EXHIBIT 10.1

                                                                                                                                      EXECUTION
COPY

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of February 9, 2011, between THE ESTÉE
LAUDER COMPANIES INC., a Delaware corporation (the “Company”), and FABRIZIO
FREDA, a resident of New York, New York (the “Executive” or “you”),

W I T N E S S E T H:

WHEREAS, the Company and its subsidiaries are principally engaged in the
business of manufacturing, marketing and selling skin care, makeup, fragrance
and hair care products and related services (the “Business”); and

 WHEREAS, the Company and the Executive are parties to an employment agreement
dated as of November 8, 2007 and amended as of  March 25, 2009; and

          WHEREAS, the Company desires to continue to retain the services of the
Executive as the President and Chief Executive Officer and the Executive desires
to provide services in such capacity to the Company, upon the terms and subject
to the conditions hereinafter set forth; and

 WHEREAS, the Compensation Committee of the Board of Directors of the Company
(the “Compensation Committee”) and the Stock Plan Subcommittee of the
Compensation Committee have approved the terms of this Agreement; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and obligations hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:

1.           Employment Term; Effectiveness

The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to enter into employment, as President and Chief Executive Officer of the
Company subject to termination pursuant to Section 6 hereof. The period from
July 1, 2011 through the date of such termination shall be the “Term of
Employment”. This agreement shall be effective as of July 1, 2011, provided the
Executive is still actively employed by the Company as of such date.

2.           Duties and Extent of Services.

(a)           During the Term of Employment, the Executive shall serve as (i)
President and Chief Executive Officer, reporting to the Executive Chairman
subject to the control of the Board of Directors, and (ii) a member of the Board
of Directors.  In such capacities, the Executive shall render such executive,
managerial, administrative and other services as customarily are associated with
and incident to such positions, and as the Company may, from time to time,
reasonably require of him consistent with such positions.

(b)           The Executive shall also hold such other positions and executive
offices of the Company and/or of any of the Company’s subsidiaries or affiliates
as may from time to time be agreed by the Executive or assigned by the Board of
Directors, provided that each such
 
 
 
 

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position shall be commensurate with the Executive’s standing in the business
community as President and Chief Executive Offficer of the Company.  The
Executive shall not be entitled to any compensation other than the compensation
provided for herein for serving during the Term of Employment in any other
office or position of the Company or any of its subsidiaries or affiliates,
unless the Board of Directors of the Company or the appropriate committee
thereof shall specifically approve such additional compensation.

(c)           The Executive shall be a full-time “at will” employee of the
Company and shall exclusively devote all his business time and efforts
faithfully and competently to the Company and shall diligently perform to the
best of his ability all of the duties required of him as President and Chief
Executive Officer, and in the other positions or offices of the Company or its
subsidiaries or affiliates assigned to him hereunder.  Notwithstanding the
foregoing provisions of this section, the Executive may serve as a
non-management director of such business corporations (or in a like capacity in
other for-profit or not-for-profit organizations) as the Board of Directors of
the Company may approve, such approval not to be unreasonably withheld.

(d)            The Executive shall comply with the Company's stock ownership
guidelines applicable to the Executive as they may be implemented and/or amended
by the Board of Directors or the Compensation Committee of the Board of
Directors.

3.           (a) Base Salary.  As compensation for all services to be rendered
pursuant to this Agreement and as payment for the rights and interests granted
by Executive hereunder, the Company shall pay or cause any of its subsidiaries
to pay the Executive a base salary (the “Base Salary”) during the Term of
Employment subject to the provisions of Section 3(c) at a rate set by the
Compensation Committee from time to time.  The Compensation Committee has
determined that the Base Salary shall be $1,750,000 for the fiscal year ending
June 30, 2012 (“Fiscal 2012”).  Subject to Section 6(j) of this Agreement, all
amounts of Base Salary provided for hereunder shall be payable in accordance
with the regular payroll policies of the Company in effect from time to time.

(b)            Incentive Bonus Compensation.  The Executive shall be eligible to
participate in the Company’s Executive Annual Incentive Plan or any subsequent
Bonus Plan for executives that is approved by the stockholders of the Company
(the “Bonus Plan”), with aggregate target bonus opportunities to be reviewed by
the Compensation Committee from time to time.  The Compensation Committee has
determined that aggregate target bonus opportunities for Fiscal 2012 shall be
equal to $3,250,000.

Any target bonus opportunities granted to the Executive shall be subject to the
terms and conditions of the Bonus Plan, which are incorporated herein by
reference; provided, however, that the bonus payout with respect to any fiscal
year shall be paid to Executive no later than the 15th day of the third month
following the end of such fiscal year.

 (c)            Deferral.

(i)  Deferral Elections—In General.  The Executive may elect to defer payment of
all or any part of any salary payable under Section 3(a) or any incentive bonus
compensation payable under Section 3(b) by making an election, in a manner
prescribed by the Company, on or before December 31 of the calendar year before
the fiscal year begins (or such earlier date as may be necessary to comply with
the applicable tax laws and regulations).
 
 
 
 
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(ii)  Deferral Elections—Performance-Based Compensation.  For any incentive
bonus compensation that qualifies as performance-based compensation under Treas.
Reg. Section 1.409A-1(e) and is based upon a performance period of at least
twelve (12) months, the Executive may make a deferral election at any time
before the date that is six (6) months before the applicable performance period
ends, but only if (i) the incentive bonus compensation is not readily
ascertainable when the election is made and (ii) the service provider has
performed services continuously from the later of the beginning of the
performance period or the date the performance criteria are established.

(iii)  Credit on Amounts Deferred.  Any amounts deferred by Executive will be
credited to a bookkeeping account in the name of the Executive as of the date
scheduled for payment (the “Deferred Compensation Account”).  The Deferred
Compensation Account will be credited with interest as of each June 30 during
the term of deferral, compounded annually, at an annual rate equal to the annual
rate of interest announced by Citibank N.A. in New York, New York as its base
rate in effect on such June 30, but limited to a maximum annual rate of 9%.
 
(iv)  Payment of Amounts Deferred and Vested.  Subject to Section 6(j), amounts
credited to the Executive’s Deferred Compensation Account  will be paid to the
Executive (or the Executive’s designated beneficiary if the Executive dies
before payment), subject to applicable withholding taxes on, or as soon as
practicable after, the date the Executive separates from service with the
Company (as defined in Treas. Reg. section 1.409A-1(h)).   The Company, in its
sole discretion, may provide an investment facility for all or a portion of such
deferred amounts, but is not required to do so.

(d)            Supplemental Deferral. (i) The Company shall credit to a
bookkeeping account in the name of the Executive an annual supplemental deferral
amount during the Term of Employment computed by taking the difference between
$485,000.00 (the gross amount of the pension contributions made on behalf of the
Executive by his former employer, using an effective tax rate of approximately
forty-two (42) percent) and the actual vested annual accruals and contributions
made to the Company’s qualified and non-qualified pension and qualified
retirement savings plans on behalf of the Executive. Such amounts shall be
credited with interest as of each June 30 for the duration of this supplemental
pension bookkeeping account, compounded annually, at a rate per annum equal to
the annual rate of interest announced by Citibank N.A. in New York, New York as
its base rate in effect on such June 30, but in no event shall such rate exceed
9%.

