Exhibit 10.1
 
PHYSICIANS FORMULA, INC.
 
EMPLOYMENT AGREEMENT
 
    THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of February 19, 2010,
(the "Effective Date") by and between Physicians Formula, Inc., a New York
corporation (the "Company") and Jeff M. Berry ("Executive").
 
    NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
 
    1. Employment.  The Company shall employ Executive, and Executive agrees to
be employed with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the Effective Date and ending as provided
in paragraph 5 hereof (the "Employment Period").
 
    2. Position and Duties.
 
    (a) During the Employment Period, Executive shall serve as Chief Financial
Officer and Secretary of Physicians Formula Holdings, Inc. ("Parent"), the
parent company of the Company, and the Company and shall have the normal duties,
responsibilities, functions and authority of the Chief Financial Officer and
Secretary, subject to the power and authority of Parent's Board of Directors
(the "Board") to expand or limit such duties, responsibilities, functions and
authority and to overrule actions of officers of Parent or the Company, as
applicable.  During the Employment Period, Executive shall render such
administrative, and other executive and managerial services to Parent and its
Subsidiaries which are consistent with Executive's position as the Board may
from time to time direct.
 
    (b) During the Employment Period, Executive shall report to the Chief
Executive Officer of Parent and shall devote his best efforts and his full
business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Parent and its Subsidiaries.  Executive shall perform his duties,
responsibilities and functions to the Parent and its Subsidiaries hereunder to
the best of his abilities in a diligent, trustworthy, professional and efficient
manner and shall comply with Parent's and its Subsidiaries' policies and
procedures in all material respects.  During the Employment Period, Executive
shall not serve as an officer or director of, or otherwise perform services for
compensation for, any other entity without the prior written consent of the
Board; provided that Executive may serve as an officer or director of or
otherwise participate in purely educational, welfare, social, religious and
civic organizations so long as such activities do not interfere with Executive's
employment hereunder or create a potential business or fiduciary conflict.
 
    (c) For purposes of this Agreement, "Subsidiaries" shall mean any
corporation or other entity of which the securities or other ownership interests
having the voting power to elect a majority of the board of directors or other
governing body are, at the time of determination, owned by Parent, directly or
through one or more Subsidiaries.
 
    3. Compensation and Benefits During Employment Period.
 
    (a) During the Employment Period, Executive's base salary shall be $316,368
per annum or such higher rate as the Board (or the Compensation Committee
established by the Board) may determine from time to time (as adjusted from time
to time, the "Base Salary"), which salary shall be payable by the Company in
regular installments in accordance with the Company's general payroll
practices.  In addition, during the Employment Period, Executive shall be
entitled to participate in all of the Company's employee benefit programs for
which senior executive employees of the Company and its Subsidiaries are
generally eligible (including, but not limited to, medical, dental, vision, life
and long-term disability insurance, business travel accident insurance and the
Company's Employee Assistance Program).  During the Employment Period, the
Executive shall be entitled to seventeen (17) days of paid vacation per calendar
year (as prorated for partial years) in accordance with the Company's policy on
accrual and use applicable to employees as in effect from time to time, provided
that the maximum number of vacation days that may be accrued shall be twenty-six
(26) days.  The Executive's participation in any benefit programs will be
subject to the terms of the applicable plan documents and generally applicable
Company policies.  Notwithstanding the foregoing, the Company may modify or
terminate any employee benefit plan at any time.
 
    (b) During the Employment Period, the Company shall reimburse Executive for
all reasonable business expenses incurred by him in the course of performing his
duties and responsibilities under this Agreement which are consistent with the
Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company's requirements
with respect to reporting and documentation of such expenses.
 
