Exhibit No. 10(b)(*)


 


EMPLOYMENT AGREEMENT


(as
Amended and Restated December 31, 2008)


 


THIS EMPLOYMENT AGREEMENT (this “Agreement”), adopted as of the
31st day of December, 2008, is made by and between Regis Corporation, a
Minnesota corporation (the “Corporation”), and Paul D. Finkelstein (the “Executive”).


 


RECITALS


 


WHEREAS, the Corporation and the Executive were parties to that certain
Employment and Deferred Compensation Agreement, dated April 14, 1998, as
subsequently amended (the “Original Agreement”); and


 


WHEREAS, the Corporation and the Executive also were parties to an
agreement dated May 24, 2005, as subsequently amended, regarding a policy
insuring the life of the Executive (the “Insurance Agreement”); and


 


WHEREAS, the Corporation and the Executive, by an agreement dated February 8,
2007 (“2007 Agreement”), terminated the Original Agreement and
consolidated the terms and conditions of the Insurance Agreement in the 2007
Agreement; and


 


WHEREAS, the Corporation and the Executive wish to further amend and
restate the 2007 Agreement as of the date hereof to make certain changes to
comply with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) (this restatement is referred to herein as the “Agreement”).


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the provisions of this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Corporation agrees to employ the Executive, and
the Executive agrees to such employment, upon the following terms and
conditions:


 


1.             EFFECTIVE
DATE; PERIOD OF EMPLOYMENT.


 


(a)           Effective
Date.  This Agreement shall be
effective on December 31, 2008 (the “Effective Date”); the 2007
Agreement was effective on February 8, 2007 (the “2007 Agreement
Effective Date”).


 


(b)           Period
of Employment.  The employment of the
Executive by the Corporation pursuant to this Agreement shall be for a period
(sometimes referred to herein as the “period of employment”) beginning
on the 2007 Agreement Effective Date and continuing, unless sooner terminated
as provided in Section 6 herein, until midnight on the day immediately
preceding the fifth anniversary of the 2007 Agreement Effective 


 

















 


Date. 
The Corporation and the Executive recognize and acknowledge that this
Agreement does not provide for any automatic renewal.  Notwithstanding the end of the Executive’s
period of employment, this Agreement shall remain in full force and effect
thereafter for the purpose of determining the Executive’s entitlement to any
payments of his life insurance premiums and his Adjusted Monthly Benefit as
provided under Sections 4(e) and (f) hereof.


 


(c)           Definitions.  Various terms are defined either where they
first appear underlined in this Agreement or in Section.


 


2.             DUTIES.  During the period of employment, the
Executive shall serve as President and Chief Executive Officer of the
Corporation, and in such other additional office or offices to which he shall
be elected by the Board of Directors of the Corporation (“Board”) with
his approval, performing the duties of such office or offices held at the time
and such other duties not inconsistent with his position as such an officer or
director as are assigned to him by the Board or committees of the Board.  During the period of employment, the
Executive shall devote his full time and attention to the business of the
Corporation and the discharge of the aforementioned duties, except for
reasonable vacations, absences due to illness, and reasonable time for
attention to personal affairs and charitable activities.


 


3.             OFFICE
FACILITIES.  During the period of
employment, the Executive shall have his office where the Corporation’s
principal executive offices are located from time to time, which currently are
at 7201 Metro Boulevard, Edina, Minnesota and the Corporation shall furnish
Executive with office facilities reasonably suitable to his position at such
location.


 


4.             COMPENSATION.  As compensation for his services performed
hereunder, the Corporation shall pay or provide to the Executive the following:


 


(a)           Base
Salary.  The Corporation shall pay
the Executive a base salary (the “Base Salary”), calculated at the rate
of One Million  One Hundred Thousand Dollars
($1,100,000.00) per annum (which Base Salary may be increased, but not reduced,
by the Compensation Committee of the Board (the “Compensation Committee”)
at any time and from time to time in its discretion), payable monthly,
semi-monthly or weekly according to the Corporation’s general practice for its
executives, for the period of employment under this Agreement.  Such Base Salary may be increased annually by
an amount determined by the Compensation Committee.  Such Base Salary, including such annual
increases (which shall be considered part of the Base Salary), shall not be
reduced during the period of employment hereunder.


 


(b)           Bonus.  The Executive shall be eligible for an annual
performance bonus (the “Bonus”) as determined under the provisions of
the Regis Corporation 2004 Short Term Incentive Compensation Plan, as amended
from time to time, any successor to such plan, or such other annual incentive
compensation program developed for the Corporation’s executive officers.


 


(c)           Other
Incentive Plans.  During the period
of employment, the Executive shall be eligible to participate in such other
incentive compensation programs in accordance with their terms as the
Corporation may have in effect from time to time for 


 


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its executive personnel (including the Regis
Corporation Long Term Incentive Plan, as amended from time to time, and any
successor thereto), other than any annual cash bonus plan (which is dealt with
in Section 4(b) hereof), and all compensation and other entitlements
earned thereunder shall be in addition to, and shall not in any way reduce, the
amount payable as Base Salary and Bonus.


 


(d)           Restricted
Stock  Units.  On the 2007 Agreement Effective Date, the
Corporation shall grant the Executive restricted stock units with respect to
One Hundred Sixty-Five Thousand (165,000) shares of the Corporation’s common
stock, subject to the terms and conditions of the Regis Corporation 2004 Long
Term Incentive Plan, including any amendments made to provide for such
awards.  Such restricted stock  units shall remain unvested and forfeitable until the day
immediately preceding the fifth anniversary of the 2007 Agreement Effective
Date; at such time the restricted stock units shall become fully (100%) vested,
provided the Executive is employed by the Corporation (or a subsidiary of the Corporation)
on such date.  Payment of such restricted
stock units automatically shall be deferred until January 31 of the
calendar year next following the vesting date provided in the immediately
preceding sentence.