(ii)  Subject to Section 6(j), amounts credited to the Executive’s supplemental
deferral account will be paid to the Executive (or the Executive’s designated
beneficiary if the Executive dies before payment), subject to applicable
withholding taxes on, or as soon as practicable after, the date the Executive
separates from service with the Company (as defined in Treas. Reg. section
1.409A-1(h)).  The Company, in its sole discretion, may provide an investment
facility for all or a portion of such deferred amounts, but is not required to
do so.

4.        (a)            Equity-Based Compensation - General.  The Executive
shall be eligible to participate in the Amended and Restated Fiscal 2002 Share
Incentive Plan or such other share incentive plan that is approved by the
stockholders of the Company (the “Share Incentive Plan”).  Any awards or
opportunities granted to the Executive shall be subject to the terms and
conditions of the Share Incentive Plan, which are incorporated herein by
reference The terms of such equity-based compensation awards shall be set forth
in separate grant letters approved by the Stock Plan Subcommittee of the
Compensation Committee.
 
 
 
 
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                                   (b)            Equity-Based Compensation –
Additional One-Time Award. An additional one-time award of Market Share Units
will be granted concurrently  with the signing of this Agreement, as provided
for  in the Market Share Unit Award Agreement and Notice of Grant dated as of
the date hereof.

                                   (c)            Equity-Based Compensation –
Annual Awards. For Fiscal 2012, the recommended annual equity-based compensation
award target opportunity under the Share Incentive Plan shall be of a value at
the time of grant of no less than $5,000,000.00 with the number of shares
determined in accordance with procedures generally utilized by the Company for
its financial reporting at the time of grant; provided, however, at no time
shall the aggregate grants during a fiscal year exceed or be in respect of more
than 500,000 shares of Class A Common Stock.  For purposes of this calculation,
shares underlying performance share units and other performance-based awards
shall be at target performance, which means that that above-target performance
payouts on performance share units or any other form of performance-based awards
shall not be subject to this limitation).

(d)            Certain Conditions.  Executive acknowledges and agrees that any
grant of equity-based compensation shall be effective as provided only to the
extent permitted by the Share Incentive Plan, and this Agreement shall not
obligate the Company to adopt any successor plan providing for the grant of
equity-based compensation.  If authority over the Company’s equity compensation
programs is changed from the Stock Plan Subcommittee to the Compensation
Committee (or other committee), then after such change, references herein to the
Stock Plan Subcommittee shall be to the appropriate committee.

5.  
Benefits.

 
(a)            Standard Benefits.  During the Term of Employment, the Executive
shall be entitled to participate in all pension and retirement savings, fringe
benefit and welfare plans, including life insurance, medical, health and
accident, disability, and vacation plans and programs maintained by the Company
from time to time for senior executives at a level commensurate with his
position.  The Executive acknowledges that participation in such programs may
result in the receipt by him of additional taxable income.
      
(b)            Perquisite Reimbursement; Financial Counseling. The Company shall
reimburse the Executive for the actual expenses incurred by him in connection
with his professional standing, in accordance with the guidelines set out in the
Company’s Senior Executive Compensation Program Perquisite Plan and upon
presentation of proper expense statements or vouchers or such other supporting
information as the Company may reasonably require of the Executive.  Such
reimbursement shall generally occur within seventy-five (75) days after the end
of the calendar year of presentment, provided that such presentment occurs
within ninety (90) days after the date the related expenses were
incurred.  Notwithstanding the above, to the extent that the expenses were
incurred in one calendar year and presentment occurs in the following calendar
year, such reimbursement shall occur by the end of the calendar year in which
the presentment occurs.  In no event shall the gross amount of such
reimbursements be greater than $20,000.00 in respect of any calendar year, nor
shall amounts that are not reimbursed in one calendar year up to the $20,000.00
per year limitation be able to be used in another calendar year or otherwise be
made available to the Executive.  Additionally, the Company will pay directly to
the service provider following presentment of invoice(s) reasonably acceptable
to the Company up to $5,000.00 per year for reasonable financial counseling
services for the Executive, and in no event shall amounts up to the $5,000.00
per
 
 
 
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year limitation that are not paid in one calendar year be able to be used in
another calendar year or otherwise be made available to the Executive.  The
Executive acknowledges that participation in such programs will result in the
receipt by him of additional taxable income.

(c)            Executive Auto. The Executive will participate in the Executive
Automobile Program of the Company, and may elect to be provided an automobile
having an acquisition value of up to $75,000.00.  Alternatively, the Executive
may receive an automobile allowance in the gross monthly amount of
$1,100.00.  The Executive acknowledges that participation in this program will
result in the receipt by him of additional taxable income.   

(d)            Expenses. The Company agrees to reimburse the Executive for all
reasonable and necessary travel (inclusive of first class air travel), business
entertainment and other business out-of-pocket expenses incurred or expended by
him in connection with the performance of his duties hereunder upon presentation
of proper expense statements or vouchers or such other supporting information as
the Company may reasonably require of the Executive.  The timing of payment of
such reimbursements and presentation by the Executive of expenses incurred shall
be in accordance with the rules described in Section 5(b).

(e)            Spousal/Companion Travel. The Executive may upon prior approval
of the  Executive Chairman or the Chairman of the Compensation Committee or
their respective designee(s), arrange for his spouse/companion or domestic
partner to accompany him on up to two (2) business related travel itineraries
per fiscal year, on a reasonable basis, at Company expense.  Any reimbursement
for such travel shall require presentation of proper expense statements or
vouchers or such other supporting information as the Company may reasonably
require of the Executive, and shall be payable within seventy-five (75) days
after the end of the calendar year of presentment.  The Executive acknowledges
that participation in this program will result in the receipt by him of
additional taxable income.    

(f)            Executive Term Life Insurance.  During the Term of Employment,
the Company shall continue to pay premiums on the existing term life insurance
policy or successor   life insurance policy with a face amount of
$10,000,000.00.  Such obligation to pay premiums is subject to standard
underwriting conditions.  The Executive acknowledges that this coverage will
result in the receipt by him of additional taxable income.

(g)            Modification of Benefits.  Nothwithstanding anything to the
contrary contained herein, the Company reserves the right with respect to any
benefit set forth in this Section 5 to modify such benefit or not to provide
such benefit.  Changes in any benefit provided solely to Executive Officers of
the Company shall be subject to approval of the Compensation Committee.   

