
c.  After any sample Licensed Product has been approved by Aerin LLC, EL shall
not materially modify such Licensed Product without the prior approval of Aerin
LLC.
 
d.  In the event of disagreement between the parties as to future Licensed
Products, Packaging and/or A&P Materials, Aerin LLC shall provide EL with a
written outline of Aerin LLC’s reasons for disagreement and diligently work with
EL in good faith to propose an alternative solution for the proposed Licensed
Products and Packaging that satisfies EL’s reasonable weighted average cost of
goods sold requirements by category (not to exceed 20% of US wholesale price for
Cosmetic Product SKUs and 17% of US wholesale price for Fragrance Product SKUs)
and/or the proposed A&P Materials that satisfies EL’s reasonable cost
parameters. EL shall diligently and in good faith work with Aerin LLC to resolve
any such disagreements.  The parties shall use their reasonable best efforts to
cooperate and rectify the basis for any disagreement within a time period
required to meet reasonable production deadlines and other requirements of both
parties and to resolve any disagreement relating to the design and composition
of the Licensed Products (including the selection of fragrances), Packaging
and/or A&P Materials in compliance with EL’s cost objectives described
above.  In the event that the parties are not able to agree on a mutually
acceptable Licensed Product, Packaging and/or A&P Materials, the applicable
launch requirement shall be delayed until such time as the parties reach
agreement and for a period that reflects the time lost in disagreement.
 

 
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ARTICLE 6. DESIGN AND MANUFACTURING
 
6.1  Marketing Plan.
 
a.  By July 1, 2011, and on or before each July 1 of each subsequent Annual
Period, EL shall submit to Aerin LLC a marketing and promotion plan for the next
Annual Period. The marketing plan also shall include projected sales volumes for
Licensed Products, in accordance with EL’s standard recording/reporting
practices.  EL shall consult with Aerin LLC but shall have final decision making
power with regard to the marketing and promotion plan.
 
b.  By July 1, 2011, and on or before each July 1 of each subsequent Annual
Period until the Aerin Lifestyle Brand is launched, Aerin LLC shall provide to
EL information regarding Aerin LLC’s anticipated business activities to assist
EL in developing marketing synchronicity between License Products and the Aerin
Lifestyle Brand.  Following the launch of the Aerin Lifestyle Brand, on or
before each July 1 thereafter, Aerin LLC shall provide EL with a marketing and
promotion plan showing aggregated marketing and promotion information for the
Aerin Lifestyle Brand for the next Annual Period in order to assist in marketing
synchronicity between Licensed Products and the Aerin Lifestyle
Brand.  Notwithstanding the foregoing, Aerin LLC shall not be required to
disclose confidential information of third parties to EL.
 
6.2 Overall Commitment to Quality.
 
a.  Aerin LLC will maintain the distinctiveness of the Licensed Trademarks and
Aerin Lifestyle Brand and maintain a prestige image and the high quality of the
goods bearing them, whether manufactured and sold by Aerin LLC or its Affiliates
or Lifestyle Licensees.  Aerin LLC agrees that it will ensure that all products
bearing Licensed Trademarks (other than Licensed Products, for which EL is
responsible) will be of high quality as to workmanship, design and materials
used therein, will be at least generally equal in quality to products sold under
the Other Prestige Trademarks, and will be distributed exclusively through
Prestige Retailers.
 
b.  EL will ensure that all Licensed Products, Packaging, and A&P Materials
utilizing the Licensed Trademarks will comply with the samples approved by Aerin
LLC and high quality standards.  EL agrees that Licensed Products will be of
high quality as to workmanship, design and materials used therein, and will be
at least equal in quality, workmanship, appearance, design and materials to the
samples of Licensed Products submitted by EL and approved by Aerin LLC pursuant
to Article 5.
 
6.3  Monitoring Program.  The parties will each have in effect a program of
monitoring manufacturing facilities, whether operated by themselves or third
party licensees, manufacturers, subcontractors or suppliers, that is sufficient
to ensure (a) compliance by such facilities and persons with all applicable laws
and regulations pertaining to wages, overtime compensation, benefits, hours,
hiring and employment, workplace conditions and safety, the environment,
collective bargaining and freedom of association, (b) that products bearing the
Licensed Trademarks and the components thereof are made without the use of child
labor, and (c) compliance with the Foreign Corrupt Practices Act.  The parties
agree that EL’s current program
 

 
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satisfies EL’s obligations under this Section 6.3.  Aerin LLC shall have the
right to conduct its own factory audits of any third party licensees,
manufacturers, subcontractors or suppliers engaged by EL and also may object,
acting reasonably, to the continued engagement of any particular third party
licensee, manufacturer, subcontractor or supplier.  Aerin LLC shall include a
monitoring obligation in any existing and/or future license agreement with a
Lifestyle Licensee for the manufacture, sale and distribution of products
bearing Licensed Trademarks.
 
6.4  Compliance with Applicable Laws. All Licensed Products manufactured and
distributed by, or on behalf of, EL shall be manufactured, marked, labeled,
packaged, advertised, and distributed in accordance with this Agreement and all
applicable laws, rules and regulations in the Territory.
 
6.5  Intellectual Property Rights. Each party shall retain ownership of any
intellectual property rights it develops prior to or in connection with this
Agreement, provided that, as between the parties: Aerin LLC and/or ALZ shall
exclusively own the Licensed Trademarks, ALZ Identifiers, and Ancillary IP; and
EL shall exclusively own the EL Trademarks and any formulas and/or colors that
EL: (i) may develop for the Licensed Products or for use in connection with the
Licensed Products, or (ii) in the past has developed or used or in the future
may develop for use in its many lines of products not sold under the Licensed
Trademarks, (collectively the “EL Formulas”).  EL may freely use such EL
Formulas in its other lines of products aside from the Licensed Products and
retains all rights in the EL Trademarks.
 
6.6  Development and Manufacture.  After Aerin LLC approves a Licensed Product
under Section 5.2, EL shall make commercially reasonable efforts to proceed with
the completion of the development and commercial production of such Licensed
Product and shall show, offer for sale, sell and ship such Licensed Product in a
timely manner in accordance with industry standards.  EL shall be responsible
for designing and developing all Licensed Products, making samples and
overseeing the production of Licensed Products, and EL shall bear all costs
thereof.
 
ARTICLE 7. SALES AND MARKETING
 
7.1  Exploitation.  EL will use commercially reasonable efforts to exploit the
license throughout the Territory taken as a whole consistent herewith and with
EL’s efforts for its other comparable products.  The choice of countries (other
than the United States) in which Licensed Products shall be marketed and the
efforts made in each country shall be in the sole discretion of EL, after
considering in good faith the suggestions of Aerin LLC.  EL shall consult with
Aerin LLC regarding such choices from time to time.  In the event that Aerin LLC
informs EL in writing that it reasonably believes, after consultation with EL
and trademark counsel, that sales of Licensed Products in a particular country
would give rise to trademark liability and EL proceeds with a launch in such
country after receiving such written notice from Aerin LLC, Aerin LLC's duty to
indemnify EL pursuant to Section 17.2 for any future sales in such country shall
be deemed waived.
 
7.2  Product Development Calendar; Quarterly Meetings.  On or about July 1 of
each Annual Period, EL shall deliver to Aerin LLC a timetable setting forth
target dates of product development, sample submissions, required approvals,
launch dates and the like in order to meet a scheduled Product Launch date
and/or development and launch of new Licensed Products (a
 

 
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“Product Development Calendar”).  EL shall consult with Aerin LLC in the
preparation of such Product Development Calendar and shall give due
consideration to Aerin LLC’s requests to amend the Product Development Calendar
or the allocation of resources thereunder.
 
