Employment Agreement - The Estee Lauder Cos. Inc. and Ronald S. Lauder


                              EMPLOYMENT AGREEMENT

         AGREEMENT  (this  "Agreement"),  dated as of July 1, 2000,  between THE
ESTEE LAUDER COMPANIES INC., a Delaware corporation (the "Company"), and
RONALD S. LAUDER, a resident of New York, New York (the "Executive").

                                   WITNESSETH:

         WHEREAS,  the Company and its subsidiaries  are principally  engaged in
the business of manufacturing, marketing and selling prestige skin care, makeup,
hair care and fragrance products and related services (the "Business"); and

         WHEREAS, the Company desires to retain the services of the Executive in
the  capacity  of  Chairman  of the  Board  of  Directors  of each  of  Clinique
Laboratories,  Inc., a Delaware  corporation  and an indirect  subsidiary of the
Company ("CLI"),  and Estee Lauder  International,  Inc., a Delaware corporation
and an indirect subsidiary of the Company ("ELII"), and the Executive desires to
provide  such  services  in such  capacities,  upon the terms and subject to the
conditions hereinafter set forth; and

         WHEREAS,  the  Compensation  Committee of the Board of Directors of the
Company (the "Compensation Committee") has approved the terms of this Agreement;

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants and obligations  hereinafter set forth, the parties hereto,  intending
to be legally bound, hereby agree as follows:

                        1.       Employment Term.

          The  Company  hereby  agrees  to use its best  efforts  and  powers to
     sustain and continue the Executive's election as a Director and as Chairman
     of the Board of Directors of each of CLI and ELII for the period commencing
     on July 1,  2000 and  ending  on June 30,  2005  unless  terminated  sooner
     pursuant to Section 5 hereof (the "Term of Employment").


                        2.      Duties and Extent of Services.

          (a)  During  the Term of  Employment,  the  Executive  shall  serve as
     Chairman of the Board of  Directors  of each of CLI and ELII,  and, in such
     capacities,  shall render such services as customarily  are associated with
     and incident to such positions,  and as the Company may, from time to time,
     reasonably require of him consistent with such positions, all as consistent
     with past practice.



          (b)  During the Term of  Employment,  the  Company  shall use its best
     efforts and powers to cause each of the  Company,  CLI and ELII to nominate
     the  Executive  as a  management  nominee  for  each  of  their  Boards  of
     Directors.  The Executive shall serve as a Director of the Company, CLI and
     ELII if  elected to such  positions  in  accordance  with law and hold such
     other positions and executives  offices of the Company and/or of any of the
     Company's subsidiaries or affiliates as may from time to time be authorized
     by the Board of Directors of the Company,  provided that each such position
     shall  be  commensurate  with  the  Executive's  standing  in the  business
     community  as a  Director  of the  Company  and  Chairman  of the  Board of
     Directors of each of CLI and ELII.  The Executive  shall not be entitled to
     any  compensation  other  than the  compensation  provided  for  herein for
     serving during the Term of Employment as a Director of the Company,  CLI or
     ELII,  or in any other  office or  position  of the  Company  or any of its
     subsidiaries  or  affiliates  unless the Board of  Directors of the Company
     shall have specifically approved such additional compensation.

          (c) The  Executive  shall  devote such time and effort as is necessary
     and appropriate to faithfully,  competently  and diligently  perform to the
     best of his  ability  all of the duties  required of him as Chairman of the
     Board of Directors of each of CLI and ELII, consistent with past practice.

          (d) In connection with his employment  hereunder,  the Executive shall
     be provided with a full-time  secretary and the use of the office space set
     forth on the floor plan  attached  hereto as Exhibit A and the  furnishings
     currently  contained  therein.  If the Company shall relocate its executive
     offices  or base of  operations,  the  Executive  shall  be  provided  with
     comparable  support  services and office  facilities,  in terms of size and
     location, to those provided for herein.

