Document:

Exhibit
10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of July 1, 2007, 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agreement dated as of January 1, 1995 as superseded by agreements dated July 1,
1995, July 1, 1998, July 1, 2001 as amended July 1, 2002, January 1, 2003 and
July 1, 2004; and

WHEREAS, the Company desires to continue to retain the services of the
Executive as President and Chief Executive Officer and the Executive desires to
provide services in such capacities 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 President and Chief Executive
Officer of the Company for the period commencing on July 1, 2007 and ending
June 30, 2010 unless terminated sooner pursuant to Section 6 hereof (the “Term
of Employment”).  The twelve-month period
commencing on July 1, 2007 and ending on June 30, 2008 shall be the “First
Contract Year” hereunder, and subsequent twelve-month periods shall be
subsequent Contract Years.

2.             Duties
and Extent of Services.

(a)           During the Term of
Employment, the Executive shall serve as President and Chief Executive Officer
of the Company reporting to the  Board of
Directors, and, in such capacities, 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 position shall be
commensurate with the Executive’s standing in the business community as

 

President
and Chief Executive Officer.  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 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.             Salary and Bonus.

(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) below at the annualized rate of not less than $1,500,000.00.  Subject to Section 6(l) 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 Compensation Committee has established for the Executive the target bonus payout for the aggregate opportunities that may be awarded in respect of each fiscal year of the Company under 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”) in respect of each Contract Year under this Agreement.   The target bonus payout for the aggregate opportunities in respect of each Contract Year shall be no less than $3,000,000.00.  All such opportunities shall be subject to the terms and conditions of the Bonus Plan, which are incorporated herein by reference; provided, however, except that with respect to bonuses deferred in accordance with Section 3(c) hereof, and as otherwise indicated under Section 6, 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 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 Contract 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.

(iii)  Amounts
Subject to Section 162(m).  If any
amount of Base Salary, any amount payable under the Bonus Plan, or any other
amount payable to the Executive is not currently deductible under Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), or like
or successor provisions (a “Non-Deductible Amount”), the Company will defer
payment of the Non-Deductible Amount until section 162(m) no longer applies to
the Executive.  Any amounts so deferred
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(l), 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.             Equity-Based
Compensation.

(a)           General.  In respect of each Contract Year, the Company
shall recommend to the Stock Plan Subcommittee of the Compensation Committee
that the Executive be awarded under the terms and conditions of the Amended and
Restated Fiscal 2002 Share Incentive Plan (the “Share Incentive Plan”), which
are incorporated herein by reference, or successor plan and subject to the
provisions of Section 6(k) below, equity-based compensation awards in
accordance with the policies and procedures of the Company as in effect from
time to time for its Executive Officers. 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.  The recommended annual equity-based
compensation awards

 

shall
be of an equivalent value to a grant of stock options with respect to 300,000
shares of the Company’s Class A Common Stock determined in accordance with
procedures generally utilized by the Company for its financial reporting at the
time of grant.

(b)           Certain
Conditions.  Executive acknowledges
and agrees that any grant of equity-based compensation otherwise provided for
in this Section 4 shall be effective as provided herein 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.  During the Term of Employment, 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 expense 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 during the Term of Employment, 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 Travel. The Executive may, upon prior
approval of the Chairman of the Board of Directors or his designee, arrange for
his spouse to accompany him on business related travel itineraries, 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, in accordance with the
timeframe described in Section 5(b). 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 pay premiums on the existing term life insurance policy with a face
amount of $5,000,000.00.  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.

