exhibit10_23.htm


    Exhibit 10.23


    


    PHYSICIANS
FORMULA HOLDINGS, INC.

    AMENDED
AND RESTATED

    2005
NONQUALIFIED DEFERRED COMPENSATION PLAN

     

    Section 1

     

    Definitions

     

    1.1 “Board of Directors” and “Board” mean the board of
directors of the Company.

     

    1.2 “Cause” means the occurrence of
one or more of the following events:

     

    (a) Conviction
of a felony or any crime or offense lesser than a felony involving the property
of the Company or a Subsidiary;

     

    (b) Conduct
that has caused demonstrable and serious injury to the Company or a Subsidiary,
monetary or otherwise; or

     

    (c) Willful
refusal to perform or substantial disregard of duties properly assigned, as
determined by the Company; or

     

    (d) Breach of
duty of loyalty to the Company or a Subsidiary or other act of fraud or
dishonesty with respect to the Company or a Subsidiary.

     

    1.3 “Change in
Control” means:

     

    (a) If any
“person” or “group” as those terms are used in Sections 13(d) and 14(d) of the
Exchange Act or any successors thereto, other than 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 the Company
representing more than 50% of the combined voting power of the Company’s then
outstanding securities; or

     

    (b) Consummation
of a merger or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in all or a portion of the
voting securities of the Company 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 the Company or such surviving entity
outstanding immediately after such merger or consolidation;
or

     

    (c) A sale or
disposition by the Company of all or substantially all the Company’s assets,
other than a sale to an Exempt Person.

     

    1.4 “Code” means the Internal
Revenue Code of 1986, as amended.  Any reference to a Code Section
shall also include reference to any Treasury regulations promulgated
thereunder.

     

    
      
        
           


        

        
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    1.5 “Committee” means the
Compensation Committee of the Board, which shall consist solely of two or more
members of the Board.

     

    1.6 “Company” means Physicians
Formula Holdings, Inc., a Delaware corporation.

     

    1.7 “Compensation” means total
taxable salary, bonuses and commissions paid to a Participant by the Employer
(determined without regard to any amounts in the Participant’s Deferred
Compensation Account).

     

    1.8 “Deferred Compensation Account”
means the book-keeping account maintained under the Plan in the Participant’s
name to reflect amounts deferred under the Plan pursuant toSection 3 (as
adjusted under Section 4).

     

    1.9 “Deferral Election” means a
written notice filed by the Participant with the Employer specifying the
Compensation to be deferred by the Participant.

     

    1.10 “Disabled” means, with respect
to a Participant, any medically determinable physical or mental impairment (a)
that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months and (b) that causes the Participant
(i) to be unable to engage in any substantial gainful activity or (ii) to be
eligible to receive income replacement benefits for a period of not less than 3
months under an accident and health plan of the Company that covers the
Participant.  Whether a Participant is Disabled shall be determined by
the Committee, and in making such determination, the Committee may rely on the
opinion of a physician (or physicians) selected by the Committee for such
purpose; provided that in such event the Participant is also “disabled” as
defined in Code Section 409A.

     

    1.11 “Distribution Date” means the
date a Participant first becomes entitled to receive payment of the
Participant’s Deferred Compensation Account pursuant to Subsection
5.1.

     

    1.12 “Effective Date” means January
1, 2005.

     

    1.13 “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

     

    1.14 “Employee” means an employee of
an Employer who meets the eligibility criteria set forth in Subsection 3.1 of
the Plan and who is a member of a select group of management or highly
compensated employees as defined under ERISA or the regulations
thereunder.

     

    1.15 “Employer” means, individually,
the Company and each Subsidiary of the Company that adopts the Plan in
accordance with Subsection 7.1. The Company and any Subsidiaries that adopt the
Plan are sometimes collectively referred to herein as the
“Employers.”

     

    1.16 “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time. Any
reference to a section of ERISA includes any comparable section or sections of
any future legislation that amends, supplements or supersedes that
section.

     

    
      
        
           


        

        
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    1.17 “Exempt Person” means (i)
Summit Master Company, LLC, Summit Partners, LLC, Summit Partners, L.P. or any
of their affiliates, (ii) any person, entity or group under the control of any
party included in clause (i), or (iii) any employee benefit plan of the Company
or a trustee or other administrator or fiduciary holding securities under an
employee benefit plan of the Company.

     

    1.18 “Participant” means an Employee
who meets the eligibility criteria set forth in Subsection 3.1 and who has made
a Deferral Election in accordance with the terms of the Plan.

