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Exhibit 10.11    
    

[Execution
Copy] 

PHYSICIANS FORMULA, INC.
 EMPLOYMENT AGREEMENT  

        THIS AGREEMENT is made as of March 8, 2004, by and between Physicians Formula, Inc., a New York corporation and formerly known as Pierre
Fabre, Inc. (the "Company"), and Joseph J. Jaeger ("Executive"). 

        WHEREAS,
the Company desires to employ Executive in the capacity and on the terms and conditions set forth herein, and Executive desires to accept such employment in such capacity and on
such terms and conditions. 

        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 hereby accepts employment with the Company,
upon the terms and conditions set forth in this Agreement for the period beginning on the date hereof and ending as provided in paragraph 4 hereof (the "Employment
Period"). 

        2.    Position and Duties.    

        (a)   During
the Employment Period, Executive shall serve as the Chief Financial Officer of the Company and shall have the normal duties, responsibilities, functions and
authority of the Chief Financial Officer of the Company, subject to the power and authority of the Company's Board of Directors (the "Board") to expand
or limit such duties, responsibilities, functions and authority and to overrule actions of officers of the Company. During the Employment Period, Executive shall render such administrative and other
executive and managerial services to the Company 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 Company's Chief Executive Officer 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 Company and its Subsidiaries. Executive shall perform his duties,
responsibilities and functions to the Company and its Subsidiaries hereunder to the best of his abilities in a diligent, trustworthy, professional and efficient manner and shall comply with the
Company'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. 

        (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 the Company, directly or through one
of more Subsidiaries. 

        3.    Compensation and Benefits.    

        (a)   During
the Employment Period, Executive's base salary shall be $225,000 per annum or such higher rate as the Board may determine from time to time;  provided that as soon as reasonably practicable following
publication of the index of wages and salaries for all private industry white collar wages as
published in the Employment Cost Index by the Bureau of Labor Statistics after January 1, 2005, and annually thereafter, the base salary shall be increased by no less than the amount necessary
to reflect any annual increase in such index (which shall be effective as of January 1 of each such year) 

 

(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 effect from time to time). 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. 

        (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 in the amount of up to 50% of his Base Salary for each 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 following consultation with Executive prior to the commencement of each calendar year or as soon as reasonably practicable thereafter, except that the performance criteria
and other goals for the calendar year ending December 31, 2004 shall be established within 45 days following the date hereof and the bonus payable in respect of calendar year 2004 shall
be prorated based on the number of days between the date of this Agreement and December 31, 2004. The bonus payable in respect of any given year during the Employment Period shall be paid
within 30 days following the delivery of the Company's annual audited financial statements for such year (and in any event no later than April 30 in any such following year). Executive
must be employed by the Company as of the last day of the calendar year for which any bonus relates in order to receive any such bonus hereunder. 

        (d)   Executive
shall also be entitled to the following additional benefits (to the extent Executive has not been provided with such benefits prior to the date hereof): 

        (i)    up
to three roundtrip coach airfares for Executive and his spouse during the Employment Period for the purposes of searching for a new residence in the Los Angeles area,
as well as for selling their house in Connecticut; 

        (ii)   coach
airfare for Executive and his spouse for his trip from Connecticut to California upon commencement of the Employment Period; 

        (iii)  up
to eight weeks of lodging at the Embassy Suites or the Marriott Residence Inn in Arcadia, California, including two meals per day, before moving into a new home; 

        (iv)  payment
or reimbursement of out-of-pocket expenses with respect to shipment of household goods and personal effects from current house in
Connecticut to new home in California upon commencement of the Employment Period, not to exceed $25,000; and 

        (v)   use
of company car (Audi A4, September 2002) during the Employment Period. 

        (e)   All
amounts payable to Executive hereunder shall be subject to all required and customary withholding by the Company. 

        4.    Term.    

        (a)   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, (i) the Employment Period shall terminate immediately upon Executive's resignation, death or Disability (as defined below) and
(ii) the Employment Period may be terminated by the Company at any time for Cause (as defined below) or without Cause. Except as 

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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. 

