Exhibit 10.2

 

SERVICES AGREEMENT

 

SERVICES AGREEMENT, dated January 1, 2003 (the “Agreement”), by and among Estee
Lauder Inc., a Delaware corporation (“ELI”), Melville Management Corp. (“MMC”),
Leonard A. Lauder (“LAL”) and William P. Lauder  (“WPL”).

 

W I T N E S S E T H:

 

WHEREAS, ELI is a subsidiary of The Estée Lauder Companies Inc. (“ELC”); and

 

WHEREAS, LAL and WPL are directors and executive officers of ELC and certain of
ELC’s subsidiaries; and

 

WHEREAS, MMC is a corporation owned and controlled by LAL; and

 

WHEREAS, for many years prior to the date hereof, ELI, ELC and other
subsidiaries of each (with ELI and ELC, the “EL Group”) have provided certain
services, space and other benefits to MMC and to LAL, WPL and their family (with
MMC, the “LAL Parties”); and

 

WHEREAS, MMC, LAL and WPL have paid the EL Group for such services, the use of
such space and such other benefits; and

 

WHEREAS, it is the intention of the parties hereto to formalize the relationship
between the parties.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereby agree as follows:

 

1.     Services.

 

(a)   ELI hereby agrees to provide to the LAL Parties, those business-related
and administrative services listed on Schedule A attached hereto and such other
services as ELI and the LAL Parties may mutually agree (collectively, the
“Services”), at a level requested by the LAL Parties; provided, that, unless the
parties otherwise agree, the scope of such Services is consistent with the
provision and cost of such Services in prior years and the cost of such Services
is not in excess of 150% of the annual level of such Services provided in the
last completed fiscal year of ELC.

 

(b)   The employees of E-L Management Corp., a subsidiary of ELI, that are
listed on Schedule B (the “LAL Service Providers”) provide services to the LAL
Parties.  The LAL Parties have agreed that in consideration of these services,
the LAL Parties shall pay 100% of the salary, bonus and other payroll and
benefit costs attributable to the LAL Service Providers (the “Payroll
Services”).  The LAL Parties may from time to time, with the consent of ELI
(which consent shall not be unreasonably

 

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withheld), change the LAL Service Providers; provided, however, that the overall
obligation to provide Payroll Services pursuant hereto shall be limited in any
particular year to 150% of the aggregate annual level of charges for such
Payroll Services provided to the persons on Schedule B at the start of the last
completed fiscal year.

 

(c)   The EL Group and its employees, directors and employees shall not be
liable for any consequential or special damages for failure to perform the
Services or Payroll Services to be provided hereunder.  The LAL Parties will
indemnify and hold harmless the EL Group, its officers, directors and employees
(other than LAL, WPL and their family members) against any losses, claims,
damages or liabilities (or action in respect thereof) arising out of or based
upon this Agreement or other expenses incurred by the Companies in connection
with investigating or defending any such action or claim as such expenses are
incurred in each case, to the extent not arising from the gross negligence or
willful misconduct of the EL Group.  Notwithstanding anything to the contrary
contained herein, the LAL Parties will indemnify and hold harmless the EL Group,
its officers, directors and employees (other than LAL, WPL and their family
members) against any losses, claims, damages or liabilities (or action in
respect thereof) arising out of or based upon, or brought by the LAL Service
Providers or other expenses incurred by the Companies in connection with
investigating or defending any such action or claim as such expenses are
incurred in each case.

 

2.     Payments.

 

(a)   General.  Except as set forth below, the LAL Parties shall pay to ELI (or
an affiliate of ELI designated by ELI) (i) for Services provided hereunder an
amount equal to 100% of the actual costs and expenses for such Services incurred
by the EL Group attributable to such Services, (ii) an amount equal to 100% of
any other expenses paid to or on account of any LAL Party, which are not
reimbursable by ELC pursuant to an applicable Employment Agreement or company
policy of the EL Group,  (iii) the full cost of providing Payroll Services for
the LAL Service Providers as determined from time to time by the Company, but
which shall include for each person on Schedule B an amount equal to such
persons’ wages (including salary and bonus) plus an amount equal to the
Applicable Fringe Benefits Rate (as defined below) multiplied by the amount of
such wages, and (iv) the cost attributable to the office space occupied by the
LAL Service Providers, including the use of common spaces at the facility,
calculated in accordance with the policies of the EL Group in determining the
cost of similar office space at such locations and charged to corporate
departments of the EL Group.  The “Applicable Fringe Benefit Rate” shall be the
fringe benefit rate from time to time applied to employees of the EL Group
employed in corporate departments thereof.

 

(b)   Invoice; Prepayment.  ELI (or an affiliate of ELI designated by ELI) shall
provide an accounting to the LAL Parties at least monthly describing the amounts
due to the EL Group in accordance with Section 2(a).  Such amounts will be due
and payable immediately.  In order that no credit be extended, the LAL Parties
shall at all times prepay the amounts incurred on their behalf by maintaining on
deposit with ELI, sums sufficient to cover the amounts that become due pursuant
to Section 2(a).  It is

 

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understood and agreed that ELI will make no payments under this Agreement at any
time the amount on deposit is insufficient to covert such payment.  No interest
shall accrue on any amounts on deposit nor shall there be any discount for
prepayment.

