Exhibit 10.ll

 

Regis Corporation

 

 

Short Term Incentive Compensation Plan

 

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TABLE OF CONTENTS

 

 

ARTICLE I

ESTABLISHMENT AND PURPOSE

 

 

1.1

Establishment

 

 

1.2

Purposes

 

 

ARTICLE II

DEFINITIONS

 

 

2.1

Affiliate

 

 

2.2

Appendix

 

 

2.3

Award

 

 

2.4

Beneficiary

 

 

2.5

Board of Directors or Board

 

 

2.6

Cause

 

 

2.7

Change in Control

 

 

2.8

Code

 

 

2.9

Committee

 

 

2.10

Company

 

 

2.11

Covered Employee

 

 

2.12

Disability

 

 

2.13

Effective Date

 

 

2.14

Participant

 

 

2.15

Performance Goals

 

 

2.16

Plan

 

 

2.17

Representative

 

 

2.18

Termination of Employment

 

 

ARTICLE III

ADMINISTRATION

 

 

3.1

Committee Structure and Actions

 

 

3.2

Committee Authority

 

 

ARTICLE IV

ELIGIBILITY

 

 

4.1

Eligibility

 

 

ARTICLE V

AWARDS

 

 

5.1

General

 

 

5.2

Award Amounts

 

 

5.3

Performance Goals

 

 

5.4

Payments

 

 

5.5

Termination of Employment Due to Death, Disability or Other Reason

 

 

5.6

Election to Defer

 

 

ARTICLE VI

CHANGE IN CONTROL PROVISIONS

 

 

6.1

Impact of Event

 

 

ARTICLE VII

MISCELLANEOUS

 

 

7.1

Amendment and Termination

 

 

7.2

Unfunded Status of Plan

 

 

7.3

Provisions Relating to Internal Revenue Code Section 162(m)

 

 

7.4

No Additional Obligation

 

 

7.5

Withholding

 

 

7.6

Controlling Law

 

 

7.7

Offset

 

 

7.8

Nontransferability; Beneficiaries

 

 

7.9

No Rights with Respect to Continuance of Employment

 

 

7.10

Headings

 

 

7.11

Severability

 

 

7.12

Successors and Assigns

 

 

7.13

Entire Agreement

 

 

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REGIS CORPORATION

SHORT TERM INCENTIVE COMPENSATION PLAN

 

ARTICLE I

 

ESTABLISHMENT AND PURPOSE

 

1.1           Establishment.  The Regis Corporation Short Term Incentive
Compensation Plan (“Plan”), as originally established on June 30, 1998, is
hereby amended and restated by Regis Corporation (“Company”), effective as of
the Effective Date.  The Plan shall remain in effect for a period of five years
and shall terminate on the fifth anniversary of the Effective Date unless
earlier determined by the Committee.

 

1.2           Purposes.  The purposes of the Plan are to enhance the value of
the Company by providing an annual incentive for the achievement of one or more
of the performance goals set out in Section 5.3(b) (“Performance Goals”) and
selected by the Committee for the applicable fiscal year;  to link a significant
portion of a Participant’s annual compensation to the achievement of one or more
of the Performance Goals; and to attract, motivate and retain employees on a
competitive basis by making awards based on annual achievement of Performance
Goals.

 

ARTICLE II

 

DEFINITIONS

 

For purposes of the Plan, the following terms are defined as set forth below:

 

2.1           “Affiliate”  means any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated association or other entity (other than the Company) that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company.

 

2.2           “Appendix”  means any schedule, chart or other description of the
specific awards prepared each year (or more frequently) by the Committee with
respect to the applicable fiscal year. Each Appendix shall be a part of this
Plan as if originally set forth herein.

 

2.3           “Award”  means an annual incentive award granted to a Participant
under the Plan.  Awards shall be subject to the terms and conditions of the
Plan, and such other terms and conditions as the Committee shall deem desirable
(as set out in an Appendix).

 

2.4           “Beneficiary”  means any person or other entity, which has been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the compensation, specified
under the Plan to the extent permitted.  If there is no designated

 

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beneficiary, then the term means any person or other entity entitled by will or
the laws of descent and distribution to receive such compensation.

 

2.5           “Board of Directors” or “Board”  means the Board of Directors of
the Company.