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, such salary to be paid in accordance
with Section 3(a) and such other amounts to be paid in accordance with
applicable payment provisions herein; (ii) bonus compensation earned but not
paid under Section 3(b) hereof that relates to any Contract Year ended prior to
the date of his termination of employment, to be paid 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 Contract Year during which termination due to permanent
disability occurred, based on the portion of the Contract Year that has elapsed
prior to such termination, and paid in accordance with Section 3(b) hereof;
(iv) reimbursement for financial counseling services specified under Section
5(b) hereof in the amount of $5,000.00 for a period of one (1) year from the
date of termination, in accordance with Section 5(b) hereof; and (v) his Base
Salary under Section 3(a) hereof for a period of one (1) year from the date of
termination as a result of permanent disability (the “Disability Continuation
Period”), paid in accordance with Section 6(l)(i) hereof; 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(l)). 
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(l), cash payments,
to be paid in accordance with Section 6(l)(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 (y) 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”).  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(l) 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 Contract 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 Contract Year during which termination due to his death
occurred, based on the portion of the Contract Year that has elapsed prior to
such termination, and paid in accordance with Section 3(b) hereof; (iv)
reimbursement for financial counseling services under Section 5(b) hereof in
the amount of $5,000.00 for a period of one (1) year from the date of
termination, in accordance with Section 5(b) hereof; 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, 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 one hundred and eighty (180) days’ prior written notice
given to the Executive, to terminate the Executive’s employment for any reason
whatsoever (excluding for Cause (as defined below)).  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, such salary to be paid in accordance with Section 3(a) and such
other amounts to be paid in accordance with applicable payment provisions
herein; (ii) receive bonus compensation earned but not paid under Section 3(b)
hereof that relates to any Contract Year ended prior to the date of his
termination without Cause, to be paid 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 Contract Year during which the termination without Cause occurred,
based on the portion of the Contract Year that has elapsed prior to such
termination, and paid in accordance with Section 3(b) hereof; (iv) receive as
damages (A) for a period ending on a date two (2) years from the date of
termination without Cause, to be paid in accordance with Section 6(l)(i), his
Base Salary as established under and in accordance with Section 3(a) hereof and
(B) bonus compensation equal to one hundred percent (100%) of the average of
the actual annual bonuses paid or payable (with respect to completed Contract
Years) to the Executive during the Term of Employment , or, if such termination
occurs prior to the payment of any bonus hereunder, $3,000,000.00, to be paid
in accordance with Section 6(l)(i);
(v) receive reimbursement for financial counseling services specified under
Section 5(b) hereof in the amount of $10,000.00 for a period of two (2) years
from the date of termination, in accordance with Section 5(b) hereof; 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 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(l), cash payments, to be paid in accordance with Section 6(l)(i),
equal to the Pension Replacement Payment (as defined in Section 6(a)) with
respect to the Without Cause Continuation Period.  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(l) 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 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 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 one
hundred and eighty (180) 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 Contract 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, to the extent that any such benefit is permitted
by applicable law and regulations and provided that any such benefit shall not
be provided beyond a period ending on a date two (2) years from the date of
such termination by

 

the
Executive.  Any amounts payable under this
Section 6(e) that are not otherwise exempt from Code section 409A are subject
to, and payable in accordance with, Section 6(l) of this Agreement.  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, (ii) the Company’s failure to cause the Executive to serve in
all the positions set forth in Section 1 hereof for any time period in which he
is entitled to so serve, or (iii) 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.  Any amounts payable under this Section 6(f)
that are not otherwise exempt from Code section 409A are subject to, and
payable in accordance with, Section 6(l) of this Agreement.  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, 2007 and (2) any
successor to such directors and any additional director who after July 1, 2007
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,  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, 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.  Following 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) and Section 6(l) hereof, including the required delay in payment for the
six-month period following the date of termination for any amounts determined
to be subject to Code section 409A, as described in Section 6(l).  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 Payments by the Company.

(i)            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 Company
shall pay to the Executive at the time specified in Section 6(h)(v) below an
additional amount (the “Tax Reimbursement Payment”) such that the net amount
retained by the Executive with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any Federal, state and
local income or employment tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 6(h), but before deduction for any Federal, state
or local income or employment tax withholding on such Covered Payments, shall
be equal to the amount of the Covered Payments.

(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)                              For purposes of determining the amount of the
Tax Reimbursement Payment, the Executive shall be deemed to pay:

(A)                             Federal income taxes at the highest
applicable marginal rate of Federal income taxation applicable to individuals
for the calendar year in which the Tax Reimbursement Payment is to be made, and

(B)                               any applicable state and local income or
other employment taxes at the highest applicable marginal rate of taxation
applicable to individuals for the calendar year in which the Tax Reimbursement
Payment is to be made, net of the maximum reduction in Federal income taxes
which could be obtained by Executive from the deduction of such state or local
taxes if paid in such year.

