Exhibit 10.09

 

TERMINATION AGREEMENT

 

This Termination Agreement (this “Agreement”) is entered into as of the
Agreement Date by and among Alberto-Culver Company, a Delaware corporation (the
“Company”), Sally Holdings, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company (“SHI”) and Gary G. Winterhalter (the “Executive”) and
shall be deemed to be effective on the date the last party signs this Agreement
(the “Agreement Date”).

 

WHEREAS, the Company and the Executive have entered into the Severance Agreement
dated as of December 1, 1996, as amended as of June 18, 1999 and February 24,
2004 (the “Severance Agreement”), pursuant to which the Executive would be
entitled to payments and benefits in the event that the Executive’s employment
were terminated under the circumstances set forth in the Severance Agreement
following, among other things, the approval by the stockholders of the Company
of a transaction that constitutes a Change in Control (as defined in the
Severance Agreement);

 

WHEREAS, the Company and Regis Corporation, a Minnesota corporation (“Regis”),
may enter into a transaction whereby Regis or a subsidiary of Regis would be
merged with SHI (such transaction, the “Transaction”);

 

WHEREAS, the Company intends to treat the Transaction as though it constitutes a
Change in Control for the purposes of, and as such term is defined under, the
Employee Stock Option Plan of 2003, Employee Stock Option Plan of 1988, 2003
Restricted Stock Plan and 1994 Restricted Stock Plan, and accordingly accelerate
the vesting of all options to purchase, and restricted shares of, common stock
of the Company issued under such plans, including those held by the Executive,
and the options to purchase shares of common stock of the Company held by the
Executive shall, effective upon the closing of the Transaction, be converted
into options to purchase shares of common stock of Regis;

 

WHEREAS, in respect of the Company’s Management Incentive Plan and the 1994
Shareholder Value Incentive Plan, the Company intends to treat the Transaction
as though it constitutes a Change in Control (as such term is defined therein)
for the participants in such plans, including the Executive; and

 

WHEREAS, the Company, SHI and the Executive desire to enter into this Agreement
pursuant to which the Severance Agreement shall be terminated upon the terms and
subject to the conditions contained herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained herein, the Company, SHI and the Executive hereby agree as
follows:

 

1. Termination of Severance Agreement. The Company and the Executive acknowledge
that the Transaction is currently contemplated to take the following form: the
shares of SHI owned by the Company would be distributed to the Company’s
stockholders pursuant to a tax-free spin-off of SHI and, immediately thereafter,
SHI would be merged with Regis or a subsidiary of Regis and those SHI shares
would be converted into shares of common stock of Regis. As a result of the
Transaction under such form, SHI would become a wholly owned subsidiary of
Regis. In addition, the Company and the Executive acknowledge that at the

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time of the spin-off of SHI (the “Effective Time”), the Executive will cease to
be an employee of the Company or any of its subsidiaries. In order to resolve
all issues that could arise with respect to the Severance Agreement by reason of
the Transaction, the Executive, on behalf of the Executive and any person
claiming through the Executive, and the Company hereby (a) agree that the
Transaction, however effected, shall not be deemed to constitute a Change in
Control for purposes of the Severance Agreement and (b) terminate effective
immediately prior to the Effective Time the Severance Agreement and any and all
rights the Executive may have to any payments or benefits pursuant to the
Severance Agreement.

 

2. Consideration for Termination.

 

(a) In consideration for the termination of the Severance Agreement, SHI and the
Executive agree that in the event of the termination of the Executive’s
employment without Cause by SHI or by the Executive for Good Reason on or after
the Agreement Date and prior to the second anniversary of the Effective Time,
the Executive shall be entitled to the payments and benefits set forth in
Schedule I hereto. For purposes of clarity, a termination by reason of
disability does not constitute a termination by SHI of the Executive’s
employment without Cause.

 

(b) As additional consideration for the termination of the Severance Agreement,
SHI agrees that it will enter into the agreement with the Executive
substantially in the form attached hereto as Exhibit A, which shall become
effective at the Effective Time.

 

If the Executive shall be entitled to any payments or benefits pursuant to the
Severance Agreement in connection with a Change in Control unrelated to the
Transaction with Regis and its affiliates, then the Executive shall not be
entitled to any payments or benefits hereunder.