6.           Termination.

(a)            Permanent Disability.  In the event of the “permanent disability”
(as hereinafter defined) of the Executive during the Term of Employment, the
Company shall have the right, upon written notice to the Executive, to terminate
the Executive’s employment hereunder, effective upon the giving of such notice
(or such later date as shall be specified in such notice).  In the event of such
termination, the Company shall have no further obligations hereunder, except
that the Executive shall be entitled to receive (i) any accrued but unpaid
salary and other amounts to which the Executive otherwise is entitled hereunder
prior to the date of his termination of employment, in accordance with Section
3(a) and other applicable
 
 
 
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payment provisions herein; (ii) bonus compensation earned but not paid under
Section 3(b) hereof that relates to any fiscal year ended prior to the date of
his termination of employment, in accordance with Section 3(b) hereof; (iii) a
pro-rata portion of the annual bonus payout that the Executive would have been
entitled to receive had he remained in employment through the end of the fiscal
year during which termination due to permanent disability occurred, based on the
portion of the fiscal year that has elapsed prior to such termination, and paid
in accordance with Section 3(b) hereof (provided, that such payment shall not be
made prior to the sixtieth (60th) day following the Executive’s date of
termination); (iv) reimbursement for financial counseling services under Section
5(b) hereof for a period of one (1) year from the date of termination, in
accordance with Section 5(b) hereof (provided, that such payment shall not be
made prior to the sixtieth (60th) day following the Executive’s date of
termination); and (v) his Base Salary at a rate equal to the highest rate during
the past twelve (12) months for a period of one (1) year from the date of
termination as a result of permanent disability, in accordance with Section 3(a)
hereof (the “Disability Continuation Period”), paid in accordance with Section
6(j)(i) hereof (provided, that such payment shall not be made prior to the
sixtieth (60th) day following the Executive’s date of termination); further
provided, however, that the Company shall only be required to pay that amount of
the Executive’s Base Salary which shall not be covered by short-term disability
payments or benefits or long-term disability payments or benefits, if any, to
the Executive under any Company plan or arrangement.  In addition, upon
termination for permanent disability, the Executive shall continue to
participate, to the extent permitted by applicable law and regulations and the
applicable benefit plan, program or arrangement, in any and all healthcare, life
insurance and accidental death and dismemberment insurance benefit plans,
programs or arrangements of the Company during the Disability Continuation
Period (disregarding any required delay in payments under Section
6(j)).  Thereafter, the Executive’s rights to participate in such programs and
plans, or to receive similar coverage, if any, shall be as determined under such
programs.  Because continued participation in any qualified pension and
qualified retirement savings plans of the Company is not permitted during the
Disability Continuation Period, the Company shall provide to the Executive,
subject to Section 6(j), cash payments, to be paid in accordance with Section
6(j)(i), equal to the sum of (x) the maximum qualified defined contribution
retirement savings plan match for pre-tax and after-tax contributions allowable
by the plan and by applicable laws and regulations for each year during the
Disability Continuation Period (or other period as expressly provided herein),
and (v) the excess of the benefit that would have been received by the Executive
had he been credited with additional years of age and service equal to the
Disability Continuation Period (or other period as expressly provided herein)
over the actual benefit to which the Executive is entitled, in each case, under
any and all qualified and non-qualified defined benefit pension plans and
qualified defined contribution retirement savings plans in which the Executive
participates as of the date of termination of employment, calculated as of and
based upon the Executive’s date of termination (such sum the “Pension
Replacement Payment”),(provided, that such payment shall not be made prior to
the sixtieth (60th) day following the Executive’s date of
termination). Notwithstanding the above, any amounts payable under this Section
6(a) that are separation pay as described under Treas. Reg.
§1.409A-1(b)(9)(iii)(A) shall be paid no later than December 31 of the second
calendar year following the year in which the Executive’s termination for
permanent disability occurs; any amounts payable under this Section 6(a) that
are not otherwise exempt from Code section 409A are subject to, and payable in
accordance with, Section 6(j) of this Agreement.  Except as otherwise provided
in this Section 6(a), the Company will have no further obligations under
Sections 3, 4 and 5 hereof or otherwise.  For purposes of this Section 6(a),
“permanent disability” means any disability as defined under the Company’s
applicable disability insurance policy or, if no such policy is available, any
physical or mental disability or incapacity that renders the Executive incapable
of performing the services required of him in accordance with
 
 
 
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his obligations under Section 2 hereof for a period of six (6) consecutive
months or for shorter periods aggregating six (6) months during any twelve-month
period.

(b)            Death.  In the event of the death of the Executive during the
Term of Employment, Executive’s employment and this Agreement shall
automatically terminate.  In the event of such termination the Company shall
have no further obligations hereunder, except to pay the Executive’s beneficiary
or legal representative (i) any accrued but unpaid salary and other amounts to
which the Executive otherwise is entitled hereunder prior to the date of
his  death, in accordance with Section 3(a) and other applicable payment
provisions herein; (ii) bonus compensation earned but not paid under Section
3(b) hereof that relates to any fiscal year ended prior to the date of his
death, in accordance with Section 3(b) hereof; (iii) a pro-rata portion of the
annual bonus payout the Executive would have been entitled to receive had he
remained in the employ of the Company through the end of the fiscal year during
which termination due to his death occurred, based on the portion of the fiscal
year that has elapsed prior to such termination, and paid in accordance with
Section 3(b) hereof (provided, that such payment shall not be made prior to the
sixtieth (60th) day following the Executive’s date of termination); (iv)
reimbursement for financial counseling services under Section 5(b) hereof for a
period of one (1) year from the date of termination, in accordance with Section
5(b) hereof (provided, that such payment shall not be made prior to the sixtieth
(60th) day following the Executive’s date of termination); and (v) for a period
of one (1) year from the date of his death, the Executive’s Base Salary as
established under Section 3(a) hereof as of the date of his death, in accordance
with Section 3(a) hereof (provided, that such payment shall not be made prior to
the sixtieth (60th) day following the Executive’s date of termination); further
provided, however, that, except as otherwise provided in this Section 6(b), the
Company will have no further obligations under Sections 3, 4 and 5 hereof or
otherwise.  

(c)            Termination Without Cause.  The Company shall have the right,
upon ninety (90) days’ prior written notice given to the Executive, to terminate
the Executive’s employment for any reason whatsoever (except for Cause (as
defined below) which is covered by Section 3(d)).  In the event of such
termination, the Company shall have no further obligations hereunder, except
that the Executive shall be entitled to (i) receive any accrued but unpaid
salary and other amounts to which the Executive otherwise is entitled hereunder
prior to the date of his termination without Cause, in accordance with Section
3(a) and other applicable payment provisions herein; (ii) receive bonus
compensation earned but not paid under Section 3(b) hereof that relates to any
fiscal year ended prior to the date of his termination without Cause, in
accordance with Section 3(b) hereof; (iii) receive a pro-rata portion of the
annual bonus payout that the Executive would have been entitled to receive had
he remained in employment through the end of the fiscal year during which the
termination without Cause occurred, based on the portion of the fiscal year that
has elapsed prior to such termination, and paid in accordance with Section 3(b)
hereof (provided, that such payment shall not be made prior to the sixtieth
(60th) day following the Executive’s date of termination); (iv) receive as
damages (A) for a period ending on a date two (2) years from the date of
termination without Cause, in accordance with the regular payroll policies of
the Company in effect from time to time, his Base Salary as established under
and in accordance with Section 3(a) hereof and (B) bonus compensation equal to
fifty percent (50%) of the average of the actual annual bonuses paid or payable
to the Executive under the Bonus Plan during the past two (2) completed fiscal
years paid in accordance with Section 6(j)(i) hereof (provided, that such
payment shall not be made prior to the sixtieth (60th) day following the
Executive’s date of termination); (v) receive reimbursement for financial
counseling services under Section 5(b) hereof for a period of two (2) years from
the date of termination, in accordance with Section 5(b) hereof (provided, that
such payment shall not be made prior to the sixtieth (60th) day following the
Executive’s date of
 