7.3  Product Launches.  EL, with Aerin LLC’s reasonable participation (which
shall include ALZ’s reasonable assistance), shall complete the following Product
Launches:  
 
a.  EL shall use commercially reasonable efforts to launch in the United States
a Capsule Cosmetics Collection within twelve (12) months of execution of this
Agreement, provided that if EL does not launch such Capsule Cosmetics Collection
within twelve (12) months, but such Capsule Cosmetics Collection is in
development and EL is making commercially reasonable efforts to launch as soon
as practicable after such date, and such launch occurs in no event more than
eighteen (18) months after execution of this Agreement, EL shall not be
considered to be in breach of its launch requirements under this Section
7.3.a.  Notwithstanding the preceding sentence, EL shall not be required to
launch the Capsule Cosmetic Collection unless and until:  (i) Aerin LLC and/or
the Lifestyle Licensee(s) launch commercially reasonable quantities of products
under the Aerin Lifestyle Brand.
 
b.  Within 12 months of the launch of the Capsule Cosmetics Collection, EL shall
launch additional Licensed Products, the number of additional and type of SKUs
shall be within EL’s reasonable commercial judgment and dependent upon the
success of the Capsule Cosmetics Collection.
 
c.  In the event that Net Sales of Licensed Products reaches $80 million in any
given Annual Period, Aerin LLC shall have the right to request that EL manage
the business as a standalone line of Licensed Products rather than as a
sub-brand of the Estee Lauder brand (the “Aerin Standalone Beauty Brand”).  EL
shall be obligated to comply with such request within 6 months.
 
7.4  Distribution.   The channels of distribution for each Licensed Product and
for the Aerin Lifestyle Brand shall be Prestige Retailers.  EL, following
consultation with Aerin LLC, shall determine in its sole discretion the manner
in which to distribute Licensed Products in Prestige Retailers and may use the
EL sales force to support such distribution.  In addition, seconds and returns
shall be sold as set forth in Sections 7.6 and 7.7.
 
7.5  Products for Aerin LLC’s Use and Resale.  EL will supply reasonable
quantities of Licensed Products to Aerin LLC, at EL’s expense, as reasonably
requested for Aerin LLC’s public relations purposes, showrooms, fashion shows,
advertising, and ALZ’s personal use.  EL shall sell Licensed Products to Aerin
LLC and its Affiliates for resale in stores operated or controlled by Aerin LLC
and/or its Affiliates and Aerin LLC’s website, at a price equal to fifty percent
(50%) off local MSRP (“Sales to Aerin LLC”).  Such Sales to Aerin LLC shall not
be included in Net Sales for purposes of calculating the Royalty Amount and/or
EL’s Annual A&P Minimum.  EL’s obligation to provide sales support to Aerin LLC
shall be limited to the provision of a commercially reasonable number of testers
and samples not to exceed 12 testers per testable SKU per door per Annual Period
and 1500 vial samples per door per Annual Period.
 

 
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7.6  Disposal of Seconds.  To the extent permitted by law, EL shall sell
Licensed Products which are seconds (as that term is commonly understood in the
industry) only in its Affiliates’ outlet store locations and in restricted
admission stores located anywhere (collectively “Licensee’s Outlet Stores”) and
will destroy seconds not so sold or donate them to charity in accordance with
EL’s and its Affiliates’ existing practices.  EL shall sell seconds only as a
cost recovery method and consistent with reasonable industry practices regarding
the sale of seconds.  Such sales shall not be included in Net Sales for purposes
of calculating the Royalty Amount and/or EL’s Annual A&P Minimum.
 
7.7  Disposal of Returns.  To the extent permitted by law and subject to all
appropriate notices required under each applicable jurisdiction, EL may sell
Licensed Products which are returns in Licensee’s Outlet Stores and may also
donate to charity such returns not so sold in accordance with EL’s and its
Affiliates’ existing practices, provided that the acceptance and distribution of
such returns comply with standard industry practice for products bearing Other
Prestige Trademarks.  EL shall not manufacture products for sale to Licensee’s
Outlet Stores and shall sell returns only as a cost recovery method and
consistent with reasonable industry practices regarding the sale of
returns.  Such sales shall not be included in Net Sales for purposes of
calculating the Royalty Amount and/or EL’s Annual A&P Minimum.
 
ARTICLE 8.  ADVERTISING AND PROMOTION
 
8.1  EL’s Minimum Advertising and Promotion Expenditure.  EL shall be required
to spend a specified minimum on Advertising and Promotion (“EL’s Annual A&P
Minimum”). EL’s Annual A&P Minimum shall be equal to 20% of Net Sales in any
given Annual Period during the Initial Term and 15% of Net Sales in any given
Annual Period thereafter, provided that in no event shall EL’s Annual A&P
Minimum exceed 50% of Aerin LLCs’s A&P Spend (as defined below) for any given
Annual Period.
 
8.2  Aerin LLC’s Brand Building Requirements. Pursuant to Section 6.1(b) herein,
on July 1 of each Annual Period, Aerin LLC shall provide EL with a marketing and
promotion plan setting forth projections of planned expenditures for all
Advertising and Promotion in connection with the Aerin Lifestyle Brand for each
Annual Period, whether to be made directly or through Lifestyle Licensees
(“Aerin LLC’s A&P Spend”).   At mid-year and the end of each Annual Period,
Aerin LLC shall update such marketing and promotion plan to provide EL with
aggregated actual expenditures by Aerin LLC and the Lifestyle Licensees for the
first half and entire Annual Period, respectively so that EL shall be able to
calculate EL’s Annual A&P Minimum pursuant to Section 8.1.  EL acknowledges that
such information constitutes Confidential Information of Aerin LLC and shall be
subject to the terms of Section 12.1.
 
8.3  Public Announcements.  During the Term, all press releases and other public
announcements related to this Agreement, including without limitation the terms
of this Agreement, and each Product Launch, are subject to written approval by
both Aerin LLC and EL.  The parties shall be permitted to repeat information
contained in previously approved press releases without further approval.
 

 
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ARTICLE 9. ROYALTIES
 
9.1  Royalty Amount.
 
a.  EL shall pay to Aerin LLC a royalty amount (the “Royalty Amount”) calculated
according to the level of Net Sales as follows:
 
(i)  Cosmetic Products:  four percent (4%) of Net Sales for Net Sales up to
forty million dollars ($40,000,000) in any given Annual Period and five percent
(5%) of Net Sales for Net Sales in excess of forty million dollars ($40,000,000)
in any given Annual Period.
 
(ii)  Fragrance Products:  five percent (5%) of Net Sales.
 
b.  Royalty Amounts shall be paid to Aerin LLC quarterly in arrears on the
fifteenth (15th) day of November, February, May and August respectively in
respect of the Net Sales achieved during the fiscal quarter concluding on the
last day of the month preceding such payment date.
 
c.  For the avoidance of doubt, no Royalty Amount shall be payable on:  (i)
employee gifts or charitable contributions and other donations or giveaways of
Licensed Products; (ii) Sales to Aerin LLC and/or (iii) sales of Licensed
Products through Licensee’s Outlet Stores in accordance with Sections 7.6 and
7.7 herein.
 