                        3.          Compensation.

          (a) Base Salary.  As full compensation for all services to be rendered
     pursuant  to this  Agreement  and as payment  for the rights and  interests
     granted by the  Executive  hereunder,  during the Term of  Employment,  the
     Company shall pay or cause any of its  subsidiaries  to pay the Executive a
     salary of $400,000 per annum (the "Salary"), payable in accordance with the
     regular payroll policies of the Company in effect from time to time.

          (b) Share  Incentive  Plan;  Stock  Options.  The  Executive  shall be
     entitled to participate in the Company's  Fiscal 1999 Share  Incentive Plan
     and any successor  plan in which senior  executive  officers of the Company
     are eligible to participate  (the "Share  Incentive Plan") on the terms set
     forth  therein.  Any awards  thereunder  shall be at the  discretion of the
     Compensation Committee.

                                      -2-

                          
                        4.          Benefits.

          (a) Standard  Benefits.  During the Term of Employment,  the Executive
     shall be entitled to (i)  participate in any and all insurance,  retirement
     and health benefit  programs and arrangements now in effect and hereinafter
     adopted and made generally available by the Company to its senior executive
     officers,  including  but not  limited to The Estee  Lauder  Inc  Incentive
     Thrift Plan (the "Thrift Plan"), the Estee Lauder Retirement Growth Account
     Plan  (the  "Qualified  Plan"),  the  related  Estee  Lauder  Inc.  Benefit
     Restoration   Plan   (the   "Non-Qualified    Plan"),    contributory   and
     non-contributory  Company welfare and benefit plans,  disability plans, and
     medical,  death  benefit and life  insurance  plans for which the Executive
     shall be eligible,  or may become  eligible  during the Term of Employment;
     (ii)  participate  in the  Company's  automobile  program now in effect and
     hereinafter  adopted and  generally  made  available  by the Company to its
     senior executive officers; and (iii) paid vacations during each year of the
     Term of Employment in  accordance  with the policies and  procedures of the
     Company as in effect from time to time for its senior executive officers.

          (b) Expenses.  The  Corporation  agrees to reimburse the Executive for
     all  reasonable  and  necessary  travel  (including  first class  airfare),
     business entertainment, no-charge merchandise (consistent with prior years'
     levels) and other  out-of-pocket  business expenses incurred or expended by
     him in  connection  with  the  performance  of his  duties  hereunder  upon
     presentation  of  proper  expense  statements  or  vouchers  or such  other
     supporting  information  as  the  Company  may  reasonably  require  of the
     Executive.

                        5.       Termination.

          (a) Permanent Disability.  In the event of the "permanent  disability"
     (as  hereinafter  defined) of the Executive  during the Term of Employment,
     the Company shall have the right, upon written notice to the Executive,  to
     terminate the Executive's  employment hereunder,  effective upon the giving
     of such notice (or such later date as shall be specified  in such  notice).
     In the  event  of such  termination,  the  Company  shall  have no  further
     obligations  hereunder,  except  the  Executive  shall be  entitled  (i) to
     receive any amounts or benefits to which the Executive  may otherwise  have
     been entitled to hereunder prior to the effective date of termination;  and
     (ii) to be paid his Salary  under  Section  3(a) hereof for a period of two
     (2) years from the effective date of termination;  provided,  however, that
     the Company  shall only be  required  to pay the amount of the  Executive's
     Salary  which  shall  not be  covered  by  pension  benefits  or  long-term
     disability  payments,  if any, to the Executive  under any Company plans or
     arrangements.  In addition, upon termination for permanent disability,  the
     Executive's  rights to  participate  in any and all pension,  insurance and
     other  benefit  plans and  programs of the Company,  or to receive  similar
     coverage, if any, shall be as determined under such programs.  For purposes
     of this paragraph,  "permanent  disability" means any disability as defined
     under the Company's  applicable  disability insurance policy or, if no such
     policy is available,  any physical or mental disability or incapacity which
     renders the Executive  incapable of performing the services required of him
     in accordance with his  obligations  under Section 2 hereof for a period of
     six (6)  consecutive  months or for  shorter  periods  aggregating  six (6)
     months during any twelve-month period.

