Document:

Exhibit 10.3

 

Each of the Stock Plan Subcommittee of the Compensation
Committee and the Compensation Committee of the Board of Directors of The Estée
Lauder Companies Inc. reserves the right to change provisions of this Agreement
to comply with the American Jobs Creation Act of 2004 or other applicable laws
or regulations.

 

Performance Share Unit Award Agreement Under

The Estée Lauder Companies Inc.

Amended and
Restated Fiscal 2002 Share Incentive Plan (the “Plan”)

 

This
PERFORMANCE SHARE UNIT AWARD AGREEMENT
(“Agreement”) provides for the granting of performance share unit awards 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 “Participant”),
representing a notional account equal to a corresponding number of shares of
the Company’s Class A Common Stock, par value $0.01 (the “Shares”),
subject to the terms below (the “Performance Share Units”).  The name of the “Participant,” the “Grant
Date,” the aggregate number of Shares representing the Target Award, and the
Plan Achievement (as defined below) goals are stated in the attached “Notice of
Grant,” and are incorporated by reference. 
The other terms of this Performance Share Unit Award are stated in this Agreement
and in the Plan. Terms not defined in this Agreement are defined in the Plan,
as amended.

 

1.     Award Grant. The Company hereby awards to the Participant a
target award of Performance Share Units in respect of the number of Shares set
forth in the Notice of Grant (the “Target Award”), representing a Stock Unit
and Performance-Based Award under the terms of the Plan.

 

2.     Right to Payment of Performance Share Units. It is
understood that the percentage of the Target Award earned and paid will be
established by the Committee based on the plan achievement (the “Plan
Achievement”) during the period specified in the Notice of Grant (the “Award
Period”).  The Plan Achievement is
comprised of, and is measured separately with respect to the components stated in
the attached Notice of Grant.  Actual
payment of the Performance Share Units awarded will be determined for each
component in accordance with the table attached hereto as Schedule “A.”

 

3.     Payment of Awards. Payments under this Agreement will be made in
the number of Shares that is equivalent to the number of Performance Share
Units earned and payable to the Participant pursuant to paragraph 2 above.
Except as otherwise provided in paragraph 4 below, payments will be made as
soon as practicable after the Award Period ends, but in no event later than 2
and 1/2 months following the last day of the calendar year in which the Award
Period ends. The form of payout will be in Shares.

 

Upon a Change in Control, each Performance Share Unit will become
payable to the Participant with the total number of Shares to be paid equal to
the Target Award.  Payments upon a Change
in Control will be made within two weeks following the Change in Control.  If the Shares cease to be outstanding
immediately after the Change in Control (e.g., due to a merger with and into
another entity), then the consideration to be received per Share will equal the
consideration paid to each stockholder per Share generally upon the Change in
Control.

 

4.     Termination of Employment. If the Participant’s
employment terminates during the Award Period, payouts will be as follows:

 

 

(a)                      Death.  If the Participant dies, the Performance
Share Units will be paid as a pro rata Target Award for the number of full
months employed during the Award Period (i.e.,
the proration of the Target Award equals a fraction, the numerator of which is
the number of full calendar months of service completed during the Award Period
through the Participant’s death and the denominator of which is the number of
full calendar months in the Award Period). 
Payment will occur as soon as practicable following the Participant’s
death and in accordance with any applicable laws or Company procedures
regarding the payments.

 

(b)                     Retirement.  If the Participant formally retires under the
terms of The Estée Lauder Companies Retirement Growth Account Plan (or an
affiliate or a successor plan or program of similar purpose), the Performance
Share Unit Award will continue through the Award Period and the Participant will
be paid based on actual Plan Achievement, at the same time the awards are paid
to active employees.  If the Participant
dies during active employment after the attainment of age 55 and the completion
of 10 or more years of service, or after the attainment of age 65 and the completion
of 5 or more years of service, without formally retiring under the terms of the
Estée Lauder Inc. Retirement Growth Account Plan (or an affiliate or a
successor plan or program of similar purpose), the Participant will have deemed
to be retired as of the date of death and this Section 4(b) will
apply rather than Section 4(a).  If
the Participant dies or becomes disabled after retirement as contemplated by
this Section 4(b), the provisions of this section shall apply.

 

(c)                      Disability.  If the Participant becomes totally and
permanently disabled (as determined under the Company’s long-term disability
program), the Performance Share Unit Award will continue through the Award
Period and the Participant will be paid a pro rata amount for the number of full
months employed during the Award Period (determined under the proration
methodology in paragraph 4(a)) based on actual Plan Achievement.  Payment will occur at the same time the awards
are paid to active employees.