9.2  Royalty Statements.  Concurrently with payments under Section 9.1, EL will
provide to Aerin LLC a royalty statement certified as true and accurate by a
comptroller of EL setting forth a computation of Net Sales. At Aerin LLC’s
request and expense, EL also shall provide to Aerin LLC an annual royalty
statement certified as true and accurate by an independent accounting firm.  EL
will provide to Aerin LLC in the royalty statement all information it generally
provides to its other licensors and such information as Aerin LLC may reasonably
request and list Net Sales made in a foreign currency showing the foreign
currency and the conversion to US dollars using the exchange rate of the
applicable currency for the last day of the relevant quarter (or the next
business day if such day falls on a weekend or holiday) as set forth in the U.S.
edition of The Wall Street Journal or any other financial publication
subsequently agreed in writing by Aerin LLC and EL.  If EL is legally prohibited
from converting the currency in which sales are made to dollars, it may pay the
relevant portion of the Royalty Amount in the source currency.
 
9.3  Weekends and Holidays.  In the event that a payment hereunder is due on a
weekend or legal federal or New York holiday, the payment shall be deemed due
instead on the next business day.
 
ARTICLE 10.  
MANNER OF PAYMENT, INTEREST, BOOKS AND RECORDS, INSPECTION

 
10.1  Manner of Payment.  All payments required by EL hereunder will be made to
Aerin LLC by wire transfer in U.S. Dollars to an account in accordance with
instruction from Aerin LLC.
 

 
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10.2  Taxes.  EL will bear all taxes, duties and other governmental charges in
the Territory relating to or arising under this Agreement, including without
limitation, any state or federal income taxes (except withholding taxes on
royalties and taxes on the income or gross receipts of Aerin LLC), any stamp or
documentary taxes or duties, turnover, sales or use taxes, value added taxes,
excise taxes, customs or exchange control duties and any other charges relating
to or on any royalty payable by EL to Aerin LLC.  EL will obtain, at its own
cost and expense, all licenses, reserve bank, commercial bank or other bank
approvals, and any other documentation necessary for the importation of
materials and the transmission of royalties and all other payments relevant to
EL’s performance under this Agreement.  If any tax or withholding is imposed on
royalties, such amounts shall be deducted from the Royalty Amount payable to
Aerin LLC and EL shall obtain certified receipts evidencing the tax payment or
withholding and transmit it to Aerin LLC upon Aerin LLC’s reasonable
request.  Aerin LLC will reasonably cooperate with EL, at EL’s expense, in
obtaining any of the foregoing approvals or documentation.
 
10.3  Books and Records.  EL agrees to keep accurate books and records covering
all transactions relating to the license granted by this Agreement, Net Sales,
EL’s Annual A&P Minimum and the computation of the Royalty Amount.  Aerin LLC’s
representatives shall have the right at reasonable times during the Term, and
for three (3) years after its termination, to examine and/or audit said books
and records (including customer invoices, invoices indicating Advertising and
Promotion expenditures and manufacturing records) and make extracts or copies
thereof for the purpose of verifying payments due and expenditures required
hereunder.  This right of examination shall be exercisable once during each
Annual Period, during normal business hours at a date and time to be approved by
EL, such approval not to be unreasonably withheld, upon at least thirty (30)
business days prior written notice.
 
10.4  Underpayments.  If, upon any examination of EL’s books and records, Aerin
LLC discovers and gives EL reasonable evidence of any undisputed royalty
underpayment by EL, EL will make all payments required to be made to correct and
eliminate such underpayment within thirty (30) days after Aerin LLC’s demand and
delivery of the evidence therefor.  In addition, if said examination reveals an
undisputed royalty underpayment of the greater of (a) $75,000 or (b) ten (10%)
percent or more, for any royalty period, EL will reimburse Aerin LLC the
reasonable cost of said examination within forty five (45) days after Aerin
LLC’s demand and delivery of evidence reasonably supporting the cost of said
examination.
 
10.5  Overpayments. If, upon any examination of EL’s books and records, Aerin
LLC discovers any royalty overpayment by EL, EL shall receive a credit for such
overpayment against future Royalty Amounts due.
 
10.6  Interest.  If EL fails to pay to Aerin LLC any sum owing to Aerin LLC
hereunder or in connection herewith in full when due, EL shall pay interest on
any unpaid balance from and including the date the payment becomes due until the
date of payment at a rate equal to the prime rate prevailing in New York City at
JP Morgan Chase during the period of delinquency plus three percent (3%) or the
maximum rate of interest that can legally be charged to EL, if lower.
 

 
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ARTICLE 11. REPRESENTATIONS AND WARRANTIES
 
11.1  Representations and Warranties of EL. EL hereby represents, warrants and
covenants that:
 
a.  it has the full right, power and authority to enter into this Agreement, and
to perform all of its obligations hereunder;
 
b.  it is financially capable of undertaking the business operations which it
conducts and of performing its obligations hereunder;
 
c.  it is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation;
 
d.  all necessary corporate acts have been effected by it to render this
Agreement valid and binding upon it; and
 
e.  in its negotiations relative to this Agreement, it has not utilized the
services of any finder, broker or agent, and it owes no commission or fees to
any such person in relation hereto.  EL agrees to indemnify Aerin LLC against,
and hold it harmless from, any and all liabilities (including, without
limitation, reasonable legal fees) to any person, firm or corporation claiming
commissions or fees in connection with this Agreement or the transactions
contemplated hereby as a result of an agreement with or services rendered to EL.
 
11.2  Representations and Warranties of Aerin LLC.  Aerin LLC hereby represents,
warrants and covenants that:
 
a.  it has the full right, power and authority to enter into this Agreement, and
to perform (and cause its designee to perform) all of its obligations hereunder
or in connection herewith;
 
b.  it is financially capable of undertaking the business operations which it
conducts or may conduct and of performing its obligations hereunder;
 
c.  it is a limited liability company organized, validly existing and in good
standing under the laws of the jurisdiction of its formation;
 
d.  all necessary acts have been effected by it to render this Agreement valid
and binding upon it;
 
e.  in negotiations relative to this Agreement, it has not utilized the services
of any finder, broker or agent, and it does not owe any commission or fees to
any such person in relation hereto.  Aerin LLC agrees to indemnify EL against,
and hold it harmless from, any and all liabilities (including, without
limitation, reasonable legal fees) to any person, firm or corporation claiming
commissions or fees in connection with this Agreement or the transactions
contemplated hereby as a result of an agreement with or services rendered to
Aerin LLC;
 

 
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f.  JW Brands is the sole and exclusive owner of, and Aerin LLC is the sole and
exclusive licensee of, in each case, the registrations and applications for
Licensed Trademarks identified on Exhibit A with respect to the Licensed
Products and certain other fields of use including clothing and other goods and
services covered by the registrations and applications;
 
g.  none of JW Brands, Aerin LLC, nor any person acting under its authority, has
granted any other existing license to use the Licensed Trademarks, ALZ
Identifiers or Ancillary IP in the Territory in connection with Licensed
Products, and, during the term, subject to Section 7.4 herein, shall not grant
(or authorize any person to grant) any such license in connection with products
constituting Licensed Products;
 
h.  there are no terms in the Master License Agreement that conflict with any of
the terms in this License Agreement.
 
i.  there are no actions, suits, legal proceedings or formal investigations
pending, or to Aerin LLC’s knowledge, threatened, against or affecting Aerin LLC
before any court, arbitrator or administrative or governmental body which might
adversely affect or materially impair (i) the ability of Aerin LLC to grant the
rights granted herein or otherwise perform its obligations under or related to
this Agreement or (ii) the rights of EL hereunder.
 
j.  other than as identified on Schedule 11.2 hereto, there are no pending or
existing adverse orders, judgments, legal proceedings or actions, formal
investigations, written claims, or consent agreements, and, to Aerin LLC’s
knowledge, no restrictions or encumbrances regarding or relating to the
ownership or use of the Licensed Trademarks in connection with products or
services constituting Licensed Products and/or the Aerin Lifestyle Brand in any
jurisdiction in the Territory;
 
k.  the Licensed Trademarks existing as of the date hereof, and the authorized
use by EL of any of them hereunder, do not and will not infringe any
intellectual property rights of a third party; and
 
l.  no event has occurred that, at or prior to the date hereof, would have a
material adverse impact on the Aerin Lifestyle Brand or on the condition
(financial or otherwise) of Aerin LLC.
 
m.  for the avoidance of doubt, Aerin LLC makes no representation or warranty
regarding “LAUDER” or any derivative thereof.
 