        (b)   If
the Employment Period is terminated by the Company without Cause, Executive shall be entitled to continue to receive his Base Salary payable in regular installments
as special severance payments for a period of twelve (12) months from the date of termination (the "Severance Period"), if and only if Executive
has executed and delivered to the Company a general release of all claims against the Company and its directors, officers and affiliates in form and substance satisfactory to the Company and only so
long as Executive has not revoked or breached the provisions of the general release or breached the provisions of that certain Nonsolicitation and Confidentiality Agreement, dated as of the date
hereof, by and between the Company and Executive, 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). 

        (c)   If
the Employment Period is terminated by the Company for Cause or is terminated pursuant to clause (a)(i) 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). 

        (d)   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). 

        (e)   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 the Company 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 the Company or any of its Subsidiaries substantial public disgrace or disrepute or substantial economic harm,
(iii) substantial and repeated failure to perform duties as reasonably directed by the Board or the Company's Chief Executive Officer, (iv) a breach of Executive's duty of loyalty to the
Company or any of its Subsidiaries or affiliates or any act of dishonesty or fraud with respect to the Company or any of its Subsidiaries or (v) any material breach of this Agreement or any
other agreement between Executive and the Company or any of its affiliates (including, without limitation, that certain Nonsolicitation and Confidentiality Agreement, dated as of the date hereof, by
and between Executive and the Company) which is not cured to the Board's reasonable satisfaction within 15 days after written notice thereof to Executive. 

        (f)    For
purposes of this Agreement, "Disability" shall mean Executive's inability to perform the essential duties,
responsibilities and functions of his position with the Company 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 the Company 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). 

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        5.    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, other than an "Employee Agreement" with Datascope Corp. dated December 20, 2003 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. 

        6.    Survival.    Paragraphs 4 through 18, inclusive, shall survive and continue in full force in accordance with
their terms notwithstanding the expiration or termination of the Employment Period. 

        7.    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:

Joseph
J. Jaeger

195 Flintlock Road

Southport, CT 06890 

with a copy to:

Gibney,
Anthony & Flaherty, LLP

665 Fifth Avenue

New York, NY 10022

Attention: Frederick W. Anthony

Telephone: (212) 688-5151

Telecopy: (212) 688-8315 

Notices to the Company:

Physicians
Formula, Inc.

1055 West 8th Street

Azusa, California 91702

Attention: Chief Executive Officer

Telecopy: (626) 812-9462 

with a copy to:

Summit
Partners, L.P.

499 Hamilton Avenue

Palo Alto, California 94301

Attention:   Walter G. Kortschak

                     Craig D. Frances

Telephone:  (415) 321-1166

Telecopy:     (415) 321-1188 

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. 

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        8.    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. 

        9.    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. 

        10.    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. 

        11.    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. 

        12.    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. 

        13.    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. 

        14.    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. 

        15.    Insurance.    The Company 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. 

        16.    Reimbursement of Payments on Behalf of Executive.    The Company and its Subsidiaries shall be entitled to
deduct or withhold from any amounts owing from the Company 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 the Company or any of its Subsidiaries or Executive's ownership
interest in the Company 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 the Company or any of its Subsidiaries does not make such deductions or withholdings, Executive shall indemnify the Company and its Subsidiaries for any
amounts paid with respect to any such Taxes. 

5

 

        17.    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 17 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. 

        18.    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. 

*    *    *    *    *

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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/  ANDRE PIETERS      

	

 	
 	

Its:	
 	

President
	 	 	 	 	

	

 	
 	

/s/  JOSEPH J. JAEGER      
 Joseph J. Jaeger

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Exhibit 10.12    
    

PFI HOLDINGS CORP.
 2003 STOCK OPTION PLAN

ARTICLE I  

Purpose of Plan

        The
2003 Stock Option Plan (the "Plan") of PFI Holdings Corp., a Delaware corporation, adopted by the Board of Directors of the Company on
November 3, 2003, for executive and other key employees of and key service providers to the Company, is intended to advance the best interests of the Company by providing those persons who have
a substantial responsibility for its management and growth with additional incentives by allowing them to acquire an ownership interest in the Company and thereby encouraging them to contribute to the
success of the Company and to remain in its employ. The availability and offering of stock options under the Plan also increases the Company's ability to attract and retain individuals of exceptional
managerial talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends. Accordingly, the Plan provides for granting Incentive Stock Option and/or
Non-qualified Stock Options, as is best suited to the circumstances of the Company and the participating directors, officers, employees and other service providers, as provided herein. 