                                      -3-



          (b) Death. In the event of the death of the Executive  during the Term
     of  Employment,  the Company shall have no further  obligations  hereunder,
     except to pay any amounts to which the Executive  otherwise would have been
     entitled  to  hereunder  prior  to the date of his  death  or which  become
     payable by reason of his death.

          (c) Cause.  The Company shall have the right,  upon written  notice to
     the Executive, to terminate the Executive's employment under this Agreement
     for "Cause" (as  hereinafter  defined),  effective  upon the giving of such
     notice (or such later date as shall be specified in such  notice),  and the
     Company  shall have no  further  obligations  hereunder,  except to pay the
     Executive any Salary otherwise  payable pursuant to Section 3(a) hereof and
     provide the  Executive  any benefits to which the  Executive  may otherwise
     have been entitled hereunder,  in each case, prior to the effective date of
     termination.  The Executive's  right to participate in any of the Company's
     retirement,  insurance  and other  benefit  plans and programs  shall be as
     determined under such programs and plans.
                  
                         For purposes of this Agreement, "Cause" means:

          (i) fraud,  embezzlement or gross  insubordination  on the part of the
     Executive  or material  breach by the  Executive of his  obligations  under
     Section 6 or 7 hereof;

          (ii)  conviction  of or the entry of a plea of nolo  contendere by the
     Executive for any felony;

          (iii) a material  breach of, or the willful  failure or refusal by the
     Executive  to  perform  and  discharge,  his  duties,  responsibilities  or
     obligations under this Agreement (other than under Sections 6 and 7 hereof,
     which shall be  governed  by clause (i) above,  and other than by reason of
     disability  or  death)  that  is not  corrected  within  thirty  (30)  days
     following  written  notice  thereof to the  Executive by the Company,  such
     notice to state  with  specificity  the  nature of the  breach,  failure or
     refusal;   provided  that  if  such  breach,   failure  or  refusal  cannot
     reasonably, be corrected within thirty (30) days of written notice thereof,
     correction  shall be commenced by the Executive  within such period and may
     be corrected within a reasonable period thereafter; or

          (iv) any act of moral turpitude or willful misconduct by the Executive
     which (A) is intended to result in substantial  personal  enrichment of the
     Executive  at the  expense  of the  Company or any of its  subsidiaries  or
     affiliates  or  (B)  has a  material  adverse  impact  on the  business  or
     reputation of the Company or any of its  subsidiaries  or affiliates  (such
     determination  to be made  by the  Board  of  Directors  in its  reasonable
     judgment).

                                      -4-



          (d) Termination  Without Cause. The Company shall have the right, upon
     sixty  (60) days'  written  notice  given to the  Executive,  to  terminate
     Executive's  employment  for any  reason  whatsoever.  In the event of such
     termination,  for a period ending on the first to occur of a date three (3)
     years  from  the  effective  date of  termination  or June  30,  2005,  the
     Executive  shall be entitled  as damages to (a)  receive  his Salary  under
     Section 3(a) hereof; and (ii) participate in all insurance,  retirement and
     health benefit plan programs or  arrangements  on terms  identical to those
     applicable  to  other  senior  officers  of the  Company.  In the  event of
     termination  pursuant to this Section  5(d),  the  Executive  shall have no
     obligation to mitigate his damages.

          (e)  Termination  by Executive.  The  Executive  shall have the right,
     exercisable  at any time during the Term of  Employment,  to terminate  his
     employment for any reason whatsoever, upon six (6) months written notice to
     the Company.  In such event, the Company shall have no further  obligations
     hereunder.

          (f) Effect of  Termination.  Upon the  termination of the  Executive's
     employment  hereunder  for any reason,  the  Company  shall have no further
     obligations hereunder,  except as otherwise provided herein. The Executive,
     however,  shall continue to have the obligations provided for in Sections 6
     and 7. Furthermore, upon such termination, the Executive shall be deemed to
     have resigned immediately from all directorships and offices held by him in
     either the  Company,  CLI or ELII or any of their  subsidiaries;  provided,
     however,  that  the  Executive's  directorship  in  the  Company  shall  be
     controlled by that certain  Stockholders'  Agreement,  dated as of November
     22, 1995,  as amended,  by and among the Company,  the  Executive,  and the
     other persons or entities party thereto,  as it may be amended from time to
     time (the "Stockholders' Agreement").

