Exhibit
10.34


NON-QUALIFIED STOCK
OPTION AWARD AGREEMENT

FOR SENIOR EXECUTIVE OFFICERS


[Physicians Formula Holdings, Inc. Letterhead]


February 6,
2007


	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


Re:          Grant
of Non-Qualified Stock Option


Dear                   :


Physicians Formula Holdings, Inc. (the “Company”)
is pleased to advise you that, pursuant to the Company’s 2006 Equity Incentive
Plan (the “Plan”), the Committee has granted to you an option (the “Option”)
to acquire shares of Common Stock, as set forth below, subject to the terms and
conditions set forth herein:




	
  Number of Option Shares:

  	
  
   

  

  
	
  Date of Grant:

  	
  
  February 6, 2007

  

  
	
  Exercise Price per Option Share:

  	
  
  $20.75

  

  
	
  Vesting of Option Shares:

  	
  
  Monthly vesting in fourty-eight (48) equal
  installments on each monthly anniversary of February 6, 2007, beginning on
  March 6, 2007

  

  
	
  Expiration Date of All Option Shares:

  	
  
  February 6, 2017

  

  






 


The Option is not intended to be an “incentive
stock option” within the meaning of Section 422 of the Code.


Any capitalized terms used herein and not defined
herein have the meaning set forth in the Plan.


1.             Option.


(a)           Term.  Subject to the terms and conditions set forth
herein, the Company hereby grants to you (or such other persons as permitted by
paragraph 5) an Option to purchase the Option Shares at the exercise price
per Option Share set forth above in the introductory paragraph of this letter
agreement (the “Exercise Price”), payable upon exercise as set forth in
paragraph 1(b) below.  The Option shall
expire at the close of business on the date set forth 



   
 









above in the
introductory paragraph of this letter agreement (the “Expiration Date”),
which is the tenth anniversary of the date of grant set forth above in the
introductory paragraph of this letter agreement (the “Grant Date”),
subject to earlier expiration as provided under the Plan should your employment
or service with the Company or a Subsidiary terminate.  The Exercise Price and the number and kind of
shares of Common Stock or other property for which the Option may be exercised
shall be subject to adjustment as provided under the Plan.  For purposes of this letter agreement, “Option
Shares” mean (i) all shares of Common Stock issued or issuable upon the
exercise of the Option and (ii) all shares of Common Stock issued with respect
to the Common Stock referred to in clause (i) above by way of stock dividend or
stock split or in connection with any conversion, merger, consolidation or
recapitalization or other reorganization affecting the Common Stock.


(b)           Payment of Option
Price.  Subject to paragraph 2 below,
the Option may be exercised in whole or in part upon payment of an amount (the “Option
Price”) equal to the product of (i) the Exercise Price and
(ii) the number of Option Shares to be acquired.  Payment of the Option Price shall be made as
provided under the Plan.


2.             Exercisability/Vesting and Expiration.


(a)           Normal Vesting.  The Option granted hereunder may be exercised
only to the extent it has become vested. 
The Option shall vest in as indicated by the vesting dates of Option
Shares set forth in the introductory paragraph of this letter agreement.


(b)           Normal Expiration.  In no event shall any part of the Option be
exercisable after the Expiration Date.


(c)           Effect on Vesting
and Expiration of Employment Termination. 
Notwithstanding paragraphs 2(a) and (b) above, the special vesting and
expiration rules set forth in the Plan shall apply if your employment or
service with the Company or a Subsidiary terminates prior to the Option
becoming fully vested and/or prior to the Expiration Date.


(d)           Change in Control.  If you have been continuously employed by the
Company from the Grant Date, the Option granted hereunder shall become fully
vested and exercisable automatically upon a Change in Control, whether or not
your employment or service with the Company or a Subsidiary subsequently
terminates.


3.             Procedure for Exercise.  You may exercise all or any portion of the
Option, to the extent it has vested and is outstanding, at any time and from
time to time prior to the Expiration Date, by delivering written notice to the
Company in the form attached hereto as Exhibit A, together with payment
of the Option Price in accordance with the provisions set forth in the
Plan.  The Option may not be exercised
for a fraction of an Option Share.


4.             Withholding of Taxes.


(a)           Participant
Election.  Unless otherwise
determined by the Committee, you may elect to deliver shares of Common Stock
(or have the Company withhold Option Shares acquired upon exercise of the
Option) to satisfy, in whole or in part, the amount the Company is 



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required to
withhold for taxes in connection with the exercise of the Option.  Such election must be made on or before the
date the amount of tax to be withheld is determined.  Once made, the election shall be
irrevocable.  The fair market value of
the shares to be withheld or delivered will be the Fair Market Value as of the
date the amount of tax to be withheld is determined.


(b)           Company
Requirement.  The Company, to the
extent permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to you, an amount
equal to any federal, state or local taxes of any kind required by law to be
withheld with respect to the delivery of Option Shares under this letter
agreement.