ARTICLE II  

Definitions

        For
purposes of the Plan, except where the context clearly indicates otherwise, the following terms shall have the meanings set forth below: 

        "Board" shall mean the Board of Directors of the Company. 

        "Cause" shall mean (A) if a Participant (i) acts in bad faith and to the detriment of the Company; (ii) refuses or
fails to act in accordance with any specific direction or order of the Company or the Board; (iii) exhibits in regard to his employment unfitness or unavailability for service, unsatisfactory
performance, misconduct, dishonesty, habitual neglect, or incompetence; (iv) is convicted of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person (or enter
a plea of guilty or nolo contendere with respect thereto); or (v) breaches any material term of this Agreement or breaches any other agreement
(including any employment agreement) between or among such Participant and the Company or (B) such other definition may be set forth in a Participant's Option Agreement (as defined in
Section 6.3). 

        "Code" shall mean the Internal Revenue Code of 1986, as amended, and any successor statute. 

        "Committee" shall mean the committee of the Board which may be designated by the Board to administer the Plan. The Committee shall be
composed of two or more directors as appointed from time to time to serve by the Board. 

        "Common Stock" shall mean the Company's Common Stock, par value $.01 per share, or if the outstanding Common Stock is hereafter changed
into or exchanged for different stock or securities of the Company, such other stock or securities. 

        "Company" shall mean PFI Holdings Corp., a Delaware corporation, and (except to the extent the context clearly requires otherwise) any
subsidiary corporation of PFI Holdings Corp. as such term is defined in Section 424(f) of the Code. 

        "Disability" shall mean the inability, due to illness, accident, injury, physical or mental incapacity or other disability, of any
Participant to carry out effectively his or her duties and obligations to the Company or to participate effectively and actively in the management of the Company for a period of 

 

at
least 90 consecutive days or for shorter periods aggregating at least 120 days (whether or not consecutive) during any twelve-month period, as determined in the reasonable judgment of the
Board. 

        "Fair Market Value" of the Common Stock shall be determined by the Committee or, in the absence of the Committee, by the Board. 

        "Incentive Stock Option" means an option conforming to the requirements of Section 422 of the Code and any successor thereto. 

        "Non-qualified Stock Option" means any stock option other than an Incentive Stock Option. 

        "Participant" shall mean any executive or other key employee of the Company who has been selected to participate in the Plan by the
Committee or the Board. 

        "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. 

        "Sale of the Company" means the sale of the Company pursuant to which any party or parties (other than Summit Partners, L.P. and/or any of
its affiliated investment funds) acquire (i) capital stock of the Company possessing the voting power under normal circumstances to elect a majority of the Company's board of directors (whether
by merger, consolidation or sale or transfer of the Company's capital stock) or (ii) all or substantially all of the Company's assets determined on a consolidated basis. 

ARTICLE III  

Administration

        The
Plan shall be administered by the Committee; provided that if for any reason the Committee shall not have been appointed by the Board,
all authority and duties of the Committee under the Plan shall be vested in and exercised by the Board. Subject to the limitations of the Plan, the Committee shall have the sole and complete authority
to: (i) select Participants, (ii) grant options to Participants in such forms and amounts as it shall determine, (iii) impose such limitations, restrictions and conditions upon
such options as it shall deem appropriate, (iv) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan,
(v) correct any defect or omission or reconcile any inconsistency in the Plan or in any option granted hereunder and (vi) make all other determinations and take all other actions
necessary or advisable for the implementation and administration of the Plan. The Committee's determinations on matters within its authority shall be conclusive and binding upon the Participants, the
Company and all other Persons. All expenses associated with the administration of the Plan shall be borne by the Company. The Committee may, as approved by the Board and to the extent permissible by
law, delegate any of its authority hereunder to such persons as it deems appropriate. 