ARTICLE 12. CONFIDENTIALITY
 
12.1  Confidentiality.  Both Aerin LLC and EL acknowledge that, in furtherance
of this Agreement, they will receive from the other information which may
consist of business methods, business plans and practices, identification of
personnel, customers, prospective customers and suppliers, financial
information, inventions, processes, methods, products, patent applications,
specifications, drawings, sketches, models, samples, designs, ideas, technical
information and other confidential business information and trade secrets.  The
parties recognize that these
 

 
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materials are valuable property.  The parties acknowledge the need to preserve
the confidentiality and secrecy of these materials and agree to take all
necessary steps to ensure that use by the recipient, or by their contractors
will in all respects preserve such confidentiality and secrecy.  Each party
shall take all commercially reasonable precautions to protect the secrecy of the
materials, samples, and designs described herein prior to their commercial
distribution or the showing of samples for sale.  Each party shall take all
reasonable precautions to protect the secrecy of the original designs created
for Licensed Products prior to their advertisement, commercial distribution or
the showing of samples for sale.  Neither party shall, at any time during the
term of this Agreement, disclose to any third party or use for any purpose,
other than as contemplated by or necessary to comply with the terms of this
Agreement, any revealed or otherwise acquired confidential information and data
relating to the business of the other.  Notwithstanding the foregoing, the
parties shall not be required to treat any information as confidential
information under this Article 12 if such information (i) was publicly known at
the time it was disclosed or becomes publicly known after disclosure without
breach hereof by the receiving party; (ii) was known by the receiving party at
the time of disclosure or becomes known to it from a party other than the
disclosing party who has the apparent right to disclose such information to the
receiving party’s knowledge after due inquiry; (iii) is independently developed
by the receiving party without reliance on the disclosed confidential
information; (iv) is approved for disclosure by the disclosing party with the
disclosing party’s prior written consent; or (v) is disclosed by the receiving
party pursuant to judicial order, requirement of a governmental agency or other
operation of law, provided that the receiving party informs the disclosing party
promptly after receiving notice of its obligation to make such disclosure, and
takes reasonable steps to limit the scope of such disclosure.  This Section 12.1
expressly replaces and supercedes the terms of any other agreement between Aerin
LLC on the one hand and EL on the other relating to the treatment of
confidential materials or the non-disclosure of information entered into between
the parties, which agreement shall be deemed terminated and of no further effect
with respect to all the parties thereto (except that confidential information
provided under any prior agreement by one party to the other shall be protected
and governed as though it were provided pursuant to this Agreement).
 
ARTICLE 13. INTELLECTUAL PROPERTY
 
13.1  Rights to the Intellectual Property.
 
a.  EL shall use and display the Licensed Trademarks, ALZ Identifiers, and
Ancillary IP only in the form and manner designated or approved by Aerin LLC
from time to time hereunder.  As between the parties, the Licensed Trademarks,
ALZ Identifiers, and Ancillary IP and all the rights therein, and goodwill
attached thereto, belong exclusively to Aerin LLC.  Any goodwill arising from
the use of the Licensed Trademarks by EL and/or its permitted sublicensees shall
inure to the benefit of JW Brands and sales by EL of Licensed Products and its
use of the Licensed Trademarks hereunder shall be deemed to have been made by JW
Brands for purposes of trademark registration.  EL will not knowingly do, or
authorize or assist any person to do, any act or thing that would, in any way,
adversely affect the rights of JW Brands or Aerin LLC in and to the Licensed
Trademarks, ALZ Identifiers, or Ancillary IP or any goodwill arising from
therefrom.  No party will knowingly do or authorize or assist any person to do,
any act or thing that may reduce the value of the Licensed Trademarks, ALZ
Identifiers, or Ancillary IP or detract from their reputation.
 

 
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b.  Aerin LLC shall notify EL if it or JW Brands elect to change the form of the
Licensed Trademarks, ALZ Identifiers, and Ancillary IP and EL shall effect the
change as promptly as reasonably practicable and, in any event, no later than
the next season after the season then in production.  However, if, after the
change has been effected, EL has an inventory of Licensed Products bearing the
previous form of the Licensed Trademarks, ALZ Identifiers, and Ancillary IP, EL
may sell off such Licensed Products, as seconds in Licensee’s Outlet Stores and
not as part of EL’s regular sales of Licensed Products, in the ordinary course.
 
c.  As between the parties, all trademarks, including without limitation the EL
Trademarks, related goodwill and other intellectual property owned and retained
by EL, as provided herein, belong exclusively to EL and this Agreement does not
confer upon Aerin LLC, ALZ or their Affiliates or licensees, any right to use
any such trademarks or other intellectual property.  No party will knowingly do
or authorize or assist any person to do, any act or thing that may reduce the
value of such trademarks, related goodwill and other intellectual property or
detract from their reputation.
 
13.2  Protecting the Licensed Trademarks and Ancillary IP.
 
a.  ALZ shall cause JW Brands to use commercially reasonable efforts to apply
for and maintain registrations for the Licensed Trademarks that are not New
Secondary Marks, including without limitation those trademarks set forth in
Exhibit A, in key markets as determined by the parties from time to time, at its
sole expense, but only to the extent such Trademarks cover any products
constituting Licensed Products.
 
b.  The parties shall cooperate with each other in securing registrations in
International Class 3, and other appropriate International Classes, for the New
Secondary Marks in the Territory as appropriate using EL’s in-house legal
department or Aerin LLC’s trademark attorneys, at the election and sole expense
of Aerin LLC, who shall file any and all applications in JW Brand’s name (or in
the name of such other party as Aerin LLC reasonably may direct).  The parties
shall cooperate in the handling, coordination, filing and prosecution of all new
applications for registration in the Territory.  With respect to New Secondary
Marks, the parties shall share equally the cost of all of the government and
third-party agent costs and expenses associated with securing such
registrations, including without limitation such costs associated with
prosecuting or defending opposition and cancellation proceedings, searches and
clearances, negotiated payments, and any and all attorneys’ fees and filing fees
(collectively, “Outside Fees”), provided that EL’s in-house legal department
shall be utilized to the extent commercially reasonable.  With respect to New
Secondary Marks, EL shall conduct in respect of each country in which it
determines to sell Licensed Products a right to use review consistent with its
standard intellectual property (including trademark) clearance procedures. If at
the end of the foregoing process, EL determines that payment to a third party
should be made to secure the right to sell under a New Secondary Mark, in a
particular country, the payment to the third party shall be borne equally by the
parties.
 
c.  If Aerin LLC determines to apply to register a Licensed Trademark in classes
other than those covering products and services constituting Licensed Products
then sold by EL, Aerin LLC shall bear the trademark search and clearance costs.
 