 


(e)           Life
Insurance.  Subject to the last sentence
of this Section 4(e), the Corporation shall reimburse the Executive the
sum of One Hundred Thousand Dollars ($100,000) annually for premiums payable by
the Executive with respect to life insurance coverage under a policy (issued by
the John Hancock Life Insurance Company) with a face amount of Ten Million
Dollars ($10,000,000) insuring the Executive’s life, or any successor or
replacement life insurance policy; said policy shall be referred to herein as
the “Policy.”  During such time
that the Corporation shall be making the premium payments pursuant to the
preceding sentence of this Section 4(e), the Corporation shall, in
addition to each premium payment, pay the Executive an amount determined by the
following formula: (P/1-X)-P, where P equals the Corporation’s premium payment
obligation on the Policy pursuant to this Section 4(e) and X equals
the Executive’s aggregate marginal federal and state income tax bracket for
such year.  Such
payments and tax gross-up shall be made during the term of this Agreement and,
if at least ten (10) annual premium payments have not been made by the
Corporation with respect to said Policy, for such additional time (regardless
of whether the Executive continues to be employed by the Corporation) until the
Corporation has made a total of ten (10) annual premium payments on said
Policy; provided, however, that the Corporation’s obligation to make such
premium payments and tax gross-up shall cease upon the Executive’s termination
of this Agreement by reason of his voluntary resignation during the term of
this Agreement.


 


(f)            Retirement
Benefit/Survivor Benefit.  The
Corporation shall pay to the Executive, if living, or to his former spouse
Barbara (sometimes referred to as the Executive’s “Former Spouse”), in
the event of his death, the following sums upon the terms and conditions and
for the periods hereinafter set forth:


 


(i)            Retirement Payments to the Executive.  Upon the Executive’s termination of
employment with the Corporation, the Corporation shall pay to the Executive a a
 lump sum cash payment of an amount
(sometimes referred to as his “Retirement Benefit”) equal to the present
value of a hypothetical annuity payable 


 


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to the Executive for life starting on the first day of the month
following his termination of employment with the Corporation, with monthly
payments equal to his Adjusted Monthly Benefit. 
For the purpose of determining this present value, the following
assumptions shall apply:


 


(1)           Interest: Payments shall be discounted to
present value at a rate of interest equal to the yield to maturity, of 30-year
U.S. Treasury Notes as of the Executive’s termination of employment.


 


(2)           Mortality: 
It shall be assumed that payments will be made for the joint life and
last survivor expectancy of the Executive and his Former Spouse, or the life
expectancy of the Executive if the Former Spouse is not then living, as
determined at the start of payments under Table II (Joint Life and Last
Survivor Expectancy), or Table I (Single Life Expectancy), as applicable, found
the IRS Publication 590.  Any payments to
be made beyond the life expectancy of the Executive, as determined under Table
I, are assumed to be fifty percent (50%) of the Adjusted Monthly Benefit.


 


(3)           Cost of Living Adjustment: It shall be
assumed that the Consumer Price Index increases by  four percent (4%) per year to derive the
Adjusted Monthly Benefit.


 


(ii)           Survivor Benefits to Former Spouse.
If the Executive dies while employed with the Corporation (or after his
termination of employment with the Corporation but prior to payment under (i) above),
the Corporation shall pay to his Former Spouse one half of the Adjusted Monthly
Benefit to which the Executive would have been entitled were he living and were
he to receive his Retirement Benefit in the form of an annuity for his life,
such payments to commence within thirty (30) days after the Executive’s death
and to continue monthly for the remainder of her life (sometimes referred to as
her “Survivor Benefit”).


 


(iii)          Termination for Cause.  If the Executive’s employment with the
Corporation is terminated at any time for Cause (as defined in Section 8),
the Corporation shall have no obligation to make any payments to him or his
Former Spouse  under this Section 4(f) and
all such future payments shall be forfeited.


 


(g)           Health,
Welfare and Retirement Plans; Vacation. 
During the period of employment, the Executive shall be entitled to:


 


(i)            participate
in such retirement, health (medical, hospital and/or dental) insurance, life
insurance, disability insurance, flexible benefits arrangements and accident
insurance plans and programs as are maintained in effect from time to time by
the Corporation for its headquarters employees;


 


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(ii)           participate
in other non-duplicative benefit programs which the Corporation may from time
to time offer generally to headquarters personnel of the Corporation; and


 


(iii)          take
vacations and be entitled to sick leave in accordance with the Corporation’s
policy for executive personnel of the Corporation.


 


(h)           Expenses.  Executive shall be reimbursed for reasonable
business expenses incurred in connection with the performance of his duties
hereunder consistent with the Company’s policy regarding reimbursement of such
expenses.  With respect to any benefits
or payments received or owed to the Executive hereunder, the Executive shall
cooperate in good faith with the Corporation to structure such benefits or
payments in the most tax-efficient manner to the Corporation.


 


5.             EFFECT
OF DISABILITY AND CERTAIN HAZARDS. 
The Executive shall not be obligated to perform the services required of
him by this Agreement during any period in which he is disabled or his health
is impaired to an extent which would render his performance of such services
hazardous to his health or life, and relief from such obligation shall not in
any way affect his rights hereunder except to the extent that such disability
or health impairment may result in termination of his employment by the
Corporation pursuant to Section 6 herein.


