COTY INC. (Form: 10-Q, Received: 02/04/2016 16:58:28)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2015
				OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE TRANSITION PERIOD FROM TO
			COMMISSION FILE NUMBER

COTY INC.

(Exact name of registrant as specified in its charter)



Delaware		13-3823358
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

350 Fifth Avenue, New York, NY		10118
(Address of principal executive offices)		(Zip Code)

(212) 389-7300

Registrant’s telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



	Large accelerated filer ý		Accelerated filer ¨
	Non-accelerated filer ¨		Smaller reporting company ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

At February 2, 2016 , 75,098,054 shares of the registrant’s Class A Common Stock, $0.01 par value, and 262,062,370 shares of the registrant’s Class B Common Stock, $0.01 par value, were outstanding.

Table of Contents

COTY INC.

INDEX TO FORM 10-Q



		Page
Part I:	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2015 and 2014	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended December 31, 2015 and 2014	2
	Condensed Consolidated Balance Sheets as of December 31, 2015 and June 30, 2015	3
	Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests for the six months ended December 31, 2015 and 2014	4
	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2015 and 2014	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50

Part II:	OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 6.	Exhibits	51

Signatures		53

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data )

(Unaudited )



	Three Months Ended December 31,				Six Months Ended December 31,
	2015		2014		2015			2014
Net revenues	$	1,210.5	$	1,259.6	$	2,322.8		$	2,441.9
Cost of sales	467.7		508.9		911.4			991.1
Gross profit	742.8		750.7		1,411.4			1,450.8
Selling, general and administrative expenses	515.4		534.9		999.7			1,055.5
Amortization expense	18.9		18.5		38.1			37.4
Restructuring costs	10.6		12.0		72.7			52.5
Acquisition-related costs	45.5		1.6		61.3			1.6
Asset impairment charges	—		—		5.5			—
Operating income	152.4		183.7		234.1			303.8
Interest expense, net	14.6		19.1		30.6			38.7
Loss on early extinguishment of debt	3.1		—		3.1			88.8
Other expense, net	24.1		0.3		23.8			0.3
Income before income taxes	110.6		164.3		176.6			176.0
Provision (benefit) for income taxes	13.0		29.4		(54.1		)	24.4
Net income	97.6		134.9		230.7			151.6
Net income attributable to noncontrolling interests	5.3		6.1		9.7			11.1
Net income attributable to redeemable noncontrolling interests	3.3		3.4		6.3			4.5
Net income attributable to Coty Inc.	$	89.0	$	125.4	$	214.7		$	136.0
Net income attributable to Coty Inc. per common share:
Basic	$	0.26	$	0.35	$	0.61		$	0.38
Diluted	0.25		0.35		0.59			0.37
Weighted-average common shares outstanding:
Basic	345.0		353.4		352.5			353.8
Diluted	354.3		362.6		362.0			363.5

Cash dividend declared per common share	$	—	$	—	$	0.25		$	0.20

See notes to Condensed Consolidated Financial Statements.

Table of Contents

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)



	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Net income	$	97.6		$	134.9		$	230.7		$	151.6
Other comprehensive income (loss):
Foreign currency translation adjustment	(1.6		)	(54.1		)	(18.8		)	(134.0		)
Net unrealized derivative gains on cash flow hedges, net of taxes of $0.1 and $(1.2), and $(0.7) and $(2.4) during the three and six months ended, respectively	2.8			8.2			7.3			14.6
Pension and other post-employment benefits (losses), net of tax of nil and $0.1, and nil and $0.1 during the three and six months ended, respectively	—			(0.2		)	0.2			(0.2		)
Total other comprehensive income (loss), net of tax	1.2			(46.1		)	(11.3		)	(119.6		)
Comprehensive income	98.8			88.8			219.4			32.0
Comprehensive income attributable to noncontrolling interests:
Net income	5.3			6.1			9.7			11.1
Foreign currency translation adjustment	0.2			(0.6		)	(0.3		)	(0.6		)
Total comprehensive income attributable to noncontrolling interests	5.5			5.5			9.4			10.5
Comprehensive income attributable to redeemable noncontrolling interests:
Net income	3.3			3.4			6.3			4.5
Foreign currency translation adjustment	(0.1		)	(0.1		)	—			(0.3		)
Total comprehensive income attributable to redeemable noncontrolling interests	3.2			3.3			6.3			4.2
Comprehensive income attributable to Coty Inc.	$	90.1		$	80.0		$	203.7		$	17.3

See notes to Condensed Consolidated Financial Statements.

Table of Contents

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data )

(Unaudited)



	December 31, 2015			June 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	482.7		$	341.3
Trade receivables—less allowances of $22.9 and $19.6, respectively	697.2			679.6
Inventories	505.9			557.8
Prepaid expenses and other current assets	170.6			191.0
Deferred income taxes	84.2			86.7
Total current assets	1,940.6			1,856.4
Property and equipment, net	486.9			500.2
Goodwill	1,530.9			1,530.7
Other intangible assets, net	1,856.3			1,913.6
Deferred income taxes	9.2			10.4
Other noncurrent assets	687.8			207.6
TOTAL ASSETS	$	6,511.7		$	6,018.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	781.4		$	748.4
Accrued expenses and other current liabilities	828.4			719.2
Short-term debt and current portion of long-term debt	85.6			28.8
Income and other taxes payable	8.2			22.4
Deferred income taxes	9.3			7.4
Total current liabilities	1,712.9			1,526.2
Long-term debt, net	3,570.9			2,605.9
Pension and other post-employment benefits	202.5			206.5
Deferred income taxes	340.1			352.6
Other noncurrent liabilities	183.8			256.7
Total liabilities	6,010.2			4,947.9
COMMITMENTS AND CONTINGENCIES (Note 18)
REDEEMABLE NONCONTROLLING INTERESTS	82.1			86.3
EQUITY:
Preferred Stock, $0.01 par value; 20.0 shares authorized, 1.9 issued and 1.7 and 1.9 outstanding, respectively, at December 31, 2015 and June 30, 2015	—			—
Class A Common Stock, $0.01 par value; 800.0 shares authorized, 136.0 and 134.0 issued, respectively, and 75.0 and 98.8 outstanding, respectively, at December 31, 2015 and June 30, 2015	1.4			1.3
Class B Common Stock, $0.01 par value; 262.0 shares authorized, issued and outstanding, respectively, at December 31, 2015 and June 30, 2015	2.6			2.6
Additional paid-in capital	2,004.5			2,044.4
Accumulated surplus (deficit)	20.8			(193.9		)
Accumulated other comprehensive loss	(285.0		)	(274.0		)
Treasury stock—at cost, shares: 61.1 and 35.2 at December 31, 2015 and June 30, 2015, respectively	(1,338.5		)	(610.6		)
Total Coty Inc. stockholders’ equity	405.8			969.8
Noncontrolling interests	13.6			14.9
Total equity	419.4			984.7
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	6,511.7		$	6,018.9

See notes to Condensed Consolidated Financial Statements.

Table of Contents

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND

REDEEMABLE NONCONTROLLING INTERESTS

For the Six Months Ended December 31, 2015

(In millions, except per share data)

(Unaudited)



	Preferred Stock				Class A Common Stock			Class B Common Stock			Additional Paid-in			(Accumulated			Accumulated Other Comprehensive			Treasury Stock				Total Coty Inc. Stockholders’			Noncontrolling			Total			Redeemable Noncontrolling
	Shares		Amount		Shares	Amount		Shares	Amount		Capital			Deficit)/Surplus			Loss			Shares	Amount			Equity			Interests			Equity			Interests
BALANCE—July 1, 2015	1.9		$	—	134.0	$	1.3	262.0	$	2.6	$	2,044.4		$	(193.9	)	$	(274.0	)	35.2	$	(610.6	)	$	969.8		$	14.9		$	984.7		$	86.3
Cancellation of Preferred Stock	(0.2	)	—								(0.1		)											(0.1		)				(0.1		)
Purchase of Class A Common Stock																				25.9	(727.9		)	(727.9		)				(727.9		)
Reclassification of Class A Common Stock from liability to APIC											13.8													13.8						13.8
Exercise of employee stock options and restricted stock units and related tax benefits					2.0	0.1					20.0													20.1						20.1
Series A Preferred Share based compensation expense											0.5													0.5						0.5
Share-based compensation expense											11.6													11.6						11.6
Dividends ($0.25 per common share)											(89.6		)											(89.6		)				(89.6		)
Net income														214.7										214.7			9.7			224.4			6.3
Other comprehensive loss																	(11.0		)					(11.0		)	(0.3		)	(11.3		)	—
Distribution to noncontrolling interests, net																											(10.7		)	(10.7		)	(6.6		)
Adjustment of redeemable noncontrolling interests to redemption value											3.9													3.9						3.9			(3.9		)
BALANCE—December 31, 2015	1.7		$	—	136.0	$	1.4	262.0	$	2.6	$	2,004.5		$	20.8		$	(285.0	)	61.1	$	(1,338.5	)	$	405.8		$	13.6		$	419.4		$	82.1

See notes to Condensed Consolidated Financial Statements.

Table of Contents

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND

REDEEMABLE NONCONTROLLING INTERESTS

For the Six Months Ended December 31, 2014

(In millions, except per share data)

(Unaudited)



	Class A Common Stock			Class B Common Stock			Additional Paid-in			(Accumulated			Accumulated Other Comprehensive			Treasury Stock				Total Coty Inc. Stockholders’			Noncontrolling			Total			Redeemable Noncontrolling
	Shares	Amount		Shares	Amount		Capital			Deficit)			Loss			Shares	Amount			Equity			Interests			Equity			Interests
BALANCE—July 1, 2014	125.1	$	1.2	263.7	$	2.6	$	1,926.9		$	(426.4	)	$	(85.1	)	34.9	$	(575.4	)	$	843.8		$	10.6		$	854.4		$	106.2
Purchase of Class A Common Stock																7.6	(149.2		)	(149.2		)				(149.2		)
Reclassification of common stock and stock options to liability							(29.5		)											(29.5		)				(29.5		)
Reclassification of Class A Common Stock from liability to APIC							29.5													29.5						29.5
Exercise of former CEO stock options	1.4	—					12.5													12.5						12.5
Purchase of Class A Common Stock from former CEO																2.4	(42.0		)	(42.0		)				(42.0		)
Exercise of employee stock options and restricted share units	2.8	0.1					22.3													22.4						22.4
Share-based compensation expense							8.1													8.1						8.1
Dividends ($0.20 per common share)							(71.8		)											(71.8		)				(71.8		)
Net income										136.0										136.0			11.1			147.1			4.5
Other comprehensive loss													(118.7		)					(118.7		)	(0.6		)	(119.3		)	(0.3		)
Distribution to noncontrolling interests, net																							1.8			1.8			(3.2		)
Dividend payable to redeemable noncontrolling interest holder																													(5.9		)
Redeemable noncontrolling interest purchase adjustment																													(16.2		)
Adjustment of redeemable noncontrolling interests to redemption value							0.2													0.2						0.2			(0.2		)
BALANCE—December 31, 2014	129.3	$	1.3	263.7	$	2.6	$	1,898.2		$	(290.4	)	$	(203.8	)	44.9	$	(766.6	)	$	641.3		$	22.9		$	664.2		$	84.9

Table of Contents

COTY INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



	Six Months Ended December 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	230.7		$	151.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	112.9			116.7
Asset impairment charges	5.5			—
Deferred income taxes	(92.0		)	(10.3		)
Provision for bad debts	1.6			2.3
Provision for pension and other post-employment benefits	6.1			10.2
Share-based compensation	12.0			8.1
Loss on early extinguishment of debt	3.1			88.8
Other	25.6			10.5
Change in operating assets and liabilities, net of effects from purchase of acquired companies:
Trade receivables	(45.7		)	(130.7		)
Inventories	35.1			48.6
Prepaid expenses and other current assets	19.6			(3.3		)
Accounts payable	64.7			(29.0		)
Accrued expenses and other current liabilities	122.7			126.3
Tax accruals	(29.2		)	(40.4		)
Other noncurrent assets	6.5			3.7
Other noncurrent liabilities	37.9			1.9
Net cash provided by operating activities	517.1			355.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(78.4		)	(103.1		)
Payment for actual and anticipated business combinations, net of cash acquired	(447.3		)	(0.6		)
Proceeds from sale of asset	0.1			14.2
Payments related to loss on foreign currency contracts	(18.1		)	—
Net cash used in investing activities	(543.7		)	(89.5		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt, original maturity more than three months	12.9			625.6
Repayments of short-term debt, original maturity more than three months	(14.4		)	(25.2		)
Net (payments) proceeds from short-term debt, original maturity less than three months	(15.9		)	14.6
Proceeds from revolving loan facilities	1,035.0			495.0
Repayments of revolving loan facilities	(490.0		)	(494.5		)
Proceeds from term loans	2,979.6			—
Repayments of term loans	(2,475.0		)	—
Proceeds from issuance of long-term debt	—			0.9
Repayment of Senior Notes	—			(584.6		)
Dividend payment	(89.0		)	(71.0		)
Net proceeds from issuance of Class A Common Stock and related tax benefits	20.1			22.4
Net proceeds from issuance of Class A Common Stock to former CEO	—			12.5
Purchase of Class A Common Stock from former CEO	—			(42.0		)
Payments for purchases of Class A Common Stock held as Treasury Stock	(727.9		)	(149.2		)
Net proceeds from foreign currency contracts	31.0			6.8
Payment for business combinations – contingent consideration	—			(0.8		)
Proceeds from noncontrolling interests	—			1.8
Distributions to noncontrolling interests	(10.7		)	—
Purchase of additional noncontrolling interests	—			(14.9		)
Distributions to redeemable noncontrolling interests	(8.1		)	(3.2		)
Payment of deferred financing fees	(53.7		)	(5.0		)
Net cash provided by (used in) financing activities	193.9			(210.8		)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(25.9		)	(89.5		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	141.4			(34.8		)
CASH AND CASH EQUIVALENTS—Beginning of period	341.3			1,238.0
CASH AND CASH EQUIVALENTS—End of period	$	482.7		$	1,203.2
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for interest	$	29.9		$	32.8
Cash paid during the period for income taxes, net of refunds received	59.6			70.0
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Accrued capital expenditure additions	$	31.5		$	27.6
Non-cash capital contribution associated with special share purchase transaction	13.8			—

See notes to Condensed Consolidated Financial Statements.

Table of Contents

COTY INC. & SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

($ in millions, except per share data)

(Unaudited)

1. DESCRIPTION OF BUSINESS

Coty Inc. and its subsidiaries (collectively, the “Company” or “Coty”) engage in the manufacturing, marketing and distribution of fragrances, color cosmetics and skin & body care related products in numerous countries throughout the world.

The Company operates on a fiscal year basis with a year-end of June 30 . Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2016 ” refer to the fiscal year ending June 30, 2016 .

The Company’s revenues generally increase during the second fiscal quarter as a result of increased demand associated with the holiday season. Accordingly, the Company’s financial performance, working capital requirements, cash flow and borrowings experience seasonal variability during the three to six months preceding this season.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited interim Condensed Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and include consolidated domestic and international subsidiaries. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements and accompanying footnotes should be read in conjunction with the Company’s Consolidated Financial Statements as of and for the year ended June 30, 2015 . In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair presentation have been included in the Condensed Consolidated Financial Statements. The results of operations for the three and six months ended December 31, 2015 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 2016 .

Related Parties

As of December 31, 2015, the Company is a majority-owned subsidiary of JAB Cosmetics B.V. (“JABC”). Both JABC and the shares of the Company are indirectly controlled by Lucresca SE, Agnaten SE and JAB Holdings B.V. (“JAB”). The Company does not generally enter into material transactions with related parties other than certain share transactions with JABC and certain executives as described in Notes 15 and 16.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, the market value of inventory, the fair value of acquired assets and liabilities associated with acquisitions, the fair value of share-based compensation, pension and other post-employment benefit costs, the fair value of the Company’s reporting units, and the assessment of goodwill, other intangible assets and long-lived assets for impairment, income taxes, derivatives and redeemable noncontrolling interests when calculating the impact on Earnings Per Share (“EPS”). Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the Condensed Consolidated Financial Statements in future periods.

Tax Information

The effective income tax rate for the three months ended December 31, 2015 and 2014 was 11.8% and 17.9% , and for the six months ended December 31, 2015 and 2014 was (30.6)% and 13.9% , respectively. The effective tax rate for the six months ended December 31, 2015 includes the net impact of the settlement with the Internal Revenue Service (“IRS”) as described below. The effective income tax rate for the six months ended December 31, 2014 includes the net impact of favorable tax audit resolutions in multiple jurisdictions, partially offset by the negative impact of the tax expense associated with the planned intercompany transfer of certain license agreements substantially utilized in the Company’s foreign operations.

Table of Contents

During the first quarter of fiscal 2016, the Company reached final settlement with the IRS in connection with the 2004–2012 examination periods. The settlement primarily relates to the acquisition of the Calvin Klein fragrance business. In connection with the settlement, the Company recognized a tax benefit of approximately $193.9 of which $164.2 is mainly due to the recognition of additional deferred tax assets related to the basis of the Calvin Klein trademark, and approximately $29.7 resulted from the reduction of gross unrecognized tax benefits. Of the $193.9 tax benefit, $113.0 was offset by a valuation allowance due to on-going operating losses in the U.S.

The effective income tax rates vary from the U.S. federal statutory rate of 35% due to the effect of (i) jurisdictions with different statutory rates, (ii) adjustments to the Company’s unrealized tax benefits (“UTBs”) and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes.

As of December 31, 2015 and June 30, 2015 , the gross amount of UTBs was $189.2 and $342.6 , respectively. As of December 31, 2015 , the total amount of UTBs that, if recognized, would impact the effective income tax rate is $67.1 . As of December 31, 2015 and June 30, 2015 , the liability associated with UTBs, including accrued interest and penalties, was $78.7 and $182.9 , respectively, which was recorded in Income and other taxes payable and Other non-current liabilities in the Condensed Consolidated Balance Sheets. The total interest and penalties recorded in the Condensed Consolidated Statements of Operations related to UTBs for the three months ended December 31, 2015 and 2014 was $0.7 and $(2.3) , and for the six months ended December 31, 2015 and 2014 was $2.0 and $ (3.2) respectively. The total gross accrued interest and penalties recorded in the Condensed Consolidated Balance Sheets as of December 31, 2015 and June 30, 2015 was $7.9 and $15.2 , respectively. On the basis of the information available as of December 31, 2015 , it is reasonably possible that a decrease of up to $3.5 in UTBs may occur within 12 months as a result of projected resolutions of global tax examinations and a potential lapse of the applicable statutes of limitations.

Recently Issued Accounting Pronouncements

In January 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance relating to the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The new guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The accounting for other financial instruments, such as loans, investments in debt securities and financial liabilities is largely unchanged. The amendment will be effective for the Company in fiscal 2019. The Company is currently evaluating the impact the amendment will have on the Company’s Consolidated Financial Statements.

In November 2015, the FASB issued authoritative guidance relating to the classification of deferred taxes. The recently issued guidance will require all deferred income tax liabilities and assets to be classified as non-current. The amendment will be effective for the Company in fiscal 2018 either on a prospective or retrospective accounting basis. The Company is currently evaluating the impact the amendment will have on the Company’s Consolidated Financial Statements.

In September 2015, the FASB issued authoritative guidance related to adjustments within the measurement period for business combinations. The amendment requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendment requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendment also requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments will be effective for the Company for fiscal 2017 using a prospective approach, with early adoption permitted. The Company is evaluating the impact this amendment will have on the Company’s Consolidated Financial Statements.

In April 2015, the FASB issued authoritative guidance on the treatment of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This amendment will be effective for the Company’s interim and annual consolidated financial statements for fiscal 2017 using a retrospective approach. Additionally, in August 2015, the FASB issued authoritative guidance related to the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The Company is evaluating the impact these amendments will have on the Company’s Consolidated Financial Statements.

In June 2014, the FASB issued authoritative guidance that implements a common revenue model that will enhance comparability across industries and require enhanced disclosures. The new standard introduces a five step principles based process to determine the timing and amount of revenue ultimately expected to be received by the customer. This amendment will be effective for the Company’s interim and annual consolidated financial statements for fiscal 2019 with either retrospective or modified retrospective treatment applied, and the Company is evaluating the impact this will have on the Company’s Consolidated Financial Statements upon implementation.

Table of Contents

3. SEGMENT REPORTING

Operating segments include components of the enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has designated its Chief Executive Officer as the CODM. The Company’s operating and reportable segments are Fragrances, Color Cosmetics and Skin & Body Care (also referred to as “segments”). The reportable segments also represent the Company’s product groupings. The items within Corporate relate to corporate-based responsibilities and decisions and are not used by the CODM to measure the underlying performance of the segments. Corporate primarily includes a component of share-based compensation expense, restructuring costs, costs related to acquisition activities and certain other expense items not attributable to ongoing operating activities of the segments.



	Three Months Ended December 31,						Six Months Ended December 31,
SEGMENT DATA	2015			2014			2015			2014
Net revenues:
Fragrances	$	627.0		$	691.7		$	1,175.1		$	1,332.6
Color Cosmetics	374.8			340.5			765.7			684.6
Skin & Body Care	208.7			227.4			382.0			424.7
Total	$	1,210.5		$	1,259.6		$	2,322.8		$	2,441.9
Operating income
Fragrances	$	128.7		$	145.5		$	237.6		$	266.0
Color Cosmetics	58.4			40.0			116.1			82.5
Skin & Body Care	27.5			15.1			34.3			18.8
Corporate	(62.2		)	(16.9		)	(153.9		)	(63.5		)
Total	$	152.4		$	183.7		$	234.1		$	303.8
Reconciliation:
Operating income	$	152.4		$	183.7		$	234.1		$	303.8
Interest expense, net	14.6			19.1			30.6			38.7
Loss on early extinguishment of debt	3.1			—			3.1			88.8
Other expense, net	24.1			0.3			23.8			0.3
Income before income taxes	$	110.6		$	164.3		$	176.6		$	176.0

Within the Company’s reportable segments, product categories exceeding 5% of consolidated net revenues are presented below:

Table of Contents



	Three Months Ended December 31,				Six Months Ended December 31,
PRODUCT CATEGORY	2015		2014		2015		2014
Fragrances:
Designer	39.5	%	39.2	%	38.7	%	40.1	%
Lifestyle	7.4		9.2		6.7		8.1
Celebrity	4.9		6.5		5.1		6.4
Total	51.8	%	54.9	%	50.5	%	54.6	%
Color Cosmetics:
Nail Care	12.3	%	11.7	%	13.7	%	12.7	%
Other Color Cosmetics	18.6		15.3		19.3		15.3
Total	30.9	%	27.0	%	33.0	%	28.0	%
Skin & Body Care:
Body Care	11.6	%	12.7	%	11.1	%	12.1	%
Skin Care	5.7		5.4		5.4		5.3
Total	17.3	%	18.1	%	16.5	%	17.4	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

4. RESTRUCTURING COSTS

Restructuring costs for the three and six months ended December 31, 2015 and 2014 are presented below:



	Three Months Ended December 31,					Six Months Ended December 31,
	2015			2014		2015		2014
Acquisition Integration Program	$	(0.9	)	$	—	$	45.6	$	—
Organizational Redesign	7.9			11.8		23.5		52.5
Productivity Program	3.6			0.2		3.6		—
Total	$	10.6		$	12.0	$	72.7	$	52.5

Acquisition Integration Program

In the first quarter of fiscal 2016, the Company’s Board of Directors (the “Board”) approved an expansion to the Acquisition Integration Program in connection with the recent acquisition of the Bourjois brand. Actions and cash payments associated with the program were initiated after the acquisition of Bourjois and are expected to be substantially completed by the end of fiscal 2017. The Company anticipates the Acquisition Integration Program will result in pre-tax restructuring and related costs of approximately $67.0 , all of which will result in cash payments. The Company incurred $60.9 of restructuring costs life-to-date as of December 31, 2015 , which have been recorded in Corporate.

The related liability balance and activity for the Acquisition Integration Program costs are presented below:



	Total Program Costs
Balance—July 1, 2015	$	15.3
Restructuring charges	46.7
Payments	(5.7		)
Changes in estimates	(1.1		)
Effect of exchange rates	(1.6		)
Balance—December 31, 2015	$	53.6

The Company currently estimates that the total remaining accrual of $53.6 will result in cash expenditures of approximately $9.6 and $44.0 in fiscal 2016 and 2017, respectively.

Table of Contents

Organizational Redesign

During the fourth quarter of fiscal 2014, the Board approved a program associated with a new organizational structure (“Organizational Redesign”) that aims to reinforce the Company’s growth path and strengthen its position as a global leader in beauty. The Company anticipates that the Organizational Redesign will result in pre-tax restructuring and related costs of $145.0 to $180.0 , all of which will result in cash payments. The Company anticipates substantial completion of all project activities by the end of fiscal 2017, with the remaining costs primarily charged to Corporate. The Company incurred $95.1 of restructuring costs life-to-date as of December 31, 2015 , which have been recorded in Corporate.

The related liability balance and activity for the Organizational Redesign costs are presented below:



	Severance and Employee Benefits			Third-Party Contract Terminations			Other Exit Costs			Total Program Costs
Balance—July 1, 2015	$	32.0		$	—		$	0.1		$	32.1
Restructuring charges	24.5			0.3			0.6			25.4
Payments	(14.4		)	—			(0.3		)	(14.7		)
Changes in estimates	(1.8		)	(0.1		)	—			(1.9		)
Effect of exchange rates	(0.4		)	—			(0.3		)	(0.7		)
Balance—December 31, 2015	$	39.9		$	0.2		$	0.1		$	40.2

The Company currently estimates that the total remaining accrual of $40.2 will result in cash expenditures of $22.2 , $17.0 , and $1.0 in fiscal 2016, 2017 and 2018, respectively.

Productivity Program

During the fourth quarter of fiscal 2013 , the Board approved a number of business integration and productivity initiatives aimed at enhancing long-term operating margins (the “Productivity Program”). Such activities primarily relate to integration of supply chain and selling activities within the Skin & Body Care segment, as well as certain commercial organization redesign activities, primarily in Europe and optimization of selected administrative support functions.

The Company anticipates that the Productivity Program will result in pre-tax restructuring and related costs of approximately $70.0 . The Company anticipates completing the implementation of all project activities by the end of fiscal 2016. The Company incurred $45.2 of restructuring costs life-to-date as of December 31, 2015 , which have been recorded in Corporate.

The related liability balance and activity for the Productivity Program costs are presented below:



	Severance and Employee Benefits			Third-Party Contract Terminations		Other Exit Costs		Total Program Costs
Balance—July 1, 2015	$	7.0		$	—	$	—	$	7.0
Restructuring charges	3.6			—		—		3.6
Payments	(3.2		)	—		—		(3.2		)
Changes in estimates	—			—		—		—
Effect of exchange rates	(0.3		)	—		—		(0.3		)
Balance—December 31, 2015	$	7.1		$	—	$	—	$	7.1

The Company currently estimates that the total remaining accrual of $7.1 will result in cash expenditures of approximately $5.4 and $1.7 in fiscal 2016 and 2017, respectively.

5. BUSINESS COMBINATIONS

Bourjois Acquisition

On April 1, 2015, the Company completed its purchase of 100% of the net assets of Bourjois from Chanel International B.V. (“CHANEL”) pursuant to the Stock Purchase Agreement, dated March 12, 2015, between the Company and CHANEL (the “Stock Purchase Agreement”) for a total purchase price of $376.8 .

The fair value of assets acquired and liabilities assumed from the Company’s acquisition of Bourjois was based on a preliminary valuation and the Company’s estimates and assumptions are subject to change within the measurement period. For the six months ended December 31, 2015 there were no adjustments to the fair value of the Bourjois assets acquired or

Table of Contents

liabilities assumed. As of December 31, 2015, the Company is still evaluating the fair value of certain intangible assets and finalizing the accounting for income taxes. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period in fiscal 2016.

Goodwill is deductible for tax purposes and is attributable to expected synergies. Goodwill of $148.7 , $11.1 , and $35.0 was allocated to the Color Cosmetics, Skin & Body Care, and Fragrances segments, respectively.

The Company recognized $0.4 and $1.6 for the three months ended December 31, 2015 and 2014, respectively, and $1.1 and $1.6 for the six months ended December 31, 2015 and 2014, respectively, of costs associated with this acquisition, which are included in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

6. ACQUISITION-RELATED COSTS

Acquisition-related costs represent costs directly related to acquiring a company, for both completed and/or contemplated acquisition offers and can include finder’s fees, legal, accounting, valuation, other professional or consulting fees, and other internal costs which can include compensation related expenses for dedicated internal resources. The Company recognized acquisition-related costs of $45.5 and $1.6 for the three months ended December 31, 2015 and 2014 and $61.3 and $1.6 for the six months ended December 31, 2015 and 2014, respectively, which have been recorded in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

7. INVENTORIES

Inventories as of December 31, 2015 and June 30, 2015 are presented below:



	December 31, 2015		June 30, 2015
Raw materials	$	135.7	$	160.9
Work-in-process	6.4		8.4
Finished goods	363.8		388.5
Total inventories	$	505.9	$	557.8

8. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

Goodwill as of December 31, 2015 and June 30, 2015 is presented below:



	Fragrances			Color Cosmetics			Skin & Body Care			Total
Gross balance at June 30, 2015	$	720.8		$	677.3		$	773.4		$	2,171.5
Accumulated impairments	—			—			(640.8		)	(640.8		)
Net balance at June 30, 2015	$	720.8		$	677.3		$	132.6		$	1,530.7

Changes during the period ended December 31, 2015:
Acquisitions ^(a)	6.9			4.5			2.3			13.7
Foreign currency translation	(4.5		)	(9.0		)	—			(13.5		)

Gross balance at December 31, 2015	$	723.2		$	672.8		$	775.7		$	2,171.7
Accumulated impairments	—			—			(640.8		)	(640.8		)
Net balance at December 31, 2015	$	723.2		$	672.8		$	134.9		$	1,530.9

^(a) During the six months ended December 31, 2015, the Company acquired 100% of the issued share capital of Beamly Limited (the “digital marketing company”) for a purchase price of $17.9 , in a transaction accounted for as a business combination.

Table of Contents

Other Intangible Assets

Other intangible assets, net as of December 31, 2015 and June 30, 2015 are presented below:



	December 31, 2015		June 30, 2015
Indefinite-lived other intangible assets, net ^(a)	$	1,264.7	$	1,274.0
Finite-lived other intangible assets, net	591.6		639.6
Total Other intangible assets, net	$	1,856.3	$	1,913.6

^(a) The balance of the Indefinite-lived other intangible assets is comprised solely of trademarks, net of accumulated impairments of $197.8 as of December 31, 2015 and June 30, 2015 .

Intangible assets subject to amortization are presented below:



	Cost		Accumulated Amortization			Accumulated Impairment			Net
June 30, 2015
License agreements	$	800.7	$	(501.1	)	$	—		$	299.6
Customer relationships	559.1		(232.8		)	—			326.3
Trademarks	119.1		(108.2		)	—			10.9
Product formulations	32.7		(29.9		)	—			2.8
Total	$	1,511.6	$	(872.0	)	$	—		$	639.6
December 31, 2015
License agreements	$	797.0	$	(514.9	)	$	—		$	282.1
Customer relationships	553.8		(251.3		)	(5.5		)	297.0
Trademarks	117.3		(107.0		)	—			10.3
Product formulations	32.3		(30.1		)	—			2.2
Total	$	1,500.4	$	(903.3	)	$	(5.5	)	$	591.6

Amortization expense totaled $18.9 and $18.5 , for the three months ended December 31, 2015 and 2014, respectively, and $38.1 and $37.4 for the six months ended December 31, 2015 and 2014, respectively.

In conjunction with the Company’s analysis of its go-to-market strategy in Southeast Asia during the first quarter of fiscal 2016, the Company evaluated future cash flows for this asset group and determined that the carrying value exceeded the undiscounted cash flows. As a result, the Company evaluated the fair value of the long-lived assets in the asset group, through an analysis of discounted future cash flows, and determined that the customer relationships were fully impaired and thus recorded nil and $5.5 of asset impairment charges in the Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2015, respectively.

9. OTHER NONCURRENT ASSETS

As of December 31, 2015 and June 30, 2015, Other noncurrent assets was $687.8 and $207.6 , respectively.

Pursuant to a Shares and Trademarks Sale and Purchase Agreement (the "Share Purchase Agreement") dated November 2, 2015, the Company agreed to acquire 100% of the net assets of a beauty business (the “Brazilian Beauty Business”) from Hypermarcas S.A., a consumer goods company based in Brazil. The total cash consideration net of preliminary working capital adjustments was R $3,539.0 million , the equivalent of $886.7 as described in Note 19. The Share Purchase Agreement required an advance payment of R $1,710.0 million , the equivalent of $429.4 , which was paid on December 28, 2015 and is included in Other noncurrent assets in the Company's Condensed Consolidated Balance Sheet as of December 31, 2015.

Table of Contents

10. DEBT



	December 31, 2015			June 30, 2015
Short-term debt	$	10.2		$	22.1
Coty Credit Agreement
Revolving Credit Facility due October 2020	675.0			—
Term Loan A Facility due October 2020	1,750.0			—
Term Loan B Facility due October 2022	1,226.6			—
2015 Credit Agreement due March 2018	—			800.0
Coty Inc. Credit Facility
2013 Term Loan due March 2018	—			1,050.0
Incremental Term Loan due April 2018	—			625.0
Revolving Loan Facility due April 2018	—			136.5
Other long-term debt and capital lease obligations	0.6			1.1
Total debt	3,662.4			2,634.7
Less: Short-term debt and current portion of long-term debt	(85.6		)	(28.8		)
Total Long-term debt	3,576.8			2,605.9
Less: Discount on Long-term debt	(5.9		)	—
Total Long-term debt, net	$	3,570.9		$	2,605.9

Coty Credit Agreement

On October 27, 2015, the Company entered into a Credit Agreement (the “Coty Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The Coty Credit Agreement provides for senior secured credit facilities (the “Senior Secured Facilities”) comprised of (i) a five year revolving credit facility in an aggregate principal amount up to $ 1,500.0 (the “Revolving Credit Facility”) which includes up to $80.0 in swingline loans available for short term borrowings, (ii) a $1,750.0 Term Loan A Facility (“Term Loan A Facility”) and (iii) a Term Loan B Facility comprising of a $500.0 tranche and a € 665.0 million tranche (“Term Loan B Facility”). The Term Loan B Facility was issued at a 0.50% discount. The proceeds of the Coty Credit Agreement were primarily used to refinance the Company’s previously existing debt, which included the 2015 Credit Agreement due March 2018 and facilities under the Coty Inc. Credit Facility (together, the “Prior Coty Inc. Credit Facilities”).

The interest rate applicable to borrowings under the Revolving Credit Facility and the Term Loan A Facility will accrue at a rate equal to, at the Company’s option, either LIBOR plus a margin ranging from 1.00% to 2.00% per annum or a base rate plus a margin ranging from 0.00% to 1.00% per annum, based on the Company’s total net leverage ratio, as defined in the Coty Credit Agreement. As of December 31, 2015, the applicable spread for the Revolving Credit Facility and the Term Loan A Facility was 1.50% .

The interest rate applicable to borrowings under the Term Loan B Facility will accrue at a rate equal to (a) for U.S. dollar term loans, at the Company’s option, either LIBOR (subject to a 0.75% floor) plus a margin of 3.00% or a base rate (subject to a 1.75% floor), plus a margin of 2.00% , and (b) for Euro denominated term loans, EURIBOR (subject to a 0.75% floor) plus a margin of 2.75% . The Company will pay to the revolving lenders an unused commitment fee calculated at a rate ranging from 0.25% to 0.50% per annum, based on the Company’s total net leverage ratio, as defined in the Coty Credit Agreement. As of December 31, 2015, the applicable rate on the unused commitment fee was 0.50% .

Quarterly repayments for the Term Loan A Facility and Term Loan B Facility will commence on June 30, 2016 and will continue to be made in quarterly installments of 1.25% and 0.25% of the original principal amount, respectively. The Revolving Credit Facility and Term Loan A Facility will mature in October 2020 and the Term Loan B Facility will mature in October 2022.

The Company recognized $56.5 of deferred financing fees in connection with the Coty Credit Agreement. In connection with the refinancing, the Company wrote off $3.1 of deferred financing fees associated with the Prior Coty Inc. Credit Facilities, which has been reflected in Loss on early extinguishment of debt in the Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2015.

The Coty Credit Agreement is guaranteed by Coty Inc.’s wholly-owned domestic subsidiaries and secured by a first priority lien on substantially all of the assets of Coty Inc. and its wholly-owned domestic subsidiaries, in each case subject to certain carve outs and exceptions.

Table of Contents

Debt Covenants

The Company is required to comply with certain affirmative and negative covenants contained within the Coty Credit Agreement. The Coty Credit Agreement includes a financial covenant that requires the Company to maintain a total net leverage ratio, as defined therein, equal to or less than 5.50 to 1.00 for each fiscal quarter through December 31, 2016, subject to certain agreed step-downs thereafter. In the four fiscal quarters following the closing of any material acquisition, as defined in the Coty Credit Agreement, the applicable leverage ratio shall be the lesser of 1.00 to 1.00 higher than the applicable rate at the time, and 5.95 to 1.00. After the four fiscal quarter period ends, the net leverage ratio levels will return to pre-material acquisition levels.

As of December 31, 2015, the Company is in compliance with all financial covenants within the Coty Credit Agreement as described above.

11. INTEREST EXPENSE, NET

Interest expense, net for the three and six months ended December 31, 2015 and 2014 is presented below:



	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Interest expense	$	25.3		$	17.4		$	40.3		$	36.8
Foreign exchange (gains) losses, net of derivative contracts ^(a)	(10.2		)	2.4			(8.7		)	3.7
Interest income	(0.5		)	(0.7		)	(1.0		)	(1.8		)
Total interest expense, net	$	14.6		$	19.1		$	30.6		$	38.7

^(a) During the three months ended December 31, 2015 the Company recorded a gain of $11.1 related to short-term forward contracts to exchange Euros for U.S. Dollars related to the Euro tranche of debt issued during the quarter. These short-term forward contracts were entered into to facilitate the repayment of the Company’s then existing U.S. Dollar denominated term loans as part of the debt refinancing discussed in Note 10. Fluctuations in exchange rates between the dates the short-term forward contracts were entered into and the settlement date resulted in a gain upon settlement of $11.1 included within Total interest expense, net for the three and six months ended December 31, 2015 in the Company’s Condensed Consolidated Statements of Operations.

12. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost for pension plans and other post-employment benefit plans recognized in the Condensed Consolidated Statements of Operations are presented below for the three and six months ended December 31, 2015 and 2014 :



	Three Months Ended December 31,
	Pension Plans												Other Post- Employment
	U.S.						International						Benefits						Total
	2015			2014			2015			2014			2015			2014			2015			2014
Service cost	$	—		$	—		$	1.7		$	1.5		$	0.3		$	0.7		$	2.0		$	2.2
Interest cost	0.8			0.8			0.9			1.2			0.5			1.0			2.2			3.0
Expected return on plan assets	(0.6		)	(0.7		)	(0.3		)	(0.4		)	—			—			(0.9		)	(1.1		)
Amortization of prior service (credit) cost	—			—			0.1			—			(1.4		)	(0.1		)	(1.3		)	(0.1		)
Amortization of net loss	0.3			0.5			0.8			0.9			—			—			1.1			1.4
Curtailment gain	—			—			—			(0.8		)	—			—			—			(0.8		)
Net periodic benefit cost (credit)	$	0.5		$	0.6		$	3.2		$	2.4		$	(0.6	)	$	1.6		$	3.1		$	4.6

Table of Contents



	Six Months Ended December 31,
	Pension Plans												Other Post- Employment
	U.S.						International						Benefits						Total
	2015			2014			2015			2014			2015			2014			2015			2014
Service cost	$	—		$	—		$	3.4		$	3.0		$	0.6		$	1.3		$	4.0		$	4.3
Interest cost	1.6			1.7			1.8			2.4			1.0			2.0			4.4			6.1
Expected return on plan assets	(1.2		)	(1.5		)	(0.6		)	(0.7		)	—			—			(1.8		)	(2.2		)
Amortization of prior service (credit) cost	—			—			0.2			0.1			(2.8		)	(0.1		)	(2.6		)	—
Amortization of net loss	0.6			1.0			1.6			1.8			—			—			2.2			2.8
Curtailment gain	—			—			—			(0.8		)	—			—			—			(0.8		)
Net periodic benefit cost (credit)	$	1.0		$	1.2		$	6.4		$	5.8		$	(1.2	)	$	3.2		$	6.2		$	10.2

In June 2015, the Board approved the termination of the U.S. Del Labs pension plan with a proposed plan termination date of September 30, 2015. On July 31, 2015, the Company filed a determination letter request with the IRS to approve the termination of the U.S. Del Labs pension plan. As of December 31, 2015, the Company has not received notification from the IRS in response to the determination letter request. The Company expects the termination of the plan will be completed during fiscal 2017. The Company intends to fully fund the plan to provide for all plan benefits prior to the date assets are distributed with the plan termination. Settlement gain or loss, if any, resulting from the termination will be recognized at that time.

13. FAIR VALUE MEASUREMENT

The following fair value hierarchy is used in selecting inputs for those assets and liabilities measured at fair value and distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 —Valuation based on quoted market prices in active markets for identical assets or liabilities;

Level 2 —Valuation based on inputs other than Level 1 inputs that are observable for the assets or liabilities either directly or indirectly;

Level 3 —Valuation based on prices or valuation techniques that require inputs that are both significant to the fair value measurement and supported by little or no observable market activity.

The financial assets and liabilities that the Company measures at fair value on a recurring basis based on the fair value hierarchy, as of December 31, 2015 and June 30, 2015 are presented below:



	Level 1				Level 2					Level 3
	December 31, 2015		June 30, 2015		December 31, 2015			June 30, 2015		December 31, 2015			June 30, 2015
Financial assets and liabilities
Recurring fair value measurements
Assets:
Foreign exchange forward contracts	$	—	$	—	$	6.5		$	12.4	$	—		$	—
Interest rate swap contracts	—		—		7.2			—		—			—
Total Assets	$	—	$	—	$	13.7		$	12.4	$	—		$	—
Liabilities:
Foreign exchange forward contracts	$	—	$	—	$	12.1		$	6.3	$	—		$	—
Interest rate swap contracts	—		—		4.4			—		—			—
Contingent consideration - business combination	—		—		—			—		0.8			0.9
Total Liabilities	$	—	$	—	$	16.5		$	6.3	$	0.8		$	0.9
Total recurring fair value measurements	$	—	$	—	$	(2.8	)	$	6.1	$	(0.8	)	$	(0.9	)

Table of Contents

The fair values of the Company’s financial instruments estimated as of December 31, 2015 and June 30, 2015 are presented below:



	December 31, 2015				June 30, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Coty Credit Agreement	$	3,651.6	$	3,599.4	$	—	$	—
Prior Coty Inc. Credit Facilities	—		—		2,611.5		2,614.2
Dividends payable	2.0		1.5		1.4		1.1

The Company has concluded that the carrying amounts of cash and cash equivalents, trade receivables, accounts payable, certain accrued expenses, short-term debt, and current portion of long-term debt approximate their fair values due to their short-term nature.

The following methods and assumptions were used to estimate the fair value of the Company’s other financial instruments for which it is practicable to estimate that value:

Foreign exchange forwards —The Company uses currency spot and forward rates to value the foreign exchange contracts, which were obtained from an independent pricing service. Based on the assumptions used to value foreign exchange contracts at fair value, these assets and/or liabilities are categorized as Level 2 in the fair value hierarchy.

Interest rate swap contracts —The fair values of the Company’s interest rate swap contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as swap yield curves and LIBOR forward rates, were obtained from independent pricing services. Based on the assumptions used to estimate the interest rate swap contracts, these assets and/or liabilities are categorized as Level 2 in the fair value hierarchy.

Contingent consideration - business combination — The Company uses an industry standard valuation model within the option pricing framework to value the contingent consideration. The inputs used to measure the fair value included weighted net sales projections through the settlement date of the contingent consideration, revenue volatility using comparable companies’ historical performance and a present value calculation to discount the expected settlement. Based on the assumptions used to value the contingent consideration, these liabilities are categorized as Level 3 in the fair value hierarchy.

Coty Credit Agreement — The Company uses the market approach to value the Coty Credit Agreement. The Company obtains market values for comparable instruments from independent pricing services and infers the fair value of these debt instruments. Based on the assumptions used to value these liabilities at fair value, these debt instruments are categorized as Level 2 in the fair value hierarchy.

Prior Coty Inc. Credit Facilities — The Company uses the income approach to value the Prior Coty Inc. Credit Facilities. The Company uses a present value calculation to discount interest payments and the final maturity payment on these liabilities using a discounted cash flow model based on observable inputs. The Company discounts these debt instruments based on what the current market rates would offer the Company as of the reporting date. Based on the assumptions used to value these liabilities at fair value, these debt instruments are categorized as Level 2 in the fair value hierarchy.

Dividends payable — The Company uses the income approach to value the long-term portion of dividends payable by utilizing a present value calculation to discount future payments using a discounted cash flow model based on observable inputs. The Company discounts the liability based on an internally developed discount rate as of the reporting date. Based on the assumptions used to value the long-term portion of dividends payable at fair value, this debt is categorized as Level 3 in the fair value hierarchy.

14. DERIVATIVE INSTRUMENTS

Foreign Exchange Risk

The Company is exposed to foreign currency exchange fluctuations through its global operations. The Company may reduce its exposure to fluctuations in the cash flows associated with changes in foreign exchange rates by creating offsetting positions through the use of derivative instruments and also by designating foreign currency denominated borrowings as hedges of net investments in foreign subsidiaries. The Company expects that through hedging, any gain or loss on the derivative instruments would generally offset the expected increase or decrease in the value of the underlying forecasted transactions. The Company entered into derivatives for which hedge accounting treatment has been applied during fiscal 2015 and 2016 which the Company anticipates realizing in the Condensed Consolidated Statements of Operations in 2016.

Table of Contents

The Company enters into foreign exchange forward contracts to hedge anticipated transactions for periods consistent with the Company’s identified exposures to minimize the effect of foreign exchange rate movements on revenues, costs and on the cash flows that the Company receives from foreign subsidiaries and third parties where there is a high probability that anticipated exposures will materialize. The foreign exchange forward contracts used to hedge anticipated transactions have been designated as foreign exchange cash-flow hedges and have varying maturities through the end of June 2016. Hedge effectiveness of foreign exchange forward contracts is based on the forward-to-forward hypothetical derivative methodology and includes all changes in value.

As of December 31, 2015 , the Company had foreign exchange forward contracts designated as effective hedges in the notional amount of $107.4 , which mature at various dates through June 2016. The foreign currencies in the hedged foreign exchange forward contracts (notional value stated in U.S. Dollars) are principally the British Pound ($38.9) , Euro ($47.1) , Australian Dollar ($8.2) , Canadian Dollar ($10.2) , and Russian Ruble ($3.0) . As of June 30, 2015 , the Company had a notional value of $277.0 in foreign exchange forward contracts designated as effective hedges.

The Company also continued to use certain derivatives as economic hedges of foreign currency exposure on firm commitments and forecasted transactions, which do not qualify for hedge accounting. Although these derivatives were not designated for hedge accounting, the overall objective of mitigating foreign currency exposure is the same for all derivative instruments. The Company does not enter into derivative financial instruments for trading or speculative purposes, nor is the Company a party to leveraged derivatives. For derivatives not designated as hedging instruments, changes in fair value are recorded in the line item in the Condensed Consolidated Statements of Operations to which the derivative relates.

Interest Rate Risk

The Company is exposed to interest rate fluctuations related to its variable rate debt instruments. The Company may reduce its exposure to fluctuations in the cash flows associated with changes in the variable interest rates by entering into offsetting positions through the use of derivative instruments, such as interest rate swap contracts. The interest rate swap contracts result in recognizing a fixed interest rate for the portion of the Company’s variable rate debt that was hedged. This will reduce the negative impact of increases in the variable rates over the term of the contracts. During the second quarter of fiscal 2016, the Company entered into interest rate swap contracts that have been designated as cash-flow hedges. Hedge effectiveness of interest rate swap contracts is based on a long-haul hypothetical derivative methodology and includes all changes in value.

As of December 31, 2015, the Company had interest rate swap contracts designated as effective hedges in the notional amount of $900.0 , which will impact interest payments through January 2019. There were no interest rate swap contracts designated as effective hedges as of June 30, 2015.

Hedge Accounting

Derivative financial instruments are recorded as either assets or liabilities on the Condensed Consolidated Balance Sheets and are measured at fair value.

