Document:

exhibit_10-9.htm

Exhibit 10.9

 

ESCROW AGREEMENT

 

This Escrow Agreement (this “Agreement”) is made as of January 31, 2016, by and among Mapi-Pharma Ltd., an Israeli company with offices at 16 Einstein St., Ness Ziona 74140, Israel (the “Company”), Zhejiang Jingxin Pharmaceutical Co., Ltd., a Chinese company with offices at NO.800,Xinchang Dadao East Road, Chengguan Town, Xinchang County, Zhejiang Province, China (the “Investor”), and Meitav Dash Trusts Ltd., as escrow agent (the “Escrow Agent”) (the Company and the Investor are each individually referred to as a “Party” and collectively as the “Parties”).

 

WHEREAS, the Company and the Investor have entered into a Subscription Agreement, dated January 31, 2016 (as the same may be amended or supplemented, the “Subscription Agreement”). Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Subscription Agreement; and

 

WHEREAS, the Company and the Investor have agreed that upon the Effective Date of the Subscription Agreement, the Investment Amount will be deposited with the Escrow Agent for release as set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

 

	
1.

	
Appointment of Escrow Agent

 

The Parties hereby appoint the Escrow Agent as the escrow agent under and pursuant to the terms, conditions and provisions of this Agreement, and the Escrow Agent hereby accepts such appointment and agrees to perform the duties thereof subject to the terms, conditions and provisions of this Agreement.

 

	
2.

	
Escrow Deposit

 

	
  

	
2.1.

	
Upon the Effective Date of the Subscription Agreement, the Investor shall deposit with the Escrow Agent the Investment Amount, in accordance with Section 1.1 of the Subscription Agreement. The Escrow Agent hereby acknowledges receipt of the Investment Amount.

 

	
  

	
2.2.

	
The Investment Amount shall be delivered to the Escrow Agent by wire transfer to the following designated bank account of the Escrow Agent, and shall then be deposited by the Escrow Agent into a separate and distinct bank account for the benefit of the Investor and the Company (the “Escrow Account”), for safekeeping in accordance with the terms herein:

 

Bank Leumi Le-Israel Ltd.

 

SWIFT Code Number: LUMIILITTLV

 

Branch Number: 800

 

Account Name: MEITAV DASH TRADE LTD

 

Account Number: 50665478

 

IBAN Number: IL96-0108-0000-0005-0665-478

 

  

  

  

 

	
  

	
2.3.

	
The Escrow Agent hereby agrees to hold the Investment Amount and any interest and other income and accretions accrued and/or earned on such funds (the “Interest” and together with the Investment Amount, the “Escrow Amount”) in the Escrow Account, subject to the terms and conditions of this Agreement. The Escrow Agent shall not distribute or release the Escrow Amount except in accordance with the express terms and conditions of this Agreement.

 

	
3.

	
Permitted Investments

 

	
  

	
3.1.

	
The Escrow Agent shall maintain the Escrow Amount in the Escrow Account and shall invest the Escrow Amount in any interest bearing U.S. Dollar deposit account, which unless otherwise instructed in writing by the Company, shall be a weekly interest bearing U.S. Dollar deposit account.

 

	
  

	
3.2.

	
All Interest shall be first used to cover all expenses and bank fees in connection with such investments and the Escrow Account, and the balance thereof, if any, shall be added to, and become part of the Escrow Amount, and held in the Escrow Account. The Escrow Agent shall not be liable or responsible for any loss or expense suffered in connection with any investment of funds made by it pursuant hereto or in connection with the liquidation of any such investment prior to its maturity or with any tax liability arising out of the Interest accumulated in the Escrow Account, except for any fraud, gross negligence or willful misconduct.

 

	
  

	
3.3.

	
Any taxes, withholdings, commissions, fees (including transfer fees), and other deductions of the bank from the Escrow Account (including in connection with the release of the Escrow Amount) shall be deducted from the Escrow Amount, and such amounts shall cease to be subject to the terms of this Agreement and the provisions of this Agreement shall apply to the new Escrow Amount.

 

	
4.

	
Release of Escrow Amount

 

	
  

	
4.1.

	
The Escrow Agent shall continue to hold the Escrow Amount in its possession until authorized hereunder to distribute the Escrow Amount, or any specified portion thereof, as specified in this Section 4. The Escrow Agent shall pay the Investment Amount by wire transfer of immediately available funds as follows:

 

	
  

	
4.1.1.

	
In accordance with the joint written instructions of the Company and the Investor, substantially in the form of Exhibit A hereto (the “Joint Instructions”), in which case the Investment Amount shall be disbursed in accordance with the Joint Instructions within five Business Days of the Escrow Agent’s receipt of the Joint Instructions or such later date stated in the Joint Instructions.