 


6.             TERMINATION
OF EMPLOYMENT.  The employment of the
Executive by the Corporation pursuant to this Agreement may be terminated by
the Corporation or the Executive at any time, as follows:


 


(a)           Death.  In the event of the Executive’s death prior
to the expiration of the period of employment hereunder, such employment shall
terminate on the date of death.


 


(b)           Permanent
Disability.  The Executive’s
employment may be terminated by the Corporation prior to the expiration of the
period of employment hereunder due to Executive’s physical or mental disability
or health impairment which prevents the effective performance by the Executive
of his duties hereunder on a full time basis, with such termination to occur (i) with
respect to disability, on or after the time which the Executive becomes
entitled to disability compensation benefits under the Corporation’s long term
disability insurance policy or program as then in effect or (ii) with
respect to health impairment, after Executive has been unable to substantially
perform his services hereunder for six consecutive months.  Any dispute as to the Executive’s physical or
mental disability or health impairment shall be settled by the opinion of an
impartial physician selected by the parties or their representatives or, in the
event of failure to make a joint selection after request therefor by either
party to the other, a physician selected by the Corporation, with the fees and
expenses of any such physician to be borne by the Corporation.


 


(c)           Cause.  The Corporation, by giving written notice of
termination to the Executive, may terminate such employment at any time prior
to the expiration of the period of employment hereunder for “Cause” (as
defined in Section 8).


 


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(d)           Without
Cause.  The Corporation may terminate
such employment at any time prior to said date without Cause (which shall be
for any reason not covered by preceding Sections 6(a) through (c)) upon
sixty (60) days prior written notice to the Executive.


 


(e)           By
the Executive.  The Executive may
terminate such employment at any time for an applicable Good Reason (as defined
in Section 8), subject to Section 6(f).  The Executive may also terminate such employment
for any other reason upon prior written notice thereof to the Corporation, and
the Executive agrees to use his reasonable best efforts to provide twelve (12)
months’ prior written notice in such event.


 


(f)            Notice
of Good Reason.  If the Executive believes
that he is entitled to terminate his employment with the Corporation for an
applicable Good Reason, he may apply in writing to the Corporation for
confirmation of such entitlement prior to the Executive’s actual separation
from employment, by following the claims procedure set forth in Section 11
hereof.  The submission of such a request
by the Executive shall not constitute “Cause” for the Corporation to terminate
the Executive under Section 6(c) hereof; and the Executive shall
continue to receive all compensation and benefits he was receiving at the time
of such submission throughout the resolution of the matter pursuant to the
procedures set forth in Section 11 hereof. 
If the Executive’s request for a termination of employment for Good
Reason is denied under both the request and appeal procedures set forth in
Sections 11(a) and (b) hereof, then the parties shall promptly submit
the claim to binding arbitration pursuant to Section 11(c) and use
their best efforts to conclude the arbitration within ninety (90) days after
the claim is submitted.


 


(g)           Notice
of Termination.  Any termination of
the Executive’s employment by the Corporation or by the Executive (other than
termination based on the Executive’s death) shall be communicated by a written
Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice
of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall 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.  For purposes of this
Agreement, no purported termination shall be effective without the delivery of
such Notice of Termination.


 


(h)           Date
of Termination.  The “date of
termination” of the Executive’s employment shall mean (i) if the
Executive is terminated by his death, the date of his death, (ii) if the
Executive’s employment is terminated due to a permanent disability or health
impairment, thirty (30) days after the Notice of Termination is given (provided
that the Executive shall not have returned to the performance of his duties on
a full-time basis during such period), (iii) if the Executive’s employment
is terminated pursuant to a termination for Cause, the date specified in the
Notice of Termination, and (iv) if the Executive’s employment is
terminated for any other reason, the date shall be the later of thirty (30)
days after termination as provided by the Notice of Termination or the date of
the final resolution of the arbitration and claims procedures set forth in Section 11
hereof, unless otherwise agreed by the Executive and Corporation or otherwise
provided in this Agreement.


 


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7.             PAYMENTS
UPON TERMINATION.


 


(a)           Death
or Disability.  If the Executive’s
employment is terminated by reason of his death or permanent disability, he (or
the legal representative of his estate in the event of his death) shall be
entitled to the following:


 


(i)            Accrued
Compensation.  All compensation due
the Executive under this Agreement and under each plan or program of the
Corporation in which he may be participating at the time shall cease to accrue
as of the date of such termination, except (1) as specifically provided in
this Agreement or (2) in the case of any such plan or program, if and to
the extent otherwise provided in the terms of such plan or program or by
applicable law.  All such compensation
accrued as of the date of such termination but not previously paid shall be
paid to the Executive at the time such payment otherwise would be due.


 


(ii)           Accrued
Obligations.  In addition, the
Executive shall also be entitled to the following: (1) a payment equal to
the Highest Annual Bonus, pro rata based on the portion of the year ended on
the date of the termination; (2) unpaid deferred compensation under the
Regis Corporation Non-Qualified Deferred Compensation Plan, together with all
earnings thereon (it being understood that this is separate from, and in
addition to, the Retirement Benefit set forth in Section 4(f) hereof);
and (3) accrued vacation pay.


 


(iii)          Acceleration
of Vesting.  All options to purchase
the Corporation’s common stock and shares of restricted stock and restricted
stock units held by Executive at the time of such termination but still subject
to vesting, shall be fully and immediately vested.  All other benefits or interests of Executive
in any of the Corporation’s long term incentive plans or arrangements which are
subject to vesting shall be fully and immediately vested.


