ESTEE LAUDER COMPANIES INC
<DOCUMENT>
<TYPE>EX-10.8(B)
<SEQUENCE>8
<FILENAME>c29284_ex10-8b.txt
<TEXT>
                                                                   Exhibit 10.8b

                                    EXHIBIT B
                              To Agreement between
                         The Estee Lauder Companies Inc.
                                       and
                                Leonard A. Lauder
                          and dated as of July 1, 1995


                   OPTION AGREEMENT (this "Agreement") dated this 16th day of
         November, 1995 providing for the granting of options by The Estee
         Lauder Companies Inc., a Delaware corporation (the "Company"), to
         Leonard A. Lauder, an Executive employee of the Company (the
         "Executive").

                   By agreement dated as of July 1, 1995, the Company has
         employed the Executive in the position of Chief Executive Officer of
         the Company (the "Employment Agreement"). As contemplated by the
         Employment Agreement, and as set out at Section 3(c) therein, the Board
         of Directors of the Company has determined that the Executive is to be
         granted options to purchase shares of the Company's Class A Common
         Stock, par value $.01 per share (the "Shares"), on the terms and
         subject to the conditions hereinafter provided.

                   The stock options to be granted pursuant hereto shall not be
         Incentive Stock Options as defined in Section 422A of the Internal
         Revenue Code of 1986, as amended, (the "Code").

                   1. NUMBER OF SHARES. Provided that Shares shall have been
         offered for sale to the public in compliance with the Securities Act of
         1933, as amended (the "Securities Act"), on or prior to December 31,
         1995, the Company hereby awards to the Executive options to purchase
         2,600,000 Shares (the "Stock Options") as follows:

                   (a)   600,000 Stock Options shall be awarded as of the date
                         that Shares are first offered for sale to the public
                                (the "Initial Award");

                   (b)   500,000 Stock Options shall be awarded as of July 1,
                                1996 (the "1996 Award");




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                   (c)   500,000 Stock Options shall be awarded as of July 1,
                                1997 (the "1997 Award");

                   (d)   500,000 Stock Options shall be awarded as of July 1,
                                1998 (the "1998 Award"), and

                   (e)   500,000 Stock Options shall be awarded as of July 1,
                                1999 (the "1999 Award").

         Notwithstanding the foregoing, no award shall be made if the Employment
         Agreement shall have been terminated for any reason on or prior to the
         date scheduled for such award.

                   2. EXERCISE PRICE. For each Stock Option granted hereunder,
         the per-share exercise price shall be equal to 100% of the closing
         price of the Class A Common Stock on the New York Stock Exchange or any
         other national securities exchange or other market system as reported
         by The Wall Street Journal on the date of grant or, if there shall be
         no trading on such date, the date next preceding on which trading
         occurred (the "Market Value").

                   3. PAYMENT OF EXERCISE PRICE. The Stock Option exercise price
         may be paid in cash, by the delivery of shares of Class A Common Stock
         of the Company then owned by the Executive or by a combination of these
         methods. Payment may also be made by delivering a properly executed
         exercise notice to the Company together with a copy of irrevocable
         instructions to a broker to deliver promptly to the Company the amount
         of sale or loan proceeds to pay the exercise price. The Company may
         prescribe any other method of paying the exercise price that it
         determines to be consistent with applicable law, including, without
         limitation, in lieu of the exercise of a Stock Option by delivery of
         shares of Class A Common Stock of the Company then owned by the
         Executive, providing the Company with a notarized statement attesting
         to the number of shares owned, where upon verification by the Company,
         the Company may issue to the Executive only the number of incremental
         shares to which the Executive is entitled upon exercise of the Stock
         Option.

                   4. EXERCISE PERIOD. Stock Options granted hereunder shall be
         exercisable as set forth below.

                   (a) With respect to Stock Options granted in the Initial
         Award:

                       (i) 200,000 of such Stock Options may be exercised from
         and after January 1, 1999;


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                       (ii) 200,000 of such Stock Options may be exercised from
         and after January 1, 2000; and

                       (iii) 200,000 of such Stock Options may be exercised from
         and after January 1, 2001.

                  (b) With Respect to Stock Options granted in the 1996 Award:

                       (i) 166,667 of such Stock Options may be exercised from
         and after January 1, 2000;

                       (ii) 166,667 of such Stock Options may be exercised from
         and after January 1, 2001; and

                       (iii) 166,666 of such Stock Options may be exercised from
         and after January 1, 2002.

                  (c) With respect to Stock Options granted in the 1997 Award:

                       (i) 166,667 of such Stock Options may be exercised from
         and after January 1, 2001;

                       (ii) 166,667 of such Stock Options may be exercised from
         and after January 1, 2002; and

                       (iii) 166,666 of such Stock Options may be exercised from
         and after January 1, 2003.