        In
the event the Company becomes a "publicly-held corporation" as defined in Section 162(m)(2) of the Code, the Company may establish a committee of outside directors
meeting the requirements of Code Section 162(m) to (i) approve the grant of options that might reasonably be anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax purposes by the Company pursuant to Code Section 162(m) and (ii) administer the Plan. In such event, the
powers reserved to the Committee in the Plan shall be exercised by such compensation committee. In addition, options under the Plan shall be granted upon satisfaction of the conditions to such grants
provided pursuant to Code Section 162(m) and any Treasury Regulations promulgated thereunder. 

        The
Committee may from time to time grant to eligible Participants Incentive Stock Options and Non-qualified Stock Options; provided that the Committee may grant Incentive
Stock Options only to 

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eligible
employees of the Company. The options granted shall take such form as the Committee shall determine, subject to the terms and conditions herein. 

        It
is the Company's intent that Non-qualified Stock Options granted under the Plan not be classified as Incentive Stock Options, that Incentive Stock Options be consistent
with and contain or be deemed to contain all provisions required under Section 422 of the Code and any successor thereto, and that any ambiguities in construction be interpreted in order to
effectuate such intent. If an Incentive Stock Option granted under the Plan does not qualify as such for any reason, then to the extent of such non-qualification, the stock option
represented thereby shall be regarded as a Non-qualified Stock Option duly granted under the Plan, provided that such stock option otherwise meets the Plan's requirements for
Non-qualified Stock Options. 

        To
the extent that the aggregate Fair Market Value (determined at the time the respective Incentive Stock Option is granted) of shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of the Company exceeds $100,000 (within the meaning of
Section 422 of the Code), such excess Incentive Stock Options shall be treated as options that do not constitute Incentive Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations
and other administrative pronouncements, which of a Participant's Incentive Stock Options will not constitute Incentive Stock Options because of such limitation and shall notify the Participant of
such determination as soon as practicable after such determination. 

ARTICLE IV  

Limitation on Aggregate Shares

        The
number of shares of Common Stock with respect to which options may be granted under the Plan and which may be issued upon the exercise thereof shall not exceed, in the aggregate,
2,500,000 shares; provided that the type and the aggregate number of shares which may be subject to options shall be subject to adjustment in accordance
with the provisions of paragraph 6.8 below, and further provided that to the extent any options expire unexercised or are canceled, terminated or
forfeited in any manner without the issuance of Common Stock thereunder, or if any options are exercised and the shares of Common Stock issued thereunder are repurchased by the Company, such shares
shall again be available under the Plan. The 2,500,000 shares of Common Stock available under the Plan may be either authorized and unissued shares, treasury shares or a combination thereof, as the
Committee shall determine. 

ARTICLE V  

Awards

        5.1    Options.    The Committee may grant options to Participants in accordance with this Article V. 

        5.2    Form of Option.    Options granted under this Plan shall be Non-qualified Stock Options or
Incentive Stock Options within the meaning of Section 422(b) of the Code or any successor provision. 

        5.3    Exercise Price.    The option exercise price per share of Common Stock ("Exercise
Price") shall be fixed by the Committee at not less than 100% of the Fair Market Value of a share of Common Stock on the date of grant. In the case of the grant of any
Incentive Stock Option to an employee who, at the time of the grant, owns more than 10% of the total combined voting power of all classes of stock of the Company, the Exercise Price may not be less
than 110% of the Fair Market Value of a share of Common Stock as of the date of grant of the option unless otherwise permitted by Section 422 of the Code or any successor thereto. 

3

 

        5.4    Exercisability.    Options shall be exercisable at such time or times as the Committee shall determine at or
subsequent to grant. 

        5.5    Payment of Exercise Price.    Options shall be exercised in whole or in part by written notice to the Company
(to the attention of the Company's Secretary) accompanied by payment in full of the option Exercise Price. Payment of the option Exercise Price shall be made in cash (including check, bank draft or
money order). 