5.             Transferability of Option.  You may transfer the Option granted hereunder
only by will or the laws of descent and distribution or to any of your Family
Members by gift or a qualified domestic relations order as defined by the Code.  Unless the context requires otherwise,
references herein to you are deemed to include any permitted transferee under
this paragraph 5.  The Option may be
exercised only by you; by your Family Member if such person has acquired the
Option by gift or qualified domestic relations order; by the executor or
administrator of the estate of any of the foregoing or any person to whom the
Option is transferred by will or the laws of descent and distribution; or by
the guardian or representative of any of the foregoing; provided that Incentive
Stock Options may be exercised by any guardian or legal representative only if
permitted by the Code and any regulations thereunder.


6.             Conformity with Plan.  The Option is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan (which
is incorporated herein by reference). 
Inconsistencies between this letter agreement and the Plan shall be
resolved in accordance with the terms of the Plan.  By executing and returning the enclosed copy
of this letter agreement, you acknowledge your receipt of this letter agreement
and the Plan and agree to be bound by all of the terms of this letter agreement
and the Plan.


7.             Rights of Participants.  Nothing in this letter agreement shall
interfere with or limit in any way the right of the Company to terminate your
employment or other performance of services at any time (with or without
Cause), nor confer upon you any right to continue in the employ or as a
director or officer of, or in the performance of other services for, the
Company or a Subsidiary for any period of time, or to continue your present (or
any other) rate of compensation or level of responsibility.  Nothing in this letter agreement shall confer
upon you any right to be selected again as a Plan participant.


8.             Amendment or Substitution of Option.  The terms of the Option may be amended from
time to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, acceleration of the date of exercise
of the Option);  provided that no such
amendment shall adversely affect in a material manner any of your rights under
the award without your written consent.


9.             Successors and Assigns.  Except as otherwise expressly provided
herein, all covenants and agreements contained in this letter agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto whether
so expressed or not.



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10.           Severability.  Whenever possible, each provision of this
letter agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this letter agreement is
held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this letter agreement.


11.           Counterparts.  This letter agreement may be executed
simultaneously in two or more counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
letter agreement.


12.           Descriptive Headings.  The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.


13.           Governing Law.  THE VALIDITY, CONSTRUCTION, INTERPRETATION,
ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND
RIGHTS RELATING TO THE PLAN AND TO THIS LETTER AGREEMENT, SHALL BE GOVERNED BY
THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF THE STATE OF
DELAWARE.


14.           Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this letter
agreement shall be in writing and shall be deemed to have been given when (i)
delivered personally, (ii) mailed by certified or registered mail, return
receipt requested and postage prepaid, (iii) sent by facsimile or (iv) sent by
reputable overnight courier, to the recipient. 
Such notices, demands and other communications shall be sent to you at
the address specified in this letter agreement and to the Company at 1055 West
8th Street, Azusa, California 91702, Attn: Chief
Financial Officer, or to such other address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party.


15.           Entire Agreement.  This letter agreement and the terms of the
Plan constitute the entire understanding between you and the Company, and
supersede all other agreements, whether written or oral, with respect to your
acquisition of the Option Shares.


*****


 



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Signature
Page to Stock Option Award Agreement


Please execute the extra copy of this letter agreement
in the space below and return it to the Company to confirm your understanding
and acceptance of the agreements contained in this letter agreement.


	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  PHYSICIANS FORMULA HOLDINGS, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


Enclosures:                                  Extra copy of this
letter agreement

Copy of the Plan


The undersigned hereby acknowledges having read this
letter agreement and the Plan and hereby agrees to be bound by all provisions
set forth herein and in the Plan.


	
  

  	
  OPTIONEE

  
	
   

  	
   

  



 


	
  Dated as of:

  	
   

  	
   

  












EXHIBIT
A


Form
of Letter to be Used to Exercise Stock Option


 


	
  

  	
  

  	
   

  
	
   

  	
  Date

  	
   

  



 


	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


	
  Attention:

  	
   

  	
   

  



 


I wish to exercise the stock option granted on                     
and evidenced by a Stock Option Award Agreement dated as of
               ,
to acquire             
shares of Common Stock of             ,
at an option price of $          per share.  In accordance with the provisions of
paragraph 1 of the Stock Option Award Agreement, I wish to make payment of the
exercise price (please check all that apply):


	
   

  	
  o

  	
  in cash

  
	
   

  	
  o

  	
  by delivery of shares of Common Stock held by me

  
	
   

  	
  o

  	
  by simultaneous sale through a broker

  



 


Please issue a certificate for these shares in the
following name:


 


	
  

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
  Address

  	
   

  



 


	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Typed or Printed Name

  
	
   

  	
   

  
	
   

  	
  Social Security Number