 

For purposes of this Section 2, the term “Cause” shall have the meaning assigned
to it in the Severance Agreement, provided that (i) the Agreement Date shall be
substituted for the term “Change in Control” each place such term appears in
such definition, (ii) the term “Company” shall, to the extent the context
requires, be deemed to also refer to SHI and its affiliates, including Regis.
“Good Reason” shall mean, without the Executive’s consent, the occurrence of any
of the following circumstances during the period beginning on the Agreement Date
and ending on the second anniversary of the Effective Time unless such
circumstances are fully corrected prior to the expiration of the fifteen
(15) calendar day period following delivery to SHI and its parent corporation of
the Executive’s notice of intention to terminate his employment for Good Reason
describing such circumstances in reasonable detail:

 

(A) any of (1) the assignment to the Executive of any duties inconsistent in any
material respect with the Executive’s position(s), duties, responsibilities or
status immediately prior to the Agreement Date, (2) a change in the Executive’s
reporting responsibilities as in effect immediately prior to the Agreement Date
or (3) any removal or involuntary termination of the Executive otherwise than as
expressly permitted by this Agreement;

 

(B) a reduction in the Executive’s rate of annual base salary as in effect
immediately prior to the Agreement Date or as the same may be increased from
time to time thereafter;

 

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(C) any requirement that the Executive be based anywhere other than within a 20
mile radius of the facility where the Executive is located as of the Agreement
Date; or

 

(D) the failure of SHI or any of its affiliated companies to (1) continue in
effect any employee benefit plan or compensation plan in which the Executive is
participating immediately prior to the Agreement Date, unless the Executive is
permitted to participate in other plans providing the Executive with
substantially comparable benefits, or the taking of any action by SHI or any of
its affiliated companies which would adversely affect the Executive’s
participation in or materially reduce the Executive’s benefits under any such
plan, (2) provide the Executive and the Executive’s dependents welfare benefits
in accordance with the plans, practices, programs and policies as in effect
generally at any time with respect to other peer executives of SHI, (3) provide
fringe benefits in accordance with the plans, practices, programs and policies
as in effect generally at any time with respect to other peer executives of SHI,
(4) provide the Executive with paid vacation in accordance with the plans,
policies, programs and practices as in effect generally at any time with respect
to other peer executives of SHI, or (5) reimburse the Executive promptly for all
reasonable employment expenses incurred by the Executive in accordance with the
policies, practices and procedures as in effect generally at any time with
respect to other peer executives of SHI.

 

The Executive shall be deemed to have waived his rights to terminate his
employment hereunder for circumstances constituting Good Reason if he shall not
have provided to SHI and its parent corporation a notice of termination within
fifty (50) calendar days following the occurrence of the Good Reason event.

 

3. Limitations on Payments to the Executive. Solely for the purposes of the
computation of benefits under this Agreement and notwithstanding any other
provisions hereof, payments to the Executive under this Agreement shall be
reduced (but not below zero) so that the present value, as determined in
accordance with Section 280G(d)(4) of the Internal Revenue Code of 1986, as
amended (the “Code”), of such payments plus any other payments that must be
taken into account for purposes of any computation relating to the Executive
under Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed
2.99 times the Executive’s “base amount,” as such term is defined in
Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof, no
reduction in payments under the limitation contained in the immediately
preceding sentence shall be applied to payments hereunder which do not
constitute “excess parachute payments” within the meaning of the Code. Any
payments in excess of the limitation of this Section 3 or otherwise determined
to be “excess parachute payments” made to the Executive hereunder shall be
deemed to be overpayments which shall constitute an amount owing from the
Executive to SHI with interest from the date of receipt by the Executive to the
date of repayment (or offset) at the applicable federal rate under
Section 1274(d) of the Code, compounded semi-annually, which shall be payable
upon demand; provided, however, that no repayment shall be required under this
sentence if in the written opinion of tax counsel satisfactory to the Executive
and delivered to the Executive and SHI such repayment does not allow such
overpayment to be excluded for federal income and excise tax purposes from the
Executive’s income for the year of receipt or afford the Executive a
compensating federal income tax deduction for the year of repayment.

 

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4. Withholding Taxes. SHI may withhold from all payments due to the Executive
(or the Executive’s estate or beneficiaries) hereunder all taxes which, by
applicable federal, state, local or other law, are required to be withheld
therefrom.

 

5. Agreement Date; Termination of Agreement. This Agreement shall be effective
on the Agreement Date. This Agreement shall terminate and be of no further force
or effect, except in respect of any benefits then accrued by the Executive
hereunder, if and only if (a) the principal agreements related to the
Transaction are not signed by the Company and Regis on or prior to March 31,
2006, or (b) such principal agreements are terminated prior to the consummation
of the Transaction.

 

6. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle the
Executive to continued employment with the Company or SHI.

 

7. Successors; Binding Agreement.

 

(a) This Agreement shall inure to the benefit of and be enforceable by the
Company and SHI and their respective successors and assigns, and by the
Executive and the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die after terminating employment pursuant to Section 2(a) while
any amounts would be payable to the Executive hereunder had the Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by the Executive to receive such amounts or, if no person
is so appointed, to the Executive’s estate.

 

(b) This Agreement shall not be terminated by any merger or consolidation of SHI
whereby SHI is or is not the surviving or resulting corporation or as a result
of any transfer of all or substantially all of the assets of SHI. In the event
of any such merger, consolidation or transfer of assets, the provisions of this
Agreement shall be binding upon the surviving or resulting corporation or the
person or entity to which such assets are transferred.