For derivatives accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of specific underlying forecasted transactions, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses both at inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Additionally, all of the master agreements governing the Company’s derivative contracts contain standard provisions that could trigger early termination of the contracts in certain circumstances which would require the Company to discontinue hedge accounting, including if the Company were to merge with another entity and the creditworthiness of the surviving entity were to be “materially weaker” than that of the Company prior to the merger. As of December 31, 2015 , foreign exchange forward contracts in net liability positions that contained credit-risk-related features were $12.1 .

For derivatives designated as hedging instruments, changes in the fair value are recorded in Accumulated other comprehensive income (loss) (“AOCI/(L)”). Gains and losses deferred in AOCI/(L) are then recognized in net income (loss) in a manner that matches the timing of the actual income or expense related to the hedging instruments with the hedged transaction. The gains and losses related to designated hedging instruments are also recorded in the line item in the Condensed Consolidated Statements of Operations to which the derivative relates. Cash flows from derivative instruments designated as fair value or cash flow hedges are recorded in the same category as the cash flows from the items being hedged in the Condensed Consolidated Statements of Cash Flows.

The ineffective portion of foreign exchange forward and interest rate swap contracts are recorded in current-period earnings. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses accumulated in Other comprehensive income (loss) (“OCI”) are reclassified to earnings when the underlying forecasted

Table of Contents

transaction occurs. If it is no longer probable that the forecasted transaction will occur, then any gains or losses in accumulated OCI (“AOCI”) are reclassified to current-period earnings. As of December 31, 2015 , all of the Company’s foreign exchange forward and interest rate swap contracts designated as hedges were highly effective.

The Company also attempts to minimize credit exposure to counterparties by entering into derivative contracts with counterparties that are major financial institutions and utilizing master netting arrangements. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the fair value of contracts in net asset positions under master netting arrangements, which totaled $6.5 at December 31, 2015 . Exposure to credit risk in the event of nonperformance by any of the counterparties with respect to the Company’s interest rate swap contracts is limited to the fair value of contracts in net asset positions, which totaled $2.8 at December 31, 2015. Accordingly, management of the Company believes risk of material loss under these hedging contracts is remote.

Net Investment Hedge

In October 2015, the Company designated its €665.0 million tranche of its Term Loan B Facility as a net investment hedge of its investments in certain of the Company’s international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by the changes in foreign currency exchange rates of the Euro with respect to the U.S. Dollar.

Foreign currency gains and losses on borrowings designated as a net investment hedge, except ineffective portions, are reported in the cumulative translation adjustment (“CTA”) component of AOCI, along with the foreign currency translation adjustments on those investments.

Net investment hedge effectiveness is assessed based on the change in the spot rate of the Euro-denominated loan payable. The critical terms (underlying notional and currency) of the loan payable match the portion of the net investment designated as being hedged. The net investment hedge was equal to the designated portion of the international subsidiary’s investment balance as of December 31, 2015. As such, the net investment hedge was considered to be effective, and, as a result, the changes in the fair value were recorded within CTA on the Company’s Condensed Consolidated Balance Sheets. As of December 31, 2015, the fair value and carrying value of the foreign currency borrowings designated as a net investment hedge was $726.5 and $726.5 , respectively.

Quantitative Information

Derivatives are recognized in the Condensed Consolidated Balance Sheets at their fair values. The following table presents the fair value of derivative instruments outstanding at December 31, 2015 and June 30, 2015 :



	Asset					Liability
	Balance Sheet Classification	Fair Value				Balance Sheet Classification	Fair Value
		December 31, 2015		June 30, 2015			December 31, 2015		June 30, 2015
Derivatives designated as hedges:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	5.7	$	6.8	Accrued expenses and other current liabilities	$	—	$	4.8
Interest rate swap contracts	Prepaid expenses and other current assets	—		—		Accrued expenses and other current liabilities	4.4		—
Interest rate swap contracts	Other noncurrent assets	7.2		—		Other noncurrent liabilities	—		—
Total derivatives designated as hedges		$	12.9	$	6.8		$	4.4	$	4.8
Derivatives not designated as hedges:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	0.8	$	5.6	Accrued expenses and other current liabilities	$	12.1	$	1.5
Total derivatives not designated as hedges		$	0.8	$	5.6		$	12.1	$	1.5
Total derivatives		$	13.7	$	12.4		$	16.5	$	6.3

The table below presents the gross amount of foreign exchange forward contract hedges recorded as assets and liabilities in Prepaid expenses and other current assets and Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheet respectively, as of December 31, 2015 :

Table of Contents



										Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts Recognized			Gross Amounts Offset in the Condensed Consolidated Statements of Operations			Net Amount Presented in the Condensed Consolidated Balance Sheets			Financial Instruments		Cash Collateral Received		Net Amount
Assets	$	8.1		$	(1.6	)	$	6.5		$	—	$	—	$	6.5
Liabilities	$	(14.2	)	$	2.1		$	(12.1	)	$	—	$	—	$	(12.1	)

The table below presents the gross amount of foreign exchange forward contract hedges recorded as assets and liabilities in Prepaid expenses and other current assets and Accrued expenses and other current liabilities in the Consolidated Balance Sheet, respectively, as of June 30, 2015 :



										Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts Recognized			Gross Amounts Offset in the Condensed Consolidated Statements of Operations			Net Amount Presented in the Condensed Consolidated Balance Sheets			Financial Instruments		Cash Collateral Received		Net Amount
Assets	$	16.1		$	(3.7	)	$	12.4		$	—	$	—	$	12.4
Liabilities	$	(6.5	)	$	0.2		$	(6.3	)	$	—	$	—	$	(6.3	)

The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments during the three and six months ended December 31, 2015 and 2014 is presented below:



Condensed Consolidated Statements of Operations Classification of Gain (Loss) Recognized in Operations	Three Months Ended December 31,					Six Months Ended December 31,
	2015			2014		2015			2014
Cost of sales	$	—		$	0.1	$	—		$	0.1
Selling, general and administrative expenses	—			1.6		1.3			2.5
Interest expense, net	26.5			5.5		23.7			7.3
Other (expense) income, net ^(a)	(24.2		)	—		(24.2		)	—

^(a) During the three and six months ended December 31, 2015, the Company recognized $18.1 and $6.1 of realized and unrealized losses, respectively, on foreign currency forward contracts related to the advance payment as described in Note 9.

As of December 31, 2015 and June 30, 2015 , the Company had foreign exchange forward contracts not designated as hedges with a notional value of $1,236.2 and $1,297.6 , respectively, which mature at various dates through June 2016.

The accumulated gain (loss) on derivative instruments classified as cash flow hedges in AOCI, net of tax, was $7.2 and $(0.1) as of December 31, 2015 and June 30, 2015 , respectively. The estimated net gain (loss) related to these effective hedges that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $(0.7) .

The accumulated gain on foreign currency borrowings classified as net investment hedges in the foreign currency translation adjustment component of AOCI was $9.1 and nil as of December 31, 2015 and June 30, 2015, respectively.

The amount of gains and losses recognized in OCI in the Condensed Consolidated Balance Sheets related to the Company’s derivative and non-derivative financial instruments which are designated as hedging instruments for the three and six months ended December 31, 2015 and 2014 is presented below:



Gain (Loss) Recognized in OCI	Three Months Ended December 31,				Six Months Ended December 31,
	2015		2014		2015		2014
Foreign exchange forward contracts	$	0.9	$	9.1	$	7.6	$	17.3
Interest rate swap contracts	2.5		—		2.5		—
Net investment hedge	9.1		—		9.1		—

The amount of gains and losses reclassified from AOCI to the Condensed Consolidated Statements of Operations related to the Company’s derivative financial instruments which are designated as hedging instruments during the three and six months ended December 31, 2015 and 2014 is presented below:

Table of Contents



Condensed Consolidated Statements of Operations Classification of Gain (Loss) Reclassified from AOCI/(L)	Three Months Ended December 31,						Six Months Ended December 31,
	2015			2014			2015			2014
Foreign exchange forward contracts:
Net revenue	$	1.4		$	1.5		$	2.8		$	1.9
Cost of Sales	0.1			(1.8		)	0.1			(1.6		)
Interest rate swap contracts:
Interest expense	$	(0.8	)	$	—		$	(0.8	)	$	—

15. EQUITY

Common Stock

As of December 31, 2015 , the Company’s common stock consisted of Class A Common Stock, and Class B Common Stock each with a par value of $0.01 . Class A and Class B Common Stock are identical in all respects except for voting rights, certain conversion rights, and transfer restrictions in respect to the shares of Class B Common Stock. The holders of Class A Common Stock are entitled to one vote per share and the holders of Class B Common Stock are entitled to ten votes per share. Holders of Class A and Class B Common Stock are entitled to pro rata distribution of dividends if and when declared by the Board. As of December 31, 2015 , total authorized shares of Class A Common Stock and Class B Common Stock are 800.0 million and 262.0 million , respectively, and total outstanding shares of Class A and Class B Common Stock are 75.0 million and 262.0 million , respectively.

In fiscal 2015, the Company recognized compensation expense of $13.9 and a related liability for 1.4 million shares which its parent JABC agreed to repurchase from an individual originally intended to become an executive of the Company. From June 30, 2015 until the date the liability was settled by JABC, the value of the obligation declined $0.1 and was recorded as a reduction of stock compensation expense. On July 8, 2015, JABC repurchased the shares and the settlement of the liability of $13.8 is considered a non-cash capital contribution to the Company and therefore was recorded in Additional paid-in capital.

Preferred Stock

As of December 31, 2015 , the Company’s preferred stock consisted of Series A Preferred Stock with a par value of $0.01 . The Series A Preferred Stock is not entitled to receive any dividends and has no voting rights except as required by law. As of December 31, 2015 , total authorized shares of preferred stock are 20.0 million and total outstanding shares of Series A Preferred Stock are 1.7 million . The outstanding 1.7 million Series A Preferred Stock generally vest on April 15, 2020. Under the terms provided in the various subscription agreements, the holders of the vested Series A Preferred Stock are entitled to exchange the Series A Preferred Stock at the election of the Company into either: (i) cash equal to the market value of a share of Class A Common Stock on the date of conversion less $27.97 or (ii) the number of whole shares whose value is equal to the aggregate market value of a share of Class A Common Stock on the date of conversion less $27.97 . If the holder does not exchange the vested Series A Preferred Stock by a certain expiration date, the Company must automatically exchange the Series A Preferred Stock into cash for the pro-rata portion of the grants attributable to services rendered by the holder within the United States. Therefore, these grants are accounted for using the liability plan accounting at issuance. As a holder provides service outside the U.S., a pro-rata portion of the grants are converted to equity awards to the extent the Company is not required to settle the award in cash, which are measured and fixed at the quarter end date that such services are provided, based on the estimated fair value of the award and recognized on a straight-line basis, net of estimated forfeitures, over the employee’s requisite service period. As of December 31, 2015 , the Company classified $0.5 Series A Preferred Stock as equity,

and $0.5 as a liability recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheet.

Table of Contents

Accumulated Other Comprehensive Income (Loss)



	(Losses) Gains on Cash Flow Hedges			Foreign Currency Translation Adjustments					Pension and Other Post-Employment Benefit Plans			Total
	(Losses) Gains on Cash Flow Hedges			Gains on Net Investment Hedge		Other Foreign Currency Translation Adjustments			Pension and Other Post-Employment Benefit Plans			Total
Balance—July 1, 2015	$	(0.1	)	$	—	$	(249.3	)	$	(24.6	)	$	(274.0	)
Other comprehensive income (loss) before reclassifications	8.8			9.1		(27.6		)	0.2			(9.5		)
Less: Net amounts reclassified from AOCI	1.5			—		—			—			1.5
Net current-period other comprehensive income (loss)	7.3			9.1		(27.6		)	0.2			(11.0		)
Balance—December 31, 2015	$	7.2		$	9.1	$	(276.9	)	$	(24.4	)	$	(285.0	)

Treasury Stock

On August 13, 2015, the Board authorized the Company to repurchase up to $700.0 of its Class A Common Stock, inclusive of any amounts remaining under the Company’s previously announced share repurchase program (the “Repurchase Program”). In connection with the Company’s Repurchase Program, the Company repurchased 19.4 million and 24.9 million shares of its Class A Common Stock during the three and six months ended December 31, 2015 , respectively. The shares were purchased in multiple transactions at prices ranging from $25.51 to $30.35 for the three and six months ended December 31, 2015. The aggregate fair value of shares repurchased during the three and six months ended December 31, 2015 was $544.3 and $700.0 , respectively, and was recorded as an increase to Treasury stock in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests. These purchases completed the approved Repurchase Program.

On December 3, 2015, the Company entered into a stock purchase agreement with a shareholder holding more than 5% of the Company’s Class A Common Stock to repurchase 1.0 million shares of its Class A Common Stock. On December 17, 2015, the Company remitted payment for the repurchased shares at a price of $27.91 per share. The fair value of shares repurchased was approximately $27.9 and was recorded as an increase to Treasury stock in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

Dividend s

On September 11, 2015, the Company declared a cash dividend of $0.25 per share, or $90.1 on its Class A and Class B Common Stock, RSUs and phantom units. Of the $90.1 , $89.0 was paid on October 15, 2015 to holders of record of Class A and Class B Common Stock on October 1, 2015 and was recorded as a decrease to APIC in the Condensed Consolidated Balance Sheet as of December 31, 2015 . The remaining $1.1 is payable upon settlement of the RSUs and phantom units outstanding as of October 1, 2015, and is recorded as Other noncurrent liabilities in the Condensed Consolidated Balance Sheet.

Additionally, the Company reduced the dividend accrual recorded in a prior period by $0.5 to adjust for accrued dividends on RSUs no longer expected to vest, which was recorded as an increase to APIC in the Condensed Consolidated Balance Sheet as of December 31, 2015 . Total accrued dividends on unvested RSUs and phantom units of $2.0 are included in Other noncurrent liabilities in the Condensed Consolidated Balance Sheet as of December 31, 2015 .

16. SHARE-BASED COMPENSATION PLANS

The Company has various share-based compensation programs (the “Plans”) under which awards, including non-qualified stock options, Series A Preferred Stock, RSUs and other share-based awards, may be granted or shares of Class A Common Stock may be purchased. As of December 31, 2015 , approximately 18.9 million shares of the Company’s Class A Common Stock were reserved and available to be granted pursuant to these Plans.

Total share-based compensation expense of $5.2 and $9.6 for the three months ended December 31, 2015 and 2014, and $16.9 and $10.9 for the six months ended December 31, 2015 and 2014, respectively, is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. As of December 31, 2015 , the total unrecognized share-based compensation expense related to unvested stock options, Series A Preferred Stock, and restricted and other share awards is $6.4 , $8.1 and $44.3 , respectively. The unrecognized share-based compensation expense related to

Table of Contents

unvested stock options, Series A Preferred stock, and restricted and other share awards is expected to be recognized over a weighted-average period of 2.02 , 4.29 and 2.93 years, respectively.

Nonqualified Stock Options

Nonqualified stock options generally become exercisable 5 years from the date of the grant and have a 5 -year exercise period from the date the grant becomes fully vested for a total contractual life of 10 years .

The Company’s outstanding nonqualified stock options as of December 31, 2015 and activity during the six months then ended are presented below:



	Shares (in millions)		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term
Outstanding at July 1, 2015	14.0		$	11.32
Exercised	(2.0	)	9.05
Canceled or expired	(0.9	)	16.24
Outstanding at December 31, 2015	11.1		$	11.31
Vested and expected to vest at December 31, 2015	9.0		$	9.94	$	141.8	4.24
Exercisable at December 31, 2015	5.5		$	8.78	$	91.9	3.22

The Company did not grant any nonqualified stock options during the six months ended December 31, 2015 . The grant prices of the outstanding options as of December 31, 2015 ranged from $6.00 to $24.13 . The grant prices for exercisable options ranged from $6.00 to $10.50 .

A summary of the total intrinsic value of stock options exercised for the six months ended December 31, 2015 and 2014 is presented below:



	Six Months Ended December 31,
	2015		2014
Intrinsic value of options exercised	$	38.6	$	38.5

The share-based compensation expense recognized on the nonqualified stock options was $2.1 and $5.4 for the three months ended December 31, 2015 and 2014, respectively, and $4.8 and $7.4 for the six months ended December 31, 2015 and 2014, respectively.

Series A Preferred Stock

Shares of Series A Preferred Stock generally become exercisable 5 years from the date of the grant and have a 2 -year exercise period from the date the grant becomes fully vested for a total contractual life of 7 years. The Company did not grant any shares of Series A Preferred Stock during the six months ended December 31, 2015 . The Company canceled 0.2 million shares of Series A Preferred Stock during the three months and six months ended December 31, 2015.

The Series A Preferred Stock are accounted for partially as a liability as of December 31, 2015 and the Company recognized shared-based compensation expense of $0.2 and $0.7 for the three and six months ended December 31, 2015 , respectively. The Company recognized no share-based compensation for the Series A Preferred Stock for the three and six months ended December 31, 2014 .

Restricted Share Units

During the six months ended December 31, 2015 and 2014 , the Company granted 1.3 million and 1.7 million RSUs under the Omnibus LTIP. The share-based compensation expense recorded in connection with the RSUs was $2.8 and $3.2 for the three months ended December 31, 2015 and 2014 , respectively. The share-based compensation expense recorded in connection with the RSUs was $3.4 and $3.0 for the six months ended December 31, 2015 and 2014 , respectively.

The Company’s outstanding RSUs as of December 31, 2015 and activity during the six months then ended are presented below:

Table of Contents



	Shares (in millions)		Aggregate Intrinsic Value		Weighted Average Grant Date Fair Value
Outstanding at July 1, 2015	4.3
Granted	1.3
Settled	(0.1	)
Canceled	(0.4	)
Outstanding at December 31, 2015	5.1
Vested and expected to vest at December 31, 2015	3.6		$	91.7	$	3.18

Phantom Units

On July 21, 2015, the Board granted Lambertus J.H. Becht (“Mr. Becht”), the Company’s Chairman of the Board and interim Chief Executive Officer, an award of 300,000 phantom units, in consideration of Mr. Becht’s increased and continuing responsibilities as interim Chief Executive Officer of the Company. At the time of grant, the phantom units had a value of $8.1 based on the closing price of the Company’s Class A Common Stock on July 21, 2015, and each phantom unit has an economic value equivalent to one share of the Company’s Class A Common Stock settleable in cash or shares at the election of Mr. Becht. The award to Mr. Becht was made outside of the Company’s Equity and Long-Term Incentive Plan. On July 24, 2015, Mr. Becht elected to receive payment of the phantom units in the form of shares of Class A Common Stock and the phantom units were valued at $8.0 . The phantom units will be settled in shares of Class A Common Stock on the fifth anniversary of the grant date or, in the event of a change of control or Mr. Becht’s death or disability, immediately. The Company recognized nil and $8.0 of share-based compensation expense during the three and six months ended December 31, 2015 as there are no service or performance conditions with respect to the phantom units.

On December 1, 2014, the Board granted Mr. Becht an award of 49,432 phantom units, in consideration of Mr. Becht’s increased responsibilities as interim Chief Executive Officer of the Company. At the time of grant, the phantom units had a value of $1.0 based on the closing price of the Company’s Class A Common Stock on December 1, 2014, and each phantom unit has an economic value equivalent to one share of the Company’s Class A Common Stock. Mr. Becht elected to receive payment of the phantom units in the form of shares of Class A Common Stock. As a result the phantom units will be settled in shares of Class A Common Stock on the fifth anniversary of the grant date or, in the event of a change of control or Mr. Becht’s death or disability, immediately. The Company recognized $1.0 share-based compensation expense for the three and six months ended December 31, 2014 as there are no service or performance conditions with respect to the phantom units.

Restricted Shares

Share-based compensation expense (income) recorded in connection with restricted shares was nil for the three months ended December 31, 2015 and 2014 , and nil and $(0.5) for the six months ended December 31, 2015 and 2014, respectively.

Special Share Purchase Transaction

In fiscal 2015, the Company recognized compensation expense of $13.9 and a related liability for 1.4 million shares which its parent JABC agreed to repurchase from an individual originally intended to become an executive of the Company. From June 30, 2015 until the date the liability was settled by JABC, the value of the obligation declined $0.1 and was recorded as a reduction of stock compensation expense. On July 8, 2015 JABC repurchased the shares and the settlement of the liability of $13.8 is considered a non-cash capital contribution to the Company and therefore was recorded in Additional paid-in capital.

17. NET INCOME ATTRIBUTABLE TO COTY INC. PER COMMON SHARE

Reconciliation between the numerators and denominators of the basic and diluted EPS computations is presented below:

Table of Contents



	Three Months Ended December 31,				Six Months Ended December 31,
	2015		2014		2015		2014
	(in millions, except per share data)
Net income attributable to Coty Inc.	$	89.0	$	125.4	$	214.7	$	136.0
Weighted-average common shares outstanding—Basic	345.0		353.4		352.5		353.8
Effect of dilutive stock options and Series A Preferred Stock ^(a)	6.3		7.4		6.5		7.9
Effect of restricted stock and RSUs ^(b)	3.0		1.8		3.0		1.8
Weighted-average common shares outstanding—Diluted	354.3		362.6		362.0		363.5
Net income attributable to Coty Inc. per common share:
Basic	$	0.26	$	0.35	$	0.61	$	0.38
Diluted	0.25		0.35		0.59		0.37

^(a)

For the three and six months ended December 31, 2015, outstanding stock options and Series A Preferred Stock with purchase or conversion rights to 3.0 million and 3.3 million shares of common stock, respectively, were excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. For the three and six months ended December 31, 2014 , no options were excluded in the computation of EPS.


^(b)	For the three and six months ended December 31, 2015, less than 0.1 million RSUs outstanding were excluded from the computation of diluted EPS as their inclusion would be anti-dilutive. For the three and six months ended December 31, 2014, 0.1 million and 0.8 million RSUs outstanding, respectively, were excluded from the computation of diluted EPS as their inclusion would be anti-dilutive.

18. COMMITMENTS AND CONTINGENCIES

Planned Merger with the P&G Specialty Beauty Business

On July 9, 2015, Coty announced the signing of a definitive agreement to merge The Procter & Gamble Company’s (“P&G”) fine fragrance, color cosmetics, and hair color businesses (the “P&G Specialty Beauty Business”), comprised of 43 beauty brands, into the Company through a Reverse Morris Trust transaction.

The Company’s transaction proposal valued the P&G Specialty Beauty Business at approximately $12,500.0 , based on the number of the Company’s basic Class A and Class B Common shares outstanding (i.e., excluding the impact of the Company’s outstanding equity awards) and an average Company trading price at the time of the proposal. The actual transaction value will be known at closing based on the Company’s then current share price and fully diluted share count, as well as, the final level of assumed debt. The aggregate consideration in the transaction will consist of shares in the combined company issued to participating P&G shareholders, as well, as the assumption of debt of the P&G Specialty Beauty Business. The share issuance is structured to result in P&G shareholders receiving 52% of all outstanding shares in the combined company on a fully diluted basis. The Company’s proposal valued this equity component at approximately $9,600.0 at the time the proposal was submitted. The remaining consideration of $2,900.0 in assumed debt from the P&G Specialty Beauty Business is subject to a $1,000.0 adjustment within a collar based on the trading price of the Company’s stock (range of $22.06 to $27.06 per share) prior to the close of the transaction as well as other contractual valuation adjustments. The assumed debt is expected to be between approximately $1,900.0 and $3,900.0 .

As of December 31, 2015 , excluding the adjustment for two brands that will not transfer upon completion of the merger, the estimated value of the transaction was approximately $13,000.0 based on Coty’s stock price and outstanding Class A and Class B Common shares and equity grants as of December 31, 2015 . The value is comprised of approximately 413 million shares which represents 52% of the diluted equity of the combined company, valued at approximately $ 10,600.0 and the assumption of $2,400.0 in debt from the P&G Specialty Beauty Business. The transaction is expected to close in the second half of calendar year 2016, subject to regulatory clearances, works council consultations, and other customary conditions. The final value of the transaction will be determined at the date of closing.

Noncontrolling Interests

The Company has the right to purchase the noncontrolling interests in certain subsidiaries from the noncontrolling interest holders (each such right, a “Call right”) at certain points in time. In December 2014, the Company gave notice of intent to exercise its Call right for 14% of a certain Singapore subsidiary from the noncontrolling interest holder at an estimated purchase price of approximately $10.7 for this 14% . The Company believes that the Call right will be completed in the third quarter of fiscal 2016. In addition, on September 29, 2015, the Company gave notice of intent to exercise its option to terminate

Table of Contents

the Shareholders’ Agreement with the noncontrolling interest holder and to purchase the remaining 35% of the noncontrolling interest holder’s interest in the Singapore subsidiary. The Company believes that the termination option will be completed in the first quarter of fiscal 2017 for an estimated purchase price of approximately $50.0 .

Legal Matters

The Company is involved, from time to time, in litigation, other regulatory actions and other legal proceedings incidental to the business. Other than as described below, management believes that the outcome of current litigation will not have a material adverse impact on the Company’s results of operations, financial condition, or cash flows. However, management’s assessment of the Company’s current litigation, regulatory actions and other legal proceedings could change in light of the discovery of facts with respect to litigation, regulatory actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation, regulatory actions and legal proceedings.

During fiscal 2014, two putative class action complaints were filed in the United States District Court for the Southern District of New York against the Company, its directors and certain of its executive officers, and the underwriters of the initial public offering (“IPO”), alleging violations of the federal securities laws in connection with the Company's IPO. Those lawsuits were consolidated under the caption In re Coty Inc. Securities Litigation, and following the court’s appointment of lead plaintiffs and lead counsel, a consolidated and amended complaint (the “Securities Complaint”) was filed on July 7, 2014. The Securities Complaint asserts claims against the Company, its directors, and certain of its executive officers, under Sections 11, 12 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), and seeks, on behalf of persons who purchased the Company’s Class A Common Stock in the IPO, damages of an unspecified amount and equitable or injunctive relief.

On September 9, 2014, Plaintiffs voluntarily dismissed their claims against the underwriter defendants without prejudice. The Securities Complaint was further amended on October 18, 2014. The Company has filed a motion to dismiss the Securities Complaint, which has been fully briefed since December 2014. The motion to dismiss is currently pending. The Company believes the Securities Complaint is without merit and intends to vigorously defend it.

On January 14, 2013, the Company voluntarily disclosed to the U.S. Department of Commerce’s Bureau of Industry and Security’s Office of Antiboycott Compliance (“OAC”) additional results of the Company’s internal due diligence review with respect to exports from its majority owned subsidiary in the UAE (the “UAE Subsidiary”). In particular, the Company disclosed information relating to overall compliance with U.S. antiboycott laws, including with respect to the inclusion of a legend on invoices, confirming that the corresponding goods did not contain materials of Israeli origin. A number of the invoices involved U.S. origin goods. The Company believes inclusions of this legend may constitute violations of U.S. antiboycott laws. On June 28, 2013, the Company voluntarily disclosed to the OAC the final results of the Company’s internal due diligence review. The disclosure addressed the above described findings and the remedial actions the Company has taken to date. The Company cannot predict when the OAC will complete its review.

Penalties for EAR violations can be significant and civil penalties can be imposed on a strict liability basis, without any showing of knowledge or willfulness. OAC has wide discretion to settle claims for violations. The Company believes that a penalty or penalties could be imposed from its voluntary disclosures, and that such penalty or penalties would result in a material loss is reasonably possible. Irrespective of any penalty, the Company could suffer other adverse effects on its business as a result of any violations or the potential violations, including legal costs and harm to its reputation, and the Company also will incur costs associated with its efforts to improve its compliance procedures. The Company has not established a reserve for potential penalties and does not know whether OAC will assess a penalty or what the amount of any penalty would be, if a penalty or penalties were assessed.

19. SUBSEQUENT EVENTS

On February 1, 2016, the Company completed its previously announced acquisition of the Brazilian Beauty Business pursuant to the Share Purchase Agreement in order to further strengthen its position in the Brazilian beauty and personal care market. The total cash consideration net of preliminary working capital adjustments was R $3,539.0 million , the equivalent of $886.7 , of which R $1,710.0 million , the equivalent of $429.4 was paid in advance on December 28, 2015, as described in Note 9. The acquisition was financed with a combination of cash on hand and drawings under the Coty Credit Agreement. As of the date of this Quarterly Report on Form 10-Q, given the close proximity of the date of acquisition to the date on which the financial statements are filed, the preliminary purchase price allocation has not been completed for goodwill, intangible assets, tangible assets, prepaid and other assets and liabilities assumed. The Company is in the process of gathering the data required to perform the preliminary purchase price allocation which is expected to be finalized during fiscal 2017.

On February 4, 2016, the Company announced that the Board has authorized the Company to repurchase up to $500.0 million of its Class A common stock (the “Incremental Repurchase Program”). Repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its

Table of Contents

common stock, and general market conditions. No time has been set for the Incremental Repurchase Program, and the program may be suspended or discontinued at any time. The Incremental Repurchase Program authorization enables the Company to purchase its common stock from time to time through open market purchases, negotiated transactions or other means, including 10b5-1 trading plans in accordance with applicable securities laws and other restrictions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the financial condition and results of operations of Coty Inc. and its consolidated subsidiaries, should be read in conjunction with the information contained in the Condensed Consolidated Financial Statements and related notes included elsewhere in this document, and in our other public filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended June 30, 2015 (“Fiscal 2015 Form 10-K”). When used in this discussion, the terms “Coty,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Coty Inc. and its majority and wholly-owned subsidiaries. The following discussion contains forward-looking statements. See Part II — Item 1A. Risk Factors of our Fiscal 2015 Form 10-K for a discussion on the uncertainties, risks and assumptions associated with these statements, as well as any updates to such discussion as may be included in subsequent reports we file with the SEC. Actual results may differ materially from those contained in any forward-looking statements. The following discussion includes certain non-GAAP financial measures. See “Overview—Non-GAAP Financial Measures” for a discussion of non-GAAP financial measures and how they are calculated.

All dollar amounts in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.

OVERVIEW

We are a leading global beauty company. We manufacture and market beauty products in the Fragrances, Color Cosmetics and Skin & Body Care segments with distribution in over 130 countries and territories across both prestige and mass markets. We continue to operate in a challenging market environment particularly in mass fragrance in Western Europe and the U.S. We are focused on growing our ten power brands around the world through innovation, strong support levels and excellence in market execution. With respect to our non-power brands, we expect to see a gradual decline of those brands which are later in their lifecycles. We are also focused on expanding our geographic footprint into emerging markets and diversifying our distribution channels within existing geographies to increase market presence.

Non-GAAP Financial Measures

Adjusted Operating Income, Adjusted Income Before Income Taxes, Adjusted Net Income Attributable to Coty Inc. and Adjusted Net Income Attributable to Coty Inc. per Common Share are non-GAAP financial measures which we believe better enable management and investors to analyze and compare the underlying business results from period to period.

These non-GAAP financial measures should not be considered in isolation, or as a substitute for or superior to, financial measures calculated in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of our business as determined in accordance with GAAP. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis, and we provide reconciliations from the most directly comparable GAAP financial measures to the non-GAAP financial measures. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Adjusted Operating Income, Adjusted Income Before Income Taxes, Adjusted Net Income Attributable to Coty Inc. and Adjusted Net Income Attributable to Coty Inc. per Common Share provide an alternative view of performance used by management and we believe that an investor’s understanding of our performance is enhanced by disclosing these adjusted performance measures. In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these adjusted performance measures. The following are examples of how these adjusted performance measures are utilized by management:


•	senior management receives a monthly analysis of our operating results that are prepared on an adjusted performance basis;


•	strategic plans and annual budgets are prepared on an adjusted performance basis; and


•	senior management’s annual compensation is calculated, in part, using adjusted performance measures.

Table of Contents

Adjusted Operating Income

We define Adjusted Operating Income as operating income adjusted for the following:


•	Share-based compensation adjustment:


•	For grants issued prior to June 12, 2013, the effective date of the share-based compensation plan amendments, the component of share-based compensation expense adjustment represents the difference between the grant date fair value and the fair value at June 12, 2013 using equity plan accounting.

•

Future adjustments for share-based compensation will consist of the difference between expense under equity plan accounting based on the grant date fair value and total estimated share-based compensation expense, which is based on (i) the fair value on June 12, 2013 for nonqualified stock option awards and restricted stock units (“RSUs”) and (ii) all costs associated with the special incentive awards granted in fiscal 2012 and 2011. The estimated aggregate expense is approximately $2, $1, and $0 for the fiscal years ended June 30, 2016, 2017, and 2018 respectively.


•	Share-based compensation adjustment may also include special transactions. Refer to “Management Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in Part II — Item 7 of our Fiscal 2015 Form 10-K for a full discussion of the share-based compensation adjustment.


•	Other adjustments, which include:


•	asset impairment charges;


•	restructuring costs and business structure realignment programs;


•	costs related to acquisition activities and certain acquisition accounting impacts; and


•	other adjustments that we believe investors may find useful.

Adjusted Net Income and Net Income per Common Share Attributable to Coty Inc.

We define Adjusted Net Income Attributable to Coty Inc. as net income attributable to Coty Inc. adjusted for the following:


•	adjustment made to reconcile operating income to Adjusted Operating Income, net of the income tax effect thereon (see Adjusted Operating Income);


•	certain interest, other (income) expense and other adjustments, net of the income tax effect thereon, that we do not consider indicative of our performance; and


•	certain tax effects that are not indicative of our performance.

Adjusted basic and diluted Net Income Attributable to Coty Inc. per Common Share is calculated as:


•	Adjusted Net Income Attributable to Coty Inc. divided by


•	Adjusted weighted-average basic and diluted common shares using the treasury stock method.

Constant Currency

We operate on a global basis, with the majority of our net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented excluding the impact of foreign currency exchange translations to provide a framework for assessing how our underlying businesses performed excluding the impact of foreign currency exchange translations (“constant currency”). Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using prior year foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information we present may not be comparable to similarly titled measures reported by other companies.

THREE MONTHS ENDED DECEMBER 31, 2015 AS COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2014

NET REVENUES

In the three months ended December 31, 2015 , net revenues decreased 4% , or $49.1 , to $1,210.5 from $1,259.6 in the three months ended December 31, 2014 . The decrease was primarily the result of a negative foreign currency exchange translations

Table of Contents

impact of 7% and a decrease in unit volume of 3%, partially offset by a positive price and mix impact of 6%. In the three months ended June 30, 2015, we completed the acquisition of the Bourjois cosmetics brand (“Bourjois acquisition”). The impact to net revenues from the Bourjois acquisition affected our Color Cosmetics segment primarily in EMEA. In fiscal 2014, we announced the discontinuation of our TJoy brand and the reorganization of our mass business in China (“China Optimization”). Excluding the negative impact of foreign currency exchange translations, the Bourjois acquisition, and the discontinuation of TJoy and China Optimization, total net revenues in the three months ended December 31, 2015 decreased 1% reflecting a decrease in unit volume of 7%, partially offset by a positive price and mix impact of 6%.

Net Revenues by Segment



	Three Months Ended December 31,
(in millions)	2015		2014		Change %
NET REVENUES
Fragrances	$	627.0	$	691.7	(9	%)
Color Cosmetics	374.8		340.5		10	%
Skin & Body Care	208.7		227.4		(8	%)
Total	$	1,210.5	$	1,259.6	(4	%)

Fragrances

In the three months ended December 31, 2015 , net revenues of Fragrances decreased 9% , or $64.7 , to $627.0 from $691.7 in the three months ended December 31, 2014 . The decrease in net revenues reflects a decrease in unit volume of 10% and negative foreign currency exchange translations impact of 6%, partially offset by a positive price and mix impact of 7%. The decrease in the segment primarily reflects lower net revenues from celebrity and lifestyle brands in the mass retail channel, in part due to brands that are later in their lifecycles and our continued efforts to execute portfolio rationalization on lower-volume product lines and non-strategic distribution channels. In addition, mass fragrances have been adversely impacted by a negative market trend in the three months ended December 31, 2015 as compared to the three months ended December 31, 2014 . Net revenues also declined in Davidoff, Chloe, Jil Sander and Joop! primarily reflecting a lower level of innovation activities in the three months ended December 31, 2015 as compared to the three months ended December 31, 2014 and a negative foreign currency exchange translations impact. Partially offsetting decreases in the segment were strong growth in Marc Jacobs and incremental net revenues from the recently launched Miu Miu fragrance. Marc Jacobs net revenues in the three months ended December 31, 2015 increased due to incremental net revenues from the launch of Marc Jacobs Decadence, partially offset by declines in existing product lines as well as a negative foreign currency exchange translations impact. Net revenues in Calvin Klein declined marginally reflecting a negative foreign currency exchange translations impact. Excluding this impact, net revenues increased in Calvin Klein, primarily reflecting strong growth in Calvin Klein ck one in the Asia Pacific region and incremental net revenues from recent launches such as Calvin Klein Eternity Now, Calvin Klein Euphoria Essence, and Calvin Klein ck2 . The positive price and mix impact for the segment primarily reflects lower relative volume of lower-priced celebrity and lifestyle products, higher relative volume of higher-priced products such as Marc Jacobs and Miu Miu products, and a lower level of promotional and discounted pricing activities.

Color Cosmetics

In the three months ended December 31, 2015 , net revenues of Color Cosmetics increased 10% , or $34.3 , to $374.8 from $340.5 in the three months ended December 31, 2014 , reflecting an increase in unit volume of 2% and a positive price and mix impact of 16%, partially offset by a negative foreign currency exchange translations impact of 8%. The Bourjois acquisition positively impacted net revenues by 13%, generating 9% of the unit volume increase and a positive impact of 6% to price and mix, partially offset by a negative 2% foreign currency exchange translations impact. Excluding the impact from the Bourjois acquisition, net revenues decreased 3% primarily due to declines in OPI, Astor, Rimmel and New York Color , partially offset by strong growth from Sally Hansen . Lower net revenues from OPI reflect declines in lacquer products, including Nicole by OPI in the U.S., as well as a negative impact from foreign currency exchange translations, partially offset by the launches of the OPI Hello Kitty collection and OPI Infinite Shine as well as growth in the Asia Pacific region. Lower net revenues in Astor reflect declines in Eastern Europe and in Germany as well as a negative impact from foreign currency exchange translations, partially offset by incremental net revenues from the new launch of Astor Lash Beautifier mascara. Lower net revenues from Rimmel primarily reflect the negative impact of foreign currency exchange translations. Excluding this impact, net revenues in Rimmel increased primarily due to incremental net revenues from new launches such as Rimmel Supercurler mascara and Rimmel the Only 1 lipstick . Lower net revenues in New York Color primarily reflects a management decision to discontinue the brand in the U.K. market. Sally Hansen net revenues increased primarily reflecting management focus on promotional and discounted

Table of Contents

pricing activities and the continued success of Sally Hansen Miracle Gel , reflecting an enhanced product offering and the introduction of Sally Hansen Miracle Gel in EMEA. However, in the three months ended December 31, 2015 the adverse impact of the U.S. retail nail market trend began to affect net revenues of Sally Hansen . Excluding the impact from the Bourjois acquisition and the negative foreign currency exchange translations impact, Color Cosmetics net revenues increased 3% reflecting a positive price and mix impact of 10% partially offset by a decrease in unit volume of 7%. The positive price and mix impact primarily reflects a lower level of promotional and discounted pricing activities as well as higher relative volume of higher-priced products such as OPI Infinite Shine and Sally Hansen Miracle Gel .

Skin & Body Care

In the three months ended December 31, 2015 , net revenues of Skin & Body Care decreased 8% , or $18.7 , to $208.7 from $227.4 in the three months ended December 31, 2014 . The decrease was primarily the result of a negative foreign currency exchange translations impact of 8% and a decrease in unit volume of 7%, partially offset by a positive price and mix impact of 7%. The discontinuation of TJoy and China Optimization had an immaterial impact on net revenues as it contributed 3% to the unit volume decline and positively impacted price and mix by 3%. Skin & Body Care net revenues in the three months ended December 31, 2015 decreased 8% primarily reflecting lower net revenues in Playboy and adidas, partially offset by higher net revenues from philosophy. Lower net revenues from Playboy were primarily due to declines in existing product lines and a negative foreign currency exchange translations impact, partially offset by incremental net revenues from new launches such as the Playboy Play It Wild franchise. Net revenues for adidas were negatively impacted by foreign currency exchange translations. Excluding this impact, net revenues in adidas increased due to growth in China reflecting the positive impact from our mass business reorganization and in EMEA from our recent launches such as adidas UEFA Champions League Edition, Functional, Climacool and After Sport toiletries, and the Born Original franchise. Net revenues from philosophy increased primarily due to different timing of promotional activities as shipments for a key U.S. customer were shifted from the first fiscal quarter of 2016 to the second fiscal quarter of 2016. Excluding the foreign currency exchange translations impact of 8% and the impact from the discontinuation of TJoy and China Optimization, Skin & Body Care net revenues in the three months ended December 31, 2015 were consistent with net revenues in the three months ended December 31, 2014 reflecting a positive price and mix impact of 4% offset by a unit volume decline of 4%. The positive price and mix impact for the segment primarily reflects higher relative volume of higher-priced philosophy products, lower relative volume of lower-priced Playboy products and a lower level of promotional and discounted pricing activities for adidas.

Net Revenues by Geographic Regions

In addition to our reporting segments, management also analyzes our net revenues by geographic region. We define our geographic regions as Americas (comprising North, Central and South America), EMEA (comprising Europe, the Middle East and Africa), and Asia Pacific (comprising Asia and Australia).



	Three Months Ended December 31,
(in millions)	2015		2014		Change %
NET REVENUES
Americas	$	419.6	$	448.9	(7	%)
EMEA	644.7		655.5		(2	%)
Asia Pacific	146.2		155.2		(6	%)
Total	$	1,210.5	$	1,259.6	(4	%)

Americas

In the three months ended December 31, 2015 , net revenues in the Americas decreased 7% , or $29.3 , to $419.6 from $448.9 in the three months ended December 31, 2014 . The decline in the region reflects lower net revenues in the U.S., Canada, Latin Americas and the regional travel retail business. Lower net revenues in the U.S. primarily reflect declines in lifestyle and celebrity fragrance brands in the mass retail channel, in part due to brands that are later in their lifecycles, partially offset by our launches such as Calvin Klein Eternity Now , Calvin Klein Euphoria Essence and Marc Jacobs Decadence . In addition, mass fragrances in the U.S. have been adversely impacted by the negative market trend mentioned in the “Fragrances” discussion above. Net revenues in Canada decreased primarily due to a negative foreign currency exchange translations impact. Excluding this impact, net revenues in Canada increased reflecting strong growth in Rimmel resulting from new launches . Net revenues declined in Latin America and in the regional travel retail business in part due to economic slowdown and currency devaluations in the region. Excluding the negative impact of foreign currency exchange translations of 2%, net revenues in the Americas decreased 5%.

Table of Contents

EMEA

In the three months ended December 31, 2015 , net revenues in EMEA decreased 2% , or $10.8 , to $644.7 from $655.5 in the three months ended December 31, 2014 . Excluding the impact of the Bourjois acquisition, net revenues in EMEA decreased 9%. The decrease in the region primarily reflects lower net revenues in Germany, Eastern Europe, and the U.K., partially offset by growth in the regional export business and the Middle East. Net revenues in Germany decreased primarily due to a negative foreign currency exchange translations impact and declines in Playboy, Davidoff, and certain regional fragrance brands, in part due to a lower level of innovation activities in the three months ended December 31, 2015 as compared to the three months ended December 31, 2014 . Declines in Germany were partially offset by incremental net revenues from launches such as Manhattan Last & Shine lipstick and Marc Jacobs Decadence fragrance. Net revenues in Eastern Europe declined due to a negative foreign currency exchange translations impact. Excluding this impact, Eastern Europe net revenues increased reflecting growth in Poland and Russia primarily driven by Calvin Klein and Rimmel , as well as incremental net revenues from the Bourjois acquisition and the recently launched Miu Miu fragrance . Lower net revenues in the U.K. primarily reflect declines in celebrity and lifestyle brands in the mass retail channel, in part due to brands that are later in their lifecycles, and a negative foreign currency exchange translations impact, partially offset by incremental net revenues from the Bourjois acquisition and the recent launch of Marc Jacobs Decadence . Higher net revenues in our export business reflect incremental net revenues from the Bourjois acquisition and growth in Fragrances, particularly products distributed in the prestige channel. Net revenues in the Middle East benefited from our new joint venture in the Kingdom of Saudi Arabia, incremental net revenues from the Bourjois acquisition and recent launches such as Marc Jacobs Decadence and Miu Miu fragrance. Net revenues in Southern Europe were consistent with the prior year period as incremental net revenues from the Bourjois acquisition were offset by the negative foreign currency exchange translations impact. Excluding the negative impact of foreign currency exchange translations of 10% and the impact of the Bourjois acquisition, net revenues in EMEA increased 1%.

Asia Pacific

In the three months ended December 31, 2015 , net revenues in Asia Pacific decreased 6% , or $9.0 , to $146.2 from $155.2 in the three months ended December 31, 2014 . Excluding the impact to net revenues related to the discontinuation of TJoy and China Optimization, net revenues decreased 5%. The decline in the region primarily reflects lower net revenues in China and Australia, partially offset by net revenues growth in Japan. Lower net revenues in China reflect declines in the prestige distribution channel in part due to economic slowdown , partially offset by growth in adidas resulting from our mass business reorganization in China . Net revenues in Australia were affected by a negative impact of foreign currency exchange translations. Excluding this impact, net revenues in Australia increased driven by growth from Calvin Klein and the launch of Marc Jacobs Decadence. Growth in Japan reflects higher net revenues from Calvin Klein and incremental net revenues from the recently launched Miu Miu fragrance. Excluding the negative foreign currency exchange translations impact of 8% and the impact to net revenues related to the discontinuation of TJoy and China Optimization of 1%, net revenues in Asia Pacific increased 3%.

COST OF SALES

In the three months ended December 31, 2015 , cost of sales decreased 8% , or $41.2 , to $467.7 from $508.9 in the three months ended December 31, 2014 . Cost of sales as a percentage of net revenues decreased to 38.6% in the three months ended December 31, 2015 from 40.4% in the three months ended December 31, 2014 , resulting in a gross margin improvement of approximately 180 basis points. The cost of sales reflects the negative impact related to the Bourjois acquisition in the three months ended December 31, 2015 and a positive impact from refinement of estimates related to the revaluation of inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market and China Optimization in the three months ended December 31, 2014 . Excluding the impact of these items, gross margin in the three months ended December 31, 2015 improved approximately 200 basis points primarily reflecting a positive impact from a lower level of promotional and discounted pricing activity, reported in net revenues, and continued contribution from our supply chain savings program, reported in cost of sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the three months ended December 31, 2015 , selling, general and administrative expenses decreased 4% , or $19.5 , to $515.4 from $534.9 in the three months ended December 31, 2014 . Selling, general and administrative expenses as a percentage of net revenues increased to 42.6% in the three months ended December 31, 2015 from 42.5% in the three months ended December 31, 2014 . Selling, general and administrative expenses include business realignment costs, share-based compensation expense adjustment, China Optimization costs, and real estate consolidation program costs. See “Adjusted Operating Income.” Excluding

Table of Contents

these items described above, selling, general and administrative expenses decreased 4% , or $19.7 , to $510.4 from $530.1 in the three months ended December 31, 2014 but increased as a percentage of net revenues to 42.2% from 42.1% . This increase of approximately 10 basis points primarily reflects approximately 50 basis points related to the negative impact from our exposure to foreign currency exchange fluctuations and approximately 10 basis points related to higher advertising and consumer promotion spending, partially offset by approximately 40 basis points related to lower administrative costs and approximately 10 basis points related to lower share-based compensation expenses due to increased forfeitures in the three months ended December 31, 2015 . Advertising and consumer promotion expense decreased due to a positive foreign exchange translations impact and a reduction in non-strategic spend, but increased as a percentage of net revenues reflecting our focus on investing in consumer-facing media spend as well as added costs related to the Bourjois acquisition not in the three months ended December 31, 2014 . Lower administrative costs primarily reflect a positive foreign exchange translations impact and savings from our Organizational Redesign, partially offset by added costs related to the Bourjois and Beamly acquisitions not in the three months ended December 31, 2014 .

OPERATING INCOME

In the three months ended December 31, 2015 , operating income decreased 17% , or $31.3 , to $152.4 from $183.7 in the three months ended December 31, 2014 . Operating margin, or operating income as a percentage of net revenues, decreased to 12.6% of net revenues in the three months ended December 31, 2015 as compared to 14.6% in the three months ended December 31, 2014 . This margin decline of approximately 200 basis points reflects approximately 370 basis points related to higher acquisition-related costs, approximately 10 basis points related to higher selling, general and administrative expenses, and approximately 10 basis points related to higher amortization expense, partially offset by approximately 180 basis points related to lower cost of sales and approximately 10 basis points related to lower restructuring expenses.