    (c) In addition to the Base Salary, Executive shall be eligible to receive
an annual bonus for calendar year 2010 at a target level of 50% of Base Salary,
to be determined based upon achievement by Executive and achievement by the
Company of performance criteria and other goals established by the Board (or the
Compensation Committee established by the Board), in accordance with the 2010
Bonus Plan that may be established by the Board (or the Compensation Committee
established by the Board) in its sole discretion; and, thereafter, Executive
shall be eligible to receive an annual bonus at a target amount to be determined
by the Board (or the Compensation Committee established by the Board) for each
subsequent calendar year during the Employment Period based upon achievement by
Executive and achievement by the Company of performance criteria and other goals
established by the Board (or the Compensation Committee established by the
Board) on an annual basis, in accordance with the Company's annual bonus plan
for senior executives that may be established by the Board (or the Compensation
Committee established by the Board) in its sole discretion.
 
    (d) During the Employment Period, the Company shall provide Executive with a
Company vehicle for business and personal use.  Executive acknowledges that the
personal use of the Company vehicle is a taxable fringe benefit and is subject
to all applicable payroll and income tax withholding.
 
    (e) All amounts payable to Executive under this Agreement shall be subject
to all required and customary withholding by the Company.
 
 
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    4. Signing Bonus.  Upon the Effective Date, Executive shall be paid a bonus
in an amount equal to $120,000 (the "Sign-On Bonus"), which shall be subject to
all applicable payroll and income tax withholding.  Should Executive terminate
his employment by voluntary resignation prior to the date that is two years and
six months following the Effective Date, Executive shall forfeit the Sign-On
Bonus and shall be required to repay to the Company the full amount of the
Sign-On Bonus upon such termination.  Should Executive terminate his employment
by voluntary resignation on or after the date that is two years and six months
following the Effective Date and prior to the date that is three years and six
months following the Effective Date, Executive shall forfeit half of the Sign-On
Bonus and shall be required to repay to the Company $60,000 of the Sign-On
Bonus.
 
    5. Term.  The Employment Period shall begin on the date hereof and,
notwithstanding anything in this Agreement to the contrary, expressed or
implied, or Section 2924 of the California Labor Code or any similar provision
of applicable law, (a) the Employment Period shall terminate immediately upon
Executive's resignation, death or Disability (as defined below) and (b) the
Employment Period may be terminated by the Company at any time for Cause (as
defined below) or without Cause.  Except as otherwise provided herein, any
termination of the Employment Period by the Company shall be effective as of the
date specified in a written notice from the Company to Executive.
 
    6. Compensation and Benefits After Termination of Employment Period.
 
    (a) If the Employment Period is terminated by the Company without Cause,
Executive shall be entitled to:
 
       (i) continue to receive his Base Salary at the then-current rate, payable
in regular installments, in accordance with the Company's payroll payment
schedule in effect on the termination date but in no event less frequently than
monthly, as special severance payments for a period of twenty-four (24) months
from the date of termination (the "Severance Period");
 
       (ii) continued use of a Company car for the Severance Period;
 
       (iii) a portion of the Target Annual Bonus prorated for the elapsed
portion of the year to the date of termination of employment, payable within 30
days after termination; and
 
       (iv) continue to participate in all of the Company's employee benefit
programs for which senior executive employees of the Company and its
Subsidiaries are generally eligible (except for any of the Company's equity
compensation plans) for the Severance Period, at the Company’s expense.
 
    (b) If a Change of Control shall have occurred, and within one year
following the Change of Control the Employment Period is terminated by the
Company without Cause, Executive shall be entitled to the payments and benefits
enumerated in clause 6(a) above, except that in lieu of 6(a)(iii) above the
Executive shall be entitled to the greater of:
 
       (i) a proportionate portion of the annual bonus award Executive would
have earned if the performance period had terminated on the date of the Change
of Control, based on the elapsed portion of the year to the date of the Change
of Control and achievement by Executive and achievement by the Company of
performance criteria and other goals established under the annual bonus plan for
senior executives over that portion of the year, payable within 30 days after
termination, and
 
       (ii) a portion of the Target Annual Bonus prorated for the elapsed
portion of the year to the date of termination of employment, payable within 30
days after termination.
 