                        6.  Confidential Ownership.

          (a) The Executive  agrees that he shall forever keep secret and retain
     in  strictest  confidence  and  not  divulge,  disclose,  discuss,  copy or
     otherwise use or suffer to be used in any manner, except in connection with
     the Business of the Company and the  businesses of any of its  subsidiaries
     or affiliates,  any "Protected Information" in any "Unauthorized" manner or
     for any  Unauthorized  purpose  (as such  terns are  hereinafter  defined).
     Furthermore,  the  Executive  acknowledges  that he has no right to use the
     "Lauder" name, or any variation,  combination or derivation thereof, in the
     fragrance,  make-up,  skin care or other personal care products businesses,
     or in any such way that would likely cause  confusion with the Company's or
     any of its subsidiaries' products.

          (i)  "Protected  Information"  means trade  secrets,  confidential  or
     proprietary  information and all other  knowledge,  know-how,  information,
     documents or materials owned,  developed or possessed by the Company or any
     of its subsidiaries or affiliates,  whether in tangible or intangible form,
     pertaining  to the Business of the Company or the  businesses of any of its
     subsidiaries  or affiliates,  including,  but not limited to,  research and
     development   operations,   systems,  data  bases,  computer  programs  and
     software,   designs,  models,   operating  procedures,   knowledge  of  the
     organization,   products  (including  prices,  costs,  sales  or  content),
     processes,   formulas,   techniques,    machinery,   contracts,   financial
     information  or measures,  business  methods,  business  plans,  details of
     consultant contracts, new personnel acquisition plans, business acquisition
     plans, customer lists, business  relationships and other information owned,
     developed or possessed by the Company or its  subsidiaries  or  affiliates,
     except as required in the course of performing duties  hereunder;  provided
     that  Protected  Information  shall not include  information  that  becomes
     generally  known to the  public  or the  trade  without  violation  of this
     Section 6.

                                      -5-


          (ii)  "Unauthorized"  means:  (A) in  contravention of the policies or
     procedures of the Company or any of its  subsidiaries  or  affiliates;  (B)
     otherwise inconsistent with the measures taken by the Company or any of its
     subsidiaries  or  affiliates  to protect  their  interests in any Protected
     Information;  (C) in contravention of any lawful  instruction or directive,
     either  written  or  oral,  of an  employee  of the  Company  or any of its
     subsidiaries  or  affiliates   empowered  to  issue  such   instruction  or
     directive;  or (D) in  contravention  of any  duty  existing  under  law or
     contract.  Notwithstanding  anything  to the  contrary  contained  in  this
     Section 6, the  Executive  may disclose any  Protected  Information  to the
     extent required by court order or decree or by the rules and regulations of
     a governmental  agency or as otherwise  required by law;  provided that the
     Executive  shall  provide the Company with prompt  notice of such  required
     disclosure in advance  thereof so that the Company may seek an  appropriate
     protective order in respect of such required disclosure.

          (b) The  Executive  acknowledges  that  all  developments,  including,
     without  limitation,  inventions  (patentable or  otherwise),  discoveries,
     formulas, improvements,  patents, trade secrets, designs, reports, computer
     software, flow charts and diagrams, procedures, data, documentation,  ideas
     and writings and  applications  thereof relating to the Business or planned
     business  of the Company or any of its  subsidiaries  or  affiliates  that,
     alone or jointly with others,  the Executive may  conceive,  create,  make,
     develop,  reduce to  practice  or  acquire  during  the Term of  Employment
     (collectively, the "Developments") are works made for hire and shall remain
     the sole and  exclusive  property of the Company and the  Executive  hereby
     assigns to the  Company,  in  consideration  of the  payments  set forth in
     Section  3(a)  hereof,  all of his right,  title and interest in and to all
     such  Developments.  The Executive  shall  promptly and fully  disclose all
     future material  Developments to the Board of Directors of the Company and,
     at any time upon request and at the expense of the Company,  shall execute,
     acknowledge  and deliver to the Company  all  instruments  that the Company
     shall prepare,  give evidence and take all other actions that are necessary
     or desirable in the reasonable opinion of the Company to enable the Company
     to file and prosecute applications for and to acquire, maintain and enforce
     all letters,  patent and trademark registrations or copyrights covering the
     Developments in all countries in which the same are deemed necessary by the
     Company. All memoranda,  notes, lists, drawings,  records,  files, computer
     tapes,  programs,  software,  source and  programming  narratives and other
     documentation (and all copies thereof) made or compiled by the Executive or
     made available to the Executive  concerning the  Developments  or otherwise
     concerning  the  Business or planned  business of the Company or any of its
     subsidiaries  or  affiliates  shall be the  property of the Company or such
     subsidiaries  or  affiliates  and shall be delivered to the Company or such
     subsidiaries  or affiliates  promptly upon the expiration or termination of
     the Term of Employment.

