Document:

Exhibit 10.3b

 

Form of

Stock Option
Agreement

Under

The Estée Lauder Companies Inc.

Fiscal 1996 Share Incentive Plan (the
“Plan”)

 

The within STOCK OPTION
AGREEMENT provides for the granting of options by The Estée Lauder Companies
Inc., a Delaware corporation (the “Company”), to the participant, an employee
of the Company or one of its subsidiaries (the “Employee”), to purchase Shares
of the Company’s Class A Common Stock, par value $0.01 (the “Shares”), on the
terms and subject to the conditions hereinafter provided.  The name of the “Participant”, the “Grant
Date”, the aggregate number of Shares that may be purchased pursuant to this
agreement, and the “Exercise Price” per share are stated in the attached
“Notice of Grant”, and incorporated herein by reference.  The other terms and conditions of the
Options are stated in this agreement and in the Plan.

 

The Stock Options
described herein are being granted pursuant to the Company’s Fiscal 1996 Share
Incentive Plan, as may be amended from time to time (the “Plan”), and are
subject in all respects to the provisions of the Plan.  The Stock Options granted hereunder are not
Incentive Stock Options (as defined in Section 422(b) of the Internal
Revenue Code of 1986, as amended).

 

1.  Payment of Exercise Price.  The Company will provide and communicate to the
Employee various methods of exercise. 
These methods may include the ability to receive Shares of Class A
Common Stock of the Company or cash at exercise.  To facilitate exercise, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms or financial
institutions.

 

2.  Exercise Period.

 

a.  General.  Subject to other provisions contained herein and in the Plan,
Stock Options granted hereunder shall be exercisable in installments as
specified under “Exercise Period” in the attached “Notice of Grant”.

 

Subject to the last
sentence of Paragraph 2b, no Stock Option awarded hereunder shall be
exercisable later than ten (10) years after the Grant Date. The Stock Option
awarded hereunder shall not be transferable otherwise than by will of the laws
of descent or distribution, and shall be exercisable during the Employee’s
lifetime only by the Employee.

 

b.  Death or Disability.  In the event of the Employee’s death or the
occurrence of the Employee’s total and permanent disability (as such status
shall be determined under the Company’s long term disability program), each
Stock Option awarded but not yet exercisable as of the date of death or the
determination of such disability, shall become immediately exercisable. Each
Stock Option awarded (i) in the case of death may be exercised for a period
commencing as of the day after the date of death and continuing for one year
thereafter and (ii) in the case of permanent disability, for a period
commencing as of the day after determination of such disability and continuing
through the earlier to occur of the first anniversary of such determination or
the tenth anniversary of the Grant Date.

 

c.  Retirement.  Subject to Paragraph 3, in the event of Employee’s formal
retirement under the terms of the Estée Lauder Inc. Retirement Growth Account
Plan (or an affiliate or a successor plan or program of similar purpose), each
Stock Option awarded but not yet exercisable as of the date of retirement shall
become immediately exercisable. Each Stock Option awarded may thereafter be
exercised until the tenth anniversary of the Grant Date.

 

1

 

d.  Termination of Employment Without Cause.

 

(1) Subject to Paragraph
3, in the event Employee is terminated at the instance of the Employee (e.g.,
resigns voluntarily), each Stock Option exercisable but unexercised as of the
effective date of such termination may be exercised until the first to occur of
(i) the date which shall be ninety (90) days after the effective date of such
termination and (ii) the tenth anniversary of the Grant Date.  Each Stock Option awarded but unexercisable
as of the date of such termination shall be forfeited as of such date.

 

(2) Subject to Paragraph
3, in the event Employee is terminated at the instance of the Company or
relevant subsidiary without Cause (as defined below), each Stock Option awarded
but unexercisable as of the date of termination shall become immediately
exercisable.  Each Stock Option awarded
may be exercised until the first to occur of (i) the date which shall be ninety
(90) days after the effective date of such termination and (ii) the tenth
anniversary of the Grant Date.  For purposes
hereof, “Cause” means any breach by the Employee of any of his or her material
obligations under any Company policy or procedure, including, without limiting
the generality, the Code of Corporate Conduct and the Policy on Avoidance of
Insider Trading.