 

	
  

	
4.1.2.

	
In accordance with the written instructions of the Company, substantially in the form of Exhibit B hereto (the “IPO Instructions”) (with a copy to the Investor), stating that an IPO is expected to be consummated on or prior to a certain date to be stated therein and such IPO is expected to meet the Pricing Condition (as defined in the Subscription Agreement), in which case the Investment Amount shall be disbursed to the Company in the manner set forth in the IPO Instructions within three Business Days of the Escrow Agent’s receipt of the IPO Instructions or such later date stated in the IPO Instructions.

 

  

2

  

 

	
  

	
4.1.3.

	
If not previously disbursed pursuant to the foregoing provisions on or prior to the end of the Term as defined in the Subscription Agreement, the Investment Amount shall be disbursed by the Escrow Agent to the Investor within five Business Days of such date, unless Investor notifies Escrow Agent otherwise, with a copy to the Company.

 

For purposes of this Agreement, the term “Business Day” means any day other than Friday, Saturday, Sunday and any day on which banking institutions in Israel are authorized by law or other governmental action to close.

 

	
  

	
4.2.

	
Upon release of the Investment Amount and the termination of the Escrow Account, the Escrow Agent shall pay to the Company the Interest (less amounts used to cover all expenses and bank fees in connection with investments made in accordance herewith and the Escrow Account).

 

	
5.

	
Termination

 

This Agreement shall automatically terminate upon the release and disbursement of all of the Escrow Amount in the Escrow Account in accordance with Section 4 ‎4 above. Upon such termination, this Agreement shall have no further force and effect, except that the provisions of this Section 5 ‎5 and Sections 6-8 and Sections 10-21 below shall survive such termination.

 

	
6.

	
Conditions to Escrow

 

The Parties agree that the Escrow Agent shall not assume any responsibility for the failure of any Party to perform in accordance with the Subscription Agreement or this Agreement. The acceptance by the Escrow Agent of its responsibilities hereunder is subject to the following terms and conditions which the Parties agree shall govern and control with respect to the Escrow Agent’s rights, duties and liabilities hereunder:

 

	
  

	
6.1.

	
Documents. The Escrow Agent shall be protected in acting upon any written notice, request, waiver, consent, receipt or other paper or document furnished to it, not only as to its due execution and validity and the effectiveness of its provisions, but also as to the truth and accuracy of any information therein contained, which the Escrow Agent in good faith believes to be genuine and what it purports to be. Should it be necessary for the Escrow Agent to act upon any instructions, directions, documents or instruments issued or signed by or on behalf of any individual or entity (each, a “Person”) acting on behalf of another party, it shall not be necessary for the Escrow Agent to inquire into such Person’s authority. The Escrow Agent is also relieved from the necessity of satisfying itself as to the authority of the Persons executing this Agreement in a representative capacity on behalf of any of the Parties.

 

  

3

  

 

	
  

	
6.2.

	
Liability. The Escrow Agent shall not be liable for any act or omission taken or suffered in good faith with respect to this Agreement unless such act or omission is the result of the gross negligence, bad faith or willful misconduct of the Escrow Agent.

 

	
  

	
6.3.

	
Legal Counsel. The Escrow Agent may consult with, and obtain advice from, legal counsel, at its own expense, in the event of any question as to any of the provisions hereof or its duties hereunder, and it shall incur no liability and shall be fully protected in acting in good faith in accordance with a written legal opinion and written instructions of such counsel, as presented to the Parties.

 

	
  

	
6.4.

	
Limitation of Duties. The Escrow Agent shall have no duties except those which are expressly set forth herein and it shall not be bound by any other agreement of the other parties hereto (whether or not it has any knowledge thereof).

 

	
  

	
6.5.

	
Confidentiality. The Escrow Agent shall maintain the confidentiality of the provisions of this Agreement and any other agreements, documents or other instruments provided to the Escrow Agent in connection with the Escrow Agent’s rights, duties and liabilities hereunder and shall not disclose the terms and conditions hereof and thereof, except to the extent and as otherwise required by any applicable law.

 

	
  

	
6.6.

	
Resignation or Termination of Escrow Agent.  The Escrow Agent may resign at any time upon giving at least thirty (30) calendar days’ written notice to the Parties; provided, however, that no such resignation will become effective until the appointment of a successor escrow agent which shall be accomplished as follows: the Parties shall use their best efforts to mutually agree on a successor escrow agent within thirty (30) calendar days after receiving such notice.  If a successor escrow agent has not been appointed and/or has not accepted such appointment within such period, the Escrow Agent may apply to a court of competent jurisdiction for the appointment of a successor escrow agent. The successor escrow agent shall execute and deliver to the Escrow Agent an instrument accepting such appointment, and the successor escrow agent shall, without further acts, be vested with all the estates, property rights, powers, and duties of the predecessor Escrow Agent as if originally named as Escrow Agent herein. The predecessor Escrow Agent then shall be discharged from any further duties and liability (except with respect to acts that occurred prior to the appointment of a successor escrow agent) under this Agreement.

