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Exhibit 10.20    
    

Physicians
Formula Holdings, Inc.

1055 West 8th Street

Azusa, California 91702 

                    ,
2006 

Mr. Joseph
J. Jaeger

Chief Financial Officer

Physicians Formula, Inc.

1055 West 8th Street

Azusa, California 91702 

	Re:
	Additional
Bonus Potential 

Dear
Joe: 

        In
recognition of your valuable and diligent efforts in assisting with the initial public offering (the "Initial Public Offering") of
Physicians Formula Holdings, Inc. (the "Company"), we are pleased to revise the terms of your bonus opportunity of $500,000 set forth in the
letter, dated December 16, 2005 (the "Original Letter"), of Physicians Formula, Inc. addressed to you. This letter shall become effective
upon the closing of the Initial Public Offering, and, upon effectiveness, this letter shall amend and restate in its entirety the Original Letter. 

        Pursuant
to the revised bonus opportunity, the Company will pay you $250,000 upon the closing of the Initial Public Offering and an additional $250,000 upon the earlier of the completion
of a secondary
equity offering following the Initial Public Offering, or your completion of 24 months employment with the Company following the Initial Public Offering, so long as in each such case you remain
employed by the Company from the date hereof until the date of each such event. These payments will be subject to all required tax withholding and similar deductions. 

        Thank
you for your continuing efforts and hard work.   

	 	 	Sincerely,
	

 	
 	

PHYSICIANS FORMULA HOLDINGS, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	

Its:	
 	

Chief Executive Officer

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Exhibit 10.32    
    

FORM OF [NON-QUALIFIED] [INCENTIVE] STOCK

OPTION AWARD AGREEMENT  

[Physicians Formula Holdings, Inc. Letterhead] 

[Date]

                        

                        

                        

                         

	Re:
	Grant of [Non-Qualified] [Incentive] 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:	 	 
	 	 	

	Exercise Price per Option Share:	 	 
	 	 	

	Vesting Dates of Option Shares:	 	 
	 	 	

	

 	
 	

 
	 	 	

	

 	
 	

 
	 	 	

	

 	
 	

 
	 	 	

	Expiration Date of All Option Shares:	 	 
	 	 	

        [The
Option is not intended to be an "incentive stock option" within the meaning of Section 422 of the Code.] [The Option is intended to be an
"incentive stock option" within the meaning of Section 422 of the Code. If the Option does not qualify as such for any reason, then to the extent of such non-qualification, the
Option shall be regarded as a non-qualified stock option.] 

        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. 

        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 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 

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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 Stree, 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. 

*        *        *        *        * 

4

 
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:	 	 	 
	 	
	 	 

5

 
 
 

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

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Exhibit 10.32

EXHIBIT A

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