 

3.  Post-Employment Exercises.  No Stock Option represented by this
Agreement may be exercised after termination of the Employee’s employment with
the Company (or any of its subsidiaries) unless as provided for in Paragraph
2b, 2c or 2d hereof.  The exercise of
any Stock Option after termination of the Employee’s employment by reason of
retirement as provided in Paragraph 2c or by reason of termination by the
Employee or termination by the Company or relevant subsidiary without Cause as
provided in Paragraph 2d shall be subject to satisfaction of the conditions
precedent that the Employee neither (i) competes with, or takes other
employment with or renders services to a competitor of, the Company, its
subsidiaries or affiliates without the written consent of the Company, nor (ii)
conducts herself or himself in a manner adversely affecting the Company.  All Stock Options that may not be exercised
after termination of the Employee’s employment shall be forfeited.

 

4.  Adjustment Provisions; Change in Control.

 

a.  If there shall be any change in the Class A
Common Stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock split, split up,
spin-off, combination of Shares, exchange of Shares, dividend in kind or other
like change in capital structure or distribution (other than normal cash
dividends) to stockholders of the Company, an adjustment shall be made to each
outstanding Stock Option such that each such Stock Option shall thereafter be
exercisable for such securities, cash and/or other property as would have been
received in respect of the Class A Common Stock subject to such Stock Option
had it been exercised in full immediately prior to such change or distribution,
and such an adjustment shall be made successively each time any such change
shall occur.  In addition, in the event
of any such change or distribution, in order to prevent dilution or enlargement
of the Employee’s rights hereunder, the Company will have authority to adjust,
in an equitable manner, the number and kind of Shares that may be issued with
respect to any Stock Option hereunder, the number and kind of Shares subject to
outstanding Stock Options, the exercise price applicable to outstanding Stock
Options, and the Market Value (as herein after defined) and other value
determinations applicable to outstanding Stock Options.  Appropriate adjustments may also be made by
the Company in the terms of any Stock Options to reflect such changes or
distributions and to modify any other terms of outstanding Stock Options on an
equitable basis.  In addition, the
Company is authorized to make adjustments to the terms and conditions of Stock
Options, in recognition of unusual or nonrecurring events affecting the Company
or the financial statements of the Company, or in response to changes in
applicable laws, regulations, or accounting principles.  For purposes of this Paragraph 4, the Market
Value of the Shares shall be equal to 100% of the closing price of the Class A
Common Stock on the New York Stock Exchange or any other national securities
exchange or other market system as reported by the Wall Street Journal for the
date on which such Market Value is being fixed, or, if there shall be no
trading on such date, the date next preceding on which trading occurred.

 

2

 

b.  Notwithstanding any other provision
hereunder, if there is a Change in Control of the Company, all then outstanding
Stock Options shall immediately become exercisable.  For purposes of this Paragraph 4b, a “Change in Control” of the
Company shall be deemed to have occurred upon any of the following events:

 

(i) A
change in control of the direction and administration of the Company’s business
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act; or

 

(ii)
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
hereinafter defined) cease for any reason to constitute at  least a
majority thereof; or

 

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

 

(iv)
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

 

(v)
The Company’s Board of Directors shall approve any merger, consolidation, or
like business combination or reorganization of the Company, the consummation of
which would result in the occurrence of any event described in Paragraph 4b
(ii) or (iii) above, and such transaction shall have been consummated.

 

Notwithstanding the
foregoing, (A) changes in the relative beneficial ownership among members of
the Lauder family and family-controlled entities shall not, by themselves,
constitute a Change in Control of the Company, (B) any spin-off of a division
or subsidiary of the Company to its stockholders and (C) any event listed in
(i) through (v) above that the Board of Directors determines not to be a Change
in Control of the Company, shall not constitute a Change in Control of the
Company

 

For purposes of this
Paragraph 4b, “Continuing Directors” shall mean (x) the directors of the
Company in office on the date that shares are first offered for sale to the
public and (y) any successor to any such director and any additional director
who after such date was nominated or selected by a majority of the Continuing
Directors in office at the time of his or her nomination or selection.