 

(d)                     Termination of Employment
Without Cause.  If the Participant’s
employment is terminated at the instance of the Company or relevant subsidiary
without Cause (as defined below) on or prior to the end of the first year of
the Award Period, the Performance Share Unit Award will be forfeited.  If such termination occurs after the end of
the first year of the Award Period, the Performance Share Unit Award will
continue through the Award Period and the Participant will be paid a pro rata
amount for the number of full months employed during the Award Period (determined
under the proration methodology in paragraph 4(a)) based on actual Plan
Achievement.  Payment will occur at the
same time the awards are paid to active employees.

 

(e)                      Termination of
Employment By Employee.  If the
Participant terminates his or her employment (e.g.,
by voluntary resigning) other than by retirement, which is subject to paragraph
4(b) above, the Performance Share Unit Award will be forfeited.

 

(f)                        Termination of
Employment With Cause.  If the
Participant is terminated for Cause, the Performance Share Unit Award will be
forfeited.  For this purpose, “Cause” is
defined in the employment agreement in effect between the Participant and the
Company or any subsidiary, including any employment agreement entered into
after the Grant Date.  In the

 

2

 

absence of an employment agreement, “Cause” means
any breach by the Participant of any of his or her material obligations under
any Company policy or procedure, including, without limitation, the Code of
Conduct.

 

(g)                     Post Employment
Conduct.  Payout of any Performance Share
Unit Award after termination of employment is subject to satisfaction of the
conditions precedent that the Participant neither (i) competes with, takes
employment with, or renders services to a competitor of the Company, its
subsidiaries, or affiliates without the Company’s written consent, nor (ii) conducts
himself or herself in a manner adversely affecting the Company.

 

If the Participant’s employment terminates after the expiration of the
Award Period but prior to payout, payout will be subject to the above.

 

5.     No Rights of Stock Ownership. This grant of Performance
Share Units does not entitle the Participant to any interest in or to any
voting or other rights normally attributable to Share ownership.

 

6.     Withholding. Regardless of any action the Company or the
Participant’s employer (the “Employer”) takes with respect to any or all income
tax, social security, payroll tax, or other tax-related withholding (“Tax-Related
Items”), Participant acknowledges that the ultimate liability for all
Tax-Related Items legally due by Participant is and remains his or her
responsibility.  Furthermore, Participant
acknowledges that the Company and/or the Employer (i) make no representations
or undertakings regarding the treatment of any Tax-Related Items in connection
with any aspect of the Performance Share Units, including the grant of the Performance
Share Units, the vesting of the Performance Share Units, the delivery of Shares,
the subsequent sale of Shares acquired under the Plan; and (ii) do not
commit to structure the terms of the grant of the Performance Share Units or
any aspect of Participant’s participation in the Plan to reduce or eliminate
his or her liability for Tax-Related Items.

 

Prior
to the relevant taxable event, Participant shall pay or make adequate
arrangements satisfactory to the Company and/or the Employer to satisfy all
withholding obligations of the Company and/or the Employer.  In this regard, Participant authorizes the
Company and/or the Employer to withhold all applicable Tax-Related Items
legally payable by Participant from his or her wages or other cash compensation
paid by the Company and/or the Employer or from proceeds of the sale of the
Shares acquired under the Plan. 
Alternatively, or in addition, the Company may (i) sell or arrange
for the sale of Shares that Participant acquires under the Plan to meet the
withholding obligation for the Tax-Related Items, and/or (ii) withhold in
Shares, provided that the Company only withholds the amount of Shares necessary
to satisfy the minimum withholding amount. 
If the Company satisfies the Tax-Related Item withholding obligation by
withholding a number of Shares as described herein, Participant will be deemed
to have been issued the full number of Shares due to Participant at vesting,
notwithstanding that a number of the Shares is held back solely for purposes of
such Tax-Related Items.

 

Finally,
Participant shall pay to the Company or the Employer any amount of Tax-Related
Items that the Company or the Employer may be required to withhold as a result
of his or her participation in the Plan that cannot be satisfied by the means
previously described.  The Company may refuse
to issue Shares under the Plan and refuse to deliver the Shares if Participant
fails to comply with his or her obligations in connection with the Tax-Related
Items as described in this paragraph.

 

3

 

7.     Nonassignability. This award may not be assigned, pledged, or
transferred except, if the Participant dies, to a designated beneficiary or by
will or by the laws of descent and distribution. The foregoing restrictions do
not apply to transfers under a court order, including, but not limited to, any
domestic relations order.

 

8.     Effect Upon Employment. The Participant’s right to
continue to serve the Company or any of its subsidiaries as an officer,
employee, or otherwise, is not enlarged or otherwise affected by an award under
this Agreement.  Nothing in this Agreement or the Plan gives
the Participant any right to continue in the employ of the Company or any of
its subsidiaries or to interfere in any way with any right the Company or any
subsidiary may have to terminate his or her employment at any time.  Payment of Shares is not secured by a trust,
insurance contract or other funding medium, and the Participant does not have
any interest in any fund or specific asset of the Company by reason of this
Award or the account established on his or her behalf.  A Performance Share Unit confers no rights as
a shareholder of the Company until Shares are actually delivered to the
Participant.