 

8. Notices. (a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
duly given upon receipt when delivered by United States mail, certified and
return receipt requested, postage prepaid, addressed (i) if to the Executive, to
the Executive’s most recent address as it appears in the records of the Company,
if to the Company, to Alberto-Culver Company, 2525 Armitage Avenue, Melrose
Park, Illinois, 60160, attention of the President, with a copy to the General
Counsel, and if to SHI, to Sally Holdings, Inc., 3001 Colorado Boulevard,
Denton, TX 76210, attention of the President, with a copy to the General
Counsel, or (ii) to such other address as any party may have furnished to the
other parties in writing in accordance herewith.

 

(b) A written notice of the Executive’s termination of employment by SHI or by
the Executive, as the case may be, shall (i) set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive’s employment and (ii) specify the termination date (which date shall
be not less than 15 days after the giving of such notice). The failure by the
Executive or SHI to set forth in such notice any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or SHI hereunder or preclude the Executive or SHI from asserting
such fact or circumstance in enforcing the rights of the Executive or SHI
hereunder.

 

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9. Employment with Subsidiaries. Employment with SHI for purposes of this
Agreement shall include (a) in the period prior to the Effective Time,
employment with the Company or any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities of such corporation or
other entity entitled to vote generally in the election of directors and (b) in
the period at or after the Effective Time, employment with Regis or any
corporation or other entity in which Regis has a direct or indirect ownership
interest of 50% or more of the total combined voting power of the then
outstanding securities of such corporation or other entity entitled to vote
generally in the election of directors.

 

10. Governing Law; Validity. The interpretation, construction and performance of
this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Illinois without regard to the principle
of conflicts of laws. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which other provisions shall remain in full force
and effect.

 

11. Counterparts. This Agreement may be executed in two or more counterparts,
all of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.

 

12. Miscellaneous. Capitalized terms not defined herein shall have the meanings
assigned to them in the Severance Agreement. No provision of this Agreement may
be modified or waived unless such modification or waiver is agreed to in writing
and signed by the Executive and by a duly authorized officer of each of the
Company and SHI, provided that after the Effective Time, a modification or
waiver of this Agreement will not require the agreement of the Company. No
waiver by any party hereto at any time of any breach by any other party hereto
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. Failure
by the Executive, the Company or SHI to insist upon strict compliance with any
provision of this Agreement or to assert any right the Executive, the Company or
SHI may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or right under this
Agreement. The rights of, and benefits payable to, the Executive (or the
Executive’s estate or beneficiaries) pursuant to this Agreement are in addition
to any rights of, or benefits payable to, the Executive (or the Executive’s
estate or beneficiaries) under any other employee benefit plan or compensation
program of the Company or SHI.

 

13. Application of Section 409A. Notwithstanding the foregoing, if SHI or the
Executive reasonably and in good faith determines that payment of any amount
pursuant to this Agreement at the time provided for such payment would cause any
amount so payable to be subject to Section 409A(a)(1) of the Code, then such
amount shall instead be paid at the earliest time at which it may be paid
without causing this Agreement to be subject to Section 409A(a)(1) and all of
the provisions of this Agreement shall be interpreted in a manner consistent
with this Section 13. SHI shall have the right to make such amendments, if any,
to this Agreement as shall be necessary to avoid the application of
Section 409A(a)(1) of the Code to the payments of amounts pursuant to this
Agreement, and shall give prompt notice of any such amendment to the Executive.
If SHI defers payments to the Executive pursuant to this Section 13, then SHI
shall

 

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provide Executive with prompt written notice thereof, including reasonable
explanation and the estimated date on which it has determined it is permitted to
make the payments deferred under this Section 13. In any event, the payments
will not take longer than 190 days from the Date of Termination, provided
however that the medical insurance coverage and executive outplacement services
to be provided under Schedule I shall extend beyond this period pursuant to the
terms of Schedule I and provided further that to the extent it is determined
that Section 409A would apply to such benefits if provided immediately after the
Date of Termination, such benefit shall commence as soon as possible without
being subject to Section 409A.

 

14. Amendment. This Agreement cannot be amended except pursuant to a writing
signed: (a) before the Effective Time, by the Executive, SHI, the Company and,
unless the Agreement has terminated pursuant to Section 5, Regis; provided that
Regis shall not unreasonably withhold its written consent to any such amendment;
and (b) on or after the Effective Time, by the Executive, SHI and Regis;
provided that any amendment that adversely affects the Company in any manner
shall be subject to the written consent of the Company.

 

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IN WITNESS WHEREOF, the Company and SHI have each caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the dates set forth below.