     

    1.19 “Plan” means this 2005
Nonqualified Deferred Compensation Plan, as amended effective August 30, 2006,
and as amended and restated effective December 30, 2008.

     

    1.20 “Plan Year” means the calendar
year.

     

    1.21 “Unforeseeable Financial
Emergency” means a severe financial hardship of the Participant resulting
from:

     

    (a) A sudden
and unexpected illness or accident of the Participant or of a dependent of the
Participant;

     

    (b) Loss of
the Participant’s principal residence due to casualty; or

     

    (c) Such
other similar extraordinary and unforeseeable circumstances resulting from
events beyond the control of the Participant;

     

    provided
that such Unforeseeable Financial Emergency is an “Unforeseeable Emergency” as
such phrase is defined for purposes of Code
Section 409A.  Whether a Participant has an Unforeseeable
Financial Emergency shall be determined in the sole discretion of the
Committee.

     

    1.22 Other
Definitions. In addition to the terms defined in this Section 1, other
terms are defined when first used in later Sections of this Plan.

     

    Section 2

     

    Purpose
and Administration

     

    2.1 Purpose.  The
Company has established the Plan primarily for the purpose of providing deferred
compensation to a select group of management or highly compensated employees of
the Employers, The Plan is intended to be a top-hat plan described in Section
201(2) of ERISA.  The Company intends that the Plan (and each Trust
under the Plan (as described in Subsection 6.1)) shall be treated as unfunded
for tax purposes and for purposes of Title I of ERlSA.  An Employer’s
obligations hereunder, if any, to a Participant (or to a Participant’s
beneficiary) shall be unsecured and shall be a mere promise by the Employer to
make payments hereunder in the future.  A Participant (or the
Participant’s beneficiary) shall be treated as a general unsecured creditor of
the Employer.

     

    
      
        
           


        

        
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    2.2 Administration.
The Plan shall be administered by the Committee.  The Committee shall
have the powers, rights, and duties set forth in the Plan and shall have the
power, in the Committee’s sole and absolute discretion, to determine all
questions arising under the Plan, including the determination of the rights of
all persons with respect to the Plan and to interpret the provisions of the Plan
and remedy any ambiguities, inconsistencies, or omissions.  Any
decisions of the Committee shall be final and binding on all persons with
respect to the Plan and the benefits provided under the Plan.  The
Committee may delegate the Committee’s authority under the Plan to one or more
directors, officers, or key employees of the Company; provided, however, that
(a) such delegation must be in writing, and (b) the officers or directors of the
Company to whom the Committee is delegating authority must accept such
delegation in writing.  If a Participant is serving as a member of the
Committee, the Participant may not decide or determine any matter or question
concerning such Participant’s benefits under the Plan that the Participant would
not have the right to decide or determine if the Participant were not serving as
a member of the Committee.

     

    Section 3

     

    Eligibility,
Participation and Deferral Elections

     

    3.1 Eligibility.  Participation
in the Plan shall be limited to Employees (a) having the title of Chief
Executive Officer, President, or Chief Financial Officer or Senior Vice
President and (b) receiving total Compensation of at least $200,000 per Plan
Year.  Participation in the Plan may be expanded to Employees having
other titles or limited to Employees having certain titles by action of the
Employer.  An Employee shall become a Participant in the Plan upon the
execution and filing with the Committee of a written election to defer a portion
of the Employee’s Compensation.  A Participant shall remain a
Participant until the entire balance of the Participant’s Deferred Compensation
Account has been distributed

     

    3.2 Rules for
Deferral Elections.  Any person identified in Subsection 3.1
may make a Deferral Election to defer receipt of Compensation he or she
otherwise would be entitled to receive for a Plan Year in accordance with the
rules set forth below:

     

    (a) All
Deferral Elections must be made in writing on the form prescribed by the
Committee and will be effective only when filed with the Committee no later than
the date specified by the Committee.  Except as set forth in
Subsection 3.2(c), in no event may a Deferral Election be made later than the
last day of the Plan Year preceding the Plan Year in which the amount being
deferred would otherwise be made available to the Participant, provided that in
the case of a Participant’s initial year of employment or association with an
Employer, the Participant may make a Deferral Election with respect to
compensation for services to be performed subsequent to such Deferral Election,
provided such election is made no later than 30 days after the date the
Participant first becomes eligible for the Plan.