                  (d) With respect to Stock Options granted in the 1998 Award:

                       (i) 166,667 of such Stock Options may be exercised from
         and after January 1, 2002;

                       (ii) 166,667 of such Stock Options may be exercised from
         and after January 1, 2003; and


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                       (iii) 166,666 of such Stock Options may be exercised from
         and after January 1, 2004.

                  (e) With respect to Stock Options granted in the 1999 Award:

                       (i) 166,667 of such Stock Options may be exercised from
         and after January 1, 2003;

                       (ii) 166,667 of such Stock Options may be exercised from
         and after January 1, 2004; and

                       (iii) 166,666 of such Stock Options may be exercised from
         and after January 1, 2005.

                   No Stock Option awarded hereunder shall be exercisable later
         than ten years after the date it is awarded except in the event of the
         Executive's death, in which case, the exercise period of Stock Options
         awarded but unexercised as of the date of death may be extended beyond
         such period but no later than one year after the date of death. Stock
         Options awarded hereunder shall not be transferrable otherwise then by
         will or the laws of descent and distribution, and shall be exercisable
         during the Executive's lifetime only by the Executive. Any attempted
         transfer contrary to the foregoing shall be null and void and without
         effect.

                   5. POST-EMPLOYMENT EXERCISES. The exercise of any Stock
         Option after termination of the Executive's employment with the Company
         shall be subject to satisfaction of the conditions precedent that the
         Executive neither (i) competes with, or takes other employment with or
         renders services to a competitor of, the Company, its subsidiaries or
         affiliates without the written consent of the Company, nor (ii)
         conducts himself in a manner adversely affecting the Company.

                   6. ADJUSTMENT PROVISIONS; CHANGE IN CONTROL.

                       (a) If there shall be any change in the Class A Common
         Stock of the Company, through merger, consolidation, reorganization,
         recapitalization, stock dividend, stock split, reverse stock split,
         split up, spinoff, combination of shares,

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         exchange of shares, dividend in kind or other like change in capital
         structure or distribution (other than normal cash dividends) to all
         holders of Class A Common Stock of the Company, an adjustment shall be
         made to each outstanding Stock Option such that each such Stock Option
         shall thereafter be exercisable for such securities, cash and/or other
         property as would have been received in respect of the Class A Common
         Stock subject to such Stock Option had it been exercised in full
         immediately prior to such change or distribution, and such an
         adjustment shall be made successively each time any such change shall
         occur. In addition, in the event of any such change or distribution, in
         order to prevent dilution or enlargement of the Executive's rights
         hereunder, the Company will have authority to adjust, in an equitable
         manner, the number and kind of shares that may be issued with respect
         to any Stock Option hereunder, the number and kind of shares subject to
         outstanding Stock Options, the exercise price applicable to outstanding
         Stock Options, and the Market Value of the Class A Common Stock and
         other value determinations applicable to outstanding Stock Options.
         Appropriate adjustments may also be made by the Company in the terms of
         any Stock Options to reflect such changes or distributions and to
         modify any other terms of outstanding Stock Options on an equitable
         basis. In addition, the Company is authorized to make adjustments to
         the terms and conditions of Stock Options, in recognition of unusual or
         nonrecurring events affecting the Company or the financial statements
         of the Company, or in response to changes in applicable laws,
         regulations, or accounting principles.

                       (b) Notwithstanding any other provision hereunder, if
         there is a "Change in Control" (as hereinafter defined) of the Company,
         all then outstanding Stock Options shall immediately become
         exercisable. For purposes of this Section 6(b), a "Change in Control"
         of the Company shall be deemed to have occurred upon any of the
         following events:

                        (i) A change in control of the direction and
                   administration of the Company's business of a nature that
                   would be required to be reported in response to Item 6(e) of
                   Schedule 14A of Regulation 14A promulgated under the
                   Securities Exchange Act of 1934, as amended (the "Exchange
                   Act"); or

                        (ii) During any period of two (2) consecutive years, the
                   individuals who at the beginning of such period constitute
                   the Company's Board of Directors or any individuals who would
                   be "Continuing


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

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

                        (iv) The Company's Board of Directors shall approve a
                   sale of all or substantially all of the assets of the
                   Company, and such transaction shall have been consummated; or

                        (v) The Company's Board of Directors shall approve any
                   merger, consolidation, or like business combination or
                   reorganization of the Company, the consummation of which
                   would result in the occurrence of any event described in
                   Section 6(b)(ii) or (b)(iii) above, and such transaction
                   shall have been consummated.

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

                  For purposes of this Section 6(b), "Continuing Directors"
shall mean (x) the directors of the Company in office on the date that shares of
the Company's Class A Common Stock are first offered for sale to the public and
(y) any successor to any such director and any additional director who after
such date was nominated or selected by a majority of the Continuing Directors in
office at the time of his or her nomination or selection.