 

ALBERTO-CULVER COMPANY

By:

 

/s/ Gary P. Schmidt

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Name:

 

Gary P. Schmidt

Its:

 

Sr. V.P. and General Counsel

Date: 1/10/2006

SALLY HOLDINGS, INC.

By:

 

/s/ Gary Winterhalter

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Name:

   

Its:

   

Date: 1/9/2006                    

EXECUTIVE

/s/ Gary Winterhalter

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Date: 1/9/2006                    

 

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SCHEDULE I

TO

TERMINATION AGREEMENT

 

Lump Sum Payment

 

Provided the Executive executes a reasonable and customary release prescribed by
SHI within 21 days, or such longer period of time allowed by SHI, after the date
on which the Executive’s employment terminates pursuant to Section 2(a) of the
Agreement (the “Termination Date”) (which release shall extend to all claims
against the Company, SHI, Regis and their customary service providers,
affiliates and agents), then as soon as administratively practicable, but in no
event later than 30 days, after such release becomes effective and irrevocable,
SHI shall pay to the Executive a lump sum payment equal to 2 times the
Executive’s current base salary from SHI or its affiliated companies, plus 2
times the average of the Executive’s actual or annualized (for any fiscal year
consisting of less than 12 full months or with respect to which the Executive
has been employed by the Company and its affiliated companies or SHI and its
affiliated companies for less than 12 full months) annual bonus, paid or
payable, including by reason of any deferral, to the Executive by the Company
and its affiliated companies or SHI and its affiliated companies in respect of
the five fiscal years of the Company or SHI (or such portion thereof during
which the Executive performed services for the Company and its affiliated
companies or SHI and its affiliated companies if the Executive shall have been
employed by the Company and its affiliated companies or SHI and its affiliated
companies for less than such five fiscal year period) immediately preceding the
fiscal year in which the Termination Date occurs.

 

Benefits

 

Medical Insurance Continuation. For a period of 18 months commencing on the
Termination Date, SHI shall allow the Executive and his eligible dependents to
participate in the group medical coverage made available by SHI or one of its
affiliates to active employees of SHI during such 18-month period (such
coverage, the “SHI Coverage”) and SHI and the Executive shall share the costs of
the continuation of such medical coverage in the same proportion as such costs
were shared immediately prior to the Termination Date, provided, however, that
SHI’s obligation to continue to provide this benefit shall terminate at such
time that the Executive commences employment with another employer and becomes
eligible to receive medical insurance coverage under an employer-provided plan
that is generally comparable to the SHI Coverage. The coverage provided
hereunder shall be applied toward the satisfaction of, and shall not supplement,
the Executive’s right to continued coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or any similar state law.

 

Executive Outplacement. SHI will pay for and provide to the Executive
outplacement services with an outplacement firm reasonably selected by the
Executive, provided that SHI shall not be responsible to pay for such services
to the extent such services (i) exceed $12,000 or (ii) are provided more than
one year following the Termination Date.

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EXHIBIT A

TO

TERMINATION AGREEMENT

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SEVERANCE AGREEMENT

 

THIS AGREEMENT is entered into as of                     , 2006 (the “Effective
Date”) by and between Regis Corporation, a Minnesota corporation, and Gary
Winterhalter (the “Executive”).

 

WHEREAS, on the Effective Date, a wholly owned subsidiary of the Company (as
defined in Section 1) was merged with Sally Holdings, Inc. (“SHI”), a Delaware
corporation and wholly-owned subsidiary of Alberto-Culver Company, a Delaware
corporation (“ACC”), pursuant to an Agreement and Plan of Merger by and among
the Company, ACC, SHI and a subsidiary of the Company dated as of
                                , 2006 (such transaction, the “Transaction”);
and

 

WHEREAS, immediately prior to the Effective Time, the Executive served as a key
employee of SHI and his services and knowledge are valuable to the Company in
connection with the management of one or more of the Company’s principal
operating facilities, divisions, departments or subsidiaries; and

 

WHEREAS, as an executive of a subsidiary of ACC, the Executive was party to a
Severance Agreement with ACC substantially similar to this Agreement and the
entry into this Agreement was sought by ACC in connection with the Transaction;
and

 

WHEREAS, the Board (as defined in Section 1) has determined that it is in the
best interests of the Company and its shareholders to secure the Executive’s
continued services and to ensure the Executive’s continued dedication and
objectivity in the event of any threat or occurrence of, or negotiation or other
action that could lead to, or create the possibility of, a Change in Control (as
defined in Section 1) of the Company, without concern as to whether the
Executive might be hindered or distracted by personal uncertainties and risks
created by any such possible Change in Control, and to encourage the Executive’s
full attention and dedication to the Company.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and the Executive hereby
agree as follows:

 

1. Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below:

 

(a) “Board” means the Board of Directors of the Company.