        5.6    Terms of Options.    The Committee shall determine the term of each option, which term shall in no event exceed
ten years from the date of grant. No Incentive Stock Option granted to an employee who at the time of the grant owns more than 10% of the total combined voting power of all classes of stock of the
Company shall be exercisable more than five years from the date of grant thereof. 

        5.7    Limitations on Grants.    If required by the Code, the aggregate Fair Market Value (determined as of the grant
date) of shares for which an Incentive Stock Option is exercisable for the first time during any calendar year under all equity incentive plans of the Company may not exceed $100,000. 

ARTICLE VI  

General Provisions

        6.1    Conditions and Limitations on Exercise.    Options may be made exercisable in one or more installments, upon
the happening of certain events, upon the passage of a specified period of time, upon the fulfillment of certain conditions or upon the achievement by the Company of certain performance goals, as the
Committee shall decide in each case when the options are granted. 

        6.2    Sale of the Company.    In the event of a Sale of the Company, the Committee or the Board may provide, in its
discretion, that the options shall become immediately exercisable by any Participants who are employed by the Company at the time of the Sale of the Company and/or that all options shall terminate if
not exercised as of the date of the Sale of the Company or other prescribed period of time. 

        6.3    Written Agreement.    Each option granted hereunder to a Participant shall be embodied in a written agreement
(an "Option Agreement") which shall be signed by the Participant and by the Chairman or Chief Executive Officer or the President of the Company for and
in the name and on behalf of the Company and shall be subject to the terms and conditions of the Plan prescribed in the Agreement (including, but not limited to, (i) the right of the Company
and such other Persons as the Committee shall designate ("Designees") to repurchase from each Participant, and such Participant's transferees, all
shares of Common Stock issued or issuable to such Participant on the exercise of an option in the event of such Participant's termination of employment, (ii) rights of first refusal granted to
the Company and its Designees, (iii) holdback and other registration right restrictions in the event of a public registration of any equity securities of the Company and (iv) any other
terms and conditions which the Committee shall deem necessary and desirable). 

        6.4    Listing, Registration and Compliance with Laws and Regulations.    Options shall be subject to the requirement
that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to the options upon any securities exchange or under any
state or federal securities or other law or regulation, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to or in connection with the granting
of the options or the issuance or purchase of shares thereunder, no options may be granted or exercised, in whole or in part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to the Committee. The holders of such options shall supply the Company with such certificates, representations and
information as the 

4

 

Company
shall request and shall otherwise cooperate with the Company in obtaining such listing, registration, qualification, consent or approval. In the case of officers and other Persons subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, the Committee may at any time impose any limitations upon the exercise of an option that, in the Committee's discretion, are
necessary or desirable in order to comply with said Section 16(b) and the rules and regulations thereunder. If the Company, as part of an offering of securities or otherwise, finds it desirable
because of federal or state regulatory requirements to reduce the period during which any options may be exercised, the Committee, may, in its discretion and without the Participant's consent, so
reduce such period on not less than 15 days written notice to the holders thereof. 

        6.5    Nontransferability.    Options may not be transferred other than by will or the laws of descent and
distribution and, during the lifetime of the Participant, may be exercised only by such Participant (or his legal guardian or legal representative); provided that Incentive Stock Options may be
exercised by
legal representative only if permitted by the Code and any regulations thereunder. In the event of the death of a Participant, exercise of options granted hereunder shall be made only: 

          (i)  by
the executor or administrator of the estate of the deceased Participant or the Person or Persons to whom the deceased Participant's rights under the option shall
pass by will or the laws of descent and distribution; and 

         (ii)  to
the extent that the deceased Participant was entitled thereto at the date of his death, unless otherwise provided by the Committee in such Participant's Option
Agreement. 

        6.6    Expiration of Options.    

        (a)    Normal Expiration.    In no event shall any part of any option be exercisable after the date of expiration
thereof (the "Expiration Date"), as determined by the Committee pursuant to paragraph 5.6 above. 