(iv)                             In the event that the Excise Tax is
subsequently determined by the Accountants or pursuant to any proceeding or
negotiations with the Internal Revenue Service (the “IRS”) to be less than the
amount taken into account hereunder in calculating the Tax Reimbursement
Payment made, the Executive shall repay to the Company, at the time of such determination,
the portion of such prior Tax Reimbursement Payment that would not have been
paid if such reduced Excise Tax had been taken into account in initially
calculating such Tax Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(b) of the Code.
Notwithstanding the foregoing, in the event any portion of the Tax
Reimbursement Payment to be refunded to the Company has been paid to any
Federal, state or local tax authority, repayment thereof shall not be required
until actual refund or credit of such portion has been made to the Executive,
and interest payable to the Company shall not exceed interest received or
credited to the Executive by such tax authority

 

for
the period it held such portion. The Executive and the Company shall mutually
agree upon the course of action to be pursued (and the method of allocating the
expenses thereof) if the Executive’s good faith claim for refund or credit is
denied.

In the event that the Excise Tax is later determined by the Accountants
or pursuant to any proceeding or negotiations with the Internal Revenue Service
to exceed the amount taken into account hereunder at the time the Tax
Reimbursement Payment is made (including, but not limited to, by reason of any
payment the existence or amount of which cannot be determined at the time of
the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined; such additional Tax Reimbursement Payment shall be made
no later than the end of the calendar year following the year in which the
Excise Tax is remitted to the IRS in the case of a determination by the
Accountants, or in the case of any proceeding or negotiations with the IRS, no
later than the end of the calendar year following the year in which any such
proceeding or negotiations with the IRS is settled and not appealable or otherwise
resolved or completed.

(v)                                 The Tax Reimbursement Payment (or portion
thereof) provided for in Section 6(h)(i) above shall be paid to the Executive
not later than ten (10) business days following the payment of the Covered
Payments; provided, however, that if the amount of such Tax
Reimbursement Payment (or portion thereof) cannot be finally determined on or
before the date on which payment is due, the Company shall pay to the Executive
by such date an amount estimated in good faith by the Accountants to be the
minimum amount of such Tax Reimbursement Payment and shall pay the remainder of
such Tax Reimbursement Payment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than forty-five (45) calendar days after
payment of the related Covered Payment. 
Notwithstanding the above, the Tax Reimbursement Payment shall be made
no later than the end of the calendar year following the year in which taxes on
the Covered Payments are remitted to the IRS. 
In the event that the amount of the estimated Tax Reimbursement Payment
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the fifth
business day after written demand by the Company for payment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) but in no
event payable by the Executive later than the end of the calendar year
following the year in which taxes on the Covered Payments are remitted to the
IRS.

(i)                                     Non-Renewal.  In the event the Company does not offer the
Executive renewal of the Term of Employment on the basis of terms no less
favorable, in the aggregate, than those pending at the time of the conclusion
of the Term of Employment and, as a result, the Company terminates the
Executive’s employment with the Company (“Non-Renewal”), such termination shall
be deemed to be a termination without Cause and shall be controlled by the
provisions of Section 6(c) and Section 6(l) hereof, including the required
delay in payment for the six-month period following the date of termination for
any amounts determined to be subject to Code section 409A, as described in
Section 6(l).  Except as otherwise provided
in this Section 6(i), the Company will have no further obligations under
Sections 3, 4 and 5 hereof or otherwise. 
This provision shall not apply if at the time for renewal any of (x) the
Board of Directors, (y) the Compensation Committee and/or the Stock Plan
Subcommittee of the Board of Directors or (z) the stockholders of the Company
have changed the Company’s policy regarding the use of written employment
agreements for executives, the form of equity-based compensation, or the mix of
cash and non-cash compensation.

 

(j)            Continued Employment Beyond the
Non-Renewal or Expiration of the Term of Employment.  Unless the parties otherwise agree in
writing, continuation of Executive’s employment with the Company beyond the
non-renewal or expiration of the Term of Employment shall be deemed an
employment-at-will and shall not be deemed to extend any of the provisions of
this Agreement, and Executive’s employment may thereafter be terminated at will
by either Executive or the Company.