 

(b) “Cause” means (1) a material breach by the Executive of those duties and
responsibilities of the Executive which do not differ in any material respect
from the duties and responsibilities of the Executive during the six-month
period immediately prior to a Change in Control (other than as a result of
incapacity due to physical or mental illness) which is demonstrably willful and
deliberate on the Executive’s part, which is committed in bad faith or without
reasonable belief that such breach is in the best interests of the Company and
which is not remedied in a reasonable period of time after receipt of written
notice from the Company specifying such breach or (2) the commission by the
Executive of a felony involving moral turpitude.

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(c) “Change in Control” means:

 

(1) The occurrence of any one or more of the following events:

 

(A) The acquisition by any individual, entity or group, including any “person”
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act but
specifically excluding Curtis Squire, Inc. or the present shareholders of Curtis
Squire, Inc. (a “Person”), of beneficial ownership within the meaning of Rule
13d-3 promulgated under the Exchange Act of 20% or more of the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that a Change in Control shall not result from
an acquisition of Outstanding Company Voting Securities:

 

(i) directly from the Company, except as otherwise provided in
Section 1(c)(2)(A);

 

(ii) by the Company, except as otherwise provided in Section 1(c)(2)(B);

 

(iii) by an employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company; or

 

(iv) by any corporation pursuant to a reorganization, merger or consolidation
involving the Company, if, immediately after such reorganization, merger or
consolidation, each of the conditions described in clauses (i) and (ii) of
Section 1(c)(1)(C) shall be satisfied.

 

(B) The cessation for any reason of the members of the Incumbent Board (as such
term is defined in Section 1(h)) to constitute at least a majority of the Board.

 

(C) Consummation of a reorganization, merger or consolidation unless, in any
such case, immediately after such reorganization, merger or consolidation:

 

(i) more than 50% of the combined voting power of the then outstanding
securities of the corporation resulting from such reorganization, merger or
consolidation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals or entities who were the beneficial owners of the combined voting
power of all of the Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation; and

 

(ii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such reorganization, merger or
consolidation.

 

(D) The sale or other disposition of all or substantially all of the assets of
the Company other than (x) pursuant to a tax-free spin-off of a subsidiary or
other business

 

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unit of the Company or (y) to a corporation with respect to which, immediately
after such sale or other disposition:

 

(i) more than 50% of the combined voting power of the then outstanding
securities thereof entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners of the combined
voting power of all of the Outstanding Company Voting Securities immediately
prior to such sale or other disposition; and

 

(ii) at least a majority of the members of the board of directors thereof were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition.

 

(E) Approval by the shareholders of the Company of a plan of complete
liquidation or dissolution of the Company.

 

(2) Notwithstanding the provisions of Section 1(c)(1)(A):

 

(A) no acquisition of Outstanding Company Voting Securities shall be subject to
the exception from the definition of Change in Control contained in clause
(i) of Section 1(c)(1)(A) if such acquisition results from the exercise of an
exercise, conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the Company; and

 

(B) for purposes of clause (ii) of Section 1(c)(1)(A), if any Person (other than
the Company or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company) shall,
by reason of an acquisition of Outstanding Company Voting Securities by the
Company, become the beneficial owner of 20% or more of the combined voting power
of the Outstanding Company Voting Securities, and such Person shall, after such
acquisition of Outstanding Company Voting Securities by the Company, become the
beneficial owner of any additional Outstanding Company Voting Securities and
such beneficial ownership is publicly announced, such additional beneficial
ownership shall constitute a Change in Control.

 

(3) For purposes of clarity, the Transaction, however effected, shall not
(whether alone or in combination with any other event) constitute or be deemed
to constitute a Change in Control for purposes of this Agreement.

 

(d) “Company” means Regis Corporation, a Minnesota corporation.

 

(e) “Date of Termination” means (1) the effective date on which the Executive’s
employment by the Company terminates as specified in a prior written notice by
the Company or the Executive, as the case may be, to the other, delivered
pursuant to Section 11 or (2) if the Executive’s employment by the Company
terminates by reason of death, the date of death of the Executive.

 

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(f) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(g) “Good Reason” means, without the Executive’s express written consent, the
occurrence of any of the following events after a Change in Control:

 

(1) any of (i) the assignment to the Executive of any duties inconsistent in any
material respect with the Executive’s position(s), duties, responsibilities or
status with the Company immediately prior to such Change in Control, (ii) a
change in the Executive’s reporting responsibilities with the Company as in
effect immediately prior to such Change in Control or (iii) any removal or
involuntary termination of the Executive from the Company otherwise than as
expressly permitted by this Agreement;

 

(2) a reduction by the Company in the Executive’s rate of annual base salary as
in effect immediately prior to such Change in Control or as the same may be
increased from time to time thereafter;

 

(3) any requirement of the Company that the Executive be based anywhere other
than within a 20 mile radius of the facility where the Executive is located at
the time of the Change in Control; or

 