 

The Company may determine
that, upon the occurrence of a Change in Control of the Company, each Stock
Option outstanding hereunder shall terminate within a specified number of days
after notice to the Employee, and the Employee shall receive, with respect to
each share of Class A Common Stock subject to such Stock Option, an amount
equal to the excess of the Market Value of such Shares of Common Stock
immediately prior to the occurrence of such Change in Control over the exercise
price per share of such Stock Option; such amount to be payable in cash, in one
or more kinds of property (including the property, if any, payable in the
transaction) or in a combination thereof, as the Company, in its discretion,
shall determine.

 

3

 

5.  Withholding.  All payments or distributions of Stock Options made hereunder of
Shares covered by Stock Options shall be net of any amounts required to be
withheld pursuant to applicable federal, national, state and local tax
withholding requirements imposed by each taxing authority having
jurisdiction.  The Company (or relevant
subsidiary) may require the Employee to remit to it an amount sufficient to
satisfy such tax withholding requirements prior to the delivery of any
certificates for such Shares.  The
Company (or relevant subsidiary) may, in its discretion and subject to such
rules as it may adopt (including any as may be required to satisfy applicable
tax and/or non-tax regulatory requirements), permit the Employee to pay all or
a portion of the federal, national, state and local withholding taxes arising
in connection with any Stock Option by electing to have the Company (or
relevant subsidiary) withhold Shares of Class A Common Stock having a Market
Value equal to the amount to be withheld, provided that such withholding shall
only be at rates required by applicable statutes or regulations.

 

6.  Tenure. 
The Employee’s right to continue to serve the Company or any of its
subsidiaries as an officer, employee, or otherwise, shall not be enlarged or
otherwise affected by the award hereunder.

 

7.  Specific Restrictions Upon Option Shares.  The Employee hereby agrees with
the Company as follows:

 

a.  The Employee shall acquire Shares hereunder
for investment purposes only and not with a view to resale or other
distribution thereof to the public in violation of the United States Securities
Act of 1933, as amended (the “1933 Act”), and shall not dispose of any such
Shares in transactions which, in the opinion of counsel to the Company, violate
the 1933 Act, or the rules and regulations thereunder, or any applicable state
or national securities or “blue sky” laws; and further,

 

b.  If any Shares shall be registered under the
1933 Act, no public offering (otherwise than on a national securities exchange,
as defined in the United States Securities Exchange Act of 1934, as amended) of
any Shares acquired hereunder shall be made by the Employee (or any other
person) under such circumstances that he or she (or such person) may be deemed
an underwriter, as defined in the 1933 Act; and further

 

c.  The Employee agrees that the Company shall
have the authority to endorse upon the certificate or certificates representing
the Shares acquired hereunder such legends referring to the foregoing
restrictions and any other application restrictions, as it may deem
appropriate.

 

8.  Notices. 
Any notice required or permitted under this Option Agreement shall be
deemed to have been duly given if delivered, telecopied or mailed, certified or
registered mail, return receipt requested to the Employee at such address as
the Company (or relevant subsidiary) shall maintain for the Employee or its
personnel records.

 

9.  Failure to Enforce Not a Waiver.  The failure of the Company to enforce at any
time any provision of this agreement shall in no manner be construed to be a
waiver of such provision or of any other provision hereof.

 

10.  Governing Law.  The Option Agreement shall be governed by and construed according
to the laws of the State of New York, applicable to agreements made and
performed in that state.

 

11.  Partial Invalidity.  The invalidity or illegality of any
provision herein shall not be deemed to affect the validity of any other
provision.

 

	
   

  	
  The Estée Lauder
  Companies Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

4

 

Notice of Grant

Under

The Estee Lauder Companies Inc.