    (c) The payments made pursuant to Sections 6(a) or 6(b) shall in each case
be paid if and only if Executive has executed and delivered to the Company and
does not revoke a general release of all claims against the Company and its
directors, officers and affiliates in form and substance satisfactory to the
Company (the "General Release") within 60 days of the termination date and only
so long as Executive has not revoked or breached the provisions of the general
release or breached the provisions of that certain Protection of Trade Secrets,
Nonsolicitation and Confidentiality Agreement, dated as of the date hereof by
and between the Company and Executive (the "Nonsolicitation and Confidentiality
Agreement"), and does not apply for unemployment compensation chargeable to the
Company during the Severance Period, and Executive shall not be entitled to any
other salary, compensation or employee or other benefits after termination of
the Employment Period, except as specifically provided for in the Company's
employee benefit plans or as otherwise expressly required by applicable law
(such as COBRA).  Any amounts payable pursuant to Section 6 shall not be paid
until the first scheduled payment date following the date the General Release is
executed and no longer subject to revocation, with the first such payment being
in an amount equal to the total amount to which Executive would otherwise have
been entitled during the period following the date of termination if such
deferral had not been required; provided, however, that any such amounts that
constitute nonqualified deferred compensation within the meaning of Internal
Revenue Code Section 409A and the regulations and guidance promulgated
thereunder ("Section 409A") shall not be paid until the 60th day following such
termination to the extent necessary to avoid adverse tax consequences under
Section 409A, and, if such payments are required to be so deferred, the first
payment shall be in an amount equal to the total amount to which Executive would
otherwise have been entitled during the period following the date of termination
if such deferral had not been required; provided further that, if Executive is a
"specified employee" within the meaning of Section 409A, any amounts payable to
Executive under this Section 6 during the first six months and one day following
the date of termination that constitute nonqualified deferred compensation
within the meaning of Section 409A shall not be paid until the date that is six
months and one day following such termination to the extent necessary to avoid
adverse tax consequences under Section 409A, and, if such payments are required
to be so deferred, the first payment shall be in an amount equal to the total
amount to which Executive would otherwise have been entitled to during the
period following the date of termination if such deferral had not been required.
 
 
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    (d) Anything in this Agreement to the contrary notwithstanding, in the event
the Company determines that any payment by the Company, Parent or any of its
Subsidiaries in connection with a Change of Control to or for the benefit of
Executive (whether paid or payable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by Parent for Federal income tax
purposes because of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), then the amounts payable to Executive hereunder pursuant
to clauses (a) and (b) above (the "Severance Payments") shall be reduced to the
Reduced Amount.  The "Reduced Amount" shall be that amount, if any, that
maximizes the Severance Payments hereunder without causing any Payment to be
nondeductible by Parent because of Section 280G of the Code.
 
    (e) If the Employment Period is terminated by the Company for Cause or is
terminated upon Executive's resignation, death or Disability pursuant to
paragraph 5(a) above, Executive shall only be entitled to receive his Base
Salary through the date of termination and shall not be entitled to any other
salary, compensation or employee or other benefits from the Company or its
Subsidiaries thereafter, except as otherwise specifically provided for under the
Company's employee benefit plans or as otherwise expressly required by
applicable law (such as COBRA).
 
    (f) Except as otherwise expressly provided herein, all of Executive's rights
to salary, bonuses, employee benefits and other compensation hereunder which
would have accrued or become payable after the termination of the Employment
Period shall cease upon such termination, other than those expressly required
under applicable law (such as COBRA).
 
    (g) It is the intention of the parties that the payments and benefits to
which Executive could become entitled in connection with termination of
employment under this Agreement comply with or be exempt from Section 409A of
the Code.  In the event that the parties determine that any such benefit or
right does not so comply, they will negotiate reasonably and in good faith to
amend the terms of this Agreement such that it complies (in a manner that
attempts to minimize the economic impact of such amendment on Executive and the
Company and its affiliates).
 