 

	
  

	
6.7.

	
Discharge of Escrow Agent. Upon delivery of all of the Escrow Amount pursuant to the terms of Section ‎4 above or to a successor escrow agent in accordance with Section 6.6 above, the Escrow Agent shall thereafter be discharged from any further obligations hereunder. The Escrow Agent is hereby authorized, in any and all events, to comply with and obey any and all final judgments, orders and decrees of any court of competent jurisdiction which may be filed, entered or issued, and all final arbitration awards and, if it shall so comply or obey, it shall not be liable to any other Person by reason of such compliance or obedience, unless such compliance or obedience is the result of the gross negligence, bad faith or willful misconduct of the Escrow Agent.

 

  

4

  

 

	
7.

	
Indemnification of the Escrow Agent

 

The Escrow Agent shall be indemnified and held harmless by the Parties against any and all losses, claims, damages, liabilities and expenses, including reasonable costs of investigation, attorney’s fees, and disbursements that may be imposed on the Escrow Agent or incurred by it in connection with the performance of its duties under this Agreement with respect to the Escrow Amount, including but not limited to any litigation arising from this Agreement or involving its subject matter, unless and except to the extent that such losses, claims, damages, liabilities or expenses shall be caused by the Escrow Agent’s gross negligence, bad faith or willful misconduct. Any indemnification payable to the Escrow Agent hereunder shall be payable (i) one-half by the Company and (ii) one-half by the Investor.

 

	
8.

	
Escrow Fees

 

The Escrow Agent shall be entitled to be paid a fee for its services as set forth on Exhibit C attached hereto and to be reimbursed for its reasonable costs and documented out-of-pocket expenses incurred in connection with maintaining the Escrow Account hereunder, which fees, costs and documented out-of-pocket expenses shall be borne by the Company.

 

	
9.

	
Limitations on Rights to Escrow Amount

 

None of the parties hereto shall have any right, title or interest in or to, or possession of, the Escrow Account and shall not have the ability to and shall not pledge, convey, hypothecate or grant as security all or any portion of the Escrow Amount unless and until such Escrow Amount have been released pursuant to Section ‎4 above. Accordingly, the Escrow Agent shall be in sole possession of the Escrow Amount and shall not act as custodian of the Parties under this Agreement for the purposes of perfecting a security interest therein, and no creditor of any of the parties shall have any right to have or to hold or otherwise attach or seize all or any portion of the Escrow Amount as collateral for any obligation and shall not be able to obtain a security interest in any of the Escrow Amount unless and until such Escrow Amount have been released pursuant to Section ‎4.

 

	
10.

	
Notices

 

All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be delivered by hand, overnight courier service, by facsimile or by electronic mail to the parties at the following addresses:

 

if to the Company:

Mapi-Pharma Ltd.

Weizmann Science Park 16 Einstein St.

P.O. Box 4113 Ness Ziona, Israel 74140

Attention: Ehud Marom, CEO

Tel: +972-73-712123

Fax: +972-8-9100154

Email: Ehud@mapi-pharma.com

Attention: Ehud Marom, CEO

  

5

  

with a copy to:

(which shall not constitute service on the Company)

Mapi-Pharma Ltd.

Weizmann Science Park 16 Einstein St.

P.O. Box 4113 Ness Ziona, Israel 74140

Attention: Ehud Marom, CEO

Tel: +972-73-712123

Fax: +972-8-9100154

Email: Aviva@mapi-pharma.com

Attention: Aviva Zyskind, Sr. Associate

Business Development

if to the Investor:

ZHEJIANG JINGXIN

PHARMACEUTICAL CO., LTD

No. 800 XinChang East Road, Yulin

Subdistrict, XinChang County, ZheJiang,

China, 312500

Tel: +86-0575-86090231

Fax: +86-0575-86096898

Email: 18060596@qq.com

Attention: Zhiping Jin, President,

with a copy to:

(which shall not constitute service on the Investor)

ZHEJIANG JINGXIN PHARMACEUTICAL CO., LTD

306 Libing Road, ZhangJiang High Technology Park,

ShangHai, China, 201210

Tel: +86-021-51388200

Fax: +86-021-51388205

Email:squellhyf@163.com

Attention: Yunfei Hong, Vice Manager, Strategic Development Department

if to Escrow Agent, to:

 

Meitav Dash Trusts Ltd.