 


(iv)          Benefits.  In lieu of any continuation coverage the
Executive may have been entitled to receive under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, (“COBRA”) during the period
commencing with the Executive’s termination of employment and continuing
through the death of the survivor of the Executive and any surviving spouse,
the Executive shall be entitled to the continuation of the same or equivalent
health, hospitalization, prescription drug and dental insurance coverage that
he had received immediately prior to termination of employment, as if he had
continued to be an executive employee of the Corporation.  In the event that the Executive is ineligible
under the terms of such insurance to continue to be so covered, the Corporation
shall provide the Executive with substantially equivalent coverage through
other sources or will reimburse the Executive for actual premiums paid for such
alternative coverage (such as Medicare Part A, Part B and
prescription drug coverage) that the Executive obtains for the payment
period.  Any such reimbursement shall be
paid by December 31 of the calendar year following the year in which
Employee pays such premiums.


 


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(b)           Termination Without Cause or for Good
Reason.  If the Executive’s
employment pursuant to this Agreement is terminated without Cause pursuant to Section 6(d) hereof
or the Executive terminates this Agreement for Good Reason, then the Executive
shall be entitled to and shall receive the following:


 


(i)            Accrued
Compensation.  All compensation due
the Executive under this Agreement and under each plan or program of the
Corporation in which he may be participating at the time shall cease to accrue
as of the date of such termination, except (1) as specifically provided in
this Agreement or (2) in the case of any such plan or program, if and to
the extent otherwise provided in the terms of such plan or program or by
applicable law.  All such compensation
accrued as of the date of such termination but not previously paid shall be
paid to the Executive at the time such payment otherwise would be due.


 


(ii)           Accrued
Obligations.  In addition, the
Executive shall also be entitled to the following: (1) a payment equal to
the Highest Annual Bonus, pro rata based on the portion of the year ended on
the date of the termination; (2) unpaid deferred compensation under the
Regis Corporation Non-Qualified Deferred Compensation Plan, together with all earnings
thereon (it being understood that this is separate from, and in addition to,
the Retirement Benefit set forth in Section 4(f) hereof); and (3) accrued
vacation pay.


 


(iii)          Acceleration
of Vesting.  All options to purchase
the Corporation’s common stock and shares of restricted stock and restricted
stock units held by Executive at the time of such termination but still subject
to vesting, shall be fully and immediately vested.  All other benefits or interests of Executive
in any of the Corporation’s long term incentive plans or arrangements which are
subject to vesting shall be fully and immediately vested.


 


(iv)          Benefits.  In lieu of any continuation coverage the
Executive may have been entitled to receive under COBRA during the period
commencing with the Executive’s termination of employment and continuing
through the death of the survivor of the Executive and any surviving spouse,
the Executive shall be entitled to the continuation of the same or equivalent
health, hospitalization, prescription drug and dental insurance coverage that
he had received immediately prior to termination of employment, as if he had
continued to be an executive employee of the Corporation.  In the event that the Executive is ineligible
under the terms of such insurance to continue to be so covered, the Corporation
shall provide the Executive with substantially equivalent coverage through
other sources or will reimburse the Executive for actual premiums paid for such
alternative coverage (such as Medicare Part A, Part B and prescription
drug coverage) that the Executive obtains for the payment period.  Any such reimbursement shall be paid by December 31
of the calendar year following the year in which Employee pays such premiums.


 


(v)           Severance Payment.  The Executive shall be entitled to
and shall receive a lump sum cash payment (the “Severance Payment”) from
the Corporation.  The amount of the
Severance Payment shall equal the product of:


 


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(1)           the
sum of (A) the Executive’s Base Salary and (B) the Highest Annual
Bonus and


 


(2)           the
number of full and partial years (rounded to the next highest month) remaining
during the period of employment at the date of termination, but in no case (A) more
than three (3) or (B) less than two (2).


 


(vi)          Life
Insurance Premiums.  The Corporation
shall pay to the Executive a lump sum amount sufficient to pay a certain number
of future annual premiums required with respect to the Policy described in Section 4(e).  The number of future annual premiums
referenced in the immediately preceding sentence of this subparagraph (vi) shall
equal ten (10), reduced by the number of annual premium payments already made
under such policy as of the date of the Executive’s termination of employment
(including any amount paid under Section 7(d)(iii) of this
Agreement).  In addition, and at the time
such payment is made to the Executive, the Corporation shall pay to the
Executive an additional amount determined by the formula described in the
second sentence of Section 4(e).


 


(c)           Termination
for Cause or Without Good Reason.  If
the Executive’s employment pursuant to this Agreement is terminated pursuant to
subsection (c) of Section 6 hereof, the Executive terminates this
Agreement without Good Reason, or the Executive’s employment hereunder
terminates due to the expiration of the period of employment, Executive shall
be entitled to and shall receive:


 


(i)            Accrued
Compensation.  All compensation due
the Executive under this Agreement and under each plan or program of the
Corporation in which he may be participating at the time shall cease to accrue
as of the date of such termination, except (1) as specifically provided in
this Agreement or (2) in the case of any such plan or program, if and to
the extent otherwise provided in the terms of such plan or program or by
applicable law.  All such compensation
accrued as of the date of such termination but not previously paid shall be
paid to the Executive at the time such payment otherwise would be due.


 


(ii)           Accrued
Obligations.  In addition, Executive
shall also be entitled to the following: (1) unpaid deferred compensation
under the Regis Corporation Non-Qualified Deferred Compensation Plan, together
with all earnings thereon (it being understood that this is separate from, and
in addition to, the Retirement Benefit set forth in Section 4(f) hereof);
and (2) accrued vacation pay.


