Document:

Exhibit 10.5

Physicians Formula
Holdings, Inc.

1055 West 8th Street

Azusa, California 91702

October 23, 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:

  	
  /s/ Ingrid Jackel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its: Chief Executive OfficerExhibit
10.1

SHARE REPURCHASE AGREEMENT 

This Share Repurchase Agreement (this “Agreement”) is entered into as
of December 20, 2006, by and between CAREER EDUCATION CORPORATION, a Delaware
corporation (the “Company”) and John M. Larson (the “Seller”).

RECITALS

WHEREAS, the closing price
for the Common Stock as reported on the NASDAQ Global Select Market on December
20, 2006 (the “Closing Date”), was $25.01 per share (the “Closing
Price”);

WHEREAS, the Seller has
delivered to the Company an irrevocable notice of exercise of stock options
(the “Options”), to purchase an aggregate of 1,652,000 shares (the “Shares”),
of the Company’s common stock, par value $0.01 per share (the “Common Stock”),
effective as of December 20, 2006, in the form attached hereto as Exhibit A
(the “Notice of Exercise”), for an aggregate exercise price of
$13,725,756.00 (the “Aggregate Exercise Price”), to be paid by the
Seller on the Closing Date;

WHEREAS, the Seller
desires to sell to the Company, and the Company desires to purchase from the
Seller, all of the Shares for a per share purchase price equal to the Closing
Price, representing an aggregate purchase price of $41,316,520.00 (the “Purchase
Price”), subject to the terms and conditions set forth herein; and

NOW,
THEREFORE, in consideration of the premises and the mutual covenants of the
parties hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:

ARTICLE I

SALE OF SHARES

1.1           Sale of Shares to Company.  In reliance upon the respective
representations and warranties of the parties set forth herein, the Seller
shall sell to the Company, free and clear of any Liens (as defined in Section
2.2), and the Company shall purchase from the Seller, the Shares for an
aggregate amount equal to the Settlement Price (as defined below).

1.2           Delivery.  On the Closing Date, pursuant to this
Agreement, the Seller hereby surrenders any stock certificate or stock
certificates evidencing the Shares, together with any letters of instruction,
stock powers or any other documents reasonably necessary to effect the purchase
of the Shares by the Company.

1.3           Settlement.  On December 26, 2006, the Company will
deliver an amount

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representing the
Purchase Price less the Aggregate Exercise Price, subject to all applicable
federal, state and local tax withholding requirements related to the exercise
of the Options (the “Settlement Price”), by wire transfer to an account
specified in writing by the Seller.  The
Seller acknowledges that, following delivery of the Settlement Price, the
Seller shall have no further rights whatsoever with respect to the Shares.

ARTICLE II

REPRESENTATIONS
AND WARRANTIES OF THE SELLER

The Seller hereby
represents and warrants to the Company as follows:

2.1           Authority and Enforceability.  The Seller has full power, right and
authority to enter into and perform his obligations under this Agreement.  This Agreement has been duly executed and
delivered by the Seller and constitutes the legal, valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its
terms.  No permit, approval or consent
of, or notification to any governmental entity or any other person is necessary
in connection with the execution, delivery and performance by the Seller of
this Agreement and the consummation by the Seller of the transactions
contemplated hereby.

2.2           Title to Shares.  Upon exercise of the Options, the Seller will
be the beneficial and record owner of the Shares, free and clear of any liens,
claims, charges, restrictions, options, preemptive rights, mortgages,
hypothecations, assessments, pledges, encumbrances or security interests of any
kind or nature whatsoever (collectively, “Liens”).  Upon exercise of the Options, the Seller will
have good and marketable title to the Shares, free and clear of all Liens
whatsoever  Upon consummation of the
transactions provided for in this Agreement in accordance with the terms hereof,
the Company will acquire good and marketable title to all of the Shares, free
and clear of any Liens whatsoever.

2.3           No Violation.  None of the execution and delivery of this
Agreement, the consummation of the transactions provided for herein or
contemplated hereby, nor the fulfillment by the Seller of the terms hereof will
(with or without notice or passage of time or both): result in the breach of
any mortgage, note, contract or other agreement or obligation of any kind or
nature by which Seller or Seller’s properties may be bound.