Champion Tower

30 Sheshet Haymim Street

Bnei- Brak, Israel

Tel: +972-3-790-3444

Fax: +972-3-696-0255

Email: Leeyah.BarakAbadi@MeitavDash.co.il

Attention: Leeyah Barak-Abadi

 

or to such other Persons, addresses, facsimile numbers or electronic mail addresses as may be designated in writing by the Person entitled to receive such communication as provided above. Each such communication shall be effective (a) if delivered by hand, when such delivery is made at the address specified in this Section ‎100; (b) if ‎10; (c) if delivered by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 10 and appropriate confirmation is received; or (d) if delivered by electronic mail, when such electronic mail is sent to the email address specified in this Section ‎10 and appropriate confirmation is received.

 

  

6

  

 

	
11.

	
Entire Agreement; Amendments

 

This Agreement contains the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes any prior understandings or agreements by or among the parties hereto, whether written or oral, which may have related to the subject matter hereof in any way. This Agreement may be amended, or any provision of this Agreement may be waived, so long as such amendment or waiver is set forth in a writing executed by the Company and the Investor (a copy of which shall be promptly provided by the Company to the Escrow Agent); provided, that if any such amendment or waiver would have the effect of increasing or expanding the Escrow Agent’s obligations or duties under this Agreement, the written consent of the Escrow Agent shall be required in addition to the written consent of the Company and the Investor. No course of dealing between or among the parties hereto shall be deemed effective to modify, amend or discharge any part of this Agreement of any rights or obligations of any party hereto under or by reason of this Agreement.

 

	
12.

	
Assigns and Assignment

 

This Agreement and all actions taken hereunder shall inure to the benefit of and shall be binding upon all of the parties to this Agreement, and upon all of their respective successors and permitted assigns; provided that the Escrow Agent shall not be permitted to assign its obligations hereunder except as provided in Section ‎6.6 above.

 

	
13.

	
Tax

 

	 	
13.1.

	
Each party hereto shall bear its own tax obligations in connection with any payment made to such party in accordance with the provisions herein. The Escrow Agent shall be entitled to deduct and withhold taxes from any payments hereunder as required by law, unless the recipient Party presents a valid certificate establishing its exemption from withholding.

 

	 	
13.2.

	
The parties hereto hereby acknowledge that for income tax purposes, the interest earned on the investment of any portion of the Escrow Amount shall be income of the Company, and the Escrow Agent shall be responsible for reporting any interest earned to the Company.

 

  

7

  

 

	
14.

	
No Other Third Party Beneficiaries

 

Nothing herein expressed or implied is intended or shall be construed to confer upon or to give any person other than the parties to this Agreement and their permitted assigns any rights or remedies under or by reason of this Agreement.

 

	
15.

	
No Waiver

 

No failure or delay by a party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise thereof shall preclude any right of further exercise or the exercise of any other right, power or privilege.

 

	
16.

	
Severability

 

The parties hereto agree that (a) the provisions of this Agreement shall be severable in the event that for any reason whatsoever the provisions hereof are invalid, void or otherwise unenforceable; (b) such invalid, void or otherwise unenforceable provisions shall be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions, but are valid and enforceable; and (c) the remaining provisions shall remain enforceable to the fullest extent permitted by  applicable law.

 

	
17.

	
Interpretation

 

The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning hereof.

 

The language used in this Agreement shall be deemed to be the language chosen by the parties to this Agreement to express their collective mutual intent, and no rule of interpretation for or against any Person shall be applied. The term “including” as used herein shall be by way of example, and shall not be deemed to constitute a limitation of any term or provision contained herein. Each defined term used in this Agreement has a comparable meaning when used in its plural or singular form.

 

	
18.

	
Releases on Non-Business Days

 

In the event that a release of Escrow Amount hereunder is required to be made on a date that is not a Business Day, such release may be made on the next succeeding Business Day with the same force and effect as if made when required.

 

	
19.

	
Governing Law; Venue

 

For the purpose of this Agreement, the Agreement shall be governed by and construed in accordance with the substantive laws of the State of Israel, without giving effect to the principles thereof relating to conflict of laws. The courts located in the Tel Aviv shall have exclusive jurisdiction over the parties and the subject matter in any matter arising out of or relating to this agreement.

 

  

8

  

 

	
20.

	
Counterparts

 

This Agreement may be executed by the parties hereto individually or in any combination, in one or more counterparts (including by means of facsimile or electronic signature pages), each of which shall be an original and all of which shall together constitute one and the same agreement.

 

	
21.

	
Identifying Information

 

	 	
21.1.