                                      -6-


          (c) The provisions of this Section 6 shall,  without any limitation as
     to  time,   survive  the  expiration  or  termination  of  the  Executive's
     employment hereunder, irrespective of the reason for any termination.

          7.  Covenant  Not to  Compete.  Subject to the last  sentence  of this
     Section 7, the Executive  agrees that during the Term of Employment and for
     a period of two (2) years  commencing upon the expiration or termination of
     the Executive's employment hereunder,  the Executive shall not, directly or
     indirectly, without the prior written consent of the Company:

          (a)  solicit,  entice,  persuade or induce any  employee,  consultant,
     agent  or  independent   contractor  of  the  Company  or  of  any  of  its
     subsidiaries  or  affiliates to terminate  his or her  employment  with the
     Company or such subsidiary or affiliate,  to become employed by any person,
     firm or corporation  other than the Company or such subsidiary or affiliate
     or approach any such employee,  consultant, agent or independent contractor
     for any of the foregoing purposes,  or authorize or assist in the taking of
     any such actions by any third party (for purposes of this Section 7(a), the
     terms "employee,"  "consultant," "agent" and "independent contractor" shall
     include any persons  with such status at any time during the six (6) months
     preceding any solicitation in question); or

          (b) directly or indirectly engage,  participate, or make any financial
     investment  in, or become  employed  by or render  consulting,  advisory or
     other  services to or for any person,  firm,  corporation or other business
     enterprise,  wherever located, which is engaged, directly or indirectly, in
     competition   with  the  Company's   Business  or  the  businesses  of  its
     subsidiaries  or  affiliates  as conducted  or any business  proposed to be
     conducted at the time of the expiration or  termination of the  Executive's
     employment hereunder;  provided, however, that nothing in this Section 7(b)
     shall be construed to preclude the Executive from making any investments in
     the  securities  of any  business  enterprise  whether  or not  engaged  in
     competition with the Company or any of its  subsidiaries or affiliates,  to
     the  extent  that  such  securities  are  actively  traded  on  a  national
     securities exchange or in the over-the-counter  market in the United States
     or on any  foreign  securities  exchange  and  represent,  at the  time  of
     acquisition,  not  more  than  30% of the  aggregate  voting  power of such
     business enterprise.

          Notwithstanding  the foregoing,  the Executive shall not be subject to
     the terms and  provisions of paragraph (b) of this Section 7 if the Term of
     Employment is terminated pursuant to Section 5(d) hereof.

                                      -7-


          8. Specific Performance.  The Executive acknowledges that the services
     to be rendered by the Executive are of a special,  unique and extraordinary
     character and, in connection  with such  services,  the Executive will have
     access to confidential  information vital to the Company's Business and the
     businesses  of its  subsidiaries  and  affiliates.  By reason of this,  the
     Executive  consents  and agrees that if the  Executive  violates any of the
     provisions of Sections 6 or 7 hereof,  the Company and its subsidiaries and
     affiliates would sustain irreparable injury and that monetary damages would
     not provide  adequate  remedy to the Company and that the Company  shall be
     entitled to have Section 6 or 7  specifically  enforced by any court having
     equity  jurisdiction.  Nothing  contained  herein  shall  be  construed  as
     prohibiting  the  Company or any of its  subsidiaries  or  affiliates  from
     pursuing any other  remedies  available to it for such breach or threatened
     breach, including the recovery of damages from the Executive.