    (h) For purposes of this Agreement, "Cause" shall mean with respect to
Executive one or more of the following:  (i) the conviction of (or entry of a
plea of guilty or nolo contendere to) a felony or other crime involving moral
turpitude or dishonesty, disloyalty or fraud with respect to Parent or any of
its Subsidiaries or any of their customers or suppliers, (ii) reporting to work
under the influence of alcohol or illegal drugs, the use of illegal drugs
(whether or not at the workplace) or other repeated conduct causing Parent or
any of its Subsidiaries substantial public disgrace or disrepute or substantial
economic harm, (iii) willful and repeated failure to substantially perform
duties as reasonably directed by the Board which is not cured to the Board's
reasonable satisfaction within 15 days after written notice thereof (which shall
specifically identify the manner in which the Board believes that Executive has
not substantially performed his duties) to Executive, (iv) a breach of
Executive's duty of loyalty to Parent or any of its Subsidiaries or affiliates
or any act of dishonesty or fraud with respect to Parent or any of its
Subsidiaries or (v) any material breach of this Agreement or any other agreement
between Executive and Parent or any of its affiliates (including, without
limitation, the Nonsolicitation and Confidentiality Agreement) which is not
cured to the Board's reasonable satisfaction within 15 days after written notice
thereof to Executive.
 
    (i) For purposes of this Agreement, "Disability" shall mean Executive's
inability to perform the essential duties, responsibilities and functions of his
position with the Parent and its Subsidiaries as a result of any mental or
physical disability or incapacity even with reasonable accommodations of such
disability or incapacity provided by Parent and its Subsidiaries or if providing
such accommodations would be unreasonable, all as determined by the Board in its
reasonable good faith judgment.  Executive shall cooperate in all respects with
the Company if a question arises as to whether he has become disabled
(including, without limitation, submitting to an examination by a medical doctor
or other health care specialists selected by the Company and authorizing such
medical doctor or such other health care specialist to discuss Executive's
condition with the Company).
 
    (j) For purposes of this Agreement, "Change of Control" shall mean the
occurrence of one of the following events:
 
       (i) if any "person" or "group" as those terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (as amended, the "Exchange
Act") or any successors thereto, other than any employee benefit plan of Parent
or its Subsidiaries or a trustee or other administrator or fiduciary holding
securities under an employee benefit plan of Parent or any of its Subsidiaries
(an "Exempt Person"), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act or any successor thereto), directly or
indirectly, of securities of Parent representing 50% or more of the combined
voting power of the Parent's then outstanding securities; or
 
       (ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by Parent's stockholders was
approved by at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election was previously
so approved, cease for any reason to constitute a majority thereof; or
 
       (iii) consummation of a merger or consolidation of Parent with any other
corporation, other than a merger or consolidation (A) which would result in all
or a portion of the voting securities of Parent outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of Parent or such surviving
entity outstanding immediately after such merger or consolidation or (B) by
which the corporate existence of Parent is not affected and following which
Parent's chief executive officer and directors retain their positions with
Parent (and constitute at least a majority of the Board); or
 
       (iv) consummation of a sale or disposition by Parent of all or
substantially all of Parent's assets, other than a sale to an Exempt Person;
provided, however, that a transaction shall not constitute a Change of Control
unless the transaction also constitutes a change in the ownership or effective
control of the Company, or in the ownership of a substantial portion of the
Company's assets, within the meaning of Section 409A(a)(2)(A)(v) of the Code and
the regulations or other published guidance promulgated thereunder.
 
    (k) For purposes of this Agreement, "Target Annual Bonus" shall mean 50% of
Executive's Base Salary in effect at the time of Executive's termination.
 