 


(d)           Change
in Control.  If, following a Change
in Control, (x) the Executive’s employment pursuant to this Agreement is
terminated by the Corporation (or any successor entity) for any reason or by
the Executive for Good Reason or (y) the Executive’s employment is
terminated by the Corporation (or any successor entity) for any reason or by
the Executive for Good Reason within two (2) years of such Change in
Control, then the Executive shall be entitled to and shall receive the
compensation, benefits and other items described in Sections 7(b)(i) through
(vi) above. In addition, upon a Change in Control the Executive also shall



 


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be entitled to the following compensation and other benefits, upon the
terms and conditions described herein:


 


(i)            Company
Stock Award.  The Executive
automatically shall receive Three Hundred Thousand (300,000) shares of the Corporation’s
common stock.  Any such shares awarded
under this Section shall be subject to automatic adjustment to reflect any
Corporation share dividend, share split, combination or exchange of shares,
recapitalization or other change in the capital structure of the Corporation
since the 2007 Agreement Effective Date.


 


(ii)           Impact
on Retirement Benefit. 
Notwithstanding any other provision of this Agreement, if the Executive’s
employment with the Corporation terminates at any time following a Change in
Control, whether such termination is initiated by the Executive or by the
Corporation (unless the termination is by the Corporation for Cause), the
following assumptions will be used to derive the present value otherwise
determined under Section 4(f):


 


(1)           Interest: There shall be no interest
discount — that is , the lump sum amount will equal the total of the assumed
payments.


 


(2)           Mortality: 
It shall be assumed that payments will be made for the longer of (A) the
period specified in Section 4(f)(2), or (B) two hundred and forty
(240) months.  Any payments to be made
beyond the longer of  the life expectancy
of the Executive, as determined under Table I (Single Life Expectancy)  found in IRS Publication 590 or any successor
publication, or two hundred and forty (240) months, are assumed to be fifty
percent (50%) of the Adjusted Monthly Benefit.


 


(3)           Cost of Living Adjustment: It shall be
assumed that the Consumer Price Index increases by four percent (4%) per year
to derive the Adjusted Monthly Benefit.


 


(iii)          Life
Insurance Premiums.  Within five (5) business
days of a Change in Control, the Corporation shall pay to the Executive a lump
sum amount sufficient to pay a certain number of future annual premiums
required with respect to the Policy described in Section 4(e).  The number of future annual premiums
referenced in the immediately preceding sentence of this Section 7(d)(iii) shall
equal (1) ten, reduced by (2) the number of annual premium payments
already made under such policy as of the date of the Change in Control. In
addition, and at the time such payment is made to the Executive, the
Corporation shall pay to the Executive an additional amount determined by the
formula described in the second sentence of Section 4(e).


 


(e)            Tax Gross-Up.  If any payments (including awards) received
by the Executive pursuant to this Agreement will be subject to the excise tax
(the “Excise Tax”) imposed by Section 4999 of the Code, or any
successor or similar provision of the Code, the Corporation shall pay to the
Executive additional compensation such that the net amount received by the
Executive after deduction of any Excise Tax (and taking into


 


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account any federal, state and local income taxes payable by the
Executive as a result of the receipt of such gross-up compensation), shall be
equal to the total amounts he would have received had no such Excise Tax (or
any interest or penalties thereon) been paid or incurred.  The Corporation shall pay such additional
compensation at the time when the Corporation withholds such Excise Tax from
any payments to the Executive (or otherwise makes a parachute payment to Executive).  The calculation of the tax gross-up payment
shall be approved by an independent certified public accounting firm and the
Executive’s designated financial adviser, with the fees in each case payable by
the Corporation. All amounts payable pursuant to this subparagraph 7(e) shall
be paid by the end of Employee’s taxable year next following Employee’s taxable
year in which the related taxes are remitted to the taxing authority.


 


(f)            Payment Terms.  Unless otherwise specified in this Section 7,
all cash payments to which Executive is entitled pursuant to this Section 7
shall be made in a lump sum within ten (10) business days of the date of
termination.  Any payment under this
Agreement that falls within the definition of “deferred compensation,” as such
term is applied under Section 409A of the Code (including, but not
necessarily limited to, the Retirement Benefit under Section 4(f)), that
is made on account of the Executive’s termination of employment shall not be
made unless such termination of employment is also a “separation from service,”
as such term is applied under such Section 409A, with the Corporation and
all corporations or entities with which the Corporation would be considered a
single employer under subsections (b) and (c) of Code.  If on the date of such separation from service
the Executive is a “specified employee” as defined in Section 409A
of the Code, determined as of December 31 of each calendar year and
applied as of April 1 following such determination in accordance with Section 409A
of the Code and the guidance issued by the Department of the Treasury with
respect to the application of such Section 409A, payments of any such
deferred compensation shall be paid or commence on the first day of the seventh
(7th)
month following separation from service, without adjustment for interest or
earnings during the period of delay.


 


8.             DEFINITIONS.  Certain terms are defined where they first
appear in this Agreement and are underlined for ease of reference.  In addition, the following definitions shall
apply for purposes of this Agreement.


 


“Adjusted Monthly Benefit” shall mean the Executive’s Monthly
Benefit increased annually after the first year during which Monthly Benefits
are paid in proportion to any increase in the Consumer Price Index for the
preceding year.


 


“Cause” shall mean (a) acts during the term of this
Agreement, the Original Agreement or the 2007 Agreement (i) resulting in a
felony conviction under any Federal or state statute, which is materially
detrimental to the financial interests of the Corporation, or (ii) willful
non-performance by the Executive of his material employment duties required by
this Agreement (other than by reason of his physical or mental incapacity) or (b) the
Executive willfully engaging in fraud or gross misconduct which is materially
detrimental to the financial interests of the Corporation during the term of
this Agreement, the Original Agreement or 2007 Agreement, with “Cause” to be
determined in any case by the Board after reasonable written notice to
Executive and an opportunity for Executive to be heard at a meeting of the
Board and with 


 


11

















 


reasonable opportunity (of not less than thirty (30) days) in the case
of clause (a)(ii) to cease substantial non-performance.