Fiscal 1996 Share Incentive Plan (The
“Plan”)

 

This is to confirm that,
upon the recommendation of your management, you were awarded options to
purchase shares of Class A Common Stock of The Estee Lauder Companies Inc. (the
“Shares”) at the most recent meeting of the Stock Plan Subcommittee of the
Compensation Committee of the Board of Directors.  This award was made in recognition of  the significant contributions you have made as a key employee of
the Company, and to motivate you to achieve future successes by aligning your
interests more closely with those of our stockholders.  These options are granted under and governed
by the terms and conditions of the Plan and the Stock Option Agreement (the
“Agreement”) attached hereto and made part hereof.  A Summary Plan Description is also attached.  Please read these documents and keep them
for future reference.  The specific
terms of your award are as follows:

 

Participant:      «First_Name»
«Middle» «Last_Name»

 

SSN or Tax ID:   «SS»

 

Grant Date:

 

Type of Award:  Non-Qualified Stock Options

 

Exercise Price per Share:  $ (Closing trading price on NYSE of the
Class A Common Stock on the date of grant)

 

Aggregate number of
Shares subject to your options:

 

Exercise Period: Your options
shall become exercisable on the following dates (or upon death, disability,
retirement, or involuntary termination of employment if these occurrences are
earlier), but are subject to termination or forfeiture as per Paragraphs 2 and
3 of the Agreement:

 

	
  Number of Shares

  	
   

  	
  Date
  Exercisable

  	
   

  	
  Expiration
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Questions regarding the
stock option program can be directed to         
at            or 
            at
            .  If you wish to accept this grant, please
sign this Notice of Grant and return immediately to:

 

Compensation Department

767 Fifth Avenue, 41st
Floor

New York, New York 10153

Attention: 

 

The undersigned hereby
accepts, and agrees to, all terms and provisions of the Agreement, including
those contained in this Notice of Grant.

 

	
  By

  	
   

  	
   

  	
  Date

  	
   

  	
   

  

 

5Exhibit
10.4a

 

Form of

Stock Option
Agreement

Under

The Estée
Lauder Companies Inc.

Fiscal
1999 Share Incentive Plan (the “Plan”)

 

This STOCK OPTION
AGREEMENT provides for the granting of Stock Options (“Options”) by The Estée
Lauder Companies Inc., a Delaware corporation (the “Company”), to the
participant, an employee of the Company or one of its subsidiaries (the
“Employee”), to purchase shares of the Company’s Class A Common Stock, par
value $0.01 (the “Shares”), on the terms and subject to the conditions
hereinafter provided.  The Stock Options
described herein are being granted pursuant to the Company’s Fiscal 1999 Share
Incentive Plan, as may be amended from time to time (the “Plan”), and are
subject in all respects to the provisions of the Plan.  The Stock Options granted hereunder are not
Incentive Stock Options (as defined in Section 422(b) of the Internal
Revenue Code of 1986, as amended).

 

The name of the
“Participant”, the “Grant Date”, the aggregate number of Shares that may be
purchased pursuant to this agreement, and the “Exercise Price” per Shares are
stated in the attached “Notice of Grant”, and incorporated herein by
reference.  The other terms and
conditions of the Options are stated in this agreement and in the Plan.

 

1.  Payment of Exercise
Price.  The Company will
provide and communicate to the Employee various methods of exercise.  These methods may include the ability to
receive Shares of Class A Common Stock of the Company or cash at exercise.  To facilitate exercise, the Company may enter
into agreements for coordinated procedures with one or more brokerage firms or
financial institutions.

 

2.  Exercise Period.

 

a.  General.  Subject to other provisions contained herein
and in the Plan, Stock Options granted hereunder shall be exercisable in
installments as specified under “Exercise Period” in the attached “Notice of
Grant”.

 

Subject to the last
sentence of Paragraph 2b, no Stock Option awarded hereunder shall be
exercisable later than ten (10) years after the Grant Date.