(k)           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), 6(c), 6(f), 6(g) or 6(i) 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.

(l)          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 or 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(l)(i) hereof.
Although the Company shall consult with Executive in good faith regarding
implementation of this Section 6(l), 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.

 

(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.

(m)                              Release of Claims.  As a
condition precedent to the receipt of payments 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(m),
his personal representative, and his beneficiary, if applicable, will execute
an effective general release of claims 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.

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
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 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

  

  12

  	
   

  	
   

  
	
   

  	
  x

  	
  One Year’s Base Salary

  
	
   

  	
   

  	
   

  

 

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.

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.

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 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

  	
   

  
	
   

  	
  40th Floor

  	
   

  
	
   

  	
  New York, New York 10153

  
	
   

  	
  Tel:

  	
  (212) 572-3897

  
	
   

  	
  Fax:

  	
  (212) 572-6899

  
	
   

  	
   

  
	
   

  	
  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 and to be
provided as described herein, 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.

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. LauderExhibit 10.1

 

SECOND
AMENDMENT TO AGREEMENT BETWEEN

EXACT SCIENCES CORPORATION

AND

LABORATORY CORPORATION OF AMERICA HOLDINGS

This Second Amendment (this “Amendment”) is made and effective as of
June 27, 2007, by and between LABORATORY CORPORATION OF AMERICA HOLDINGS (“LabCorp”)
and EXACT SCIENCES CORPORATION (“EXACT”).

WHEREAS, LabCorp and EXACT entered into an Agreement dated June 26,
2002, which was amended pursuant to a First Amendment dated January 19, 2004
(as amended, the “Agreement”); and

WHEREAS, the parties desire to amend certain provisions of the
Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree to the following amendments to the
Agreement, to be effective as of the date of execution of this Amendment:

1.             Extension of Exclusive Period.   Section 1.8 of the Agreement shall be
deleted in its entirety and replaced with the following:

1.8                                 “Exclusive
Period” shall mean the period beginning on August 13, 2003 and ending on December 31, 2010, unless sooner terminated in
accordance with Section 8.1, 11.2, 11.6, 11.7, 11.8, or 11.9.

2.             Approval for EXACT to use the
Technology for Commercial Purposes. 
Section 2.1(i) is hereby deleted in its entirety and replaced with the
following:

                (i)            to use the Technology in-house for
commercial purposes;

3.             Approval for EXACT to Grant
Other Licenses.

a.             LabCorp hereby
approves EXACT licensing the Technology to the following entities and their
affiliates for commercial purposes, as contemplated by Section 2.1(iv),
and such entities shall be added to Schedule 2 of the Agreement:  [********].  LabCorp agrees that it will not unreasonably
withhold approval with respect to other licenses EXACT wishes to grant pursuant
to Section 2.1(iv) to entities that are not Designated Companies (as
defined in Section 6.5).  Any
license granted by EXACT pursuant to Section 2.1(iv) shall not allow the
licensee to transfer or sublicense the Technology.

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 

b.             The following text
is hereby deleted from Section 2.1 (iii): 
“. . . provided such license is [********].”

4.             Launch
of PV2 Test.

a.             A new Section 1.29 is hereby
added to the Agreement as follows:

1.29                           “PV2”
shall mean an Assay targeting genetic Loci that more specifically include [********] and [********].

b.             The following text
is hereby added to the end of Section 2.3:

EXACT expressly
acknowledges that all rights of EXACT relating to PV2 are included within the
Technology licensed under this Agreement, and EXACT agrees to use its best
efforts to enable LabCorp to commercially launch PV2 by [********].

c.             A new
Section 3.6 is hereby added to the Agreement as follows:

3.6                                 On
or before [********], EXACT shall
provide LabCorp with access to the data associated with [********], and (iii) the overall
sensitivity and specificity as a standalone dataset (the “PV2 Sample Data”), to
attest the clinical sensitivity and specificity of PV2 claims stated in the
following article:  Steven H. Itzkowitz
et al., Improved Fecal DNA Test for Colorectal Cancer
Screening, 5 CLINICAL
GASTROENTEROLOGY AND HEPATOLOGY 111 (2007).  All such data provided to LabCorp
pursuant to this provision shall be considered Confidential Information of
EXACT.  EXACT agrees that it will not
unreasonably withhold approval for the PV2 Sample Data to be used by LabCorp to
promote or describe PV2 in support of a PV2 commercial launch.  Notwithstanding the foregoing, PV2 Sample
Data that fails to meet the sensitivity/specificity targets described in
Section 11.9 of this Amendment shall be treated as Confidential Information of
EXACT.