 
 
 
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termination); and (vi) participate for a period ending on a date two (2) years
from the date of termination without Cause (the “Without Cause Continuation
Period”), to the extent permitted by applicable law and regulations and the
applicable benefit plan, program or arrangement, in any and all qualified and
non-qualified pension and qualified retirement savings, healthcare, life
insurance and accidental death and dismemberment insurance benefit plans,
programs or arrangements, on terms identical to those applicable to full-term
senior officers of the Company.  Because continued participation in any
qualified pension and qualified retirement savings plans of the Company is not
permitted during the Without Cause Continuation Period, the Company shall
provide to the Executive, subject to Section 6(j), cash payments, to be paid in
accordance with Section 6(j)(i), equal to the Pension  Replacement Payment (as
defined in Section 6(a)) with respect to the Without Cause Continuation Period
(provided, that such payment shall not be made prior to the sixtieth (60th) day
following the Executive’s date of termination).  Notwithstanding the above, any
amounts payable under this Section 6(c) that are separation pay as described
under Treas. Reg. §1.409A-1(b)(9)(iii)(A) shall be paid no later than December
31 of the second calendar year following the year in which the Executive’s
termination pursuant to this section 6(c) occurs; any amounts payable under this
Section 6(c) that are not otherwise exempt from Code section 409A are subject
to, and payable in accordance with, Section 6(j) of this Agreement. Except as
otherwise provided in this Section 6(c), the Company will have no further
obligations under Sections 3, 4 and 5 hereof or otherwise.  In the event of
termination pursuant to this Section 6(c), the Executive shall not be required
to mitigate his damages hereunder.  

(d)            Cause.  The Company shall have the right, upon notice to the
Executive, to terminate the Executive’s employment under this Agreement for
“Cause” (as defined below), effective upon the Executive’s receipt of such
notice (or such later date as shall be specified in such notice), and the
Company shall have no further obligations hereunder, except to pay the Executive
his accrued but unpaid salary, in accordance with Section 3(a) hereof, and
provide the Executive with any benefit under the employee benefit programs and
plans of the Company as determined under such programs and plans upon and as of
such a termination for Cause.  Except as otherwise provided in this Section
6(d), the Company will have no further obligations under Sections 3, 4 and 5
hereof or otherwise.

For purposes of this Agreement, “Cause” means:

(i)            a material breach of, or the willful failure or refusal by the
Executive to perform and discharge duties or obligations he has agreed to
perform or assume under this Agreement (other than by reason of disability or
death) that, if capable of correction, is not corrected within ten (10) business
days following notice thereof to the Executive by the Company, such notice to
state with specificity the nature of the breach, failure or refusal;

(ii)           willful misconduct by the Executive, unrelated to the Company or
any of its subsidiaries or affiliates, that could reasonably be anticipated to
have a material adverse effect on the Company or any of its subsidiaries or
affiliates (the determination of Cause to be made by the Company’s Executive
Chairman in his/her reasonable judgment);

(iii)           the Executive’s gross negligence, whether related or unrelated
to the business of the Company or any of its subsidiaries or affiliates which
could reasonably be anticipated to have a material adverse effect on the Company
or any of its subsidiaries or affiliates that, if capable of correction, is not
corrected within ten (10) business days following notice thereof to the
Executive by the Company, such notice to state with specificity the nature
 
 
 
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of the conduct complained of (the determination of Cause to be made by the
Company’s Executive Chairman in his/her reasonable judgment);

(iv)            the Executive’s failure to follow a lawful directive of the
Executive Chairman or the Board of Directors of the Company that is within the
scope of the Executive’s duties for a period of ten (10) business days after
notice from the Executive Chairman of the Company specifying the performance
required;

(v)            any violation by the Executive of a policy contained in the Code
of Conduct of the Company (the determination of Cause to be made by the
Company’s Executive Chairman in his/her reasonable judgment);

(vi)            drug or alcohol abuse by the Executive that materially affects
the Executive’s performance of his duties under this Agreement; or

(vii)            conviction of, or the entry of a plea of guilty or nolo
contendere by the Executive for, any felony.
 
(e)    Termination by Executive.  The Executive shall have the right,
exercisable at any time during the Term of Employment, to terminate his
employment for any reason whatsoever, upon ninety (90) days’ prior written
notice to the Company.  Upon such termination, the Company shall have no further
obligations hereunder other than to (i) pay the Executive his accrued but unpaid
salary, in accordance with Section 3(a) hereof; (ii) provide bonus compensation,
if any, earned but not paid under Section 3(b) hereof that relates to any fiscal
year ended prior to the date of such a termination by the Executive, in
accordance with Section 3(b) hereof; and (iii) provide the Executive with any
benefit under the employee benefit programs and plans of the Company as
determined under such programs and plans upon and as of such a termination by
the Executive.Except as otherwise provided in this Section 6(e), the Company
will have no further obligations under Sections 3, 4 and 5 hereof or otherwise.

                       (f)           Termination by Executive for Material
Breach.  The Executive shall have the right, exercisable by notice to the
Company, to terminate his employment effective ninety (90) days after the giving
of such notice, if, at any time during the Term of Employment, the Company shall
be in material breach of its obligations hereunder; provided, however, that such
notice must be provided to the Company within thirty (30) days of the date on
which the Executive obtains knowledge or reasonably should obtain knowledge of
such material breach; and provided further, that such termination will not
become effective if within thirty (30) days after receiving the notice the
Company shall have cured all such material breaches of its obligations
hereunder.  For purposes of this Section 6(f), a material breach shall only be,
(i) a material reduction in the Executive’s authority, functions, duties or
responsibilities provided in Section 2 hereof, or (ii) the Company's failure to
pay any award that the Executive is entitled to receive pursuant to the terms of
this Agreement. Such termination shall be deemed to be a termination without
Cause and shall be controlled by the provisions of Section 6(c) hereof. Except
as otherwise provided in this Section 6(f), the Company will have no further
obligations under Sections 3, 4 and 5 hereof or otherwise.
 
 
 

 
 
9

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(g)           Change of Control.

(i)           Definitions.  For purposes of this Agreement,

(A)  a “Change of Control” shall be deemed to have occurred upon any of the
following events:

(1)  a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14(A) promulgated under the
Securities Exchange Act of 1934, as amended; or

(2)  during any period of two (2) consecutive years, the individuals who at the
beginning of such period constitute the Company’s Board of Directors or any
individuals who would be “Continuing Directors” (as defined below) cease for any
reason to constitute a majority thereof; or

(3)  the Company’s Class A Common Stock shall cease to be publicly traded; or

(4)  the Company’s Board of Directors shall approve a sale of all or
substantially all of the assets of the Company, and such transaction shall have
been consummated; or

(5)  the Company’s Board of Directors shall approve any merger, exchange,
consolidation, or like business combination or reorganization of the Company,
the consummation of which would result in the occurrence of any event described
in Section 6(g)(i)(A)(2) or (3) above, and such transaction shall have been
consummated.