 

2.6           “Cause”  means, for purposes of determining whether and when a
Participant has incurred a Termination of Employment for Cause, any act or
omission which permits the Company to terminate the written agreement or
arrangement between the Participant and the Company or an Affiliate for “cause”
as defined in such agreement or arrangement, or in the event there is no such
agreement or arrangement or the agreement or arrangement does not define the
term “Cause,” then “Cause” means the Participant’s intentional participation in
illegal conduct which (i) is materially and directly detrimental to the
financial interests of the Company or an Affiliate and (ii) results in the
Participant’s conviction of a felony.

 

2.7           “Change in Control”  means the first to occur of any of the
following events:

 

(1)           the acquisition by any “person,” as that term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, “beneficial
ownership,” as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of 20% or more of the shares of the Company’s capital stock;

 

(2)           the first day on which less than two-thirds of the total
membership of the Board of Directors shall be Continuing Directors (as that term
is defined in Article VII of the Company’s Articles of Incorporation);

 

(3)           the approval by the shareholders of the Company of a merger, share
exchange, or consolidation of the Company (a “Transaction”), other than a
Transaction which would result in the Voting Stock of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the Voting Stock of the Company or such surviving
entity immediately after such Transaction; or

 

(4)           the approval by the shareholders of the Company of a complete
liquidation of the Company or a sale or disposition of all or substantially all
the assets of the Company.

 

2.8           “Code”  means the Internal Revenue Code of 1986, as amended from
time to time, and any successor, along with related rules, regulations and
interpretations.

 

2.9           “Committee”  means the committee of the Board responsible for
granting Awards under the Plan, which initially shall be the Compensation
Committee of the Board, until such time as the Board may designate a different
committee.  The Committee shall consist solely of two or more directors, each of
whom is an “outside director” under Section 162(m) of the Code.

 

2.10         “Company”  means Regis Corporation, a Minnesota corporation, and
includes any successor or assignee corporation or corporations into which the
Company

 

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may be merged, changed or consolidated; any corporation for whose securities the
securities of the Company shall be exchanged; and any assignee of or successor
to substantially all of the assets of the Company.

 

2.11         “Covered Employee”  means a “covered employee” within the meaning
of Section 162(m) of the Code.

 

2.12         “Disability”  means a mental or physical illness that entitles a
Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if there is no such plan or the Participant is not
covered by such a plan or the Participant is not an employee of the Company or
an Affiliate, a mental or physical illness that renders a Participant totally
and permanently incapable of performing the Participant’s duties for the Company
or an Affiliate.  Notwithstanding the foregoing, a Disability shall not qualify
under this Plan if it is the result of (i) a willfully self-inflicted injury or
willfully self-induced sickness; or (ii) an injury or disease contracted,
suffered, or incurred while participating in a criminal offense.  The
determination of Disability for purposes of this Plan shall be made by the
Committee and shall not be construed to be an admission of disability for any
other purpose.

 

2.13         “Effective Date”  means July 1, 2004.

 

2.14         “Participant”  means a person who satisfies the eligibility
conditions of Article IV and to whom an Award has been granted by the Committee
under the Plan for the applicable year.  In the event that a Representative is
appointed for a Participant, then the term “Participant” shall mean such
appointed Representative.  Notwithstanding the appointment of a Representative,
the term “Termination of Employment” shall mean the Termination of Employment of
the Participant.

 

2.15         “Performance Goals”  mean one or more of the performance goals set
out in Section 5.3 (b) and chosen by the Committee for the applicable fiscal
year.

 

2.16         “Plan”  means the Regis Corporation Short Term Incentive
Compensation Plan, as herein set forth and as may be amended from time to time.

 

2.17         “Representative”  means (a) the person or entity acting as the
executor or administrator of a Participant’s estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant’s primary residence at the date of the
Participant’s death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant’s death; or (d)
the person to whom an Award has been permissibly transferred; provided that only
one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.

 

2.18         “Termination of Employment”  means the occurrence of any act or
event, whether pursuant to an employment agreement or otherwise, that actually
or effectively causes or results in the person’s ceasing, for whatever reason,
to be an employee of the Company or of any Affiliate, including, without
limitation, death, Disability, dismissal, severance at the election of the
Participant, retirement, or severance as a result of the discontinuance,
liquidation, sale or transfer by

 

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the Company or its Affiliates of a business owned or operated by the Company or
its Affiliates.  A Termination of Employment shall occur with respect to an
employee who is employed by an Affiliate if the Affiliate shall cease to be an
Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate.