	
To help the government fight the funding of terrorism and money laundering activities, applicable law may require all financial institutions to obtain, verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust or other legal entity, the Escrow Agent may ask for documentation to verify its owners, formation and existence as a legal entity. The Escrow Agent may also ask to see such financial statements, licenses, identification and authorization documents as required by applicable law, from individuals claiming authority to represent the entity or other relevant documentation.

 

	 	
21.2.

	
In furtherance of Section 21.1, upon the execution of this Agreement, the Investor shall deliver to the Escrow Agent a copy of: (i) its certificate of incorporation or formation; and (ii) a W8-BEN-E/W8-IMY/W9 form.

[signature page to follow]

  

9

  

 

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

 

	THECOMPANY:	 	THE ESCROW AGENT:
	 	 	 
	
Mapi-Pharma Ltd.

 

By: /s/ Ehud Marom

 

Name: Ehud Marom

 

Title: CEO

	  	
Meitav Dash Trusts Ltd.

 

By: /s/ Leeyah Barak-Abadi

 

Name: Leeyah Barak-Abadi

 

Title: VP Professional Affairs

 

	THE INVESTOR:	 	 
	 	 	 
	
Zhejiang Jingxin Pharmaceutical Co., Ltd.

 

By: Signature and Seal

 

Name: Zhiping Jin

 

Title: President of Research Institute

 

	  	  

[Signature Page to the Escrow Agreement]

  

10

  

 

EXHIBIT A

 

Joint Instructions

 

[Date]

Meitav Dash Trusts Ltd.

Champion Tower

30 Sheshet Haymim Street

Bnei- Brak, Israel

Attention: Leeyah Barak-Abadi

 

Re. Joint Instructions

 

Ladies and Gentlemen:

 

Reference is made to the Escrow Agreement dated January 31, 2016 (the “Escrow Agreement”), by and among Mapi-Pharma Ltd., an Israeli company with offices at 16 Einstein St., Ness Ziona 74140, Israel (the “Company”), Zhejiang Jingxin Pharmaceutical Co., Ltd., a Chinese company with offices at NO.800,Xinchang Dadao East Road, Chengguan Town, Xinchang County, Zhejiang Province, China (the “Investor”), and Meitav Dash Trusts Ltd., as escrow agent entered into in connection with the Subscription Agreement, dated January 31, 2016, by and among the Company and the Investor.  Capitalized terms used and not defined herein shall have the meaning ascribed to such terms in the Escrow Agreement.

 

Pursuant to Section 4.1.1 of the Escrow Agreement, each of the undersigned hereby instructs you to disburse the Investment Amount as set forth on Annex A hereto and in the manner specified thereon, [within five Business Days of the receipt hereof/no later than ________].

 

	
THE COMPANY:

	  	
THE INVESTOR:

 

	
Mapi-Pharma Ltd.

 

By: _________________________

 

Name: ________________________

 

Title:_________________________

	  	
Zhejiang Jingxin Pharmaceutical Co., Ltd.

 

By: _________________________

 

Name: ________________________

 

Title:_________________________

 

  

  

  

 

Annex A

 

	
Recipient

	
Amount to be Paid

	
Payment or Wiring Instructions

	  	  	  

 

  

2

  

EXHIBIT B

 

IPO Instructions

 [Date]

Meitav Dash Trusts Ltd.

Champion Tower

30 Sheshet Haymim Street

Bnei- Brak, Israel

Attention: Leeyah Barak-Abadi

 

Re. IPO Instructions

 

Ladies and Gentlemen:

 

Reference is made to the Escrow Agreement dated January 31, 2016 (the “Escrow Agreement”), by and among Mapi-Pharma Ltd., an Israeli company with offices at 16 Einstein St., Ness Ziona 74140, Israel (the “Company”), Zhejiang Jingxin Pharmaceutical Co., Ltd., a Chinese company with offices at NO.800,Xinchang Dadao East Road, Chengguan Town, Xinchang County, Zhejiang Province, China (the “Investor”), and Meitav Dash Trusts Ltd., as escrow agent, entered into in connection with the Subscription Agreement, dated January 31, 2016, by and among the Company and the Investor (the “Subscription Agreement”).  Capitalized terms used and not defined herein shall have the meaning ascribed to such terms in the Escrow Agreement.

 

Pursuant to Section 4.1.2 of the Escrow Agreement, as an IPO meeting the Pricing Condition is expected to be consummated on or prior to [_________], the undersigned hereby instructs you to transfer to the Company the Investment Amount on behalf of the Investor in accordance with Section 1.1 of the Subscription Agreement.

 

	 	
Mapi-Pharma Ltd.