d.             A new
Section 3.7 is hereby added to the Agreement as follows:

3.7                                 EXACT
agrees to consult with LabCorp on [********]
(collectively, the “Collection [********]
Information”), as well as information known with respect to regulatory
requirements.  The Collection [********] Information shall be treated as
Confidential Information of EXACT.

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 2
 

 

5.             PV1
Capture Plates.

a.             A new Section 1.30 is hereby
added to the Agreement as follows:

1.30                           “PV1”
shall mean an Assay targeting genetic Loci that more specifically include [********], as well as microsatellites [********].

b.             A new Section 6.6 is hereby
added to the Agreement as follows:

6.6                                 [********]. 
EXACT agrees to reimburse LabCorp for all costs (reasonable
out-of-pocket expenses) of LabCorp, its Affiliates and sublicensees associated
with [********] that are utilized
for the performance of PV1 [********]
up to a maximum total cost of no more than [********].  LabCorp will issue invoices to EXACT from
time to time for reimbursement of such costs and EXACT agrees to pay all such
invoices within thirty (30) days of the date of each invoice.  In addition, LabCorp will retain such
contractor(s) as necessary to provide LabCorp with training on how to conduct
quality control with respect to the [********], the costs of which will be reimbursed by EXACT
within the [********] limit. 
The terms of this Section 6.6 will terminate upon commercial launch
of PV2 by LabCorp.

6.             Royalty Rate.

a.             A new
Section 1.31 is hereby added to the Agreement as follows:

1.31                           “Net Revenue” shall mean [********] by LabCorp for the performance of Assays less the following deductions to
the extent that they are applicable and are not already deducted in the [********]:  [********] (up to maximum of [********]) from
clients/payors, based on the actual experience of LabCorp.

b.             A new
Section 1.32 is hereby added to the Agreement as follows:

1.32                           “Annual
Net Revenue” means the aggregate Net Revenues for an entire calendar year
(except that, with respect to the 2007 calendar year only, Annual Net Revenue
shall be deemed to only refer to the portion of the calendar year beginning on
the date of the Second Amendment to this Agreement and ending on December 31,
2007).

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 3
 

 

c.             A new
Section 1.33 is hereby added to the Agreement as follows:

1.33                           “Applicable
Annual Percentage” means the percentage designated as the Applicable Annual
Percentage in the chart below based on the corresponding Annual Net Revenue for
the applicable calendar year:

	
   Annual Net Revenue

  	
  Applicable Annual
  Percentage

  
	
   $0 to
  [********]

  	
  15%

  
	
   [********] or
  greater

  	
  17%

  

 

d.             A new
Section 1.34 is hereby added to the Agreement as follows:

1.32                           “Applicable
Interim Percentage” means

(i)            for the 2007
calendar year:  15%; and

(ii)                                  for
each calendar year thereafter: the percentage which was the Applicable Annual
Percentage for the immediately preceding calendar year.

e.             Section 3.3.1  is hereby amended by being deleted in its
entirety and replaced with the following:

3.3.1                        Assays Performed and Net
Revenue.  Within thirty (30) days
following the end of each calendar month during the Term, LabCorp will notify
EXACT in writing of: (i) the total number of Assays performed during the
prior calendar month by LabCorp and its Affiliates and sublicensees, including
Research Assays (separately reported), and (ii) the total Net Revenue of
LabCorp and its Affiliates and sublicensees during the prior calendar month.

f.              Section 6.2.1
is hereby amended by being deleted in its entirety and replaced with the
following:

6.2.1                        Royalties.

(a)                                  Interim
Monthly Royalties.  Within forty-five
(45) days following the end of each calendar month during the Term, LabCorp
agrees to pay EXACT a royalty equal to the Applicable Interim Percentage of its
Net Revenue for that calendar month.