(4) the failure of the Company to (i) continue in effect any employee benefit
plan or compensation plan in which the Executive is participating immediately
prior to such Change in Control, unless the Executive is permitted to
participate in other plans providing the Executive with substantially comparable
benefits, or the taking of any action by the Company which would adversely
affect the Executive’s participation in or materially reduce the Executive’s
benefits under any such plan, (ii) provide the Executive and the Executive’s
dependents welfare benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive immediately prior to such Change in Control or as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies, (iii) provide fringe benefits in
accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive immediately
prior to such Change in Control or as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies, (iv) provide the Executive with paid vacation in accordance with the
most favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive immediately prior to such
Change in Control or as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies, or
(v) reimburse the Executive promptly for all reasonable employment expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive immediately prior to such Change in Control or as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.

 

For purposes of this Agreement, an action which is remedied by the Company
promptly after receipt of notice thereof given by the Executive shall not
constitute Good Reason.

 

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(h) “Incumbent Board” means those individuals who, as of                 ,
        , constitute the Board, provided that:

 

(1) any individual who becomes a director of the Company subsequent to such date
whose election, or nomination for election by the Company’s shareholders, was
approved by the vote of at least a majority of the directors then comprising the
Incumbent Board shall be deemed to have been a member of the Incumbent Board;
and

 

(2) no individual who was initially elected as a director of the Company as a
result of an actual or threatened election contest, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other
actual or threatened solicitation of proxies or consents by or on behalf of any
Person other than the Board shall be deemed to have been a member of the
Incumbent Board.

 

(i) “Nonqualifying Termination” means a termination of the Executive’s
employment (1) by the Company for Cause, (2) by the Executive for any reason
other than a Good Reason, (3) as a result of the Executive’s death or (4) by the
Company due to the Executive’s absence from his duties with the Company on a
full-time basis for at least 180 consecutive days as a result of the Executive’s
incapacity due to physical or mental illness.

 

(j) “Termination Period” means the period of time beginning with a Change in
Control and ending on the earlier to occur of (1) two years following such
Change in Control or (2) the Executive’s death.

 

2. Obligations of the Executive. The Executive agrees that in the event of a
Change in Control, he shall not voluntarily leave the employ of the Company
without Good Reason until 90 days following such Change in Control. The
Executive further agrees that in the event that any person or group attempts a
Change in Control, he shall not voluntarily leave the employ of the Company
during such attempted Change in Control unless an event occurs which would have
constituted Good Reason had it occurred following a Change in Control (for
purposes of determining whether such an event would have constituted Good Reason
had it occurred following a Change in Control, the definition of Good Reason
shall be interpreted as if a Change in Control had occurred when such attempted
Change in Control became known to the Board). The Executive acknowledges that if
he leaves the employ of the Company for any reason prior to a Change in Control,
he shall not be entitled to any payment or benefit pursuant to this Agreement.

 

3. Payments Upon Termination of Employment.

 

(a) If during the Termination Period the employment of the Executive shall
terminate, other than by reason of a Nonqualifying Termination, then the Company
shall pay to the Executive (or the Executive’s beneficiary or estate) within 30
days following the Date of Termination, as compensation for services rendered to
the Company:

 

(1) a cash amount equal to the sum of (i) the Executive’s base salary from the
Company and its affiliated companies through the Date of Termination, to the
extent not theretofore paid, (ii) an amount equal to the Executive’s annual
bonus in an amount determined in accordance with the terms of the Company’s
annual incentive plan, multiplied by a fraction,

 

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the numerator of which is the number of days in the Company’s fiscal year prior
to the Date of Termination and the denominator of which is 365 (which amount,
notwithstanding the foregoing, shall be paid when and as bonuses under such plan
are ordinarily paid), and (iii) any compensation previously deferred for the
benefit of the Executive (together with any interest and earnings thereon) and
any accrued vacation pay, in each case to the extent not theretofore paid; plus

 

(2) a lump-sum cash amount which, when added to any other payments that must be
taken into account for purposes of any computation relating to the Executive
under Section 280G(b)(2)(A)(ii) of the Internal Revenue Code of 1986, as amended
(the “Code”), equals, in the aggregate, 2.99 times the Executive’s “base
amount,” as such term is defined in Section 280G(b)(3) of the Code; provided,
that any amount paid pursuant to this Section 3(a)(2) shall be paid in lieu of
any other amount of severance relating to salary or bonus continuation to be
received by the Executive upon termination of employment of the Executive under
any severance plan, policy or arrangement of the Company.

 

(b) In addition to the payments to be made pursuant to Section 3(a) hereof, any
stock options granted to the Executive under the Company’s 2004 Long Term
Incentive Plan shall be treated in accordance with the terms of such plan.