 

In addition, certain other terms used herein have definitions given to them in
the first place in which they are used.

 

ARTICLE III

 

ADMINISTRATION

 

3.1           Committee Structure and Actions.  The Plan shall be administered
by the Committee in accordance with the rules and responsibilities of the
Committee.

 

3.2           Committee Authority.  Subject to the terms of the Plan, the
Committee shall have the authority:

 

(1)           to select those persons to whom Awards may be granted from time to
time;

 

(2)           to determine, whether through the use of an Appendix or otherwise,
such other terms and conditions regarding any Award granted hereunder, any time
or from time to time, of any Award, subject to the limitations of Section 7.1;

 

(3)           to determine to what extent and under what circumstances amounts
payable with respect to an Award may be deferred;

 

(4)           to determine what legal requirements are applicable to the Plan
and Awards and to require of a Participant that appropriate action be taken with
respect to such requirements;

 

(5)           to cancel, with the consent of the Participant or as otherwise
provided in the Plan, outstanding Awards;

 

(6)           to determine whether and with what effect an individual has
incurred a Termination of Employment;

 

(7)           to determine whether an Award is to be adjusted, modified or
prorated under the Plan;

 

(8)           to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of this Plan; and

 

(9)           to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.

 

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The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan and to otherwise supervise the
administration of the Plan.  The Committee’s policies and procedures may differ
with respect to Awards granted at different times and may differ with respect to
a Participant from time to time, or with respect to different Participants at
the same or different times.

 

Any determination made by the Committee pursuant to the provisions of the Plan
shall be made in its sole discretion, and in the case of any determination
relating to an Award may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan, at any time
thereafter.  All decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Participants.  Any determination shall not be subject to de novo review if
challenged in court.

 

ARTICLE IV

 

ELIGIBILITY

 

4.1           Eligibility.  The Participants for each fiscal year (“Award Year”)
shall consist of (a) the Covered Employees for the immediately preceding fiscal
year, except as excluded in writing by the Committee prior to the commencement
of the Award Year plus (b) any other person that the Committee expects to be a
Covered Employee for the Award Year and designates as a Participant before the
commencement of the Award Year.

 

ARTICLE V

 

AWARDS

 

5.1           General.  The Committee shall have authority to grant Awards under
the Plan at any time or from time to time. Awards consist of the right to
receive cash upon achievement of certain Performance Goals.  The Committee shall
have complete discretion to determine the Awards granted to each Participant.
The time period during which an Award shall be earned shall be the “Performance
Period,” and shall be one fiscal year in length.

 

5.2           Award Amounts.

 

(a)           Target Pay-out.  The target amount that may be paid with respect
to an Award (the “Target Pay-out”) shall be determined by the Committee and
shall be based on a percentage of a Participant’s actual annual base salary at
the time of grant (“Participation Factor”), within the range established by this
Section and any Appendix to the Plan.  Any such amount shall be subject to
adjustment as provided below in this Section 5.2. The Participation Factors are
intended to reflect a Participant’s level of responsibility and other factors
deemed

 

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appropriate by the Committee.  Accordingly, the Participation Factors will vary
among the Chief Executive Officer, the Executive Vice Presidents, the Senior
Vice Presidents, the Vice Presidents and other Participants. The Committee may
establish curves, matrices or other measurements for prorating the amount of
pay-outs for achievement of Performance Goals at less than the Target Pay-out.

 

(b)           Maximum Pay-out.  The Committee may also establish a maximum
potential pay-out amount (the “Maximum Pay-out”) with respect to an Award of [up
to 100%] of the Target Pay-out in the event that Performance Goal targets are
exceeded by an amount established by the Committee at the time Performance Goals
are established. The Committee may establish curves, matrices or other
measurements for prorating the amount of pay-outs for achievement of Performance
Goals at greater than the Target Pay-out but less than the Maximum Pay-out.

 

(c)           Threshold Pay-out.  The Committee may also establish a minimum
potential pay-out amount (the “Threshold Pay-out”) with respect to an Award of a
fraction of the Target Pay-out in the event that at least a minimum percentage
(established by the Committee at the time Performance Goals are established) of
the Performance Goal targets are achieved. The Committee may establish curves,
matrices or other measurements for prorating the amount of pay-outs for
achievement of Performance Goals at greater than the Threshold Pay-out but less
than the Target Pay-out.