     

    (b) With
respect to Plan Years following the Participant’s initial Plan Year of
participation in the Plan, failure to complete a subsequent Deferral Election
shall

     

    
      
        
           


        

        
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constitute
a waiver of the Participant’s right to elect a different amount of Compensation
to be deferred for each such Plan Year and shall be considered an affirmation
and ratification to continue the Participant’s existing Deferral Election.
However, a Participant may, prior to the beginning of any Plan Year, elect to
increase or decrease the amount of Compensation to be deferred for the next
following Plan Year by filing another Deferral Election with the Committee in
accordance with paragraph (a) above.

     

    (c) A
Deferral Election in effect for a Plan Year may not be modified during the Plan
Year, except that a Participant may terminate the Participant’s Deferral
Election during a Plan Year in the event of an Unforeseeable Financial
Emergency.

     

    3.3 Amounts
Deferred.  Commencing on the Effective Date, a Participant may
elect to defer up to 100% of the Participant’s Compensation for a Plan
Year.  The amount of Compensation deferred by a Participant shall be
credited to the Participant’s Deferred Compensation Account as of the date
coincident with or immediately following the date such Compensation would, but
for the Participant’s Deferral Election, be payable to the
Participant.

     

    Section 4

     

    Deferred
Compensation Accounts

     

    4.1 Deferred
Compensation Accounts.  All amounts deferred pursuant to one or
more Deferral Elections under the Plan shall be credited to a Participant’s
Deferred Compensation Account and shall be adjusted under Subsection
4.2.

     

    4.2 Deferral
Account Adjustments and Investment Options.  The amounts in a
Participant’s Deferred Compensation Account shall be adjusted to reflect
earnings (or losses) in the Investment Options (as defined in Subsection 4.4)
attributable to the Participant’s Deferred Compensation
Account.  Earnings (or losses) on amounts in a Participant’s Deferred
Compensation Account shall accrue commencing on the date the Deferred
Compensation Account first has a positive balance and shall continue to accrue
until the entire balance in the Participant’s Deferred Compensation Account has
been distributed.  Earnings (or losses) shall be credited to a
Participant’s Deferred Compensation Account based on the realized rate of return
(net of any expenses and taxes paid from the Trust, if applicable) on the
Investment Options attributable to the Participant’s Deferred Compensation
Account.

     

    4.3 Vesting.  A
Participant shall be fully vested in the amounts in the Participant’s Deferred
Compensation Account attributable to the Participant’s Deferral
Elections.

     

    4.4 Investment
Options. The Company shall, from time to time and in its sole discretion,
select one or more investment vehicles (“Investment Options”) to be
made available as the measuring standards for crediting earnings or losses to
each participant’s Deferred Compensation Account.  A Participant may
select from such Investment Options in a manner established by the Company, the
investment vehicle or vehicles to apply to his or her accounts and may change
such selections, all in accordance with such rules as the Company
may

     

    
      
        
           


        

        
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    establish.  Notwithstanding
the foregoing, the Committee may change the method for crediting earnings or
losses to each participant’s accounts as described above by written notice to
each Participant (including former Participants who then have a Deferred
Compensation Account which would be affected by such change), which notice shall
specify the new method for crediting earnings or losses to be used under this
section, the effective date of such change (provided that any change shall only
be applied prospectively), and the Deferred Compensation Accounts to which such
new method shall apply.

     

    Section 5

     

    Payment
of Benefits

     

    5.1 Time and
Method of Payment.  Payment of a Participant’s Deferred
Compensation Account shall be made in a single lump sum payment as soon as
practicable following the earliest to occur of:

     

    (a)  the
date or fixed schedule specified in writing by the Participant at the time of
Participant’s initial Deferral Election under the Plan;

     

    (b) the
Participant ceasing to be employed by Employer (and ceasing to provide
substantial services to Employer in any non-employee capacity);

     

    (c) the
Participant becoming Disabled;

     

    (d) Participant’s
death;

     

    (e) a Change
in Control of the Company (other than a Change in Control that does not
constitute a change (i) in ownership or effective control of the Company or (ii)
in the ownership of a substantial portion of the assets of the Company, in each
case as defined in regulations or other official Treasury or IRS guidance issued
under Section 409A(a)(2)(A)(vi) of the Code); or

     

    (f) an
Unforeseeable Financial Emergency with respect to the Participant;