(b)                                 Annual
Royalty True-up.  If the Applicable
Annual Percentage for a calendar year is greater than the Applicable Interim
Percentage 

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 4
 

                                                for
that calendar year, then within sixty (60) days following the end of that
calendar year, LabCorp agrees to pay EXACT a royalty equal to the difference
between (i) the amounts previously paid that year (based on the Applicable
Interim Percentage of its aggregate Net Revenue for each calendar month that
calendar year), and (ii) the Applicable Annual Percentage of its Annual
Net Revenue for that calendar year.  If
the Applicable Annual Percentage for a calendar year is less than the
Applicable Interim Percentage for that calendar year, then LabCorp shall be
entitled to a credit against future royalties payable under this Agreement in
an amount equal to the difference between (a) the Applicable Annual
Percentage of its Annual Net Revenue for that calendar year, and (b) the
amounts previously paid that year (based on the Applicable Interim Percentage
of its aggregate Net Revenue for each calendar month that calendar year).

Example 1:  For example, if LabCorp’s Annual Net Revenue
during 2008 is [********], then
during 2009 LabCorp will pay 15% of its Net Revenue on a monthly basis.  If, after the end of 2009, it is determined
that LabCorp’s Annual Net Revenue for 2009 is [********]
(which has a 17% corresponding Applicable Annual Percentage), then LabCorp
would pay the difference between (i) 15% of its Annual Net Revenue for
2009 (which it has already paid), and (ii) 17% of its Annual Net Revenue
for 2009 (which is the appropriate percentage based on that year’s sales), as a
“true-up.”

Example 2:  On the other hand, if LabCorp’s Annual Net
Revenue during 2008 is [********], then during 2009 LabCorp will pay 17% of
its Net Revenue on a monthly basis.  If,
after the end of 2009, it is determined that LabCorp’s Annual Net Revenue for
2009 is [********] (which has a 15% corresponding
Applicable Annual Percentage), then LabCorp would receive a credit for the
difference between (a) 15% of its Annual Net Revenue for 2009 (which is
the appropriate percentage based on that year’s sales), and (b) 17% of its
Annual Net Revenue for 2009 (which it already overpaid).

g.             All references in
Section 6.2.2.a. of the Agreement to the “per-Assay fee” shall be deemed
changed to references to the “royalty.”

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 5
 

 

h.             Section 6.2.2.c. is hereby amended by being
deleted in its entirety and replaced with the following:

c.                                       Royalties On Existing Technology or
Markers.  If LABCORP is required to
pay any third party, other than [********] or
its Affiliates, a royalty to use any of the protocols transferred by EXACT for
PV1 as of the Commercial Launch Date pursuant to this Agreement (as such
protocols are configured at the time of transfer by EXACT to LabCorp), or any
of the loci in Schedule 5 (as Schedule 5 existed as of August 13, 2003), then
the royalty due such third party shall be deducted from the Assay payments due
under this Article 6.

i.              Except as provided
in Section 6.7 (relating to [********]),
LabCorp agrees that it shall be solely responsible for any third party
royalties due relating to PV2, to the extent relating to third party
intellectual property identified and known to LabCorp as of the date of this
Amendment.  Intellectual property not
identified and known to LabCorp as of the date of this Amendment will be
handled in accordance with Section 6.2.2.d.

j.              Section 2.2
is hereby amended by adding the following language to the end of the first
sentence:

 . . , subject
to the royalty requirements set forth in 6.2.2.d.

k.             Sections 1.3, 1.24,
3.3.2, 3.3.3, 6.2.2.b., 6.2.3, and Schedule 3 of the Agreement are hereby
deleted.

l.              The parties
acknowledge that the rights and obligations of the parties under this Amendment
were the result of good faith negotiations and represent an “equitable
adjustment” to the terms of the Agreement pursuant to Section 6.2.2.d.
based on the circumstances and intellectual property identified and known to
LabCorp as of the date of this Amendment.