 

9.     Notices.  Any notice
required or permitted under this Performance Share Unit Award Agreement is
deemed to have been duly given if delivered, telecopied, mailed (certified or
registered mail, return receipt requested), or sent by
internationally-recognized courier guaranteeing next day delivery (a) to
the Participant at the address on file in the Company’s (or relevant subsidiary’s)
personnel records or (b) to the Company, attention Stock Plan
Administration at its principal executive offices, which are currently located
at 767 Fifth Avenue, New York, NY 10153.

 

10.  Disclosure and Use
of Information.

 

a.     By
signing and returning the attached Notice of Grant, and as a condition of the
grant of the Performance Share Units, the Participant hereby expressly and
unambiguously consents to the collection, use, and transfer of personal data as
described in this paragraph by and among, as necessary and applicable, the
Employer, the Company and its subsidiaries and by any agent of the Company or
its subsidiaries for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.

 

b.     The Participant
understands that the Employer, the Company and/or its other subsidiaries holds,
by means of an automated data file or otherwise, certain personal information
about the Participant, including, but not limited to, name, home address and
telephone number, date of birth, social insurance number, salary, nationality,
job title, any shares or directorships held in the Company, details of all Performance
Share Units or other entitlement to shares awarded, canceled, exercised,
vested, unvested, or outstanding in the Participant’s favor, for purposes of
managing and administering the Plan (“Data”).

 

c.     The
Participant also understands that part or all of his or her Data may be held by
the Company or its subsidiaries in connection with managing and administering
previous award or incentive plans or for other purposes, pursuant to a prior
transfer made with the Participant’s consent in respect of any previous grant
of performance share units or other awards.

 

d.     The
Participant further understands that the Employer may transfer Data to the
Company or its subsidiaries as necessary to implement, administer, and manage his
or her participation in the Plan.  The
Company and its subsidiaries may transfer data among themselves, and each, in

 

4

 

turn, may further transfer Data to any third parties assisting the
Company in the implementation, administration, and management of the Plan (“Data
Recipients”).

 

e.     The
Participant understands that the Company, its subsidiaries, and the Data
Recipients are or may be located in his or her country of residence or
elsewhere. The Participant authorizes the Employer, the Company, its
subsidiaries, and the Data Recipients to receive, possess, use, retain, and
transfer Data in electronic or other form to implement, administer, and manage
his or her participation in the Plan, including any transfer of Data that the
Administrator deems appropriate for the administration of the Plan and any transfer
of Shares on his or her behalf to a broker or third party with whom the Shares
may be deposited.

 

f.      The
Participant understands that he or she may request a list with the names and
addresses of any potential recipients of the Data by contacting his or her
local human resources representative.

 

g.     The
Participant understands that Data will be held as long as is reasonably
necessary to implement, administer and manage his or her participation in the
Plan and he or she may oppose the processing and transfer of his or her Data
and may, at any time, review the Data, request that any necessary amendments be
made to it, or withdraw his or her consent by notifying the Company in writing.
The Participant further understands that withdrawing consent may affect his or
her ability to participate in the Plan.

 

11.  Discretionary Nature and Acceptance
of Award.  By
accepting this Award, the Participant agrees to be bound by the terms of this
Agreement and acknowledges that:

 

a.     The Plan is established
voluntarily by the Company, it is discretionary in nature, and it may be
modified, amended, suspended or terminated by the Company at any time, unless
otherwise provided in the Plan and this Agreement;

 

b.     The award of Performance
Share Units is voluntary and occasional, and does not create any contractual or
other right to receive future awards of Performance Share Units, or benefits in
lieu of Performance Share Units, even if Performance Share Units have been awarded
repeatedly in the past.

 

c.     All decisions with respect
to future awards, if any, will be at the sole discretion of the Company;

 

d.     Participant’s participation
in the Plan is voluntary;

 

e.     Participant’s participation
in the Plan shall not create a right to further employment with the Employer
and shall not interfere with the ability of the Company or the Employer to
terminate Participant’s employment at any time;

 

f.      Performance Share Units
are an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or any subsidiary, and which is
outside the scope of Participant’s employment or service contract, if any;

 

5

 

g.     The Performance Share Units
are not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation,
termination, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement or welfare benefits or similar payments and in no event
should be considered as compensation for, or relating in any way to, past
services for the Company or any subsidiary;

 

h.     In the event the
Participant is not an employee of the Company, the Performance Share Units and
Participant’s participation in the Plan will not be interpreted to form an
employment or service contract or relationship with the Company; and
furthermore, the Performance Share Units and Participant’s participation in the
Plan will not be interpreted to form an employment or service contract with any
subsidiary of the Company;

 

i.      The future value of the
underlying Shares is unknown and cannot be predicted with certainty;