Operating Income by Segment



	Three Months Ended December 31,
(in millions)	2015			2014			Change %
OPERATING INCOME (LOSS)
Fragrances	$	128.7		$	145.5		(12	%)
Color Cosmetics	58.4			40.0			46	%
Skin & Body Care	27.5			15.1			82	%
Corporate	(62.2		)	(16.9		)	<(100%)
Total	$	152.4		$	183.7		(17	%)

Fragrances

In the three months ended December 31, 2015 , operating income for Fragrances decreased 12% , or $16.8 , to $128.7 from $145.5 in the three months ended December 31, 2014 . Operating margin decreased to 20.5% of net revenues in the three months ended December 31, 2015 as compared to 21.0% in the three months ended December 31, 2014 , primarily driven by higher selling, general and administrative expenses and amortization expenses as percentages of net revenues, partially offset by lower cost of sales as a percentage of net revenues, in part due to a lower level of promotional and discounted pricing activities.

Color Cosmetics

In the three months ended December 31, 2015 , operating income for Color Cosmetics increased 46% , or $18.4 , to $58.4 from $40.0 in the three months ended December 31, 2014 . Operating margin increased to 15.6% of net revenues in the three months ended December 31, 2015 as compared to 11.7% in the three months ended December 31, 2014 , reflecting lower cost of sales as a percentage of net revenues, in part due to a lower level of promotional and discounted pricing activities, partially offset by higher selling, general and administrative expenses and amortization expenses as percentages of net revenues.

Skin & Body Care

In the three months ended December 31, 2015 , operating income for Skin & Body Care increased 82% , or $12.4 , to $27.5 from $15.1 in the three months ended December 31, 2014 . Operating margin increased to 13.2% of net revenues in the three months ended December 31, 2015 as compared to 6.6% in the three months ended December 31, 2014 primarily reflecting lower selling, general and administrative expenses and cost of sales as percentages of net revenues, in part due to a lower level of promotional and discounted pricing activities.

Table of Contents

Corporate

Corporate primarily includes corporate expenses not directly related to our operating activities. These items are included in Corporate since we consider them to be Corporate responsibilities, and these items are not used by our management to measure the underlying performance of the segments.

In the three months ended December 31, 2015 , operating loss for Corporate was $62.2 compared to $16.9 in the three months ended December 31, 2014 , as described under “Adjusted Operating Income” below.

Adjusted Operating Income

We believe that Adjusted Operating Income further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” Reconciliation of reported operating income to Adjusted Operating Income is presented below:



	Three Months Ended December 31,
(in millions)	2015			2014			Change %
Reported Operating Income	$	152.4		$	183.7		(17	%)
% of Net revenues	12.6		%	14.6		%
Costs related to acquisition activities	46.6			0.3			>100%
Restructuring and other business realignment costs	16.2			15.1			7	%
Share-based compensation expense adjustment	(0.6		)	2.2			<(100%)
China Optimization	—			0.3			(100	%)
Real estate consolidation program costs	—			(0.7		)	100	%
Total adjustments to Reported Operating Income	62.2			17.2			>100%
Adjusted Operating Income	$	214.6		$	200.9		7	%
% of Net revenues	17.7		%	15.9		%

In the three months ended December 31, 2015 , Adjusted Operating Income increased 7% , or $13.7 , to $214.6 from $200.9 in the three months ended December 31, 2014 . Adjusted operating margin increased to 17.7% of net revenues in the three months ended December 31, 2015 as compared to 15.9% in the three months ended December 31, 2014 , primarily reflecting lower cost of sales of approximately 200 basis points, slightly offset by higher amortization and selling, general and administrative expenses of approximately 10 basis points each, as described under “Cost of Sales” and “Selling, General and Administrative Expenses,” respectively. Excluding the impact of foreign currency exchange translations, Adjusted Operating Income increased 14% .

Costs Related to Acquisition Activities

In the three months ended December 31, 2015 , we incurred $46.6 of costs related to acquisition activities. We recognized acquisition-related costs of $45.5 , in the Condensed Consolidated Statements of Operations. These costs can include finder’s fees, legal, accounting, valuation, and other professional or consulting fees, and other internal costs which can include compensation related expenses for dedicated internal resources. We also incurred $1.1 of costs in connection with the Bourjois acquisition, included in cost of sales in the Condensed Consolidated Statements of Operations.

In the three months ended December 31, 2014 , we incurred $0.3 of costs related to acquisition activities. These costs include acquisition-related costs of $1.6 , included in the Condensed Consolidated Statements of Operations, and an income of $1.3 from refinement of estimates related to the revaluation of inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market, included in cost of sales in the Condensed Consolidated Statements of Operations.

In all reported periods, all costs related to acquisition activities were reported in Corporate.

Restructuring and Other Business Realignment Costs

Table of Contents

after the acquisition of Bourjois and are expected to be substantially completed by the end of fiscal 2017. We anticipate the Acquisition Integration Program will result in pre-tax restructuring and related costs of approximately $67.0 , all of which will result in cash payments. We have incurred $60.9 of restructuring costs life-to-date as of December 31, 2015, which are recorded in Corporate. We currently estimate that the total remaining accrual of $53.6 will result in cash expenditures of approximately $9.6 and $44.0 in fiscal 2016 and 2017, respectively.

In the three months ended December 31, 2015 , we incurred restructuring and other business structure realignment costs of $16.2 , as follows:


•	We incurred restructuring costs of $10.6 , included in restructuring costs in the Condensed Consolidated Statements of Operations, which primarily consist of Organizational Redesign.


•	We incurred business structure realignment costs of $5.6 primarily related to our Organizational Redesign and certain other programs, included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In the three months ended December 31, 2014 , we incurred restructuring and other business structure realignment costs of $15.1 , as follows:


•	We incurred restructuring costs of $12.0 , included in restructuring costs in the Condensed Consolidated Statements of Operations, which primarily relate to the Organizational Redesign.


•	We incurred business structure realignment costs of $3.1 primarily related to our Organizational Redesign and certain other programs, included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

Share-Based Compensation Adjustment

Share-based compensation expense adjustment included in the calculation of Adjusted Operating Income was $(0.6) and $2.2 in the three months ended December 31, 2015 and 2014 , respectively. The decrease in the share-based compensation expense adjustment primarily reflects increased forfeitures.

Senior management evaluates operating performance of our segments based on the share-based expense calculated under equity plan accounting for the recurring stock option awards, share-based awards, and director-owned and employee-owned shares, and we follow the same treatment of the share-based compensation for the financial covenant compliance calculations under our debt agreements. See “Overview—Non-GAAP Financial Measures.” Share-based compensation expense calculated under equity plan accounting for the recurring nonqualified stock option awards and director-owned and employee-owned shares, restricted shares, and RSUs is reflected in the operating results of the segments. Share-based compensation adjustment is included in Corporate. See Note 3, “Segment Reporting” in our notes to the Condensed Consolidated Financial Statements.

China Optimization

In the three months ended December 31, 2015 , we did not incur any costs related to China Optimization.

In the three months ended December 31, 2014 , we incurred costs of $0.3 related to the Color Cosmetics segment. China Optimization costs primarily reflect refinement in estimates and miscellaneous costs associated with the program.

Real Estate Consolidation Program Costs

In the three months ended December 31, 2015 , we did not incur any costs related to the consolidation of real estate in New York.

In the three months ended December 31, 2014 , we incurred $0.7 of income related to the refinement of lease loss expenses estimates in connection with the consolidation of real estate in New York, recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and were included in Corporate.

INTEREST EXPENSE, NET

In the three months ended December 31, 2015 , interest expense, net was $14.6 as compared with $19.1 in the three months ended December 31, 2014 . The decrease is primarily due to one-time net derivative gains of $8.5 related to foreign currency forward contracts entered into to facilitate the debt refinancing and to economically hedge intercompany loans used to facilitate

Table of Contents

payments to Hypermarcas S.A. in connection with the acquisition of a beauty business (the “Brazilian Beauty Business”). Excluding these one-time activities, interest expense increased primarily due to higher average interest rates on outstanding debt balances and increased deferred financing costs, partially offset by foreign exchange impact.

LOSS ON EARLY EXTINGUISHMENT OF DEBT

In the three months ended December 31, 2015 , we incurred $3.1 related to the write-off of deferred financing costs in connection with the refinancing of the Prior Coty Inc. Credit Facilities.

In the three months ended December 31, 2014 , we did not incur any loss on early extinguishment of debt.

OTHER EXPENSE, NET

We incurred $24.1 and $0.3 in the three months ended December 31, 2015 and 2014 , respectively. The increase in other expense primarily reflects $24.2 losses on foreign currency contracts related to an advance payment to Hypermarcas S.A. in connection with the acquisition of the Brazilian Beauty Business.

INCOME TAXES

The effective income tax rate for the three months ended December 31, 2015 and 2014 was 11.8% and 17.9% respectively. The effective tax rate for the current year period includes the decrease in the accrual for unrecognized tax benefits and the expiration of foreign statutes of limitation. The effective tax rate from the prior year period included the positive impacts associated with decrease in the accrual for unrecognized tax benefits, the settlement of a tax audit in a foreign jurisdiction for approximately $32.5 during the three months ended December 31, 2014 and the expiration of foreign statutes of limitation, partially offset by the negative impact of the tax expense associated with the planned intercompany transfer of certain license agreements substantially utilized in our foreign operations and excess U.S. net deferred tax assets that cannot be recognized.

The effective income tax rates vary from the U.S. federal statutory rate of 35% due to the effect of (i) jurisdictions with different statutory rates, (ii) adjustments to our unrealized tax benefits (“UTBs”) and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

Reconciliation of Reported Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:



	Three Months Ended December 31, 2015						Three Months Ended December 31, 2014
(in millions)	Income Before Income Taxes		Provision for Income Taxes		Effective Tax Rate		Income Before Income Taxes		Provision for Income Taxes			Effective Tax Rate
Reported Income Before Income Taxes	$	110.6	$	13.0	11.8	%	$	164.3	$	29.4		17.9	%
Adjustments to Reported Operating Income ^(a)	62.2		26.3				17.2		(20.2		)
Other Adjustments ^(b)	18.8		7.9				—		—
Adjusted Income Before Income Taxes	$	191.6	$	47.2	24.6	%	$	181.5	$	9.2		5.1	%


^(a)	See the reconciliation of reported operating income to Adjusted Operating Income under “Adjusted Operating Income.”


^(b)	See the reconciliation of Reported Net Income Attributable to Coty Inc. to Adjusted Net Income Attributable to Coty Inc. under “Net Income Attributable to Coty Inc.”

The adjusted effective tax rate was 24.6% compared to 5.1% in the prior-year period. The differences were primarily due to the net impact of the settlement of a tax audit in a foreign jurisdiction in the prior period. Cash paid during the quarter for income taxes of $22.8 and $43.4 , represents 11.9% and 23.9% of Adjusted income before income taxes for the three months ended December 31, 2015 and 2014 , respectively.

NET INCOME ATTRIBUTABLE TO COTY INC.

Table of Contents

In the three months ended December 31, 2015 , net income attributable to Coty Inc. decreased $36.4 , to $89.0 , from $125.4 in the three months ended December 31, 2014 . This decrease primarily reflects lower operating income and losses on foreign currency contracts, partially offset by lower income taxes.

We believe that Adjusted Net Income Attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”



	Three Months Ended December 31,
(in millions)	2015			2014			Change %
Reported Net Income Attributable to Coty Inc.	$	89.0		$	125.4		(29	%)
% of Net revenues	7.4		%	10.0		%
Adjustments to Reported Operating Income ^(a)	62.2			17.2			>100%
Adjustments to Other Expense ^(b)	24.2			—			N/A
Adjustments to Interest Expense ^(c)	(8.5		)	—			N/A
Loss on early extinguishment of debt ^(d)	3.1			—			N/A
Adjustments to noncontrolling interest expense ^(e)	—			0.4			(100	%)
Change in tax provision due to adjustments to Reported Net Income Attributable to Coty Inc.	(34.2		)	20.2			<(100%)
Adjusted Net Income Attributable to Coty Inc.	$	135.8		$	163.2		(17	%)
% of Net revenues	11.2		%	13.0		%
Per Share Data
Adjusted weighted-average common shares
Basic	345.0			353.4
Diluted	354.3			362.6
Adjusted Net Income attributable to Coty Inc. per common share
Basic	$	0.39		$	0.46
Diluted	0.38			0.45


^(a)	See “Reconciliation of Operating Income to Adjusted Operating Income.”


^(b)	In the three months ended December 31, 2015 , the amount represents $24.2 losses on foreign currency contracts related to an advance payment to Hypermarcas S.A. in connection with the acquisition of the Brazilian Beauty Business. included in other expense in the Condensed Consolidation Statements of Operations.

^(c)

The amount primarily represents a one-time gain of $11.1 related to short-term forward contracts to exchange Euros for U.S. Dollars related to the Euro-denominated Term Loan B Facility partially offset by losses of $2.6 on derivative contracts used to economically hedge intercompany loans to facilitate payments to Hypermarcas S.A. for the Brazilian Beauty Business, included in interest expense in the Condensed Consolidated Statements of Operations.


^(d)	In the three months ended December 31, 2015 , the amount represents the write-off of deferred financing costs in connection with the refinancing of the Prior Coty Inc. Credit Facilities.


^(e)	Noncontrolling interest expense in the three months ended December 31, 2014 was related to the revaluation of inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market and is included in net income attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations.

SIX MONTHS ENDED DECEMBER 31, 2015 AS COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2014

NET REVENUES

In the six months ended December 31, 2015 , net revenues decreased 5% , or $119.1 , to $2,322.8 from $2,441.9 in the six months ended December 31, 2014 . The decrease was primarily the result of a negative foreign currency exchange translations impact of 8%, partially offset by a positive price and mix impact of 2% and an increase in unit volume of 1%. In the three months ended June 30, 2015, we completed the Bourjois acquisition. The impact to net revenues from the Bourjois acquisition affected our Color Cosmetics segment primarily in EMEA. In fiscal 2014, we announced the discontinuation of our TJoy brand and the reorganization of our mass business in China (“China Optimization”). Excluding the negative impact of foreign currency exchange translations, the Bourjois acquisition, and the discontinuation of TJoy and China Optimization, total net revenues in the six months ended December 31, 2015 decreased 1% reflecting a decrease in unit volume of 4%, partially offset by a positive price and mix impact of 3%.

Table of Contents

Net Revenues by Segment



	Six Months Ended December 31,
(in millions)	2015		2014		Change %
NET REVENUES
Fragrances	$	1,175.1	$	1,332.6	(12	%)
Color Cosmetics	765.7		684.6		12	%
Skin & Body Care	382.0		424.7		(10	%)
Total	$	2,322.8	$	2,441.9	(5	%)

Fragrances

In the six months ended December 31, 2015 , net revenues of Fragrances decreased 12% , or $157.5 , to $1,175.1 from $1,332.6 in the six months ended December 31, 2014 . The decrease in net revenues reflects decrease in unit volume of 7% and a negative foreign currency exchange translations impact of 7%, partially offset by a positive price and mix impact of 2%. The decrease in the segment primarily reflects lower net revenues from celebrity and lifestyle brands in the mass retail channel, in part due to brands that are later in their lifecycles and our continued efforts to execute portfolio rationalization on lower-volume product lines and non-strategic distribution channels. In addition, mass fragrances have been adversely impacted by a negative market trend in the six months ended December 31, 2015 . Also contributing to segment declines were lower net revenues in Calvin Klein , Davidoff , and Chloe, partially offset by Nautica and incremental net revenues from the recently launched Miu Miu fragrance. Calvin Klein net revenues decreased primarily reflecting a negative foreign currency exchange translations impact and declines in existing product lines, partially offset by incremental net revenues from the launches of Calvin Klein Eternity Now , Calvin Klein Euphoria Essence, and Calvin Klein ck2 . Lower net revenues in Davidoff and Chloe reflect declines in existing product lines, a lower level of launch activity in the six months ended December 31, 2015 as compared to the six months ended December 31, 2014 and a negative foreign currency exchange translations impact. Marc Jacobs net revenues in the six months ended December 31, 2015 were comparable to the prior year period as incremental net revenues from the launch of Marc Jacobs Decadence were offset by declines in existing product lines as well as a negative foreign currency exchange translations impact. Lower net revenues in the segment were partially offset by growth from Nautica, primarily in the Asia Pacific region, along with incremental net revenues from the recently launched Miu Miu fragrance. The positive price and mix impact for the segment primarily reflects higher relative volume of high-priced products such as Marc Jacobs and Miu Miu products, lower relative volume of lower-priced celebrity and lifestyle products, and a lower level of promotional and discounted pricing activities.

Color Cosmetics

In the six months ended December 31, 2015 , net revenues of Color Cosmetics increased 12% , or $81.1 , to $765.7 from $684.6 in the six months ended December 31, 2014 reflecting an increase in unit volume of 6% and a positive price and mix impact of 16%, partially offset by a negative foreign currency exchange translations impact of 10%. The Bourjois acquisition positively impacted net revenues by 13%, generating 10% of the unit volume increase and a positive 6% price and mix impact, partially offset by a negative 3% foreign currency exchange translations impact. Excluding the impact from the Bourjois acquisition, Color Cosmetics net revenues decreased 1% reflecting lower net revenues from Rimmel, OPI, New York Color, and Astor , partially offset by strong growth from Sally Hansen . Lower net revenues from Rimmel reflect the negative impact of foreign currency exchange translations. Excluding this impact, net revenues in Rimmel increased primarily driven by recent launches such as Rimmel the Only 1 lipstick and Rimmel Supercurler mascara. Lower net revenues from OPI were impacted partly by foreign currency exchange translations and declines in lacquer products, including Nicole by OPI in the U.S., partially offset by new launches OPI Infinite Shine and the OPI Hello Kitty collection as well as incremental net revenues in the Asia Pacific region. Lower net revenues in New York Color reflect declining sales in the U.S. and the U.K., reflecting a management decision to discontinue the brand in the U.K. market. Declines in Astor primarily reflect a negative foreign currency exchange translations impact. Sally Hansen net revenues increased primarily driven by the continued success of Sally Hansen Miracle Gel, reflecting an enhanced product offering as well as the introduction of Sally Hansen Miracle Gel in EMEA. However, in the six months ended December 31, 2015 the adverse impact of the U.S. retail nail market trend began to affect net revenues of Sally Hansen . Excluding the impact to net revenues from the Bourjois acquisition and the negative impact of foreign currency exchange translations, net revenues for Color Cosmetics increased 6% reflecting a positive price and mix impact of 10% partially offset by a decrease in unit volume of 4%. The positive price and mix impact primarily reflects higher relative volumes of higher-priced products, such as OPI Infinite Shine and Sally Hansen Miracle Gel .

Table of Contents

Skin & Body Care

In the six months ended December 31, 2015 , net revenues of Skin & Body Care decreased 10% , or $42.7 , to $382.0 from $424.7 in the six months ended December 31, 2014 . The decrease was primarily the result of a negative foreign currency exchange translations impact of 9% and a decrease in unit volume of 3%, partially offset by a positive price and mix impact of 2%. The discontinuation of TJoy and China Optimization had an immaterial impact on net revenues as it contributed 2% to the unit volume decline and offset by a positive price and mix impact of 2%. Skin & Body Care net revenues decreased 10% reflecting declines in all brands. Lower net revenues from Playboy were primarily driven by a negative foreign currency exchange translations impact, declines in Brazil reflecting a planned shift towards fragrances in our product offerings, and declines in existing product lines, partially offset by incremental net revenues from new launches such as the Playboy Play It Wild franchise. Net revenues for adidas were negatively impacted by foreign currency exchange translations. Excluding this impact, net revenues in adidas increased reflecting growth in EMEA due to recent launches such as adidas UEFA Champions League Edition, Functional, Climacool, and After Sport toiletries, and the Born Original franchise, partially offset by declines in Brazil. Net revenues for adidas also increased in Asia Pacific resulting from our mass business reorganization in China. Net revenues from philosophy were negatively impacted by foreign currency exchange translations. Excluding this impact, philosophy net revenues were consistent with the prior year. Excluding the negative foreign currency exchange translations impact of 9% and the impact from the discontinuation of TJoy and China Optimization, Skin & Body Care net revenues decreased 1% reflecting a unit volume decline of 1%.

Net Revenues by Geographic Regions



	Six Months Ended December 31,
(in millions)	2015		2014		Change %
NET REVENUES
Americas	$	842.8	$	896.2	(6	%)
EMEA	1,202.0		1,249.4		(4	%)
Asia Pacific	278.0		296.3		(6	%)
Total	$	2,322.8	$	2,441.9	(5	%)

Americas

In the six months ended December 31, 2015 , net revenues in the Americas decreased 6% , or $53.4 , to $842.8 from $896.2 in the six months ended December 31, 2014 . The decline in the region reflects lower net revenues in the U.S., Canada, Latin America and the regional travel retail business. Lower net revenues in the U.S. were primarily due to lifestyle and celebrity fragrance brands in the mass retail channel, in part due to brands that are later in their lifecycles , as well as OPI , Calvin Klein and Davidoff . In addition, mass fragrances in the U.S. have been adversely impacted by a negative market trend mentioned in the “Fragrances” discussion above. Partially offsetting the net revenue decline in the U.S. were higher net revenues from Sally Hansen . Net revenues in Canada decreased primarily due to a negative foreign currency exchange translations impact as well as declines in Calvin Klein . Net revenues declined in Latin America and in the regional travel retail business in part due to economic slowdown and currency devaluations in the region. Excluding the negative impact of foreign currency exchange translations of 2%, net revenues in the Americas in the six months ended December 31, 2015 decreased 4%.

EMEA

In the six months ended December 31, 2015 , net revenues in EMEA decreased 4% , or $47.4 , to $1,202.0 from $1,249.4 in the six months ended December 31, 2014 . Excluding the impact of the Bourjois acquisition, net revenues in EMEA decreased 11%. Lower net revenues in Germany, Eastern Europe, the U.K., our travel retail business and Southern Europe contributed to the decline in the region, partially offset by growth from the regional export business and the Middle East. Net revenues in Germany declined due to a negative foreign currency exchange translations impact. Excluding this impact, net revenues in the six months ended December 31, 2015 in Germany were consistent with the six months ended December 31, 2014 as growth in Rimmel and Sally Hansen as well as incremental net revenues from the launch of the Miu Miu fragrance were offset by declines in the Fragrances segment. Net revenues in the Eastern Europe region decreased due to a negative foreign currency exchange

Table of Contents

translations impact. Excluding this impact, Eastern Europe net revenues increased primarily driven by growth in Calvin Klein and Color Cosmetics as well as incremental net revenues from the Bourjois acquisition and the recently launched Miu Miu fragrance. U.K. net revenues decreased primarily due to a negative foreign currency exchange translations impact and celebrity and lifestyle brands in the mass retail channel, in part due to brands that are later in their lifecycles, partially offset by incremental net revenues from the Bourjois acquisition. The decline in our travel retail business primarily reflects a negative foreign currency exchange transactions impact. Net revenues in Southern Europe decreased as incremental net revenues from the Bourjois acquisition could not offset the negative foreign exchange translations impact and declines in Playboy and Calvin Klein. Growth in the regional export business was primarily driven by the Fragrances segment as well as incremental net revenues from the Bourjois acquisition. Net revenues in the Middle East benefited from our new joint venture in the Kingdom of Saudi Arabia, and incremental net revenues from the Bourjois acquisition. Excluding the negative impact of foreign currency exchange translations of 10% and the Bourjois acquisition, net revenues in EMEA decreased 1%.

Asia Pacific

In the six months ended December 31, 2015 , net revenues in Asia Pacific decreased 6% , or $18.3 , to $278.0 from $296.3 in the six months ended December 31, 2014 . The decline in the region reflects lower net revenues in China and Australia, partially offset by the regional export business. Lower net revenues in China reflect declines in the prestige distribution channel in part due to economic slowdown, partially offset by strong growth in adidas resulting from our mass business reorganization in China . Net revenues in Australia were affected by a negative foreign currency exchange translations impact. Excluding this impact, net revenues in Australia increased primarily driven by growth in Calvin Klein and Rimmel . Partially offsetting declines in the region were net revenues growth in the regional export business, primarily from Nautica, in part due to different phasing of orders , and Calvin Klein . Excluding the negative foreign currency exchange translations impact of 9%, net revenues in Asia Pacific increased 3% with net revenue growth across all product segments. The discontinuation of TJoy and China Optimization had an immaterial impact on net revenues in the six months ended December 31, 2015 as compared to the six months ended December 31, 2014 .

COST OF SALES

In the six months ended December 31, 2015 , cost of sales decreased 8% , or $79.7 , to $911.4 from $991.1 in the six months ended December 31, 2014 . Cost of sales as a percentage of net revenues decreased to 39.2% in the six months ended December 31, 2015 from 40.6% in the six months ended December 31, 2014 , resulting in a gross margin improvement of approximately 140 basis points. The cost of sales reflects the negative impact related to the Bourjois acquisition in the six months ended December 31, 2015 and the impact of the revaluation of inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market and China Optimization in the six months ended December 31, 2014 . Excluding the impact of these items, gross margin improved approximately 130 basis points primarily reflecting a positive impact from a lower level of promotional and discounted pricing activity, reported in net revenues, and continued contribution from our supply chain savings program, reported in cost of sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the six months ended December 31, 2015 , selling, general and administrative expenses decreased 5% , or $55.8 , to $999.7 from $1,055.5 in the six months ended December 31, 2014 . Selling, general and administrative expenses as a percentage of net revenues decreased to 43.0% in the six months ended December 31, 2015 from 43.2% in the six months ended December 31, 2014 . Selling, general and administrative expenses include business realignment costs, share-based compensation expense adjustment, China Optimization costs, and real estate consolidation program costs. See “Adjusted Operating Income.” Excluding these items described above, selling, general and administrative expenses decreased 6% , or $60.1 , to $988.9 from $1,049.0 in the six months ended December 31, 2014 and decreased as a percentage of net revenues to 42.6% from 43.0% . This decrease of approximately 40 basis points primarily reflects approximately 70 basis points related to lower advertising and consumer promotion spending and lower administrative costs of approximately 30 basis points, partially offset by approximately 40 basis points related to the negative impact from our exposure to foreign currency exchange fluctuations and higher share-based compensation expenses of approximately 20 basis points reflecting higher forfeitures in the six months ended December 31, 2014 . Advertising and consumer promotion expense decreased due to a positive foreign exchange translations impact and a reduction in non-strategic spending, offset by increased investment in consumer-facing media spend as well as added costs related to the Bourjois acquisition not in the six months ended December 31, 2014 . Lower administrative costs primarily reflect a positive foreign exchange translations impact and savings from our Organizational Redesign, partially offset by added costs related to the Bourjois and Beamly acquisitions not in the six months ended December 31, 2014 .

OPERATING INCOME

Table of Contents

In the six months ended December 31, 2015 , operating income decreased 23% , or $69.7 to $234.1 from $303.8 in the six months ended December 31, 2014 . Operating margin, or operating income as a percentage of net revenues, decreased to 10.1% in the six months ended December 31, 2015 as compared to 12.4% in the six months ended December 31, 2014 . This margin decline of approximately 230 basis points reflects approximately 260 basis points related to higher acquisition-related costs, approximately 100 basis points related to higher restructuring expenses, approximately 20 basis points related to asset impairment charges in the six months ended December 31, 2015 , and approximately 10 basis points related to higher amortization expense, partially offset by approximately 140 basis points related to lower cost of sales and approximately and 20 basis points related to lower selling, general and administrative expenses.

Operating Income by Segment



	Six Months Ended December 31,
(in millions)	2015			2014			Change %
OPERATING INCOME
Fragrances	$	237.6		$	266.0		(11	%)
Color Cosmetics	116.1			82.5			41	%
Skin & Body Care	34.3			18.8			82	%
Corporate	(153.9		)	(63.5		)	<(100%)
Total	$	234.1		$	303.8		(23	%)

Fragrances

In the six months ended December 31, 2015 , operating income for Fragrances decreased 11% , or $28.4 , to $237.6 from $266.0 in the six months ended December 31, 2014 . Operating margin increased to 20.2% of net revenues in the six months ended December 31, 2015 as compared to 20.0% in the six months ended December 31, 2014 , primarily driven by lower selling, general and administrative expenses as a percentage of net revenues, partially offset by higher amortization expenses and higher cost of sales as percentages of net revenues.

Color Cosmetics

In the six months ended December 31, 2015 , operating income for Color Cosmetics increased 41% , or $33.6 , to $116.1 from $82.5 in the six months ended December 31, 2014 . Operating margin increased to 15.2% of net revenues in the six months ended December 31, 2015 as compared to 12.1% in the six months ended December 31, 2014 , primarily reflecting lower cost of sales as a percentage of net revenues, in part due to a lower level of promotional and discounted pricing activities, partially offset by higher selling, general and administrative expenses and amortization expenses as percentages of net revenues.

Skin & Body Care

In the six months ended December 31, 2015 , operating income for Skin & Body Care increased 82% , or $15.5 , to $34.3 from $18.8 in the six months ended December 31, 2014 . Operating income in the six months ended December 31, 2014 includes charges of $1.7 related to China Optimization.

Excluding charges related to China Optimization, operating income increased $13.8 , to $34.3 from $20.5 in the six months ended December 31, 2015 . Operating margin increased to 9.0% of net revenues in the six months ended December 31, 2015 as compared to 4.8% in the six months ended December 31, 2014 , primarily driven by lower selling, general and administrative expenses and lower costs of sales as percentages of net revenues, in part due to a lower level of promotional and discounted pricing activities.

Corporate

Table of Contents

In the six months ended December 31, 2015 , operating loss for Corporate was $153.9 compared to $63.5 in the six months ended December 31, 2014 , as described under “Adjusted Operating Income” below.

Adjusted Operating Income



	Six Months Ended December 31,
(in millions)	2015			2014			Change %
Reported Operating Income	$	234.1		$	303.8		(23	%)
% of Net revenues	10.1		%	12.4		%
Restructuring and other business realignment costs	83.2			56.4			48	%
Costs related to acquisition activities	64.9			5.0			>100%
Asset impairment charges	5.5			—			N/A
Share-based compensation expense adjustment	0.3			2.8			(89	%)
China Optimization	—			0.7			(100	%)
Real estate consolidation program costs	—			(0.7		)	100	%
Total adjustments to Reported Operating Income	153.9			64.2			>100%
Adjusted Operating Income	$	388.0		$	368.0		5	%
% of Net revenues	16.7		%	15.1		%

In the six months ended December 31, 2015 , Adjusted Operating Income increased 5% , or $20.0 , to $388.0 from $368.0 in the six months ended December 31, 2014 . Adjusted operating margin increased to 16.7% of net revenues in the six months ended December 31, 2015 as compared to 15.1% in the six months ended December 31, 2014 , driven by approximately 130 basis points related to lower cost of sales and approximately 40 basis points related to lower selling, general and administrative expenses as described under “Selling, General and Administrative Expenses” above, partially offset by approximately 10 basis points related to higher amortization expense. Excluding the impact of foreign currency exchange translations, Adjusted Operating Income increased 13% .

Restructuring and Other Business Realignment Costs

In the first quarter of fiscal 2016, our Board of Directors approved an expansion to the Acquisition Integration Program in connection with the acquisition of the Bourjois brand. Actions and cash payments associated with the program were initiated after the acquisition of Bourjois and are expected to be substantially completed by the end of fiscal 2017. We anticipate the Acquisition Integration Program will result in pre-tax restructuring and related costs of approximately $67.0, all of which will result in cash payments. We have incurred $60.9 of restructuring costs life-to-date as of December 31, 2015, which are recorded in Corporate. We currently estimate that the total remaining accrual of $53.6. will result in cash expenditures of approximately $9.6 and $44.0 in fiscal 2016 and 2017, respectively.

In the six months ended December 31, 2015 , we incurred restructuring and other business structure realignment costs of $83.2 , as follows:


•	We incurred restructuring costs of $72.7 , included in restructuring costs in the Condensed Consolidated Statements of Operations, which primarily relate to the Acquisition Integration Program and Organizational Redesign.


•	We incurred business structure realignment costs of $10.5 primarily related to our Organizational Redesign and certain other programs, included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In the six months ended December 31, 2014 , we incurred restructuring and other business structure realignment costs of $56.4 , as follows:


•	We incurred restructuring costs of $52.5 , included in restructuring costs in the Condensed Consolidated Statements of Operations, which primarily relate to the Organizational Redesign.

Table of Contents


•	We incurred business structure realignment costs of $3.9 primarily related to our Organizational Redesign and certain other programs, included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In all reported periods, all restructuring and other business realignment costs were reported in Corporate.

Costs Related to Acquisition Activities

In the six months ended December 31, 2015 , we incurred $64.9 of costs related to acquisition activities. We recognized acquisition-related costs of $61.3 in the Condensed Consolidated Statements of Operations. These costs can include finder’s fees, legal, accounting, valuation, and other professional or consulting fees, and other internal costs which can include compensation related expenses for dedicated internal resources. We also incurred $3.6 of costs in connection with the Bourjois acquisition, included in cost of sales in the Condensed Consolidated Statements of Operations.

In the six months ended December 31, 2014 , we incurred $5.0 costs related to acquisition activities. These costs include $1.6 of acquisition-related costs, in the Condensed Consolidated Statements of Operations, and $3.4 associated with the revaluation of inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market, included in cost of sales in the Condensed Consolidated Statements of Operations.

In all reported periods, all costs related to acquisition activities were reported in Corporate.

Asset Impairment Charges

In the six months ended December 31, 2015 , asset impairment charges of $5.5 were reported in the Condensed Consolidated Statements of Operations. The impairment represents the write-off of long-lived assets in Southeast Asia consisting of customer relationships reported in Corporate.

In the six months ended December 31, 2014 , we did not incur any asset impairment charges.

Share-Based Compensation Adjustment

Share-based compensation expense adjustment included in the calculation of Adjusted Operating Income was $0.3 and $2.8 in the six months ended December 31, 2015 and 2014 , respectively. The decrease in the share-based compensation expense adjustment primarily reflects increased forfeitures.

China Optimization

In the six months ended December 31, 2015 , we did not incur any costs related to China Optimization.

In the six months ended December 31, 2014 , we incurred costs of $0.7 related to China Optimization, which consisted of costs of $1.7 in the Skin & Body Care segment and income of $1.0 in the Color Cosmetics segment. China Optimization costs primarily reflect refinement in estimates and miscellaneous costs associated with the program.

Real Estate Consolidation Program Costs

In the six months ended December 31, 2015 , we did not incur any real estate consolidation program costs.

In the six months ended December 31, 2014 , we incurred $0.7 of income related to refinement of lease loss expense estimates in connection with the consolidation of real estate in New York, recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Table of Contents

In all reported periods, all real estate consolidation program costs were reported in Corporate.

INTEREST EXPENSE, NET

In the six months ended December 31, 2015 , interest expense, net was $30.6 as compared with $38.7 in the six months ended December 31, 2014 . The decrease is primarily due to one-time net derivative gains of $8.5 related to foreign currency forward contracts entered into to facilitate the debt refinancing and to economically hedge intercompany loans used to facilitate payments to Hypermarcas S.A. in connection the Brazilian Beauty Business. Excluding these one-time activities, interest expense increased primarily due to higher average interest rates on outstanding debt balances, increased deferred financing costs and lower interest income, partially offset by foreign exchange impact.

LOSS ON EARLY EXTINGUISHMENT OF DEBT

In the six months ended December 31, 2015 , we incurred $3.1 related to the write-off of deferred financing costs in connection with the refinancing of with the refinancing of the Prior Coty Inc. Credit Facilities.

In the six months ended December 31, 2014 , we incurred $88.8 in losses on the early extinguishment of debt in conjunction with the repurchase of our previously existing Series A notes due June 2017, Series B notes due June 2020, and Series C notes due June 2022.

OTHER EXPENSE, NET

We incurred $23.8 and $0.3 in the three months ended December 31, 2015 and 2014 , respectively. The increase in other expense primarily reflects $24.2 losses on foreign currency contracts related to an advance payment to Hypermarcas S.A. in connection with the acquisition of the Brazilian Beauty Business.

INCOME TAXES

The effective income tax rate for the six months ended December 31, 2015 and 2014 was (30.6)% and 13.9%, respectively. The effective tax rate for the six months ended December 31, 2015 includes the net impact of the settlements with the Internal Revenue Service (“IRS”) as described below. The effective income tax rate for the six months ended December 31, 2014 includes the net impact of favorable tax audit resolutions in multiple jurisdictions, partially offset by the negative impact of the tax expense associated with the planned intercompany transfer of certain license agreements substantially utilized in our foreign operations.

During first quarter of fiscal year 2016, the Company reached final settlement with the IRS in connection with the 2004-2012 examination periods. The settlement primarily relates to the acquisition of the Calvin Klein fragrance business. In connection with the settlement, the Company recognized a tax benefit of approximately $193.9 of which $164.2 is mainly due to the recognition of additional deferred tax assets related to the basis of the Calvin Klein trademark, and approximately $29.7 resulted from the reduction of gross unrecognized tax benefits. Of the $193.9 tax benefit, $113.0 was offset by a valuation allowance due to on-going operating losses in the U.S.

The effective rates vary from the U.S. federal statutory rate of 35% due to the effect of (i) jurisdictions with different statutory rates, (ii) adjustments to our unrecognized tax benefits and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.

Table of Contents

Reconciliation of Reported Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:



	Six Months Ended December 31, 2015							Six Months Ended December 31, 2014
(in millions)	Income Before Income Taxes		(Benefit) Provision for Income Taxes			Effective Tax Rate		Income Before Income Taxes		Provision for Income Taxes		Effective Tax Rate
Reported Income Before Income Taxes	$	176.6	$	(54.1	)	(30.6	%)	$	176.0	$	24.4	13.9	%
Adjustments to Reported Operating Income ^(a)	153.9		28.4					64.2		9.1
Other adjustments ^(b)	18.8		3.5					88.8		12.5
Adjusted Income Before Income Taxes	$	349.3	$	(22.2	)	(6.4	%)	$	329.0	$	46.0	14.0	%


^(a)	See the reconciliation of reported operating income to Adjusted Operating Income under “Adjusted Operating Income.”


^(b)	See the reconciliation of Reported Net Income Attributable to Coty Inc. to Adjusted Net Income Attributable to Coty Inc. under “Net Income Attributable to Coty Inc.”

The adjusted effective tax rate was (6.4)% compared to 14.0% in the prior-year period. The differences were primarily due the net impact of the settlements with the IRS and of tax audits in multiple foreign jurisdictions in the prior period. Cash paid during the six months ended December 31, 2015 and 2014 , for income taxes of $59.6 and $70.0 , represents 17.1% and 21.3% of Adjusted income before income taxes for the nine months ended, respectively.

NET INCOME ATTRIBUTABLE TO COTY INC.

In the six months ended December 31, 2015 , net income attributable to Coty Inc. increased $78.7 , to $214.7 , from $136.0 in the six months ended December 31, 2014 . This increase primarily reflects the aforementioned tax benefit for the settlement with the IRS in the six months ended December 31, 2015 and losses on early extinguishment of debt in the six months ended December 31, 2014 , partially offset by lower operating income and losses on foreign currency contracts in the six months ended December 31, 2015 .

We believe that Adjusted Net Income Attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”



	Six Months Ended December 31,
(in millions)	2015			2014			Change %
Reported Net Income Attributable to Coty Inc.	$	214.7		$	136.0		58	%
% of Net revenues	9.2		%	5.6		%
Adjustments to Reported Operating Income ^(a)	153.9			64.2			>100%
Adjustments to Other Expense ^(b)	24.2			—			N/A
Adjustments to Interest Expense ^(c)	(8.5		)	—			N/A
Loss on early extinguishment of debt ^(d)	3.1			88.8			(97	%)
Adjustments to noncontrolling interest expense ^(e)	—			(1.2		)	100	%
Change in tax provision due to adjustments to Reported Net Income Attributable to Coty Inc.	(31.9		)	(21.6		)	(48	%)
Adjusted Net Income Attributable to Coty Inc.	$	355.5		$	266.2		34	%
% of Net revenues	15.3		%	10.9		%
Per Share Data
Adjusted weighted-average common shares
Basic	352.5			353.8
Diluted	362.0			363.5
Adjusted net income attributable to Coty Inc. per common share
Basic	$	1.01		$	0.75
Diluted	0.98			0.73

Table of Contents


^(a)	See “Reconciliation of Operating Income to Adjusted Operating Income” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


^(b)	In the six months ended December 31, 2015 , the amount represents $24.2 losses on foreign currency contracts related to an advance payment to Hypermarcas S.A. in connection with the acquisition of their Brazilian Beauty Business, included in other expense in the Condensed Consolidation Statements of Operations.

^(c)

The amount primarily represents a one-time gain of $11.1 related to short-term forward contracts to exchange Euros for U.S. Dollars related to the Euro-denominated Term Loan B Facility partially offset by losses of $2.6 on derivative contracts used to economically hedge intercompany loans to facilitate payments to Hypermarcas S.A for the Brazilian Beauty Business, included in interest expense in the Condensed Consolidated Statements of Operations.


^(d)	In the six months ended December 31, 2015 , the amount represents the write-off of deferred financing costs in connection with the refinancing of our Prior Coty Inc. Credit Facilities, included in loss on early extinguishment of debt in the Condensed Consolidated Statements of Operations.


^(e)	Noncontrolling interest expense related to the revaluation of inventory buyback associated with the conversion from a distributor to subsidiary distribution model in a select emerging market, included in net income attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations.

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary sources of funds include cash generated from operations, borrowings from issuance of debt and committed and uncommitted lines of credit provided by banks and lenders in the U.S. and abroad. As of December 31, 2015 , we had cash and cash equivalents of $482.7 compared with $341.3 at June 30, 2015 .

Our cash flows are subject to seasonal variation throughout the year, including demands on cash made during our first fiscal quarter in anticipation of higher global sales during the second quarter and strong cash generation in the second fiscal quarter as a result of increased demand by retailers associated with the holiday season. Our principal uses of cash are to fund planned operating expenditures, capital expenditures, interest payments, acquisitions, dividends, share repurchases and any principal payments on debt. The working capital movements are based on the sourcing of materials related to the production of our Fragrances, Color Cosmetics, and Skin & Body Care products.

As a result of the cash on hand, our ability to generate cash from operations and through access to our revolving credit facility and other lending sources, we believe we have sufficient liquidity to meet our ongoing needs on both a near term and long-term basis.

Debt



	December 31, 2015			June 30, 2015
Short-term debt	$	10.2		$	22.1
Coty Credit Agreement
Revolving Credit Facility due October 2020	675.0			—
Term Loan A Facility due October 2020	1,750.0			—
Term Loan B Facility due October 2022	1,226.6			—
2015 Credit Agreement due March 2018	—			800.0
Coty Inc. Credit Facility
2013 Term Loan due March 2018	—			1,050.0
Incremental Term Loan due April 2018	—			625.0
Revolving Loan Facility due April 2018	—			136.5
Other long-term debt and capital lease obligations	0.6			1.1
Total debt	3,662.4			2,634.7
Less: Short-term debt and current portion of long-term debt	(85.6		)	(28.8		)
Total Long-term debt	3,576.8			2,605.9
Less: Discount on Long-term debt	(5.9		)	—
Total Long-term debt, net	$	3,570.9		$	2,605.9

Coty Credit Agreement

On October 27, 2015, we entered into a Credit Agreement (the “Coty Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent. The Coty Credit Agreement provides for senior secured credit facilities (the “Senior Secured Facilities”) comprised of (i) a five year revolving credit facility in an aggregate principal amount up to $ 1,500.0 (the “Revolving Credit Facility”) which includes up to $80.0 in swingline loans available for short term borrowings, (ii) a $1,750.0 Term Loan A Facility (“Term Loan A Facility”) and (iii) a Term Loan B Facility comprising of a $500.0 tranche and a € 665.0 million tranche (“Term Loan B Facility”). The Term Loan B Facility was issued at a 0.50% discount. The proceeds of the Coty Credit Agreement were primarily used to refinance our previously existing debt, which included the 2015 Credit Agreement due March 2018 and facilities under the Coty Inc. Credit Facility (together, the “Prior Coty Inc. Credit Facilities”).

The interest rate applicable to borrowings under the Revolving Credit Facility and the Term Loan A Facility will accrue at a rate equal to, at our option, either LIBOR plus a margin ranging from 1.00% to 2.00% per annum or a base rate plus a margin ranging from 0.00% to 1.00% per annum, based on our total net leverage ratio, as defined in the Coty Credit Agreement. As of December 31, 2015, the applicable spread for the Revolving Credit Facility and the Term Loan A Facility was 1.50% .

The interest rate applicable to borrowings under the Term Loan B Facility will accrue at a rate equal to (a) for U.S. dollar term loans, at our option, either LIBOR (subject to a 0.75% floor) plus a margin of 3.00% or a base rate (subject to a 1.75% floor), plus a margin of 2.00% , and (b) for Euro denominated term loans, EURIBOR (subject to a 0.75% floor) plus a margin of 2.75% . We will pay to the revolving lenders an unused commitment fee calculated at a rate ranging from 0.25% to 0.50% per annum, based on our total net leverage ratio, as defined in the Coty Credit Agreement. As of December 31, 2015, the applicable rate on the unused commitment fee was 0.50% .

We recognized $56.5 of deferred financing fees in connection with the Coty Credit Agreement. In connection with the refinancing, we wrote off $3.1 of deferred financing fees associated with the Prior Coty Inc. Credit Facilities, which has been reflected in Loss on early extinguishment of debt in the Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2015.

The Coty Credit Agreement is guaranteed by Coty Inc.’s wholly-owned domestic subsidiaries and secured by a first priority lien on substantially all of the of assets of Coty Inc. and its wholly-owned domestic subsidiaries, in each case subject to certain carve outs and exceptions.

Debt Covenants

We are required to comply with certain affirmative and negative covenants contained within the Coty Credit Agreement. The Coty Credit Agreement includes a financial covenant that requires us to maintain a total net leverage ratio, as defined therein, equal to or less than 5.50 to 1.00 for each fiscal quarter through December 31, 2016, subject to certain agreed step-downs thereafter. In the four fiscal quarters following the closing of any material acquisition, as defined in the Coty Credit Agreement, the applicable leverage ratio shall be the lesser of 1.00 to 1.00 higher than the applicable rate at the time, and 5.95 to 1.00. After the four fiscal quarter period ends, the net leverage ratio levels will return to pre-material acquisition levels.

As of December 31, 2015, we are in compliance with all financial covenants within the Coty Credit Agreement as described above.

Business Combinations

Pending Transaction with P&G Specialty Beauty Business

On July 9, 2015, we announced the signing of a definitive agreement to merge The Procter & Gamble Company’s (“P&G”) fine fragrance, color cosmetics, and hair color businesses (the “P&G Specialty Beauty Business”), comprised of 43 beauty brands, into us through a Reverse Morris Trust transaction.

Our transaction proposal valued the P&G Specialty Beauty Business at approximately $12,500.0 , based on the number of our basic Class A and Class B Common shares outstanding (i.e., excluding the impact of our outstanding equity awards) and an average trading price of our stock at the time of the proposal. The actual transaction value will be known at closing based on the our then current share price and fully diluted share count, as well as, the final level of assumed debt. The aggregate consideration in the transaction will consist of shares in the combined company issued to participating P&G shareholders, as well as, the assumption of debt of the P&G Specialty Beauty Business. The share issuance is structured to result in P&G shareholders receiving 52% of all outstanding shares in the combined company on a fully diluted basis. Our proposal valued this equity component at approximately $9,600.0 at the time the proposal was submitted. The remaining consideration of

$2,900.0 in assumed debt from the P&G Specialty Beauty Business is subject to a $1,000.0 adjustment within a collar based on the trading price of the our stock (range of $22.06 to $27.06 per share) prior to the close of the transaction as well as other contractual valuation adjustments. The assumed debt is expected to be between approximately $1,900.0 and $3,900.0 .

As of December 31, 2015, excluding the adjustment for two brands that will not transfer upon completion of the merger, the estimated value of the transaction was approximately $13,000.0 based on our stock price and outstanding Class A and Class B Common shares and equity grants as of December 31, 2015. The value is comprised of approximately 413 million shares which represents 52% of the diluted equity of the combined company, valued at approximately $ 10,600.0 and the assumption of $2,400.0 in debt from the P&G Specialty Beauty Business. The transaction is expected to close in the second half of calendar year 2016, subject to regulatory clearances, works council consultations, and other customary conditions. The final value of the transaction will be determined at the date of closing.

Acquisition of Brazilian Beauty Business

On February 1, 2016, we completed our previously announced acquisition of the Brazilian Beauty Business pursuant to a Shares and Trademarks Sale and Purchase Agreement (the "Share Purchase Agreement") in order to strengthen our position in the Brazilian beauty and personal care market. The total cash consideration net of preliminary working capital adjustments was R $3,539.0 million , the equivalent of $886.7 , of which R$1,710.0, the equivalent of $429.4, was paid in advance on December 28, 2015. The acquisition was financed with a combination of cash on hand and drawings under the Coty Credit Agreement. The remaining payment made on February 1, 2016 was funded with cash of $100.0 and $357.3 of drawings under the Coty Credit Agreement.