Notwithstanding the foregoing, (X) changes in the relative beneficial ownership
among members of the Lauder family and family-controlled entities shall not, by
itself, constitute a Change of Control of the Company, (Y) any spin-off of a
division or subsidiary of the Company to its stockholders  shall not constitute
a Change of Control of the Company.

(B)  “Continuing Directors” shall mean (1) the directors in office on the date
hereof and (2) any successor to such directors and any additional director who
after the date hereof was nominated or selected by a majority of the Continuing
Directors in office at the time of his or her nomination or selection.

(C)  “Good Reason” means the occurrence of any of the following, without the
express written consent of the Executive, within two (2) years after the
occurrence of a Change in Control:

(1)  (a) the assignment to the Executive of any duties inconsistent in any
material adverse respect with the Executive’s position, authority or
responsibilities as contemplated by Section 2 hereof, or (b) any other material
adverse change in such position, including title, authority or responsibilities;

(2)  any failure by the Company to comply with any provisions of Sections 3, 4
or 5 hereof or a material reduction of the overall amounts set by the
Compensation Committee or the Stock Plan Subcommittee and in effect within
twelve (12)
 
 
 
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months prior to the Change in Control, other than an insubstantial or
inadvertent failure remedied by the Company promptly after receipt of notice
thereof given by the Executive;

(3)  the Company’s requiring the Executive to be based at any office or location
more than fifty (50) miles from that location at which he performed his services
specified under the provisions of Section 2 immediately prior to the Change in
Control, except for travel reasonably required in the performance of the
Executive’s responsibilities; or

(4)  any failure by the Company to obtain the assumption and agreement to
perform this Agreement by a successor as contemplated by Section 14, unless such
assumption occurs by operation of law.

(ii)           Termination for Good Reason.  Within two (2) years after the
occurrence of a Change of Control, the Executive may terminate his employment
for Good Reason.  Such termination shall be deemed to be a termination without
Cause and shall be controlled by the provisions of Section 6(c) hereof.  Except
as otherwise provided in this Section 6(g)(ii), the Company will have no further
obligations under Sections 3, 4 and 5 hereof or otherwise.
 
 
                 (h)  Certain Limitations.

(i)           Notwithstanding anything to the contrary contained herein, in the
event that any amount or benefit paid or distributed to the Executive pursuant
to this Agreement, taken together with any amounts or benefits otherwise paid or
distributed to the Executive by the Company or any affiliated company
(collectively, the "Covered Payments"), are or become subject to the tax (the
"Excise Tax") imposed under Section 4999 of the Code, or any similar tax that
may hereafter be imposed, the Covered Payments shall be reduced (but not below
zero) until no portion of such payments would be subject to Excise Tax.

(ii)           For purposes of determining whether any of the Covered Payments
will be subject to the Excise Tax and the amount of such Excise Tax,

(A)  such Covered Payments will be treated as "parachute payments" to the extent
they exceed the “2.99 base amount threshold” within the meaning of Section 280G
of the Code, and all “parachute payments” in excess of the “base amount” (as
defined under Section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless, and except to the extent that, in the good faith judgment of
the Company's independent certified public accountants appointed prior to the
date of the change in ownership or control or tax counsel selected by such
accountants (the "Accountants"), the Company has a reasonable basis to conclude
that such Covered Payments (in whole or in part) either do not constitute
"parachute payments" or are otherwise not subject to such Excise Tax, and

(B)  the value of any non-cash benefits or any deferred payment or benefit shall
be determined by the Accountants in accordance with the principles of Section
280G of the Code.
 
                                   (iii)           In the event that Covered
Payments are to be reduced pursuant to this Section 6(h), such Covered Payments
shall be reduced such that the reduction of compensation to be provided to the
Executive as a result of this Section 6(h) is minimized.  In applying this
principle, the reduction shall be made in a manner consistent with the
requirements of Section 409A of the Code, and where two economically equivalent
amounts are
 
 
 
11

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subject to reduction but payable at different times, such amounts shall be
reduced on a pro rata basis (but not below zero). 
 
(i)   Effect of Termination.  In addition to the foregoing, in the event that
this Agreement shall be terminated pursuant to the provisions of subparagraphs
6(a), 6(b) and 6(c) above, and the Executive is not considered to be retirement
eligible under the terms and conditions of the Company’s qualified defined
benefit pension plan, if any, notwithstanding anything to the contrary contained
in the Company’s Share Incentive Plan or other similar equity plan, (i) all
stock options granted to the Executive during the Term of Employment shall
become immediately exercisable and shall be exercisable until the earlier to
occur of (A) the end of the stock option term as set forth in the applicable
option agreement(s); or (B) the first anniversary of the date that Base Salary
continuation payments end, after which all such option awards shall expire and
be of no further force or effect and (ii) all restricted stock units and
performance share units granted to the Executive shall continue to vest through
the last date that Base Salary continuation payments, if any, are made
hereunder.  The vesting and exercisability provided for in the previous sentence
shall be subject to all provisions relating to post-employment exercises set
forth in the applicable Share Incentive Plan and option agreement(s).  Subject
to the preceding sentences, upon the termination of the Executive’s employment
hereunder for any reason, the Company shall have no further obligations
hereunder, except as otherwise provided herein.  The Executive, however, shall
continue to have the obligations provided for in Sections 7 and 8 hereof.
Furthermore, upon any such termination, the Executive shall be deemed to have
resigned immediately from all offices and directorships held by him in the
Company or any of its subsidiaries.

(j)    Section 409A of the Code.  It is the intention of the parties to this
Agreement that no payment or entitlement pursuant to this Agreement will give
rise to any adverse tax consequences to the Executive under Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including that issued after the date hereof (collectively,
“Section 409A”).  The Agreement shall be interpreted to that end and, consistent
with that objective and notwithstanding any provision herein to the contrary,
the Company may unilaterally take any action it deems necessary or desirable to
amend any provision herein to avoid the application of an excise tax under
Section 409A.  Further, no effect shall be given to any provision herein in a
manner that reasonably could be expected to give rise to adverse tax
consequences under that provision.  The Company shall from time to time compile
a list of "specified employees" as defined in, and pursuant to, Treas. Reg.
Section 1.409A-1(i).  Notwithstanding any other provision herein, if the
Executive is a specified employee on the date of termination, no payment of
compensation under this Agreement shall be made to the Executive during the
period lasting six (6) months from the date of termination unless the Company
determines that there is no reasonable basis for believing that making such
payment would cause the Executive to suffer any adverse tax consequences
pursuant to Section 409A of the Code.  If any payment to the Executive is
delayed pursuant to the foregoing sentence, such payment instead shall be made
on the first business day following the expiration of the six-month period
referred to in the prior sentence, unless specified otherwise in Section 6(j)(i)
hereof. Although the Company shall consult with Executive in good faith
regarding implementation of this Section 6(j), neither the Company nor its
employees or representatives shall have liability to the Executive with respect
to any additional taxes that the Executive may be subject to in the event that
any amounts under this Agreement are determined to violate Code section 409A.
 