 
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    7. Executive's Representations.  Executive hereby represents and warrants to
the Company that (i) the execution, delivery and performance of this Agreement
by Executive do not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which he is bound, (ii) Executive is not a
party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.  Executive hereby acknowledges and represents that he has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.
 
    8. Survival.  Paragraphs 5 through 21, inclusive, shall survive and continue
in full force in accordance with their terms notwithstanding the expiration or
termination of the Employment Period.
 
    9. Notices.  Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, sent by reputable overnight courier
service or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated:
 
Notices to Executive:
 
Jeff M. Berry
19 Clipper Street
San Francisco, CA 94114

Notices to the Company:
 
Physicians Formula, Inc.
1055 West 8th Street
Azusa, California  91702
Attention:  Chief Executive Officer
Telecopy:  (626) 812-9462
 
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.  Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.
 
    10. Severability.  Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
 
    11. Complete Agreement.  This Agreement and the Nonsolicitation and
Confidentiality Agreement referred to herein embodies the complete agreement and
understanding among the parties hereto and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
 
    12. No Strict Construction.  The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
 
    13. Counterparts.  This Agreement may be executed in separate counterparts
(including by means of telecopied signature pages), each of which is deemed to
be an original and all of which taken together constitute one and the same
agreement.
 
    14. Successors and Assigns.  This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign his rights
or delegate his duties or obligations hereunder without the prior written
consent of the Company.
 
    15. Choice of Law.  All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of California, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of California or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
 
    16. Amendment and Waiver.  The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company (as approved by the
Board) and Executive, and no course of conduct or course of dealing or failure
or delay by any party hereto in enforcing or exercising any of the provisions of
this Agreement shall affect the validity, binding effect or enforceability of
this Agreement or be deemed to be an implied waiver of any provision of this
Agreement.
 
    17. Insurance.  Parent or its Subsidiaries may, at its discretion, apply for
and procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered advisable.  Executive
agrees to cooperate in any medical or other examination, supply any information
and execute and deliver any applications or other instruments in writing as may
be reasonably necessary to obtain and constitute such insurance.
 
 
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    18. Taxes; Code Section 409A.
 
    (a) Parent and its Subsidiaries shall be entitled to deduct or withhold from
any amounts owing from Parent or any of its Subsidiaries to Executive any
federal, state, local or foreign withholding taxes, excise tax, or employment
taxes ("Taxes") imposed with respect to Executive's compensation or other
payments from Parent or any of its Subsidiaries or Executive's ownership
interest in Parent or any of its direct or indirect parent companies (including,
without limitation, wages, bonuses, dividends, the receipt or exercise of equity
options and/or the receipt or vesting of restricted equity).  In the event
Parent or any of its Subsidiaries does not make such deductions or withholdings,
Executive shall indemnify Parent and its Subsidiaries for any amounts paid with
respect to any such Taxes.
 
    (b) To the extent that reimbursements or other in-kind benefits under this
Agreement constitute “nonqualified deferred compensation” for purposes of Code
Section 409A, (A) all such expenses or other reimbursements hereunder shall be
made on or prior to the last day of the taxable year following the taxable year
in which such expenses were incurred by the Executive, (B) any right to such
reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit, and (C) no such reimbursement, expenses eligible
for reimbursement, or in-kind benefits provided in any taxable year shall in any
way affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year.
 