 
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d.  EL, at Aerin LLC’s and EL’s shared expense, shall prepare and execute all
necessary documents, including, without limitation, registered user agreements,
necessary to protect the Trademarks used in connection with the Licensed
Products and the parties shall reasonably cooperate in connection therewith.
 
e.  Aerin LLC shall promptly notify EL of any restrictions on use of the
Licensed Trademarks, ALZ Identifiers or Ancillary IP in connection with the
Licensed Products anywhere in the Territory of which it becomes aware.
 
13.3  Compliance with Notice and Other Requirements.  EL will use the Licensed
Trademarks in compliance with all applicable legal requirements.  Upon
expiration or termination of this Agreement for any reason whatsoever, EL will
execute and deliver to Aerin LLC any and all documents required by Aerin LLC for
terminating any and all registered user agreements and other documents regarding
EL’s use of the Licensed Trademarks.
 
13.4  Infringement.  Each party agrees upon its learning thereof to notify the
other party promptly in writing of any potential infringement of the Licensed
Trademarks, ALZ Identifiers, or Ancillary IP, or imitation or counterfeiting of
Licensed Products in the Territory, of any use by any person of a trademark
confusingly similar to the Licensed Trademarks for goods in International Class
3 and/or goods and services related thereto, or of any applications or
registrations for the Licensed Trademarks or Ancillary IP or marks confusingly
similar to the Licensed Trademarks within the Territory for use on goods in
International Class 3 and/or goods and services related thereto, or of any suit
or proceeding or action of unfair competition involving the Licensed Trademarks
or Ancillary IP in the Territory in connection with goods in International Class
3 and goods and/or services related thereto.  Aerin LLC thereupon shall at its
sole discretion and at its sole expense take such action as it deems
advisable for the protection of its rights in and to the Licensed Trademarks,
ALZ Identifiers, Ancillary IP, and Licensed Products and, if requested to do so
by Aerin LLC, EL shall, at Aerin LLC’s expense, provide reasonable assistance to
Aerin LLC in all respects, including, without limitation, by being a plaintiff
or co-plaintiff in any one or more lawsuits in connection therewith and by
causing its officers to execute pleadings and other related documents. The
institution and conduct of litigation, the selection of attorneys and the
settlement of litigation and claims affecting the Licensed Trademarks, ALZ
Identifiers, and Ancillary IP in the Territory shall be entirely within the
discretion of Aerin LLC and under Aerin LLC’s control.  In no event, however,
will Aerin LLC be required to take any action if it deems it inadvisable to do
so.   EL, may in its discretion, participate in litigation brought by Aerin
LLC.  All costs and expenses, including reasonable legal fees incurred in
connection with any such suits in which both parties voluntarily participate (it
being agreed that the parties, where practical shall share attorneys), shall be
borne equally by the parties, and each party’s expenses shall be reimbursed out
of any monetary recovery obtained, and the remainder, if any, shall be divided
equally between the parties taking into account any further pro rata division
that may be required in the event the suit involves products and services in
addition to Licensed Products.  If the monetary recovery obtained is not
sufficient to fully reimburse both parties, the parties’ expenses shall be
reimbursed on a pro rata basis out of such monetary recovery, taking into
account any further pro rata division that may be required in the event the suit
involves products and services in addition to Licensed Products.  If EL does not
participate, Aerin LLC may bring such action or suit at its own expense and
shall keep any recovery therefrom.  If Aerin LLC decides not to bring any action
or suit, EL may (subject to
 

 
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Aerin LLC’s reasonable objection) bring such action or suit at its own expense
and shall keep any recovery therefrom. If requested to do so by EL, Aerin LLC
shall, at EL’s expense, provide reasonable assistance to EL in all respects,
including, without limitation, by being a plaintiff or co-plaintiff in any one
or more lawsuits in connection therewith and by causing its officers to execute
pleadings and other related documents.
 
13.5  Use of Licensed Trademarks on Business Materials.  Aerin LLC hereby
consents to use by EL of a trade name incorporating a Licensed Trademark (e.g.,
Aerin Beauty or similar name) and to the use of such trade name in the masthead
or letterhead of invoices, order forms, stationery and related materials in
advertising in telephone or other directory listings; provided, however, that
each such use of the Licensed Trademarks is only in conjunction with the
manufacture, sale, distribution or advertisement of Licensed Products pursuant
to this Agreement, and provided, further, that all such materials and the trade
name itself shall be subject to Aerin LLC’s approval as if such items were A&P
Materials hereunder.  All goodwill associated with such use shall be for the
sole and exclusive benefit of Aerin LLC, and such materials may not include or
otherwise promote any other products sold by EL.
 
13.6  Further Assurances.  Each of Aerin LLC, ALZ and EL shall cooperate with
the others and take such steps as are reasonably requested by the others to
implement the intellectual property ownership allocation contemplated, and
preserve the other rights granted, by this Article 13.
 
ARTICLE 14. INSOLVENCY
 
14.1  Effect of Proceeding in Bankruptcy, etc.  If either party institutes for
its protection or is made a defendant in any proceeding under bankruptcy,
insolvency, reorganization or receivership law, or if either party is placed in
receivership or makes an assignment for benefit of creditors or is unable to
meet its debts in the regular course of business, the other party may elect to
terminate this Agreement immediately by written notice to the other party
without prejudice to any right or remedy the terminating party may have,
including, but not limited to, damages for breach.
 
14.2  Rights Personal.  The license and rights granted hereunder are personal to
EL.  No assignee for the benefit of creditors, receiver, trustee in bankruptcy,
sheriff or any other officer or court charged with taking over custody of EL’s
assets or business, shall have any right to continue performance of this
Agreement or to exploit or in any way use the Licensed Trademarks if this
Agreement is terminated pursuant hereto, except as may be required by law.
 
14.3  Trustee in Bankruptcy.  Notwithstanding the provisions of Section 14.2, in
the event that, pursuant to applicable bankruptcy law (the “Code”), a trustee in
bankruptcy, receiver or other comparable person, of either party, as debtor (the
“Debtor”), is permitted to assume this Agreement and does so and, thereafter,
desires to assign this Agreement to a third party, which assignment satisfies
the requirements of the Code, the trustee or the Debtor, as the case may be,
must notify the other party.  Said notice shall set forth the name and address
of the proposed assignee, the proposed consideration for the assignment and all
other relevant details thereof.  The giving of such notice will be deemed to
constitute an offer to such party to have this Agreement assigned to it or its
designee for such consideration, or its equivalent in money, and
 

 
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upon such terms as are specified in the notice.  The other party may accept the
aforesaid offer only by written notice given to the trustee or the Debtor, as
the case may be, within fifteen (15) days thereafter.  If the non-debtor party
fails to deliver such notice within the said fifteen (15) days, the trustee or
Debtor may complete the assignment referred to in its notice, but only if such
assignment is to the entity named in said notice and for the consideration and
upon the terms specified therein.  Nothing contained herein will be deemed to
preclude or impair any rights that a party may have as a creditor in the
bankruptcy proceeding.
 