 
 
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          (i)           Notwithstanding the above, amounts described as being
subject to payment in accordance with the provisions of this Section 6(j)(i)
shall be subject to a delay in payment for a six-month period following the date
of termination and shall be paid as follows:  For any Base Salary under Section
6(a)(v) or Section 6(c)(iv)(A) to be continued beyond the date of termination
and for any Pension Replacement Payment, all payments that would have been made
during the six-month period immediately following the date of termination shall
be made in a single cash payment on the first business day following the
expiration of such six-month period, and as of the first business day following
the expiration of such six-month period all such payments shall resume in
accordance with the regular payroll practices of the Company until the end of
the specified period; any bonus payments under Section 6(c)(iv)(B) shall be paid
in a single lump sum payment on the first business day following the expiration
of such six-month period.

(k)           Relocation.  In the event of termination of the Executive’s
employment hereunder for any reasons other than for “Cause” pursuant to Section
6(d) hereof, the Executive will be reimbursed for the actual cost of relocating
Executive and his family from the New York City area to Rome, Italy.  Such
reimbursement shall be subject to the Executive actually undertaking relocation
within one (1) year from the termination of his employment and will be capped at
the amount reimbursed with respect to his relocation from Rome, Italy to the New
York City area, inclusive of the two month salary relocation allowance.

(l)           Release of Claims.  As a condition precedent to the receipt of
payments (other than accrued but unpaid amounts) and benefits pursuant to this
Section, the Executive, or, in the case of his death or Disability that prevents
the Executive from performing his obligation under this Section 6(l), his
personal representative, and his beneficiary, if applicable, will execute an
effective general release of claims (in a form satisfactory to the Company)
against the Company and its subsidiaries and affiliates and their respective
directors, officers, employees, attorneys and agents; provided, however, that
such effective release will not affect any right that the Executive, or in the
event of his death, his personal representative or beneficiary, otherwise has to
any payment or benefit provided for in this Agreement or to any vested benefits
the Executive may have in any employee benefit plan of Company or any of its
subsidiaries or affiliates, or any right the Executive has under any other
agreement between the Executive and the Company or any of its subsidiaries or
affiliates that expressly states that the right survives the termination of the
Executive’s employment.  

(m)           Modification of Severance Payments and Benefits.  Nothwithstanding
anything to the contrary contained herein except as provided in this Section
6(m), the Company reserves the right with respect to any severance payments or
benefits set forth in this Section 6 to modify such payments or benefits or not
to provide such payments or benefits.  Changes in any severance payment or
benefit provided to the Executive may only be made by the Compensation Committee
(or the Stock Plan Subcommittee, if there is one, and the change relates to
matters subject to the authority of such Subcommittee).   Unless agreed to by
the Executive, no change to any severance payments or benefits set forth in this
Section 6 will be effective until two years after such change is approved by the
Compensation Committee (or Stock Plan Subcommittee).    No changes may be made
in severance payments or benefits set forth in this Section 6 either (i) at such
time the Company is contemplating one or more transactions that will result in a
Change of Control or (ii) after a Change of Control.
 
 
 
 
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7.           Confidentiality; Ownership.

(a)           The Executive agrees that he shall forever keep secret and retain
in strictest confidence and not divulge, disclose, discuss, copy or otherwise
use or suffer to be used in any manner, except in connection with the Business
of the Company, its subsidiaries or affiliates and any other business or
proposed business of the Company or any of its subsidiaries or affiliates, any
“Protected Information” in any “Unauthorized” manner or for any “Unauthorized”
purpose (as such terms are hereinafter defined).

(i)           “Protected Information” means trade secrets, confidential or
proprietary information and all other knowledge, know-how, information,
documents or materials owned, developed or possessed by the Company or any of
its subsidiaries or affiliates, whether in tangible or intangible form,
pertaining to the Business or any other business or proposed business of the
Company or any of its subsidiaries or affiliates, including, but not limited to,
research and development, operations, systems, data bases, computer programs and
software, designs, models, operating procedures, knowledge of the organization,
products (including prices, costs, sales or content), processes, formulas,
techniques, machinery, contracts, financial information or measures, business
methods, business plans, details of consultant contracts, new personnel hiring
plans, business acquisition plans, customer lists, business relationships and
other information owned, developed or possessed by the Company or its
subsidiaries or affiliates; provided that Protected Information shall not
include information that becomes generally known to the public or the trade
without violation of this Section 7.

(ii)           “Unauthorized” means: (A) in contravention of the policies or
procedures of the Company or any of its subsidiaries or affiliates; (B)
otherwise inconsistent with the measures taken by the Company or any of its
subsidiaries or affiliates to protect their interests in any Protected
Information; (C) in contravention of any lawful instruction or directive, either
written or oral, of an employee of the Company or any of its subsidiaries or
affiliates empowered to issue such instruction or directive; or (D) in
contravention of any duty existing under law or contract. Notwithstanding
anything to the contrary contained in this Section 7, the Executive may disclose
any Protected Information to the extent required by court order or decree or by
the rules and regulations of a governmental agency or as otherwise required by
law or to his legal counsel and, in connection with a determination under
Section 6(h), to accounting experts; provided that the Executive shall provide
the Company with prompt notice of such required disclosure in advance thereof so
that the Company may seek an appropriate protective order in respect of such
required disclosure.

(b)           The Executive acknowledges that all developments, including,
without limitation, inventions (patentable or otherwise), discoveries, formulas,
improvements, patents, trade secrets, designs, reports, computer software, flow
charts and diagrams, procedures, data, documentation, ideas and writings and
applications thereof relating to the Business or any business or planned
business of the Company or any of its subsidiaries or affiliates that, alone or
jointly with others, the Executive may conceive, create, make, develop, reduce
to practice or acquire during the Executive’s employment with the Company or any
of its subsidiaries or affiliates (collectively, the “Developments”) are works
made for hire and shall remain the sole and exclusive property of the
Company.  The Executive hereby assigns to the Company, in consideration of the
payments set forth in Section 3(a) hereof, all of his right, title and interest
in and to all such Developments. The Executive shall promptly and fully disclose
all future material Developments to the Board of Directors of the Company and,
at any time upon request and at the expense of the Company, shall execute,
acknowledge and deliver to the Company all
 
 
 
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instruments that the Company shall prepare, give evidence and take all other
actions that are necessary or desirable in the reasonable opinion of the Company
to enable the Company to file and prosecute applications for and to acquire,
maintain and enforce all letters patent and trademark registrations or
copyrights covering the Developments in all countries in which the same are
deemed necessary by the Company.  All memoranda, notes, lists, drawings,
records, files, computer tapes, programs, software, source and programming
narratives and other documentation (and all copies thereof) made or compiled by
the Executive or made available to the Executive concerning the Developments or
otherwise concerning the Business or planned business of the Company or any of
its subsidiaries or affiliates shall be the property of the Company or such
subsidiaries or affiliates and shall be delivered to the Company or such
subsidiaries or affiliates promptly upon the expiration or termination of the
Term of Employment.