7.             [********]
Payments.

a.             A new
Section 1.35 is hereby added to the Agreement as follows:

1.35                           “[********] Agreement” means that Sublicense
Agreement by and between LabCorp and [********],
whereby LabCorp licensed certain rights (the “[********]”)
from [********].

b.             A new
Section 1.36 is hereby added to the Agreement as follows:

1.36                           “[********] Net Service Revenues” has the
meaning of “Net Service Revenues” as defined in the [********] Agreement.

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 6
 

 

c.             A new
Section 1.37 is hereby added to the Agreement as follows:

1.37                           “[********] Effective Royalty Rate” means
the total amount (including but not limited to percentage royalties and minimum
royalties) actually paid by LabCorp to [********]
during each Measuring Period of the Exclusive Period pursuant to the
[********] Agreement, divided by the [********]
Net Service Revenues from Assay sales during the same period.

d.             A new
Section 1.38 is hereby added to the Agreement as follows:

1.38                           “[********] Excess” shall mean the [********] Effective Royalty Rate minus [********].

e.             A new
Section 1.39 is hereby added to the Agreement as follows:

1.39                           “Measuring Period” means each of the
three following periods:  (i) the
portion of the 2007 calendar year beginning on the date of the Second Amendment
to this Agreement and ending on December 31, 2007, combined with the entire
2008 calendar year; (ii) the 2009 calendar year; and (iii) the 2010
calendar year.  With respect to the 2007
calendar year, a prorated portion of any minimum annual royalty payments made
by LabCorp with respect to 2007 shall be attributed to the aforementioned
portion of the calendar year for purposes of calculating the [********] Effective Royalty Rate.

f.              A new
Section 6.7 is hereby added to the Agreement as follows:

6.7                                 In
the event that, following a
Measuring Period of the Exclusive Period, the [********]
Effective Royalty Rate is greater than [********],
then LabCorp will notify EXACT and EXACT will pay LabCorp an amount equal to
the [********] Excess times the [********] Net Service Revenues, within 30
days after such notice.

g.             Exact
recognizes that it has certain responsibilities as described in Section 9 of
the First Amendment to the Agreement to reimburse LabCorp for certain [********] royalty payments incurred over the term of the
agreement. LabCorp is willing to exchange any claim for reimbursement from
Exact in recognition of the value it is receiving in this Second Amendment to
the parties’ agreement,  and,
therefore, no amounts shall be payable by EXACT based on such section.  Section 9
of the First Amendment to the Agreement is hereby deleted in its entirety.

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 7
 

 

8.             Milestones.

a.             Milestone 4 (and
the associated Milestone License Fee) on Schedule 4 of the Agreement shall be
deemed eliminated for all purposes.

b.             Milestone 5 on
Schedule 4 of the Agreement is hereby deleted in its entirety and replaced with
the following:

Upon LabCorp and
its Affiliates’ performance of [********] in
the aggregate, over the Term for third parties (excluding Research Assays).

c.             The Milestone
License Fee for Milestone 5, as amended above, shall remain at [********].

d.             Sections 1.16 and
11.6.2 of the Agreement are hereby deemed deleted in their entirety.

9.             Education and Awareness Efforts.  The following text is added to the end of
Section 7.1 of the Agreement:

LabCorp agrees to
issue joint press releases with EXACT concerning its entering into the Second
Amendment to this Agreement with EXACT (the language of which shall be agreed
upon and attached as Exhibit A to such Amendment) and the launch of PV2.  The Parties agree to form a steering
committee of at least four individuals (2 from LabCorp and 2 from EXACT) to
meet regularly to discuss developments regarding the Assay, educational
activities, commercially reasonable efforts to promote awareness of stool-based
DNA screening for colorectal cancer, or other issues related to this
Agreement.  Decisions regarding
educational, promotional or advertising activities related to the Assay are in
the sole discretion of LabCorp.