ARTICLE 15. EXPIRATION AND TERMINATION
 
15.1  EL’s Right to Terminate.  In addition to other rights of termination by
EL, as set forth in this Agreement, EL shall have the right, subject to Aerin
LLC’s and ALZ’s right to cure set forth herein, to terminate this Agreement:
 
a.  If JW Brands, Aerin LLC and/or ALZ sells, distributes or authorizes others
to sell or distribute Licensed Products in the Territory;
 
b.  If Aerin LLC and/or ALZ materially breaches any of its/her representations,
warranties or covenants herein; or
 
c.  If Aerin LLC and/or ALZ shall otherwise fail to perform any of the material
terms of this Agreement to be performed.
 
Upon Aerin LLC’s or ALZ’s default, EL shall have the right to notify Aerin LLC
and/or ALZ of its intent to terminate the Agreement, which notice shall be in
writing and shall set forth the specific reason for termination.  Aerin LLC
and/or ALZ shall have sixty (60) days from receipt of such written notice to
cure the alleged default.  If Aerin LLC and/or ALZ is unable to cure within the
time frame set forth above for the default in question, the license hereunder
shall terminate upon EL’s further written notice of termination to Aerin LLC
and/or ALZ, provided that, to the extent any such default is curable but not
within such sixty (60) day period and Aerin LLC and/or ALZ is diligently
proceeding to cure such default, such default will not constitute grounds for a
termination of this Agreement if it is cured within one hundred twenty (120)
days.
 
15.2  Aerin LLC’s Right to Terminate.  Aerin LLC shall have the right, subject
to EL’s right to cure as set forth herein, to terminate this Agreement:
 
a.  If EL fails to pay any Royalty Amount or any other amount indisputedly due
to Aerin LLC hereunder within sixty (60) days following the end of the quarter
for which they were due;
 
b.  If EL materially breaches any of its representations, warranties or
covenants herein; or
 
c.  If EL shall otherwise fail to perform any of the material terms of this
Agreement to be performed, not covered by the preceding paragraph.
 
Upon EL’s default, Aerin LLC shall have the right to notify EL of its intent to
terminate the Agreement, which notice shall be in writing and shall set forth
the specific reason for
 

 
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termination.  EL shall have sixty (60) days from receipt of such written notice
to cure the alleged default.  If EL is unable to cure within the time frame set
forth above for the default in question, the license hereunder shall terminate
upon Aerin LLC’s further written notice of termination to EL, provided that, to
the extent any such default is curable but not within such sixty (60) day period
and EL is diligently proceeding to cure such default, such default will not
constitute grounds for a termination of this Agreement if it is cured within one
hundred twenty (120) days.
 
15.3  Effect of Expiration or Termination.
 
a.  At any time that EL becomes aware of the expiration or termination of this
Agreement (whether pursuant to Section 3.2 or Section 15), EL shall refrain from
any activities relating to the Licensed Products that are out of the ordinary
course of or inconsistent with past practices until expiration or termination.
 
b.  Upon expiration or termination of this Agreement for any reason whatsoever,
other than due to termination by Aerin LLC arising out of EL’s material breach
of Section 4.8, 6.2(b), 6.4 or 6.6 herein (with respect to termination due to
EL’s material breach of 6.2(b), 6.4 or 6.6 , the following right of sell off
shall be limited to Licensed Products not impacted by such breach), EL shall
have the right for a period of twelve (12) months following expiration or
termination to manufacture for, fulfill and make delivery of all orders received
before expiration or termination and confirmed by it within thirty (30) days
after such expiration or termination, to complete any partially-finished
Licensed Products; and to sell and dispose of its inventory of Licensed Products
on hand as of the date of expiration or termination or finished thereafter as
described above.  Promptly after the end of such twelve (12) month period, EL
shall deliver to Aerin LLC an Inventory and Materials Schedule.  The Inventory
and Materials Schedule will be prepared as of the close of business on last day
of the twelve (12) months period and will identify EL’s remaining Inventory and
all plates, engravings, computer tapes, molds, tooling and the like used to make
or reproduce the Trademarks and Licensed Products in EL’s possession or
control.  Aerin LLC, at its sole discretion, may purchase the remaining
Inventory for a price equal to EL’s direct cost therefor and the other items
identified on the schedule for a price equal to EL’s book value therefor.  To
the extent Aerin LLC exercises its right to purchase, title to such Inventory
and materials immediately shall transfer to Aerin LLC, and EL (and its
Affiliates and distributors, if any), within sixty (60) business days
thereafter, shall ship the purchased items F.O.B. to the United States
destination selected by Aerin LLC.  Aerin LLC shall pay EL for such items on or
before shipment.  Aerin LLC shall have the right to sell the Inventory so
purchased, until such Inventory is exhausted or to the date one (1) year from
the date that said Inventory is shipped to Aerin LLC, whichever is
earlier.  Thereafter, Aerin LLC shall not sell or otherwise use EL’s trade name
or the trade name of an EL Affiliate or the trade name of an EL distributor. In
the event Aerin LLC elects not to purchase such Inventory and materials, EL
shall have the right to sell the remaining inventory of finished goods in
Licensee’s Outlet Stores until the earlier of the date on which such inventory
is fully depleted and twelve (12) months after the notice of Aerin LLC’s
election not to purchase such Inventory and materials.  If Aerin LLC elects to
purchase such Inventory and materials, at Aerin LLC’s request, EL shall enter
into a one-year supply agreement with Aerin LLC for the formulas used in any
Licensed Products at the time of termination.  EL shall make such formulas
available at customary terms and conditions.
 

 
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ARTICLE 16.  RELATIONSHIP BETWEEN THE PARTIES
 
16.1  No Agency.  Neither party shall represent itself as the employee, agent or
legal representative of the other party, or its Affiliates for any purpose
whatsoever and shall have no right to create or assume any obligation of any
kind, expressed or implied, for or on behalf of the other in any way whatsoever.
 
ARTICLE 17. INDEMNIFICATION AND INSURANCE
 
17.1  Indemnification by EL.  Except to the extent EL or related indemnified
parties would be entitled to indemnification from Aerin LLC pursuant to Section
17.2, EL hereby saves and holds ALZ and Aerin LLC harmless of and from and shall
indemnify them against any and all losses, liabilities, damages, judgments,
awards, suits, claims, fines, penalties and expenses (including reasonable
attorneys’ fees and expenses) (collectively, “Losses”) for which they may become
liable or be compelled to pay in any action, claim or proceeding against it for
or by reason of:  (a) any acts, whether of omission or commission, that may be
committed or suffered by EL or its Affiliates or any of their servants, agents
or employees in connection with EL’s performance under this Agreement; (b) the
design, manufacture, packaging, distribution, sale, marketing, advertisement or
promotion of any Licensed Products (except to the extent created or modified by
ALZ and/or Aerin LLC) specifically including those Losses related to the safety
or efficacy of, or compliance with any regulatory requirement applicable to,
such Licensed Products; (c) EL’s use of the Licensed Trademarks contrary to
Aerin LLC’s instructions provided to EL in writing in accordance herewith; or
(d) an allegation that the actions of EL or its Affiliates should be attributed
to ALZ and/or Aerin LLC by reason of EL using a Licensed Trademark as a trade
name or otherwise as provided in Section 13.5.  Aerin LLC must give EL prompt
written notice of any such action, claim or proceeding and EL, in its sole
discretion, then may take such action as it deems advisable to defend such
action, claim or proceeding on behalf of ALZ and/or Aerin LLC.  ALZ and/or Aerin
LLC may participate in such defense at their own expense with their own
counsel.  In the event appropriate action is not taken by EL within thirty (30)
days after its receipt of notice from ALZ and/or Aerin LLC, ALZ and/or Aerin LLC
may defend such action, claim or proceeding, but no settlement thereof may be
made without the approval of EL, which approval shall not be withheld
unreasonably.  In either case, the parties shall keep each other fully advised
of all developments and shall cooperate fully with each other in all respects in
connection with any such defense as is made.  The provisions of this Section
17.1 and EL’s obligations hereunder shall survive the expiration or termination
of this Agreement.
 