 


“Change in Control” shall be deemed to have occurred at such
time as any of the following events occur:


 


(a)           any
“person” within the meaning of Section 2(a)(2) of the Securities Act
of 1933 and Section 14(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”), is or has become the “beneficial owner,” as defined in Rule 13d-3
under the Exchange Act, of twenty percent (20%) or more of either (i) the
then outstanding shares of Common Stock of the Corporation (the “Outstanding
Common Stock”) or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”), except for an acquisition by
an entity resulting from a Business Combination (as defined below) in which
clauses (x) and (y) of subparagraph (b) applies;


 


(b)           consummation
of (i) a merger or consolidation of the Corporation with or into another
entity, (ii) a statutory share exchange or (iii) the acquisition by
any person (as defined above) of all or substantially all of the assets of the
Corporation (each, a “Business Combination”), unless immediately following such
Business Combination, (x) all or substantially all of the beneficial
owners of the Outstanding Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than fifty percent
(50%) of the voting power of the then outstanding shares of voting stock (or
comparable voting equity interests) of the surviving or acquiring entity
resulting from such Business Combination (including such beneficial ownership
of an entity that, as a result of such transaction, owns the Corporation or all
or substantially all of the Corporation’s assets either directly or through one
or more subsidiaries), in substantially the same proportions (as compared to
the other beneficial owners of the Corporation’s voting stock immediately prior
to such Business Combination) as their beneficial ownership of the Corporation’s
voting stock immediately prior to such Business Combination and (y) no
person (as defined above) beneficially owns, directly or indirectly, twenty
percent (20%) or more of the voting power of the outstanding voting stock (or
comparable equity interests) of the surviving or acquiring entity (other than a
direct or indirect parent entity of the surviving or acquiring entity, that,
after giving effect to the Business Combination, beneficially owns, directly or
indirectly, 100% of the outstanding voting stock (or comparable equity
interests) of the surviving or acquiring entity), or


 


(c)           individuals
who constitute the Corporation’s Board of Directors on the 2007 Agreement
Effective Date (the “Incumbent Board”) have ceased for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the 2007 Agreement Effective Date whose election, or
nomination for election by the Corporation’s stockholders, was approved by a
vote of at least three-quarters (75%) of the directors comprising the Incumbent
Board shall be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board.


 


12

















 


“Consumer Price Index” shall mean the “Consumer Price Index for
all urban consumers, U.S. city average, for all Items, 1982-1984 equals 100%”
published by the Bureau of Labor Statistics of the United States Department of
Labor.  If publication of such Index is
discontinued, the Consumer Price Index shall be based upon comparable
statistics on the cost of living as computed and published by an agency of the
United States or by a responsible financial periodical of recognized authority.


 


“Designated Beneficiary” shall mean such person or persons as
the Executive shall have designated in writing and as has or have been accepted
in writing by the Corporation, including for this purpose his Former Spouse.


 


“Good Reason”  shall mean the occurrence, without the
express written consent of the Executive, of any of the following:


 


(a)           the
assignment to the Executive of any duties inconsistent with the Executive’s
authorities, positions, duties, responsibilities and status with the
Corporation, or any adverse alteration in the nature of the Executive’s
reporting responsibilities, titles, or offices, or any removal of the Executive
from, or any failure to reelect the Executive to, any such positions, except in
connection with a termination of the employment of the Executive for Cause,
permanent disability, or as a result of the Executive’s death or by the
Executive other than for Good Reason;


 


(b)           a reduction by the
Corporation in the Executive’s Base Salary then in effect;


 


(c)           any material breach
by the Corporation of any provisions of this Agreement;


 


(d)           the requirement by
the Corporation that the Executive’s principal place of employment be relocated
more than thirty (30) miles from the Corporation’s address for notice in Section 12(h);
or


 


(e)           the Corporation’s
failure to obtain a satisfactory agreement from any successor to assume and
agree to perform Corporation’s obligations under this Agreement;


 


provided that Executive notifies the
Corporation of such condition set forth in clause (a), (b), (c), (d) or (e) and
the Corporation fails to remedy such condition within thirty (30) days of
receiving such notice.


 


 “Highest
Annual Bonus” shall mean the highest Bonus paid or payable to the Executive
in respect of the three fiscal years prior to the date of termination.


 


“Monthly Benefit” shall mean an amount equal to sixty percent
(60%) of the Executive’s average monthly compensation, excluding bonuses, for
the sixty (60) months immediately preceding his termination of employment or
disability.


 


13

















 


9.             CONFIDENTIAL
INFORMATION.  The Executive shall not
at any time during the period of employment and thereafter disclose to others
or use any trade secrets or any other confidential information belonging to the
Corporation or any of its subsidiaries, including, without limitation,
drawings, plans, programs, specifications and non-public information relating
to customers of the Corporation or its subsidiaries, except as may be required
to perform his duties hereunder.  The
provisions of this Section 9 shall survive the termination of the
Executive’s employment with the Corporation, provided that after the
termination of the Executive’s employment with the Corporation, the
restrictions contained in this Section 9 shall not apply to any such trade
secret or confidential information which becomes generally known in the trade.