Cash Flows



	Six Months Ended December 31,
	2015			2014
Condensed Consolidated Statements of Cash Flows Data: (in millions)
Net cash provided by operating activities	$	517.1		$	355.0
Net cash used in investing activities	(543.7		)	(89.5		)
Net cash provided by (used in) financing activities	193.9			(210.8		)

Net cash provided by operating activities

Net cash provided by operating activities was $517.1 and $355.0 for the six months ended December 31, 2015 and 2014 , respectively. The increase in operating cash inflows of $162.1 is primarily due to an increase in accounts payable of $93.7 substantially attributable to a change in the frequency of our payables processing from a bi-monthly to a monthly basis, a decrease in accounts receivable of $85.0 resulting from timing of collections and an increase in other noncurrent liabilities of $36.0 primarily associated with restructuring activities partially offset by $151.5 in additional adjustments to reconcile net income to operating cash flow.

Net cash used in investing activities

Net cash used in investing activities was $543.7 and $89.5 for the six months ended December 31, 2015 and 2014 , respectively. The increase in cash outflows of $454.2 is primarily driven by the $429.4 advance payment for the Brazilian Beauty Business acquisition, the $17.9 acquisition of the digital marketing company, a loss of $18.1 on a foreign currency forward contract related to the Brazilian Beauty Business acquisition and a decrease in proceeds from the sale of assets of $14.1, partially offset by lower capital expenditures of $24.7 during the six months ended December 31, 2015.

Net cash provided by (used in) financing activities

Net cash provided by (used in) financing activities was $193.9 and $(210.8) for the six months ended December 31, 2015 and 2014 , respectively. The decrease in financing cash outflows of $404.7 is primarily attributable to various debt related transactions during the six months ended December 31, 2015 that resulted in net cash inflows of $1,032.2 compared to net cash inflows of $31.8 during the six months ended December 31, 2014. The year over year increase in cash inflows from debt related transactions of $1,000.4 primarily related to net proceeds from the Coty Credit Agreement, net proceeds from foreign currency forward contracts of $24.2, the prior year payment for the purchase of additional noncontrolling interests of $14.9, which did not reoccur in the current year, which were offset by year over year cash outflows of $578.7 for the purchase of treasury shares, higher distributions to noncontrolling interest partners of $10.7 and higher payments of deferred financing fees of $48.7 during the six months ended December 31, 2015.

Dividends

On September 11, 2015, we declared a cash dividend of $0.25 per share, or $90.1 on our Class A and Class B Common Stock, RSUs and phantom units. Of the $90.1 , $89.0 was paid on October 15, 2015 to holders of record of Class A and Class B Common Stock on October 1, 2015 and was recorded as a decrease to APIC in the Condensed Consolidated Balance Sheet as of December 31, 2015 . The remaining $1.1 is payable upon settlement of the RSUs and phantom units outstanding as of October 1, 2015, and is recorded as Other noncurrent liabilities in the Condensed Consolidated Balance Sheet.

Share Repurchase

On August 13, 2015, our Board authorized us to repurchase up to $700.0 of our Class A Common Stock, inclusive of any amounts remaining under our previously announced share repurchase program (the “Repurchase Program”). In connection with our Repurchase Program, we repurchased 19.4 million and 24.9 million shares of our Class A Common Stock during the three and six months ended December 31, 2015 , respectively. The shares were purchased in multiple transactions at prices ranging from $25.51 to $30.35 for the three and six months ended December 31, 2015. The aggregate fair value of shares repurchased during the three and six months ended December 31, 2015 was $544.3 and $700.0, respectively, and was recorded as an increase to Treasury stock in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests. These purchases completed the approved Repurchase Program.

On December 3, 2015, we entered into a stock purchase agreement with a shareholder holding more than 5% of our Class A Common Stock to repurchase 1.0 million shares of our Class A Common Stock. On December 17, 2015, we remitted payment for the repurchased shares at a price of $27.91 per share. The fair value of shares repurchased was approximately $27.9 and was recorded as an increase to Treasury stock in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interests.

On February 4, 2016, we announced that our Board has authorized us to repurchase up to $500.0 million of our Class A common stock (the “Incremental Repurchase Program”). Repurchases may be made from time to time at our discretion, based on ongoing assessments of the capital needs of the business, the market price of its common stock, and general market conditions. No time has been set for the Incremental Repurchase Program, and the program may be suspended or discontinued at any time. The Incremental Repurchase Program authorization enables us to purchase our common stock from time to time through open market purchases, negotiated transactions or other means, including 10b5-1 trading plans in accordance with applicable securities laws and other restrictions.

Commitments and Contingencies

We have the right to purchase the noncontrolling interests in certain subsidiaries from the noncontrolling interest holders (each such right, a “Call right”) at certain points in time. In December 2014, we gave notice of intent to exercise our Call right for 14% of a certain Singapore subsidiary from the noncontrolling interest holder at an estimated purchase price of approximately $10.7 for this 14% . We believe that the Call right will be completed in the third quarter of fiscal 2016. In addition, on September 29, 2015, we gave notice of intent to exercise our option to terminate the Shareholders’ Agreement with the noncontrolling interest holder and to purchase the remaining 35% of the noncontrolling interest holder’s interest in the Singapore subsidiary. We believe that the termination option will be completed in the first quarter of fiscal 2017 for an estimated purchase price of approximately $50.0 .

Off-Balance Sheet Arrangements

We had undrawn letters of credit of $4.6 and $4.1 as of December 31, 2015 and June 30, 2015, respectively.

Critical Accounting Policies

We believe that the critical accounting policies listed below involve our more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on our condensed consolidated financial statements:


•	Revenue Recognition


•	Goodwill, Other Intangible Assets and Long-Lived Assets


•	Pension and Other Post-Employment Benefit Costs


•	Share-Based Compensation


•	Income Taxes

As of December 31, 2015 , there have been no material changes to the items disclosed as critical accounting policies and estimates in “Management Discussion and Analysis of Financial Condition and Results of Operations” in Part II—Item 7 of our Fiscal 2015 Form 10-K.

Forward Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, our future operations and financial performance; expected growth; our ability to support our planned business operation on a near- and long-term basis. These forward-looking statements are generally identified by words or phrases, such as “anticipate”, “estimate”, “plan”, “project”, “expect”, “believe”, “intend”, “foresee”, “forecast”, “will”, “may”, “should”, “outlook”, “continue”, “target”, “aim” and similar words or phrases.

Reported results should not be considered an indication of future performance, and actual results may differ materially from the results predicted due to risks and uncertainties including:


•	our ability to achieve our global business strategy and compete effectively in the beauty industry;


•	our ability to anticipate, gauge and respond to market trends and consumer preferences, which may change rapidly, and the market acceptance of new products;


•	our ability to identify suitable acquisition targets and managerial, integration, operational and financial risks associated with those acquisitions, including our recent acquisitions of Bourjois, Beamly, the Brazilian Beauty Business and our expected transaction with the P&G Specialty Beauty Business;


•	risks related to our international operations, including reputational, regulatory, economic and foreign political risks, such as the political instability in Eastern Europe and the Middle East, the debt crisis and the economic environment in Europe and fluctuations in currency exchange rates;


•	dependence on certain licenses, entities performing outsourced functions and third-party suppliers;


•	our and our brand partners’ and licensors’ ability to obtain, maintain and protect the intellectual property rights used in our products and our abilities to protect our respective reputations;


•	our ability to implement the Acquisition Integration Program and the Organizational Redesign restructuring program as planned and the success of the programs in delivering anticipated improvements and efficiencies;


•	administrative, development and other difficulties in meeting the expected timing of market expansions, product launches and marketing efforts;


•	global political and/or economic uncertainties or disruptions, including a general economic downturn, a sudden disruption in business conditions affecting consumer purchases of our products and volatility in the financial markets;


•	our ability to manage seasonal variability;


•	consolidation among retailers, shifts in consumers’ preferred distribution channels, and other changes in the retail environment in which we sell our products;


•	disruptions in operations;


•	increasing dependency on information technology and our ability to protect against service interruptions, data corruption, cyber-based attacks or network security breaches;


•	changes in laws, regulations and policies that affect our business or products;


•	market acceptance of new product introductions; and


•	the illegal distribution and sale by third parties of counterfeit versions of our products.

More information about potential risks and uncertainties that could affect our business and financial results is included under the heading “Risk Factors” in Part I — Item IA. of our Fiscal 2015 Form 10-K .

We assume no responsibility to update forward-looking statements made herein or otherwise.

Industry, Ranking and Market Data

Unless otherwise indicated, information contained in this Quarterly Report on Form 10-Q concerning our industry and the market in which we operate, including our general expectations about our industry, market position, market opportunity and market size, is based on data from various sources including internal data and estimates as well as third-party sources widely available to the public such as independent industry publications (including Euromonitor International Ltd), government publications, reports by market research firms or other published independent sources and on our assumptions based on that data and other similar sources. We did not fund and are not otherwise affiliated with the third-party sources that we cite. Industry publications and other published sources generally state that the information contained therein has been obtained from third-party sources believed to be reliable. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and management’s understanding of industry

conditions, and such information has not been verified by any independent sources. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the market, industry and other information included in this Quarterly Report on Form 10-Q to be the most recently available and to be generally reliable, such information is inherently imprecise and we have not independently verified any third-party information or verified that more recent information is not available.

We refer to North America, Western Europe and Japan as “developed markets,” and all other markets as “emerging markets”. We define North America as the United States of America and Canada. Except as specifically indicated, all references to rankings are based on retail value market share.

Our fiscal year ends on June 30. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2016” refer to the fiscal year ending June 30, 2016. Any reference to a year not preceded by “fiscal” refers to a calendar year.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Fiscal 2015 Form 10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our interim Chief Executive Officer (the “interim CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2015 . Based on the evaluation of our disclosure controls and procedures as of December 31, 2015 , our interim CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) of the Exchange Act during the second fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our interim CEO and CFO, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving our objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Table of Contents

Part II. OTHER INFORMATION

Item 1. Legal Proceedings .

We have disclosed information about certain legal proceedings in the section entitled “Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2015 (the “Fiscal 2015 Form 10-K”). Other than as disclosed below, there have been no subsequent material developments to these matters.

In 2007, prior to its acquisition by Coty, Del Laboratories, Inc. (“Del Labs”) sold its LaCross manufacturing facility in Newark, New Jersey. The buyer gave Del Labs certain indemnities and assumed responsibility for environmental remediation of the property as required by the New Jersey Department of Environmental Protection (“NJDEP”). In February 2013, we received a demand from NJDEP to complete the remediation of the property. In May 2013, we initiated litigation against the buyer in New Jersey Superior Court for the appointment of a statutory receiver of the property in connection with the remediation as well as for indemnification and reimbursement of our legal fees. In February 2015, the court held that the buyer was responsible for the remediation and the reimbursement of certain of our legal fees. In November 2015, a settlement was reached whereby the buyer agreed to remit payment to Coty, assume all costs of remediation and provide periodic reports regarding the status of the remediation to Coty, NJDEP and the New Jersey Superior Court.

We are involved, from time to time, in litigation, other regulatory actions and other legal proceedings incidental to our business. Other than as previously disclosed above and in the Fiscal 2015 Form 10-K, management believes that current litigation, regulatory actions and legal proceedings will not have a material effect upon our business, results of operations, financial condition or cash flows. However, management’s assessment of our current litigation, regulatory actions and other legal proceedings could change in light of the discovery of facts with respect to litigation, regulatory actions or other proceedings pending against us not presently known to us or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation, regulatory actions and legal proceedings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The table below provides information with respect to repurchases of shares of our Class A Common Stock that settled during the fiscal quarter ended December 31, 2015. No shares of Class B Common Stock were repurchased during this period.



Period	Total Number of Shares Purchased	Average Price Paid per Share ^(a)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs ^(a)
October 1, 2015 - October 31, 2015	8,856,400	27.7621	8,856,400	298,418,266.59
November 1, 2015 - November 30, 2015	7,663,800	28.5418	7,663,800	79,679,705.18
December 1, 2015 - December 31, 2015	3,888,327 ^(b)	27.6687	2,888,327	17.91
Total	20,408,527	28.0371	19,408,527 ^(c)	17.91

^(a) Includes fees and commissions.

^(b) 1,000,000 shares of Class A Common Stock were repurchased pursuant to the Stock Purchase Agreement, dated December 3, 2015, by and between Coty Inc. and Mousseluxe S.á.r.l. at a price equal to $27.9052 per share.

^(c) 19,408,527 shares of Class A Common Stock were purchased for approximately $544.3 million under our $700.0 million share repurchase program (the “Repurchase Program”) publicly announced on August 13, 2015. All repurchases were made using cash resources. As of December 31, 2015, we have completed all authorized purchases remaining under the Repurchase Program.

Item 6. Exhibits, Financial Statement Schedules.

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q:

Table of Contents



Exhibit
Number		Document
10.15			Lease Agreement, dated December 23, 2015, between Coty Services UK Limited and St. James UK PLC
10.29			Employment Agreement, dated October 12, 2015, between Coty Geneva SA Versoix and Esi Eggleston Bracey
10.30			Employment Agreement, dated October 12, 2015, between Coty Geneva SA Versoix and Sylvie Moreau
10.31			Employment Agreement, dated November 2, 2015, between Coty S.A.S. and Edgar Huber
10.32			Settlement Agreement, dated November 12, 2015, between Coty S.A.S. and Jean Mortier
21.1			List of significant subsidiaries
31.1			Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)
31.2			Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)
32.1			Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350
32.2			Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350
101.INS	*		XBRL Instance Document.
101.SCH	*		XBRL Taxonomy Extension Schema Document
101.CAL	*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	*		XBRL Taxonomy Extension Presentation Linkbase Document

* Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	COTY INC.

Date: February 4, 2016	By:	/s/Lambertus J.H. Becht
		Name: Lambertus J.H. Becht
		Title: Interim Chief Executive Officer and Chairman of the Board of Directors
		(Principal Executive Officer)

		/s/Patrice de Talhouët
		Name: Patrice de Talhouët
		Title: Chief Financial Officer
		(Principal Financial Officer)

Exhibit 10.15



DATED	23rd December	2015

ST JAMES'S PLACE UK PLC

and

COTY SERVICES UK LIMITED



	LEASE relating to first floor, St George's House, St George's Road, Wimbledon, London, SW19 4UA

CONTENTS

Clause Subject Matter Page

LAND REGISTRY PRESCRIBED CLAUSES 1

1. DEFINITIONS 1

2. INTERPRETATION 8

3. GRANT AND TERM 10

4. RIGHTS GRANTED 11

5. RIGHTS RESERVED AND REGRANTED 12

6. THIRD PARTY RIGHTS OVER THE PREMISES 13

7. PAYMENT OF RENTS 14

8. RENT REVIEW 14

9. OTHER FINANCIAL MATTERS 17

10. INSURANCE 19

11. SERVICE CHARGE 22

12. STATE AND CONDITION OF THE PREMISES 31

13. USE OF THE PREMISES 33

14. DEALINGS 38

15. LEGAL REQUIREMENTS AND REGULATIONS 43

16. LANDLORD'S COVENANT FOR QUIET ENJOYMENT 45

17. LIMIT ON LANDLORD'S LIABILITY 45

18. FORFEITURE 45

19. MISCELLANEOUS 48

20. GUARANTEE 52

21. SUB-GUARANTEE 55

LAND REGISTRY PRESCRIBED CLAUSES

LR1. Date of lease

23rd December 2015

LR2. Title number(s)

LR2.1 Landlord's title number(s)

SGL329411 and SGL355089.

LR2.2 Other title numbers

None.

LR3 Parties to this lease

Landlord

St James's Place UK Plc (incorporated and registered in England and Wales under company registration number 02628062), the registered office of which is at St James's Place House, 1 Tetbury Road, Gloucester GL7 1FP.

Tenant

Coty Services UK Limited (incorporated and registered in England and Wales under company registration number 00325646), the registered office of which is at Eureka Park, Ashford, Kent TN25 4AQ.

Other parties

None.

LR4. Property

The Property as specified in this lease in the definition of the Premises at clause 1.

In the case of a conflict between this clause and the remainder of this lease then, for the purposes of registration, this clause shall prevail.

LR5. Prescribed statements etc.

None.

LR5.1 Statements prescribed under rules 179 (dispositions in favour of a charity), 180 (dispositions by a charity) or 196 (leases under the Leasehold Reform, Housing and Urban Development Act 1993) of the Land Registration Rules 2003.

None.

LR5.2 This lease is made under, or by reference to, provisions of:

None.

LR6. Term for which the Property is leased

The term as specified in this lease at clause 1.

LR7. Premium

None.

LR8. Prohibitions or restrictions on disposing of this lease

This lease contains a provision that prohibits or restricts dispositions.

LR9. Rights of acquisition etc.

LR9.1 Tenant's contractual rights to renew this lease, to acquire the reversion or another lease of the Property, or to acquire an interest in other land

None.

LR9.2 Tenant's covenant to (or offer to) surrender this lease

None.

LR9.3 Landlord's contractual rights to acquire this lease

None.

LR10. Restrictive covenants given in this lease by the Landlord in respect of land other than the Property

None.

LR11. Easements

LR11.1 Easements granted by this lease for the benefit of the Property

The easements granted for the benefit of the Property as specified in this lease at clause 4.

LR11.2 Easements granted or reserved by this lease over the Property for the benefit of other property

The easements granted or reserved by this lease over the Property as specified in this lease at clause 5.

LR12. Estate rentcharge burdening the Property

None.

LR13. Application for standard form of restriction

None.

LR14. Declaration of trust where there is more than one person comprising the Tenant

None.

IT IS AGREED AS FOLLOWS:


1.	DEFINITIONS

The following definitions apply in this Lease:

"Access Road"

means the roadway and the footways adjoining it shown for identification coloured green on Plan A including the tarmac paving cladding or other surface finish but not the structure on which this is laid (or such other roadway or access serving any car park in the Development as may from time to time be provided or designated by the Landlord for common use by the tenants or occupiers of the Development or any part of it);

"Building"

means the office building and associated parking landscaping plant rooms and facilities known as St. George's House, St. George's Road, Wimbledon, London SW19 4UA (being that part of the West Block not comprised within the West Block Car Park or the West Block Car Park Structure) and all Service Media on, over or under such land and Service Media outside such land but exclusively serving it (excluding in both cases, any Service Media which are not owned by the Landlord) and associated parking, landscaping, plant rooms and facilities;

"Business Day"

means a day other than Saturday, Sunday or a day on which banks are authorised to close in London for general banking business;

"Common Parts"

means the Parking Area all footpaths halls passageways landscaped areas lavatories staircases lifts landings fire escapes and any other areas not comprised in any Lettable Unit in the Building which are from time to time during the Term provided by the Landlord for use in common by the tenants and occupiers of the Building and all persons expressly or by implication authorised by them;

"Development"

means the land together with the offices shops bank car parks service yard roads and footpaths erected on it fronting Wimbledon Hill Road and St. George's Road London SW19 and known as "St. George's" registered at the Land Registry under title numbers SGL329411 and SGL355089 and shown for identification respectively edged blue and red on Plan A;

"East Block"

means that part of the Development known as St. Georges East registered at the Land Registry under title number SGL355089 shown for identification only edged red on Plan A;

"EPC"

means both an energy performance certificate and a recommendation report (as each term is defined in The Energy Performance of Buildings (England and Wales) Regulations 2012);

"Environmental Performance" means the efficiency of the:


(a)	consumption of energy;


(b)	consumption or use of water;


(c)	waste generation and management; and


(d)	consumption or other resources

involved in the development, use and/or operation of the Property and/or the Building, measured by the extent to which the climatic or environmental impacts of such development use and/or operation are minimised or ameliorated;

"Excluded Risks"

means any risk listed in paragraph (a) or referred to in paragraph (b) of the definition of Insured Risks against which the Landlord does not insure (or in respect of which there is a partial exclusion to the extent that the partial exclusion applies) because insurance cover for that risk is either not ordinarily available in the London insurance market, or is available there only at a premium or subject to conditions which in the Landlord's discretion are unacceptable;

"Footpath"

means the public footpath in the Development adjoining the railway and running between Wimbledon Hill Road and Francis Grove shown for identification only coloured yellow on Plan A and (except for the part shown coloured yellow and hatched black) includes its paving or other surface finish but not the structure on which this is laid (or such other footpath as may from time to time be provided or designated by the Landlord for common use by tenants or occupiers of Development or any part of it);

"Group"

means a group of companies within the meaning of section 42 of the Landlord and Tenant Act 1954;

"Guarantor"

means any person who has entered into a guarantee or an authorised guarantee agreement pursuant to this Lease;

"Insurance Rent"

means a fair proportion of the cost to the Landlord (including any insurance premium tax) of insuring:


(a)	the Building against the Insured Risks for its full reinstatement cost, including the costs of demolition and site clearance, temporary works, compliance with local authority requirements in connection with any works of repair or reinstatement, architects', surveyors' and other professional fees and other incidental expenses, and in each case with due allowance for inflation and VAT;


(b)	against loss of the Rent (having regard to the provisions for the review of the Rent) for a period of three years; and


(c)	against public liability of the Landlord in connection with any matter relating to the Building, its occupation or use;

"Insured Risks"

means:


(a)	fire, explosion, lightning, earthquake, flood, storm, bursting or overflowing of water tanks, pipes or other water or heating apparatus, impact, aircraft (other than hostile aircraft) and things dropped from such aircraft, riot, civil commotion and malicious damage; and


(b)	such other risks as the Landlord may from time to time insure against (whether at its own discretion or at the request of the Tenant),

except to the extent that any such risk is for the time being an Excluded Risk;

"Interest Rate"

means the rate of four per cent above the base lending rate from time to time of Barclays Bank PLC, or if that rate is no longer published then four per cent above the rate of interest which the Landlord reasonably considers to be most closely comparable to minimum lending rates generally applicable in the United Kingdom from time to time;

"Landlord"

means the first party to this deed and its successors in title and persons entitled to the reversion immediately expectant on the termination of this Lease;

"Landlord's Energy Management Costs"

means the costs of the Landlord of:


(a)	acquiring allowances of any nature and paying all present and future taxes, duties, or assessments of any nature relating to the supply or consumption of energy, or relating to emissions consequential upon that supply or consumption (and whether those emissions are direct or indirect);


(b)	monitoring the supply and consumption of energy and such emissions; and


(c)	gathering and processing information relating to the supply and consumption of energy and to such emissions,

and in this definition "Landlord" means the group of undertakings of which the Landlord is a member for the purposes of such allowances or taxes;

"Landlord's Surveyor"

means a chartered surveyor appointed by the Landlord, who may be an individual, or a firm or company of chartered surveyors, or an employee of the Landlord or a company which is in the same Group as the Landlord;

"this Lease"

means this deed as varied or supplemented by any document which is supplemental to this deed;

"Lettable Unit"

means any part of the Building (other than the Premises) which is let or is intended for letting on the basis of a lease similar in nature to this Lease;

"Parking Area"

means the car parking area forming part of the Building at ground floor level;

"Parking Spaces"

means ten (10) car parking spaces in the Parking Area allocated from time to time by the Landlord for the use of the Tenant;

"Permitted Hours"

means the hours beginning at 8 a.m. and ending at 7 p.m. on each day from Monday to Friday inclusive but excluding bank public or other national holidays or such other hours which the Landlord shall from time to time notify to the Tenant as being the period during which services are provided to the Building;

"Permitted Part"

means any self-contained part of the Premises that in the reasonable opinion of the Landlord is reasonably capable of separate beneficial occupation and use and being limited to no more than two occupiers of the Premises;

"Permitted Use"

means use as high class offices within Use Class B1 of the Town and Country Planning (Use Classes) Order 1987 (as at the date of this deed);

"Plan A and Plan B"

means the plans attached to this Lease and marked Plan A and Plan B;

"Premises"

means the first floor, St. George's House, St. George's Road, Wimbledon, London SW19 4UA, as shown edged red on Plan B bounded by and including:

(a)


(i)	the internal plaster tile and other surface finishes and internal plaster work of:


(A)	the external or structural walls in or bounding the premises; and


(B)	all load bearing columns;


(ii)	the windows window frames doors and doorframes (except those in external walls which are exposed to the elements);


(iii)	the internal non structural walls and partitions other than those bounding the premises;


(iv)	the ceilings (including suspended ceilings) plastered coverings or other surface finishes of the premises up to the underside of the floor slabs to which ceilings are fixed;


(v)	the carpets or other floor finishes and parts of the floors including any raised floor system and screed down to the upper surface of the floor slabs on which the floors are laid;


(vi)	all Service Media in the Building (whether or not within the boundaries of the premises) which serve the premises exclusively;


(vii)	all gas electrical and water and sanitary apparatus exclusively serving the premises and all other fixtures and fittings in the premises (other than tenant's fixtures and fittings) not excluded by paragraph (a); and


(viii)	all parts of the air handling system and heating system within the boundaries of the premises and exclusively serving the premises.

[PLAN A - MAP]

[LOCATION MAP]

[FLOOR PLAN MAP]

(b) The premises do not include:


(i)	any part of the Building (other than any matters expressly included by paragraph (a)) lying above the underside of the floor slabs to which the ceilings are fixed or below the upper surfaces of the floor slabs to which the floors are fixed;

(ii) any of the:


(A)	floor slabs structural walls load bearing columns and other load bearing parts of the Building; and


(B)	external cladding walls or columns or other external parts in the Building except those surface finishes and coverings expressly included by paragraph (a);


(iii)	any Service Media in the Building which do not exclusively serve the Premises.


(c)	The glass in windows and doors included in the Premises forms part of the Premises but the glass in doors and windows excluded from the Premises does not form part of the Premises;

"Refuse Compactor Bay"

means that part of the Development shown for identification only hatched brown and coloured blue on Plan A extending vertically to the underside of the first floor of the East Block so that the upper limit includes its surface finish but does not extend to anything above it and includes the surface finishes of all walls bounding it (but not its structure) the paving or other surface finish of its floor (but not the structure on which this is laid) all doors and shutters and all Service Media exclusively serving it(or such other facility as may from time to time be provided or designated by the Landlord);

"Rent"

means six hundred and twenty four thousand nine hundred and ten pounds (£624,910.50) (exclusive) per annum as reviewed under this Lease or any interim rent payable under the Landlord and Tenant Act 1954;

"Rent Commencement Date"

means 23rd September 2016;

"Retained Parts"

means any part of the Building or the Development other than the Premises and the Lettable Units;

"Review Date"

means 23rd December 2020;

"Service Charge"

means the Service Charge calculated and payable in accordance with clause 11;

"Service Charge Balance"

means the shortfall, if any, between the Service Charge Estimate and the Service Charge;

"Service Charge Estimate"

means a reasonable sum which the Landlord, or the Landlord's Surveyor or its accountant, reasonably estimates will be the total cost of the Services (as defined in clause 11.1) in any Service Charge Year;

"Service Charge Year"

means the year from and including 01 October in each year or such other date which the Landlord chooses from time to time;

"Service Media"

means conduits and equipment used for the generation, passage, reception and/or storage of Utilities and all fire alarms, sprinklers, smoke detectors, dry risers, security cameras and closed circuit television apparatus;

"Service Road"

means the roadway and the footways adjoining it shown for identification only hatched green on Plan A (or such other roadway or access serving the Service Yard and/or any parking area in the Development as may from time to time be provided or designated by the Landlord for common use by the tenants or occupiers of the Development or any part of it);

"Service Yard"

means the service yard in the Development shown for identification only edged green on Plan A (but in respect of the loading platform which is shown for identification only hatched black includes only the paviors cladding or other surface finish of the platform and of the vertical faces of the side and not the structure on which this is laid nor any grilles or ventilators;

"Tenant"

means the second party to this deed and, except where otherwise expressly stated, its successors in title;

"Term"

means the term of years granted by this deed and the period of any statutory continuation of the tenancy granted by this deed;

"Utilities"

means electricity, gas, water, foul water and surface drainage, heating, ventilation and air conditioning, smoke and fumes, signals, telecommunications, satellite and data communications and all other utilities;

"VAT"

means value added tax and/or any similar tax from time to time replacing it or performing a similar fiscal function;

"West Block"

means that part of the Development known as St. George's West registered at the Land Registry under title number SGL329411 shown for identification only edged blue on Plan A;

"West Block Car Park"

means the public car parking area in the West Block comprised in a lease dated 5 September 1984 made between (1) Commercial Union Properties (UK) Limited and (2) London Borough of Merton (as varied) registered under title number SGL419027;

"West Block Car Park Structure"

means that part of the West Block which is below ground level and includes:


(a)	any ventilators ducts barriers or grilles giving access to or serving it (except where these are included in any demise); and


(b)	the structure of the ground floor slab,

but excludes:


(c)	such parts of the ground floor stab as lie above the structure including the screed and surface finish paving or cladding of the ground floor slab; and


(d)	any plant containers.


2.	INTERPRETATION


2.1	In this Lease:


2.1.1	the contents page, headings and sub-headings are for ease of reference only and do not affect its meaning;


2.1.2	any words following the terms "include" and "including" or any similar expression shall be interpreted as illustrative and shall not limit the sense of the words preceding those terms;


2.1.3	general words do not have a restrictive meaning because they are preceded or followed by specific words indicating a particular type, class or category;


2.1.4	obligations owed by or to more than one person are owed by or to them jointly and severally;


2.1.5	words in the singular include the plural and vice versa; and


2.1.6	references to one gender include all genders.


2.2	In this Lease, unless otherwise specified:


2.2.1	a reference to legislation is a reference to all legislation having effect in the United Kingdom from time to time, including:


(a)	directives, decisions and regulations of the Council or Commission of the European Union;


(b)	Acts of Parliament;


(c)	orders, regulations, consents, licences, notices and bye-laws made or granted:


(i)	under any Act of Parliament; or


(ii)	under any directive, decision or regulation of the Council or Commission of the European Union; or


(iii)	by a local authority or by a court of competent jurisdiction; and


(d)	any mandatory codes of practice issued by a statutory body;


2.2.2	a reference to particular legislation is a reference to that legislation as amended, modified, consolidated, re-enacted or replaced from time to time and to all subordinate legislation made under it from time to time;


2.2.3	a reference to a person includes an individual, firm, partnership, company, association, organisation or trust (in each case whether or not having a separate legal personality);


2.2.4	a reference to a company includes any company, corporation or any other body corporate (wherever incorporated); and


2.2.5	references to the Premises and the Building include any part of the Premises or the Building.


2.3	In this Lease:


2.3.1	an obligation of the Tenant not to do something includes an obligation not to cause or allow that thing to be done;


2.3.2	a reference to any act or to any act or omission of the Tenant includes any act or any act or omission of any other person at the Premises or the Building with the Tenant's express or implied authority;


2.3.3	the rights and remedies of the Landlord under any clause are without prejudice to any other right or remedy of the Landlord;


2.3.4	the obligations of or restrictions on the Tenant or a Guarantor under any clause, supplemental document or other instrument entered into in connection with this Lease, are without prejudice to the obligations of or restrictions on the Tenant or Guarantor, or to the rights of the Landlord under any other clause, supplemental document or other instrument entered into in connection with this Lease;


2.3.5	a reference to the consent or approval of the Landlord means the prior consent in writing (which, if required by the Landlord, is to be contained in a deed) of the Landlord, and, where required, of any superior landlord or mortgagee of the Landlord;


2.3.6	references to any adjoining property of the Landlord include any property adjoining or near the Premises or the Building owned, leased or occupied by the Landlord (or any company in the same Group as the Landlord) from time to time;


2.3.7	references to the end of the Term are to the end of the Term whether before or at or after the end of the term of years granted by this deed;


2.3.8	references to a fair proportion of any sum are to the whole or a proportion of that sum which is fair and reasonable in the circumstances as determined by the Landlord's Surveyor whose decision will be final and binding (except in the case of manifest error) and where there are different elements to that sum a different proportion for each element may be determined on this basis;


2.3.9	references to a certified copy are to a copy certified by solicitors to be a true copy of the original; and


2.3.10	a requirement that a notice or other communication to be given or made under or in connection with this Lease must be signed by the person giving or making it will be deemed to be satisfied if the notice or other communication is signed on behalf of the person giving it.


2.4	In this deed:


2.4.1	in clause 14 the word "security" includes a guarantee or rent deposit; and


2.4.2	a reference to a clause is to a clause to this deed.


3.	GRANT AND TERM

The Landlord leases the Premises to the Tenant for a term of 10 years from and including the date of this Lease, the Tenant paying the following sums, which are reserved as rent: the Rent, the Insurance Rent the Service Charge Estimate, the Service Charge Balance and any VAT payable on those sums and any interest due under this Lease.


4.	RIGHTS GRANTED


4.1	The Landlord grants the following rights to the Tenant:


4.1.1	the use of the Parking Spaces allocated from time to time by the Landlord subject to compliance with clause 13.11;

4.1.2

the right of free passage and running of water soil gas electricity telecommunications and other services from and to the Premises by and through the Service Media now or during the Term constructed for such purpose in or under or upon the remainder of the Development such right to be so far as necessary for the enjoyment of the Premises and in common with the Landlord and all others so authorised by the Landlord and all others entitled thereto;


4.1.3	the right in common with the Landlord and all others so authorised by the Landlord and with other tenants of Lettable Units in the Building to use such of the Common Parts as are necessary to obtain access to and egress from the Premises during the Permitted Hours;


4.1.4	the right to use the Service Yard during the Permitted Hours or as the Landlord shall direct for effecting deliveries to the Premises subject to the observance by the Tenant of all regulations made by the Landlord governing its use and the provisions of clause 13.6;

4.1.5

the right with or without cars but not further or otherwise of access to the Parking Area over the Access Road and of egress from the Parking Area over the Access Road through the public car parking area at upper and lower basement level (along such route as may from time to time be authorised by the owner tenant or occupier of such public car parking area being a route which provides proper convenient and adequate egress) and along the Service Road;

4.1.6

the right with surveyors agents workmen and others at reasonable times of the day upon reasonable notice (except in case of emergency) to enter into the remainder of the Building so far as is necessary for the purpose of inspection repair maintenance and replacement of any Service Media and any plant and equipment serving the Premises and for which the Tenant is responsible under the terms of this Lease subject to the Tenant causing as little damage and disturbance as practicable and promptly making good in a proper and workmanlike manner at its own expense and to the Landlord's satisfaction any damage caused in the exercise of this right;


4.1.7	the right to display the Tenant's name on any internal tenant name board that shall from time to time be situated on the ground floor of the Retained Parts;


4.1.8	the right of support as enjoyed at the date of this Lease for the Premises over and against the Building


4.1.9	the exclusive right together with the Landlord and the Landlord's representatives to use the lift lobby shown on hatched yellow on Plan B together with the right for the Tenant to restrict lift access to the first floor of the Building to the Tenant's staff and visitors and the Landlord and the Landlord's representatives.


4.2	The rights granted by clause 4.1:


4.2.1	are granted only to the extent that the Landlord has power to grant them;


4.2.2	unless otherwise specified, are not granted to the Tenant exclusively, but are to be used in common with the Landlord, any superior landlord, any other tenants and lawful occupiers of the Building, and other persons authorised by them;


4.2.3	may be interrupted or varied for the purposes of any works of maintenance, repair, alteration or the replacement of any land, building, lifts or lift equipment, or Service Media in connection with which the rights are exercised; and


4.2.4	are to be exercised by the Tenant, and any authorised undertenant, in accordance with any regulations which the Landlord may make for the proper management of the Building.


4.3	The Tenant will not be or become entitled to any right, easement or privilege that is not expressly granted by clause 4.1, and section 62 of the Law of Property Act 1925 does not apply to this Lease.


5.	RIGHTS RESERVED AND REGRANTED


5.1	The following rights are reserved from this Lease and regranted to the Landlord by the Tenant:


5.1.1	the free passage of water soil gas electricity telecommunications and other services from the remainder of the Development and any adjoining or neighbouring premises through the Service Media constructed for such purpose now or at any time running through or under the Premises;


5.1.2	the right at all reasonable times on giving to the Tenant not less than 48 hours prior written notice (except in emergency) to enter the Premises for the purposes set out in clause 5.1.2(a) subject to the conditions set out in clause 5.1.2(b);


(a)	the right of entry is for any of the following purposes:


(i)	inspecting cleansing repairing or altering the remainder of the Development or any adjoining or neighbouring premises;


(ii)	inspecting laying connecting cleansing repairing altering or improving any Service Media in the Premises or the remainder of the Development and any adjoining or neighbouring premises;


(iii)	constructing any building or structure on any other part of the Development and/or any adjoining or neighbouring premises;


(iv)	performing the obligations and exercising the rights of the Landlord in this Lease or the lease of any other part of the Development and in connection with the provision of the Services;


(b)	the Landlord or other persons entering is to exercise such rights in a reasonable manner and to make good all damage caused to the Premises;


5.1.3	the right at any time to build on rebuild or alter any parts of the remainder of Development or any adjoining or neighbouring premises according to such plans (whether as to height extent or otherwise) and in such manner as the Landlord decides even though this may interfere with the access of light or air to the Premises;


5.1.4	the right to use the remainder of the Development or any adjoining or neighbouring premises for any purpose whatsoever and without imposing upon the Development any adjoining or neighbouring premises any restrictions or conditions similar to those imposed upon the Tenant;


5.1.5	the right to erect scaffolding for the purpose of repairing maintaining cleansing or altering the Building or any adjoining or neighbouring premises whether or not part of the Development even though this may temporarily interfere with the access to or the use and enjoyment of the Premises;


5.1.6	all rights of light air support protection and shelter and all other easements and rights now or after the date of this Lease belonging to or enjoyed by any parts of the Development or any adjoining or neighbouring premises;


5.1.7	the right to vary or change the use of temporarily suspend or control access to the whole or any part of the Service Yard the Service Road the Access Road the Footpath the Refuse Compactor Bay or any other services or amenities provided in common to the tenants or occupiers of the Development or any part of it without payment of compensation for disturbance.


5.2	The rights reserved and regranted by this Lease are reserved and regranted to the Landlord and any superior landlord or mortgagee and their tenants, and may be exercised by anyone authorised by the Landlord or a superior landlord.


5.3	The person exercising any right of entry reserved and regranted by this Lease shall make good any damage caused to the Premises (subject to clause 5.4) but shall not be under any obligation to make any other compensation to the Tenant or other occupier of the Premises.

5.4

The Tenant shall allow any person who has a right to enter the Premises to enter the Premises at all reasonable times, during and outside usual business hours, provided that reasonable notice has been given, which need not be written notice. In cases of emergency no notice need be given and the Landlord, or another person on behalf of the Landlord may break into the Premises if entry cannot be effected in any other way. The Landlord shall make good any damage caused to the Premises in breaking into the Premises in these circumstances.


6.	THIRD PARTY RIGHTS OVER THE PREMISES


6.1	There are excepted from this Lease and this Lease is granted subject to:


6.1.1	all existing rights which belong to other property, or are enjoyed by other property over the Premises or any land or Service Media over which the Tenant may exercise rights by virtue of this Lease; and


6.1.2	the matters contained or referred to in the property and charges registers of the title numbers referred to in the registers of title number SGL329411 (as at 1 December 2015 (16:20:50)) and title number SGL355089 (as at 1 December 2015 16:21:47)) to the extent that such matters relate to the Premises.


6.2	The Tenant shall comply with the matters contained or referred to in the registers referred to in clause 6.1 so far as they relate to the Premises or any rights the Tenant may exercise by virtue of this Lease.


6.3	The Tenant shall:


6.3.1	not permit any third party to acquire any right over the Premises or to encroach upon the Premises and shall give the Landlord immediate written notice of any attempt to do this;


6.3.2	take any steps which the Landlord may reasonably require to prevent the acquisition of any right over or encroachment on the Premises;


6.3.3	preserve for the benefit of the Premises and the Landlord's interest in them all existing rights which belong to the Premises and are enjoyed over adjoining or neighbouring property; and


6.3.4	not block or obstruct any window or ventilator at the Premises.


7.	PAYMENT OF RENTS

7.1

The Tenant shall pay to the Landlord the Rent, the Service Charge Estimate and any VAT payable on those sums without deduction or set-off (whether legal or equitable) in four equal instalments in advance on the usual quarter days, and shall pay the Insurance Rent on demand, the Service Charge Balance and any VAT on it on demand (whether such demand is made and received before or after the end of the Term) and interest in accordance with clause 9.7, provided that the Landlord shall not be entitled to distrain for non-payment of the Rent, Service Charge Estimate, the Insurance Rent, the Service Charge Balance and any other payments treated as rent under this Lease until at least 14 days has elapsed from the date such payment became due.


7.2	The Tenant shall pay the first instalment of the Rent and any VAT due on it to the Landlord on the Rent Commencement Date, and the first instalment is to be a proportionate amount for the period from and including the Rent Commencement Date, until the day before the next quarter day.


7.3	The Tenant shall pay the first instalment of the Service Charge Estimate and any VAT due on it to the Landlord on the date of this deed, and the first instalment is to be a proportionate amount for the period from and including the date of this deed until the day before the next quarter day.


7.4	If required by the Landlord, the Tenant shall pay the Rent and the Service Charge Estimate and any VAT on them by banker's standing order, direct debit or credit transfer to a bank account in the United Kingdom which the Landlord has notified in writing to the Tenant.


8.	RENT REVIEW


8.1	Open Market Rent

The following definition applies in this clause 8:

"Open Market Rent"

means the annual rent at which the Premises could reasonably be expected to be let as a whole at the Review Date in the open market:


(a)	without a fine or premium;


(b)	by a willing landlord to a willing tenant;


(c)	which would be payable after the expiry of a rent-free or reduced rent period (if any) of such length as would be negotiated in the open market between the willing landlord and the willing tenant at the Review Date in respect only of the period of time needed for carrying out fitting-out works which would be carried out by the willing tenant;


(d)	under a lease commencing on and including the Review Date and equal in length to the unexpired residue of the term of years granted by this deed at the Review Date; and


(e)	otherwise on the same terms as this Lease, except as to the amount of the Rent and assuming that there is a rent commencement date which provides for the rent-free or reduced rent period referred to in paragraph (c) above,

assuming that:


(f)	the Premises are available to be let with vacant possession;


(g)	the Premises and the Building and any land or Service Media over which the Tenant may exercise any rights by virtue of this Lease are in good and substantial repair and condition and if damaged or destroyed that they have been reinstated;


(h)	the Premises are ready to receive the willing tenant's fitting-out works;


(i)	the Landlord (save for wilful and persistent breaches) and the Tenant have fully complied with their obligations in this Lease;


(j)	no work has been carried out on the Premises by the Tenant or any undertenant or their predecessors in title, or on any other part of the Building or on any adjoining property of the Landlord before or during the Term, which would lessen the rental value of the Premises;


(k)	the Premises can, in their assumed state, be lawfully used by the willing tenant for the Permitted Use and for any other purpose to which the Landlord has, at the request of the Tenant, given its consent;


(l)	any consents or licences current or required at the Review Date are available to the willing tenant; and


(m)	if the Landlord (or the relevant member of its VAT group) has elected to waive the exemption for the purposes of VAT in respect of the Premises, that the willing landlord has also so elected, but that if the Landlord (or the relevant member of its VAT group) has not so elected, that the willing landlord has not so elected,

but disregarding:


(n)	any occupation of the Premises or any other part of the Building by the Tenant or any authorised undertenant;


(o)	any goodwill attached to the Premises by reason of the Tenant or any authorised undertenant carrying on any business at the Premises;

(p)

any improvements (including improvements which form part of the Premises at the Review Date) carried out by the Tenant or any authorised undertenant, or their predecessors in title, before or during the Term, with the consent (if required) of the Landlord, at the cost of the person who carried out the improvement, and not pursuant to an obligation owed by the person who carried out the improvement to the Landlord or its predecessors in title;


(q)	any requirement and costs applicable to the removal and reinstatement relating to any improvements as referred to in paragraph (p) above; and


(r)	any legislation which imposes a restraint upon agreeing or receiving an increase in the Rent.


8.2	Determination of the revised Rent


8.2.1	The Rent will be reviewed at the Review Date, and from the Review Date the Rent will be the higher of:


(a)	the Rent reserved immediately before the Review Date (disregarding any suspension of Rent under clause 10.4); and


(b)	the Open Market Rent at the Review Date.

8.2.2

If the Landlord and the Tenant have not agreed the Open Market Rent three months before the Review Date, either may require it to be determined by a surveyor (the "Surveyor" ), who will be an independent chartered surveyor appointed jointly by the Landlord and the Tenant or, if they do not agree on the identity of such surveyor, by the President of the Royal Institution of Chartered Surveyors (or any other officer authorised to carry out that function) on the application of either the Landlord or the Tenant in accordance with this Lease.


8.2.3	The Landlord and the Tenant may agree the level of the Open Market Rent at any time before the Surveyor has determined it.


8.2.4	The Surveyor will act as an arbitrator in accordance with the Arbitration Act 1996.


8.2.5	If the Surveyor dies, or gives up the appointment, or fails to act in accordance with clause 8, or it becomes apparent that the Surveyor is or will become unable so to act, the Landlord and the Tenant may make a further appointment of, or application for, a substitute Surveyor.


8.2.6	The costs of appointment and fees of the Surveyor shall be paid in such proportions as the Surveyor directs, or if no such direction is made, then equally by the Landlord and the Tenant.


8.3	General


8.3.1	If the revised Rent has not been agreed or determined before the Review Date, then the Tenant shall continue to pay the Rent at the rate payable immediately before the Review Date and no later than five Business Days after the revised Rent has been agreed or determined the Tenant shall pay:


(a)	the shortfall, if any, between the Rent paid and the revised Rent for the period from the Review Date until the next quarter day after payment is made; and


(b)	interest on the shortfall at the base rate from time to time of Barclays Bank PLC calculated on a daily basis by reference to the period from each quarter day on which each part of the shortfall would have become due had the revised Rent been agreed or determined before the Review Date to the date payment of the shortfall is made.

8.3.2

If there is any legislation in force at the Review Date which restricts the Landlord's right to review the Rent in accordance with clause 8, or to receive any increase in the Rent following a review, then the date on which the legislation is repealed or amended to allow a review of or increase in the Rent, will be a further Review Date and the Landlord will be entitled to require a review of the Rent in accordance with this clause 8.


8.3.3	A Guarantor will have no right to take part in the review of the Rent, but will be bound by it.


8.3.4	Following the agreement of the revised Rent after the rent review, the Landlord, the Tenant and any Guarantor shall sign a memorandum recording the revised level of the Rent.


8.3.5	Time will not be of the essence in relation to clause 8.


9.	OTHER FINANCIAL MATTERS


9.1	Utilities

The Tenant shall pay all charges, including connection and hire charges, relating to the supply and consumption of Utilities to or at the Premises and that part of the Landlord's Energy Management Costs which the Landlord reasonably attributes to the Premises,

and shall comply with all present or future requirements and recommendations of the suppliers of Utilities to the Premises.


9.2	Common facilities


9.2.1	The Tenant shall pay on demand a fair proportion of any costs incurred or payable by the Landlord in respect of any land or Service Media outside the Building but used in connection with the Premises to the extent that such costs are not included in the Service Charge.


9.2.2	To pay to or indemnify the Landlord against all costs fees and expenses incurred by the Landlord under clause 11.1 in providing the Services outside the Permitted Hours, such costs fees and expenses to be assessed by the Landlord acting reasonably payable on demand and recoverable as rent in arrear.


9.3	Rates and taxes

9.3.1

The Tenant shall pay and indemnify the Landlord against all present and future rates, duties, taxes and assessments of any nature charged on or payable in respect of the Premises (or in respect or by reason of any works carried out by or on behalf of the tenant at the Premises) whether payable by the Landlord, owner, occupier or tenant of the Premises and whether of a capital or income, recurring or non-recurring nature except any income or corporation tax imposed on the Landlord (or any superior landlord) in respect of:


(a)	the grant of this Lease;


(b)	the receipt of the rents reserved by this Lease; or


(c)	any dealing or disposition by the Landlord with its interest in the Premises.


9.3.2	The Tenant shall not make any claim for relief from any of the charges referred to above which could result in the Landlord not being entitled (during or after the end of the Term) to that relief in respect of the Premises.


9.4	Payments relating to the Premises and other property

Where any of the charges payable under clause 9.1, 9.2 or 9.3 relates to other property as well as the Premises, the amount to be paid by the Tenant will be a fair proportion of the whole of the amount charged or payable.