17.2  Indemnification by Aerin LLC.  Except to the extent Aerin LLC or any other
indemnified parties would be entitled to indemnification under Section
17.1, Aerin LLC hereby saves and holds EL and its Affiliates harmless of and
from and shall indemnify each of them against any and all Losses for which EL or
any of its Affiliates may become liable or be compelled to pay in any action,
claim or proceeding against EL or any of its Affiliates, for or by reason
of:  (a) use of the Licensed Trademarks in connection with the Licensed Products
in the Territory infringes upon the trademark, trade name or other rights of a
third party; (b) use of Ancillary IP or designs contributed by Aerin LLC
infringe the copyright, trade dress, trademark or any other intellectual
property rights of a third party in the Territory; (c) use of the ALZ
Identifiers (other than the “Lauder” part of ALZ’s name) infringes the
intellectual property rights of any third party in the Territory; and (d) any
acts, whether by omission or commission, that
 

 
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may be committed by Aerin LLC, or any of its agents or employees in connection
with this Agreement.  EL must give Aerin LLC prompt written notice of any such
action, claim or proceeding and Aerin LLC, in its sole discretion, then may take
such action as it deems advisable to defend such action, claim or proceeding on
behalf of EL.  EL may participate in such defense at its own expense with its
own counsel.  In the event appropriate action is not taken by Aerin LLC within
thirty (30) days after its receipt of notice from EL, EL may defend such action,
claim or proceeding, but no settlement thereof may be made without the approval
of Aerin LLC, which approval shall not be withheld unreasonably.  In either
case, parties shall keep each other fully advised of all developments and shall
cooperate fully with each other in all respects in connection with any such
defense as is made.  The provisions of this Section 17.2 and Aerin LLC’s
obligations hereunder shall survive the expiration or termination of this
Agreement.  Notwithstanding anything to the contrary herein, if Aerin LLC
advises EL in writing to cease manufacture, sale or distribution of Licensed
Products because it reasonably believes that such manufacture, sale or
distribution is infringing the rights of a third party in a manner for which
Aerin LLC is required to indemnify EL, EL shall cease such manufacture, sale or
distribution as soon as commercially practical, provided that Aerin LLC pays the
cost of ceasing such activities and any required product recalls (including
unrecouped development costs allocable to the jurisdiction in question).  In the
event that Aerin LLC no longer exists and does not have a successor which is at
least as financially sound and carries similar insurance coverage to that
carried by Aerin LLC for the benefit of EL as provided for in this Agreement,
then ALZ agrees to indemnify EL to the same extent as Aerin LLC pursuant to this
Section.
 
17.3  Insurance.
 
a.  Requirements.  Without limiting liability pursuant to the indemnity
provisions of this Agreement, EL will maintain comprehensive general liability
insurance in the amount of at least ten million dollars ($10,000,000) (total
limit) with a broad form property damage liability endorsement, which must
include products liability coverage. Without limiting liability pursuant to the
indemnity provisions of this Agreement, Aerin LLC will maintain comprehensive
general liability insurance in the amount of at least ten million dollars
($10,000,000) (total limit) with a broad form property damage liability
endorsement.
 
b.  General Provisions.  Each party’s insurance described in subsection (a) will
include:  (i) an endorsement stating that the other party will receive at least
thirty (30) days written notice prior to cancellation or non-renewal of
coverage; and (ii) an endorsement including the other party as an additional
insured.
 
c.  Approved Carrier/Policy Changes.  All insurance must be obtained from
recognized insurance companies licensed to do business within the United
States.  Each party shall notify the other at least thirty (30) days prior to
the cancellation of, or any modification in, such insurance policy that would
affect the other’s status or benefits thereunder.
 
d.  Evidence of Coverage.  Upon reasonable request of the other party, each
party shall furnish to the other evidence of the maintenance and renewal of the
required insurance and certificates of insurance.
 

 
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ARTICLE 18. NOTICES
 
18.1  Manner of Notice.  Any notice or legal service of process required or
arising out of or under this Agreement will be effective only when personally
delivered in writing, or on the date when the notice or service is transmitted
and confirmed by electronic facsimile (with a second confirmation copy to be
sent by mail) or the date when any notice or service sent by overnight air
courier service or by first class registered mail and confirmed as
delivered.  All notices and service will be sent to the parties at the addresses
listed below or to such other persons and addresses as may be designated in
writing by the parties to each other.  The date a notice or service will be
deemed to be transmitted, sent by overnight air courier or mailed will be the
date at the notifying party’s place of business at the time of transmission,
sending or mailing.
 
To Aerin LLC and/or ALZ:
President
Aerin LLC
595 Madison Ave.
New York, NY 10022
Tel. (212) 834-0440
Fax (212) 834-0449
   
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Andrew J. Nussbaum
Tel. (212) 403-1000
Fax. (212) 403-2269
 
   
With further copies to:
Hand Baldachin & Amburgey LLP
8 West 40th Street, 12th Floor
New York, NY  10018
Attn: Douglas Hand
Tel. (212) 956-9539
Fax. (212) 956-9500
     
and such other party or individual that Aerin LLC and/or ALZ may designate in
writing.
   
To EL:
Estee Lauder Inc.
767 Fifth Avenue
New York, New York  10153
Attention:  Global Brand President
Telephone:  (212) 572-5725
Facsimile:  (212) 572-5730
   
with copies to:
Estee Lauder Inc.
767 Fifth Avenue
New York, New York  10153

 
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Attention:  General Counsel
Telephone:  (212) 572-3980
Facsimile:  (212) 572-3989
     
and such other party or individual that EL may designate in writing.
   

The foregoing notwithstanding, requests for or grants/denials of approval or
other day-to-day communications may be given by email or fax.
 
ARTICLE 19. SUSPENSION OF OBLIGATIONS
 
19.1  Suspension of Obligations (Force Majeure). If either party is prevented
from performing any of its obligations because of governmental regulation or
order, or by strike or war, declared or undeclared, acts of terrorism, or other
calamities such as fire, earthquake, or similar acts of God, or because of other
similar or dissimilar cause beyond the control of such party, the party’s
obligations will be suspended during the period of such condition.  If such
condition continues for a period of more than one hundred eighty (180) days, the
other party will have the right to terminate this Agreement, provided that the
failure to render such obligations has resulted in a material adverse impact on
the other party’s rights under this Agreement.  If the force majeure does not
impact EL directly but it prevents EL from manufacturing and/or delivering
Licensed Products, due to an inability to obtain materials, EL will diligently
attempt to find alternate sources and EL will advise Aerin LLC on a regular
basis of the progress it has made in that regard.  If, in Aerin LLC’s reasonable
opinion, EL fails to diligently proceed to obtain alternate sources, or if the
condition continues for more than one hundred eighty (180) days, whichever first
occurs, Aerin LLC shall have the right to terminate this Agreement.
 