     

    provided,
in each case, that the amount distributed as a result of an Unforeseeable
Emergency shall not exceed that amount necessary to mitigate the severe
financial hardship resulting from such Unforeseeable Emergency, plus the amount
required to pay taxes reasonably anticipated as a result of such distribution,
after taking into account the extent to which such hardship is or may be
relieved by insurance or otherwise by liquidation of the Participant’s assets to
the extent such liquidation would not itself cause a severe financial hardship
to the Participant; and provided, further, that notwithstanding any other
payment schedule provided herein to the contrary, if the Participant is deemed
on the date of termination to be a “specified employee” within the meaning of
that term under Code Section 409A(a)(2)(B), then any payment that is considered
deferred compensation under Code Section 409A payable on account of a
“separation from service,” such payment shall be made on the date which is the
earlier of (A) the expiration of the six (6)-month period measured from the date
of such “separation from service” of the Executive, and (B) the

     

    


    
      
        
           


        

        
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    date of
the Executive’s death (the “Delay Period”) to the extent required under Code
Section 409A.  Upon the expiration of the Delay Period, all payments
delayed pursuant to this Section (whether they would have otherwise been payable
in a single sum or in installments in the absence of such delay) shall be paid
to the Executive in a lump sum.

     

    5.2 Beneficiary.  In
the event of a participant’s death, the Participant’s Deferred Compensation
shall be paid to the Participant’s beneficiary as determined in accordance with
this Subsection 5.2.  If a Participant is married on the date of the
Participant’s death, the Participant’s beneficiary shall be the Participant’s
spouse, unless the Participant names a beneficiary or beneficiaries (other than
the Participant’s spouse) to receive the balance of the Participant’s Deferred
Compensation Account in the event of the Participant’s death prior to the
payment of the Participant’s entire Deferred Compensation Account.  To
be effective, any beneficiary designation must be filed in writing with the
Committee in accordance with rules and procedures adopted by the Committee for
that purpose. A Participant may revoke an existing beneficiary designation by
filing another written beneficiary designation with the Committee. The latest
beneficiary designation received by the Committee shall be controlling. If no
beneficiary is named by a Participant, or if the Participant survives all of the
Participant’s named beneficiaries and does not designate another beneficiary,
the Participant’s Deferred Compensation Account shall be paid in the following
order of precedence:

     

    (a) The
Participant’s spouse;

     

    (b) The
Participant’s children (including adopted children) per stirpes; or

     

    (c) The
Participant’s estate.

     

    5.3 Withholding of
Taxes. In connection with the Plan, the Employers shall withhold any
applicable Federal, state or local income tax and any employment taxes,
including Social Security taxes, at such time and in such amounts as is
necessary to comply with applicable laws and regulations.

     

    Section 6

     

    Miscellaneous

     

    6.1 Use of
Trusts.  Each Employer under the Plan may establish and
maintain one or more trusts (individually, a “Trust”) to hold assets to be
used for payment of benefits under the Plan.  The assets of the Trust
with respect to benefits payable to the Participants employed by or associated
with an Employer shall remain the assets of such Employer subject to the claims
of its general creditors.  Any payments by a Trust of benefits
provided to a Participant under the Plan shall be considered payment by the
applicable Employer and shall discharge such Employer from any further liability
under the Plan for such payments

     

    6.2 Rights.
Establishment of the Plan shall not be construed to give any Employee the right
to be retained by the Employers or to any benefits not specifically provided by
the Plan.

     

    
      
        
           


        

        
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    6.3 Interests Not
Transferable.  Except as to withholding of any tax under the
laws of the United States or any state or locality and the provisions of
Subsection 5.2, no benefit payable at any time under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
or any other encumbrance of any kind or to any attachment, garnishment, or other
legal process of any kind.  Any attempt by a person (including a
Participant or a Participant’s beneficiary) to anticipate, alienate, sell,
transfer, assign, pledge, or otherwise encumber any benefits under the Plan,
whether currently or thereafter payable, shall be void.  If any person
shall attempt to, or shall alienate, sell, transfer, assign, pledge or otherwise
encumber such person’s benefits under the Plan, or if by any reason of such
person’s bankruptcy or other event happening at any time, such benefits would
devolve upon any other person or would not be enjoyed by the person entitled
thereto under the Plan, then the Committee, in the Committee’s sole discretion,
may terminate the interest in any such benefits of the person otherwise entitled
thereto under the Plan and may hold or apply such benefits in such manner as the
Committee may deem proper.