 

By: _________________________

 

Name: ________________________

 

Title: _________________________

CC: [                ], the Investor

 

  

  

  

EXHIBIT C

 

Escrow Fees

 

Escrow Agent services annual fee: $3,500 (not including Israeli VAT)

 

Processing fee, including wire transfer within the Israeli banking system:

 

In NIS: NIS 20 per each wire

 

In US$: US$20 per each wire

 

Bank charges: no chargeEXHIBIT 10.1

 

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 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 “Number of Shares,” the “Service Period,” the “Performance Period” and the Section 162(m) Plan Achievement Goal (as defined below) are stated in the “Notice of Grant” attached or posted electronically together with this Agreement 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 an award of Performance Share Units in respect of the number of Shares set forth in the Notice of Grant (the “Award”), representing Stock Unit and Performance-Based Awards under the terms of the Plan.

 

2.            Right to Payment of Performance Share Units. Except as otherwise provided in paragraph 3, 4 or 5 below, at the end of a Performance Period, the number of Shares earned in respect of the Performance Share Units will be determined in accordance with the Notice of Grant and the Number of Shares earned in respect of the Performance Share Units will vest subject to the Participant’s continued employment through the end of the Service Period applicable to each Tranche.

 

3.            Payment of Awards. Payments under this Agreement will be made in the number of Shares that is equivalent to the number of vested Performance Share Units earned and payable to the Participant pursuant to paragraph 2 above. Except as otherwise provided in paragraph 4 or 5 below, any payment with respect to each Tranche shall be made as specified in the Notice of Grant.  The form of payout will be in Shares.  In addition, each Performance Share Unit that becomes earned and payable pursuant to paragraph 2 above carries a Dividend Equivalent Right, payable in cash at the same time as the payment of Shares in accordance with this paragraph 3 and paragraph 4 or 5. For the avoidance of doubt, with respect to each Tranche, such Dividend Equivalent Right shall not attach to, and no payment shall be made as a result of, dividends (a) the record date for which is prior to the grant date with respect to such Tranche or (b) paid with respect to Performance Share Units that are not ultimately earned.

 

4.            Change in Control.

 

(a)   Upon a Change in Control, the Section 162(m) Plan Achievement Goal shall be deemed met in full. If on or after a Change in Control, the Participant terminates for Good Reason (as defined below), dies, becomes disabled as described in paragraph 5(b), or is terminated by the Company without Cause in accordance with paragraph 5(c), each Tranche shall immediately vest in full and payments under this paragraph will be made within two weeks following the date on which Participant terminates employment or dies or becomes disabled (as described in paragraph 5(b)). 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 amount and type of consideration to be received in respect of each Share earned under a Performance Share Unit will be based on the consideration paid to each stockholder per Share generally upon the Change in Control as determined by the Subcommittee. Notwithstanding anything herein to the contrary, the Subcommittee shall have the right to terminate and payout any amounts hereunder in accordance with Section 409A-3(j)(4)(ix).

 

 

(b)   For purposes hereof, “Good Reason” means the occurrence of any of the following, without the express written consent of the Participant:

 

(i)           the assignment to the Participant of any duties inconsistent in any material adverse respect with the Participant’s position, authority or responsibilities immediately prior to the Change in Control, or any other material adverse change in such position, including title, authority or responsibilities;

 

(ii)          any failure by the Company to pay any amounts for compensation or benefits owed to the Participant or a material reduction of the overall amounts of compensation and benefits in effect prior to the Change in Control, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Participant;

 

(iii)         the Company’s requiring the Participant to be based at any office or location more than fifty (50) miles from that location at which he performed his or her services for the Company immediately prior to the Change in Control, except for travel reasonably required in the performance of the Participant’s responsibilities; or

 

(iv)        any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor, unless such assumption occurs by operation of law; provided that, the Participant shall first provide the Company, within 60 days of the occurrence of the circumstance or conduct alleged to constitute Good Reason, with a 30-day period (the “Cure Period”), following receipt of by the Company of written notice setting forth in reasonable detail the specific circumstance or conduct of the Company that is alleged to constitute Good Reason, to cease, and to cure, such circumstance or conduct. If, at the end of the Cure Period, the circumstance that constitutes Good Reason has not been remedied, the Participant will be entitled to terminate employment for Good Reason during the 30-day period that follows the end of the Cure Period. If Employee does not terminate employment during such 30-day period, the Participant will not be permitted to terminate employment for Good Reason as a result of such event.