    19. Arbitration.
 
    (a) Except with respect to disputes and claims arising under the
Nonsolicitation and Confidentiality Agreement (which the parties hereto may
pursue in any court of competent jurisdiction as specified below and with
respect to which each party shall bear the cost of his or its own attorneys'
fees and expenses, except to the extent otherwise required by applicable law),
each party hereto agrees that arbitration, pursuant to the procedures set forth
in the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association (as adopted and effective as of June 1, 1997 or such
later version as may then be in effect) (the "AAA Rules"), shall be the sole and
exclusive method for resolving any claim or dispute ("Claim") arising out of or
relating to the rights and obligations of the parties under this Agreement and
the employment of Executive by the Company (including, without limitation,
claims and disputes regarding employment discrimination, sexual harassment,
termination and discharge), whether such claim arose or the facts on which such
Claim is based occurred prior to or after the execution and delivery of this
Agreement.  The parties hereto agree that (i) one arbitrator shall be appointed
pursuant to the AAA Rules to conduct any such arbitration, (ii) all meetings of
the parties and all hearings with respect to any such arbitration shall take
place in Los Angeles, California, (iii) each party to the arbitration shall bear
his or its own costs and expenses (including, without limitation, all attorneys'
fees and expenses, except to the extent otherwise required by applicable law)
and (iv) all costs and expenses of the arbitration proceeding (such as filing
fees, the arbitrator's fees, hearing expenses, etc.) shall be borne equally by
the parties hereto; provided that at the conclusion of the arbitration, the
arbitrator shall award costs and expenses (including the costs of the
arbitration previously advanced, the costs of mediation as set forth in
subparagraph (b) below, and the fees and expenses of attorneys, accountants and
other experts) to the parties hereto based upon the relative fault of each such
party as determined by the arbitrator.  The parties agree that the judgment,
award or other determination of any arbitration under the AAA Rules shall be
final, conclusive and binding on all of the parties hereto.  Nothing in this
paragraph 19 shall prohibit any party hereto from instituting litigation to
enforce any final judgment, award or determination of the arbitration.  Each
party hereto hereby irrevocably submits to the jurisdiction of the federal
courts (and, if jurisdiction in the federal courts is not proper, then the state
courts) sitting in Los Angeles, California, and agrees that either court shall
be the exclusive forum for the enforcement of any such final judgment, award or
determination of the arbitration.  Each party hereto irrevocably consents to
service of process by registered mail or personal service and waives any
objection on the grounds of personal jurisdiction, venue or inconvenience of the
forum.  Each party hereto further agrees that each other party hereto may
initiate litigation in any court of competent jurisdiction to execute any
judicial judgment enforcing or not enforcing any award, judgment or
determination of the arbitration.
 
    (b) Notwithstanding the foregoing, prior to any party hereto instituting any
arbitration proceeding hereunder to resolve any Claim, such party first shall
submit the Claim to a mediation proceeding between the parties hereto which
shall be governed by the prevailing procedures of the American Arbitration
Association and shall be conducted in Los Angeles, California.  If the parties
hereto have not agreed in writing to a resolution of the Claim pursuant to the
mediation within 45 days after the commencement thereof of if any party refuses
to participate in the mediation process, then the Claim may be submitted to
arbitration under paragraph (a) above.  Each party hereto shall bear his or its
own costs and expenses incurred in connection with the mediation, and all costs
and expenses of the mediation proceeding shall be borne equally by the parties
hereto unless otherwise determined by the parties hereto.
 
    20. Waiver of Jury Trial.  As a specifically bargained for inducement for
each of the parties hereto to enter into this Agreement (after having the
opportunity to consult with counsel), each party hereto expressly waives the
right to trail by jury in any lawsuit or proceeding relating to or arising in
any way from this Agreement or the matters contemplated hereby.
 
    21. Third Party Beneficiary.   The parties agree that Parent is an intended
third party beneficiary of this Agreement.
 
*    *    *    *    *
 
 
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    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
 

  PHYSICIANS FORMULA, INC.            By:  /s/ Ingrid Jackel      Name:  Ingrid
Jackel      Its:  Chief Executive Officer              /s/ Jeff M. Berry     
Jeff M. Berry   

 

Acknowledged and Agreed:              PHYSICIANS FORMULA HOLDINGS, INC.         
  By:  /s/ Ingrid Jackel      Name:  Ingrid Jackel      Its:  Chief Executive
Officer     

 
 
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