 

b.  Death or Disability.  In the event of the Employee’s death or the
occurrence of the Employee’s total and permanent disability (as such status
shall be determined under the Company’s long term disability program), each
Stock Option awarded but not yet exercisable as of the date of death or the
determination of such disability, shall become immediately exercisable. Each
Stock Option awarded (i) in the case of death may be exercised for a period
commencing as of the day after the date of death and continuing for one year
thereafter and (ii) in the case of permanent disability, for a period
commencing as of the day after determination of such disability and continuing
through the earlier to occur of the first anniversary of such determination or
the tenth anniversary of the Grant Date.

 

c.  Retirement.  Subject to Paragraph 3, in the event of
Employee’s formal retirement under the terms of the Estée Lauder Inc.
Retirement Growth Account Plan (or an affiliate or a successor plan or program
of similar purpose), each Stock Option awarded but not yet exercisable as of
the date of retirement shall become immediately exercisable. Each Stock Option
awarded may thereafter be exercised until the tenth anniversary of the Grant
Date.

 

1

 

d.  Termination of Employment Without Cause.

 

(1) Subject to Paragraph
3, in the event Employee is terminated at the instance of the Employee (e.g.,
resigns voluntarily), each Stock Option exercisable but unexercised as of the
effective date of such termination may be exercised until the first to occur of
(i) the date which shall be ninety (90) days after the effective date of such
termination and (ii) the tenth anniversary of the Grant Date.  Each Stock Option awarded but unexercisable
as of the date of such termination shall be forfeited as of such date.

 

(2) Subject to Paragraph
3, in the event Employee is terminated at the instance of the Company or
relevant subsidiary without Cause (as defined below), each Stock Option awarded
but unexercisable as of the date of termination shall become immediately
exercisable.  Each Stock Option awarded
may be exercised until the first to occur of (i) the date which shall be ninety
(90) days after the effective date of such termination and (ii) the tenth
anniversary of the Grant Date.  For
purposes hereof, “Cause” means any breach by the Employee of any of his or her
material obligations under any Company policy or procedure, including, without
limiting the generality, the Code of Corporate Conduct and the Policy on Avoidance
of Insider Trading.

 

3.  Post-Employment Exercises.  No Stock Option represented by this Agreement
may be exercised after termination of the Employee’s employment with the
Company (or any of its subsidiaries) unless as provided for in Paragraph 2b, 2c
or 2d hereof.  The exercise of any Stock
Option after termination of the Employee’s employment by reason of retirement
as provided in Paragraph 2c or by reason of termination by the Employee or
termination by the Company or relevant subsidiary without Cause as provided in
Paragraph 2d shall be subject to satisfaction of the conditions precedent that
the Employee neither (i) competes with, or takes other employment with or
renders services to a competitor of, the Company, its subsidiaries or affiliates
without the written consent of the Company, nor (ii) conducts herself or
himself in a manner adversely affecting the Company.  All Stock Options that may not be exercised
after termination of the Employee’s employment shall be forfeited.

 

4.  Adjustment Provisions;
Change in Control.

 

a.  If there shall be any change in the Class A
Common Stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock split, split up,
spin-off, combination of Shares, exchange of Shares, dividend in kind or other
like change in capital structure or distribution (other than normal cash
dividends) to stockholders of the Company, an adjustment shall be made to each
outstanding Stock Option such that each such Stock Option shall thereafter be
exercisable for such securities, cash and/or other property as would have been
received in respect of the Class A Common Stock subject to such Stock Option
had it been exercised in full immediately prior to such change or distribution,
and such an adjustment shall be made successively each time any such change
shall occur.  In addition, in the event
of any such change or distribution, in order to prevent dilution or enlargement
of the Employee’s rights hereunder, the Company will have authority to adjust,
in an equitable manner, the number and kind of Shares that may be issued with
respect to any Stock Option hereunder, the number and kind of Shares subject to
outstanding Stock Options, the exercise price applicable to outstanding Stock
Options, and the Market Value (as herein after defined) and other value
determinations applicable to outstanding Stock Options.  Appropriate adjustments may also be made by
the Company in the terms of any Stock Options to reflect such changes or distributions
and to modify any other terms of outstanding Stock Options on an equitable
basis.  In addition, the Company is
authorized to make adjustments to the terms and conditions of Stock Options, in
recognition of unusual or nonrecurring events affecting the Company or the
financial statements of the Company, or in response to changes in applicable
laws, regulations, or accounting principles. 
For purposes of this Paragraph 4, the Market Value of the Shares shall be
equal to 100% of the closing price of the Class A Common Stock on the New York
Stock Exchange or any other national securities exchange or other market system
as reported by the Wall Street Journal for the date on which such Market Value
is being fixed, or, if there shall be no trading on such date, the date next
preceding on which trading occurred.

