Document:

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 

 

2

 

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 

 

3

 

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;

 

4

 

(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).

 

5

 

(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.

 

6

 

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.

 

7

 

(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:

 

8

 

(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

 

9

 

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

 

10

 

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

  

 

18Exhibit No. 10(c)(*)

 

EMPLOYMENT AGREEMENT

(as
Amended and Restated December 31, 2008)

 

THIS
EMPLOYMENT AGREEMENT (this “Agreement”), dated as of the 31st day
December, 2008, is made by and between Regis Corporation, a Minnesota
corporation (the “Corporation”), and Randy L. Pearce (the “Executive”).

 

RECITALS

 

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

 

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

 

WHEREAS,
the Corporation and the Executive, by an agreement dated as of May 9, 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 May 9, 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 due 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 Senior Executive Vice
President and Chief Financial and Administrative 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 Four Hundred Seventy-Five Thousand Dollars
($475,000.00) 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

 

2

 

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 Fifty Thousand (50,000) 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)           Payment to Cover
Life Insurance Premiums or Other Purposes.  The Corporation previously
agreed under the Insurance Agreement to pay the Executive, for a period of ten (10) years,
an amount equal to the annual premium on a a policy with a face amount of Two
Million Five Hundred Dollars ($2,500,000) insuring the Executive’s life, plus a
gross-up for the federal and state income taxes imposed on such payment. In
lieu of such payments and subject to the last sentence of this Section 4(e),
the Corporation shall pay the Executive the sum of One Hundred and Twenty
Thousand Dollars ($120,000) annually for three years starting in 2008, which
the Executive may use to continue to pay life insurance premiums, income tax
obligations or as the Executive otherwise may determine.  The Corporation’s
obligation to make the payments provided for under this Section 4(e) shall
cease upon the termination of this Agreement by the Corporation for Cause (as
defined in Section 8 hereof).

 

(f)            Retirement
Benefit.  The Corporation shall pay to the Executive, if living, or,
if not, to his surviving spouse or other designated beneficiary (either sometimes
referred to as the Executive’s “Beneficiary”) or to the Executive’s
estate if there is no surviving Beneficiary, the following sums (sometimes
referred to as his “Retirement Benefit”) upon the terms and conditions
and for the periods hereinafter set forth:

 

(i)            Payments
upon Retirement.  On the last day of the month next following the
month in which the Executive (1) retires from employment with the
Corporation after attaining age 65, or (2) reaches age 65 if he is then
disabled within the meaning of Section 4(f)(iv), the Corporation shall pay
to the Executive a lump sum cash payment of an amount equal to the present
value of his Vested Monthly Benefit. For the purpose of determining the present
value, the following assumptions shall apply:

 

3

 

(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)           Payment Duration:  It shall be assumed that payments of the
Vested Monthly Benefit will be made for two hundred and forty (240) months.

 

Notwithstanding
the foregoing in this subparagraph 4(f)(i), Executive shall be entitled, by
written election to the Corporation’s Board of Directors, to receive, in
connection with a termination of employment at or after age 65, to have his
Vested Monthly Benefit paid in monthly payments rather than the lump-sum
described above, provided (x) Executive makes such written election more
than 12 months before Executive attains age 65 (y) such election is not
effective for 12 months, and (z) the first installment of the Vested
Monthly Benefit is paid five years after the month next following the month of
such termination of employment (or if earlier, upon death or disability pursuant to subparagraphs 4(f)(iii) and
(iv), respectively).  Pursuant to (and
subject to the requirements of) transitional relief  provided with respect to initial and
redeferral elections under Code Section 409A (including without
limitation, IRS Notice 2005-1, Notice 2006-79, the Preamble to the final Section 409A
treasury regulations, and Notice 2007-86, any election made on or before December 31,
2008 shall not be subject to the foregoing timing requirements.

 

If
this election is made, the Vested Monthly Benefit will be paid for two hundred
and forty (240) months.  If Executive
dies before receiving all 240 monthly payments specified herein, the
Corporation shall pay to the Executive’s Beneficiary the remaining monthly payments
as they become due as provided above.

 

(ii)           Early
Termination.  In the event the Executive has a termination of  employment with the Corporation before
reaching age 65 (unless the Executive has been terminated by the Corporation
for Cause, or if the termination is by reason of disability pursuant to
subparagraph 4(f)(iv), or by reason of death), then, on the last day of the
month next following the month of the Employee’s termination of employment, the
Corporation shall pay to the Executive a lump sum cash payment of an amount
equal to the present value of his Discounted Vested Monthly Benefit.  For the purpose of determining the 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)           Payment Duration:  It shall be assumed that payments of the
Discounted Vested Monthly Benefit will be made for two hundred and forty (240)
months.