 


10.           NON-COMPETITION :
NON-MITIGATION: LITIGATION EXPENSES.


 


(a)           No Mitigation.  The Executive shall not be required to
mitigate the amount of any termination benefits due him under Section 7
herein, by seeking employment with others, or otherwise, nor shall the amount of
such benefits be reduced or offset in any way by any income or benefits earned
by the Executive from another employer or other source.


 


(b)           Non-competition.  For a period of twenty-four (24) months after
the Executive’s termination of employment hereunder, the Executive shall not
enter into endeavors that are competitive with the business or operations of
the Corporation in the beauty industry (including, but not limited to, salons,
hair restoration centers, education and related products),  and
shall not own an interest in, manage, operate, join, control, lend money or
render financial or other assistance to or participate in or be connected with,
as an officer, employee, director, partner, member, stockholder (except for
passive investments of not more than a one percent (1%) interest in the
securities of a publicly held corporation regularly traded on a national
securities exchange or in an over-the-counter securities market), consultant,
independent contractor, or otherwise, any individual, partnership, firm,
corporation or other business organization or entity that engages in a business
which competes with the Company.


 


(c)           Non-solicitation.  For a period of twenty-four (24) months after
the Executive’s termination of employment hereunder, Executive shall not hire
or attempt to hire any employee of the Corporation, assist in such hiring by
any person or encourage any employee to terminate his relationship with the
Corporation.


 


(d)           Remedies.  If the Executive violates any of the
restrictive covenants set forth in Sections 9, 10(b) and (c) above
during the first twenty-four (24) months after such termination of employment,
and such violation continues after the Executive is notified in writing by the
Company that he is in violation of the restrictive covenant, then (i) the
Corporation shall have no further obligation to make any payments to the
Executive of the Retirement Benefit described in Section 4(f) or of
any severance payments provided in Section 7(b) and 7(d) and (ii) all
such future payments shall be forfeited. 
The Executive acknowledges that any breach or threatened breach of
Sections 9, 10(b) or (c) would damage the Corporation irreparably
and, consequently, the Corporation, in addition to any other remedies available
to it, shall be entitled to preliminary and permanent injunction, without
having to post any bond or other security.


 


14

















 


(e)           Attorneys Fees.  The Corporation shall pay the Executive’s
attorneys’ fees for any proceeding or group of related proceedings to enforce,
construe or determine the validity of the provisions of this Agreement.


 


11.           CLAIMS
PROCEDURE.


 


(a)           If
the payment of benefits under this Agreement shall be disputed by the Company,
the Executive, or other person claiming through the Executive, must file a
written claim with the Board as a prerequisite to the payment of such
benefits.  The Board shall make all
determinations as to the right of any person to receive benefits under
subsections (a) and (b) of this Section 11.  Any denial by the Board of a claim for
benefits by the Executive, his heirs or personal representative (“the
claimant”) shall be stated in writing by the Board and delivered or mailed
to the claimant within ten (10) days after receipt of the claim, unless
special circumstances require an extension of time for processing the
claim.  If such an extension is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial ten (10)-day period. 
In no event shall such extension exceed a period of ten (10) days
from the end of the initial period.  Any
notice of denial shall set forth the specific reasons for the denial, specific
reference to pertinent provisions of this Agreement upon which the denial is
based, a description of any additional material or information necessary for
the claimant to perfect his claim, with an explanation of why such material or
information is necessary, and any explanation of claim review procedures,
written to the best of the Board’s ability in a manner that may be understood
without legal or actuarial counsel.


 


(b)           A claimant whose
claim for benefits has been wholly or partially denied by the Board may
request, within ten (10) days following the date of such denial, in a
writing addressed to the Board, a review of such denial.  The claimant shall be entitled to submit such
issues or comments in writing or otherwise as he shall consider relevant to a
determination of his claim, and he may include a request for a hearing in
person before the Board.  Prior to
submitting his request, the claimant shall be entitled to review such documents
as the Board shall agree are pertinent to his claim.  The claimant may, at all stages of review, be
represented by counsel, legal or otherwise, of his choice, provided that such
fees and expenses shall be borne by the Corporation.  All requests for review shall be promptly
resolved.  The Board’s decision with
respect to any such review shall be set forth in writing and shall be mailed to
the claimant not later than ten (10) days following receipt by the Board
of the claimant’s request unless special circumstances, such as the need to
hold a hearing, require an extension of time for processing, in which case the
Board’s decision shall be so mailed not later than twenty (20) days after
receipt of such request.


 


(c)           A claimant who has
followed the procedure in subsections (a) and (b) of this Section,
but who has not obtained full relief on his claim for benefits, may submit such
claim for expedited and binding arbitration of his claim before an arbitrator
in Hennepin County, Minnesota, in accordance with the commercial arbitration rules of
the American Arbitration Association, as then in effect, or pursuant to such
other form of alternative dispute resolution as the parties may agree
(collectively, the “arbitration”). 
The arbitrator’s sole authority shall be to interpret and apply the
provisions of this Agreement; the arbitrator shall not change, add to, or
subtract from, any of its provisions.


 


15

















 


The arbitrator shall have the power to compel
attendance of witnesses at the hearing. 
Any court having competent jurisdiction may enter a judgment based upon
such arbitration.  The arbitrator shall
be appointed by mutual agreement of the Corporation and the claimant pursuant
to the applicable commercial arbitration rules. 
The arbitrator shall be a professional person with a national reputation
for expertise in employee benefit matters and who is unrelated to the claimant
and any employees of the Corporation. 
All decisions of the arbitrator shall be final and binding on the
claimant and the Corporation.