 

5.            Termination of Employment. If the Participant’s employment terminates, except as otherwise provided in paragraph 4, payouts will be as follows:

 

(a)   Death.  If the Participant dies prior to the end of the Service Period for a Tranche, a pro rata portion of such Tranche will vest and be paid. As to each such Tranche, the pro rata portion will be determined by multiplying the Number of Shares subject to such Tranche by a fraction, the numerator of which is the number of full calendar months of service completed during the Service Period for such Tranche through the Participant’s death and the denominator of which is the number of full calendar months in the Service Period for such Tranche. Payment thereof will be made on the 75th day following the Participant’s death. If the Participant dies on or after the last day of the Service Period for a Tranche, the full Number of Shares with respect to such Tranche, if otherwise earned and vested in accordance with the Notice of Grant but not yet paid, will be paid. Payment thereof will be made on the earlier of (i) the 75th day following the Participant’s death, and (ii) the date such payment would otherwise be made in accordance with paragraph 3 of this Agreement.  All payments under this paragraph 5(a) shall be made in accordance with any applicable laws or Company procedures regarding such payments.

 

(b)   Disability.  If the Participant becomes “disabled” (within the meaning of Treasury Regulation 1.409A-3(i)(4)) prior to the end of the Service Period for a Tranche, a pro rata portion of such Tranche will vest and be paid. As to each such Tranche, the pro rata portion will be determined by multiplying the Number of Shares subject to such Tranche by a fraction, the numerator of which is the number of full calendar months of service completed during the Service Period for such Tranche through the date the Participant becomes disabled and the denominator of which is the number of full calendar months in the Service Period for such Tranche. Payment thereof will be made within two weeks following the date on which the Participant becomes disabled. If the Participant becomes disabled on or after the last day of the Service Period for a Tranche, the Shares, if any, otherwise earned and vested with respect to such Tranche in accordance with the Notice of Grant but not yet paid, will be paid. Payment thereof will be made within two weeks following the date on which Participant becomes disabled or, if earlier, the date such payment

 

 

would otherwise be made in accordance with paragraph 3 of this Agreement.

 

(c)   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) prior to the end of the Service Period for a Tranche, a pro rata portion of such Tranche will vest and be paid, subject to the achievement of the Section 162(m) Plan Achievement Goal. As to each such Tranche, the pro rata portion will be determined by multiplying the Number of Shares subject to such Tranche by a fraction, the numerator of which is the number of full calendar months of service completed during the Service Period for such Tranche through the date the Participant’s employment is terminated and the denominator of which is the number of full calendar months in the Service Period for such Tranche. Payment thereof will be made within two weeks following the date on which the Participant’s employment is terminated pursuant to this Section 5(c), provided that, in the event that the Participant’s employment is terminated prior to the achievement of the Section 162(m) Plan Achievement Goal, payment shall be made only upon, and when, the Subcommittee certifies in writing that the Company has achieved the 162(m) Goal, which shall be done no later than two and a half months following the end of the year in which the termination of employment occurs. If the Participant’s employment is terminated pursuant to this Section 5(c) on or after the last day of the Service Period for a Tranche, the Shares, if any, otherwise earned and vested with respect to such Tranche in accordance with the Notice of Grant but not yet paid, will be paid. Payment thereof will be made within two weeks following the date on which Participant’s employment is terminated pursuant to this Section 5(c) or, if later, the date such payment would otherwise be made in accordance with paragraph 3 of this Agreement.

 

(d)   Termination of Employment By Employee.  If the Participant terminates his or her employment (e.g., by retiring or by voluntary resigning), any unearned, unvested Tranche will be forfeited, and any earned and vested Tranche will be paid in accordance with paragraph 3 of this Agreement.

 

(e)   Termination of Employment With Cause.  If the Participant is terminated for Cause, all Tranches of the Award will be forfeited, regardless of whether a Tranche has been otherwise earned and vested.  If the Participant is (a) no longer employed by the Corporation for any reason, (b) payment of a Tranche has not previously been made, and (c) it is determined that Participant’s behavior while he was employed would have constituted Cause, then each Tranche not previously paid will be forfeited, regardless of whether such Tranche has been otherwise earned and vested.  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 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.

 

 

6.            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 other than the Dividend Equivalent Rights granted under paragraph 3 above.

 

7.            Clawback.  Shares earned or delivered under any Performance Share Unit Award shall be subject to any recoupment policy for awards under the Plan adopted by the Company as such policy exists from time to time.

 

8.            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 the receipt of any dividends; 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 the minimum withholding obligations of the Company and/or the Employer.  In this regard, Participant authorizes the Company and/or the Employer to withhold the minimum applicable Tax-Related Items legally required to be paid 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 such withholding obligation for the Tax-Related Items, and/or (ii) withhold such amount 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.

 

9.            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.

 

10.          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.

 

11.          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.

 

12.         Disclosure and Use of Information.

 

(a)   By acknowledging and agreeing to or 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, including sensitive data, as described in this paragraph and below 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, 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 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, the United States or elsewhere. The Participant authorizes the Employer, the Company, its subsidiaries, and such 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.