 

4

 

Notwithstanding
the foregoing in this subparagraph 4(f)(ii), Executive shall be entitled, by
written election to the Corporation’s Board of Directors, to receive, in
connection with Executive’s termination of employment prior to age 65, to (i) be
paid the lump sum cash payment on the basis of his Vested Monthly Benefit
rather than the Discounted Vested Monthly Benefit (or based on his Discounted
Vested Monthly Benefit but commencing at a later date if the payment date is
prior to age 65), and/or (ii) to be paid in monthly payments rather than
the lump-sum described above, provided (x) Executive makes such written
election more than 12 months before Employee’s termination of employment (y) such
election is not effective for 12 months following the date the election is
made, and (z) the first installment of the Monthly Benefit (or the lump
sum payment as applicable) is paid no earlier than five years after the month
next following the month of Employee’s termination of employment (or if
earlier, upon death or disability pursuant to subparagraphs 4(f)(iii) or
(iv), respectively).  Pursuant to (and
subject to the requirements of) transitional relief  provided with respect to initial and redeferral
elections under Code Section 409A (including without limitation, IRS
Notice 2005-1, Notice 2006-79, the Preamble to the final Section 409A
treasury regulations, and Notice 2007-86, any election made on or before December 31,
2008 shall not be subject to the foregoing timing requirements.

 

If
monthly payments are elected, the Vested Monthly Benefit (or the Discounted
Vested Monthly Benefit (if payment commences prior to age 65)) will be paid for
two hundred and forty (240) months.  If
Executive dies before receiving all two hundred and forty (240) monthly
payments specified herein, the Corporation shall pay to Executive’s Beneficiary
the remaining unpaid monthly payments as they become due as provided above.

 

 (iii)         Payments upon Death before Separation. 
If the Executive dies while employed by the Corporation, during the first six (6) months
of disability, or while disability payments are being paid under subparagraph
(iv), the Corporation shall pay to Executive’s Beneficiary a lump sum cash
payment of an amount equal to the present value of Executive’s Monthly Benefit
(based on the assumptions listed in subparagraph (ii), but with the 30-year
Treasury Note rate determined at the Executive’s death), provided, however,
that if Employee elected to receive monthly payments rather than a lump sum (as
provided under subparagraph (i) and (ii), as applicable based on the age
of the Executive at death), the Corporation shall pay to Executive’s
Beneficiary Executive’s full Monthly Benefit for two hundred and forty (240)
months.  The lump sum payment or the
first monthly payment, as applicable, shall be paid within thirty (30) days
after Executive’s death.

 

(iv)          Payments
During Disability.  In addition to the payments provided in Section 4(f)(i) and
(ii), should the Executive become disabled while employed by the Corporation,
and such disability continues for a period of six (6) months,  the
Corporation shall pay to the Executive his Monthly Benefit during each month
that the Executive remains disabled until he attains age 65 or until his death
prior to attaining such age, at which time the payment provided in

 

5

 

Section
4(f)(i), (ii) or (iii) (whichever is applicable) shall be paid or
begin (in the case of a lump sum, the 30-year Treasury Note rate shall be
determined at age 65 or death, as applicable).  The first payment under
this Section 4(f)(iv) shall be made during the seventh month of
such disability, and each succeeding payment shall be made on the same
date of each succeeding month thereafter.  Payments shall be made under
this Section 4(f)(iv) only if the Executive is disabled within the
meaning of the disability clause of the Corporation’s long term disability
insurance policy or program as then in effect and within the meaning of “disability”
as set forth in Treas. Reg. § 1.409A-3(i)(4).

 

(v)           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
Beneficiary 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;

 

(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:

 

6

 

(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).

 

(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.

 

7

 

(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.

 

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.

 

8

 

(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 be 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 Executive’s attainment of age 65 (or with respect to the
Executive’s wife, Mary Kay Pearce [the “Executive’s wife”], through her
attainment of age 65), the Executive and the Executive’s wife each shall be
entitled to the continuation of the same or equivalent health, hospitalization,
prescription drug and dental insurance coverage that each had received
immediately prior to the Executive’s termination of employment, as if the
Executive had continued to be an executive employee of the Corporation. 
In the event that the Executive or the Executive’s wife is ineligible under the
terms of such health or other insurance to continue to be so covered, the
Corporation shall provide the Executive and the Executive’s wife with
substantially equivalent coverage through other sources or will reimburse the
Executive or the Executive’s wife (as applicable) for actual premiums paid for
such alternative coverage (such as Medicare Part A, Part B and
prescription drug coverage) that the Executive or the Executive’s wife 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.