 

(c) For a period of 36 months commencing on the Date of Termination, the Company
shall continue to keep in full force and effect all policies of medical,
accident, disability and life insurance with respect to the Executive and his
dependents with the same level of coverage, upon the same terms and otherwise to
the same extent as such policies shall have been in effect immediately prior to
the Date of Termination or as provided generally with respect to other peer
executives of the Company and its affiliated companies, and the Company and the
Executive shall share the costs of the continuation of such insurance coverage
in the same proportion as such costs were shared immediately prior to the Date
of Termination.

 

(d) If during the Termination Period the employment of the Executive shall
terminate by reason of a Nonqualifying Termination, then the Company shall pay
to the Executive within 30 days following the Date of Termination, a cash amount
equal to the sum of (1) the Executive’s full annual base salary from the Company
through the Date of Termination, to the extent not theretofore paid and (2) any
compensation previously deferred by the Executive (together with any interest
and earnings thereon) and any accrued vacation pay, in each case to the extent
not theretofore paid.

 

4. Limitations on Payments by the Company. Solely for the purposes of the
computation of benefits under this Agreement and notwithstanding any other
provisions hereof, payments to the Executive under this Agreement shall be
reduced (but not below zero) so that the present value, as determined in
accordance with Section 280G(d)(4) of the Code, of such payments plus any other
payments that must be taken into account for purposes of any computation
relating to the Executive under Section 280G(b)(2)(A)(ii) of the Code, shall
not, in the aggregate, exceed 2.99 times the Executive’s “base amount,” as such
term is defined in Section 280G(b)(3) of the Code. Notwithstanding any other
provision hereof, no reduction in payments under the limitation contained in the
immediately preceding sentence shall be applied to payments hereunder which do
not constitute “excess parachute payments” within the meaning

 

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of the Code. Any payments in excess of the limitation of this Section 4 or
otherwise determined to be “excess parachute payments” made to the Executive
hereunder shall be deemed to be overpayments which shall constitute an amount
owing from the Executive to the Company with interest from the date of receipt
by the Executive to the date of repayment (or offset) at the applicable federal
rate under Section 1274(d) of the Code, compounded semi-annually, which shall be
payable to the Company upon demand; provided, however, that no repayment shall
be required under this sentence if in the written opinion of tax counsel
satisfactory to the Executive and delivered to the Executive and the Company
such repayment does not allow such overpayment to be excluded for federal income
and excise tax purposes from the Executive’s income for the year of receipt or
afford the Executive a compensating federal income tax deduction for the year of
repayment.

 

5. Withholding Taxes. The Company may withhold from all payments due to the
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.

 

6. Reimbursement of Expenses. If any contest or dispute shall arise under this
Agreement involving termination of the Executive’s employment with the Company
or involving the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse the Executive, on
a current basis, for all legal fees and expenses, if any, incurred by the
Executive in connection with such contest or dispute, together with interest in
an amount equal to the prime rate from time to time in effect, as published
under “Money Rates” in The Wall Street Journal, but in no event higher than the
maximum legal rate permissible under applicable law, such interest to accrue
from the date the Company receives the Executive’s statement for such fees and
expenses through the date of payment thereof; provided, however, that in the
event the resolution of any such contest or dispute includes a finding denying,
in total, the Executive’s claims in such contest or dispute, the Executive shall
be required to reimburse the Company, over a period of 12 months from the date
of such resolution, for all sums advanced to the Executive pursuant to this
Section 6.

 

7. Operative Event. Notwithstanding any provision herein to the contrary, no
amounts shall be payable hereunder unless and until there is a Change in Control
at a time when the Executive is employed by the Company.

 

8. Termination of Agreement.

 

(a) This Agreement shall be effective on the Effective Date and shall continue
until terminated by the Company as provided in Section 8(b); provided, however,
that this Agreement shall terminate in any event upon the first to occur of
(i) termination of the Executive’s employment with the Company prior to a Change
in Control or (ii) the Executive’s death.

 

(b) The Company shall have the right prior to a Change in Control, in its sole
discretion, pursuant to action by the Board, to approve the termination of this
Agreement, which termination shall not become effective until the date fixed by
the Board for such termination, which date shall be at least 120 days after
notice thereof is given by the Company to the Executive in accordance with
Section 11; provided, however, that no such action shall be taken by the Board
during any period of time when the Board has knowledge that any person has taken

 

7

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steps reasonably calculated to effect a Change in Control until, in the opinion
of the Board, such person has abandoned or terminated its efforts to effect a
Change in Control; and provided further, that in no event shall this Agreement
be terminated in the event of a Change in Control.

 

9. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle the
Executive to continued employment with the Company or its subsidiaries, and if
the Executive’s employment with the Company shall terminate prior to a Change in
Control, then the Executive shall have no further rights under this Agreement;
provided, however, that any termination of the Executive’s employment following
a Change in Control shall be subject to all of the provisions of this Agreement.