2.4           Acknowledgment.  Except as expressly set forth herein, the
Seller acknowledges that the Company has not made, and is not making, any
representation or warranty as to the business, properties, condition (financial
or otherwise), risks, results of operations, prospects or any other aspect of
the operations of the Company or its subsidiaries.  The Seller has such knowledge and experience
in business and financial matters as to be capable of evaluating the merits and
risks of the transaction contemplated to be made hereunder.  The Seller has adequate information and has
made his own independent investigation concerning the business, properties,
condition (financial or otherwise), risks, results of operations and prospects
of the Company and its subsidiaries taken as a whole to make an informed
decision regarding the sale of Shares.

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ARTICLE III

REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

The Company represents
and warrants to the Seller as follows:

3.1           Organization and Standing.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

3.2           Authorization; Power.  The Company has all requisite corporate power
to enter into this Agreement, and to carry out and perform its obligations
under the terms of this Agreement.  All
action on the part of the Company necessary for the authorization, execution,
delivery and performance by the Company of this Agreement, and the consummation
of the transactions contemplated hereby, has been taken.  This Agreement constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.

3.3           No Violation.  Neither the execution and delivery of this
Agreement, the consummation of the transactions provided for herein or
contemplated hereby, nor the fulfillment by the Company of the terms hereof
will (with or without notice or passage of time or both) conflict with or
result in a breach of any provision of the organizational documents of the
Company.

ARTICLE IV

INDEMNIFICATION

4.1           Indemnification by the Seller.  From and after the Closing, the Seller agrees
to indemnify, defend and save the Company and its officers, directors,
employees, agents, attorneys, affiliates and successors and assigns (all or
each, a “Company Indemnified Party”) forever harmless from and against
any and all liabilities (whether contingent, fixed or unfixed, liquidated or
unliquidated, or otherwise), obligations, deficiencies, demands, claims, suits,
actions, or causes of action, assessments, losses, costs, expenses, interest,
fines, penalties, actual or punitive damages (including reasonable fees and
expenses of attorneys, accountants and other experts) (individually and
collectively, the “Losses”) suffered, sustained or incurred by any
Company Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of: (a) any misrepresentation in or breach of the
representations or warranties of the Seller contained in this Agreement or (b)
the failure of Seller to perform any of his covenants or obligations contained
in this Agreement.  A Company Indemnified
Party’s remedy for any indemnification hereunder shall be satisfied by prompt
payment from Seller.

4.2           Indemnification by Company.  From and after the Closing, the Company
agrees to indemnify, defend and save the Seller, and his successors, heirs,
agents and attorneys (each, a “Seller Indemnified Party”) forever
harmless from and against any and all Losses sustained or incurred by any
Seller Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of: (i) any misrepresentation in or breach of the representations
and warranties of the

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Company contained
in this Agreement or (ii) the failure of the Company to perform any of its
covenants or obligations contained in this Agreement.

ARTICLE V

MISCELLANEOUS

5.1           Survival of Representations and
Warranties.  All representations and
warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement.

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

5.3           Notices.  Any notices required or permitted to be sent
hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, or delivered by overnight courier service to the following
addresses, or such other address as any party hereto designates by written
notice to the other party, and shall be deemed to have been given upon
delivery, if delivered personally, three days after mailing, if mailed, or one
business day after delivery to the courier, if delivered by overnight courier
service:

If to
the Seller, to:

John M. Larson

230 Westfield Way

Barrington Hills,
Illinois 60010

 

with
a copy to:

Sonnenschein Nath &
Rosenthal LLP

7800 Sears Tower

233 South Wacker Drive

Chicago, Illinois  60606

Attention: Dominic
J. DeMatties, Esq.

 

If to the Company,
to:

Career Education
Corporation

2895 Greenspoint Parkway

Suite 600

Hoffman Estates, Illinois
60169

Attention: Gail B. Rago,
Esq.