10.           Rights of Termination.

a.             A new Section 11.7
is hereby added to the Agreement as follows:

11.7                           This
Agreement may be terminated by LabCorp upon written notice in the event
stool-based colorectal cancer screening has not be accepted as a Standard of
Care on or before [********].

b.             A new
Section 11.8 is hereby added to the Agreement as follows:

11.8                           This
Agreement may be terminated by LabCorp upon written notice in the event PV2 is
not commercially 

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 8
 

                                                launched
(meaning made generally available to LabCorp’s customers) on or before [********], provided the reason for delay
in commercial launch can be attributed in whole or in part to EXACT.  Without limiting the foregoing, the parties
acknowledge that either of the following shall give rise to LabCorp’s right to
terminate the Agreement pursuant to this Section 11.8:  (i) any failure of EXACT to provide all
of the PV2 Sample Data described in Section 3.6 on or before [********], or (ii) any failure of
EXACT to fulfill its obligations with respect to [********] on or before any of the deadlines to be mutually
agreed upon by the parties in writing.

c.             A new
Section 11.9 is hereby added to the Agreement as follows:

11.9                           This
Agreement may be terminated by LabCorp upon written notice in the event the PV2
Sample Data do not demonstrate sensitivity and specificity with a lower limit
of the [********] confidence
interval of at least [********]
for each.

11.           Technology Exclusivity.

a.             Section 8.1 is
hereby amended by being deleted in its entirety and replaced with the
following:

8.1                                 Exclusivity.  EXACT may terminate the Exclusive Period and
convert the license granted under Section 2.1 to a non-exclusive license
for the remainder of Term  immediately
upon written notice to LABCORP in the event that LABCORP ceases to use EXACT as
its sole licensor of DNA-based molecular diagnostics technology for the
detection of colon and rectal cancer in stool at any time during the Exclusive
Period.  The Parties acknowledge that
such right of conversion to a non-exclusive license shall not exist as a result
of (i) any procurement, purchasing, marketing, sale or distribution by
LABCORP of any commercially available diagnostic product approved by the FDA,
or (ii) LABCORP’s purchase of any components from any source for use in
connection with performance of Assays.

b.             In
Section 11.1, the words “with this Article 13” are hereby replaced with “with
this Article 11”, and the words “or Section 8.1” are hereby deleted.

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 9
 

 

12.           [********]
Pricing.

Section 3.2 is hereby deleted in its
entirety and replaced with the following:

Supply and Pricing of
Assay Kits.  In the event that, during the Term
of this Agreement, EXACT is [********],
then EXACT shall [********] in the
event that LabCorp (including its Affiliates) is the [********] (as determined by EXACT with respect to all
licensees of the Technology).  EXACT
shall have the unqualified right to enter into agreements with third-parties
for the development or commercialization of in vitro diagnostic kits, provided,
however, that such agreements do not terminate any exclusivity to which LABCORP
is entitled during the Exclusive Period of this Agreement, and any such
agreements shall [********] (as
determined by EXACT with respect to all licensees of the Technology).  For the avoidance of doubt, EXACT shall not [********] not also provided to LABCORP if
LabCorp (including its Affiliates) is [********].  In addition, EXACT shall not agree or
otherwise commit to provide any third party with [********] on a future date, if LabCorp (including its
Affiliates) [********].

13.           Performance-Based
License Fees.  In Section 6.1.4,
the date “[********]” is hereby
replaced with “[********].”

14.           Except as expressly modified herein,
the Agreement and all of its terms and conditions shall continue in full force
and effect.

 

Portions of this Exhibit were omitted
and have been filed separately with the Secretary of the Commission pursuant to
the Company’s application requesting confidential treatment under Rule 24b-2 of
the Exchange Act; [*] denotes omissions.

 10
 

 

IN WITNESS WHEREOF, the
duly authorized representatives of the parties have executed this Amendment as
of the date first above written.

	
  Laboratory Corporation of America:

  	
   

  	
  EXACT Sciences Corporation:

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Bradford T.
  Smith

  	
   

  	
  By:

  	
  /s/ Don M. Hardison

  
	
   

  	
  Bradford T.
  Smith 

  	
   

  	
   

  	
  Don M. Hardison

  
	
   

  	
  Printed Name

  	
   

  	
   

  	
  Printed Name

  
	
   

  	
  Title: Executive
  Vice President

  	
   

  	
   

  	
  Title: President and Chief Executive Officer

  

 

Portions
of this Exhibit were omitted and have been filed separately with the Secretary
of the Commission pursuant to the Company’s application requesting confidential
treatment under Rule 24b-2 of the Exchange Act; [*] denotes omissions.

 11

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