     

    6.4 Forfeitures
and Unclaimed Amounts.  Unclaimed amounts shall consist of the
amounts in the Deferred Compensation Account of a Participant that cannot be
distributed because of the Committee’s inability, after a reasonable search, to
locate a Participant or the Participant’s beneficiary, as applicable, within a
period of two years after the Distribution Date upon which the payment of
benefits became due.  Unclaimed amounts shall be forfeited at the end
of such two-year period.  These forfeitures will reduce the
obligations of the Employers, if any, under the Plan.  After an
unclaimed amount has been forfeited, the Participant or beneficiary, as
applicable, shall have no further right to amounts in the Participant’s Deferred
Compensation Account.

     

    6.5 Controlling
Law.  The law of the state California shall be controlling in
all matters relating to the Plan to the extent not preempted by Federal
law.

     

    6.6 Number.  Words
in the plural shall include the singular, and the singular shall include the
plural.

     

    6.7 Action by the
Employers.  Except as otherwise specifically provided herein,
any action required of or permitted to be taken by an Employer under the Plan
shall be by resolution of its Board of Directors or by resolution of a duly
authorized committee of its Board of Directors or by action of a person or
persons authorized by resolution of such Board of Directors or such
committee.

     

    6.8 Offset for
Obligations to Employer.
If, at such time as a Participant or a Participant’s beneficiary becomes
entitled to benefit payments hereunder, the Participant has any debt, obligation
or other liability representing an amount owing to an Employer or a Subsidiary
of the Employer, and if such debt, obligation, or other liability is due and
owing at the time benefit payments are payable hereunder, the Employer may
offset the amount owing it or an Subsidiary against the amount of benefits
otherwise distributable hereunder.

     

    6.9 No Fiduciary
Relationship.  Nothing contained in this Plan, and no action
taken pursuant to its provisions by either the Employers or the Participants
shall create, or be construed

     

    
      
        
           


        

        
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    to create
a fiduciary relationship between the Employer and the Participant, a designated
beneficiary, other beneficiaries of the Participant, or any other
person.

     

    6.10 Notice.  Any
notice required or permitted to be given under the provisions of the Plan shall
be in writing, and shall be signed by the party giving or making the
same.  If such notice, consent or demand is mailed to a party hereto,
it shall be sent by United States certified mail, postage prepaid, addressed to
such party’s last known address as shown on the records of the
Employers.  Notices to the Committee should be sent in care of the
Company at the Company’s principal place of business.  The date of
such mailing shall be deemed the date of notice. Either party may change the
address to which notice is to be sent by giving notice of the change of address
in the manner set forth above.

     

    Section 7

     

    Employer
Participation

     

    7.1 Adoption of
Plan.  Any Subsidiary of the Company may, with the approval of
the Company, adopt the Plan by filing with the Company a resolution of its Board
of Directors to that effect.

     

    7.2 Withdrawal
from the Plan by Employer.  Any Employer shall have the right,
at any time, upon the approval of, and under such conditions as may be provided
by the Committee, to withdraw from the Plan by delivering to the Committee
written notice of its election so to withdraw, provided that (a) no Deferred
Payment Account established and maintained under the Plan by such Employer shall
be paid to a Participant except as permitted pursuant to Subsection 5.1 (which
provision shall remain effective notwithstanding any Employer’s withdrawal from
the Plan) and (b) all Deferred Payment Accounts established and maintained under
the Plan by such Employer shall continue to constitute a general unsecured
obligation of the Employer until paid in accordance with Subsection 5.1, and the
other Employers shall have no obligation to any Participants and beneficiaries
with respect to such amounts.

     

    Section 8

     

    Amendment
and Termination

     

    The
Company intends the Plan to be permanent, but reserves the right at any time to
modify, amend or terminate the Plan; provided however, that (a) any amendment or
termination of the Plan shall not reduce or eliminate any balance in a
Participant’s Deferred Compensation Account accrued through the date of such
amendment or termination and (b) no Deferred Payment Account established and
maintained under the Plan shall be paid to a Participant except as permitted
pursuant to Subsection 5.1 (which provision shall remain effective
notwithstanding any amendment or termination of the Plan).

     

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    IN
WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly
authorized officers as of the 30th day of December 2008.

     

    
      
        
          	 	Physicians Formula
      Holdings, Inc. a Delaware corporation	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Joseph
      J. Jaeger	 
	 	 	Chief
      Financial Officer	 
	 	 	 	 


        

      

    

    

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