 

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with
a copy to:

Katten Muchin Rosenman
LLP

525 West Monroe Street

Chicago, Illinois  60661

Attention:
Lawrence D. Levin, Esq.

 

5.4           Governing Law.  All questions concerning the construction,
validity and interpretation of this Agreement, and the performance of the
obligations imposed by this Agreement, shall be governed by the laws of the
State of Delaware, without giving effect to principles of conflicts of laws.

5.5           Further Assurances.  From time to time hereafter and without
further consideration, each of the parties hereto shall execute and deliver
such additional or further instruments of conveyance, assignment and transfer
or other agreements and take such actions as the other party hereto may request
in order to more effectively consummate the transactions contemplated by this
Agreement or as shall be reasonably necessary or appropriate in connection with
the carrying out of the parties’ respective obligations hereunder.

5.6           Final Agreement.  This Agreement and Notice of Exercise, taken
together, constitute the complete and final agreement of the parties concerning
the matters referred to herein, and supersedes all prior agreements and
understandings with respect thereto.

5.7           No Inducement.  The undersigned parties hereby represent and
warrant that they have not been induced to agree to and execute this Agreement
by any statement, act, or representation of any kind or character by anyone,
except as contained herein.  The parties
further represent that each of them has fully reviewed this Agreement and has
full knowledge of its terms, and each executes this Agreement of his own choice
and free will, after having received the advice of their respective attorneys.

5.8           Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission or electronic mail) in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.

[Remainder
of page intentionally left blank.

Signature
page follows.]

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The parties hereto have
executed this Agreement on the date first set forth above.

	
  

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ John M. Larson

  
	
   

  	
   

  	
  John M. Larson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CAREER EDUCATION CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick K. Pesch

  
	
   

  	
  Name:

  	
  Patrick K. Pesch

  
	
   

  	
  Its:

  	
  Chief Financial Officer

  

 

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EXHIBIT
A

Notice
of Exercise

NOTICE OF EXERCISE

OF
STOCK OPTIONS UNDER

CAREER
EDUCATION CORPORATION

1998
EMPLOYEE INCENTIVE COMPENSATION  PLAN

1.               Exercise.  John M. Larson, (the “Optionee”)
hereby notifies Career Education Corporation, (the “Company”) of, and
irrevocably commits to, the Optionee’s election to exercise the outstanding
options granted to Optionee on May 20, 1999, June 28, 2000 and May 11, 2001
(collectively, the “Options”), under the Career Education Corporation 1998
Employee Incentive Compensation Plan (the “Plan”) as follows:

o            This Notice is to purchase 120,000 shares
of Common Stock at $4.6563 per share ($558,756.00);

o            This Notice is to purchase 932,000 shares
of Common Stock at $6.00 per share ($5,592,000.00);

o            This Notice is to purchase 600,000 shares
of Common Stock at $12.625 per share ($7,575,000.00);

o            The exercise date for the shares of Common
Stock purchased pursuant to this Notice is December 20, 2006; and

o            The total amount due to the Company
pursuant to this Notice is $13,725,756.00 (the “Aggregate Exercise Price”).

2.               Payment and Withholding.  The Aggregate Exercise Price shall be paid
consistent with, and pursuant to, that certain Share Repurchase Agreement by
and between the Company and Optionee dated December 20, 2006 (the “Repurchase
Agreement”).  Any amounts required to be
withheld by the Company as a result of the exercise described in this Notice of
Exercise shall be taken from Optionee’s proceeds under the Repurchase
Agreement.

3.               Acknowledgements.  The Optionee agrees and understands that the
shares of Common Stock received pursuant to this Notice of Exercise are subject
to the terms of the Plan, as may be applicable.

4.               Definitions.  Capitalized terms used but not otherwise
defined herein shall have the meaning given to such terms in the Plan.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned has
executed this Notice of Exercise, this 20th day of
December, 2006.

OPTIONEE

Agreed and
Accepted this 20th day of December, 2006.

CAREER
EDUCATION CORPORATION

By:__________________________________

Name:_______________________________

Its:__________________________________

 

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