                  The Company, in its discretion, may determine that, upon the
occurrence of a Change in Control of the Company, each Stock Option outstanding
hereunder shall terminate within a specified number of days after notice to the
Executive, and the Executive shall receive, with respect to each share of Class
A Common Stock subject to such Stock Option, an amount equal to the excess of
the Market Value of such shares of Common Stock immediately prior to the
occurrence of such Change in Control over the


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exercise price per share of such Stock Option; such amount to be payable in
cash, in one or more kinds of property (including the property, if any, payable
in the transaction) or in a combination thereof, as the Company, in its
discretion, shall determine. The provisions contained in the preceding sentence
shall be inapplicable to any Stock Option awarded hereunder within six (6)
months before the occurrence of a Change in Control if the Executive is subject
to the reporting requirements of Section 16(c) of the Exchange Act and no
exception from liability under Section 16(b) of the Exchange Act is otherwise
available to the Executive.

                  7. WITHHOLDING. All payments or distributions of Stock Options
made hereunder shall be net of any amounts required to be withheld pursuant to
applicable Federal, state and local tax withholding requirements. The Company
may require the Executive to remit to it an amount sufficient to satisfy such
tax withholding requirements prior to the delivery of any certificates for such
Class A Common Stock. The Company may, in its discretion and subject to such
rules as it may adopt (including any as may be required to satisfy applicable
tax and/or non-tax regulatory requirements), permit the Executive to pay all or
a portion of the federal, state and local withholding taxes arising in
connection with any Stock Option by electing to have the Company withhold shares
of Class A Common Stock having a Market Value equal to the amount of tax to be
withheld, such tax calculated at rates required by statute or regulation.

                  8. TENURE. The Executive's right to continue to serve the
Company or any of its subsidiaries as an officer, employee, or otherwise, shall
not be enlarged or otherwise affected by his award hereunder.

                  9. INVESTMENT REPRESENTATION AND RELATED MATTERS. The
Executive hereby represents that Stock Options awarded hereunder are being
acquired for investment purposes and not for sale or with a view to distribution
thereof. The Executive hereby acknowledges that as of the date hereof there does
not exist a Registration Statement on an appropriate form under the Securities
Act and applicable state securities laws that has become effective and includes
a prospectus which is current with respect to shares of Class A Common Stock
subject to Stock Options awarded hereunder. Accordingly, the Executive
acknowledges and agrees that any subsequent offer for sale or sale of any such
shares of Class A Common Stock shall be made either pursuant to (i) a
Registration Statement on appropriate form under the Securities Act and, where
applicable, state securities laws, which Registration Statement shall have
become



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effective and shall be current with respect to the shares of Class A Common
Stock being offered and sold, or (ii) a specific exemption from the registration
requirements of the Securities Act and any applicable securities laws, but in
claiming such exemption, the Executive shall, prior to any offer for sale or
sale of such shares, obtain a favorable written opinion of counsel, in form and
substance satisfactory to counsel for the Company, as to the applicability of
such exemption.

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

                  10. NOTICES. Any notice required or permitted under this
Option Agreement shall be deemed to have been duly given if delivered,
telecopied or mailed, certified or registered mail, return receipt requested to
the Executive,in any case, in accordance with Section 16 of the Employment
Agreement.

                  11. FAILURE TO ENFORCE NOT A WAIVER. The failure of the
Company to enforce at any time any provision of the this Option Agreement shall
in no manner be construed to be a waiver of such provision or of any other
provision hereof.

                  12. GOVERNING LAW. This Option Agreement shall be governed by
and construed according to the laws of the State of New York, applicable to
agreements made and performed in that state.

                  13. PARTIAL INVALIDITY. The invalidity or illegality of any
provision herein shall not be deemed to affect the validity of any other
provision.

                  14. COUNTERPARTS. This Option Agreement may be executed in
counterparts each of which taken together shall constitute one and the same
instrument.

                  15. AMENDMENT. This Option Agreement may not be amended except
by an instrument in writing making specific reference hereto signed by each of
the parties hereto; PROVIDED, HOWEVER, the provisions of Section 1 hereof may
not be amended more than once every six (6) months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974 or the
rules thereunder.




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                  IN WITNESS WHEREOF, the Company has executed this Option
Agreement in duplicate on the date and year first above written.


                          THE ESTEE LAUDER COMPANIES INC.



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


                  The undersigned hereby accepts, and agrees to, all terms and
provisions of the foregoing Option Agreement.


                              /s/ LEONARD A. LAUDER
                              ---------------------
                                  Leonard A. Lauder

















                   [Signature page to Option Agreement, dated November 16, 1995,
between The Estee Lauder Companies Inc. and Leonard A. Lauder.]


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