 

j.      In consideration of the
award of the Performance Share Units, no claim or entitlement to compensation
or damages shall arise from termination of the Performance Share Units or
diminution in value of the Performance Share Units, or Shares acquired upon vesting
of the Performance Share Units, resulting from termination of Participant’s
employment by the Company or any subsidiary (for any reason whatsoever and
whether or not in breach of local labor laws) and in consideration of the award
of the Performance Share Units, Participant irrevocably releases the Company
and any subsidiary from any such claim that may arise; if, notwithstanding the
foregoing, any such claim is found by a court of competent jurisdiction to have
arisen, then, by signing the Notice of Grant, Participant shall be deemed
irrevocably to have waived his or her right to pursue or seek remedy for any
such claim or entitlement;

 

k.     In the event of termination
of Participant’s employment (whether or not in breach of local labor laws),
Participant’s right to receive Performance Share Units under the Plan and to
vest in such Performance Share Units, if any, will terminate effective as of
the date that Participant is no longer actively employed and will not be
extended by any notice period mandated under local law (e.g., active
employment would not include a period of “garden leave” or similar period
pursuant to local law); the Administrator shall have the exclusive discretion
to determine when Participant is no longer actively employed for purposes of
this Agreement;

 

l.      The Company is not
providing any tax, legal or financial advice, nor is the Company making any
recommendations regarding Participant’s participation in the Plan or
Participant’s acquisition or sale of the underlying Shares; and

 

m.    Participant is hereby
advised to consult with Participant’s own personal tax, legal and financial
advisors regarding Participant’s participation in the Plan before taking any action
related to the Plan.

 

12.  Failure to Enforce Not a Waiver.  The Company’s failure to enforce at any time
any provision of this Agreement does not constitute a waiver of that provision
or of any other provision of this Agreement.

 

13.  Governing Law.  The
Performance Share Unit Award Agreement is governed by and is to be construed
according to the laws of the State of New York that apply to agreements made
and performed in that state, without regard to its choice of law provisions.  For purposes of litigating any dispute that 

 

6

 

arises
under the Performance Share Units or this Agreement, the parties hereby submit
to and consent to the jurisdiction of the State of New York, and agree that
such litigation will be conducted in the courts of New York County, New York,
or the federal courts for the United States for the Southern District of New
York, and no other courts, where the Performance Share Units are made and/or to
be performed.

 

14.  Partial Invalidity.  The
invalidity or illegality of any provision of the Agreement will be deemed not to
affect the validity of any other provision.

 

15.  Section 409A Compliance.  This Agreement is intended to comply with
section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
any regulations, rulings, or guidance provided thereunder.  The Company reserves the unilateral right to
amend this Agreement upon written notice to the Participant to prevent taxation
under Code section 409A.

 

16.  Electronic Delivery.  The Company may, in its sole
discretion, decide to deliver any documents related to Performance Share Units
awarded under the Plan or future Performance Share Units that may be awarded
under the Plan by electronic means or request Participant’s consent to
participate in the Plan by electronic means. 
Participant hereby consents to receive such documents by electronic
delivery and agrees to participate in the Plan through any on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

 

	
   

  	
  The
  Estée Lauder Companies Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Amy DiGeso

  
	
   

  	
   

  	
  Amy
  DiGeso

  
	
   

  	
   

  	
  Executive
  Vice President,

  
	
   

  	
   

  	
  Global
  Human Resources

  

 

7

 

Schedule “A”

 

For Net Sales Cumulative Annual Growth Rate:

 

	
   

  	
   

  	
  Component Plan Achievement

  	
   

  	
  Component Payout (Percentage of Target Award)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum

  	
   

  	
  110%

  	
   

  	
  150%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  90%

  	
   

  	
  50%

  	
   

  

 

For Net Earnings Per Share Cumulative Annual Growth Rate:

 

	
   

  	
   

  	
  Component Plan Achievement

  	
   

  	
  Component Payout (Percentage of Target Award)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum

  	
   

  	
  115%

  	
   

  	
  150%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  85%

  	
   

  	
  50%

  	
   

  

 

For ROIC Cumulative Annual Growth Rate:

 

	
   

  	
   

  	
  Component Plan Achievement

  	
   

  	
  Component Payout (Percentage of Target Award)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum

  	
   

  	
  115%

  	
   

  	
  150%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  85%

  	
   

  	
  50%

  	
   

  

 

Payout
amount for levels of Plan Achievement between the maximum and threshold
achievement shall be interpolated on a straight line basis (rounded up to the nearest
integer).  In no event shall the
Participant receive a payout in excess of 150% of the Target Award for any
component.  No payout shall be made in
the event of component Plan Achievement less than the threshold achievement.  Notwithstanding anything to the contrary
stated above, the Committee may reduce the payment based on other factors at
the discretion of the Committee unless a Change of Control has occurred.