 

 b. 
Notwithstanding any other provision hereunder, if there is a Change in
Control of the Company, all then outstanding Stock Options shall immediately
become exercisable.  For purposes of this

 

2

 

Paragraph 4b, a “Change
in Control” of the Company shall be deemed to have occurred upon any of the
following events:

 

(i) A
change in control of the direction and administration of the Company’s  business of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act; or

 

(ii)
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 hereinafter defined) cease
for any reason to constitute at least a majority thereof; or

 

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

 

(iv)
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

 

(v)
The Company’s Board of Directors shall approve any merger, consolidation, or
like business combination or reorganization of the Company, the consummation of
which would result in the occurrence of any event described in Paragraph 4b
(ii) or (iii) above, and such transaction shall have been consummated.

 

Notwithstanding the
foregoing, (A) changes in the relative beneficial ownership among members of
the Lauder family and family-controlled entities shall not, by themselves,
constitute a Change in Control of the Company, (B) any spin-off of a division
or subsidiary of the Company to its stockholders and (C) any event listed in
(i) through (v) above that the Board of Directors determines not to be a Change
in Control of the Company, shall not constitute a Change in Control of the
Company

 

For purposes of this
Paragraph 4b, “Continuing Directors” shall mean (x) the directors of the
Company in office on the date that shares are first offered for sale to the
public and (y) any successor to any such director and any additional director
who after such date was nominated or selected by a majority of the Continuing
Directors in office at the time of his or her nomination or selection.

 

The Company may determine
that, upon the occurrence of a Change in Control of the Company, each Stock
Option outstanding hereunder shall terminate within a specified number of days
after notice to the Employee, and the Employee shall receive, with respect to
each Shares of Class A Common Stock subject to such Stock Option, an amount
equal to the excess of the Market Value of such Shares of Common Stock immediately
prior to the occurrence of such Change in Control over the exercise price per
Shares of such Stock Option; such amount to be payable in cash, in one or more
kinds of property (including the property, if any, payable in the transaction)
or in a combination thereof, as the Company, in its discretion, shall
determine.

 

5.  Withholding.  All payments or distributions made hereunder
of Shares covered by Stock Options shall be net of any amounts required to be
withheld pursuant to applicable federal, national, state and local tax
withholding requirements imposed by each taxing authority having
jurisdiction.  The Company (or relevant
subsidiary) may require the Employee to remit to it an amount sufficient to
satisfy such tax withholding requirements prior to the delivery of any
certificates for such Shares.  The
Company (or relevant subsidiary) may, in its discretion and subject to such
rules as it may adopt (including any as may be required to satisfy applicable
tax and/or non-tax regulatory requirements), permit the Employee to pay the
minimum amount of the federal, national, state and local withholding taxes
arising in connection with any Stock Option by electing to have the Company (or
relevant subsidiary) withhold Shares of Class A Common Stock having a Market
Value equal to the amount to be withheld.

 

3

 

6.   Transferability.   The Plan permits the transfer of
the Stock Option award by an Employee solely to the Employee’s spouse,
siblings, parents, children and grandchildren or trusts for the benefits of
such persons, or partnerships, corporations, limited liability companies, or
other entities owned solely by such persons, including trusts for such persons,
subject to any restriction in the award of Stock Options.