9.5	Landlord's costs

The Tenant shall pay to the Landlord, on demand, and on an indemnity basis, the fees, costs and expenses properly charged, incurred or payable by the Landlord and its advisers, agents or bailiffs in connection with:


9.5.1	any steps taken in contemplation of, or in relation to, any proceedings under section 146 or 147 of the Law of Property Act 1925 or the Leasehold Property (Repairs) Act 1938, including the preparation and service of all notices, and even if forfeiture is avoided (unless it is avoided by relief granted by the court);


9.5.2	preparing and serving schedules of dilapidations at any time during the Term or within three months after the end of the Term (or, if later, three months after the date the Tenant has given vacant possession of the Premises to the Landlord) and supervising any works undertaken to remedy such dilapidations;


9.5.3	recovering (or attempting to recover) any arrears of Rent or other sums due to the Landlord under this Lease, including the costs of preparing and serving any notice under section 17 of the Landlord and Tenant (Covenants) Act 1995 and any costs associated with the Landlord's remedies of distress or execution;


9.5.4	any investigations or reports carried out to determine the nature and extent of any breach by the Tenant of its obligations in this Lease;


9.5.5	any steps taken to procure that a breach by the Tenant of its obligations under this Lease is remedied; and


9.5.6	any application for a consent of the Landlord (including the preparation of any documents) which is needed by virtue of this Lease, whether or not such consent is granted and whether or not the application is withdrawn.


9.6	VAT


9.6.1	Where the Tenant is to pay the Landlord for any supply made to the Tenant by the Landlord, the Tenant shall also pay any VAT which may be payable in connection with that supply.


9.6.2	Where the Tenant is to pay the Landlord the costs of any supplies made to the Landlord, the Tenant shall also pay the Landlord any VAT payable in connection with that supply, except to the extent that the Landlord is able to obtain a credit for the VAT from HM Revenue & Customs.


9.7	Interest

If the Rent is not paid to the Landlord on the due date for payment or if or any other sum payable under this Lease is not paid to the Landlord within ten Business Days of the due date for payment or if the Landlord refuses to accept any Rent or other such sum when the Tenant is, or may be, in breach of any of its obligations in this Lease, the Tenant shall pay interest to the Landlord on such sum at the Interest Rate for the period from and including the due date until payment (both before and after any judgment) or until payment is accepted by the Landlord (as the case may be).


9.8	Exclusion of statutory compensation

Any statutory right of the Tenant, or any undertenant, to claim compensation from the Landlord or any superior landlord on leaving the Premises is excluded to the extent that the law allows.


10.	INSURANCE


10.1	Landlord's obligations


10.1.1	The Landlord shall insure the Building, other than any part installed by or on behalf of the Tenant or any other occupier, and other than any plate glass at the Premises

or the Lettable Units against the Insured Risks, through an agency chosen by the Landlord and subject to any exclusions, excesses and conditions as may be usual in the insurance market at the time or required by the insurers, or reasonably required by the Landlord.


10.1.2	The Landlord shall, at the request of the Tenant, provide the Tenant with details of the insurance policy under which the Building and the Premises are insured.


10.2	Reinstatement

If the Premises or the means of access to the Premises are damaged or destroyed by an Insured Risk, then:


10.2.1	unless payment of any insurance money is refused because of any act or omission of the Tenant and the Tenant has failed to comply with clause 10.3.8; and


10.2.2	subject to the Landlord being able to obtain any necessary consents, which the Landlord covenants to use its reasonable endeavours to obtain and to the necessary labour and materials being and remaining available,

the Landlord shall use the insurance money it receives, except money received for loss of rent, in repairing and reinstating the Premises and the means of access thereto (other than any part which the Landlord is not obliged to insure) or in building reasonably comparable premises as soon as reasonably practicable.


10.3	Tenant's obligations

The Tenant shall:


10.3.1	pay the Insurance Rent in accordance with this Lease;


10.3.2	pay on demand any increase in the insurance premium for the Building or any adjoining property of the Landlord which is attributable to the use of the Premises, or anything done or omitted to be done on the Premises by the Tenant or any other occupier of the Premises;


10.3.3	pay on demand a fair proportion of the costs incurred or payable by the Landlord in connection with the Landlord obtaining a valuation of the Building for insurance purposes, as long as such valuation is made at least three years after any previous such valuation;


10.3.4	comply with the requirements of the insurers relating to the Premises;


10.3.5	not do or omit to do anything which may make any insurance of the Building or of any adjoining property of the Landlord taken out by the Landlord or any superior landlord void or voidable, or which would result in an increase in the premiums for such insurance;


10.3.6	give the Landlord immediate written notice of any damage to or destruction of the Premises by an Insured Risk;


10.3.7	pay the Landlord on demand the amount of any excess required by the insurers in connection with that damage or destruction;


10.3.8	pay the Landlord on demand an amount equal to any amount which the insurers refuse to pay, following damage or destruction by an Insured Risk to any part of the Building or any adjoining property of the Landlord, because of any act or omission of the Tenant;


10.3.9	pay the Landlord on demand the costs incurred by the Landlord in preparing and settling any insurance claim relating to the Premises (or a fair proportion of such costs in relation to the Retained Parts or the Building as a whole) arising, in any case, from any insurance taken out by the Landlord;

10.3.10

not take out any insurance of the Premises against the Insured Risks in its own name other than in respect of any plate glass at the Premises or any part of the Premises installed by or on behalf of the Tenant or any undertenant or any other occupier, and if the Tenant has the benefit of any such insurance, the Tenant shall hold all money receivable under that insurance upon trust for the Landlord; and


10.3.11	if requested by the Landlord remove its fixtures and effects from the Premises to allow the Landlord to repair or reinstate the Premises.


10.4	Suspension of Rent

10.4.1

If the whole of the Premises or any part which the Landlord is obliged to insure, or the means of access thereto, are damaged or destroyed by an Insured Risk or an Excluded Risk so as to make the Premises or any part which the Landlord is obliged to insure, unfit for occupation or use or inaccessible, the Rent and the Service Charge (or a due proportion of them determined by the Landlord according to the nature and extent of the damage) will, subject to clause 10.4.2, be suspended from the date of damage or destruction for a period of three years, or, if sooner, until the Premises, or such part, or the means of access have been made fit for occupation and use.


10.4.2	The Rent will not be suspended to the extent that any loss of rent insurance has been made ineffective, or payment of it has been refused by the insurers because of any act or omission by the Tenant, nor unless and until any arrears of Rent or other sums due under this Lease have been paid by the Tenant in full.


10.5	Termination after end of Rent suspension period

10.5.1

This clause 10.5 applies if the Rent is suspended pursuant to clause 10.4.1 by reason of the whole (or substantially the whole) of the Premises being unfit for occupation or use or inaccessible and the Landlord has not substantially completed the relevant works required to be carried out pursuant to clause 10.2, by the end of the period of two years and six months from the date of damage or destruction.

10.5.2

If this clause 10.5 applies the Landlord or the Tenant may terminate this Lease by giving to the other not less than six months' written notice (such notice not to be served until the two years and six months period referred to in clause 10.5.1 has expired) and upon expiry of such notice, unless the Landlord has then substantially completed the relevant works required to be carried out pursuant to clause 10.2, this Lease shall then determine.


10.5.3	Termination of this Lease pursuant to clause 10.5 will be without prejudice to any right of the Landlord against the Tenant or any Guarantor for any antecedent breach of its obligations under this Lease.


10.6	Termination following damage by an Excluded Risk


10.6.1	This clause 10.6 applies following damage or destruction of the whole or substantially the whole of the Premises by an Excluded Risk.


10.6.2	If this clause 10.6 applies the Landlord may give written notice to the Tenant at any time within 12 months following the date of the damage or destruction stating either that the Landlord intends to repair and reinstate the Premises or that the Landlord does not intend to repair and reinstate the Premises.

10.6.3

If the Landlord gives notice pursuant to clause 10.6.2 that the Landlord intends to repair and reinstate the Premises then subject to the Landlord being able to obtain any necessary consents which the Landlord covenants to use its reasonable endeavours to obtain and to the necessary labour and materials being and remaining available the Landlord shall repair and reinstate the Premises (other than any part which the Landlord was not obliged to insure) or build reasonably comparable premises as soon as reasonably practicable.


10.6.4	If the Landlord gives notice pursuant to clause 10.6.2 that the Landlord does not intend to repair and reinstate the Premises, then (subject to clause 10.6.5) this Lease shall determine with effect from the date such notice is given.


10.6.5	This Lease will not determine pursuant to clause 10.6.4 if, on what would have been the date of termination pursuant to clause 10.6.4, the relevant damage or destruction has been substantially repaired.


10.6.6	Rights under this clause 10.6 are in addition to rights under clause 10.5.


10.6.7	Termination of this Lease pursuant to clause 10.6 will be without prejudice to any right of the Landlord against the Tenant or any Guarantor for any antecedent breach of its obligations under this Lease.


10.7	Insurance money

All insurance money payable will belong to the Landlord.


11.	SERVICE CHARGE


11.1	Definitions

The following definitions apply in clause 11.

"Certificate"

means a statement certified by the Landlord or the Landlord's Surveyor or its accountant, which shows:


(a)	the Service Charge Estimate;


(b)	the Service Charge; and


(c)	the Service Charge Balance,

for the relevant Service Charge Year;

"Services"

means the:


(a)	keeping in tenantable repair the structure and exterior of the Building;


(b)	the provision of supplies to the heating and air handling systems in the Building during the Permitted Hours as appropriate;


(c)	the provision of a supply of hot and cold water during the Permitted Hours to the lavatories in the Building;


(d)	so far as is necessary for the quiet enjoyment of the Premises and the exercise of the rights granted by this Lease at the Landlord's discretion and subject to payment by the Tenant to the Landlord of the Service Charge the provision of the expenses set out in clause 11.1.3;


(e)	using reasonable endeavours to provide or procure the services referred to in (b) above outside the Permitted Hours when reasonably requested by the Tenant from time to time subject to the following:


(i)	the Tenant shall give reasonable written notice of such request; and


(ii)	the Tenant shall comply with clause 9.2.2


11.1.1	"Development Expenses"

means:


(a)	the maintenance repair renewal replacement rebuilding redecoration cleaning and (where appropriate) lighting and heating of:


(i)	the Refuse Compactor Bay Service Yard Service Road and Access Road (including the footways) including all road markings and directional signs;


(ii)	sewers drains pipes channels ducts and cables which do not serve exclusively the West Block or the East Block together with the sump pump in the Development;


(iii)	the Footpath (but not the plant containers or plants thereon) and all boundary walls fences and gates in the Development together with any walls fences arches and other structures separating the Footpath from the rest of the Development; and


(iv)	all notices and signs in the Development which are not the responsibility of a tenant of any part of the Development;


(b)	the maintenance repair renewal replacement and/or cost of hire of:


(i)	any equipment in the Service Yard;


(ii)	the Refuse Compactor and ancillary equipment in the Refuse Compactor Bay; and


(iii)	all cleaning and other equipment for use in the Development;


(c)	any insurance effected:


(i)	against third party liability in connection with all or any part of the Development Including the acts neglects or defaults of the Landlord its servants or agents insofar as such liability is insurable at any time; and


(ii)	in relation to any machinery or equipment referred to in this clause 11.1.1;


(d)	the provision of staff (whether or not such staff are engaged directly by the Landlord or any managing agent) in connection with the provision of services to the Development including (but without limitation):


(iii)	wages national insurance pension contributions compensation payments uniform and expenses wholly and exclusively Incurred in connection with the provision of such staff;


(iv)	all costs incurred in connection with any office provided for such staff including:


(A)	notional rent of the office;


(B)	insurance rates and water rates;


(C)	electricity heating lighting and telephone costs;


(v)	the cost or notional rent applicable to any car parking spaces (whether inside or outside the Development) provided for the staff;


(e)	the cost of supply of all electricity gas oil fuel or other power for all purposes in connection with the Refuse Compactor Bay Service Yard Service Road and Access Road;


(f)	all costs incurred in making arrangements for the safety and security of the Development both as regards property and buildings in the Development and persons using or visiting the Development including the provision

maintenance repair renewal replacement and cleaning of any equipment provided therefor (including without prejudice to the generality of the foregoing):


(i)	any television cameras monitors and recording equipment or other security systems;


(ii)	any barriers or posts whether or not these are collapsible or telescopic;


(iii)	any speed restriction controls including (without prejudice to the generality thereof) speed restriction ramps;

(g)

the amount which the Landlord shall properly be required to pay as a contribution towards the expense of making repairing maintaining the Building and cleansing all the ways roads pavements sewers drains and pipes watercourses party walls party structures party fences walls or other conveniences which may belong to or be used for the Development in common with other premises near to or adjoining thereto;


(h)	all costs incurred In connection with compliance with all requirements relating to health and safety including without limitation:


(i)	the assessment of any risk to the health and safety of any persons in the Development or who may be affected by its use and occupation;


(ii)	the establishment of procedures to monitor the control of such risks;

(i)

the cost of taking all steps deemed desirable or expedient by the Landlord for complying with making representations against or otherwise contesting the incidence of the provisions of any legislation or orders or statutory requirements thereunder concerning town planning public health and safety highways streets drainage or any other matter relating to or alleged to relate to the Development for which any tenant is not directly liable;


(j)	the proper costs of and connected with the compliance by the Landlord and/or the need for the Landlord to comply with all the provisions of any Act of Parliament now in force or in force at any time during the Term or any orders bye-laws or regulations passed thereunder affecting the Development;


(k)	any other costs and/or expenses including those of any consultants or professional advisors properly incurred by the Landlord and/or Its managing agents and in connection with the management of the Development and/or the matters specified in this clause 11.1.1; and


(l)	the proper fees and expenses of the Landlord's managing agents and/or accountants incurred in connection with the management of the Development not attributable solely to the West Block or the East Block provided that if the Landlord does not employ managing agents It shall be

entitled to charge a fee equal to 10 per cent of the total expenses incurred under the provisions of this clause 11.1.1 (other than this sub-clause (l);


11.1.2	"West Block Car Park Structure Expenses"

means:


(a)	The maintenance repair renewal replacement rebuilding redecoration cleaning and (where appropriate) lighting of:


(i)	the structure and exterior (including the roofs and foundations of the West Block Car Park Structure;


(ii)	sewers drains pipes channels wires ducts and cables used in common with other tenants in the West Block Car Park Structure but not serving the whole Development; and


(iii)	the ventilation grilles on the boundaries of the West Block adjoining St Georges Road and the Service Road together with the barrier or grille running from ground floor level to upper basement level protecting the Access Road from the adjoining ventilation shaft.


(b)	Any other costs and/or expenses including those of any consultants or professional advisers properly incurred by the Landlord and/or its managing agents in connection with the management of the West Block Car Park Structure and/or the matters specified under the provisions of this clause 11.1.2;


(c)	The proper fees and expenses of the Landlord's managing agents and/or accountants incurred in connection with the management of the West Block Car Park Structure provided that if the Landlord does not employ managing agents it shall be entitled to charge a fee equal to 10 percent of the total expenses incurred under the provisions of this clause 11.1.22 (other than this sub-clause (c));


11.1.3	"Building Expenses"

means:


(a)	The maintenance repair renewal replacement rebuilding redecoration and cleaning (and when appropriate) lighting and heating of:


(i)	the Retained Parts;


(ii)	plant containers and plant in the West Block not included in any Lettable Unit and the automatic irrigation equipment serving the West Block including the plant and plant containers in or over the Footpath;


(iii)	the paved forecourts forming part of the West Block adjoining St Georges Road together with such parts of St

Georges Road (including pavements) which the Landlord maintains and or cleans;


(iv)	all party walls party structures party fences walls or other things which may belong to or be used for the West Block in common with the East Block or any other part of the Development;


(v)	any television radio aerial or dish provided by the Landlord for the benefit of tenants or occupiers of the West Block;


(vii)	any equipment and signs relating to the operation of the car parks in the Development (including the Parking Area) and for the control of access to and egress from those car parks;


(vii)	the roof garden on the fifth floor of the Building and all plant containers in or on the roof garden (but excluding all plants garden furniture and free standing plant containers).


(b)	The cleaning lighting carpeting furnishing of and provision of floral decoration to the Common Parts to such a standard as the Landlord shall in its discretion acting reasonably think fit.


(c)	The cost of providing maintaining repairing replacing and renewing all directional and other signs including a tenants' name board and other informative notices in or upon the Building or Retained Parts.


(d)	The provision of hot and cold water and supply of necessary washing and toiler requisites in the lavatory accommodation in the Building.


(e)	The provision maintenance repair renewal and replacement of such smoke detection fire fighting and alarm equipment in the Building as the Landlord may deem necessary or desirable.


(f)	The supply provision purchase maintenance renewal repair and replacement of all fixtures and fittings receptacles tools appliance equipment materials and other things which the Landlord may deem desirable or necessary for the repair maintenance upkeep general management security or cleanliness of the Building.


(g)	The supply of heating and air handling to the Building to such temperatures as the Landlord may from time to time consider adequate.


(h)	The cost of providing inspecting serving maintaining repairing altering overhauling replacing and insuring any lifts space heating water heating or air handling equipment generators all electrical and mechanical and other plant and equipment in the Building.


(i)	The cost of supply of water electricity gas oil or other fuel or power for all purposes in connection with the provision of services referred to in this part of the clause 11.1.3.


(j)	The provision of staff (whether or not such staff are engaged directly by the Landlord or any managing agent) in connection with the provision of services to the Building including (but without limitation:


(i)	wages national insurance pension contributions compensation payments uniforms working clothes and expenses wholly and exclusively incurred in connection with the provision of such staff;


(ii)	all costs incurred in connection with any office provided for such staff including:


(A)	notional rent of the office;


(B)	insurance rates and water rates;


(C)	electricity heating lighting and telephone costs;


(iii)	the cost or notional rent applicable to any car parking spaces (whether inside or outside the Building) provided for such staff;


(k)	all costs incurred in making arrangements for the safety and security of the Building both as regards property and building in the Building and persons using or visiting the Building including the provision maintenance repair renewal replacement and cleaning of any equipment provided therefor (including without prejudice to the generality of the foregoing):


(i)	any television cameras monitors and recording equipment or other security systems;


(ii)	any barriers or posts whether or not these are collapsible or telescopic;


(iii)	any speed restriction controls including (without prejudice to the generality therefore) speed restriction ramps;


(l)	all costs incurred by the Landlord relating to the maintenance repair upkeep security and running of the Parking Area;


(m)	all insurance effected in relation to any part of the West Block not included in any Lettable Unit and any fixtures fittings furnishings plant equipment and contents referred to in this clause 11.1.3;


(n)	the cost of obtaining or carrying out valuations or revaluations of the Building or any part of the West Block not included in a Lettable Unit for insurance purposes;


(o)	all rates and other outgoings payable in respect of all parts of the West Block which are not Lettable Units;


(p)	all costs incurred in connection with compliance with all requirements relating to health and safety including without limitation:


(i)	the assessment of any risk to the health and safety of any persons in the Building or who may be affected by its use and occupation;


(ii)	the establishment of procedures to monitor the control of such risks

(q)

the cost of taking all steps deemed desirable or expedient by the Landlord for complying with making representations against or otherwise contrasting the incidence of the provisions of any legislation or orders or statutory requirements thereunder concerning the town planning public health and safety highways street drainage or any other matter relating to or alleged to relate to the Building for which any tenant is not directly liable;


(r)	the cost of and connected with the compliance by the Landlord and/or the need for the Landlord to comply with all the provisions of any Act of Parliament now in force or in force any time during the Term or any orders bye-laws or regulations passed thereunder affecting the Building;


(s)	any other costs and/or expenses including those of consultants and professional advisers properly incurred by the Landlord and/or its managing agents and in connection with the management of the Building and/or the matters specified in this clause 11.1.3;


(t)	the proper fees and expenses of the Landlord's managing agents and/or the Landlord's accountants incurred in connection with the management of the Building not attributable solely to anyone occupier provided that if the Landlord does not employ managing agents it shall be entitled to charge a fee equal to 10 percent of the total expenses incurred under the provisions of this clause 11.1.3;


11.2	Landlord's obligations


11.2.1	The Landlord shall provide the Services in a manner which the Landlord reasonably considers appropriate.


11.2.2	The Landlord will have no liability for any failure or interruption of any Service:


(a)	while the Tenant is in arrears with payment of the Rent or other sums due and demanded under this Lease;


(b)	during the proper inspection, maintenance, repair or replacement of any relevant Service Media or equipment;


(c)	resulting from a shortage of fuel, water, materials or labour;


(d)	resulting from a breakdown of any equipment used in connection with the provision of the Services; or


(e)	resulting from any act or omission of any employee, contractor or agent of the Landlord, or for any other reason beyond the reasonable control of the Landlord.


11.2.3	In the circumstances mentioned in clauses 11.2.2(b), 11.2.2(c), 11.2.2(d) and 11.2.2(e), the Landlord shall restore the relevant Service as soon as is reasonably practicable.


11.2.4	The Landlord shall produce the Certificate to the Tenant as soon as practicable after the end of the Service Charge Year.


11.2.5	The Landlord shall allow the Tenant to inspect any invoices and receipts for the Services as long as the Tenant has given the Landlord reasonable written notice.


11.2.6	If any Lettable Unit is unlet for any period, the Landlord shall bear a fair proportion of the Services in respect of that Lettable Unit.


11.3	Tenant's obligations


11.3.1	The amount of Service Charge payable by the Tenant is the aggregate of:


(a)	12.01 per cent of the Development Expenses.


(b)	10.53 per cent of the West Block Car Park Structure Expenses; and


(c)	15.92 per cent of the Building Expenses,

Provided always that the Landlord is entitled from time to time by notice in writing to the Tenant to vary the share of the Service Charge payable in relation to the Services or any items referred to in clauses 11.1.1, 11.1.2 and 11.1.3 having regard to:


(d)	the number of Lettable Units comprised in the Development;


(e)	the relative areas comprised in the Lettable Units in the Development; and


(f)	the extent to which the Services are supplied to the various Lettable Units in the Development,

But so that no variation may result in the Landlord being able to recover in aggregate more than 100% of the costs of the Services.


11.3.2	The Tenant shall pay the Service Charge Estimate, and any VAT on it and the Service Charge Balance, and any VAT on it as provided in clause 7.

11.3.3

If the date of this deed does not coincide with the beginning of a Service Charge Year, the Service Charge due from the Tenant for the part of that Service Charge Year which is within the Term will be reduced by the proportion which the part of that Service Charge Year which is before the beginning of the Term bears to one year, and the Service Charge Estimate for that part of that Service Charge Year will be adjusted accordingly.


11.3.4	If the end of the Term does not coincide with the end of a Service Charge Year, the Service Charge due from the Tenant for the part of that Service Charge Year which is within the Term will be reduced by the proportion which the part of that Service Charge Year which is after the end of the Term bears to one year.


11.3.5	The end of the Term shall not prejudice the Landlord's entitlement to demand nor the Tenant's liability to pay the Service Charge Balance for the Service Charge Year then current, apportioned in accordance with clause 11.3.4.


11.4	Estimating and revising the Service Charge

11.4.1

The Landlord shall give the Tenant a statement of the Service Charge Estimate for each Service Charge Year. Until the statement has been given, the Service Charge Estimate shall be payable at the rate of the Service Charge Estimate for the previous Service Charge Year. Once the statement has been given, the remaining instalments of the Service Charge Estimate and any VAT on them will be adjusted so as to provide for payment of the whole Service Charge Estimate for that Service Charge Year to be paid during that year.

11.4.2

If, during a Service Charge Year, the Landlord reasonably expects the cost of the Services to increase materially above its previous estimate of the cost of the Services for that Service Charge Year, the Landlord may revise its estimate of those costs and the Service Charge Estimate will be based on that revised estimate and the remaining instalments of the Service Charge Estimate adjusted so that the revised Service Charge Estimate will have been paid by the end of that Service Charge Year. The Landlord may revise the Service Charge Estimate more than once in a Service Charge Year.


11.5	General provisions


11.5.1	In the absence of manifest error, the Certificate will be conclusive as to the amount of the Service Charge.


11.5.2	The Landlord shall notify the Tenant in writing of any change in the date of the beginning of the Service Charge Year.


11.5.3	If the Service Charge for any Service Charge Year is less than the Service Charge Estimate (as and if revised), the balance will be credited against the instalments of the Service Charge Estimate due from the Tenant in the following Service Charge Year, or, at the end of the Term, set-off against any sums due from the Tenant to the Landlord with any balance being repaid to the Tenant.

11.5.4

The Services for the Service Charge Year in which the beginning of the Term falls may include costs incurred by or provided for or on behalf of the Landlord before the beginning of the Term so far as they relate to Services which are to be provided during the Term. The Services in any Service Charge Year may include provisions for expenses to be made after the end of the Term so far as such provisions are reasonable having regard to the Services which are provided during the Term.


12.	STATE AND CONDITION OF THE PREMISES


12.1	Repair


12.1.1	The Tenant shall repair the Premises and keep them in good and substantial repair and condition and shall keep all plant and machinery within or forming part of the Premises in good condition and working.


12.1.2	The Tenant shall replace any fixtures, fittings, plant or machinery (other than tenant's fixtures and fittings) within or forming part of the Premises which are in need of replacement with new articles of similar kind and quality.


12.1.3	The Tenant shall regularly clean the inside and outside of the windows at the Premises and replace any plate glass which becomes broken or damaged.


12.1.4	The Tenant shall clean the Premises regularly and maintain them at all times in a clean and tidy condition.


12.1.5	The Tenant shall follow the manufacturer's recommendations regarding the use maintenance and repair of all Landlord's fixtures and fittings.


12.1.6	In relation to the carpet belonging to the Landlord in the Premises the Tenant shall:


(a)	keep it clean and in good repair and condition;


(b)	replace it as often and in such manner as may be required by the Landlord acting reasonably with carpets of similar quality, and

in any event at the end of the Term remove the carpet and replace it with carpet of similar quality of such pattern and colour as the Landlord shall approve with such method of fixing as the Landlord shall reasonably require.


12.1.7	The Tenant shall not be liable under clause 12.1 to the extent that the Landlord is obliged to carry out the relevant repair works under clause 10.2 or to the extent that the Landlord is prevented from carrying them out by reason of the matters referred to in clause 10.2.2.


12.2	Redecoration

At all times during the Term the Tenant shall keep the Premises in good decorative condition and:


12.2.1	in the fifth year of the Term and in the last year of the Term in a proper and workmanlike manner prepare and then paint all the inside parts of the Premises where previously or usually painted with two coats at least of good quality paint and at the same time and in like manner wash varnish paper and otherwise decorate restore or treat the parts previously or usually so decorated or treated;


12.2.2	the tints colours and patterns of all works of decoration effected in the last year of the Term are to be approved by the Landlord.


12.3	Alterations


12.3.1	The Tenant shall not make any alterations or additions to, the Premises except internal, non-structural alterations or additions which may be made with the consent of the Landlord, such consent not to be unreasonably withheld or delayed subject

to the proposed works not having an unreasonably adverse impact on Environmental Performance.

12.3.2

The Tenant may erect, modify and remove demountable partitioning, floor boxes and under-floor wiring without the consent of the Landlord provided that such alterations or additions do not affect any of the Service Media, plant or machinery or air conditioning or have an unreasonable adverse impact on Environmental Performance but the Tenant shall notify the Landlord of its intention to carry out any such works at least 14 days before it intends to begin the works and shall in relation to any such works which it does carry out, carry them out:

(a)

and complete them in a good and workmanlike manner, with new and good quality materials fit for the purpose for which they are required and so as to be free from defects and without using or permitting the use of any material or substance which, at the time of use, does not conform to all relevant British and European standards and codes of practice or which is generally known to the United Kingdom building industry at the time of use to be deleterious to health and safety or to the durability of the works in the particular circumstances in which it is used;


(b)	in accordance in all respects with all relevant legislation and the terms of any consents which are required for the works;


(c)	in a manner so as to cause as little inconvenience and annoyance as reasonably possible to the Landlord, any superior landlord and the other occupiers of the Building;


(d)	so as not to result in the Premises, or any other part of the Building, becoming unsafe; and


(e)	at its sole risk,

and the Tenant shall make good to the Landlord's satisfaction any damage arising out of, or incidental to, the carrying out or completion of the works and shall provide the Landlord with a set of as-built drawings as soon as reasonably practicable after completion of the alterations or additions.


12.3.3	Unless and to the extent otherwise required by the Landlord, the Tenant shall, at the end of the Term, remove any and all alterations and additions made to the Premises during the Term and shall make good any damage caused by that removal to the reasonable satisfaction of the Landlord.


12.4	Signs and re-letting notices


12.4.1	The Tenant shall not display any signs or notices at the Premises which can be seen from outside the Premises.


12.4.2	The Tenant shall be permitted to display an internal sign on the Tenant's signage board approved by the Landlord and giving the name and business of the Tenant, and at the end of the Term the Tenant shall remove any such sign and make good any damage caused by that removal to the reasonable satisfaction of the Landlord.


12.4.3	The Tenant shall permit the Landlord to place a sign on the Premises at any time advertising the sale of the Landlord's interest (or any superior interest) in the Premises and during the last six months of the Term for the re-letting of the Premises.


12.5	Yield up

At the end of the Term the Tenant shall yield up the Premises with vacant possession decorated and repaired in accordance with the obligations in this Lease.


12.6	Codes of practice

The Tenant shall ensure that all works carried out at the Premises by or on behalf of the Tenant are carried out in accordance with all relevant codes of practice applicable to those works and issued by a statutory or professional body.


13.	USE OF THE PREMISES


13.1	The Permitted Use

The Tenant shall not use the Premises except for the Permitted Use.


13.2	Obstructions

The Tenant shall not obstruct the Retained Parts or any other pavement, footpath or roadway adjoining or serving the Premises.


13.3	Restrictions on use

The Tenant shall not:


13.3.1	leave the Premises unoccupied for a period of more than one month without first giving written notice to the Landlord nor for more than three months without the consent of the Landlord, but the Tenant shall not by virtue of clause 13.3.1 be required to trade from the Premises;


13.3.2	do anything on the Premises which is illegal or immoral or which would cause a nuisance or inconvenience or any damage or disturbance to the Landlord or any of the other occupiers of the Building or any owner or occupier of any other property adjoining or near the Premises;


13.3.3	carry out any acts at the Premises which are noisy, noxious, dangerous or offensive or store dangerous or inflammable materials at the Premises;


13.3.4	allow waste to accumulate at the Premises nor allow any material which is deleterious, polluting or dangerous (to persons or property) to enter any Service Media or any adjoining property; nor


13.3.5	overload or obstruct any Service Media which serve the Premises.


13.4	Not to obstruct

The Tenant shall not obstruct the Footpath the Access Road the Service Road or the footways adjoining them the public car parking areas at the upper and lower basement level or any of the Common Parts including (without limitation) any road footpath forecourt landing corridor staircase or all other Common Parts in the Building.


13.5	Refuse

The Tenant shall:


13.5.1	not allow refuse or rubbish of any description to accumulate on the Premises;


13.5.2	until its removal from the Premises store all refuse in a manner which causes no fire or health hazard;


13.5.3	not deposit refuse rubbish litter goods or any other material on any of the open parts of the Premises or on any of the Common Parts or any other part of the Development;


13.5.4	to keep all refuse in the type of container specified by the Landlord and prepared for collection in the manner and at the times and places specified by the Landlord for picking up refuse.


13.6	Pollution

The Tenant shall:


13.6.1	not discharge into any pipe drain or sewer serving the Premises or any other property any oil grease or other deleterious matter waste or other substance which might cause a nuisance or annoyance or might block or damage the sanitary or drainage system of the Development or the Building or any other property;


13.6.2	not cause or permit any deposit in or under the Premises or any discharge or escape


13.6.3	from the Premises of any matter substance material waste or effluent which would cause or be likely to cause:


(a)	any nuisance annoyance damage or harm;


(b)	any pollution of any watercourses or any controlled waters; or


(c)	the Building or any other land to be contaminated land.


13.7	Not to overload services

In relation to the electrical gas heating or air handling systems in the Premises the Tenant shall not:


13.7.1	attach any appliances so as to overload the current or supply;


13.7.2	interfere with alter or add to such systems without the previous written consent of the Landlord;


13.7.3	employ any person or persons other than the engineers or other persons approved from time to time by the Landlord to make any alterations or additions.


13.8	Cleaning

The Tenant shall not employ in relation to the Premises any office or window cleaners to whom the Landlord reasonably objects


13.9	Common Parts

The Tenant shall:


13.9.1	not misuse overload damage or interfere with any lift in the Building and in particular:


(a)	not exceed either the permitted number of persons or weightload;


(b)	not use any lift other than the goods lift in the Building for the carrying of goods furniture or bulky articles;


(c)	comply with any Landlord's requirements made as a condition of any consent for the carrying of goods.


13.9.2	at all times take all necessary steps to prevent any damage to the Common Parts including (but without limitation) when bringing in or removing goods furniture or luggage from the Premises.


13.9.3	use any lift entrance passage and staircase lavatories and water closets in the Common Parts in a careful manner and make good any damage caused by improper or careless use.


13.10	Fire and security precautions

The Tenant shall comply with the requirements and recommendations of the fire authority and with any reasonable requirements of the Landlord relating to fire prevention and the provision of fire-fighting equipment at the Premises and the reasonable requirements of the Landlord in relation to the security of the Building and of the Premises while they are vacant.


13.11	Parking

The Tenant shall:


13.11.1	use the Parking Spaces only for the parking of private cars and not do anything in or about the Parking Area or any other part of the Development which could be a nuisance annoyance or disturbance or cause damage or inconvenience to the Landlord or any tenant owner or occupier of any part of the Building any other part of the Development or any adjoining or neighbouring premises;


13.11.2	comply with all regulations and instructions which the Landlord makes from time to time for the control of traffic to and from the Parking Area including any regulations relating to one way routes;


13.11.3	not park any vehicle in any part of the Development other than the Parking Spaces;


13.11.4	make good any damage to the Parking Area or to the approaches to it or to any other part of the Development by accidental impact or any other cause arising from the act neglect or default of the Tenant;


13.11.5	not do any of the following things to any vehicle in the Parking Spaces:


(a)	washing cleaning and polishing;


(b)	works of repair or maintenance;


(c)	refuelling.


13.11.6	The Landlord may close or restrict access to allow part of the Parking Area at any time (giving reasonable notice except in case of emergency) for such periods as are reasonably necessary in connection with any works of repair maintenance alteration or renewal to the Parking Area to any Service Media lying under it or them or to any other part of the Development.


13.11.7	The Landlord shall not be liable to the Tenant or any other person:


(a)	for any loss of or damage to or theft from any vehicle using the Parking Area nor for any damage or injury suffered by any driver or passenger or by any principal servant agent licensee or visitor of the Tenant;


(b)	for any difficulty or interruption in obtaining access to the Parking Area by reason of any works referred to in clause 13.11.6 or for any other reason beyond the reasonable control of the Landlord;


(c)	if anyone other than the Tenant uses or occupies the Parking Area without the authority of the Landlord.


13.11.8	The right to use the Parking Spaces in accordance with the provisions of this clause 13.11 is personal to the Tenant for the time being and is not capable of being assigned or sublet or licensed except to a permitted assignee or undertenant upon a permitted assignment or underletting of the whole or part of the Premises.


13.11.9	The Landlord may by notice in writing to the Tenant change the Parking Spaces from time to time during the Term.

13.11.10

The Tenant shall notify the Landlord of the times when the Parking Spaces are not required by the Tenant or its sub-tenants and of any changes in such requirements so that the Landlord may make available the Parking Area at such times free of charge to the London Borough of Merton (or such other authority as may from time to time have the responsibility for public car parking in the Wimbledon Town Centre area) for use by the public.


13.12	Service Yard


13.12.1	The Tenant shall not cause any obstruction to or leave anything in nor cause any damage to or interfere with the use of the Service Yard and in particular:


(a)	shall use the Service Yard only for the purpose of loading and unloading and not park or permit to be parked any vehicle In the Service Yard save for the purpose of loading and unloading;


(b)	not store place deposit or keep (except during loading and unloading) any articles or things in the Service Yard;


(c)	comply with any regulations made by the Landlord relating to the Service Yard or its use.

13.12.2

The Landlord may close or restrict access to all or part of the Service Yard and/or Service Road at any time (giving reasonable notice except in case of emergency) for such period as is reasonably necessary in connection with any works of repair maintenance alteration or renewal to the Service Yard and/or Service Road to any Service Media lying under it or them or to any other part of the Development.


13.12.3	The Landlord shall not be liable to the Tenant or any other person for any difficulty or interruption in obtaining access to the Service Yard and/or Service Road by reason of any works referred to in clause 13.12.2 or for any other reason beyond the reasonable control of the Landlord.


13.13	Exclusion of warranty

The Landlord does not warrant or represent that the Premises may be used for the Permitted Use or for any other purpose.


14.	DEALINGS


14.1	General restrictions

The Tenant shall not part with or share nor agree to part with or share possession of the whole or part of the Premises or this Lease, nor allow any other person to occupy the whole or any part of the Premises, except as permitted by the remainder of clause 14.


14.2	Assignments


14.2.1	The Tenant shall not assign or agree to assign any part (as opposed to the whole) of this Lease. The Tenant shall not assign the whole of this Lease without the consent of the Landlord, such consent not to be unreasonably withheld or delayed.


14.2.2	The Landlord and the Tenant agree that, for the purposes of section 19(1A) of the Landlord and Tenant Act 1927 the Landlord may refuse its consent to an assignment in any of the following circumstances:


(a)	if, in the reasonable opinion of the Landlord, the financial standing of the assignee is not sufficient to pay the Rent and other sums due under this Lease and to comply with the tenant covenants of this Lease. For these purposes the "financial standing of the assignee" means the financial standing of the assignee:


(i)	taking into account the financial standing of any guarantor who will enter into a guarantee of the assignee's obligations pursuant to clause 14.2.3(c) and (but subject to clause 14.2.2(a)(ii)) the

provision of any other security for the performance of the assignee's obligations and the terms upon which such security is to be held; but


(ii)	ignoring any authorised guarantee and sub-guarantee which may be entered into pursuant to clauses 14.2.3(a) and 14.2.3(b) (and any sub-guarantee of such authorised guarantee agreement which may have already been entered into); or


(b)	if the Tenant has not paid all the Rent and other sums due under this Lease;


(c)	if the assignee (being a company) is not incorporated within the United Kingdom, unless the person who is to be its guarantor pursuant to clause 14.2.3(c) (being a company) is incorporated within the United Kingdom; or


(d)	if the proposed assignee is a member of the same Group as the Tenant.


14.2.3	The Landlord and the Tenant agree that, for the purposes of section 19(1A) of the Landlord and Tenant Act 1927 the Landlord may give its consent to an assignment subject to any of the following conditions:


(a)	the Tenant entering into an authorised guarantee agreement no later than the date of the instrument of the assignment, and that agreement is:


(i)	to take effect immediately following completion of the instrument of the assignment;


(ii)	to be by deed;


(iii)	to provide for a guarantee of the performance of all the tenant covenants of this Lease by the assignee from the date of the instrument of the assignment until the assignee is released by virtue of the Landlord and Tenant (Covenants) Act 1995;


(iv)	to provide for all the matters permitted by section 16(5) of that Act and is otherwise in accordance with section 16 of that Act; and


(v)	to include such further provisions as the Landlord reasonably requires;

(b)

that any person who has guaranteed the obligations of the Tenant under this Lease (otherwise than by way of an authorised guarantee agreement) and whose guarantee is subsisting immediately before completion of the instrument of the assignment enter into a sub-guarantee of the obligations of the Tenant contained in an authorised guarantee agreement entered into pursuant to clause 14.2.3(a), and that sub-guarantee is:


(i)	to take effect immediately following completion of the instrument of the assignment;


(ii)	to be by deed;


(iii)	to provide for the sub-guarantor to enter into a new lease (whether as guarantor or as tenant) if the liability of the assignee is disclaimed;


(iv)	to include such further provisions as the Landlord reasonably requires; and


(v)	to be entered into notwithstanding that that person may have already entered into such a sub-guarantee (or may have purported to have done so); and


(c)	that, if reasonably required by the Landlord, the assignee procure a guarantor or guarantors (not being the Tenant pursuant to the condition referred to in clause 14.2.3(a)) acceptable to the Landlord, to enter into a full guarantee and indemnity of the assignee's obligations under this Lease, and that guarantee and indemnity is:


(i)	to take effect immediately following completion of the instrument of the assignment;


(ii)	to be by deed;


(iii)	to provide for the guarantor to take a new lease (as tenant) if this Lease is forfeited or if the liability of the assignee is disclaimed;


(iv)	to include such further provisions the Landlord reasonably requires; and


(v)	to be in addition to any authorised guarantee agreement entered into pursuant to clause 14.2.3(a) and sub-guarantee entered into pursuant to clause 14.2.3(b) or which may have already been entered into); and


(d)	that, if reasonably required by the Landlord the assignee enters into a rent deposit deed with the Landlord for such amount and in such form as the Landlord may reasonably require and paying the amount set out in such deed by way of clear funds.


(e)	that if at any time before the assignment any of the circumstance set out in clause 14.2.2 exist, the Landlord may revoke its consent to the assignment by notice to the Tenant.


14.2.4	Clauses 14.2.2 and 14.2.3 do not limit the right of the Landlord to refuse consent to an assignment on any other reasonable ground or to impose any other reasonable condition to its consent.


14.3	Underlettings


14.3.1	The Tenant shall not underlet or agree to underlet any part of the Premises (as opposed to the whole) other than a Permitted Part.


14.3.2	The Tenant shall not underlet the whole of the Premises or a Permitted Part, except in accordance with the remainder of clause 14.3 and with clause 14.4 and then only with the consent of the Landlord, such consent not to be unreasonably withheld or delayed.

14.3.3

The Tenant shall not underlet the Premises or a Permitted Part without first obtaining from the undertenant a covenant by the undertenant with the Landlord to comply with the terms of this Lease on the part of the tenant, other than as to the payment of any Rent or other sums reserved as rent by this Lease, and to comply with the obligations on the undertenant in the underlease (and any document which is supplemental or collateral to the underlease) throughout the term of the underlease or until the undertenant is released by virtue of the Landlord and Tenant (Covenants) Act 1995, if sooner.

14.3.4

Any underlease of whole or a Permitted Part shall be granted at a rent which is not less than the then full open market rental value of the Premises or the relevant Permitted Part (but this will not prevent an underlease providing for a rent-free period of a length as is then usual in the open market in respect of such a letting), and without a fine or premium and with the underlease rent payable not more than one quarter in advance.


14.3.5	The Tenant shall not grant an underlease unless:

(a)

before the earlier of the undertenant entering into the underlease and the undertenant becoming contractually bound to do so, the Tenant has served a notice on the undertenant and the undertenant (or a person duly authorised by the undertenant) has made a statutory declaration, such notice and statutory declaration to relate to the tenancy to be created by the underlease and to comply with section 38A of the Landlord and Tenant Act 1954 and the relevant schedules of the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003; and


(b)	the Tenant has supplied the Landlord with a certified copy of the notice and statutory declaration referred to in clause 14.3.5(a).


14.3.6	In the case of an underletting of a Permitted Part:


(a)	such Permitted Part must be capable of self-contained beneficial use and must be let on a self-contained basis, it must comply with the then current statutory requirements including fire and building regulations and have the benefit of all necessary accesses, means of escape and facilities including access and necessary toilet, sanitary and staff facilities; and


(b)	the grant of the underlease of the Permitted Part shall not result in more than two separate occupations of the Premises subsisting at any one time and if the Tenant remains in occupation that occupation shall be counted as one of the two occupations.


14.3.7	The Tenant shall not grant any underlease of the whole or a Permitted Part for a term which will expire by effluxion of time later than three clear days before the date the contractual term granted by this deed will expire by effluxion of time.


14.3.8	The Tenant shall not enter into any collateral deed nor give any side letter varying or relieving the undertenant from any terms required by clause 14.3 or clause 14.4 to be contained in the underlease.


14.4	Terms to be contained in any underlease

Any underlease shall contain the following terms:


14.4.1	if the term of the underlease extends beyond the Review Date, a provision for the review of the rent in the same terms and on the same dates as the review of the Rent in this Lease;

14.4.2

an obligation on the undertenant not to deal with or dispose of its interest in the underlease (including by way of declaration of trust) or part with or share possession of the whole or part of that interest or permit any other person to occupy the Premises except by way of an assignment or charge of the whole of its interest in the Premises, which may only be made with the Landlord's consent, such consent not to be unreasonably withheld or delayed, or as permitted by clause 14.8;

14.4.3

agreements between the Tenant and the undertenant in the same terms as clauses 14.2.2 and 14.2.3 and a further agreement between the Tenant and the undertenant expressed to be for the purposes of section 19(1A) of the Landlord and Tenant Act 1927 that the Tenant may give its consent to an assignment of the underlease subject to a condition that the assignee of the underlease enters into a covenant with the Landlord with effect from the date of the instrument of the assignment of the underlease in the terms of the covenant required by clause 14.3.3;


14.4.4	a statement in the terms of clause 14.2.4;


14.4.5	if this Lease requires the consent or approval of the Landlord for any matter and that matter is permitted by the underlease, a provision requiring the consent or approval of the Landlord for that matter;


14.4.6	if this Lease requires the consent or approval of the Landlord, such consent not to be unreasonably withheld or delayed for any matter and that matter is permitted by the underlease, a provision requiring the consent or approval of the Landlord for that matter, such consent not to be unreasonably withheld or delayed; and

14.4.7

a statement by the Tenant and the undertenant referring to the notice and statutory declaration mentioned in clause 14.3.5, and where the statutory declaration was made by a person other than the undertenant, a statement by the undertenant confirming that such person was duly authorised by the undertenant to make the statutory declaration and an agreement between the Tenant and the undertenant that the provisions of sections 24-28 of the Landlord and Tenant Act 1954 shall be excluded in relation to the tenancy created by the underlease,

and shall otherwise be on terms consistent with this Lease.


14.5	Further provisions relating to underleases


14.5.1	The Tenant shall procure that the rent in any underlease is reviewed in accordance with the underlease and shall not agree the level of any reviewed rent with an undertenant without the consent of the Landlord, such consent not to be unreasonably withheld.


14.5.2	The Tenant shall enforce the obligations of the undertenant in any underlease and exercise its rights under the agreements made between it and the undertenant for the purposes of section 19(1A) of the Landlord and Tenant Act 1927.


14.5.3	The Tenant shall not vary the terms of, nor, without the consent of the Landlord, such consent not to be unreasonably withheld, accept or agree to accept a surrender of, nor forfeit any underlease.


14.6	Charging

The Tenant shall not charge or agree to charge any part of the Premises (as opposed to the whole) and shall not charge or agree to charge the whole of the Premises without the consent of the Landlord, such consent not to be unreasonably withheld or delayed.


14.7	Declarations of trust

The Tenant shall not make any declaration of trust of the whole or any part of its interest in the Premises or this Lease.


14.8	Group sharing of occupation

Nothing in clause 14 will prevent the Tenant or any permitted undertenant from sharing occupation of the Premises with another member of the same Group if and so long as that other member remains a member of that Group provided that no relationship of landlord and tenant subsists between the Tenant or permitted undertenant and that other member. The Tenant shall keep the Landlord informed of the identity of all occupiers and of the basis of their occupation of the Premises.


14.9	Notification of dealings

Within five Business Days of any dealing with, or devolution of, the Premises or this Lease or of any interest created out of them or it, the Tenant shall give the Landlord written notice of that dealing or devolution together with a certified copy of any document effecting or evidencing the dealing or devolution (and a certified copy for any superior landlord) and shall pay the Landlord a reasonable registration fee of not less than seventy five pounds (£75) and the registration fee of any superior landlord.


14.10	Registration at the Land Registry


14.10.1	If this Lease and/or the rights granted or reserved by this Lease are or should be registered at the Land Registry under the Land Registration Act 2002 then the Tenant shall:


(a)	apply to register this Lease and any assignment or other registrable disposition of this Lease at the Land Registry within 10 Business Days of the date of the grant of this Lease or the date of the instrument of assignment or other disposition requiring registration (as the case may be) and procure completion of that registration;


(b)	use its best endeavours to procure that all rights granted or reserved by this Lease are properly noted against the affected title; and


(c)	within five Business Days of the registration of the grant, assignment, other registrable disposition of this Lease or notice against the affected titles (as the case may be) deliver to the Landlord official copies of the registered titles.


14.10.2	The Landlord shall not be liable to the Tenant for the Tenant's failure to register and/or to protect this Lease or any rights granted by it


15.	LEGAL REQUIREMENTS AND REGULATIONS


15.1	Legislation and planning

The Tenant shall:


15.1.1	comply with all legislation affecting the Premises, their use and occupation and the health and safety of persons working at or visiting the Premises, whether the legislation requires the owner, landlord, tenant or occupier to comply;


15.1.2	give the Landlord written notice of any defect in the Premises which may make the Landlord liable to do, or not to do, any act to comply with the duty of care imposed by the Defective Premises Act 1972, and shall display any notices at the Premises needed to enable the Landlord to comply with the Defective Premises Act 1972;


15.1.3	not apply for planning permission;


15.1.4	pay any charge imposed under legislation relating to town and country planning in respect of the use of the Premises, or any works carried out at the Premises; and


15.1.5	at the end of the Term pay the Landlord a fair proportion of any compensation which the Tenant has received or which is receivable by the Tenant because of any restriction placed on the use of the Premises under any legislation.