 

For
purposes of this Performance Share Unit Award Agreement, “Net Sales” has the
meaning utilized by the Company in its consolidated financials in accordance
with generally accepted accounting principles as in effect on the first day of
the Award Period, excluding the impact of foreign currency fluctuations,  “Earnings Per Share” means “diluted earnings
per share” as utilized by the Company in its consolidated financials and ROIC
represents Return on Invested Capital with invested capital defined as assets
less liabilities (excluding debt).  Actual
payment of the Performance Share Units awarded will be determined for each
component in accordance with the table above.

 

8

 

In
measuring Plan Achievement, financial performance measures (e.g., “Earnings Per
Share”, “Net Sales” and “ROIC”) will be calculated without regard to the
following:

 

·                  Changes in accounting principles (i.e.,
cumulative effect of GAAP changes)

·                  Extraordinary items as defined in accordance
with US GAAP or which are the result of a change in the law or the Company’s
response thereto

·                  Income/loss from discontinued operations and
income/loss on sale of discontinued operations

·                  Non-recurring operating income/expenses
(separately stated and disclosed in the financial statements — e.g.,
restructuring charges, legal settlement charges, goodwill write-off)

·                  Impairment of intangibles

 

In
calculating net sales during the Award Period, net sales in currencies other
than U.S. dollars shall be translated into U.S. dollars at the Company’s budget
exchange rate at the beginning of the Award Period.

 

Earnings
Per Share will be calculated based on the weighted average number of Shares
outstanding as of the measurement date and will be adjusted to eliminate the
effect of material changes in the number or type of outstanding Shares due to
events such as:

 

·                  Stock splits

·                  Stock dividends

·                  Recapitalizations

·                  Acquisitions involving stock of the Company

 

No
adjustment will be made for the impact of stock repurchases under any plans
approved by the Board.

 

9Exhibit 10.4

 

Each of the Stock Plan Subcommittee of the
Compensation Committee and the Compensation Committee of the Board of Directors
of The Estée Lauder Companies Inc. reserves the right to change provisions of
this Agreement to comply with the American Jobs Creation Act of 2004.

 

Restricted Stock Unit Agreement Under

The Estée Lauder Companies Inc.

Amended and
Restated Fiscal 2002 Share Incentive Plan (the “Plan”)

 

This RESTRICTED STOCK UNIT AGREEMENT
(“Agreement”) provides for the granting 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 “Participant”),
of Stock Units under the Plan representing a notional account equal to a
corresponding number of shares of the Company’s Class A Common Stock, par
value $0.01 (the “Shares”), subject to the terms below (the “Restricted
Stock Units”).  The name of the “Participant,”
the “Grant Date,” the “Number of Restricted Stock Units,” the “Vesting
Commencement Date,” the “Vesting Schedule,” and the “Vesting Period” are stated
in the attached “Notice of Grant” and are incorporated by reference.  The other terms of this award are stated in
this Agreement and in the Plan. Terms not defined in this Agreement are defined
in the Plan, as amended.

 

1.     Award Grant. The Company hereby awards to the Participant an
award of Restricted Stock Units in respect of the number of Shares set forth in
the Notice of Grant.

 

2.     Vesting.  The Restricted Stock Units granted
to the Participant will vest and become payable in accordance with the Vesting
Schedule in the Notice of Grant.  This
schedule indicates the vesting date upon which the Participant will be entitled
to receive Shares.  Except as otherwise
provided in this Agreement, any Restricted Stock Units that are unvested when
the Participant terminates employment with the Company will be forfeited.

 

3.     Payment of Awards.  Each
Restricted Stock Unit represents the right to receive one Share when the
Restricted Stock Unit vests.

 

In addition, each Restricted Stock Unit
carries a Dividend Equivalent Right, payable in cash at the same time as
payment of Restricted Stock Units in Shares in accordance with this paragraph 3
and paragraph 4.  Dividend Equivalent
Rights are deemed part of the related Restricted Stock Units under this
Agreement.

 

Upon a Change in Control, each Restricted
Stock Unit will vest and become payable to the Participant.  Payments upon a Change in Control will be
made within two weeks following the Change in Control.  If the Shares cease to be outstanding
immediately after the Change in Control (e.g., due to a merger with and into
another entity), then the consideration to be received per Share will equal the
consideration paid to each stockholder per Share generally upon the Change in
Control.

 

EO

 

 

4.     Termination of Employment. If the Participant’s employment
terminates during the Vesting Period, all Restricted Stock Units will be
forfeited except as follows:

 

(a)                      Death.  If the Participant dies, the Restricted Stock
Units will vest pro rata for the number of full months the Participant was
employed during the Vesting Period (i.e., the proration equals a fraction, the
numerator of which is the number of full calendar months of service completed
during the Vesting Period through the Participant’s death and the denominator
of which is the number of full calendar months in the Vesting Period).  Payment of the Restricted Stock Units will
occur as soon as practicable following the Participant’s death and in
accordance with any applicable laws or Company procedures regarding the
payments.