 

7.  Tenure.  The Employee’s right to continue to serve the
Company or any of its subsidiaries as an officer, employee, or otherwise, shall
not be enlarged or otherwise affected by the award hereunder.

 

8.  Specific Restrictions Upon
Option Shares.  The Employee
hereby agrees with the Company as follows:

 

a.  The Employee shall acquire Shares hereunder
for investment purposes only and not with a view to resale or other
distribution thereof to the public in violation of the United States Securities
Act of 1933, as amended (the “1933 Act”), and shall not dispose of any such
Shares in transactions which, in the opinion of counsel to the Company, violate
the 1933 Act, or the rules and regulations thereunder, or any applicable state
or national securities or “blue sky” laws; and further,

 

b.  If any Shares shall be registered under the
1933 Act, no public offering (otherwise than on a national securities exchange,
as defined in the United States Securities Exchange Act of 1934, as amended) of
any Shares acquired hereunder shall be made by the Employee (or any other
person) under such circumstances that he or she (or such person) may be deemed
an underwriter, as defined in the 1933 Act; and further

 

c.  The Employee agrees that the Company shall
have the authority to endorse upon the certificate or certificates representing
the Shares acquired hereunder such legends referring to the foregoing
restrictions and any other application restrictions, as it may deem
appropriate.

 

9.  Notices.  Any notice required or permitted under this
Option Agreement shall be deemed to have been duly given if delivered,
telecopied or mailed, certified or registered mail, return receipt requested to
the Employee at such address as the Company (or relevant subsidiary) shall maintain
for the Employee or its personnel records.

 

10.  Failure to Enforce Not a
Waiver.  The failure of the
Company to enforce at any time any provision of this agreement shall in no
manner be construed to be a waiver of such provision or of any other provision
hereof.

 

11.  Governing Law.  The Option Agreement shall be governed by and
construed according to the laws of the State of New York, applicable to
agreements made and performed in that state.

 

12.  Partial Invalidity.  The invalidity or illegality of any provision
herein shall not be deemed to affect the validity of any other provision.

 

	
   

  	
  The Estée Lauder
  Companies Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

4

 

Notice of
Grant

Under

The Estee
Lauder Companies Inc.

Fiscal
1999 Share Incentive Plan (The “Plan”)

 

This is to confirm that,
upon the recommendation of your management, you were awarded options to
purchase shares of Class A Common Stock of The Estee Lauder Companies Inc. (the
“Shares”) at the most recent meeting of the Compensation Committee of the Board
of Directors.  This award was made in
recognition of  the significant
contributions you have made as a key employee of the Company, and to motivate
you to achieve future successes by aligning your interests more closely with
those of our stockholders.  These options
are granted under and governed by the terms and conditions of the Plan and the
Stock Option Agreement (the “Agreement”) attached hereto and made part hereof.  A Summary Plan Description is also
attached.  Please read these documents
and keep them for future reference.  The
specific terms of your award are as follows:

 

Participant:

 

SSN or Tax ID:

 

Grant Date:

 

Type of Award:  Non-Qualified Stock Options

 

Exercise Price per Share:  $     
(Closing trading price on NYSE of the Class A Common Stock on the date of
grant)

 

Aggregate number of
Shares subject to your options:  «Grant»

 

Exercise Period: Your options shall become exercisable on the following dates (or upon
death, disability, retirement, or involuntary termination of employment if
these occurrences are earlier), but are subject to termination or forfeiture as
per Paragraphs 2 and 3 of the Agreement:

 

	
  Number
  of Shares

  	
   

  	
  Date Exercisable

  	
   

  	
  Expiration Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Questions regarding the
stock option program can be directed to
              
at              or
             
at            .  If you wish to accept this grant, please sign this Notice and return within the next
two weeks to:

 

Compensation Department

767 Fifth Avenue, 37th
Floor

New York, New York 10153

Attention: 

 

The undersigned hereby
accepts, and agrees to, all terms and provisions of the Agreement, including
those contained in this Notice of Grant.

 

	
  By

  	
   

  	
   

  	
  Date

  	
   

  	
   

  

 

5

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