15.2	Notices relating to the Premises


15.2.1	The Tenant shall give the Landlord a copy of any notice received by the Tenant, relating to the Premises or the Building or any occupier of them, or to the Landlord's interest in them, upon having received it and take any steps which the Landlord may require in connection with such notice.


15.2.2	The Tenant shall not give any notice or counter-notice under the Party Wall etc. Act 1996 without the consent of the Landlord.


15.3	The Construction (Design and Management) Regulations 2015


15.3.1	In this clause 15.3 "Regulations" means the Construction (Design and Management) Regulations 2015 and "File" means the Health and Safety file required by the Regulations for any project (within the meaning of the Regulations) carried out by or on behalf of the Tenant or any undertenant or other occupier of the Premises.


15.3.2	In respect of any works carried out by or on behalf of the Tenant or any undertenant or other occupier of the Premises (including any works of reinstatement which may be carried out after the end of the Term) to which the Regulations apply:


(a)	the Tenant shall comply in all respects with the Regulations and procure that any person (other than the Landlord) who otherwise has any duty under the Regulations, complies with the Regulations;


(b)	the Tenant shall pay the Landlord on demand its reasonable costs and expenses (and any VAT in relation to them) for providing any information or documents which the Landlord may supply to any person in connection with such works; and

(c)

if and to the extent that the Landlord is a client for the purposes of the Regulations, the Tenant shall elect in writing (or the Tenant shall procure that the undertenant or other occupier of the Premises (as the case may be) elects in writing), for the purpose of the Regulations, to be the only client in relation to such works, and the Tenant shall not begin (or shall procure that the undertenant or other occupier (as the case may be) does not begin) to carry out such works until the Landlord has consented to that election.


15.3.3	The Tenant shall:


(a)	compile, maintain and make the File available to the Landlord for inspection at all times;


(b)	on request provide copies of the whole or any part of the File to the Landlord; and


(c)	hand the File to the Landlord at the end of the Term unless the Tenant is granted a new lease of the Premises.


15.3.4	The Tenant shall obtain all copyright licences which are needed for the Tenant to comply lawfully with clause 15.3.


15.3.5	The copyright licences obtained by the Tenant shall:


(a)	be granted with full title guarantee;


(b)	allow the Landlord and any superior landlord and anyone deriving title through or under them to take further copies of the File or any part of it;


(c)	be obtained without cost to any such person;


(d)	allow any such person to grant sub-licences on similar terms; and


(e)	be irrevocable.


15.4	Regulations

The Tenant shall comply with any regulations concerning the Retained Parts reasonably made by the Landlord from time to time.


16.	LANDLORD'S COVENANT FOR QUIET ENJOYMENT

The Landlord agrees with the Tenant that for so long as the Tenant complies with the terms of this Lease the Tenant may hold and use the Premises during the Term without any interruption (except as authorised by this Lease) by the Landlord or by any person lawfully claiming through, under or in trust for the Landlord.


17.	LIMIT ON LANDLORD'S LIABILITY

To the extent that the obligations on the Landlord contained or implied in this Lease relate to any time after a person has parted with the whole of its interest in the reversion immediately expectant on the end of the Term, they shall not be binding on or enforceable against that person after that person has parted with the whole of that interest.


18.	FORFEITURE


18.1	Landlord's right of re-entry

If any event set out in clause 18.2 occurs, the Landlord may forfeit this Lease and re-enter the Premises (or any part of them in the name of the whole). The Term will then end, but this will be without prejudice to any claim which the Landlord may have against the Tenant or a Guarantor for any failure to comply with the terms of this Lease.


18.2	Events giving rise to the Landlord's right of re-entry


18.2.1	The Rent or any other sum payable under this Lease has not been paid 15 Business Days after it became due, whether formally demanded or not.


18.2.2	The Tenant or any Guarantor has failed to comply with any of the terms of this Lease.


18.2.3	The Tenant or any Guarantor who is an individual (or if more than one individual then any one of them):


(a)	is unable to pay, or has no reasonable prospect of being able to pay, its debts within the meaning of section 268 of the Insolvency Act 1986;


(b)	is the subject of an application for an interim order under the Insolvency Act 1986, or it enters into, or commences negotiations in respect of, or calls or convenes any meeting for the approval of any composition, compromise, moratorium, scheme or other similar arrangement with its creditors or any of them, whether under the Insolvency Act 1986 or otherwise;

(c)

requests or suffers the appointment of a Law of Property Act 1925, court appointed or other receiver or receiver and manager or similar officer over or in relation to the whole or any part of its undertaking, property, revenue or assets, or any person holding security over the whole or any part of its undertaking, property, revenue or assets takes possession of all or any part of them, or it requests that such a person does so;


(d)	is the subject of a bankruptcy petition or any step is taken in connection with obtaining such a petition, or an interim receiver of its property is appointed, or a bankruptcy order is made against it;


(e)	has a receiver appointed for it under the Mental Health Act 1983 or the court makes any declaration or order under the Mental Capacity Act 2005 in relation to the Tenant's or Guarantor's property or affairs or appoints any deputy to make decision on the Tenant's or Guarantor's behalf in relation to its property and affairs;


(f)	has any distress, execution, sequestration or other process levied or forced upon or against its undertaking, chattels, property or any of its assets in the Premises; or

(g)

is, or becomes, subject to, or takes or has taken against it or in relation to it or the whole or any part of its undertaking, property, revenue or assets, any finding, step, process or proceeding in any jurisdiction other than England and Wales which is equivalent, analogous, corresponding or similar to any of the findings, steps, processes or proceedings mentioned in clauses 18.2.3(a) to 18.2.3(f), and whether or not any such finding, step, process or proceeding has been taken in England and Wales.


18.2.4	The Tenant or any Guarantor which is a company (or if more than one company then any one of them):


(a)	is unable to pay, or has no reasonable prospect of being able to pay, its debts within the meaning of section 123 or sections 222 to 224 of the Insolvency Act 1986 (but disregarding references in those sections to proving it to the court's satisfaction);

(b)

resolves or its directors resolve to enter into, or it enters into, or it or its directors commence negotiations or make any application to court in respect of, or call or convene any meeting for the approval of any composition, compromise, moratorium (including a moratorium statutorily obtained, whether as a precursor to a voluntary arrangement under the Insolvency Act 1986 or otherwise, or a moratorium informally obtained), the appointment of a nominee, scheme or other similar arrangement with its creditors or any of them, whether under the Insolvency Act 1986, the Companies Act 2006 or otherwise;

(c)

resolves, or its directors, or the holders of a qualifying floating charge (as defined in Schedule 61 of the Insolvency Act 1986) or a third party resolve to appoint an administrator of it, or to petition or apply to court for an administration order in respect of it, or a petition or an application for an administration order is made in respect of it, or an administration order is made in respect of it, or a notice of appointment or a notice of intention to appoint an administrator is issued, or any step under the Insolvency Act 1986 is taken to appoint an administrator of it out of court, or it enters administration;

(d)

requests or suffers the appointment of a receiver under the Law of Property Act 1925, court appointed, administrative receiver or other receiver or receiver and manager, or similar officer over or in relation to the whole or any part of its undertaking, property, revenue or assets, or any person holding security over all or any part of its undertaking, property, revenue or assets takes possession of all or any part of them or requests that such a person does so;


(e)	resolves or its directors resolve to wind it up, whether as a voluntary liquidation or a compulsory liquidation, or its directors or any third party take any step under the Insolvency Act 1986 to wind it up voluntarily or to petition the court for a winding-up order, or a winding-up petition is presented against

it, or a provisional liquidator is appointed to it, or it goes into liquidation within the meaning of section 247 of the Insolvency Act 1986;


(f)	is dissolved, or is removed from the Register of Companies, or ceases to exist (whether or not being capable of reinstatement or reconstitution) or threatens to cease to exist, or its directors apply for it to be struck off the Register of Companies;


(g)	has any distress, execution, sequestration or other process levied or forced upon or against its undertaking, chattels, property or any of its assets in the Premises; or

(h)

is, or becomes, subject to, or takes or has taken against it or in relation to it or the whole or any part of its undertaking, property, revenue or assets, any finding, step, process or proceeding in any jurisdiction other than England and Wales which is equivalent, analogous, corresponding or similar to any of the findings, steps, processes or proceedings mentioned in clauses 18.2.4(a) to 18.2.4(g), and whether or not any such finding, step, process or proceeding has been taken in England and Wales.


18.2.5	The Tenant or any Guarantor ceases or threatens to cease to carry on any business, or makes or permits or threatens to make or permit any material change in the nature of its business, or suspends or threatens to suspend payment of its debts.


18.3	Interpretation


18.3.1	In clause 18 "company" includes:


(a)	a company as defined in section 1 of the Companies Act 2006;


(b)	a body corporate or corporation within the meaning of section 1173 of the Companies Act 2006;


(c)	an unregistered company or association;


(d)	any "company or legal person" in relation to which insolvency proceedings may be opened pursuant to article 3 of the EC Regulation on Insolvency Proceedings 2000 (No. 1346/2000);


(e)	a partnership within the meaning of the Partnership Act 1890;


(f)	a limited partnership registered under the Limited Partnerships Act 1907; and


(g)	a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000,

and the "Register of Companies" means any register of any of the legal persons mentioned above.


18.3.2	In relation to a Tenant or Guarantor that is a partnership within the meaning of the Partnership Act 1890 or a limited partnership registered under the Limited Partnerships Act 1907, the provisions of clause 18.2.4 will, except where the context

otherwise requires, apply mutatis mutandis to the Tenant or Guarantor (as the case may be) incorporating, where relevant, the modifications mentioned in the Insolvent Partnerships Order 1994 and the Insolvent Partnerships (Amendment) Order 2005.


18.3.3	In relation to a Tenant or Guarantor that is a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000, the provisions of clause 18.2.4 will, except where the context otherwise requires, apply mutatis mutandis to the Tenant or Guarantor (as the case may be) incorporating, where relevant, the modifications made under the Limited Liability Partnerships Act 2000.


19.	MISCELLANEOUS


19.1	Notices


19.1.1	A notice given in connection with this Lease must be given in writing and signed by or on behalf of the party giving it, unless this Lease states that it need not be given in writing.


19.1.2	A notice given in connection with this Lease will be validly served if personally delivered or if sent by a registered post service (within the meaning of the Postal Services Act 2000) or first class recorded delivery or first class ordinary post and (in each case) addressed to:


(a)	the Landlord at the address given in this deed or, in substitution, at such other address which the Landlord has notified to the Tenant in writing;


(b)	the Tenant at the Premises or its registered office or its last known address; or


(c)	a Guarantor at the Premises or its registered office or its last known address.


19.1.3	The Tenant shall give the Landlord oral notice as well as written notice of any matter affecting the Premises where emergency action is or may be needed.


19.1.4	Writing does not include, and notices given in connection with this Lease may not be given by, email or any other electronic means.


19.2	Landlord's rights to remedy default by the Tenant

If the Tenant fails to comply with any of its obligations in this Lease, the Landlord may give the Tenant written notice of that failure, and the Tenant shall remedy the failure within the time reasonably specified by the Landlord (or immediately in the case of an emergency). If the Tenant fails to do this the Landlord may enter the Premises and carry out any works or do anything else which may be needed to remedy the Tenant's failure to comply with its obligations under this Lease, and any costs incurred by the Landlord will be a debt due from the Tenant payable on demand and may be recovered by the Landlord as if it were additional rent.


19.3	Superior interests

If at any time this Lease is an underlease, the Tenant shall comply with the terms of any superior lease to the extent that they relate to the Premises, other than any obligation

to pay any rent, and the Landlord shall pay any rent due under the immediate superior lease.


19.4	No right to enforce

Nothing contained or referred to in this Lease entitles the Tenant to the benefit of, or the right to enforce, or to prevent the release or modification of any agreement entered into by any other tenant or occupier of the Building with the Landlord.


19.5	Tenant to provide information

The Tenant shall give the Landlord any information or documents which the Landlord reasonably requests to show that the Tenant is complying with its obligations in this Lease and shall give the Landlord immediate written notice of any matter in connection with the Premises which may make the Landlord liable to the Tenant or any third party.


19.6	EPC information


19.6.1	The Tenant shall allow the Landlord and all others authorised by the Landlord to have access to all documentation, data and information in the Tenant's possession or under its control that is reasonably required in order for the Landlord to:


(d)	prepare an EPC in respect of the Premises; and


(e)	comply with any duty imposed upon the Landlord under The Energy Performance of Buildings (England and Wales) Regulations 2012,

and the Tenant shall co-operate with the Landlord and any person so authorised so far as is reasonably necessary to enable them to carry out such functions.


19.6.2	The Tenant shall provide free of charge to the Landlord a copy of any EPC that the Tenant obtains in respect of the Premises.


19.7	Tenant's indemnity

The Tenant agrees to indemnify the Landlord at all times (both during and after the Term) against all charges, claims, proceedings, liabilities, damages, losses, costs and expenses arising directly or indirectly from the existence, state of repair or use of the Premises or any works carried out at the Premises or any breach of any of the Tenant's obligations in this Lease, or any act or omission of the Tenant.


19.8	Guarantor to enter into supplemental documents

The Tenant shall procure that a Guarantor enters into and executes and delivers to the Landlord any deed or document which is supplemental to this deed and which is entered into before that Guarantor is released by virtue of the Landlord and Tenant (Covenants) Act 1995.


19.9	Replacement Guarantor


19.9.1	In clause 19.9 a "Guarantor Replacement Event" is the death of a Guarantor or the occurrence of any of the events referred to in clause 18.2.3, 18.2.4, or 18.2.5 in relation to a Guarantor, or where a Guarantor comprises more than one person, the

death of any one of them or the occurrence of any of those events in relation to any one of them.

19.9.2

If at any time during the Term a Guarantor Replacement Event occurs, the Tenant shall give immediate written notice of it to the Landlord. The Landlord may after a Guarantor Replacement Event (and whether or not it has received notice of it from the Tenant) give written notice to the Tenant requiring the Tenant to procure a replacement or additional guarantor. Within one month of the Landlord giving such notice to the Tenant, the Tenant shall procure that a person of standing acceptable to the Landlord enters into and executes and delivers to the Landlord a replacement or additional guarantee and indemnity in the same form as that entered into by the Guarantor in respect of which the Guarantor Replacement Event has occurred.


19.9.3	Clause 19.9 does not apply in relation to a Guarantor who is a Guarantor by reason of having entered into an authorised guarantee agreement.


19.10	Qualification of Landlord's liability

The Landlord shall not be liable to the Tenant or any other person for:


19.10.1	any damage to person or property arising from any act, omission or misfeasance by the Landlord or its employees, agents or independent contractors or by any other tenant or occupier of the Building or from the state and condition of the Premises or of any other part of the Building or any adjoining property of the Landlord;


19.10.2	any interruption to the supply of Utilities to the Premises or other parts of the Building;


19.10.3	any accidental damage to the Premises or to any property of the Tenant or any other occupier of the Premises or their employees, agents or independent contractors; or


19.10.4	for any failure to perform any obligation in this Lease, unless the Tenant has given the Landlord written notice of the facts giving rise to that failure and allowed the Landlord a reasonable time to remedy the matter.


19.11	Removal of goods after end of Term

The Tenant shall remove all its fittings, goods and other possessions at the end of the Term and the Landlord may dispose of any such items left at the Premises more than 15 Business Days after the end of the Term as the Landlord sees fit.


19.12	Governing law and jurisdiction


19.12.1	This Lease and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) are governed by the law of England and Wales.


19.12.2	The parties irrevocably agree that the courts of England and Wales have exclusive jurisdiction to determine any dispute or claim that arises out of or in connection with this Lease or its subject matter or formation (including non-contractual disputes or claims).


19.13	Contracts (Rights of Third Parties) Act 1999

Unless expressly stated nothing in this Lease will create any rights in favour of any person pursuant to the Contracts (Rights of Third Parties) Act 1999.


19.14	Landlord and Tenant (Covenants) Act 1995

This Lease is a new tenancy for the purposes of section 1 of the Landlord and Tenant (Covenants) Act 1995.


19.15	Tenant's acknowledgement

19.15.1

The Tenant acknowledges that except for the written replies made by the Landlord's solicitors to the formal written pre-lease enquiries made by the Tenant's solicitors, it has not relied on or taken into account any statement or representation, whether written or oral (and including any made negligently) made by or on behalf of the Landlord, in deciding whether to enter into this deed, and the documents annexed to it and any document expressed to be supplemental to this Lease and entered into on the same day as this deed and will have no right or remedy (including any right or remedy based on negligence) in respect of any such statement or representation.


19.15.2	Nothing in this deed will operate to limit or exclude any liability arising or remedy available by reason of fraud.


20.	GUARANTEE


20.1	Guarantee

20.1.1

In consideration of the grant of this Lease to the Tenant, the Guarantor irrevocably and unconditionally guarantees to the Landlord that the Tenant shall, until the end of the Term or, if earlier, until the Tenant is released pursuant to the Landlord and Tenant (Covenants) Act 1995, duly and punctually pay the Rent and other sums due under this Lease and shall observe and perform the tenant covenants of this Lease.


20.1.2	The Guarantor covenants with the Landlord that in any case of default by the Tenant the Guarantor shall pay the rents and comply with the obligations referred to in clause 20.1.1.


20.1.3	The Guarantor's liability under this Lease is as principal debtor and not merely as surety.


20.1.4	In this clause 20 references to the "Tenant" are to the person who named as the second party to this deed only.


20.2	Guarantor to take a new lease


20.2.1	In this clause 20.2 a "Relevant Event" is:


(a)	the surrender of this Lease by the tenant for the time being under it acting by a liquidator, trustee in bankruptcy, administrator, receiver or receiver and manager or any other similar officer appointed to it or over it or in relation to any of its assets or undertaking (whether such person is appointed in England and Wales or in any other jurisdiction and whether such person is appointed

in relation to any or all of the tenant for the time being's assets or undertaking in England and Wales or in any other jurisdiction);


(b)	the disclaimer of this Lease or of the liabilities under it of the tenant for the time being under this Lease;


(c)	the forfeiture of this Lease; or


(d)	the tenant for the time being (being a company) ceasing to exist (whether or not capable of being reconstituted or reinstated).


20.2.2	The Guarantor agrees that if a Relevant Event occurs, it shall, if required by the Landlord within 18 months of the Landlord having received notice of the Relevant Event, take a new lease of the Premises from the Landlord.


20.2.3	The new lease shall:


(a)	be for a term expiring on the date when this Lease would have expired by effluxion of time had there been no Relevant Event;


(b)	be at the same rents in this Lease but with no rent-free period payable (or which would be payable but for any suspension of rent pursuant to this Lease) from and including the date of the Relevant Event;

(c)

include provision for rent review on the same date during the term of the new lease as this Lease and if on the date of the Relevant Event there is a rent review pending under this Lease or if between the Relevant Event and the date of completion of the new lease there would have been the Review Date but for the Relevant Event then the initial rent to be reserved by the new lease shall be the amount which would have been agreed or determined pursuant to this Lease for the rent review at the Review Date had there been no Relevant Event;


(d)	contain provision for the first instalment of the annual rent and any VAT due on it to be paid to the Landlord on the date of completion of the new lease such first instalment to be a proportionate amount for the period from and including the date of the Relevant Event until the next quarter day following the date of completion of the new lease;


(e)	otherwise be on the same covenants and conditions as this Lease; and


(f)	take effect from the date of the Relevant Event.


20.2.4	The new lease will take effect subject to this Lease, if and to the extent that it is still subsisting, and subject to any underlease or other interest created, permitted or suffered by the tenant under this Lease at the time of the Relevant Event or its predecessors in title.


20.2.5	The Guarantor shall pay the Landlord's costs and expenses (on an indemnity basis) and a sum equal to all VAT on them which may be payable by the Landlord in connection with the grant of the new lease.


20.2.6	The Guarantor shall execute and deliver a counterpart of the new lease to the Landlord within one month of the Landlord having required the Guarantor to take the new lease.


20.3	No discharge of Guarantor

Without prejudice to section 18 of the Landlord and Tenant (Covenants) Act 1995, the Guarantor's liability under this clause 20 will remain in full force and effect and will not be avoided, released, discharged or reduced nor will the rights of the Landlord be prejudiced or affected by any of the following:


20.3.1	any time, indulgence or concession granted by the Landlord to the Tenant or to any other person who is liable;


20.3.2	the Landlord dealing with, varying or failing to perfect or enforce any of its rights or remedies against the Tenant or any other person who is liable;


20.3.3	the existence of, dealing with, varying or failing to perfect or enforce any security which may be or become available to the Landlord;


20.3.4	any act or neglect of the Landlord by reason of which the benefit of any security or any right or remedy against any person who is liable is released, lost or diminished;


20.3.5	any variation of, addition to or reduction from, the terms of this Lease whether or not the same is substantial or is prejudicial to the Guarantor or confers only a personal right or obligation;


20.3.6	any invalid or ineffective payment by the Tenant or any other person who is liable;


20.3.7	any right of set-off (whether legal or equitable), counter-claim or deduction which may have accrued to the Guarantor, the Tenant or any other person who is liable;


20.3.8	any non-acceptance of the Rent or other sums due under this Lease, in circumstances in which the Landlord has reason to suspect a breach of the tenant's obligations under this Lease;


20.3.9	any waiver by the Landlord of any right to forfeit this Lease;


20.3.10	a surrender of part of the Premises, except that the Guarantor will have no liability in relation to the surrendered part in respect of any period after the date of the surrender;


20.3.11	any death, incapacity, disability or change in the constitution, status or name of the Landlord, the Guarantor, the Tenant or any other person who is liable;


20.3.12	any amalgamation or merger by the Landlord, the Guarantor, the Tenant or any other person who is liable with any other person, any restructuring or the acquisition by another person of the whole or any part of its assets or undertaking of the Landlord, the Guarantor, the Tenant or any other person who is liable;


20.3.13	the Tenant or any other person who is liable entering into any voluntary arrangement or composition with any of its creditors (whether or not such arrangement or composition binds or is expressed to bind the Landlord);

20.3.14

the appointment of any liquidator, trustee in bankruptcy, administrator, receiver or receiver and manager or any other similar officer to, over or in relation to any of the assets or undertaking of the Tenant or any other person who is liable whether any such person is appointed in England and Wales or in any other jurisdiction and whether any such person is appointed in relation to any or all of the Tenant's (or other such person's) assets or undertaking in England and Wales or in any other jurisdiction;


20.3.15	without prejudice to clause 20.2, the disclaimer of the liability under the Lease of the Tenant or any other person who is liable, or the forfeiture of the Lease;


20.3.16	any provisions of the Lease being or becoming wholly or in part void, voidable or unenforceable by the Landlord against the Tenant or any other person who is liable; or


20.3.17	any other act, omission or thing by virtue of which, but for this provision, the Guarantor would have avoided or been released or discharged from its obligations under this clause 20 in whole or in part, or the rights or remedies of the Landlord would have been prejudiced or affected, other than a release by deed, entered into by the Landlord in accordance with the terms of such deed,


20.4	Waiver of rights by the Guarantor

The Guarantor waives any right or remedy that it may have against the Tenant in respect of any amount paid or other obligation performed by the Guarantor such waiver to take effect only if and when any step has been taken in connection with any voluntary arrangement or any other compromise or arrangement for the benefit of any creditors of the Tenant.


20.5	Supplemental documents

As and when called upon to do so by either the Landlord or the Tenant, the Guarantor shall enter into any document which is supplemental to this Lease (by deed if required) for the purpose of consenting to the Tenant entering into such supplemental document and confirming that, subject only to section 18 of the Landlord and Tenant (Covenants) Act 1995, all the obligations of the Guarantor will remain in full force and effect in respect of this Lease and will extend and apply to the Lease as varied by that supplemental document.


20.6	Scope of this guarantee


20.6.1	Each of the provisions of this clause 20 is separate and severable from the others, and if at any time one or more such provisions is or becomes illegal, invalid or unenforceable (either wholly or to any extent), the legality, validity or enforceability of the remaining provisions (or the same provision to any other extent) will not be affected or impaired.


20.6.2	The rights of the Landlord under any provision of this clause 20 are without prejudice to its rights under any other provision of it.


20.6.3	The obligations of the Guarantor under any provision of this clause 20 are without prejudice to its obligations under any other provision of it or under any other security.


20.6.4	The provisions of this clause 20 will enure for the benefit of the Landlord and its successors in title without any need for express assignment.


21.	SUB-GUARANTEE


21.1	Sub-guarantee


21.1.1	The obligations in this clause 21:


(a)	are made in contemplation of and will apply in relation to an authorised guarantee agreement which may be entered into by the Tenant if and when it assigns this Lease (the "Future AGA" );


(b)	will have effect immediately upon the Future AGA taking effect; and


(c)	will not prevent the Landlord requiring the Guarantor to enter into a further sub-guarantee of the obligations of the Tenant in the Future AGA when the Future AGA is entered into.


21.1.2	The Guarantor:


(a)	irrevocably and unconditionally guarantees to the Landlord that the Tenant shall duly and punctually comply with its obligations in the Future AGA; and


(b)	covenants with the Landlord that in any case of default by the Tenant, the Guarantor shall comply with the obligations referred to in clause 21.1.1(a) and shall, on demand, make good to the Landlord on a full indemnity basis all losses, costs, damages and expenses caused to the Landlord by any such default.


21.1.3	The Guarantor's liability under this clause 21 shall be as principal debtor and not merely as surety.


21.1.4	In this clause 21 references to the "Tenant" are to the person who named as the second party to this deed only.


21.1.5	The provisions of clauses 20.3 to 20.6 (inclusive) shall apply to this clause 21 as if they were set out in full in this clause 21 except that:


(a)	in their application to this clause 21 references in clauses 20.3 to 20.6 (inclusive):


(i)	to clause 20 shall be read as references to this clause 21;


(ii)	to the Tenant in clauses 20.3.15 and 20.3.16 shall be read as references to the assignee of the Tenant; and


(iii)	to the date of this deed shall be read as references to the date of the assignment to the assignee of the Tenant;


(b)	in its application to this clause 21, clause 20.3.15 shall be without prejudice to clauses 21.3 and 21.4 (instead of clause 20.2); and


(c)	clause 20.5 shall not apply to this clause 21.


21.2	Supplemental documents


21.2.1	Clause 21.2.2 applies where the Tenant enters (or may be required by the Landlord to enter) into any document which is supplemental to this Lease for the purpose of consenting to the assignee entering into such document and confirming that (subject to section 18 of the 1995 Act) all the obligations of the Tenant under the Future AGA will remain in full force and effect.


21.2.2	The Guarantor shall enter into such supplemental document for purpose of confirming that (subject to section 18 of the 1995 Act) its obligations under this sub-guarantee will remain in full force and effect.


21.3	Obligation to join in new lease accepted by the Tenant

If the Tenant takes a new lease pursuant to an obligation on its part in the Future AGA (such new lease being on the terms required by the Future AGA) the Guarantor shall enter into that new lease as guarantor. The Guarantor shall execute and deliver the counterpart of that new lease to the Landlord within one month of the Landlord having required the Tenant to take the new lease.


21.4	Obligation to take new lease


21.4.1	If the liability under this Lease of the assignee is disclaimed the Guarantor shall take a new lease of the Premises from the Landlord if required to do so by the Landlord within the relevant time period:


(a)	if the Tenant (having been required to do so pursuant to the Future AGA) fails to take the new lease within the time limit stated in the Future AGA; or


(b)	if the Landlord has not required the Tenant to take a new lease pursuant to the Future AGA,

and the relevant time period in relation to paragraph (a) is 14 months after the Landlord has received notice of the disclaimer of the assignee, and in relation to paragraph (b) is 12 months after the Landlord has received that notice.


21.4.2	If the Guarantor is required to accept a new lease as tenant, the new lease will be on the terms mentioned in clauses 20.2.3 and 20.2.4 except that it will have no provision for a guarantor to be party to it. The Guarantor shall execute and deliver a counterpart of the new lease to the Landlord within one month of the Landlord having required the Guarantor to take such new lease.


21.4.3	The Guarantor shall pay to the Landlord on demand all legal and other costs and expenses (on an indemnity basis) and a sum equal to VAT on them which may be payable in connection with the grant of a new lease pursuant to this clause 21.4.


21.5	Modification of liability

If any provision, or any part of a provision, of the Future AGA has the effect of causing it not to be an authorised guarantee agreement within the meaning of the Landlord and Tenant (Covenants) Act 1995 to any extent and that provision or part of it is treated as

having been modified (or if necessary omitted) to the extent needed to avoid that effect, the liability of the Guarantor under this clause 21 will be modified accordingly.

This document has been executed as a deed and is delivered on the date stated at the beginning of it.



Executed as a deed by Gary Felee
	and Phillip Rodge

As attorneys for St. Jame's Place UK Plc		Signature
under a Power of Attorney dated
22 August 2015 in the presence of a witness		Name	/s/Gary Felee
			as attorney for St James's Place
			UK Plc

Witness signature	/s/O.P. Munday
Witness Name	Jamie Munday
Witness Address	1st Floor
Witness Occupation	16 New Burlington Place
	London	Signature
	W1S 2HX
		Name	/s/Phillip Rodge
			as attorney for St James's Place
			UK Plc

Witness signature	/s/O.P. Munday
Witness Name	Jamie Munday
Witness Address	1st Floor
Witness Occupation	16 New Burlington Place
	London
	W1S 2HX

Executed as a deed by Coty Services UK Limited
Acting by


		Director

		Director/Secretary

ALM/UKDP/79114/202547/UKM/72533515.3

Exhibit 10.29

EMPLOYMENT AGREEMENT

(Hereinafter the “Agreement”)

Between

Coty Geneva SA Versoix

A company incorporated under the laws of Switzerland

with its registered office at Chemin de la Papeterie 1, 1290 Versoix, Switzerland

Hereinafter: the "Company"

And

Esi Eggleston Bracey ,

domiciled at ###### ###### ####### ##, #### #######, ######, ######

Hereinafter: the "Employee"

PREAMBLE 1

1. EMPLOYMENT, DESCRIPTION OF SCOPE 1

2. ADDITIONAL RESPONSIBILITIES, DIRECTORSHIPS, OFFICES 2

3. COMPENSATION 2

4. BENEFITS 3

5. TERMINATION 4

6. INVENTIONS, INDUSTRIAL RIGHTS 5

7. CODE OF BUSINESS CONDUCT, CONFIDENTIALITY 6

8. COMPETITION RESTRICTIONS 6

9. GENERAL 7



[initials]	[initials]

Preamble

The Company, Coty Geneva SA Versoix is a direct or indirect subsidiary of Coty Inc., ("Coty") which has its head offices at 2 Park Avenue, New York, NY 10016.

Now therefore, the Parties agreed to the following:


1.	Employment, Description of Scope

1.1

The Employee will be employed as Manager (“Directeur”) and in such quality he shall be subordinated to the Board of Directors of the Company to which he will regularly report. The Employee may also be requested, from time to time, to carry out special tasks in the framework of the operations of Coty, which request shall not affect his position as Manager of the Company which shall prevail over any other activities.

The Employee shall start employment with the Company as of the date of closing of the transaction between Procter & Gamble and Coty regarding the cession of certain beauty businesses by Procter & Gamble to Coty.

Seniority from any prior and continuous employment within Coty or Procter & Gamble is recognized by the Company for purposes of this position. Based on this recognition, the Employee’s seniority date shall be deemed to be September 9, 1991.

The employment is on full-time permanent basis and shall be for an indefinite period.

The Employee confirms that he is not bound by any non-competition or non-solicitation restrictions or other agreement preventing the Employee from entering into this Agreement.


1.2	The Employee, in particular, shall act as Designate Executive Vice President, Coty and President of Coty Color and Body Care , and as a member of Coty Executive Committee. Without prejudice of sect. 1.1 the Employee shall also report to the Chief Executive Officer, Coty.

The Company reserves the right to transfer the Employee to another position corresponding to the Employee's professional qualifications.

In performing his Employee's duties, the Employee shall follow the Company and Coty policies and comply with all local laws, the articles of association, the by-laws of the Company and resolutions of the Company's Board.


1.3	The Employee's authority to represent the Company is governed by the by-laws of the Company, as well as specific directions given to the Employee by the Company's Board, and by the Chief Executive Officer, Coty. The Company retains the right to appoint other representatives in addition to the Employee.


1.4	The Employee will coordinate his activities with the appropriate divisions, departments and companies within Coty, as designated by his business leader. The Employee may also be directed to report to members of Coty in addition to normal reporting lines existing within the Company.

If there are conflicting instructions at Company and Coty level, the Employee will contact the next higher level within Coty in order to have the conflict resolved.

All personnel matters with respect to the Employee are exclusively handled by the Company which will coordinate internally with Coty.


1.5	The place of employment shall be chemin de la Papeterie 1, 1290 Versoix, Switzerland - provided, however, that within the normal course of his duties the Employee may be required to travel extensively and that the Employee may be required to relocate in accordance with the Company's needs.



	1
[initials]	[initials]

2 Additional Responsibilities, Directorships

2.1

The Employee may, however, be requested by the Company to take additional responsibilities such as directorships on the Boards of Companies belonging to Coty. The Employee agrees to accept such additional responsibilities without additional compensation except for nominal compensation as may be required under local laws. Those additional responsibilities, however, will not affect or alter his position as Manager of the Company (as set in sect. 1.1) which is prevalent.

2.2

Coty may, without an obligation to do so, offer or encourage the Employee to accept a position in an outside organization such as an industrial association. In such case, the Employee will represent the interests of Coty within that company or organization in addition to his obligations under the present Employment Agreement. The Employee agrees to accept such additional responsibilities without additional compensation except for nominal compensation as may be required under local laws. Those additional responsibilities, however, will not affect or alter his position as Manager of the Company (as set in sect. 1.1) which is prevalent.

Should a conflict arise between the Employee's obligations to the Company and his other directorship(s) the Employee will advise Coty accordingly.


2.3	In performing his duties as a director or representative, the Employee will report to Coty or such person as Coty may direct.

2.4

Unless provided otherwise in writing, the Employee shall be obliged to and hereby agrees to resign from any and all directorships, other offices or positions which he held with respect to or on behalf of any Coty Group company (as outlined in paragraph 2.2 above) whenever so directed by the Company and/or Coty, and immediately upon termination of the employment, and the Employee hereby waives any right of compensation or retention in connection with such directorship, other offices or positions.

Any share held by the Employee in the affiliates of Coty shall be transferred immediately at Coty's or the Company's direction, and as the Company or Coty directs and in any event upon termination of Employee's work duties.


2.5	The Employee shall devote all of his working hours and efforts to the Company’s business and shall not, without the prior written approval of the Company and Coty Chief Executive Officer:


(i)	hold any employment or business position outside the Company and Coty, irrespective of whether any remuneration is paid; or


(ii)	directly or indirectly engage in any other business activity or otherwise conduct activities which may conflict with or may have a detrimental effect on the Employee’s obligations to or work for the Company or for Coty, or which may adversely affect their reputation or business.

3 Compensation

3.1

The Employee shall receive a basic annual gross salary of CHF 588’500 (Five hundred and eighty eight thousand and five hundreds Swiss francs) which shall be payable in 13 installments according to the Company’s local payroll practice and subject to the deduction of statutory charges, such as tax, social security, and health insurance (where applicable). The annual gross salary includes a participation to the Employee representation costs as applicable in the canton of Geneva.

The Company may decide to change the intervals of payment by introducing weekly or bi-weekly payment or in any other intervals, at the Company's discretion and if permitted by local laws. The annual salary shall be reviewed in regular annual intervals.

The remuneration of any other special assignment, position or function within or outside the Coty Group, for example, serving as a member of the board of directors of any group company including the Company or on an industry panel as contemplated in Article 2 above, shall be deemed to be already included in the salary for the ordinary activity which has a prevailing nature.



	2
[initials]	[initials]

On an exceptional basis, the Employee will benefit from a housing allowance of 148.747 CHF in net considering you will spend 12 months in Geneva from the starting date of this new employment. If you spend less than 12 months, this amount will be prorated. If you decide to leave the Company in the first 2 years of the starting date of this new employment contract, you will have to reimburse 100% of this allowance to the Company. You also confirm that you will move at the latest on 31 ^st of August 2017 to New-York office (USA) under a local employment contract and the Company international transfer policy.

The Employee acknowledges that in light of his managing position (“cadre dirigeant”) and of the high level of his remuneration the salary payable under this article includes overtime (“heures supplémentaires”) and excess overtime (“travail supplémentaire”) which may be incurred from time to time by the employee and is inclusive of any additional compensation in any form due in consideration for such overtime or excess overtime under local laws.


3.2	In addition to annual base salary the Employee shall be part of the Coty Annual Performance Plan ("APP") with a Target Award at 70 % of Employee's basic gross annual salary. Details of the APP shall be communicated in separate documents.

The Employee shall participate in the Coty APP as outlined therein. The Employee understands that the Coty APP is subject to review, amendment and termination by Coty in its sole discretion at any time. The Employee shall have no vested right or expectancy to benefits which are modified or deleted in accordance with the APP, and the amount, calculation and proportion of his award is not guaranteed by Coty or any entity of Coty, except as provided in the APP.

In determining the Employee's award, if any, in the APP, Coty may consider the business results of the Company as well as other appropriate entities within Coty as provided in the APP.

The amounts paid under the Coty APP are not an element of the base salary; they will however be included in the yearly salary certificate (“certificat de salaire”).

3.3

The Employee shall also participate to Coty Long Term Incentive Plan (“ELTIP”) as detailed in the Terms Sheet. The Employee understands that the ELTIP is subject to review, amendment and termination by Coty in its sole discretion at any time. The Employee shall have no vested right or expectancy to benefits which are modified or deleted in accordance with the plans, and the amount, calculation and proportion of his award is not guaranteed by Coty or any entity of Coty, except as provided in the ELTIP.


3.4	The Employee understands and acknowledges that the compensation described under section 3 has been developed in view of a global role that could equally be executed from other major cities in the world. Such Compensation shall not be adjusted if the role is relocated to another city in the world.

4 Benefits


4.1	The Employee participates in the Swiss Company Pension Plan. Information regarding the Swiss Company Pension Plan will be provided to the Employee.


4.2	The Employee will participate in such of the Company's Social Welfare Programs (health, life, disability) in the same manner and to the same extent as other employees similarly situated.

In case of death, illness or accident the Company will continue to pay his salary according to the provisions of the Swiss Code of obligations (“CO”) (Articles 338, 324a and 324b CO).


4.3	The Employee shall be entitled to an annual vacation of 25 work days (work days being defined as the regular office work days of the Company) and three floating days. Any vacation days which are not taken before the end of April of the following year, regardless of reason not taken, shall be forfeited without compensation.

In planning vacation the Employee will duly consider the business requirements of the Company and will coordinate vacation days with his immediate Supervisor.



	3
[initials]	[initials]

4.4

The Employee is entitled to a company car in accordance with the Company's local policies. The Employee may alternatively elect to receive a cash allowance. To the extent that the Employee is entitled to use the company car for private purposes or to the extent required under local law the use of the company car may be subject to taxes payable by the Employee. In particular, the amount corresponding to the Employee’s right to use the company car for private purposes shall be included in the yearly salary certificate. The company car must be returned to the Company without delay upon termination of the Employee's work duties or upon specific request of the Company.

Any work related travel shall be subject to the Coty Travel Policy. All travel expenses must be properly accounted for and documented and shall be filed for reimbursement without delay. Any request for reimbursement shall be subject to the provisions of the Coty Travel Policy, and must first be approved by the Employee's immediate supervisor.


4.5	The Company acknowledges that this position is part of a number of international roles that require the job holder to be internationally mobile throughout his career. As such, the employee will be eligible to the benefits of the Company International Relocation Policy which terms may change from time to time under the sole discretion of the company:

The Company will provide reasonable assistance in securing the necessary visas and work permits for the Employee and his family. The Company will also provide reasonable assistance in filing taxes in Switzerland and/or other countries where the Employee is performing his activities.

The Employee will benefit for him and his family from an international medical coverage and under certain circumstances, the employees might be eligible to the Company International Retirement plan.

The employee will also be eligible to schooling reimbursement in Geneva.

4.6

Any other benefits, if actually received by the Employee during the term of employment, but which are not expressly stated in this Contract, shall be considered discretionary and may be withdrawn by the Company without any obligation to compensate the Employee for the loss thereof, except that the Employee is eligible for benefits required by mandatory applicable law provided that any such benefits shall not duplicate benefits already provided under this New Agreement, which may be adjusted accordingly in such an instance to avoid any duplicative payment.

4.7

The employee will benefit from the provisions of the agreement signed between Coty and P&G (the Transaction) regarding the Total Direct Compensation and Benefits during the Continuation Period as defined in the Transaction. As such, Coty will analyze the Total Direct Compensation and Benefits offered to the Employee with the one in place immediately prior to the employment with Coty and pay any shortfall that might result from that analysis.

5 Termination

5.1

Either party may terminate this Agreement with six-month written notice to the other party. Should the Company terminate the employment without cause, with the exception of a transfer of the Employee to another direct or indirect affiliate or sister company of Coty, the Company shall pay the Employee, in exchange of a full release and settlement, a severance amounting to twelve months base gross salary, inclusive of any amounts due under the applicable labor laws and collective agreements and subject to all applicable withholdings. During the first 2 years of your employment contract, the severance will be no less that the severance calculated using P&G rules and your current compensation prior to starting your employment with Coty.


5.2	The Company may terminate this Agreement for cause without notice period immediately and without liability for compensation or damages if the Employee commits a material or persistent breach of any of the provisions of this Agreement or is guilty of any grave misconduct or willful neglect in the discharge of his duties, thereby breaking the Company’s trust in the Employee.



	4
[initials]	[initials]


5.3	The Company shall also have the right to dismiss the Employee with immediate effect if he has willfully grossly and continuously neglected his obligations to the Company or for any other just cause ( justes motifs ) under applicable law. In that case the Employee shall be no longer entitled to any indemnity and compensation unless explicitly set forth by mandatory provisions of law.

5.4

Upon terminating his employment for any reason or whenever so directed by the Company or Coty, the Employee will return all work materials and any other material or property in any form, electronic or otherwise belonging to the Company or any company in the Coty Group, which is in the Employees’ possession, custody or control. In particular, the Employee shall not keep any documents, papers, drawings, plans, diskettes, tapes, data, manuals, forms, notes, tables, calculations, reports, or other items which Employee has received, or in or on which Employee has stored or recorded Company or Coty data or information, in the course of his employment as well as all copies and any material into which any of the foregoing has been incorporated and any other Company or Coty property which may be in his possession or control, to the Company or to such entity as Coty may direct, without right of retention. The Employee shall also provide to the Company at the latest upon termination of employment a list of all passwords and other codes used by the Employee in the IT-system of the Company.

5.5

Notwithstanding the notice period, the Company shall have the right to relieve the Employee from his responsibilities and access to the workplace and to work facilities by putting the Employee on leave during the entire notice period or part thereof. In such event, the Employee’s rights and obligations under this Contract shall nonetheless remain in force and he shall consequently observe all provisions of this Contract including those relating to confidentiality, competition restriction etc. Also in this case the Employee shall remain bound to all duties under this Agreement including those relating to confidentiality, competition restriction, etc.


5.6	The Employee agrees that the Company may set off against any claim the Employee may have against the Company any claim that the Company may have against the Employee, for which payment is due, to the extent allowed under applicable law.

6 Inventions, Industrial Rights

6.1

The Employee shall disclose promptly to the Company any invention, patentable or otherwise, which during the term of employment and within one (1) year thereafter previously has been or may be hereafter conceived, developed or perfected by the Employee, either alone or jointly with another or others, and either during or outside employment, and which pertains to any activity, business, process, equipment, material, product, system or service, in which the Company has any direct or indirect interest whatsoever.

6.2

All right, title and interest in and to such inventions shall belong to the company which has employed the Employee at the time the invention was made, unless statutory local law provides otherwise. To the extent that statutory law applicable to such inventions provides for mandatory compensation, the Company and Coty are entitled to consider the payment of such separate compensation in determining the Employee's share in any bonus scheme, such as the Coty Long-Term Incentive Plan or the Coty APP.

6.3

The provisions of the preceding paragraph shall apply similarly to any other industrial or intellectual property rights which the Employee creates as part of his employment with any entity of Coty. Local laws notwithstanding, the Employee will offer the exclusive right to use the invention and/or right to Coty. The Employee will reasonably cooperate with any Coty entity in any filings it makes regarding such inventions and/or rights.

6.4

The right to use any software or other computer programs prepared or amended by the Employee shall be transferred exclusively to the Company. The right to use shall be unlimited and includes the right to reproduce, amend or change the software or to transfer such rights to third parties. Compensation for the transfer of these rights shall be included in and covered by the Employee's base salary. The Employee expressly waives any right to receive the original or copies, including author's copies, of such software or programs.



	5
[initials]	[initials]


6.5	The provisions of this article shall survive the term of this Agreement and shall be binding upon the Employee's executors, administrators or assigns, unless waived in writing by the Company or Coty.

7 Code of Business Conduct, Confidentiality

7.1

The Employee will comply with Coty Code of Business Conduct, a copy of which has been provided to the Employee. The Employee shall not disclose, directly or indirectly, during or any time following employment, to others or use for Employee's own benefit or for the benefit of others, and agrees to keep strictly confidential all information concerning the Company or any other entity within Coty unless such use or disclosure has been approved in advance and in writing by the Company or Coty.

This duty of confidentiality applies in addition to all applicable laws regarding the protection of trade secrets and includes, but is not limited to, any internal papers and documents, business secrets or know-how, proprietary information, business or marketing plans, cost calculations, financial or other data, profit plans, inventions, discoveries, processes, drawings, notes, customer or supplier information and any other internal information which the Employee has received, used, observed, been exposed to or had access to in the course of his employment with an entity of Coty.

7.2

If the Employee contravenes section 7, any relevant Coty Group company injured by the breach shall be entitled to compensation for damages including loss of profits ( gains manqués ) arising from such breach from the Employee in accordance with the applicable law, in addition to any other damages and remedies available at law. Any Coty Group Company injured by such conduct may bring an action to enforce such remedies on its own behalf.

8 Competition Restrictions

8.1

As the Employee will know all the clients and business secrets of the Company, during the term of the employment and for two (2) years after the termination of the employment by the employee’s unilateral termination of her employment, the Employee may not, directly or indirectly, engage in or conduct any business or services in competition with the Company or Coty in the beauty industry, including accept employment with or acquiring any material participating interest in any company or legal entity conducting such a competing Beauty business.

8.2

During the term of the employment and for two (2) years after the termination of the employment the Employee also agrees that he may not, directly or indirectly, for his own or any other person’s benefit solicit or encourage one or more of the Company’s or Coty Group’s customers or prospective customers or suppliers with whom the Employee has had material dealings within the 24 months prior to termination of employment, to cease business with the Company or with Coty, or, entirely or partly, transfer their custom to a business which is in competition with the Company or with Coty.


8.3	Furthermore, the Employee may not during the term of the employment and for two (2) years after the termination of the employment, directly or indirectly, encourage one or more of the Company’s or Coty’s employees with whom he has had material dealings within the 24 months prior to termination of employment to leave their employment with the Company or Coty.

8.4

In the event of any single breach of this non-competition and non-solicitation clause or of the confidentiality clause of article 7 above, the Employee shall pay to the Company a penalty of CHF 300’000 per occurrence. Furthermore, the Company shall have the right to be fully indemnified and held harmless for all losses exceeding the amount of the penalty. The payment of the penalty shall in no way relieve the Employee from his non-competition, non-solicitation and confidentiality obligations.

8.5

In addition, the Company shall have the right to request the immediate discontinuation or to prevent any repetition of a breach by the Employee of the present non-competition and non-solicitation clause or of the confidentiality obligation stated in article 7 above by means of an injunction in accordance with article 340 lit b paragraph 3 of the Swiss Code of Obligations or of any other appropriate legal remedies.



	6
[initials]	[initials]


8.6	These competition restrictions shall be valid and apply for any country where the Employee has conducted directly or indirectly business on behalf of Coty or Procter & Gamble at any time during the two years immediately preceding the end of the employment contract.

9 General


9.1	This Agreement relates only to the Employee's employment with the Company. Nothing within this Agreement shall be construed as to constitute an Employment Agreement with Coty or any of its entities, other than the Company.

This Agreement, including the documents expressly mentioned herein along with the executed Terms Sheet attached to this Agreement constitutes the full agreement; any verbal or prior agreements shall be replaced by this Agreement. Any amendments to this Agreement, including a change of this sentence, must be made in writing only and signed by the Employee and the Company. Any verbal assurances or agreements are not binding unless reduced to written form and signed by both parties.