 

10. Successors; Binding Agreement.

 

(a) This Agreement shall not be terminated by any merger or consolidation of the
Company whereby the Company is or is not the surviving or resulting corporation
or as a result of any transfer of all or substantially all of the assets of the
Company. In the event of any such merger, consolidation or transfer of assets,
the provisions of this Agreement shall be binding upon the surviving or
resulting corporation or the person or entity to which such assets are
transferred.

 

(b) The Company agrees that concurrently with any merger, consolidation or
transfer of assets referred to in Section 10(a), it will cause any successor or
transferee unconditionally to assume, by written instrument delivered to the
Executive (or his beneficiary or estate), all of the obligations of the Company
hereunder. Failure of the Company to obtain such assumption prior to the
effectiveness of any such merger, consolidation or transfer of assets shall be a
breach of this Agreement and shall entitle the Executive to compensation and
other benefits from the Company in the same amount and on the same terms as the
Executive would be entitled hereunder if the Executive’s employment were
terminated following a Change in Control other than by reason of a Nonqualifying
Termination. For purposes of implementing the foregoing payment of compensation
and benefits to the Executive, the date on which any such merger, consolidation
or transfer becomes effective shall be deemed the Date of Termination.

 

(c) This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die after a termination of employment during the Termination Period (other than
a Nonqualifying Termination) while any amounts would be payable to the Executive
hereunder had the Executive continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to such person or persons appointed in writing by the Executive to
receive such amounts or, if no person is so appointed, to the Executive’s
estate.

 

11. Notice.

 

(a) For purposes of this Agreement, all notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered or five days after deposit in the United States
mail, certified and return receipt requested, postage prepaid, addressed (1) if
to the Executive, to his most recent address as it

 

8

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appears in the records of the Company, and if to the Company, to Regis
Corporation, [7201 Metro Boulevard, Edina, Minnesota], attention of the
[President], with a copy to the [General Counsel] or (2) to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.

 

(b) A written notice of the Executive’s Date of Termination by the Company or
the Executive, as the case may be, to the other, shall (i) indicate the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated and (iii) specify the termination date (which date shall
not be less than 15 days after the giving of such notice). The failure by the
Executive or the Company to set forth in such notice any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the Executive’s or
the Company’s rights hereunder.

 

12. Full Settlement; Resolution of Dispute. The Company’s obligation to make any
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment.

 

13. Employment with Subsidiaries. Employment with the Company for purposes of
this Agreement shall include employment with any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of the then outstanding securities of such
corporation or other entity entitled to vote generally in the election of
directors.

 

14. Governing Law; Validity. The interpretation, construction and performance of
this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Minnesota without regard to the principle
of conflicts of laws. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which other provisions shall remain in full force
and effect.

 

15. Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.

 

16. Miscellaneous. No provision of this Agreement may be modified or waived
unless such modification or waiver is agreed to in writing and signed by the
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar

 

9

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provisions or conditions at the same or at any prior or subsequent time. Failure
by the Executive or the Company to insist upon strict compliance with any
provision of this Agreement or to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement. The rights
of, and benefits payable to, the Executive, his estate or his beneficiaries
pursuant to this Agreement are in addition to any rights of, or benefits payable
to, the Executive, his estate or his beneficiaries under any other employee
benefit plan or compensation program of the Company.

 

17. Application of Section 409A. Notwithstanding the foregoing, if the Company
or the Executive reasonably and in good faith determines that payment of any
amount pursuant to this Agreement at the time provided for such payment would
cause any amount so payable to be subject to Section 409A(a)(1) of the Code,
then such amount shall instead be paid at the earliest time at which it may be
paid without causing this Agreement to be subject to Section 409A(a)(1) and all
of the provisions of this Agreement shall be interpreted in a manner consistent
with this Section 17. The Company shall have the right to make such amendments,
if any, to this Agreement as shall be necessary to avoid the application of
Section 409A(a)(1) of the Code to the payments of amounts pursuant to this
Agreement, and shall give prompt notice of any such amendment to the Executive.
If the Company defers payments to the Executive pursuant to this Section 17,
then the Company shall provide the Executive with prompt written notice thereof,
including reasonable explanation and the estimated date on which it has
determined it is permitted to make the payments deferred under this Section 17.
In any event, the payments will not take longer than 190 days from the date of
employment termination, provided however that the continuation of benefits
pursuant to Section 3(c) shall extend beyond this period pursuant to the terms
of Section 3(c) and provided further that to the extent it is determined that
Section 409A would apply to such benefits if provided immediately after the date
of employment termination, such benefits shall commence as soon as possible
without being subject to Section 409A.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a
duly authorized officer of the Company and the Executive has executed this
Agreement as of the Effective Date.

 

REGIS CORPORATION By:  

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    President and Chief Executive Officer EXECUTIVE: By:  

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    Executive

 

Subscribed and Sworn to before me

this          day of                     , 2006.

 

 

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Notary Public

 

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