(c)           During the Term of Employment, the Company, its subsidiaries and
affiliates shall have the exclusive right to use the Executive’s name and image
throughout the world in its advertising and promotional materials in connection
with the advertising and promotion of the Company, its subsidiaries and
affiliates, and their products.  After the expiration of the Term of Employment,
the Company, it subsidiaries and affiliates shall have the non-exclusive right
in perpetuity to use the Executive’s name and image throughout the world solely
in connection with promotional materials related to the history of the Company,
it subsidiaries and affiliates, and their products.  The consideration for such
rights is the payments set forth in Section 3(a) hereof.  The rights conveyed
hereby may be assigned by the Company, its subsidiaries or affiliates to a
successor in the interest of the Company or the relevant subsidiary or affiliate
or their businesses or product lines.

(d)           The provisions of this Section 7 shall, without any limitation as
to time, survive the expiration or termination of the Executive’s employment
hereunder, irrespective of the reason for any termination.

8.           Covenant Not to Compete.  The Executive agrees that during the
Executive’s employment with the Company or any of its subsidiaries or affiliates
and for a period of two (2) years commencing upon the expiration or termination
of the Executive’s employment for any reason whatsoever (the “Non-Compete
Period”), the Executive shall not, directly or indirectly, without the prior
written consent of the Company:  

(a)           solicit, entice, persuade or induce any employee, consultant,
agent or independent contractor of the Company or of any of its subsidiaries or
affiliates to terminate his, her or its employment with the Company or such
subsidiary or affiliate, to become employed by any person, firm or corporation
other than the Company or such subsidiary or affiliate or approach any such
employee, consultant, agent or independent contractor for any of the foregoing
purposes, or authorize or assist in the taking of any such actions by any third
party (for purposes of this Section 8 (a), the terms “employee,” “consultant,”
“agent” and “independent contractor” shall include any persons with such status
at any time during the six (6) months preceding any solicitation in question);
or

(b)           directly or indirectly engage, participate, or make any financial
investment in, or become employed by or render consulting, advisory or other
services to or for any person, firm, corporation or other business enterprise,
wherever located, which is engaged, directly or indirectly, in competition with
the Business or any business of the Company or any of its subsidiaries or
affiliates as conducted or any business proposed to be conducted at the time of
the expiration or termination of the Executive’s employment with the Company and
its subsidiaries and affiliates; provided, however, that nothing in this Section
8(b) shall be
 
 
 
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construed to preclude the Executive from making any investments in the
securities of any business enterprise whether or not engaged in competition with
the Company or any of its subsidiaries or affiliates, to the extent that such
securities are actively traded on a national securities exchange or in the
over-the-counter market in the United States or on any foreign securities
exchange and represent, at the time of acquisition, not more than 3% of the
aggregate voting power of such business enterprise.

To ensure that the Company is able to enforce these provisions in Sections 8(a)
and (b) above, the Executive and the Company further agree that if such
noncompetition and nonsolicitation requirements should be violated during this
additional two-year period after the Executive's termination of employment, the
remedy (determined at the Company's option) shall be either equitable relief (in
the form of an injunction to stop the violation), or liquidated damages payable
by the Executive to the Company in an amount equal to (a) (i) (A) twenty-four
(24) minus (B) the number of full months between the date of Executive’s
termination and the date of breach (“Months Complied”) divided by (ii) 12, times
(b) one year’s Base Salary in effect at the time of termination.  In other
words:
 
                             Twenty-four (24) – Months Complied
                                 -----------------------------------------           
x          One Year’s Base Salary
                                                       12
 
If equitable relief is elected by the Company as an alternative to liquidated
damages, any equitable relief shall not include any forfeiture or cash refund of
monies or benefits.  If liquidated damages is elected by the Company, the
Company may elect not to pay amounts that would otherwise be payable but for the
breach; provided that, the Executive would remain liable to the Company to the
extent that the liquidated damages exceeded the amounts not paid by the Company.
The foregoing shall have no impact on the operation of the provisions of any
other compensation program of the Company or its subsidiaries, including without
limitation the Amended and Restated Fiscal 2002 Share Incentive Plan.

(c)           During the Non-Compete Period, to the extent that the Executive is
not receiving termination payments pursuant to Section 6 hereof, the Company
shall pay or cause to be paid to the Executive his Base Salary under Section
3(a) hereof and continue to provide the Executive with benefits hereunder to the
extent permitted by applicable law and regulations and the applicable benefit
plan, program or arrangement, in any and all healthcare, life insurance and
accidental death and dismemberment insurance benefit plans, programs or
arrangements, on terms identical to those applicable to full-term senior
officers of the Company   for that portion of the Non-Compete Period during
which the Executive is required to comply and does comply with the provisions of
this Section 8 (“the Non-Compete Period”). Notwithstanding the above, any
amounts payable under this Section 8 that are separation pay as described under
Treas. Reg. §1.409A-1(b)(9)(iii)(A) shall be paid no later than December 31 of
the second calendar year following the year in which the Executive’s termination
pursuant to this Section 6 occurs; any amounts payable under this Section 8 that
are not otherwise exempt from Code section 409A are subject to, and payable in
accordance with, Section 6(j) of this Agreement.

9.           Specific Performance.  The Executive acknowledges that the services
to be rendered by the Executive are of a special, unique and extraordinary
character and, in connection with such services, the Executive will have access
to confidential information vital to the Company’s Business and the other
current or planned businesses of it and its subsidiaries and affiliates.  By
reason of this, the Executive consents and agrees that if the Executive violates
any of the provisions of Sections 7 or 8 hereof, the Company and its
subsidiaries
 
 
 
16

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and affiliates would sustain irreparable injury and that monetary damages would
not provide adequate remedy to the Company and that the Company shall be
entitled to have Section 7 or 8 hereof specifically enforced by any court having
equity jurisdiction.  Nothing contained herein shall be construed as prohibiting
the Company or any of its subsidiaries or affiliates from pursuing any other
remedies available to it or them for such breach or threatened breach, including
the recovery of damages from the Executive.  This provision shall, without any
limitation as to time, survive the expiration or termination of the Executive’s
employment hereunder, irrespective of the reason for any termination.

10.           Deductions and Withholding.  The Executive agrees that the Company
or its subsidiaries or affiliates, as applicable, shall withhold from any and
all compensation paid to and required to be paid to the Executive pursuant to
this Agreement, all Federal, state, local and/or other taxes which the Company
determines are required to be withheld in accordance with applicable statutes or
regulations from time to time in effect and all amounts required to be deducted
in respect of the Executive’s coverage under applicable employee benefit
plans.  For purposes of this Agreement and calculations hereunder, all such
deductions and withholdings shall be deemed to have been paid to and received by
the Executive.