 

(b)                     Retirement.  If the Participant formally retires under the
terms of The Estée Lauder Companies Retirement Growth Account Plan (or an
affiliate or a successor plan or program of similar purpose), the unvested
Restricted Stock Units will continue to vest and be paid in accordance with the
Vesting Schedule.  If the Participant
dies during active employment after the attainment of age 55 and the completion
of 10 or more years of service, or after the attainment of age 65 and the
completion of 5 or more years of service, without formally retiring under the
terms of the Estée Lauder Inc. Retirement Growth Account Plan (or an affiliate
or a successor plan or program of similar purpose), the Participant will have
deemed to be retired as of the date of death and this Section 4(b) will
apply rather than Section 4(a).  If
the Participant dies or becomes disabled after retirement as contemplated by
this Section 4(b), the provisions of this section shall apply.

 

(c)                      Disability.  If the Participant becomes totally and
permanently disabled (as determined under the Company’s long-term disability
program), the Restricted Stock Units will vest pro rata for full months
employed during the Vesting Period (determined under the proration methodology
in paragraph 4(a)).  The Restricted Stock
Units will be paid in accordance with the Vesting Schedule.

 

(d)                     Termination
of Employment Without Cause.  If the
Participant’s employment is terminated at the instance of the Company or
relevant subsidiary without Cause (as defined below), any unvested Restricted
Stock Units will vest pro rata for full months employed during the Vesting
Period (determined under the proration methodology in paragraph 4(a)) on the
next vesting date during the Vesting Period. Restricted Stock Units will be
paid in accordance with the Vesting Schedule.

 

(e)                      Termination
of Employment By Employee.  If the
Participant voluntarily terminates his or her employment (e.g., by voluntary resigning) other than by
retirement, which is subject to paragraph 4(b) above, all Restricted Stock
Units that are not vested as of the effective date of resignation will be
forfeited.

 

(f)                        Termination
of Employment With Cause.  If the
Participant is terminated for Cause, all Restricted Stock Units that are not
vested as of the effective date of termination will be forfeited.  For this purpose, “Cause” is defined in the
employment agreement in effect between the Participant and the Company or any
subsidiary, including an employment agreement entered into after the Grant
Date. In the absence of an employment agreement, “Cause” means any breach by
the Participant of any of his or her material obligations under 

 

2

 

any Company policy or procedure, including,
without limitation, the Code of Corporate Conduct.

 

(g)                     Post
Employment Conduct.  Payment in
respect of any Restricted Stock Unit after termination of employment is subject
to satisfaction of the conditions precedent that the Participant neither (i) competes
with, takes employment with, or renders services to a competitor of the
Company, its subsidiaries, or affiliates without the Company’s written consent,
nor (ii) conducts himself or herself in a manner adversely affecting the
Company.

 

5.     No Rights of Stock Ownership. This grant of Restricted Stock
Units does not entitle the Participant to any interest in or to any voting or
other rights normally attributable to Share ownership other than the Dividend
Equivalent Rights granted under paragraph 3 above.

 

6.     Withholding. Regardless of any action the Company or the
Participant’s employer (the “Employer”) takes with respect to any or all income
tax, social security, payroll tax, or other tax-related withholding (“Tax-Related
Items”), Participant acknowledges that the ultimate liability for all
Tax-Related Items legally due by Participant is and remains his or her
responsibility.  Furthermore, Participant
acknowledges that the Company and/or the Employer (i) make no
representations or undertakings regarding the treatment of any Tax-Related
Items in connection with any aspect of the Restricted Stock Units, including
the grant of the Restricted Stock Units, the vesting of the Restricted Stock
Units, the delivery of Shares, the subsequent sale of Shares acquired under the
Plan and the receipt of any dividends; and (ii) do not commit to structure
the terms of the grant of the Restricted Stock Units or any aspect of
Participant’s participation in the Plan to reduce or eliminate his or her
liability for Tax-Related Items.

 

Prior to the relevant taxable event, Participant shall pay or make
adequate arrangements satisfactory to the Company and/or the Employer to
satisfy all withholding obligations of the Company and/or the Employer.  In this regard, Participant authorizes the
Company and/or the Employer to withhold all applicable Tax-Related Items
legally payable by Participant from his or her wages or other cash compensation
paid by the Company and/or the Employer or from proceeds of the sale of the
Shares acquired under the Plan. 
Alternatively, or in addition, the Company may (i) sell or arrange
for the sale of Shares that Participant acquires under the Plan to meet the
withholding obligation for the Tax-Related Items, and/or (ii) withhold in
Shares, provided that the Company only withholds the amount of Shares necessary
to satisfy the minimum withholding amount. 
If the Company satisfies the Tax-Related Item withholding obligation by
withholding a number of Shares as described herein, Participant will be deemed
to have been issued the full number of Shares due to Participant at vesting,
notwithstanding that a number of the Shares is held back solely for purposes of
such Tax-Related Items.