9.2	This Agreement will come into force upon the closing of the transaction between Procter & Gamble and Coty regarding the cession of certain beauty businesses by Procter & Gamble to Coty. Should the transaction not close, this Agreement will be deemed void.


9.3	The provisions of this Agreement shall be subject to the laws of Switzerland

The place of jurisdiction for all disputes arising between the parties in relation to the interpretation or performance of this Agreement shall be determined in accordance with Art. 34 of the Swiss Code of Civil Proceeding provided however that as to any claims or causes of action against Coty, the appropriate State and Federal courts located in New York, New York, shall have exclusive jurisdiction and venue and the parties hereby consent to such exclusive jurisdiction and venue.

Unless otherwise prohibited by local laws, the parties agree that any damages shall be limited to actual damages and shall not include any special, punitive, consequential or similar damages.


9.4	Any grievance relating to employment should be referred to Employee's Department Head.

Headings used in this Agreement are meant to facilitate reading this Agreement and do not serve as definitions or interpretation of the respective provisions.

If one or more of the provisions of this Agreement is or becomes wholly or partly invalid or unenforceable, or if this Agreement fails to cover an issue which the parties would have covered had they thought of it at the time of the Agreement, such invalidity, unenforceability or missing provision shall not affect the validity of the remaining provisions of this Agreement. Such invalid, unenforceable or missing provision shall be replaced by a valid provision which best reflects the intentions of the parties to this Agreement in accordance with the valid provisions of this Agreement, applicable laws and the Company and Coty Policies referred to in this Agreement.

No provision of this Agreement shall be deemed waived and no breach shall be excused unless such waiver or consent is in writing and signed by the party claimed to have waived or consented.


9.5	This Agreement is made in the English language which the Employee perfectly understands along with a French translation to which both parties have agreed in the event that the French language version might be required for any official purpose. Should a discrepancy exist between the English and the French versions, the English version shall prevail for all official purpose.



	7
[initials]	[initials]

Any references to the masculine gender herein are for convenience only.

Geneva, Switzerland, October 12, 2015



/s/Rebeca Pascual		/s/Sebastien Froidefond
Rebeca Pascual		Sebastien Froidefond
Human Resources Director		Senior Vice President, Human Resources
Coty Geneva SA Versoix		Coty Inc.

/s/Claudia Laeng		/s/Bart Becht
Claudia Laeng		Bart Becht
HR Payroll and Administration Manager		Chief Executive Officer
Coty Geneva SA Versoix		Coty Inc.

/s/Esi Eggleston Bracey
Esi Eggleston Bracey
The Employee



	8

Exhibit 10.30

EMPLOYMENT AGREEMENT

(Hereinafter the “Agreement”)

Between

Coty Geneva SA Versoix

A company incorporated under the laws of Switzerland

with its registered office at Chemin de la Papeterie 1, 1290 Versoix, Switzerland

Hereinafter: the "Company"

And

Sylvie Moreau-Lepeigneul ,

domiciled at ##, ###### ### #####, #### ######, ######, ######

Hereinafter: the "Employee"

PREAMBLE 1

1. EMPLOYMENT, DESCRIPTION OF SCOPE 1

2. ADDITIONAL RESPONSIBILITIES, DIRECTORSHIPS, OFFICES 2

3. COMPENSATION 2

4. BENEFITS 3

5. TERMINATION 4

6. INVENTIONS, INDUSTRIAL RIGHTS 5

7. CODE OF BUSINESS CONDUCT, CONFIDENTIALITY 6

8. COMPETITION RESTRICTIONS 6

9. GENERAL 7

Preamble



[initials]	[initials]

The Company, Coty Geneva SA Versoix is a direct or indirect subsidiary of Coty Inc., ("Coty") which has its head offices at 2 Park Avenue, New York, NY 10016.

Now therefore, the Parties agreed to the following:


1.	Employment, Description of Scope

1.1

The employment is on full-time permanent basis and shall be for an indefinite period.

The Employee confirms that he is not bound by any non-competition or non-solicitation restrictions or other agreement preventing the Employee from entering into this Agreement.


1.2	The Employee, in particular, shall act as Designate Executive Vice President, Coty and President of Coty Professional Hair & Nail Care , and as a member of Coty Executive Committee. Without prejudice of sect. 1.1 the Employee shall also report to the Chief Executive Officer, Coty.

The Company reserves the right to transfer the Employee to another position corresponding to the Employee's professional qualifications.


1.3	The Employee's authority to represent the Company is governed by the by-laws of the Company, as well as specific directions given to the Employee by the Company's Board, and by the Chief Executive Officer, Coty. The Company retains the right to appoint other representatives in addition to the Employee.


1.4	The Employee will coordinate his activities with the appropriate divisions, departments and companies within Coty, as designated by his business leader. The Employee may also be directed to report to members of Coty in addition to normal reporting lines existing within the Company.

If there are conflicting instructions at Company and Coty level, the Employee will contact the next higher level within Coty in order to have the conflict resolved.

All personnel matters with respect to the Employee are exclusively handled by the Company which will coordinate internally with Coty.


1.5	The place of employment shall be chemin de la Papeterie 1, 1290 Versoix, Switzerland - provided, however, that within the normal course of his duties the Employee may be required to travel extensively and that the Employee may be required to relocate in accordance with the Company's needs.



	1
[initials]	[initials]

2. Additional Responsibilities, Directorships

2.1

2.2

Should a conflict arise between the Employee's obligations to the Company and his other directorship(s) the Employee will advise Coty accordingly.


2.3	In performing his duties as a director or representative, the Employee will report to Coty or such person as Coty may direct.

2.4


2.5	The Employee shall devote all of his working hours and efforts to the Company’s business and shall not, without the prior written approval of the Company and Coty Chief Executive Officer:


(i)	hold any employment or business position outside the Company and Coty, irrespective of whether any remuneration is paid; or


(ii)	directly or indirectly engage in any other business activity or otherwise conduct activities which may conflict with or may have a detrimental effect on the Employee’s obligations to or work for the Company or for Coty, or which may adversely affect their reputation or business.

3 Compensation

3.1

The Employee shall receive a basic annual gross salary of CHF 550’000 (Five hundred and fifty thousands Swiss francs) which shall be payable in 13 installments according to the Company’s local payroll practice and subject to the deduction of statutory charges, such as tax, social security, and health insurance (where applicable). The annual gross salary includes a participation to the Employee representation costs as applicable in the canton of Geneva.



	2
[initials]	[initials]


3.2	In addition to annual base salary the Employee shall be part of the Coty Annual Performance Plan ("APP") with a Target Award at 70 % of Employee's basic gross annual salary. Details of the APP shall be communicated in separate documents.

In determining the Employee's award, if any, in the APP, Coty may consider the business results of the Company as well as other appropriate entities within Coty as provided in the APP.

The amounts paid under the Coty APP are not an element of the base salary; they will however be included in the yearly salary certificate (“certificat de salaire”).

3.3


3.4	The Employee understands and acknowledges that the compensation described under section 3 has been developed in view of a global role that could equally be executed from other major cities in the world. Such Compensation shall not be adjusted if the role is relocated to another city in the world.

4 Benefits


4.1	The Employee participates in the Swiss Company Pension Plan. Information regarding the Swiss Company Pension Plan will be provided to the Employee.


4.2	The Employee will participate in such of the Company's Social Welfare Programs (health, life, disability) in the same manner and to the same extent as other employees similarly situated.

In case of death, illness or accident the Company will continue to pay his salary according to the provisions of the Swiss Code of obligations (“CO”) (Articles 338, 324a and 324b CO).


4.3	The Employee shall be entitled to an annual vacation of 25 work days (work days being defined as the regular office work days of the Company) and three floating days. Any vacation days which are not taken before the end of April of the following year, regardless of reason not taken, shall be forfeited without compensation.

In planning vacation the Employee will duly consider the business requirements of the Company and will coordinate vacation days with his immediate Supervisor.

4.4



	3
[initials]	[initials]


4.5	The Company acknowledges that this position is part of a number of international roles that require the job holder to be internationally mobile throughout his career. As such, the employee will be eligible to the benefits of the Company International Relocation Policy which terms may change from time to time under the sole discretion of the company:

The Employee will benefit for him and his family from an international medical coverage and under certain circumstances, the employees might be eligible to the Company International Retirement plan.

The employee will also be eligible to schooling reimbursement.

4.6

4.7

5 Termination

5.1


5.2	The Company may terminate this Agreement for cause without notice period immediately and without liability for compensation or damages if the Employee commits a material or persistent breach of any of the provisions of this Agreement or is guilty of any grave misconduct or willful neglect in the discharge of his duties, thereby breaking the Company’s trust in the Employee.


5.3	The Company shall also have the right to dismiss the Employee with immediate effect if he has willfully grossly and continuously neglected his obligations to the Company or for any other just cause ( justes motifs ) under applicable law. In that case the Employee shall be no longer entitled to any indemnity and compensation unless explicitly set forth by mandatory provisions of law.

5.4



	4
[initials]	[initials]

which Employee has received, or in or on which Employee has stored or recorded Company or Coty data or information, in the course of his employment as well as all copies and any material into which any of the foregoing has been incorporated and any other Company or Coty property which may be in his possession or control, to the Company or to such entity as Coty may direct, without right of retention. The Employee shall also provide to the Company at the latest upon termination of employment a list of all passwords and other codes used by the Employee in the IT-system of the Company.



	5
[initials]	[initials]

5.5


5.6	The Employee agrees that the Company may set off against any claim the Employee may have against the Company any claim that the Company may have against the Employee, for which payment is due, to the extent allowed under applicable law.

6 Inventions, Industrial Rights

6.1

6.2

6.3

6.4


6.5	The provisions of this article shall survive the term of this Agreement and shall be binding upon the Employee's executors, administrators or assigns, unless waived in writing by the Company or Coty.

7 Code of Business Conduct, Confidentiality


7.1	The Employee will comply with Coty Code of Business Conduct, a copy of which has been provided to the Employee.



	6
[initials]	[initials]


7.2	The Employee shall not disclose, directly or indirectly, during or any time following employment, to others or use for Employee's own benefit or for the benefit of others, and agrees to keep strictly confidential all information concerning the Company or any other entity within Coty unless such use or disclosure has been approved in advance and in writing by the Company or Coty.

7.3

8 Competition Restrictions

8.1

8.2


8.3	Furthermore, the Employee may not during the term of the employment and for two (2) years after the termination of the employment, directly or indirectly, encourage one or more of the Company’s or Coty’s employees with whom he has had material dealings within the 24 months prior to termination of employment to leave their employment with the Company or Coty.

8.4

8.5


8.6	These competition restrictions shall be valid and apply for any country where the Employee has conducted directly or indirectly business on behalf of Coty or Procter & Gamble at any time during the two years immediately preceding the end of the employment contract.



	7
[initials]	[initials]

9 General


9.1	This Agreement relates only to the Employee's employment with the Company. Nothing within this Agreement shall be construed as to constitute an Employment Agreement with Coty or any of its entities, other than the Company.


9.2	This Agreement will come into force upon the closing of the transaction between Procter & Gamble and Coty regarding the cession of certain beauty businesses by Procter & Gamble to Coty. Should the transaction not close, this Agreement will be deemed void.


9.3	The provisions of this Agreement shall be subject to the laws of Switzerland

Unless otherwise prohibited by local laws, the parties agree that any damages shall be limited to actual damages and shall not include any special, punitive, consequential or similar damages.


9.4	Any grievance relating to employment should be referred to Employee's Department Head.

Headings used in this Agreement are meant to facilitate reading this Agreement and do not serve as definitions or interpretation of the respective provisions.

No provision of this Agreement shall be deemed waived and no breach shall be excused unless such waiver or consent is in writing and signed by the party claimed to have waived or consented.


9.5	This Agreement is made in the English language which the Employee perfectly understands along with a French translation to which both parties have agreed in the event that the French language version might be required for any official purpose. Should a discrepancy exist between the English and the French versions, the English version shall prevail for all official purpose.



	8
[initials]	[initials]

Any references to the masculine gender herein are for convenience only.

Genève, Switzerland, October 12, 2015



/s/Rebeca Pascual		/s/Sebastien Froidefond
Rebeca Pascual		Sebastien Froidefond
Human Resources Director		Senior Vice President, Human Resources
Coty Geneva SA Versoix		Coty Inc.

/s/Claudia Laeng		/s/Bart Becht
Claudia Laeng		Bart Becht
HR Payroll and Administration Manager		Chief Executive Officer
Coty Geneva SA Versoix		Coty Inc.

/s/ Sylvie Moreau-Lepeigneul
Sylvie Moreau-Lepeigneul
The Employee



	9
	[initials]

Exhibit 10.31



CONTRAT DE TRAVAIL (ci-après, le « Contrat ») ENTRE Coty SAS, société par actions simplifiée au capital de 22.905.465 €, dont le siège social est situé 14, rue du 4 septembre 75002 Paris (France), immatriculée au RCS de Paris sous le numéro 394 710 552, représentée par Monsieur Géraud-Marie Lacassagne, en sa qualité de Président. Ci-après dénommée la « Société » ET Monsieur Edgar Huber , né le 21 janvier 1962, de nationalité autrichienne, résidant #### ######### ##### #######, ## #####, Etats-Unis et dont le numéro de sécurité sociale est #############-##. Ci-après dénommé le «Salarié». La Société et le Salarié étant ci-après dénommés collectivement les «Parties» et individuellement une «Partie». Préambule La Société est une filiale directe ou indirecte de Coty Inc. («Coty»), dont le siège social est situé 2 Park Avenue, New York, NY 10016 (Etats-Unis). Les Parties ont convenu et arrêté ce qui suit : ARTICLE 1- Poste, Fonctions 1.1 Au plus tard à compter du 2 novembre 2015 (la « Date d’Effet ») la Société engage le Salarié en qualité de Transformation Leader Groupe V, coefficient 880, conformément aux dispositions prévues par la législation en vigueur et par la convention collective des industries chimiques (ci-après dénommée la «Convention Collective»). Le salarié sera nommé Vice-Président Exécutif et Président, Coty Fragrances à la conclusion de la transaction entre Procter & Gamble et Coty concernant la cession de certaines activités de Procter & Gamble à Coty. Il deviendra, à cette date, membre du Comité Exécutif de Coty. 1.2 Les Parties reconnaissent expressément qu’il pourra également être demandé au Salarié d’effectuer, occasionnellement, certaines tâches spécifiques dans le cadre	EMPLOYMENT AGREEMENT (hereinafter, the “Agreement”) BETWEEN Coty SAS , a French Simplified Joint Stock company with a share capital of €22,905,465, whose head offices is located at 14, rue du 4 septembre 75002 Paris (France), incorporated with the Paris Commercial and Companies Registry under number 394 710 552, represented by Mr. Géraud-Marie Lacassagne, in his capacity as President. Hereinafter, the “Company” AND Mr. Edgar Huber , born on 21 January 1962, an Austrian citizen, residing at #### ######### ##### #######, ## #####, United States of America whose social security number is #############-##. Hereinafter: the “Employee”. The Company and the Employee being collectively referred to as the “Parties”, and individually as a “Party”. Preamble The Company is a direct or indirect subsidiary of Coty Inc., ("Coty"), which has its head offices at 2 Park Avenue, New York, NY 10016 (USA). Now therefore the Parties agreed the following: ARTICLE 1- Employment, Description of Scope 1. No later than November 2, 2015 (the “Effective Date”) the Employee will be employed as Transformation Leader corresponding to a status of ‘Top Executive’ (cadre dirigeant), Group V, coefficient 880, pursuant to French law and the provisions of the Collective Bargaining Agreement for the Chemical Industries (hereinafter referred to as the “Collective Bargaining Agreement”). Subject to the closing of the transaction between Procter & Gamble and Coty regarding the cession of certain beauty businesses by Procter & Gamble to Coty, the Employee shall be appointed as Designate Executive Vice President, Coty and President of Coty Fragrances, and as a member of Coty Executive Committee. 1.2 The Parties expressly agree that the Employee may also be requested, from time to time, to carry out special tasks in the framework of the operations of Coty, which will not affect his position as Transformation Leader, which will remain prevalent to any other tasks he may have.



[initials]	[initials]



des activités de Coty, ce qui n’affectera pas son rôle de Transformation Leader au sein de la Société, qui restera prédominant. 1.3 Le Contrat est conclu pour une durée indéterminée. Le Salarié confirme qu’il n’est lié par aucune clause de non-concurrence ou autre accord l’empêchant de conclure le présent Contrat. 1.4 Les parties reconnaissent que le Contrat est assorti d’une période d’essai de trois mois conformément aux dispositions prévues par la législation en vigueur et par la Convention Collective. 1.5 Le Salarié s'engage à passer la visite médicale d'embauche à laquelle il sera convoqué, le Contrat étant conclu sous réserve que le Salarié soit alors déclaré apte pour l'emploi proposé. 1.6 Le cas échéant, les statuts de la Société pourront prévoir les conditions dans lesquelles le Salarié serait habilité à représenter la Société. La Société se réserve le droit de confier des missions de représentation à d’autres personnes que le Salarié. Le Salarié devra se conformer aux instructions qui lui seront données par la direction et par son supérieur opérationnel. Le Salarié coordonnera ses activités avec les services, départements et sociétés appropriés de Coty, ainsi que son supérieur opérationnel le lui indiquera. Il pourra également être demandé au Salarié de rendre compte à des membres de Coty en plus des supérieurs hiérarchiques habituels de la Société. Si des instructions données au niveau de la Société et au niveau de Coty sont en contradiction, le Salarié contactera l’échelon suivant le plus élevé au sein de Coty afin que le problème soit résolu. Toutes les questions personnelles liées au Salarié seront exclusivement traitées par la Société qui en assurera une coordination interne avec Coty. 1.7 Le Salarié exercera principalement ses fonctions depuis le siège social de la Société actuellement situés 14 rue du 4 septembre, 75002 Paris. Toutefois, les Parties conviennent expressément qu’il pourra être demandé au Salarié d’effectuer de très fréquents déplacements en France ou à l’étranger et que le lieu de travail du Salarié pourra être modifié, selon les besoins de la Société. ARTICLE 2 - Responsabilités supplémentaires, mandats sociaux 2.1 . La Société pourra demander au Salarié d’assumer des responsabilités supplémentaires, par exemple exercer un mandat social au sein des conseils d’administration des sociétés du groupe Coty. Le Salarié s’engage à accepter ces éventuelles responsabilités supplémentaires sans rémunération additionnelle, à l’exception de la rémunération minimale qui pourrait être requise en application de la législation locale. Le Salarié	1.3 This Agreement is an indefinite term employment contract. The Employee confirms that he is not bound by any non-competition restrictions or other understanding preventing the Employee from entering into this Agreement. 1.4 The Parties expressly agree that this Agreement provides for a three months trial period pursuant to French law and the provisions of the Collective Bargaining Agreement. 1.5 The Employee agrees to have a taking-on medical examination for which the Employee shall be convened, and this Agreement is subject to the condition that the Employee be declared fit for the offered position. 1.6 If the case arises, the Employee's authority to represent the Company may be governed by the by-laws of the Company. The Company retains the right to appoint other representatives in addition to the Employee. The Employee will also receive specific directions given to the Employee by the Company's Board and by the Employee's business leader. The Employee will coordinate his activities with the appropriate divisions, departments and companies within Coty, as designated by his operational business leader. The Employee may also be directed to report to members of Coty in addition to normal reporting lines existing within the Company. If there are conflicting instructions at Company and Coty level, the Employee will contact the next higher level within Coty in order to have the conflict resolved. All personal matters with respect to the Employee are exclusively handled by the Company which will coordinate internally with Coty. 1.7 The Employee will mainly carry out his duties at the Company’s registered office currently located at 14, rue du 4 septembre 75002 Paris. However, the Parties expressly agree that the Employee may be required to travel extensively in France or abroad and that the Employee may be required to relocate in accordance with the Company’s needs. ARTICLE 2- Additional Responsibilities, Directorships 2.1 . The Employee may, however, be requested by the Company to take additional responsibilities such as directorships on the Boards of companies of the Coty group. The Employee agrees to accept such additional responsibilities without additional compensation except for nominal compensation as may be required under local laws. In any event, the Employee will benefit from an insurance policy covering his professional liability which might be incurred by these additional responsibilities. These additional responsibilities, however, will not affect nor after his



[initials]	[initials]



bénéficiera en tout état de cause d’une police d’assurance couvrant la responsabilité civile professionnelle qui pourrait résulter de ces responsabilités supplémentaires. Celles-ci n’auront en tout état de cause aucun effet ni ne modifieront les fonctions du Salarié au sein de la Société, telles que visées à l’article 1 ci-dessus, qui prévaudront. 2.2 . Coty pourra, sans aucune obligation, proposer au Salarié d’occuper un mandat social au sein de l’une ou de plusieurs sociétés du groupe Coty, ou proposer, ou encourager le Salarié à accepter une mission de représentation au sein d’une organisation extérieure telle qu’une organisation professionnelle. Dans ce cas, le Salarié représentera les intérêts de Coty au sein de cette société ou organisation en plus de ses obligations en vertu du Contrat. Ces responsabilités supplémentaires n’auront en tout état de cause aucun effet ni ne modifieront les fonctions du Salarié au sein de la Société, telles que visées à l’article 1 ci-dessus, qui prévaudront. Si un conflit naissait entre les obligations du Salarié envers la Société et ses responsabilités supplémentaires, le Salarié en informera Coty en conséquence. Dans le cadre de l’exécution d’un mandat social, de fonctions de représentation, le Salarié rendra compte à Coty ou à toute personne que Coty désignerait à cet effet. 2.3 L’exercice par le Salarié d’éventuels mandats sociaux, et/ou responsabilités supplémentaires étant étroitement lié à l’existence d’un emploi salarié avec le groupe Coty, la rupture du Contrat entraînera de plein droit la cessation immédiate de ces éventuels mandats, ou responsabilités supplémentaires. Le Salarié accepte donc par les présentes de démissionner, sans délai et sans aucun droit de rétention, de tous les mandats sociaux, ou de toutes responsabilités supplémentaires (telles que visées aux paragraphes précédents), à la demande de la Société et/ou de Coty et en tout état de cause immédiatement à la rupture du Contrat, sauf stipulation expresse contraire. Toute action d’une société du groupe Coty, de la Société et/ou de Coty qui serait détenue par le Salarié sera immédiatement transférée à la demande de la Société et/ou de Coty et, en tout état de cause, à la rupture du Contrat. 2.4 Le Salarié consacrera toutes ses heures de travail et tous ses efforts à l’activité de la Société et ne pourra, pendant toute la durée du Contrat, sans l’accord préalable et écrit de la Société et/ou de Coty: (i) occuper tout poste ou toute fonction en dehors de la Société et du groupe Coty, que ce poste ou cette fonction soient rémunérés ou non ; ou (ii) directement ou indirectement, se livrer à ou diriger toute autre activité qui pourrait être contraire aux intérêts ou qui pourrait nuire aux obligations du Salarié envers la Société ou à ses responsabilités au sein de Coty ou qui pourrait nuire à leur réputation ou à leurs activités. ARTICLE 3- Rémunération et Durée du Travail 3.1 En qualité de Président Coty Prestige, le Salarié aura le statut de cadre dirigeant au sens des dispositions de l’article	position in the Company as set in article 1 above, which is prevalent. 2.2. Coty may, without an obligation to do so, offer the Employee to take over a directorship in one or more companies of the Coty group or offer or encourage the Employee to accept a position in an outside organization such as an industrial association. In such case, the Employee will represent the interests of Coty within that company or organization in addition to his obligations under the Agreement. Those additional responsibilities, however, will not affect or alter his position in the Company, as set in article 1 above, which is prevalent. Should a conflict arise between the Employee's obligations to the Company and his other directorship(s) the Employee will advise Coty accordingly. In performing his duties as a director or representative, the Employee will report to Coty or such person as Coty may direct. 2.3 . In consideration for the close link which would exist between the potential directorships and/or additional responsibilities with the salaried employment relationship within the Coty group, the termination of the Agreement will automatically entail the immediate termination of all directorships and/or additional responsibilities. Therefore, the Employee hereby agrees to resign, without delay and without right of retention, from all directorships or other offices (as outlined in the preceding paragraph) whenever so directed by the Company and/or Coty and immediately so upon termination of Employee's work duties for the Company unless expressly provided otherwise in writing. Any shares in the affiliates of the Company or Coty held by the Employee, at Coty's or the Company's direction shall be transferred immediately, whenever and as the Company or Coty directs and upon termination of the Agreement. 2.4 The Employee shall devote all of his working hours and efforts to the Company’s business and shall not, during the Agreement, without the prior written approval of the Company and Coty Chief Executive Officer : (i) Hold any employment or business position outside the Company and the Coty group, irrespective of whether any remuneration is paid; or (ii) Directly or indirectly engage in any other business activity or otherwise conduct activities which may conflict with or may have a detrimental effect on the Employee’s obligations to or work for the Company or for Coty, or which may adversely affect their reputation or business. ARTICLE 3- Compensation and working time 3.1 As President Coty Prestige, the Employee will have the status of Top Executive in conformance with the provisions of article L. 3111-2 of the Labor Code and hold a top position in the Company hierarchy, testified by the level of his compensation and full ability



[initials]	[initials]



L.3111-2 du Code du travail et se verra attribuer à ce titre des responsabilités et une rémunération parmi les plus élevées de la Société, et disposera de toute latitude pour l’organisation de ses horaires tout en restant placé sous la subordination de la direction de la Société, à qui il rendra compte régulièrement. En qualité de cadre dirigeant, le Salarié reconnait expressément qu’il est exclu de la législation sur la durée du travail. En conséquence, la rémunération telle que stipulée ci-dessous à l’article 3.2, sera entendue comme étant forfaitaire et indépendante du temps que le Salarié consacrera à l’exercice de ses fonctions. 3.2 . Le Salarié percevra, à compter de la Date d’Effet, une rémunération annuelle brute de 588.500 € (cinq cent quatre-vingt-huit mille cinq cent Euro). La rémunération du Salarié lui sera versée en douze versements égaux sous réserve de la déduction des charges sociales applicables. La rémunération annuelle brute sera révisée à intervalles annuels réguliers. Exceptionnellement, le Salarié bénéficiera d'une prime brute de 300 000 euros (trios cent mille euros) qui sera remboursée en totalité par le Salarié s'il décide de quitter l'entreprise dans les deux premieres annees de son contrat. 3.3 L’exercice de toute responsabilité supplémentaire au sein du groupe Coty, par exemple l’exercice de tout mandat social au sein de toute société du groupe Coty et/ou de la Société, n’entraînera le versement d’aucune rémunération additionnelle, la rémunération correspondant aux fonctions confiées au Salarié au titre du Contrat incluant d’ores et déjà l’éventuel exercice de telles responsabilités, compte tenu du niveau hiérarchique occupé par le Salarié. 3.4 . En outre, le Salarié sera éligible au Plan Annuel de Performance de Coty ( Annual Performance Plan - «APP») dont le Bonus Cible serait équivalent à 70% de la rémunération annuelle brute de base et du montant brut annuel de la prime d’expatriation brute du Salarié. Des informations complémentaires concernant l’APP seront communiquées par documents séparés. Le Salarié participera à l’APP ainsi que précisé dans les éléments visés ci-dessus. Le Salarié comprend que l’APP pourra être révisé, modifié et résilié par Coty, à sa seule discrétion et à tout moment. Le Salarié n’aura acquis aucun droit ou ne devra s’attendre à aucun droit à des avantages qui sont modifiés ou supprimés conformément à l’APP, et le montant, le calcul et la proportion de ce bonus ne seront pas garantis par Coty ou toute autre entité de Coty, sauf stipulations expresses de l’APP. Pour déterminer le bonus auquel le Salarié pourrait être éligible, le cas échéant, en vertu du Plan de Performance, il sera notamment procédé à l’analyse des résultats de la Société ainsi que d’autres entités de Coty, le cas échéant, tel que mentionné dans le Plan de Performance.	to organize his work hours, while remaining subordinated to the Company’s legal representative to which he will regularly report to. As a Top Executive, the Employee expressly acknowledges that he is excluded from the scope of application of the legislation on workweek length. As a consequence, the compensation stated under article 3.2 below will be considered as global and independent from the actual duration of work of the Employee. 3.2. As from the Effective Date, the Employee shall receive a annual gross salary of € 588’500 (five hundred eighty eight thousand and five hundred Euros). The Employee’s salary shall be payable in twelve equal installments subject to the deduction of social security charges, as applicable. The gross annual salary shall be reviewed in regular annual intervals. On an exceptional basis, the Employee will benefit of a one-off allownace of 300 000 euros gross (Three hundred thousand euros) that will have to be fully reimbursed by the Employee if he leaves the Company in the first 2 years of his employment within the Company. 3.3 The remuneration of any other special assignment within the Coty Group, for example, serving as a member of the board of directors of any group company including the Company shall not give rise to any additional compensation, the compensation served to the Employee corresponding the functions entrusted with the Employee as defined by the Agreement will be deemed to be already inclusive of such additional responsibilities, given the hierarchical level of the Employee. 3.4. In addition, the Employee shall be part of the Coty Annual Performance Plan - ("APP"), with a Target Award at 70 % of Employee's basic gross annual salary and of the yearly gross amount of the expatriation allowance. Details of the APP shall be communicated in separate documents. The Employee shall participate in the Coty APP as outlined therein. The Employee understands that the Coty APP is subject to review, amendment and termination by Coty in its sole discretion at any time. The Employee shall have no vested right or expectancy to benefits which are modified or deleted in accordance with the APP, and the amount, calculation and proportion of his award is not guaranteed by Coty or any entity of Coty, except as provided in the APP. In determining the Employee's award, if any, in the APP, the business results of the Company as well as other appropriate entities within Coty will notably be appreciated, as provided in the APP. 3.5. In addition, the Employee shall be part of the Coty Long Term Incentive Plan - ("ELTIP"). Details of the ELTIP shall be



[initials]	[initials]



3.5 . En outre, le Salarié sera éligible au Plan Annuel d’attributions d’actions (« ELTIP » ). Des informations complémentaires concernant l’ELTIP seront communiquées par documents séparés. Le Salarié comprend que l’ELTIP pourra être révisé, modifié et résilié par Coty, à sa seule discrétion et à tout moment. Le Salarié n’aura acquis aucun droit ou ne devra s’attendre à aucun droit à des avantages qui sont modifiés ou supprimés conformément à l’ELTIP, et le véhicule, le montant ou la valeur des attributions seront pas garantis par Coty ou toute autre entité de Coty, sauf stipulations expresses de l’ELTIP. ARTICLE 4- Avantages, Assurances Sociales et Congés Payés 4.1 . Le Salarié donne son accord sans réserve pour cotiser à tous les organismes de prévoyance, de retraite et de complémentaire maladie auxquels sera liée la Société. Le Salarié sera affilié aux caisses de retraite obligatoires. Le Salarié est informé qu’il existe dans l’entreprise un régime collectif et obligatoire de garanties collectives de remboursement de frais médicaux et de décès - incapacité - invalidité pour lesquels il sera précompté pour la quote-part salariale. Les notices d’information de l’assureur résumant notamment les garanties et leurs modalités d’application seront remises au Salarié. Les Parties reconnaissent expressément que la Société se réserve le droit d'affilier le Salarié à d'autres organismes. Il est entendu entre les Parties que tout changement d’affiliation concernant les organismes visés au présent article ne constituera pas une modification du Contrat dans la mesure où les garanties nouvelles seraient identiques ou supérieures. 4.2 . Le Salarié bénéficiera du nombre de jours de congés payés fixés par la loi (25 jours ouvrés par an) appréciable par année de référence allant du 1 ^er juin au 31 mai. Pour organiser ses congés, le Salarié devra prendre en considération les impératifs liés à l’activité de la Société et coordonnera ses jours de congé avec son supérieur hiérarchique. En cas d’incapacité de travail résultant de maladie ou d’accident, l’exécution du Contrat sera suspendue dans les conditions déterminées par les stipulations légales et réglementaires applicables. Le Salarié est tenu de prévenir immédiatement la Société et de lui faire parvenir dans les quarante-huit heures (48) un certificat médical pour justifier son absence. 4.3 . La Société met à disposition du Salarié un véhicule de fonction correspondant aux fonctions exercées par le Salarié qu’il	communicated in separate documents. The Employee understands that the Coty ELTIP is subject to review, amendment and termination by Coty in its sole discretion at any time. The Employee shall have no vested right or expectancy to benefits which are modified or deleted in accordance with the APP, and the vehicle, amount, calculation or value of his award are not guaranteed by Coty or any entity of Coty, except as provided in the ELTIP. ARTICLE 4 - Benefits, Social Insurance and paid leave 4.1. The Employee accepts without reservation to contribute to all health and retirement funds to which the Company shall be bound. The Employee shall be affiliated to the compulsory pension schemes. The Employee knows that there is within the Company a collective and mandatory scheme for collective coverage in relation to the reimbursement of medical expenses and death - disability - invalidity, for which a deduction shall apply with regard to the employee part. Information notices of the insurer summarizing in particular the coverage and the application terms shall be provided to the Employee. The Parties expressly agree that the Company reserves the right to affiliate the Employee to other health and retirement funds. The Parties agree that such change would not constitute a modification of the Agreement inasmuch as the benefits coverage would be identical or superior. 4.2. The Employee shall be entitled to paid vacation as provided by applicable legislation (25 working days per year) calculated by year of reference, from June 1st to May 31. In planning vacation the Employee will duly consider the business requirements of the Company and will coordinate vacation days with his Business Leader. Should the Employee be unable to work as a result of sickness or accident, the performance of this Agreement shall be suspended pursuant to the terms provided by applicable laws and regulations. The Employee is required to inform the Company immediately of any absence and must forward to the Company within forty-eight (48) hours a medical certificate to justify his absence. 4.3 . The Company shall provide the Employee with a company car corresponding to the Employee’s duties that may be used for professional or personal purposes in accordance with the Company’s Car Policy, which may be amended by the Company from time to time. The use of the vehicle for personal purposes



[initials]	[initials]



pourra utiliser à des fins professionnelles et personnelles. La part correspondant à l’utilisation du véhicule à des fins privées sera considérée comme un avantage en nature et à ce titre, sera assujettie aux cotisations de sécurité sociale. A cet égard le Salarié confirme être titulaire d’un permis de conduire valide et s’engage à informer sans délai la Société de tout changement y afférent. En cas d’accident, le Salarié devra en informer dans les 48 heures, d’une part, la Société et, d’autre part, la compagnie d’assurance, en précisant toutes les circonstances de l’accident. La Société prendra en charge les primes annuelles d’assurance tous risques ainsi que toutes les dépenses relatives à l’entretien et au fonctionnement du véhicule liées à l’utilisation du véhicule à des fins professionnelles. Le Salarié accepte par les présentes d’indemniser et de garantir la Société contre les amendes, frais, responsabilités, dommages ou préjudices résultant de l’utilisation du véhicule à des fins personnelles. Les frais d’essence, de péage etc. encourus par le Salarié pour l’utilisation de la voiture à des fins personnelles seront exclusivement à la charge du Salarié. Le véhicule mis à la disposition du Salarié reste la propriété de la Société et devra lui être restitué sans délai en cas de rupture du Contrat pour quelque motif que ce soit, à la date du départ physique du Salarié de la Société. La Société se réserve le droit de modifier ultérieurement les modalités d’utilisation du véhicule de fonction. 4.4 Tout déplacement effectué dans le cadre professionnel sera soumis à la Politique de Déplacements de Coty (Coty Travel Policy) . Les frais de déplacement engagés devront être accompagnés de justificatifs et la demande de remboursement devra être sollicitée sans délai. Toute demande de remboursement sera soumise aux règles fiscales en vigueur, aux dispositions de la Politique de Déplacements de Coty, et devra être approuvée au préalable par le supérieur hiérarchique du Salarié. 4.5 La Société apportera une assistance raisonnable au Salarié concernant la procédure de déclaration d’impôts en France ainsi qu’aux localisations géographiques où le Salarié sera amené à exécuter ses fonctions. 4.6 Tout autre avantage qui serait effectivement alloué au Salarié pendant toute la durée du Contrat sans y être expressément stipulé, serait considéré comme discrétionnaire et pourrait être supprimé par la Société sans entraîner une quelconque indemnisation du Salarié sauf dans l’hypothèse ou le Salarié aurait droit à des avantages en vertu d’une législation obligatoire applicable et dans la mesure où ces avantages ne feraient pas doublon avec des avantages déjà prévus en vertu du présent Contrat, qui pourront, dans ce cas, être ajustés en conséquence pour éviter tout paiement en double.	will be considered as a benefit in kind and as such, will be subject to social security contributions. The Employee confirms that he possesses a valid driving license and will immediately inform the Company of any change in her legal authorization to drive a vehicle. In the event of an accident, the Employee must inform the Company as well as the insurance company within 48 hours and provide a detailed description of all circumstances surrounding the accident. The Company shall bear the costs of the annual comprehensive insurance premium as well as any charges relating to the maintenance and operating of the vehicle and arising from the use for professional purposes only. The Employee agrees to indemnify and hold harmless the Company against any fines, costs, responsibilities, damages resulting from the Employee’s use of the vehicle for personal purposes. Any petrol or toll costs etc. incurred by the Employee while using the vehicle for personal purposes are to be exclusively borne by the Employee. The vehicle is placed at the Employee’s disposal without any transfer of property, and will have to be returned immediately to the Company in the event of termination of the Agreement for whatever reason on the date of the Employee’s departure from the Company. The Company reserves the right to modify the terms of use of the company car at a later date. 4.4 Any work related travel shall be subject to the Coty Travel Policy. All travel expenses must be properly accounted for and documented and shall be filed for reimbursement without delay. Any request for reimbursement shall be subject to local tax rules, the provisions of the Coty Travel Policy, and must first be approved by the Employee's Business Leader. 4.5 The Company will provide reasonable assistance to the Employee in filing taxes in France and other geographies where the Employee is performing his activities. 4.6 Any other benefit, if actually received by the Employee during the term of employment, but which are not expressly stated in this Agreement, shall be considered discretionary and may be withdrawn by the Company without any compensation for the Employee, except that the Employee is eligible for benefits required by mandatory applicable law provided that any such benefits shall not duplicate benefits already provided under this Agreement, which may be adjusted accordingly in such an instance to avoid any duplicative payment. ARTICLE 5 - Termination of the Agreement



[initials]	[initials]



ARTICLE 5 - Résiliation du Contrat 5.1 . Chaque partie pourra résilier le présent Contrat sur notification écrite adressée à l’autre partie sous réserve de la législation applicable en matière de préavis. La Société pourra résilier le présent Contrat sans préavis en cas de violation caractérisée du Salarié à l’une des stipulations du Contrat ou en cas de faute grave ou lourde du Salarié. En cas de rupture du Contrat par l’une ou l’autre partie, la Société pourra libérer le Salarié de ses fonctions à tout moment, en tout ou partie. 5.2 En cas de résiliation du présent Contrat pour quelque raison que ce soit ou à la demande de la Société ou de Coty, le Salarié devra retourner à la Société ou à toute entité que Coty pourra désigner, sans droit de rétention, tous documents, articles, dessins, plans, disquettes, cassettes, données, manuels, formulaires, notes, tableaux, calculs, rapports ou autres éléments que le Salarié a reçus, dans ou sur lesquels le Salarié a stocké ou enregistré des données ou informations relatives à la Société ou Coty, pendant toute la durée du présent Contrat, ainsi que toutes copies et tous équipements sur lesquels les éléments ci-dessus mentionnés ont été intégrés et tout autre élément qui serait la propriété de la Société ou de Coty qui pourrait être en la possession du Salarié ou sous son contrôle. 5.3 Au cours du préavis, la Société pourra libérer en tout ou partie le Salarié de l’exercice de ses responsabilités et de limiter son accès au lieu de travail et aux équipements de travail. Dans cette hypothèse, les droits et obligations du Salarié en vertu du présent Contrat resteront toutefois en vigueur et il devra donc respecter toutes les stipulations du présent Contrat notamment celles relatives à la confidentialité et à la non concurrence. A la date de rupture du Contrat au plus tard, le Salarié devra démissionner de tous les mandats sociaux, postes de direction au sein de toute société du groupe Coty, ou responsabilités supplémentaires telles que visées ci-dessus sans solliciter une quelconque indemnité à ce titre, et de tous les autres postes qu’il occupait au nom de toute société du groupe Coty. 5.4 A la date de son départ physique, ou à la demande expresse de la Société ou de Coty, le Salarié devra retourner à la Société ou à toute société du groupe Coty selon les instructions de Coty, sans droit de rétention, tous les documents, dessins, plans, disquettes ou clés USB, bandes enregistrées, données, manuels, formulaires, notes, tableaux, calculs, rapports ainsi que tout autre élément, données ou information concernant la Société ou Coty que le Salarié a eu à sa disposition, a conservé ou enregistré au cours de ses fonctions au titre du Contrat, ainsi que tout copie ou tout équipement dans lesquels lesdites données ou informations auraient pu être intégrées ainsi que tout élément qui serait la propriété de la Société ou de toute société du groupe Coty, que le Salarié aurait en sa possession ou sous son contrôle. Le Salarié ne conservera aucune copie ou partie des documents ni ne devra déposer ces éléments ou les conserver chez un tiers.	5.1 . Either party may terminate this Agreement by written notice to the other party in accordance with local laws and applicable notice period. The Company may terminate this Agreement without notice period immediately if the Employee commits a serious breach of any of the provisions of this Agreement or is guilty of any grave misconduct or willful neglect in the discharge of his duties. If this Agreement is terminated by notice of either party, the Company may release the Employee from his work duties partially or in full. 5.2 Upon terminating his employment for any reason or whenever so directed by the Company or Coty, the Employee will return any documents, papers, drawings, plans, diskettes, tapes, data, manuals, forms, notes, tables, calculations, reports, or other items which Employee has received, or in or on which Employee has stored or recorded Company or Coty data or information, in the course of his employment as well as all copies and any material into which any of the foregoing has been incorporated and any other Company or Coty property which may be in his possession or control, to the Company or to such entity as Coty may direct, without right of retention. 5.3 During the notice period, the Company shall have the right to release the Employee either partly or in full from the performance of his responsibilities during the notice and access to the workplace and to work facilities. In such event, the Employee’s rights and obligations under this Agreement shall nonetheless remain in force and he shall consequently observe all provisions of this Agreement including those relating to confidentiality, non competition obligation, etc. When the Agreement is terminated, the Employee shall be obliged to resign from any and all directorships with any Coty Group company, or additional responsibilities as mentioned above, without claiming compensation therefore, and all other positions which he held on behalf of any Coty Group company. 5.4 When the Employee physically leaves his position with the Company, or whenever so directed by the Company or Coty, the Employee will return to the Company any documents, papers, drawings, plans, diskettes or USB keys, tapes, data, manuals, forms, notes, tables, calculations, reports or other items which Employee has received, or in or on which Employee has stored or recorded Company or Coty data or information, in the course of his employment as well as all copies and any material into which any of the foregoing has been incorporated and any other Company or Coty property which may be in his possession or control, to the Company or to such entity as Coty may direct, without any right of retention. The Employee shall not keep any copies of the material or any part of the material nor deposit the same or keep the same with any third party. The Employee shall also provide to the Company at the latest when the Employee physically leaves the Company termination of the Agreement a list of all passwords and other



[initials]	[initials]



Le Salarié devra également fournir à la Société, au plus tard à la date de son départ physique, une liste de tous les mots de passe et autres codes utilisés par le Salarié dans le système informatique de la Société. ARTICLE 6. Inventions, Propriété Intellectuelle Pour les besoins du présent Contrat, les « Créations Intellectuelles » désignent de manière non limitative, toute œuvre de l’esprit au sens de l’article L.112-2 du Code de la Propriété Intellectuelle susceptible de faire l’objet de droits d’auteur, ainsi que toute création susceptible de faire l'objet de droits privatifs de propriété intellectuelle et notamment les créations soumises au droit des marques, des dessins et modèles ou du droit des brevets, en application du Code de la Propriété Intellectuelle, réalisées par le Salarié en exécution du Contrat dans le cadre des activités de la Société et des missions qui lui sont confiées. 6.1. Droits cédés : Le Salarié cèdera à la Société l’intégralité des droits patrimoniaux sur les Créations Intellectuelles, au fur et à mesure de leur création par le Salarié. Cette cession comprendra, de façon non limitative, dans le respect des droits moraux dévolus à l’auteur sur sa création, (i) le droit de reproduction par tous procédés et sur tous supports connus ou inconnus à ce jour, (ii) le droit de représentation et de communication au public par tous moyens, tous médias et tous réseaux de communication connus ou inconnus à ce jour, (iii) le droit d’intégration dans un élément de même nature et/ou genre ou de nature et/ou genre différent, (iv) le droit d’adaptation dans le même genre ou dans un genre différent, (v) le droit de modification, (vi) le droit de traduction, (vii) le droit de localisation, (viii) le droit d’utilisation, (ix) le droit de distribution, de vente et de location et (x) le droit d’exploitation sous toutes formes, par tous procédés, sur tous supports, par tous moyens, tous médias et tous réseaux de communication connus ou inconnus à ce jour, à titre gratuit ou onéreux et quels qu’en soient les destinataires et ce, pour l'ensemble de ces droits, pour toute destination ou exploitation, notamment à titre d’information ou à titre commercial. A ce titre, le Salarié renonce à revendiquer tous droits éventuels de propriété intellectuelle, et notamment de reproduction, de représentation, d’intégration, d’adaptation, de modification, de traduction, de localisation, d’utilisation, de distribution, de vente et de location et d’exploitation sous toutes formes et sur tous supports. Cette cession de droits est consentie à titre exclusif, et gratuit, pour le monde entier et pour la durée légale d’existence de ces droits. La Société pourra céder, à titre gratuit ou onéreux, tout ou partie des droits ci-dessus et notamment consentir à tout tiers tout contrat d’exploitation des Créations Intellectuelles, sous quelque forme, quelque support et quelque moyen que ce soit.	codes used by the employee in the IT-system of the Company. ARTICLE 6 - Inventions, Industrial Rights For the purposes of the Agreement, the “Intellectual Creations” mean without limitation, any work of authorship within the meaning of Article L.112-2 of the Intellectual Property Code that may be subject to author copyrights and all creations that may be subject to private rights of intellectual property and notably creations such as subject to the law of trademarks, designs or patent law, under the Code of Intellectual Property, conducted by Employee in the performance of the Agreement in connection with the Company's operations and missions entrusted with the Employee. 6.1. Assignment of Rights : The Employee will transfer to the Company the full property rights in Intellectual Creations, as and when they are created by the Employee. This assignment will include, without limitation, in respect of moral rights conferred to the author on it, (i) the right of reproduction by any means and on any media known or unknown to date, (ii) the right of representation and communication to the public by any means, all media and all communication networks known or unknown to date, (iii) the right of integration in an element of similar nature and / or kind or nature and / or gender different, (iv) the right of adaptation in the same or a different type, (v) the right to change, (vi) the right of translation, (vii) the right of location, (viii) the right of use, (ix) the right of distribution, sale and lease, and (x) the right of exploitation in all forms, all processes on all media, by all means, all media and all communication networks known or unknown to this day, for free or not and regardless of the recipients and that, for all of these rights, for any purpose or use, such as information or as a business. As such, the Employee waives all rights to claim any intellectual property rights, including reproduction, representation, integration, adaptation, modification, translation, localization, use, distribution, sale renting and operating in all forms and all media. This transfer of rights is granted on an exclusive basis, and free for the world and for the duration of legal existence of such rights. The Company may dispose, gratuitously or for consideration, some or all of the above rights, including consent to any third party any contract for the exploitation of Intellectual Creations, in any form, any medium and any manner whatsoever.