13.          Discretionary Nature and Acceptance of 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)    The Award of the Performance Share Units will be deemed accepted unless the Award is declined by way of written notice by the Participant within 30 days of the Grant Date to the Equity Based Compensation Department of the Company in New York;

 

(g)   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;

 

(h)   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;

 

(i)    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;

 

(j)    The future value of the underlying Shares is unknown and cannot be predicted with certainty;

 

(k)   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

 

(l)    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.

 

14.          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.

 

15.          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 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.

 

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

 

17.          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.  Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A of the Code.  In no event may the Participant, directly or indirectly, designate the calendar year of any payment to be made under this Agreement.  The Company reserves the unilateral right to amend this Agreement upon written notice to the Participant to prevent taxation under Code section 409A, in a manner that is intend to preserve the economic benefits of this award.

 

18.          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:
    	

    
	
 
    	
 
    	
Michael O’Hare

 
    
	
 
    	
 
    	
Executive Vice President

 
    
	
 
    	
 
    	
Global Human Resources

 
    

 

 

NOTICE OF GRANT

UNDER

THE ESTÉE LAUDER COMPANIES INC.

AMENDED AND RESTATED FISCAL 2002 SHARE INCENTIVE PLAN (The “Plan”)

 

This Notice of Grant is incorporated by reference into the Agreement and made a part thereof.

 

This is to confirm that you were awarded a grant of Performance Share Units at the most recent meeting of the Stock Plan Subcommittee of the Compensation Committee of the Board of Directors (the “Subcommittee”) representing the right to receive shares of Class A Common Stock of The Estée Lauder Companies Inc. (the “Shares”), subject to the terms of the Plan and the Performance Share Unit Award Agreement.  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.  This Performance Share Unit Award is granted under and governed by the terms and conditions of the Plan and the Performance Share Unit Award Agreement (the “Agreement”) which are made a part hereof.  Please read these documents and the Summary Plan Description and keep them for future reference.  The specific terms of your award are as follows:

 

Participant:                  John Demsey

 

Grant Date:                 January 28, 2016

 

Number of Shares:  There are three separate Awards granted hereby.  Each is a “Tranche,” and will be separately, the “First Tranche,” the “Second Tranche,” and the “Third Tranche,” respectively. The Number of Shares subject to the First Tranche is 23,898, the Second Tranche is 23,898 and the Third Tranche is 23,898.

 

Vesting:  The vesting date for the First Tranche is January 29, 2018, the Second Tranche is January 29, 2019 and the Third Tranche is January 29, 2020, subject, in each case, to the Participant’s continued employment through the end of the Service Period applicable to relevant Tranche and the achievement of the Section 162(m) Plan Achievement Goal described below.

 

Type of Award:   Stock Unit and Performance-Based Award (referred to herein as a “PSU”)

 

Service Period: For the First Tranche: January 28, 2016 to January 29, 2018; for the Second Tranche: January 28, 2016 to January 29, 2019; and for the Third Tranche: January 28, 2016 to January 29, 2020.

 

Section 162(m) Plan Achievement Goal:

 

(a) Except as otherwise provided in Section 4 or 5 of the Agreement, no PSUs shall vest and no Shares shall be delivered (or any amount paid) unless and until the Subcommittee certifies in writing that the Company has achieved positive Net Earnings, as defined below, for the period from July 1, 2016 through June 30, 2017 (the “162(m) Goal”). If the 162(m) Goal is not achieved, the PSUs shall be immediately forfeited, and the Participant shall have no further rights with respect thereto.  The Subcommittee shall make such certification by no later than September 30, 2017.

 

(b) If the Subcommittee certifies that the 162(m) Goal has been achieved, the Participant shall be eligible to earn the number of Shares allocated to the Participant in the Committee’s resolution approving the establishment of the 162(m) Goal.

 

(c) For purposes of this PSU Award Agreement, “Net Earnings” has the meaning utilized by the Company in its consolidated financial statements in accordance with generally accepted accounting principles as in effect on July 1, 2015.

 

(d) Shares subject to the PSU shall be settled within 30 business days of the date on which the PSUs vest.

 

Questions regarding the award can be directed to Patricia Zakrzewski at (xxx) xxx-xxxx.

 

 

If you wish to accept this grant, please sign this Notice of Grant and return it immediately to:

 

Compensation Department

28 West 23rd Street, 8th Floor

New York, New York 10010

Attention: Patricia Zakrzewski

 

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

 

 

 

 

	
By
    	
/s/ John Demsey
    	
 
    	
Date
    	
January 28, 2016

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00253-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00253-of-00352.parquet"}]]