 

Finally, Participant shall pay to the Company
or the Employer any amount of Tax-Related Items that the Company or the
Employer may be required to withhold as a result of his or her participation in
the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue Shares under
the Plan and refuse to deliver the Shares if Participant fails to comply with
his or her obligations in connection with the Tax-Related Items as described in
this paragraph.

 

7.     Nonassignability. This award may not be assigned, pledged, or
transferred, except, if the Participant dies, to a designated beneficiary or by
will or by the laws of descent and distribution. The foregoing restrictions do
not apply to transfers under a court order, including, but not limited to, any
domestic relations order.

 

3

 

8.     Effect Upon Employment. The Participant’s right to
continue to serve the Company or any of its subsidiaries as an officer,
employee, or otherwise, is not enlarged or otherwise affected by an award under
this Agreement.  Nothing in this
Agreement or the Plan gives the Participant any right to continue in the employ
of the Company or any of its subsidiaries or to interfere in any way with any
right the Company or any subsidiary may have to terminate his or her employment
at any time.  Payment of Shares is not
secured by a trust, insurance contract or other funding medium, and the
Participant does not have any interest in any fund or specific asset of the
Company by reason of this Award or the account established on his or her
behalf.  A Restricted Stock Unit award
confers no rights as a shareholder of the Company until Shares are actually
delivered to the Participant.

 

9.     Notices. Any notice required or permitted under this Agreement
is deemed to have been duly given if delivered, telecopied, or mailed
(certified or registered mail, return receipt requested), or sent by
internationally-recognized courier guaranteeing next day delivery (a) to
the Participant at the address on file in the Company’s (or relevant subsidiary’s)
personnel records, or (b) to the Company, attention Stock Plan
Administration at its principal executive offices, which are currently located
at 767 Fifth Avenue, New York, NY 10153.

 

10.  Disclosure and Use of
Information.

 

a.     By signing and returning the
attached Notice of Grant, and as a condition of the grant of the Restricted
Stock Units, the Participant hereby expressly and unambiguously consents to the
collection, use, and transfer of personal data as described in this paragraph
by and among, as necessary and applicable, the Employer, the Company and its
subsidiaries and by any agent of the Company or its subsidiaries for the
exclusive purpose of implementing, administering and managing Participant’s
participation in the Plan.

 

b.     The Participant understands
that the Employer, the Company and/or its other 
subsidiaries holds, by means of an automated data file or otherwise,
certain personal information about the Participant, including, but not limited to,
name, home address and telephone number, date of birth, social insurance
number, salary, nationality, job title, any shares or directorships held in the
Company, details of all Restricted Stock Units or other entitlement to shares
awarded, canceled, exercised, vested, unvested, or outstanding in the
Participant’s favor, for purposes of managing and administering the Plan (“Data”).

 

c.     The Participant also
understands that part or all of his or her Data may be held by the Company or
its subsidiaries in connection with managing and administering previous award
or incentive plans or for other purposes, pursuant to a prior  transfer made with the Participant’s consent
in respect of any previous grant of restricted stock units or other awards.

 

d.     The Participant further
understands that the Employer may transfer Data to the Company or its
subsidiaries as necessary to implement, administer, and manage his or her
participation in the Plan.  The Company
and its subsidiaries may transfer data among themselves, and each, in turn, may
further transfer Data to any third parties assisting the Company in the
implementation, administration, and management of the Plan (“Data Recipients”).

 

e.     The Participant understands
that the Company, its subsidiaries, and the Data Recipients are or may be
located in his or her country of residence or elsewhere. The Participant
authorizes the Employer, the Company, its subsidiaries, and the Data Recipients
to receive, possess, use, 

 

4

 

retain, and transfer Data in electronic or
other form to implement, administer, and manage his or her participation in the
Plan, including any transfer of Data that the Administrator deems appropriate
for the administration of the Plan and any transfer of Shares on his or her
behalf to a broker or third party with whom the Shares may be deposited.

 

f.      The Participant understands
that he or she may request a list with the names and addresses of any potential
recipients of the Data by contacting his or her local human resources
representative.

 

g.     The Participant understands
that Data will be held as long as is reasonably necessary to implement,
administer and manage his or her participation in the Plan and he or she may
oppose the processing and transfer of his or her Data and may, at any time, review
the Data, request that any necessary amendments be made to it, or withdraw his
or her consent by notifying the Company in writing. The Participant further
understands that withdrawing consent may affect his or her ability to
participate in the Plan.

 

11.  Discretionary Nature and Acceptance of
Award.  By accepting this Award, the
Participant agrees to be bound by the terms of this Agreement and acknowledges
that:

 

a.     The Plan is established voluntarily by the
Company, it is discretionary in nature, and it may be modified, amended,
suspended or terminated by the Company at any time, unless otherwise provided
in the Plan and this Agreement;

 

b.     The award of Restricted Stock Units is voluntary
and occasional, and does not create any contractual or other right to receive
future awards of Restricted Stock Units, or benefits in lieu of Restricted
Stock Units, even if Restricted Stock Units have been awarded repeatedly in the
past.