 

(d)           Code Section 162(m) Maximum.  With respect to any Participant who
is or may become a Covered Employee, the maximum dollar amount that may be paid
under an Award shall be set at the time the Committee grants the Award and
establishes Performance Goals for the Award.  The Committee shall have the
discretion to decrease an Award payment, but may not under any circumstances
increase such amount. Notwithstanding any other provision of this Plan, the
maximum dollar amount a Plan Participant may be paid under an Award, with
respect to any fiscal year is $2,000,000. The Committee may, in its discretion,
decrease this maximum, but may not, under any circumstances, increase this
maximum.  Additional restrictions designed to satisfy Code Section 162(m) appear
in Section 12.3 below.

 

5.3           Performance Goals.

 

(a)           Establishment.  Payment under an Award shall be made to a
Participant only if the Company achieves Performance Goals established by the
Committee.  The Performance Goals must be set forth in writing not later than
ninety (90) days after the commencement of the fiscal year to which the
Performance Goals relate, provided that the outcome is substantially uncertain
at the time the Committee establishes the Performance Goals; and provided
further that in no event will a Performance Goal be considered to be
pre-established if it is established after 25% of the period of service (as
scheduled in good faith at the time the Performance Goal is established) has
elapsed.

 

(b)           Criteria for Performance Goals.  Performance Goals may based on
any of the following performance criteria, either alone or in any combination,
as the Committee may determine:  earnings per share (“EPS”); sales; cash flow;
cash flow from operations; operating

 

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profit or income; net income; operating margin; net income margin; return on net
assets; economic value added; return on total assets; return on common equity;
return on total capital; total shareholder return; revenue; revenue growth;
earnings before interest, taxes, depreciation and amortization (“EBITDA”);
EBITDA growth; funds from operations per share and per share growth; cash
available for distribution; cash available for distribution per share and per
share growth; share price performance on an absolute basis and relative to an
index of earnings per share or improvements in the Company’s attainment of
expense levels; and implementing or completion of critical projects.  The
foregoing criteria shall have any reasonable definitions that the Committee may
specify, which may include or exclude any or all of the following items as the
Committee may specify:  extraordinary, unusual or non-recurring items; effects
of accounting changes; effects of financing activities (e.g., effect on EPS of
issuance of convertible debt securities); expenses for restructuring or
productivity initiatives; other non-operating items; spending for acquisitions;
effects of divestitures; and effects of litigation activities and settlements. 
Any such performance criterion or combination of such criteria may apply to a
Participant’s Award opportunity in its entirety or to any designated portion or
portions of the Award opportunity, as the Committee may specify.  Unless the
Committee determines otherwise for any Performance Period, extraordinary items,
such as capital gains and losses, which affect any performance criterion
applicable to the Award (including but not limited to the criterion of net
income) shall be excluded or included in determining the extent to which the
corresponding performance goal has been achieved, whichever will produce the
higher Award.  In the event applicable tax or other laws change to permit the
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval.

 

5.4           Payments.  After the close of the applicable Performance Period,
the Committee shall determine the extent to which the established Performance
Goals have been achieved.  Before any payment is made under the Plan, the
Committee must certify in writing, as reflected in its minutes, that the
Performance Goals established with respect to an Award have been achieved. 
Payment with respect to Awards for Covered Employees shall be a direct function
of the extent to which the Company’s Performance Goals have been achieved.  The
Committee may, in its discretion, reduce or eliminate the amount of payment with
respect to an Award to a Covered Employee, notwithstanding the achievement of a
specified performance condition.  In the event of a Participant’s Termination of
Employment prior to the end of the Performance Period for any reason, the amount
payable with respect to such Award will be governed by the provisions of Section
5.5.

 

5.5           Termination of Employment Due to Death, Disability or Other
Reason.  In the event of a Termination of Employment due to death or Disability
during a Performance Period, the Participant shall receive a pro rata share of
the Award relating to such Performance Period.  Unless otherwise determined by
the Committee, in the event that a Participant’s employment terminates for any
other reason (whether or not the Termination of Employment is for Cause), all
Awards not yet paid to the Participant shall be forfeited by the Participant to
the Company.  Distribution of amounts with respect to earned Awards may be made
at the same time payments are made to Participants who did not incur a
Termination of Employment during the applicable Performance Period.

 

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5.6           Election to Defer.  A Participant may elect to defer receipt of
the payment of his or her Award for a specified period or until a specified
event, subject to the Committee’s approval and to such terms as are determined
by the Committee.  Subject to any exceptions adopted by the Committee, such
election must be made at least one year prior to completion of the Performance
Period.