          9. Deductions and  Withholding.  The Executive agrees that the Company
     or its subsidiaries or affiliates,  as applicable,  shall withhold from any
     and all  compensation  paid  to and  required  to be paid to the  Executive
     pursuant to this Agreement,  all Federal,  state,  local and/or other taxes
     which the Company determines are required to be withheld in accordance with
     applicable  statutes  or  regulations  from time to time in effect  and all
     amounts  required  to be deducted  in respect of the  Executive's  coverage
     under applicable employee benefit plans. For purposes of this Agreement and
     calculations  hereunder,  all such  deductions  and  withholdings  shall be
     deemed to have been paid to and received by the Executive.

          10. Entire  Agreement.  Except for the  Stockholders'  Agreement,  the
     Share Incentive Plan,  outstanding stock option agreements,  existing split
     dollar life  insurance  and  deferred  compensation  arrangements,  and the
     Thrift Plan, Qualified Plan, Non-Qualified Plan and the other benefit plans
     referred  to in  Section 4  hereof,  this  Agreement  embodies  the  entire
     agreement  of the  parties  with  respect  to the  Executive's  employment,
     compensation,  perquisites and related items and supersedes any other prior
     oral or written  agreements,  arrangements  or  understandings  between the
     Executive and the Company or any of its subsidiaries or affiliates, and any
     such prior agreements, arrangements or understandings are hereby terminated
     and of no further  effect.  This Agreement may not be changed or terminated
     orally but only by an agreement in writing signed by the parties hereto.

          11. Waiver.  The waiver by the Company of a breach of any provision of
     this  Agreement  by the  Executive  shall not operate or be  construed as a
     waiver of any  subsequent  breach by him. The waiver by the  Executive of a
     breach of any provision of this  Agreement by the Company shall not operate
     or be construed as a waiver of any subsequent breach by the Company.

                       12. Governing Law; Jurisdiction.

          (a) This  Agreement  shall be subject to, and governed by, the laws of
     the State of New York  applicable  to  contracts  made and to be  performed
     therein.

                                      -8-


          (b) Any  action to enforce  any of the  provisions  of this  Agreement
     shall be brought in a court of the State of New York located in the Borough
     of Manhattan of the City of New York or in a Federal court  located  within
     the Southern  District of New York. The parties consent to the jurisdiction
     of such carts and to the  service of process in any manner  provided by New
     York law. Each party  irrevocably  waives any objection which it may now or
     hereafter  have to the  laying  of the  venue of any such  suit,  action or
     proceeding  brought in such  court and any claim that such suit,  action or
     proceeding  brought in such court has been brought in an inconvenient forum
     and  agrees  that  service  of process  in  accordance  with the  foregoing
     sentences  shall be deemed in every respect  effective  and valid  personal
     service of process upon such party.

          13.  Assignability.  The  obligations  of  the  Executive  may  not be
     delegated and, except with respect to the designation of  beneficiaries  in
     connection with any of the benefits payable to the Executive hereunder, the
     Executive may not, without the Company's  written consent thereto,  assign,
     transfer,  convey,  pledge,  encumber,  hypothecate or otherwise dispose of
     this Agreement or any interest  herein.  Any such  attempted  delegation or
     disposition shall be null and void and without effect.  The Company and the
     Executive  agree that this  Agreement and all of the  Company's  rights and
     obligations  hereunder may be assigned or transferred by the Company to and
     shall be assumed by and be binding upon any  successor to the Company.  The
     term  "successor"  means,  with  respect  to  the  Company  or  any  of its
     subsidiaries,  any  corporation or other business  entity which, by merger,
     "consolidation,  purchase  of the  assets or  otherwise  acquires  all or a
     material part of the assets of the Company.