 

c.     All decisions with respect to future awards, if
any, will be at the sole discretion of the Company;

 

d.     Participant’s participation in the Plan is
voluntary;

 

e.     Participant’s participation in the Plan shall not
create a right to further employment with the Employer and shall not interfere
with the ability of the Company or the Employer to terminate Participant’s
employment at any time;

 

f.      Restricted Stock Units are an extraordinary item
that does not constitute compensation of any kind for services of any kind
rendered to the Company or any subsidiary, and which is outside the scope of
Participant’s employment or service contract, if any;

 

g.     The Restricted Stock Units are not part of normal
or expected compensation or salary for any purposes, including, but not limited
to, calculating any severance, resignation, termination, redundancy, end of
service payments, bonuses, long-service awards, pension or retirement or
welfare benefits or similar payments and in no event should be considered as
compensation for, or relating in any way to, past services for the Company or
any subsidiary;

 

h.     In the event the Participant is not an employee of
the Company, the Restricted Stock Units and Participant’s participation in the
Plan will not be interpreted to form an employment or service contract or
relationship with the Company; and furthermore, the Restricted Stock Units and
Participant’s 

 

5

 

participation in the Plan will not be
interpreted to form an employment or service contract with any subsidiary of
the Company;

 

i.      The future value of the underlying Shares is
unknown and cannot be predicted with certainty;

 

j.      In consideration of the award of the Restricted
Stock Units, no claim or entitlement to compensation or damages shall arise
from termination of the Restricted Stock Units or diminution in value of the
Restricted Stock Units, or Shares acquired upon vesting of the Restricted Stock
Units, resulting from termination of Participant’s employment by the Company or
any subsidiary (for any reason whatsoever and whether or not in breach of local
labor laws) and in consideration of the award of the Restricted Stock Units,
Participant irrevocably releases the Company and any subsidiary from any such
claim that may arise; if, notwithstanding the foregoing, any such claim is
found by a court of competent jurisdiction to have arisen, then, by signing the
Notice of Grant, Participant shall be deemed irrevocably to have waived his or
her right to pursue or seek remedy for any such claim or entitlement;

 

k.     In the event of termination of Participant’s employment
(whether or not in breach of local labor laws), Participant’s right to receive
Restricted Stock Units under the Plan and to vest in such Restricted Stock
Units, if any, will terminate effective as of the date that Participant is no
longer actively employed and will not be extended by any notice period mandated
under local law (e.g., active employment would not
include a period of “garden leave” or similar period pursuant to local law);
the Administrator shall have the exclusive discretion to determine when
Participant is no longer actively employed for purposes of this Agreement;

 

l.      The Company is not providing any tax, legal or
financial advice, nor is the Company making any recommendations regarding
Participant’s participation in the Plan or Participant’s acquisition or sale of
the underlying Shares; and

 

m.    Participant is hereby advised to consult with
Participant’s own personal tax, legal and financial advisors regarding
Participant’s participation in the Plan before taking any action related to the
Plan

 

12.  Failure to Enforce Not a Waiver.  The Company’s failure to enforce at any time
any provision of this Agreement does not constitute a waiver of that provision
or of any other provision of this Agreement.

 

13.  Governing Law.  This
Agreement is governed by and is to be construed according to the laws of the
State of New York that apply to agreements made and performed in that state,
without regard to its choice of law provisions. 
For purposes of litigating any dispute that arises under the Restricted
Stock Units or this Agreement, the parties hereby submit to and consent to the
jurisdiction of the State of New York, and agree that such litigation will be
conducted in the courts of New York County, New York, or the federal courts for
the United States for the Southern District of New York, and no other courts,
where the Restricted Stock Units are made and/or to be performed.

 

14.  Partial Invalidity.  The
invalidity or illegality of any provision of this Agreement will be deemed not
to affect the validity of any other provision.

 

15.  Section 409A Compliance. This Agreement is intended to
comply with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and any regulations, rulings, or guidance provided thereunder. The Company reserves
the unilateral right to amend this Agreement upon written notice to the
Participant to prevent taxation under Code section 409A.

 

6

 

16.  Electronic Delivery.  The Company may, in its sole discretion,
decide to deliver any documents related to Restricted Stock Units awarded under
the Plan or future Restricted Stock Units that may be awarded under the Plan by
electronic means or request Participant’s consent to participate in the Plan by
electronic means.  Participant hereby
consents to receive such documents by electronic delivery and agrees to
participate in the Plan through any on-line or electronic system established
and maintained by the Company or another third party designated by the Company.

 

	
   

  	
  The Estée Lauder Companies Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amy DiGeso

  
	
   

  	
   

  	
  Amy DiGeso

  
	
   

  	
   

  	
  Executive Vice President,

  
	
   

  	
   

  	
  Global Human Resources

  

 

7

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