 


12.           MISCELLANEOUS.


 


(a)           Successors and
Assigns.  This Agreement shall inure
to the benefit of and shall be binding upon the successors and assigns of the
Corporation, including any party with which the Corporation may merge or
consolidate or to which it may transfer substantially all of its assets.  As used in this Agreement, the term “successor”
shall include any person, firm, corporation or other business entity which at
any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the capital stock or assets of the Corporation.


 


(b)           Non-assignability
and Non-transferability.  The rights
and obligations of the Executive under this Agreement are expressly declared
and agreed to be personal, nonassignable and nontransferable during his life;
provided, however, that one-half of the amount of each payment of his
Retirement Benefit under Section 4(f) (other than payments under Section 4(f)(iii))
may be assigned by a domestic relations order to the Executive’s Former Spouse
in connection with the dissolution of their marriage, but only if the Board
determines that the order (i) satisfies such requirements of a “qualified
domestic relations order” as are set forth in paragraphs (1) through (3) of
Code Section 414(p), as if this Agreement were a plan described in Code Section 401(a)(13)
and (ii) does not provide for the payment or assignment of benefits under
this Agreement to the Executive’s Former Spouse prior to the date that benefit
payments under this Agreement have commenced to the Executive following his
separation from employment with the Corporation.  The federal income and payroll taxation of any
Retirement Benefits assigned as provided in the immediately preceding sentence
shall be governed by Revenue Rulings 2002-22 and 2004-60, or any applicable
guidance subsequently published by the Internal Revenue Service or other
applicable federal tax authority. 
Notwithstanding the foregoing, any claim by the Executive’s Former
Spouse to benefits under this Agreement shall be subject to all other
applicable federal laws, including without limitation, Code Section 409A,
and to the extent that any claim by the Executive’s Former Spouse to any rights
or benefits under this Agreement is determined, in the sole discretion of the
Board, to violate such requirements, such right or benefit may be denied or
modified to the extent the Board determines shall be reasonably required.


 


(c)           Limitation of
Waiver.  The waiver by either party
hereto of its rights with respect to a breach of any provision of this
Agreement by the other shall not operate or be construed as a waiver of any
rights with respect to any subsequent breach.


 


(d)           Amendments.  No modification, amendment, addition,
alteration or waiver of any of the terms, covenants or conditions hereof shall
be effective unless made in writing and duly executed by the Corporation and
Executive.


 


16

















 


(e)           Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together will constitute but one and the same agreement.


 


(f)            Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, without regard
to the conflicts of law principles thereof.


 


(g)           Severability.  If any provision of this Agreement is
determined to be invalid or unenforceable under any applicable statute or rule of
law, it is to that extent to be deemed omitted and it shall not affect the
validity or enforceability of any other provision.


 


(h)           Notices.  Any notice required or permitted to be given
under this Agreement shall be in writing, and shall be deemed given when sent
by registered or certified mail, postage prepaid, addressed as follows:


 


	
  If to the Executive:

  	
  Paul D. Finkelstein

  
	
   

  	
  Regis Corporation

  
	
   

  	
  7201 Metro Boulevard

  
	
   

  	
  Edina, Minnesota 55439

  
	
   

  	
   

  
	
  If to the Corporation:

  	
  Regis Corporation

  
	
   

  	
  7201 Metro
  Boulevard

  
	
   

  	
  Edina,
  Minnesota 55439

  
	
   

  	
  Attn:
  General Counsel

  



 


or mailed to such other person and/or address
as the party to be notified may hereafter have designated by notice given to
the other party in a similar manner.


 


(i)            Mandatory
Arbitration.  Any dispute or
controversy arising under or in connection with this Agreement, other than
claims administered under Section 11, shall be settled exclusively by
binding arbitration in the manner set forth in Section 10(c).


 


13.           PRIOR AGREEMENTS
SUPERSEDED.  Upon the Effective Date,
this Agreement shall supersede all prior agreements between the parties hereto
with respect to the subject matter hereof, including without limitation the
Original Agreement, the Insurance Agreement, the 2007 Agreement and any and all
change in control provisions contained in any agreement, arrangement or plan
with or for the benefit of Executive, all of which are forever irrevocably
waived by the Executive; provided, however, that this Agreement shall not supersede
any agreements between the Corporation and the Executive regarding currently
outstanding options held by the Executive to purchase the Corporation’s common
stock or restricted stock, except for the change in control provisions thereof,
which are hereby superseded.


 


17

















 


14.           NO INTERRUPTION
OF BENEFITS.  Nothing in this
Agreement shall be deemed an interruption of the Executive’s years of service
for vesting of the Corporation’s benefit plans, vesting of options to purchase
the Corporation’s common stock, or otherwise.


 


15.           INDEMNIFICATION.  The Corporation shall indemnify, defend, and
hold the Executive harmless, to the fullest extent allowed by law, from and
against any liability, damages, costs, or expenses (including attorney’s fees)
in connection with any claim, cause of action, investigation, litigation, or
proceeding involving him by reason of his having been an officer, director,
employee, or agent of the Corporation or its affiliates, unless it is judicially
determined, in a final, nonappealable order that the Executive was guilty of
gross negligence or willful misconduct. 
The Corporation also agrees to maintain adequate directors and officers
liability insurance for the benefit of the Executive for the term of this
Agreement and for at least three (3) years thereafter.


 


IN WITNESS WHEREOF, the parties have caused
this amended and restated Agreement to be executed as of December 31,
2008.


 


	
   

  	
  REGIS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Eric A. Bakken

  
	
   

  	
   

  	
  Name:

  	
  Eric A. Bakken

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President, General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Paul D. Finkelstein

  
	
   

  	
   

  	
  Name:

  	
  Paul D. Finkelstein

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board of Directors,

  
	
   

  	
   

  	
  President and Chief Executive Officer

  



 


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