11.           Entire Agreement.  Except for the Amended and Restated Fiscal 2002
Share Incentive Plan, the Executive’s outstanding stock option and other
equity-compensation agreements, the Executive Annual Incentive Plan,  the
Executive Perquisites Program, the Executive Automobile Program,  the term life
insurance arrangement between the Company and the Executive, the Company’s
qualified and non-qualified defined benefit pension plans, the Company’s
qualified defined contribution retirement savings plan and applicable successor
plans or agreements, this Agreement embodies the entire agreement of the parties
with respect to the Executive’s employment, compensation, perquisites and
related items and supersedes any other prior oral or written agreements,
arrangements or understandings between the Executive and the Company or any of
its subsidiaries or affiliates, and any such prior agreements, arrangements or
understandings are hereby terminated and of no further effect.  Notwithstanding
the foregoing, the current employment agreement dated November 8, 2007 and
amended March 25, 2009, shall remain in full force and effect until which time
this Agreement becomes effective, as provided in Section 1 hereof.  This
Agreement may not be changed or terminated orally but only by an agreement in
writing signed by the parties hereto.

12.           Waiver.  The waiver by the Company of a breach of any provision of
this Agreement by the Executive shall not operate or be construed as a waiver of
any subsequent breach by him. The waiver by the Executive of a breach of any
provision of this Agreement by the Company shall not operate or be construed as
a waiver of any subsequent breach by the Company.

13.           Governing Law; Jurisdiction.

(a)           This Agreement shall be subject to, and governed by, the laws of
the State of New York applicable to contracts made and to be performed therein,
without regard to conflict of laws principles.

(b)           Any action to enforce any of the provisions of this Agreement
shall be brought in a court of the State of New York located in the Borough of
Manhattan of the City of New York or in a Federal court located within the
Southern District of New York.  The parties consent to the jurisdiction of such
courts and to the service of process in any manner provided by New York
law.  Each party irrevocably waives any objection which it may now or hereafter
 
 
 
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have to the laying of the venue of any such suit, action or proceeding brought
in such court and any claim that such suit, action or proceeding brought in such
court has been brought in an inconvenient forum and agrees that service of
process in accordance with the foregoing sentences shall be deemed in every
respect effective and valid personal service of process upon such party.

14.           Assignability.  The obligations of the Executive may not be
delegated and, except with respect to the designation of beneficiaries in
connection with any of the benefits payable to the Executive hereunder, the
Executive may not, without the Company’s written consent thereto, assign,
transfer, convey, pledge, encumber, hypothecate or otherwise dispose of this
Agreement or any interest herein.  Any such attempted delegation or disposition
shall be null and void and without effect.  The Company and the Executive agree
that this Agreement and all of the Company’s rights and obligations hereunder
may be assigned or transferred by the Company to and shall be assumed by and be
binding upon any successor to the Company.  Unless assumption occurs by
operation of law, the Company shall require any successor by an agreement in
form and substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent as the
Company would be required to perform if no such succession had taken place.  The
term “successor” means, with respect to the Company or any of its subsidiaries,
any corporation or other business entity which, by merger, consolidation,
purchase of the assets or otherwise acquires all or a majority of the operating
assets or business of the Company.

15.           Severability.  If any provision of this Agreement or any part
thereof, including, without limitation, Sections 7 and 8 hereof, as applied to
either party or to any circumstances shall be adjudged by a court of competent
jurisdiction to be void or unenforceable, the same shall in no way affect any
other provision of this Agreement or remaining part thereof, or the validity or
enforceability of this Agreement, which shall be given full effect without
regard to the invalid or unenforceable part thereof.

If any court construes any of the provisions of Section 7 or 8 hereof, or any
part thereof, to be unreasonable because of the duration of such provision or
the geographic scope thereof, such court may reduce the duration or restrict or
redefine the geographic scope of such provision and enforce such provision as so
reduced, restricted or redefined.

16.           Notices.  All notices to the Company or the Executive permitted or
required hereunder shall be in writing and shall be delivered personally, by
telecopier or by courier service providing for next-day or two-day delivery or
sent by registered or certified mail, return receipt requested, to the following
addresses:

The Company:

The Estée Lauder Companies Inc.
767 Fifth Avenue
New York, New York 10153
Attn:     General Counsel
Tel:      (212) 572-3980
Fax:     (212) 572-3989

 
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The Executive:

Fabrizio Freda
c/o The Estée Lauder Companies Inc.
767 Fifth Avenue
New York, New York 10153
Tel:      (212) 572-4200

Either party may change the address to which notices shall be sent by sending
written notice of such change of address to the other party.  Any such notice
shall be deemed given, if delivered personally, upon receipt; if telecopied,
when telecopied; if sent by courier service providing for next-day or two-day
delivery, the next business day or two business days, as applicable, following
deposit with such courier service; and if sent by certified or registered mail,
three days after deposit (postage prepaid) with the U.S. mail service.

17.           No Conflicts.  The Executive hereby represents and warrants to the
Company that his execution, delivery and performance of this Agreement and any
other agreement to be delivered pursuant to this Agreement will not (i) require
the consent, approval or action of any other person or (ii) violate, conflict
with or result in the breach of any of the terms of, or constitute (or with
notice or lapse of time or both, constitute) a default under, any agreement,
arrangement or understanding with respect to the Executive’s employment to which
the Executive is a party or by which the Executive is bound or subject.  The
Executive hereby agrees to indemnify and hold harmless the Company and its
directors, officers, employees, agents, representatives and affiliates (and such
affiliates’ directors, officers, employees, agents and representatives) from and
against any and all losses, liabilities or claims (including interest, penalties
and reasonable attorneys’ fees, disbursements and related charges) based upon or
arising out of the Executive’s breach of any of the foregoing representations
and warranties.

 18.           Legal Fees.  Following a Change of Control, the Company shall
reimburse the Executive up to $20,000.00, in the aggregate, for all legal fees
and related expenses (including the costs of experts, evidence and counsel)
reasonably and in good faith incurred by the Executive in an action (i) by the
Executive to obtain or enforce any right or benefit to which the Executive is
entitled under this Agreement or (ii) by the Company to enforce a
post-termination covenant referred to in Section 7 or 8 against the Executive,
in each case, provided that the Executive substantially prevails in such
action.  Such amount shall be reimbursed to the Executive by the end of the
calendar year in which the Executive substantially prevails in such action,
based on the date of any settlement, judgment, or other official document
evidencing same.

19.           Cooperation.  During the Term of Employment and thereafter,
Executive shall provide reasonable cooperation in connection with any action or
proceeding (or any appeal therefrom) that relates to events occurring during
Executive’s employment with the Company.

20.           Paragraph Headings.  The paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpreta­tion of this Agreement.
 
 
 
 
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21.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first written above.

 

 
THE ESTÉE LAUDER COMPANIES INC.
         
 
By:
/s/  Amy DiGeso       Name:   Amy DiGeso       
Title:
Executive Vice President,
Global Human Resources 
 

 

 
/s/ Fabrizio Freda
    Fabrizio Freda   

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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