Exhibit 10.1


 


EXECUTION COPY


 


EMPLOYMENT AGREEMENT


 


THIS
AGREEMENT (“Agreement”), dated as of September 13, 2010, between THE ESTÉE
LAUDER COMPANIES INC., a Delaware corporation (the “Company”), and WILLIAM P.
LAUDER, 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 July 1, 2007 and amended as of November 8,
2007 and March 25, 2009; and


 


WHEREAS, the Company desires to continue to retain the services of the
Executive as the Executive Chairman 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.


 


The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to enter into employment, as Executive Chairman
of the Company subject to termination pursuant to Section 6 hereof. The
period from July 1, 2010 through the date of such termination shall be the
“Term of Employment”.


 


2.                                       Duties and
Extent of Services.


 


(a)                                  During the Term
of Employment, the Executive shall serve as Executive
Chairman of the Company reporting to the Board
of Directors, and, in such capacity, shall render such executive,
managerial, administrative and other services as customarily are associated
with and incident to such position, and as the Company may, from time to time,
reasonably require of him consistent with such position.


 


(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 o, provided that each such position shall be
commensurate with the Executive’s standing in the business community as Executive Chairman.  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 Executive Chairman, 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.  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”).


 


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).


 


(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.


 


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(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 On or Before December 31,
2004.  Amounts credited to the
Executive’s Deferred Compensation Account on or before December 31, 2004,
and any subsequently credited interest, will be paid in cash to the Executive
(or the Executive’s designated beneficiary if the Executive dies before
payment,)  subject to applicable
withholding taxes.  The Company will
choose the payment date, which will be no later than 90 days after Executive’s
employment with the Company terminates, unless the Executive requests before
terminating a later payment date or dates and the Company agrees to the
request.


 


(v)  Payment of Amounts Deferred and Vested After December 31,
2004.  Subject to Section 6(j),
amounts credited to the Executive’s Deferred Compensation Account after December 31,
2004 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 Non-Deductible Amount will be paid at the
earliest date at which the Company reasonably expects that the deduction will
not be limited or eliminated by Code section 162(m).  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.  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.


 


(b)                           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 


 


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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 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  Chairman of the Compensation Committeeor
his/her designeearrange 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 $5,000,000.00.  Such obligation to pay premiums is


 


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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 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 


 


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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 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 


 


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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 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.


 


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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 Board of Directors in its 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 of the conduct complained of (the
determination of Cause to be made by the Company’s Board of Directors in its
reasonable judgment);


 


(iv)                              the Executive’s
failure to follow a lawful directive of the TITLE, TITLE 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 Board of Directors
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 Board of Directors in
its 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


 


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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.


 


(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 July 1, 2009 and
(2) any successor to such directors and any additional director who after July 1,
2009 was nominated or selected by a majority of the Continuing Directors in
office at the time of his or her nomination or selection.


 


9

















 


(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) 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


 


10
















 


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.


 


(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, 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.  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.


 


11

















 


(i)                                     Notwithstanding the above, amounts described as being subject to payment
in accordance with the provisions of this Section 6(l)(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)                                  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(k), 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.


 


(l)  Modification of
Severance Payments and Benefits. 
Nothwithstanding anything to the contrary contained herein except as
provided in this Section 6(l), 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.


 


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).


 


12

















 


(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 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 


 


13

















 


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 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 


 


14

















 


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 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.


 


15

















 


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. 
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 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 


 


16

















 


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


 


The Executive:


 


William P. Lauder


c/o The Estée Lauder Companies Inc.


767 Fifth Avenue


New York, New York 10153


Tel:                            (212) 572-4200


 


17

















 


With a copy to:


Carol S. Boulanger, Esq.


Pillsbury Winthrop Shaw Pittman LLP


1540 Broadway


New York, New York 10036


Tel: (212) 858-1119


 


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.


 


18

















 


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/
  William P. Lauder

  
	
   

  	
  William
  P. Lauder

  



 


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