        (b)    Early Expiration Upon Termination of Employment.    Except as otherwise provided by the Committee in a
Participant's Option Agreement, any portion of a Participant's option that was not vested and exercisable on the date of the termination of such Participant's employment shall expire and be forfeited
as of such date, and any portion of a Participant's option that was vested and exercisable on the date of the termination of such Participant's employment shall expire and be forfeited as of such
date, except that: (i) if any Participant dies or becomes subject to any Disability, such Participant's option shall expire 90 days after
the date of his death or Disability, but in no event after the Expiration Date, (ii) if any Participant retires (with the approval of the Board) or resigns (but only to the extent provided in
his Option Agreement), his option shall expire 45 days after the date of his retirement, but in no event after the Expiration Date, and (iii) if any Participant is discharged other than
for Cause, such Participant's option shall expire 30 days after the date of his discharge, but in no event after the Expiration Date. 

        6.7    Withholding of Taxes.    The Company shall be entitled, if necessary or desirable, to withhold from any
Participant from any amounts due and payable by the Company to such Participant (or secure payment from such Participant in lieu of withholding) the amount of any minimum statutory withholding with
respect to any shares issuable under the options, and the Company may defer such issuance unless indemnified to its satisfaction. 

        6.8    Adjustments.    In the event of a reorganization, recapitalization, stock dividend or stock split, or
combination or other change in the shares of Common Stock or any merger, consolidation or exchange of shares, the Board or the Committee may, in order to prevent the dilution or enlargement of rights
under outstanding options, make such adjustments in the number and type of shares authorized by the Plan, the number and type of shares covered by outstanding options and the exercise prices specified
therein as may be determined to be appropriate and equitable. The issuance by the Company of shares of stock of any class, or options or securities exercisable or convertible into shares 

5

 

of
stock of any class, for cash or property, or for labor or services either upon direct sale, or upon the exercise of rights or warrants to subscribe therefore, or upon exercise or conversion of
other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to the number or price of shares of Common Stock then subject to any options. 

        6.9    Rights of Participants.    Nothing in this Plan or in any Option Agreement shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any time (with or without Cause), nor confer upon any Participant any right to continue in the employ of the Company for any
period of time or to continue his present (or any other) rate of compensation, and except as otherwise provided under this Plan or by the Committee in the Option Agreement, in the event of any
Participant's termination of employment (including, but not limited to, the termination by the Company without Cause) any portion of such Participant's option that was not previously vested and
exercisable shall expire and be forfeited as of the date of such termination. No employee shall have a right to be selected as a Participant or, having been so selected, to be selected again as a
Participant. 

        6.10    Amendment, Suspension and Termination of Plan.    The Board or the Committee may suspend or terminate the Plan
or any portion thereof at any time and may amend it from time to time in such respects as the Board or the Committee may deem advisable; provided that
no such amendment shall be made without stockholder approval to the extent such approval is required by law, agreement or the rules of any exchange upon which the Common Stock is listed, and no such
amendment, suspension or termination shall impair in any material respect the rights of Participants under outstanding options without the consent of the Participants affected thereby. No options
shall be granted hereunder after the tenth anniversary of the adoption of the Plan. 

        6.11    Amendment, Modification and Cancellation of Outstanding Options.    The Committee may amend or modify any
option in any manner to the extent that the Committee would have had the authority under the Plan initially to grant such option; provided that, except
as otherwise provided in a Participant's Option Agreement, no such amendment or modification shall impair in any material respect the rights of any Participant under any option without the consent of
such Participant. With the Participant's consent (not to be unreasonably withheld or delayed), the Committee may cancel any option and issue a new option to such Participant. 

        6.12    Indemnification.    In addition to such other rights of indemnification as they may have as members of the
Board or the Committee, the members of the Committee shall be indemnified by the Company
against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason of any action taken or failure to act
under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding; provided that any such Committee member
shall be entitled to the indemnification rights set forth in this paragraph 6.12 only if such member has acted in good faith and in a manner that such member reasonably believed to be in or not
opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such conduct was unlawful, and further provided that upon
the institution of any such action, suit or proceeding a Committee member shall give the Company written notice thereof and an opportunity, at its own expense, to handle and defend the same before
such Committee member undertakes to handle and defend it on his own behalf. 

*    *    *    *    * 

6

QuickLinks

Exhibit 10.12

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