ARTICLE 20. CHANGE OF CONTROL
 
20.1  Termination in the Event of Change of Control of Aerin LLC or JW Brands
LLC.  In the event that control of Aerin LLC (or all or substantially all of its
assets) or JW Brands LLC (or all or substantially all of its assets) is
transferred to (i) a competitor of EL, other than a third party that has de
minimis sales of cosmetic, skincare and/or fragrance products or ii) mass, club
or similar retailers in any form of distribution, including the internet, EL
shall have the right to terminate the Agreement, no later than 30 days following
the occurrence of such event.  A transfer of control of JW Brands LLC (or its
assets) to Aerin LLC shall not by itself trigger EL’s right to terminate as
provided in this Section 20.1.
 
20.2  Termination in the Event of Change of Control of EL.  In the event that a
person, entity or single group of persons or entities acting in concert, other
than the Lauder family, related entities, or a group comprised of members of the
Lauder family and/or related entities, obtains control directly or indirectly of
more than 50% of the voting power or equity interest in (i) EL or (ii) the Estee
Lauder brand, Aerin LLC may terminate this Agreement, no later than 30 days
following the occurrence of such event.
 

 
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ARTICLE 21. MISCELLANEOUS
 
21.1  Benefit.  This Agreement will inure to the benefit of and be binding upon
the parties hereto, and to their permitted successors and assigns.  Nothing in
this Agreement is intended, nor will be deemed, to confer rights or remedies
upon any person or legal entity not a party to this Agreement except to the
extent that JW Brands shall be entitled to enforce, as a third party
beneficiary, the provisions of Sections 4.8, 13.2(a), and this Section 21.1.
 
21.2  Entire Agreement; Amendment.  This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
this Agreement may not be amended or modified, except in a writing signed by
both parties hereto.
 
21.3  Non-Waiver. The failure of either party to enforce at any time any term,
provision or condition of this Agreement, or to exercise any right or option
herein, will in no way operate as a waiver thereof, nor will any single or
partial exercise preclude any other right or option herein; and no waiver
whatsoever will be valid unless in writing, signed by the waiving party, and
only to the extent set forth in such writing.
 
21.4  Assignment by EL. EL shall have the right, upon written notice to Aerin
LLC, to assign this Agreement:  (a) to an Affiliate of EL, and/or (b) to a
purchaser of all or substantially all of EL’s assets, provided in either case
that the assignee assumes in writing all of EL’s obligations under this
Agreement.  Any other assignment by EL (including an assignment by operation of
law) requires the prior written consent of Aerin LLC in its sole discretion.  In
the event of a permitted assignment, this Agreement shall be binding upon the
parties’ successors and permitted assigns.  Any purported transaction in
violation of this Agreement shall be null and void at the outset. 
 
21.5  Assignment by Aerin LLC. Aerin LLC shall have the right, upon written
notice to EL, to assign this Agreement:  (a) to an Affiliate of Aerin LLC,
and/or (b) to a purchaser of all or substantially all of the assets of Aerin LLC
that is authorized pursuant to Section 20.1 herein, provided in either case that
the assignment is not in conflict with the Master License Agreement and assignee
assumes in writing all of ALZ/Aerin LLC’s obligations under this Agreement.  Any
other assignment by Aerin LLC and/or its Affiliates (including an assignment by
operation of law) requires the prior written consent of EL in its sole
discretion.  In the event of a permitted assignment, this Agreement shall be
binding upon the parties’ successors and permitted assigns.
 
21.6  Non-Solicitation.  During the Term and for a period of one (1) year
following Termination of this Agreement, no party hereto shall solicit, or
knowingly entice, persuade or induce any employee of another party hereto (or
its Affiliates) to terminate his or her employment with such party or to become
employed by another party hereto (for purposes of this Section, the terms
“employee,” shall include any persons with such status at any time during the
six (6) months preceding any solicitation in question).  For the avoidance of
doubt, the foregoing limitation shall not restrict any party hereto from placing
general advertisements of employment, or retaining a headhunter or other search
firm to conduct an employment search or recruiting activities, so long as such
advertisement or search is not directed at employees of another party (or its
Affiliates).
 

 
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21.7  Severability.  If any provision or any portion of any provision of this
Agreement is construed to be illegal, invalid, or unenforceable, such shall be
deemed stricken and deleted from this Agreement to the same extent and effect as
if never incorporated herein, but all other provisions of this Agreement and any
remaining portion of any provision which is not deemed illegal, invalid or
unenforceable in part shall continue in full force and effect.  The statements
set forth in the Premises section of this Agreement shall be deemed to be
incorporated into the operative provisions hereof.
 
21.8  Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
 
21.9  Jurisdiction. The parties hereby consent to the exclusive jurisdiction of
the United States District Court for the Southern District of New York and any
of the courts of the State of New York sitting in the City of New York in any
dispute arising under this Agreement and agree further that service of process
or notice in any such action, suit or proceeding will be effective if in writing
and issued as provided in Section 18.1.
 
21.10  Injunction. Notwithstanding the terms of 21.11, the parties agree that
unauthorized use of a party’s intellectual property and/or a breach of the
exclusivity provisions herein shall cause immediate and irreparable harm to the
non-breaching party for which a determination of cash damages would be difficult
or impossible and therefore agree that in the event of any such unauthorized
use, breach or threatened unauthorized use or breach, the non-breaching party
shall be entitled to preliminary and permanent injunctive relief without the
obligation of posting bond or other security.  Such injunctive relief may be
sought prior to or in lieu of termination of this Agreement and is in addition
to, and not in lieu of, any other rights and remedies available to the parties.
 
21.11  Mediation. In the event of any dispute, claim, question, or disagreement
arising from or relating to this Agreement, the parties agree to try in good
faith for thirty (30) days to settle the dispute by mediation administered by a
person mutually agreed upon by the parties and expert in issues related to
licensing agreements related to the fragrance and cosmetics industry before
resorting to litigation, such mediation to be conducted in New York, New
York.  Each party shall ensure that senior management with authority to settle
the dispute, claim, question or disagreement participates in the mediation. The
parties shall share equally in the costs of mediation.  All offers, promises,
conduct and statements, whether written or oral, made in the course of the
mediation by any of the parties, their agents, employees, experts and attorneys,
and by the mediator, shall be confidential, privileged and inadmissible for any
purpose, including impeachment, in any litigation or other proceeding involving
the parties, provided that evidence that is otherwise admissible or discoverable
shall not be rendered inadmissible or non-discoverable as a result of its use in
the mediation.  Either party may seek equitable relief prior to mediation to
preserve the status quo pending the completion of that process.
 
21.12  Exhibits and Schedules. All Exhibits and Schedules are incorporated into
this Agreement.
 
21.13  Headings. The headings of the Articles and Sections of this Agreement are
for convenience only and in no way limit or affect the terms or conditions of
this Agreement.
 

 
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21.14  Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
 
[Signature page follows.]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement the day
and year first above written.
 

ESTEE LAUDER INC.
 
AERIN LLC
                 
By:
  /s/  Sara Moss  
By:
    /s/  Aerin Lauder Zinterhofer  
Name:
Sara Moss  
Name:
Aerin Lauder Zinterhofer  
Title:
Executive Vice President and General Counsel  
Title:
President                      
AERIN LAUDER ZINTERHOFER
                       
  /s/  Aerin Lauder Zinterhofer
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
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EXHIBIT A
 

 
EXISTING LICENSED TRADEMARKS
 
AERIN
 
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