 

(c)   ELI shall keep books and records of the Services and Payroll Services
provided, including reasonable supporting documentation of the costs and
expenses attributable to such Services and Payroll Services, and shall make such
books and records available to the LAL Parties, upon reasonable notice, during
normal business hours.

 

3.     Joint and Several Liability.  The LAL Parties shall remain joint and
severally liable  to the members of the EL Group and their officers, directors
and employees for the LAL Parties’ obligations to ELI and the other members of
the EL Group arising hereunder.

 

4.     Suspension of Services.  ELI reserves the right, without any liability to
any LAL Party or to any LAL Service Provider, except as otherwise expressly
provided in this Agreement, and without being in breach of any covenant of this
Agreement to stop, interrupt or suspend any Services or Payroll Services,
whenever and for so long as may be necessary or appropriate, by reason of
accidents, emergencies, strikes or the making of repairs or changes which ELI is
required in the operation of its business or by law to make or in good faith
deems advisable, or by reason of difficulty in securing proper supplies of fuel,
steam, water, electricity, labor or supplies or by reason of any other cause
beyond ELI’s reasonable control, including governmental restrictions on the use
of materials or the use of any of the Building systems.  In each instance, ELI
shall exercise reasonable diligence to eliminate the cause of stoppage and to
effect restoration of the Services or Payroll Services and shall give the LAL
Parties reasonable notice, when practicable, of the commencement and anticipated
duration of such stoppage.

 

5.     General.

 

(a)   Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

 

(b)   Notices.  All notices and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and mailed,
telecopied or delivered to such party at his address or telecopier number set
forth on the signature pages hereof, with copies to the persons noted thereon,
or to such other address or telecopier number as such party may hereafter
specify for the purpose.  Each such notice, request or other communication shall
be effective upon receipt, if delivered personally or by courier; when
telecopied, if telecopied; and if sent by certified mail, three days after
deposit (postage prepaid) with the U.S. mail service.

 

(c)   Headings.  The headings of the various Articles and Sections of this
Agreement have been inserted for convenience only and shall not be deemed to be
part of this Agreement.

 

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(d)   Binding Effect.  Without the written consent of ELI, no LAL Party may
assign his, her or its rights to receive services under this Agreement.  This
Agreement will be binding upon and inure to the benefit of ELI, its successors
and assigns and to the LAL Parties and their permitted successors and assigns.

 

(e)   No Oral Change.  This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change modification or discharge is sought.

 

(f)    Termination.  This Agreement may be terminated (i) by mutual consent of
the parties hereto, (ii) by written notice of such termination by the LAL
Parties to ELI (or by an LAL Party, as to which this Agreement shall terminate
as to such party only), (iii) at such time as both LAL and WPL are not employees
of the EL, (iv) upon 30 days prior written notice if the LAL parties are in
default for ten days in their payment obligations hereunder and such obligations
in the aggregate exceed $100,000,  (v) by ELI immediately if it is determined
upon advice of counsel that ELI cannot legally provide the services contemplated
hereunder or (vi) by either party upon 30 days prior written notice.  Upon
termination, the payment obligations of the LAL Parties in respect of their
indemnification obligation hereunder and Services, occupancy costs and Payroll
Services rendered prior to such termination shall continue in full force and
effect.

 

(g)   Entire Understanding.  This Agreement sets forth the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof and
the transactions contemplated hereby and supersedes all prior written and oral
agreements, arrangement and understandings relating to the subject matter
hereof.

 

(h)   Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument.  Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.

 

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

 

ESTÉE LAUDER INC.

 

MELVILLE MANAGEMENT CORPORATION

 

 

 

 

 

 

BY:

/s/Fred H. Langhammer

 

BY:

/s/Leonard A. Lauder

 

Name: Fred H. Langhammer

 

 

Name: Leonard A. Lauder

 

Title: President and Chief Executive Officer

 

 

Title: President

 

 

 

Address:

 

Address:

 

 

 

767 Fifth Avenue
New York, NY 10153
Tel: (212) 572-4200
Fax: (212) 572-3989
Attn: General Counsel

 

767 Fifth Avenue
New York, NY 10153
Tel: (212) 572-4200
Fax: (212) 572-6745
Attn: Leonard A. Lauder

 

 

 

 

 

 

/s/William P. Lauder

 

/s/Leonard A. Lauder

William P. Lauder

 

Leonard A. Lauder

 

 

 

Address:

 

Address:

 

 

 

767 Fifth Avenue
New York, NY 10153
Tel: (212) 572-4200
Fax: (212) 572-6899

 

767 Fifth Avenue
New York, NY 10153
Tel: (212) 572-4200

Fax: (212) 572-6745

 

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Schedule A

 

Telephone

 

Computer services, including hardware, software and technical support

 

Use of Company Resources, such as Travel Services and advice relating to
properties and maintenance thereof

 

Office Supplies

 

Insurance coverage for Demised Premises

 

A-1

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Schedule B

 

10 persons

 

The following are consultant(s) paid directly by an LAL Party, but the LAL
Parties are responsible for the office the occupy under Section 2(a):

 

1 person

 

B-1

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