 

ARTICLE VI

 

CHANGE IN CONTROL PROVISIONS

 

6.1           Impact of Event.  Notwithstanding any other provision of the Plan
to the contrary, in the event of a Change in Control prior to a Participant’s
Termination of Employment any Performance Goal or other condition with respect
to any Award shall be deemed to have been satisfied in full, and such Award
shall be fully distributable.

 

ARTICLE VII

 

MISCELLANEOUS

 

7.1           Amendment and Termination.  The Committee may, in its sole
discretion, amend, suspend or terminate the Plan at any time, with or without
advance notice to Participants.  Notwithstanding the preceding sentence of this
Section, no amendment to the Plan shall be effective that (a) would increase the
maximum amount payable under Article V to a Participant who is a Covered
Employee, (b) would change the Performance Goal criteria applicable to a
Participant who is a Covered Employee for payment of Awards stated under Article
V, or (c) would modify the requirements as to eligibility for participation
under Article IV, unless the shareholders of the Company shall have approved
such change in accordance with the requirements of Code Section 162(m). No
amendment, modification or termination of the Plan may adversely affect in a
material manner any right of any Participant with respect to any Award
theretofore granted without such Participant’s written consent, except an
amendment (a) made to cause the Plan to comply with applicable law or (b) made
to permit the Company or an Affiliate a tax deduction under applicable law.

 

7.2           Unfunded Status of Plan.  It is intended that the Plan be an
“unfunded” plan for incentive compensation.  The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to make payments; provided, however, that, unless the Committee
otherwise determines, the existence of such trusts or other arrangements is
consistent with the “unfunded” status of the Plan.

 

7.3           Provisions Relating to Internal Revenue Code Section 162(m).  It
is the intent of the Company that Awards granted to persons who are Covered
Employees shall constitute “qualified performance-based compensation” satisfying
the requirements of Code Section 162(m).  Accordingly, the Plan shall be
administered and the provisions of the Plan shall be interpreted in a manner
consistent with Code Section 162(m).  If any provision of the Plan does not
comply or is inconsistent with the requirements of Code Section 162(m), such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.

 

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7.4           No Additional Obligation.  Nothing contained in the Plan shall
prevent the Company or an Affiliate from adopting other or additional
compensation or benefit arrangements for its employees.

 

7.5           Withholding.  Awards are subject to withholding for certain
federal, state, or local taxes required by law to be withheld with respect to
such income. The Company and its Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment otherwise due to
the Participant.

 

7.6           Controlling Law.  The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
Minnesota (other than its law respecting choice of law).  The Plan shall be
construed to comply with all applicable law and to avoid liability to the
Company, an Affiliate or a Participant.

 

7.7           Offset.  Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the payment of
any Award to the Participant.  No cash shall be transferred unless and until all
disputes between the Company and the Participant have been fully and finally
resolved and the Participant has waived all claims to such against the Company
or an Affiliate.

 

7.8           Nontransferability; Beneficiaries.  No Award shall be assignable
or transferable by the Participant, otherwise than by will or the laws of
descent and distribution or pursuant to a beneficiary designation. Each
Participant may designate a Beneficiary to receive the proceeds of any Award
held by the Participant at the time of the Participant’s death.  If a deceased
Participant has named no Beneficiary, the proceeds of any Award held by the
Participant at the time of death shall be transferred as provided in his or her
will or by the laws of descent and distribution.

 

7.9           No Rights with Respect to Continuance of Employment.  Nothing
contained herein shall be deemed to alter the relationship between the Company
or an Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship.  Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant.  The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract.  The Company or
an Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan.  There shall be no inference as to the length
of employment or service hereby, and the Company or an Affiliate reserves the
same rights to terminate the Participant’s employment or service as existed
prior to the individual becoming a Participant in this Plan.

 

7.10         Headings.  The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.

 

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7.11         Severability.  If any provision of this Plan shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed as
if such invalid or unenforceable provision were omitted.

 

7.12         Successors and Assigns.  This Plan shall inure to the benefit of
and be binding upon each successor and assign of the Company.  All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant’s heirs, legal representatives and
successors.

 

7.13         Entire Agreement.  This Plan (including any Appendix thereto)
constitutes the entire agreement with respect to the subject matter hereof and
thereof.

 

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