          14.  Severability.  If any  provision  of this  Agreement  or any part
     thereof, including, without limitation, Sections 6 and 7 hereof, as applied
     to either  party or to any  circumstances  shall be  adjudged by a court of
     competent  jurisdiction to be void or  unenforceable,  the same shall in no
     way affect any other provision of this Agreement or remaining part thereof,
     which  shall  be  given  full  effect  without  regard  to the  invalid  or
     unenforceable  part  thereof,  or the  validity or  enforceability  of this
     Agreement.

          If any court construes any of the provisions of Section 6 or 7 hereof,
     or any part  thereof,  to be  unreasonable  because of the duration of such
     provision  or the  geographic  scope  thereof,  such  court may  reduce the
     duration or restrict or redefine the geographic scope of such provision and
     enforce such provision as so reduced, restricted or redefined.

                                      -9-


          15. Notices.  All notices to the Company or the Executive permitted or
     required  hereunder shall be in writing and shall be delivered  personally,
     by telecopier or by courier service providing for next-day delivery or sent
     by registered or certified mail, return receipt requested, to the following
     addresses:

                           The Company:

                                    The Estee Lauder Companies Inc.
                                    767 Fifth Avenue
                                    New York, New York 10153
                                    Attn: Chief Executive Officer
                                    Tel: (212) 572-4200
                                    Fax: (212) 572-6745

                                    with a copy to:

                                            Weil, Gotshal & Manges LLP
                                            767 Fifth Avenue
                                            New York, New York 10153
                                            Attn: Jeffrey J. Weinberg, Esq.
                                            Tel: (212) 310-8000
                                            Fax: (212) 310-8007

                           The Executive:

                                    Ronald S. Lauder
                                    767 Fifth Avenue
                                    New York, New York 10153
                                    Tel: (212) 572-4211
                                    Fax: (212) 572-4046

                                    with a copy to:

                                            Debevoise & Plimpton
                                            875 Third Avenue
                                            New York, New York 10022
                                            Attn: Louis Begley, Esq.
                                            Tel: (212) 909-6000
                                            Fax: (212) 909-6836


Either  party may change the address to which  notices  shall be sent by sending
written  notice of such  change of address to the other  party.  Any such notice
shall be deemed given,  if delivered  personally,  upon receipt;  if telecopied,
when telecopied; if sent by courier service providing for next-day delivery, the
next business day following  deposit with such courier  service;  and if sent by
certified or registered mail,  three days after deposit  (postage  prepaid) with
the U.S. mail service.


                                      -10-


          16. No Conflicts.  The Executive hereby represents and warrants to the
     Company that his execution,  delivery and performance of this Agreement and
     any other agreement to be delivered pursuant to this Agreement will not (i)
     require  the  consent,  approval  or  action  of any  other  person or (ii)
     violate,  conflict  with or result in the breach of any of the terms of, or
     constitute (or with notice or lapse of time or both,  constitute) a default
     under,  any  agreement,  arrangement or  understanding  with respect to the
     Executive's  employment  to which the  Executive is a party or by which the
     Executive is bound or subject. The Executive hereby agrees to indemnify and
     hold harmless the Company,  its  directors,  officers,  employees,  agents,
     representatives and affiliates (and such affiliates'  directors,  officers,
     employees, agents and representatives) from and against any and all losses,
     liabilities  or  claims  (including,  interest,  penalties  and  reasonable
     attorneys' fees,  disbursements  and related charges) based upon or arising
     out of the Executive's breach of any of the foregoing  representations  and
     warranties.

          17.  Effective  Date. This Agreement shall be effective as of the date
     and year first written above.

          18.  Paragraph  Headings.  The  paragraph  headings  contained in this
     Agreement are for  reference  purposes only and shall not affect in any way
     the meaning or interpretation of this Agreement.

          19.  Counterparts.  This  Agreement  may be  executed  in one or  more
     counterparts,  each of which shall be deemed to be an original,  but all of
     which taken together shall constitute one and the same instrument.

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


                          THE ESTEE LAUDER COMPANIES INC.


                          

                          By:  /s/Andrew J. Cavanaugh
                               ----------------------
                          Name:  Andrew J. Cavanaugh
                          Title: Senior Vice President - Global Human Resources




                               /s/Ronald S. Lauder
                               -------------------
                                 RONALD S. LAUDER