[initials]	[initials]



Dans l'hypothèse où des Créations Intellectuelles feraient l'objet de droits de propriété intellectuelle autres que ceux définis à l'article L.111-1 et suivants, notamment droit de marque, dessins et modèles ou droit des brevets (nonobstant les dispositions du Code de la propriété intellectuelle relatives aux inventions faites par le Salarié dans l’exécution du Contrat et de la Convention Collective applicable), il est convenu entre les Parties que la Société procèdera à toute formalité nécessaire afin de faire constater et rendre opposable aux tiers son droit sur les Créations Intellectuelles en question. En tant que titulaire des droits définis ci-dessus, la Société pourra donc exploiter, de la manière la plus large et pour les finalités les plus diverses les éléments élaborés à l’occasion ou résultant de l’exécution des prestations par la Société au titre du présent Contrat. La Société pourra également et en son nom déposer tout brevet, toute marque, tout dessin et modèle et plus généralement prendre toute mesure propre à rendre opposable aux tiers les droits dont elle est investie et, ce, pour tous pays. Dans l'hypothèse où le Salarié divulguerait, dans les 18 mois à compter de la rupture du Contrat, une Création Intellectuelle réalisée dans la continuation de son Contrat ou d'une mission attribuée par la Société et/ou grâce aux Informations Confidentielles telles que définies au présent Contrat ou au savoir-faire de la Société, la Société sera en droit de revendiquer la propriété de la Création Intellectuelle concernée conformément aux présentes. 6.2. Garanties Le Salarié garantit la Société et/ou toute société du groupe Coty contre tout trouble, revendication, éviction, ou réclamation quelconques, notamment contre toute action en contrefaçon ou en concurrence déloyale éventuellement exercée par des tiers à l’encontre de la Société ou de toute société du groupe Coty, et portant sur les Créations Intellectuelles. Le Salarié garantit notamment que les Créations Intellectuelles n’ont pas été et ne seront pas copiées sur aucune autre œuvre, invention, dessin, modèle, logiciel, etc., à moins qu’il puisse justifier d’une autorisation en ce sens. Le Salarié garantit également qu’il n’a attribué et n’attribuera à aucun tiers des droits sur les Créations Intellectuelles. A cet égard, le Salarié garantit à la Société qu’il n’a conclu et ne conclura aucun accord ou convention de quelque sorte que ce soit qui pourrait entraver ou s’opposer à l’application du présent article. Le Salarié reconnait et accepte que l'ensemble des réalisations et développements, créés par lui en application ou pendant la durée du Contrat, qui ne relèveraient pas, à ce jour, d'un droit de propriété intellectuelle reconnu aux termes des dispositions du Code de la Propriété Intellectuelle, tels que notamment mais pas exclusivement formules, études, savoir faire, méthodes sont et restent la propriété pleine, entière et exclusive de la Société. Le Salarié garantit qu’il n’a procédé et ne procédera à aucun	In the event of intellectual creations would be subject to intellectual property rights other than those defined in Article L.111-1 et seq, including trademark rights, design rights or patents (notwithstanding the provisions of the Code of Intellectual Property relating to inventions made by the Employee in performance of the Agreement and Collective Bargaining Agreement), it is agreed between the Parties that the Company will carry out all formalities necessary to ascertain and make binding towards third parties his right to the Intellectual Creations in question. As the holder of the rights set out above, the Company will then operate, in the broader way and for the most diverse purposes, the elements developed during or resulting from the execution of services by the Company under this Agreement. The Company may also in its name and file any patent, trademark, and any design model and more generally take any measure to make it effective against third parties the rights vested in it and, for all countries. In the event that the Employee would disclose, within 18 months from the termination of the Agreement, an Intellectual Creation made in the continuation of the Agreement or mission assigned by the Company and / or using Confidential Information as defined under this Agreement or know-how of the Company, the Company will be entitled to claim ownership of the Intellectual Creation in question. 6.2 Warranties The Employee warrants the Company and/or any company of the Coty group against any disorder, claims, eviction, or claim, notably any action against any infringement or unfair competition eventually started by third parties against the Company or any affiliate concerning the Intellectual Creations. The Employee warrants that such Intellectual Creations have not been and will not be copied to any other work, invention, design, model, software, etc. unless he can prove authorization to do so. The Employee also guarantees that he has not and will not assign to any third party rights the Intellectual Creations. In this respect, the Employee warrants the Company that he has not entered and will not enter into any agreement of any kind which may obstruct or oppose the application of this section. The Employee acknowledges and agrees that all achievements and developments, created by him under or for the duration of the Agreement, that would not, to date, be protected by any intellectual property right recognized under the provisions of the Code of Intellectual Property, including but not limited to particular formulations, studies, expertise, methods are and remain the full and exclusive property of the Company. The Employee warrants that he has not carried and will not carry



[initials]	[initials]



dépôt de propriété industrielle quel qu’il soit sur les Créations Intellectuelles, leurs évolutions, modifications ou améliorations. ARTICLE 7- Code de conduite, Confidentialité Le Salarié respectera le Code de conduite de Coty, dont une copie a été remise au Salarié. Le Salarié ne divulguera pas à des tiers, directement ou indirectement, pendant toute la durée du Contrat ou après sa résiliation, ou n’utilisera pas à son propre bénéfice ou au bénéfice de tiers, et accepte de conserver comme strictement confidentielles toutes les informations relatives à la Société ou toute autre entité du groupe Coty, sauf si cette utilisation ou cette communication a été préalablement approuvée par écrit par la Société ou par Coty. Cette obligation de confidentialité s’applique en plus de toute la législation applicable en matière de protection des secrets commerciaux et inclut, notamment, tous articles et documents internes, secrets d’affaires ou savoir faire, informations exclusives, plans d’actions ou plans marketing, calculs de coûts, données financières ou autres, plans relatifs aux bénéfices, inventions, découvertes, procédés, dessins, notes, informations relatives aux clients ou aux fournisseurs et toutes autres informations internes que le Salarié a reçues, utilisées, ou observées, auxquelles il a été exposé ou auxquelles il a eu accès pendant toute la durée de son emploi au sein d’une entité du groupe Coty. Si le Salarié enfreint le présent article 7, toute société du groupe Coty ainsi lésée pourra demander des dommages et intérêts pour tout préjudice subi et notamment pour perte de bénéfices, préjudice qui serait né du manquement du Salarié à la législation applicable, en plus de tous les autres préjudices et moyens de recours disponibles. Toute société du groupe Coty lésée par un tel comportement pourra initier une procédure en son nom. ARTICLE 8 - Clause de non-concurrence - non sollicitation Les Parties reconnaissent que la présente clause est nécessaire à la protection des intérêts légitimes de la Société en raison du fait que la Société opère dans un domaine extrêmement concurrentiel où d’autres acteurs économiques majeurs sont également présents et alors que le Salarié, compte tenu de son niveau de responsabilités, a accès à l’ensemble des données commerciales, marketing et financières de la Société. En cas de rupture du Contrat, et quelle qu'en soit la cause, le Salarié s'interdit : Ÿ d'entrer au service à quelque titre que ce soit, onéreux ou non, d'une entreprise concurrente et en particulier de toutes celles dont l'activité principale consiste à fabriquer, concevoir et commercialiser des parfums, des produits cosmétiques et de maquillage, des produits de soin de la peau et leurs dérivés. Ÿ de s'intéresser directement ou indirectement sous	out any deposit of industrial property of any kind on the Intellectual Creations, their changes, modifications or improvements. ARTICLE 7- Code of Business Conduct, Confidentiality The Employee will comply with the Coty Code of Business Conduct, a copy of which has been provided to the Employee The Employee shall not disclose, directly or indirectly, during the Agreement or at any time following its termination, to others or use for Employee's own benefit or for the benefit of others and agrees to keep strictly confidential all information concerning the Company or any other entity within Coty unless such use or disclosure has been approved in advance and in writing by the Company or Coty. This duty of confidentiality applies in addition to all applicable laws regarding the protection of trade secrets and includes, but is not limited to, any internal papers and documents, business secrets or know-how, proprietary information, business or marketing plans, cost calculations, financial or other data, profit plans, inventions, discoveries, processes, drawings, notes, customer or supplier information and any other internal information which the Employee has received, used, observed, been exposed to or had access to in the course of his employment with an entity of Coty. If the Employee contravenes section 7, any relevant Coty Group company injured by the breach shall be entitled to compensation for damages including loss of profits damages arising from such breach from the Employee in accordance with the applicable law, in addition to any other damages and remedies available at law. Any company of the Coty Group injured by such conduct may bring an action to enforce such remedies on its own behalf. ARTICLE 8 -Competition Restrictions - non solicitation The Parties acknowledge that this covenant is necessary in order to safeguard the Company’s interests, due to the fact that Company conducts business activities in an extremely competitive sector in which other major economic actors are also present, and that in consideration of his level of responsibility, the Employee has access to the Company’s entire commercial, marketing and financial data. The Employee agrees, in the event of termination of the Agreement on any grounds, to abstain from : Ÿ entering the service of a competing undertaking, with or without compensation and in particular any firm whose principal business consists in manufacturing, designing and selling any fragrances, cosmetic and make up products, skin care products and any related products. Ÿ taking an interest, directly or indirectly, in any manner



[initials]	[initials]



quelque forme que ce soit à une entreprise de cet ordre. Cette interdiction de concurrence est limitée à une période de vingt-quatre mois commençant au jour du départ physique du Salarié et couvre l’ensemble des pays et territoires dans lesquels le salarié a exercé une activité professionnelle au cours des vingt-quatre mois précédents la fin du contrat de travail, soit l’ensemble des pays et territoires dans lesquels Coty Prestige commercialise ses produits par le biais d’une filiale ou d’un distributeur. En contrepartie de cette obligation de non-concurrence, le Salarié percevra une indemnité mensuelle d’un montant brut de deux tiers (2/3) du Salaire Moyen Brut. Pour les besoins du présent article, le Salaire Moyen Brut s’entend comme étant la moyenne sur les 12 derniers mois précédant la notification de la rupture du Contrat des sommes brutes versées au Salarié à titre de salaire de base et primes sur objectifs à l’exclusion de toute prime exceptionnelle ou autre prime discrétionnaire ou non. Cette compensation financière, comprenant une indemnité de non-concurrence et les congés payés afférents à cette indemnité, sera soumise aux mêmes charges et contributions sociales qu'un salaire. Cette indemnité sera versée mensuellement au Salarié à compter de son départ physique de la Société et dans la limite de la durée de l’obligation de non-concurrence. Cependant, la Société pourra décider unilatéralement de libérer le Salarié de l’interdiction de concurrence pendant la durée du Contrat par lettre recommandée avec accusé de réception. La Société pourra également libérer le Salarié de l’interdiction de concurrence par une lettre recommandée avec accusé de réception envoyée au moment de la notification de la rupture du Contrat en cas de dispense de préavis, ou à la date de cessation de ce dernier si le préavis est exécuté. En cas de rupture du Contrat à l’initiative du Salarié, la Société pourra relever le Salarié de son obligation de non-concurrence conformément aux dispositions de la Convention Collective. En cas de dispense, la Société ne sera pas tenue à une quelconque obligation de paiement de l'indemnité de non-concurrence. Le Salarié s’engage, dans l’hypothèse où il exercerait une nouvelle activité pendant l’application de l’obligation de non-concurrence, à en informer immédiatement la Société par lettre recommandée avec A.R., en mentionnant son nouveau poste, le nom de son nouvel employeur et son domaine d’activité. Le Salarié s'interdit également, directement ou indirectement, pour son compte ou pour le compte d’un tiers : Ÿ d’encourager, débaucher, tenter de débaucher, solliciter ou tenter de solliciter, ou prendre toute autre action ayant pour but de démarcher ou d’encourager toute personne qui a été salariée de la Société à la date de cessation du Contrat de travail, à quitter son emploi ou débaucher d’autres salariés ;	whatsoever in any such undertaking. This non-competition covenant shall be limited to a duration of twenty four months running from the date the Employee physically leaves the Company and covers all countries and geographies where the Employee has performed any professional activity over the last 24 months of his employment, i.e., all geographies where Coty Prestige sells its products via a subsidiary or a distributor. In consideration of such non-compete obligation, the Employee will receive a monthly compensation of two thirds (2/3) of his Monthly Gross Salary. For the purposes of this section, the Monthly Gross Salary will mean the average gross salary paid over the 12 months prior to the notification of termination of the Agreement, including base salary and any target bonuses served to the Employee, but excluding exceptional bonus or any other premium, whether discretionary or not. This indemnification, that covers a non-compete indemnity as well as the indemnification of the related accrued holidays, shall be subject to the same social charges and contributions as salary. Such indemnity will be monthly paid to the Employee as from the date the Employee physically leaves the Company until the end of the non-competition obligation time period. However, the Company may unilaterally release the Employee from the non-competition obligation at any time during the Agreement by sending a registered mail with return receipt requested. The Company may also release the Employee from the non-competition obligation by registered mail with return receipt requested at the time of the notification of the termination of the Agreement in case the Employee would be exempted from performing his notice period, or on the date of termination of the Agreement in case the notice would be performed by the Employee. In case the Employee would terminate the Agreement, the Company may release the Employee from his non-competition obligation in accordance with the provisions of the Collective Bargaining Agreement. In case of a release, the Company will be exempted from any obligation of payment of the non-compete indemnification. The Employee acknowledges and expressly agrees, in case he would find a new position during the application of the non-competition covenant to immediately inform the Company by registered letter upon receipt, disclosing his new position, name of his new employer and scope of activity. The Employee also undertakes, directly or indirectly, on his own behalf or on behalf of a third party: Ÿ not to encourage, poach or try to poach, solicit or try to solicit, or take any measure aiming at canvassing or encouraging any person who was an employee of the Company as at the date of the termination of the Contract to leave his/her position or to poach other employees;



[initials]	[initials]



Ÿ d’encourager, démarcher ou tenter de débaucher, recruter, solliciter ou tenter de solliciter ou prendre toute autre action qui aurait pour but de démarcher ou d’encourager toute personne qui a été salarié de la Société à la date de cessation du Contrat de Travail, en vue de lui faire effectuer des tâches qui seraient concurrentes avec celles effectuées par ledit Salarié Ces interdictions s’appliqueront pendant une durée de vingt-quatre (24) mois à compter de la date de départ physique du Salarié de la Société. La violation de la présente clause rendrait automatiquement redevable le Salarié du paiement d'une indemnité qui est d'ores et déjà forfaitairement fixée à une somme équivalente à 18 mois de salaire brut calculés sur la base du Salaire Moyen brut perçu l'année ayant précédé la rupture du Contrat. Cette indemnité est due à la Société par le Salarié pour chaque infraction commise. Cette indemnité est due par le Salarié sans préjudice de tous autres dommages et intérêts que la Société se réserve le droit de demander en justice en vue de la réparation intégrale du préjudice tant moral que pécuniaire qu'elle aurait effectivement subi du fait de l'activité du Salarié, et de faire ordonner, au besoin sous astreinte, la cessation de l'activité concurrentielle. Le Salarié reconnaît que son engagement est nécessaire afin de préserver les intérêts de la Société et/ou toute société du groupe Coty et que la présente clause ne l'empêchera nullement de retrouver un emploi. Pour les besoins du Contrat, les termes « société du groupe Coty» désigneront toute société en France ou à l’étranger qui, directement ou indirectement, contrôle ou est contrôlée par la Société, ou est sous le même contrôle que la Société (au sens donné à ce terme à l’article L.233-3 du Code de commerce). Dans l'hypothèse où cette clause serait considérée comme trop étendue par une juridiction compétente, les parties conviennent qu'il sera alors fait application de la clause dans son étendue la plus large telle qu'autorisée par la loi. ARTICLE 9 - Stipulations générales 9.1 . Le Contrat concerne exclusivement les fonctions du Salarié au sein de la Société. Aucune stipulation du Contrat ne pourra être interprétée comme constituant un contrat de travail avec Coty ou toute autre société du groupe Coty, autre que la Société. 9.2 Le Contrat ainsi que la « Terms Sheet » datée du 22 septembre et dont une copie est jointe en annexe représentent l’intégralité du Contrat et annule et remplace de plein droit tous accords antérieurs écrits ou verbaux conclus ou échangés entre les parties. Toute modification à un élément essentiel sera effectuée par écrit et signé par le Salarié et la Société. Toutes garanties ou tous accords verbaux ne lient pas les Parties à moins qu’ils ne soient formalisés par écrit et signés des deux	Ÿ not to encourage, canvass or try to poach, recruit, solicit or try to solicit, or take any measure aiming at canvassing or encouraging any person who was an employee of the Company as at the date of the termination of the Contract, in order to make him/her perform tasks that would be in competition with those performed by the Employee. These restrictions shall apply for a period of twenty four (24) months from the date of the physical departure of the Employee from the Company. Breach of this covenant shall make the Employee liable for payment of liquidated damages of 18 months of gross salary, computed on the basis of the Monthly Gross Salary collected during the year prior to termination of the Agreement. Such damages shall be payable to the Company in respect of each breach committed. Such damages shall be without prejudice to any damages which the Company reserves the right to claim at law for full repair of any intangible and pecuniary losses actually suffered as a result of the Employee's activity, and to apply for an injunction, if necessary subject to fines, for discontinuation of the competing activity. The Employee acknowledges that his agreement is necessary in order to safeguard the Company's interests and/or any company of the Coty Group, and that the present article shall not prevent him from finding another position. For the purposes of the Agreement, “ any company of the Coty group” shall mean any company in France or abroad, which directly or indirectly, controls or is controlled by the Company, or is under the same control as the Company (according to the meaning set forth by article L. 233-3 of the French Commercial Code). Should the provisions of this article be considered too broad by a competent jurisdiction, the parties agree that this clause shall be applied to its maximum extent as authorized by the current legislation. ARTICLE 9 - General 9.1. This Agreement relates only to the Employee's employment with the Company. Nothing within this Agreement shall be construed as constituting an employment agreement with Coty or any company of the Coty group, other than the Company. 9.2 This Agreement along with the Terms Sheet dated September 22, 2015, a copy of which is annexed to this Agreement constitute the full agreement; any verbal or prior agreements shall be replaced by this Agreement. Any amendments to a substantial provision of this Agreement must be made in writing only and signed by the Employee and the Company. Any verbal assurances or agreements are not binding unless reduced to written form and signed by both parties.



[initials]	[initials]



Parties. 9.3. Les stipulations du présent Contrat seront régies par le droit français. Les tribunaux de Paris seront compétents pour trancher tous litiges résultant de ou en relation avec le présent Contrat, à l’exclusion de toute demande ou action à l’encontre de Coty, pour lesquelles les tribunaux d’Etat et fédéraux de New York (Etats-Unis) seront exclusivement compétents, ce que les parties acceptent expressément. Sauf si la législation locale l’interdit, les Parties acceptent que tout versement de dommages et intérêts soit limité aux dommages effectivement subis et n’inclut pas tous dommages spéciaux, punitifs, indirects et similaires, sauf stipulation contraire de ce Contrat. 9.4. Le Salarié reconnaît et accepte que la Société et Coty ne disposent pas de recours adéquat en cas de manquement ou de menace de manquement à l’une des stipulations du présent Contrat, et, à cet égard, le Salarié reconnaît qu’en cas d’un tel manquement ou d’une telle menace de manquement, la Société et Coty subiront un préjudice irréparable qui ne pourra être indemnisé par une compensation financière. Le Salarié accepte que, en plus de recours, la Société et Coty pourront obtenir une réparation en equity sous la forme d’une exécution forcée, d’une ordonnance temporaire imposant certaines restrictions, d’une injonction définitive ou temporaire ou de tout autre recours en equity alors disponible. Aucune stipulation du présent Contrat ne sera interprétée comme interdisant à la Société ou à Coty de chercher tout autre recours en droit ou en equity à sa disposition ou tout autre droit en vertu de tout autre contrat. Le Salarié renonce expressément à toute demande ou défense relative au fait applicable dont disposerait la Société sauf si cette renonciation est interdite en vertu de la législation applicable. Le Salarié renonce également expressément à toute obligation pour la Société ou Coty de donner un engagement ou une garantie avant toute demande de réparation en equity . 9.5. Tous griefs relatifs au présent Contrat doivent être rapportés au supérieur hiérarchique du Salarié. Les intitulés utilisés dans le présent Contrat servent à en faciliter la lecture et ne constituent pas une définition ou une interprétation des stipulations correspondantes. Si une ou plusieurs stipulations du présent Contrat sont ou deviennent invalides ou inapplicables, en tout ou partie, ou si le présent Contrat ne couvre pas une question que les parties auraient souhaité couvrir si elles y avaient pensé au moment de la rédaction du Contrat, cette invalidité ou inapplicabilité ou disposition manquante n’affectera pas la validité des autres dispositions du Contrat. Cette stipulation invalide, inapplicable ou manquante sera remplacée par une stipulation valide reflétant au mieux l’intention des parties au présent Contrat conformément aux stipulations valides du Contrat, à la législation applicable et aux politiques et codes de la Société et de Coty tels que mentionnés dans le Contrat.	9.3 . The provisions of this Agreement shall be subject to the laws of France. The Labor Courts of Paris, France, shall have jurisdiction over all disputes arising out of or in reference to this Agreement, provided however that as to any claims or causes of action against Coty, the appropriate State and Federal courts located in New York, New York, shall have exclusive jurisdiction and venue and the parties hereby consent to such exclusive jurisdiction and venue. Unless otherwise prohibited by local laws, the Parties agree that any damages shall be limited to actual damages and shall not include any special, punitive, consequential or similar damages unless otherwise agreed in this Agreement. 9.4. The Employee acknowledges and agrees that the Company and Coty have no adequate remedy at law for a breach or threatened breach of any of the provisions of this Agreement, and, in recognition of this fact, Employee agrees that, in the event of such a breach or threatened breach, the Company and Coty will suffer irreparable harm that cannot be adequately compensated by money damages. Employee agrees that, in addition to any remedies at law, the Company and Coty, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. Nothing in this Agreement shall be construed as prohibiting the Company or Coty from pursuing any other remedies at law or in equity that it may have or any other rights that it may have under any other agreement. Employee expressly waives the claim or defense that the Company has an adequate remedy at law, unless such waiver is prohibited by law. Employee also expressly waives any requirement that the Company or Coty post bond or security prior to seeking equitable relief. 9.5. Any grievance relating to employment should be referred to the Employee’s Business Leader. Headings used in this Agreement are meant to facilitate reading this Agreement and do not serve as definitions or interpretation of the respective provisions. If one or more of the provisions of this Agreement is or becomes wholly or partly invalid or unenforceable, or if this Agreement fails to cover an issue which the parties would have covered had they thought of it at the time of the Agreement, such invalidity, unenforceability or missing provision shall not affect the validity of the remaining provisions of this Agreement. Such invalid, unenforceable or missing provision shall be replaced by a valid provision which best reflects the intentions of the parties to this Agreement in accordance with the valid provisions of this Agreement, applicable laws and the Company and Coty Policies referred to in this Agreement.



[initials]	[initials]



Aucune disposition du Contrat ne sera considérée comme ayant fait l’objet d’une renonciation et aucun manquement ne sera considéré comme ayant été acquiescé sauf si cette renonciation ou cet accord est donné par écrit et signé par la Partie affirmant avoir renoncé ou acquiescé. ARTICLE 10 - Langue du Contrat Ce Contrat a été rédigé en deux langues. En cas de difficulté d’interprétation, seule la version française sera applicable et cette version prévaudra en tout état de cause. Toutes les références au genre masculin sont pour des raisons de commodité uniquement. ARTICLE 11- Information, Protection des données personnelles Le Salarié s’engage à communiquer à la Société toutes ses données personnelles requises par la Société et nécessaires pour exécuter le Contrat. Le Salarié accepte que ces données personnelles soient collectées et traitées par la Société pour la bonne administration du personnel, ce qui inclut la paie, le contrôle des accès aux locaux, du temps de travail et le traitement des dossiers des salariés. Le Salarié est informé que toutes les données de ce type contenues dans ce Contrat (et toute mise à jour de celui-ci), devront être notifiées à la Société puisque nécessaires à l’exécution du Contrat et du traitement des données personnelles du Salarié. Le Salarié est informé qu’il a un droit d’accès et de rectification de ses données, conformément à la loi du 6 janvier 1978, en contactant la direction des ressources humaines. Le droit d’accès permet au Salarié de demander les copies de toutes les données personnelles dont il est l’objet, de demander des informations concernant le traitement de ses données personnelles et les tierces parties à qui elles peuvent être communiquées. Par ailleurs, le Salarié peut s’opposer pour des raisons légitimes au traitement des données personnelles qui lui sont relatives en contactant le département des ressources humaines de la Société. Fait à Paris, le _ 2 November 2015 _ En trois originaux	No provision of this Agreement shall be deemed waived and no breach shall be excused unless such waiver or consent is in writing and signed by the party claimed to have waived or consented. ARTICLE 10 - Language This Agreement has been drawn in two languages. In the event that difficulties in interpretation arise, the French version will be applicable and prevail in all respects. Any references to the masculine gender herein are for convenience only. ARTICLE 11- Information, Data Protection The Employee agrees to disclose to the Company all his personal data which are requested by the Company and are necessary for the performance of the Agreement. The Employee accepts that the said data be collected and processed by the Company for managing employees, including payroll management and control of access to the premises, working hours, catering, and keeping and maintaining employees records etc. The Employee is informed that all the data of the type contained in this Agreement (as well as updates thereof) must be notified to the Company because they are necessary for the performance of this Agreement and management of the Employee’s personal data. The Employee is informed that he will have the right of access to and rectification of this data, pursuant to the law n° 78-17 of 6 January 1978, by contacting the Human Resources Department of the Company. The right of access entitles the Employee to request copies of all personal data of which the Employee is a data subject, information regarding the processing of personal data and the third parties to whom data may be disclosed. In addition, the Employee may oppose for legitimate reasons to the processing of personal data related to him by contacting the Human Resources Department of the Company. Paris, France, on November 2, 2015 __ In three original copies



[initials]	[initials]



/s/Sebastien Froidefond		/s/ Bart Becht
Sebastien Froidefond		Bart Becht
Senior Vice President, Human Resources		Chief Executive Officer
President, Coty SAS		Coty Inc.

* handwritten
/s/ Edgar Huber
Edgar Huber
The Employee (*)

(*) Signature précédée des mentions manuscrites suivantes: "Lu et Approuvé, Bon pour Accord".

Exhibit 10.32

SETTLEMENT AGREEMENT

BETWEEN THE UNDERSIGNED:

Coty SAS, a French société par actions simplifiée (simplified form of limited liability company) with a share capital of €22,905,465, registered with the Companies Registry of Paris under number 394 710 552 and having its registered office at 14 rue Quatre Septembre, 75002 Paris, France, represented by Sébastien Froidefond, Senior Vice President, Human Resources, duly empowered for the purposes hereof.

Hereinafter referred to as the "Company"

OF THE FIRST PART,

AND:

Mr. Jean Mortier, born on 16 January 1960, in Boulogne-Billancourt, of French nationality, domiciled at ## ### ###### ## ## ###### #####, ##### #####, ######,

Hereinafter referred to as "Mr. Mortier"

OF THE SECOND PART,

Hereinafter referred to collectively as the "Parties".



	1
[initials]	[initials]

For the purposes of this Contract, the term "Group" shall mean any company, as well as its subsidiaries and affiliates, directly or indirectly controlling the Company, and any company, as well as its subsidiaries and affiliates, directly or indirectly controlled by the Company.

WHEREAS:


1.	Mr. Mortier was initially hired by the Unilever Company with a full-time indefinite-term employment contract effective as of 1 November 1984.


2.	Following the transfer of Unilever’s business within which Mr. Mortier carried out his duties in the Coty group, Mr. Mortier’s employment contract was transferred to the Company effective as of 1 July 2005.


3.	Starting on 25 June 2014, Mr. Mortier was appointed President, Global Markets, effective as of 1 July 2014.


4.	Finally, his basic gross fixed annual remuneration is €490,000 (four hundred ninety thousand Euros) with a gross additional expatriation bonus of €110,000 (one hundred and ten thousand Euros).


5.	Mr. Mortier's employment contract is subject to the national collective bargaining agreement for the chemical industry and the collective statutes in force at the Company.


6.	By letter delivered by hand with acknowledgement of receipt dated 22 October 2015, the Company gave Mr. Mortier notice to attend a pre-dismissal meeting on 29 October 2015 with respect to his potential dismissal.

The Company then notified Mr. Mortier of his dismissal by registered letter dated 2 November 2015 on the grounds of fundamental disagreement on the Company and Group’s strategy , making it extremely difficult for Management and him to work together. According to the Company, this situation was compromising implementation of recently announced evolution and development projects announced for the Global Markets structure of the Coty group, which results in particular from the announced acquisition of Procter & Gamble’s Beauty business, and could result in preventing the Group from functioning properly, given his level of responsibilities and motivational role that he should play for his teams from the Global Markets structure.


8.	A few days after receiving the letter of dismissal, Mr. Mortier strongly contested the dismissal procedure launched by the Company as well as the substantive grievances levied against him, and informed the Company of his intention to refer the matter to the Employee Claims Court.


9.	In this respect, on 5 November 2015, Mr. Mortier, via his lawyer, sent a letter to the Company in which he stated that he considered his dismissal was without real and serious grounds (i.e., without just cause) .



	2
[initials]	[initials]

He insisted first of all on the fact that the alleged differences of opinion mentioned in support of his dismissal were only a pretext to remove him.

He claimed that he could not be reproached for having given his opinion, as part of his duties and responsibilities, and without misusing his freedom of speech, on the orientations and projects which had been submitted to him and were impacting the Global Markets structure under his supervision.

He added that he considered that he had always demonstrated his commitment and skills, as illustrated by his professional development within the Group and the responsibilities entrusted to him

More generally, Mr. Mortier stated that termination of his employment contract, in these conditions, was therefore totally unjustified and caused him considerable financial loss, moral prejudice, professional harm and damage to his career.

10.

The Company pursued the procedure for Mr. Mortier's dismissal, the grounds of which, in its opinion, are not only real but also sufficiently serious to justify termination of his employment contract. It considered that this termination was not sudden but followed, on the contrary, a series of remarks from his superiors concerning his persistent differences of opinion despite the Management’s differing stance.

Therefore, the Company considered that the differences of opinion over strategy which Mr. Mortier displayed in carrying out his assignments were affecting the credibility of the decisions made by his superiors regarding the Global Markets structure’s teams and were incompatible with his level of responsibility and his position within the Company and the Group.

It indeed considered that Mr. Mortier should be the spokesperson for Management and the strategic vision of the Group, and this was incompatible with the disagreements and strong criticisms that he was expressing.

The Company therefore confirmed to Mr. Mortier that it could not go back on its decision that it considered was totally legitimate.


11.	With a view to appeasing the situation, the Parties entered into negotiations.

After discussions and exchanges of views concerning their respective rights, the Parties, having taken all advice necessary from their respective advisers to be able to express their consent freely, have come together and have decided to resolve their dispute in a final manner by means of a settlement by giving the reciprocal concessions set out hereinafter.



	3
[initials]	[initials]

IT HAS THEREFORE BEEN DECIDED AND AGREED AS FOLLOWS:

ARTICLE 1: END OF CONTRACTUAL RELATIONS

1.1. Notice period

Mr. Mortier acknowledges receipt of his dismissal letter dated 2 November 2015.

However, in order to allow a smooth transition to Mr. Mortier's successor, and in light of the various projects underway within the Group and more specifically within the Global Markets structure, the Parties agree that Mr. Mortier's three-month notice period will be extended to 30 June 2016 (the " Extended Notice Period ").

The Parties agree that Mr. Mortier will work during the Extended Notice Period.

Until 31 March 2016, Mr. Mortier agrees to work first and foremost on the following subjects:


•	Transfer of files to the future President of the Perfume division;


•	Transfer of the Licenses files with Mr. C. Pane;


•	Management of the Anti-Trust project with Mr. J. Creus;


•	Management of the distribution joint ventures review project with Mr. G. Amigues.

The subjects presented here do not represent an exhaustive list. Therefore, Mr. Mortier also agrees to work first and foremost on any subject identified by the Company subsequently to the signing of this settlement agreement.

As from 1 April 2016, the Parties also agree that Mr. Mortier, without being released from having to work during his notice period, will have full liberty in the organization of his work time, subject to ad hoc interventions that he may be asked to conduct on the Anti-Trust project. By signing this settlement agreement, Mr. Mortier expressly agrees to respond favorably to the Company’s requests regarding the Anti-Trust project for the remainder of his Extended Notice Period.

In any event, Mr. Mortier shall be entitled to the entirety of his fixed and variable remuneration, his benefits in kind and expatriation bonus, until 30 June 2016, expiration date of the Extended Notice Period.

1.2. Mr. Mortier's final pay including all amounts outstanding

The Company shall pay Mr. Mortier by bank transfer on the usual salary payment date for the month of June 2016, the following amounts as his final pay including all amounts outstanding:


a.	Compensation for paid leave not taken corresponding to the days of paid leave not taken and the days of paid leave acquired on the date he is effectively no longer an employee of the Company;


b.	The sum of €2,108,157.20 gross, i.e. two million one hundred and eight thousand one hundred and fifty-seven Euros and twenty cents gross as severance pay in accordance with applicable provisions of the law and the relevant collective bargaining agreement;



	4
[initials]	[initials]


c.	Reimbursement of professional expenses incurred by Mr. Mortier in connection with his employment contract, up until the date on which he is effectively no longer an employee of the Company, in accordance with the rules and procedures for reimbursement applicable within the Company.

For the avoidance of doubt, it is expressly noted that the aforementioned sums shall be subject to deduction of the social contributions as provided for by applicable legislation.

Mr. Mortier will also receive around 30 June 2016:


•	His receipt acknowledging full settlement of all amounts outstanding;


•	His work certificate;


•	The certificate for the French employment office (Pôle Emploi), and


•	The documents providing information on the continuity of coverage under contingency funds and health insurance.

1.3. Bonus

If applicable, Mr. Mortier will receive his bonus, calculated over the entire 2015-2016 fiscal year, in light of the performance indicators on which the bonus is based. The amount corresponding to this bonus will be paid to him, as the case may be, no later than 31 October 2016.

1.4. Non-Compete

Mr. Mortier acknowledges that he has not been released from his non-compete obligation as provided in Article 8 of his employment contract (the “ Non-Compete Obligation ”) and therefore that he is bound by this Non-Compete Obligation during a period of 12 months starting 1 July 2016.

The Company also acknowledges being bound by the terms of the Non-Compete Obligation and agrees to pay Mr. Mortier as from 1 July 2016 the financial compensation set out in the employment contract, i.e., €69,944.44 gross (sixty-nine thousand nine hundred and forty- four Euros and forty-four cents gross) for the duration of the Non-Compete Obligation, subject to full compliance with its terms by Mr. Mortier.

ARTICLE 2: CONCESSIONS MADE BY THE COMPANY

Without acknowledging the validity of Mr. Mortier's claims, the Company accepts, in the interest of conciliation and in order to end all litigation between the parties, to make the following concessions:


•	Global settlement amount

The Company accepts to pay Mr. Mortier, as remedy for the moral prejudice, financial loss, professional harm and damage to his career that he is claiming he has suffered, the sum of €4,891,842.80 Euros gross, i.e., four million eight hundred and ninety-one thousand eight hundred and forty-two Euros and eighty cents gross as compensation for the global, final and lump-sum settlement of all amounts owed and as a final settlement of any alleged cause of any loss, prejudice or harm and of any dispute having arisen or which may arise as a result of the conclusion, the performance, and the termination of his employment contract.



	5
[initials]	[initials]

This settlement and lump sum amount will be paid in two installments, after deduction of the applicable social contributions, by wire transfer to Mr. Mortier’s account:


•	Within five working days following the signature of this settlement agreement for an amount of 2 million Euros gross;


•	Within five working days following the expiration of the Extended Notice Period for the remaining gross amount of the global settlement amount.

The applicable social contribution deductions will appear on the corresponding payslip.

2.2. Stock Options and Shares

Mr. Mortier owns stock options and shares granted to him in connection with the performance of his employment contract in accordance with the rules for the Coty Inc. ELTIP and LTIP plans.

The Company agrees to ensure that the treatment of stock options and shares granted to Mr. Mortier shall be settled in accordance with the applicable provisions of the aforementioned plan rules.

2.3. Non-disparagement obligation

The Company, via the voting members of its Executive Committee (Comité Exécutif) or its Board of Directors (Conseil d'Admimstration), expressly agrees to not do anything, in particular, but not limited to, to not make a public or private statement, which could harm the interests and/or adversely affect the professional image or reputation of Mr. Mortier.

Should Mr. Mortier report disparagement to the Company (through its Executive Committee or one of its members), the Company agrees to do its best to put an end to this situation.

2.4. Waiver of action

In exchange for the obligations contracted by Mr. Mortier pursuant to Article 3 of this settlement agreement, the Company expressly and definitively agrees not to make any claim and/or any grievance, for whatever purpose, on whatever grounds, against Mr. Mortier, as well as not to take any legal action or any legal proceedings against him, of whatever kind or purpose, before any court and/or independent administrative authority whatsoever, including a criminal court, in relation to the facts and/or events and/or relations described in the introduction above and/or their performance and/or their termination.

2.5. Mr. Mortier's legal advisers' fees to be borne by the Company

The Company undertakes to bear the cost of advisers' fees and legal representation fees incurred by Mr. Mortier in defending his interests in connection with



	6
[initials]	[initials]

finalizing this settlement, on the basis of an hourly rate of up to €450 (excluding tax) and limited to a total amount of €4,500 (excluding tax).

ARTICLE 3: CONCESSIONS MADE BY MR. MORTIER

3.1. Waiver of action

Mr. Mortier confirms that the payment of the settlement amount referred to in Article 2 above constitutes global, all-inclusive and final compensation for all of his causes of loss and prejudice, in that they relate to the performance and/or termination of his employment contract with the Company and the corporate offices he holds within the Group.

Mr. Mortier acknowledges, subject to full payment and due receipt of the sums mentioned in Articles 1 and 2 of this settlement agreement, that all his rights, whether existing or contingent, have been fulfilled, relating to the payment of all salary, ancillary amounts, remuneration and in particular, allowances, bonuses, overtime, reimbursement of expenses, compensation for paid leave not taken, compensation for the notice period not worked, severance pay, compensation for the non-compete agreement, variable remuneration, bonuses, benefits in kind, indemnification of whatever kind, compensation of whatever kind, other benefits granted by the Company, payable or to become payable as a result of the legal relationship or in fact which may have existed between him and the Company or any other entity of the Group.

In exchange for the obligations contracted by the Company pursuant to Article 2 of this settlement agreement, Mr. Mortier expressly and definitively agrees not to make any claim and/or any grievance, for whatever purpose, on whatever grounds, against the Company and/or any company or entity economically or legally related to the Group, or against any of the current and/or past executives and/or corporate officers and/or employees of the Group, as well as not to take any legal action or any legal proceedings against them, of whatever kind or purpose, before any court and/or independent administrative authority whatsoever, including a criminal court, in relation to the facts and/or events and/or relations described in the introduction above and/or their performance and/or their termination.

3.2. Non-disparagement obligation

Mr. Mortier expressly agrees not to do anything, in particular, and not exclusively, not to make any public or private statement, which could harm the interests and/or adversely affect the image or reputation of the Company, of any other company of the Group and/or their current or past employees and executives.

3.3. Confidentiality obligation

Mr. Mortier agrees, after leaving the Group, to exercise absolute discretion concerning the confidential information relating to the Company and/or the other companies of the Group or its customers and partners, which he received or which he may have collected in connection with his collaboration with the Company or the Group.

In addition, Mr. Mortier agrees not to give, obtain for or provide to, in any manner whatsoever, directly or indirectly, any person, whether private individual or legal entity, any trade secret or any confidential information concerning in particular the activities of the Company and any other company of the



	7
[initials]	[initials]

Group, their finances, products, customers or members of staff, except with prior written consent from a legal representative of the Company.

It is expressly agreed that these agreements constitute an essential condition to this settlement agreement, the breach of which could compromise all of its provisions.

3.4. Non-solicitation of employees

In accordance with Article 8 of his employment contract, during a period of twelve months starting 1 July 2016, Mr. Mortier shall not, without the Company's prior written consent, solicit or directly encourage, the departure of employees from the Company or its subsidiaries, or hire or assist a third party to poach an employee who was employed by the Company or one of its subsidiaries as of 1 July 2016.

ARTICLE 4: CONFIDENTIALITY CONCERNING THE SETTLEMENT AGREEMENT

The Parties agree to keep all information confidential concerning the aforementioned disagreements, the provisions of this agreement as well as the conditions and the content of the negotiations having led to its conclusion, this confidentiality being applied in particular to the reciprocal concessions granted pursuant to this settlement agreement.

This settlement agreement may only be disclosed in the following cases:


•	in the event that either of the Parties has not complied with his or its undertakings given herein, for this settlement agreement to be provided in court in order to obtain specific performance hereof; or


•	if the social security or tax authorities were to expressly request disclosure hereof in connection with an inspection or audit, or if expressly ordered to do so by a judicial authority. If a social security or tax authority requires such disclosure, the Party having received the request will inform the other Party immediately; or


•	in order to allow the Company or the Group to comply with its legal obligations, notably in the United States.

ARTICLE 5: SOCIAL SECURITY AND TAX TREATMENT OF THE SUMS PAID

Mr. Mortier declares that he is fully aware of the social security and tax treatment of the sums paid to him pursuant to the present settlement agreement.

Therefore, each of the Parties agrees to assume any tax or social security consequences resulting from payment of the sums referred to in this settlement agreement, subject to Article 2.3.

Mr. Mortier also acknowledges that he has been informed that the payment of the settlement amount mentioned above, the gross amount of which will be declared to the French employment office (Pôle Emploi), may entail, as the case may be, postponement of the payment of unemployment benefits.

ARTICLE 6: INFORMATION

The Parties declare, each as far as they are respectively concerned, that their consent to enter into this settlement agreement has been given freely and reflects their intention with full knowledge of the facts.



	8
[initials]	[initials]

Mr. Mortier acknowledges in particular that he has had the necessary time to reflect and has obtained the informed opinions of his legal adviser before signing this settlement agreement and that he has been informed that any breach of this settlement agreement could justify rescission hereof or the award of damages to the Company.

Mr. Mortier also acknowledges that his attention has been expressly drawn to the final and irrevocable nature of this settlement agreement which shall constitute, in accordance with Articles 2044 et seq. of the French Civil Code, between him and the Company, res judicata.

Subject to each of the Parties complying with its or his own respective obligations, the Company and Mr. Mortier agree not to challenge this settlement agreement, in any of its provisions whatsoever, on any grounds whatsoever, even for an error at law or in fact.

This settlement agreement is entered into in accordance with Articles 2044 to 2058 of the French Civil Code and shall therefore constitute res judicata between the Parties.

In [Hw:] Paris, on November 12th, 2015



In two original copies
[Hw:] Read and approved – Valid as settlement	[Hw:] Read and approved – Valid as settlement
/s/Sebastien Froidefond	/s/Jean Mortier
COTY SAS (*)	JEAN MORTIER (*)
Sébastien Froidefond
Senior VP Human Resources

(*) Please sign after adding the handwritten words "Lu et approuvé - Bon pour transaction" (meaning "Read and approved - Valid as settlement”) and initial each of the pages of this settlement agreement.



	9
[initials]	[initials]

Coty Inc.

Subsidiary List

As of December 31, 2015



Subsidiary Name	Jurisdiction of Organization
Coty Argentina S.A	Argentina
Coty Australia Pty. Ltd.	Australia
Coty Austria GmbH, wien	Austria
Bourjois S.A.	Belgium
Coty Benelux S.A.	Belgium
Coty Brasil Industria e Comercio de Cosmeticos Ltda.	Brazil
Coty Brazil Retail Cosmeticos S.A.	Brazil
Lancaster do Brasil Cosmeticos Ltda.	Brazil
StarAsia Distribution (Cambodia) Ltd.	Cambodia
Coty Canada Inc.	Canada
TJoy Holdings Co. Ltd.	Cayman
Coty Cosmeticos Chile Limitada	Chile
Coty China Holding Limited	China
Coty International Trade (Shanghai) Co. Ltd.	China
Coty Prestige Shanghai Ltd.	China
Coty R&D (Suzhou) Co. Ltd.	China
Nanjing Yanting Trade Co. Ltd.	China
StarAsia Distributions Hong Kong Limited	China
Suzhou Ganon Trading Co., Ltd.	China
Suzhou Jiahua Biochemistry Co.	China
Coty Colombia Ltda.	Colombia
Coty Ceska Republika, k.s.	Czech Republic
Bourjois S.A.S.	France
Coty France S.A.S.	France
Coty S.A.S.	France
Else France S.A.S.	France
Fragrance Production S.A.S.	France
Coty Germany GmbH	Germany
Coty Services and Logistics GmbH	Germany
Coty Hellas S.A.	Greece
Bourjois Limited (HK)	Hong Kong
Chi Chun Industrial Co. Ltd.	Hong Kong
Coty Hong Kong Ltd.	Hong Kong
Coty Prestige Hong Kong Ltd.	Hong Kong
Coty Prestige Shanghai (HK) Ltd.	Hong Kong
Coty Prestige Southeast Asia (HK) Limited	Hong Kong
Ming-De Investment Co. Ltd.	Hong Kong
Super Globe Holdings Ltd.	Hong Kong
Coty Hungary Kft.	Hungary
Coty India Beauty and Fragrance Products Private Ltd.	India
PT Coty Prestige Southeast Asia Indonesia	Indonesia

Coty Inc.

Subsidiary List

As of December 31, 2015



PT StarAsia Distributions	Indonesia
Coty Ireland Ltd.	Ireland
Coty Italia S.p.A.	Italy
Coty Prestige Japan KK	Japan
OPI Japan KK	Japan
Coty Prestige Southeast Asia (M) SDN. BHD.	Malaysia
StarAsia (Malaysia) Sdn Bhd.	Malaysia
Coty Mexico S.A. de C.V.	Mexico
Coty Lancaster S.A.M.	Monaco
Coty B.V.	Netherlands
Coty Benelux B.V.	Netherlands
Coty Investment B.V.	Netherlands
Lancaster B.V.	Netherlands
Coty Prestige Southeast Asia Philippines	Philippines
Coty Polska Sp z.o.o.	Poland
Coty Puerto Rico Inc.	Puerto Rico
Coty Cosmetics Romania S.r.l.	Romania
Bourjois Paris LLC	Russia
Coty Russia ZAO	Russia
Coty Beauty LLC	Russia
Coty Arabia Trading Company	Saudi Arabia
Coty Asia Pte. Ltd.	Singapore
Coty Prestige Southeast Asia Pte. Ltd.	Singapore
StarAsia Group Pte. Ltd.	Singapore
StarAsia Manufacturing Pte. Ltd.	Singapore
StarAsia Singapore Pte. Ltd.	Singapore
Coty Slovenska Republika s.r.o.	Slovak Republic
Coty Beauty South Africa (Pty) Ltd.	South Africa
Coty South Africa (PTY) Ltd.	South Africa
Coty Korea Ltd.	South Korea
Coty Spain S.L.	Spain
Coty (Schweiz) AG	Switzerland
Coty Geneva S.A. Versoix	Switzerland
Coty Prestige (Taiwan) Ltd.	Taiwan
StarAsia Taiwan Co., Ltd.	Taiwan
Coty Prestige Southeast Asia (Thailand) Co. Ltd.	Thailand
Coty Distribution Emirates L.L.C.	United Arab Emirates
Coty Middle East FZCO	United Arab Emirates
Beamly, Ltd.	United Kingdom
Beauty International Ltd.	United Kingdom
Bourjois Limited	United Kingdom
Coty Brands Group Limited	United Kingdom
Coty Export U.K. Ltd.	United Kingdom

Coty Inc.

Subsidiary List

As of December 31, 2015



Coty Manufacturing UK Ltd.	United Kingdom
Coty Services U.K. Ltd.	United Kingdom
Coty UK Ltd.	United Kingdom
Del Laboratories (U.K.) Limited	United Kingdom
India Projects Ltd.	United Kingdom
Lady Manhattan Ltd.	United Kingdom
Lancaster Group, Ltd.	United Kingdom
Lena White Limited	United Kingdom
Rimmel International Ltd.	United Kingdom
Philosophy Cosmetics, Inc.	United States – AZ
Philosophy, Inc.	United States – AZ
Beamly Inc.	United States - DE
Biotech Research Labs, Inc.	United States – DE
Calvin Klein Cosmetic Corporation	United States – DE
Coty Prestige Travel Retail and Export LLC	United States – DE
Coty US LLC	United States – DE
DLI International Holding II Corp.	United States – DE
Green Acquisition Sub Inc.	United States – DE
Philosophy Beauty Consulting LLC	United States – DE
Rimmel Inc.	United States – DE
DLI International Holding I LLC	United States – DE
OPI Products Inc.	United States – DE
Philosophy Acquisition Company, Inc.	United States – DE
Philosophy Mezzanine Corp.	United States – DE
Coty Beauty Vietnam Company Limited	Vietnam

Exhibit 31.1

Certification

I, Lambertus J.H. Becht, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Coty Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	February 4, 2016	/s/Lambertus J.H. Becht
		Lambertus J.H. Becht
		Interim Chief Executive Officer

Exhibit 31.2

Certification

I, Patrice de Talhouët, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Coty Inc.;

d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	February 4, 2016	/s/ Patrice de Talhouët
		Patrice de Talhouët
		Chief Financial Officer

Exhibit 32.1

Certification

Pursuant to Rule 13a-14(b) or

Rule 15d-14(b) and 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002)

Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), the undersigned officer of Coty Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended December 31, 2015 (the “Report”) of the Company fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated:	February 4, 2016	/s/Lambertus J.H. Becht
		Lambertus J.H. Becht
		Interim Chief Executive Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and for no other purpose.

Exhibit 32.2

Certification

Pursuant to Rule 13a-14(b) or

Rule 15d-14(b) and 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002)



Dated:	February 4, 2016	/s/ Patrice de Talhouët
		Patrice de Talhouët
		Chief Financial Officer