 

(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 

 

9

 

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 be entitled to receive
under COBRA, during the period commencing with the Executive’s termination of
employment (provided that such termination of employment is not a voluntary
resignation by the Executive prior to the second anniversary of this Agreement)
and continuing through the Executive’s attainment of age 65 (or with respect to
the Executive’s wife, through her attainment of age 65), the Executive and the
Executive’s wife each shall be entitled to the continuation of the same or
equivalent health, hospitalization, prescription drug and dental insurance
coverage that each had received immediately prior to the Executive’s
termination of employment,  as if
the Executive had continued to be an executive employee of the
Corporation.  In the event that the Executive or the Executive’s
wife is ineligible under the terms of such health or other insurance to
continue to be so covered, the
Corporation shall provide the Executive and the Executive’s wife with
substantially equivalent coverage through other sources or will reimburse the
Executive or the Executive’s wife (as applicable) for actual premiums paid for
such alternative coverage (such as Medicare Part A, Part B and
prescription drug coverage) that the Executive or the Executive’s wife 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:

 

(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 more 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

 

10

 

Executive’s termination of employment (including any
amount paid under Section 7(d)(iii) of the Agreement).

 

(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.

 

(iii)          Benefits.  If the Executive terminates this
Agreement without Good Reason on or after the second anniversary of this
Agreement or the Executive’s employment hereunder terminates due to the
expiration of the period of employment, but not in the event if the Executive’s
employment is terminated pursuant to section (c) of Section 6 hereof,
the Executive and the Executive’s wife (as applicable) shall be entitled to and
shall receive the benefits described in Section 7(b)(iv).

 

(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, and
Executive shall also 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 Fifty Thousand (50,000) 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 

 

11

 

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 lump
sum benefit payable under Section 4(f)(i) or (ii), as applicable,
will equal the Executive’s Aggregate Benefit (without any reduction for vesting
or for discounting).

 

(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.

 

(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 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 

 

12

 

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.

 

“Aggregate
Benefit”  shall mean an amount
equal to the Executive’s Monthly Benefit multiplied by 240.

 

“Cause”
shall mean (a) acts occurring or discovered 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 the 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 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) apply;

 

(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 

 

13

 

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.

 

 “Discounted Vested Monthly Benefit”
shall mean an amount determined by discounting the Executive’s Vested Monthly
Benefit to present value based on the number of months between (a) the
Executive’s age at the date of his termination of employment or, if he elects
to defer payment or commencement pursuant to subparagraph 4(f)(ii) of this
Agreement, the date of payment or commencement, and (b) the date of his
65th birthday.  The discount rate to be used for this purpose shall be
equal to the yield to maturity, at the date in (a), above, of U.S. Treasury
Notes with a maturity date nearest the date of the Executive’s 65th birthday.

 

“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;

 

14

 

(c)           any material breach by the Corporation of any
provisions of the 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 the 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 the greater of (i) forty
percent (40%) of the Executive’s average monthly compensation, excluding
bonuses, for the sixty (60) months immediately preceding his termination of employment
or disability, or (ii) Five Thousand Dollars ($5,000).

 

“Vested
Monthly Benefit” shall mean a percentage of the Executive’s Monthly Benefit
determined on the basis of the number of the Executive’s completed years of
service with the Corporation according to the following schedule:

 

	
  Years of Service

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than 7
  years

  	
   

  	
  0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  7 years

  	
   

  	
  5

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  8 years

  	
   

  	
  10

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  9 years

  	
   

  	
  15

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  10 years

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  11 years

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  12 years

  	
   

  	
  30

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  13 years

  	
   

  	
  35

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  14 years

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  15 years

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  16 years

  	
   

  	
  60

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  17 years

  	
   

  	
  70

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  18 years

  	
   

  	
  80

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  19 years

  	
   

  	
  90

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  20 or more years

  	
   

  	
  100

  	
  %

  

 

15

 

A
“year of service” for purposes of vesting shall mean a consecutive twelve
(12)-month period during which the Executive is employed by the Corporation.

 

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 

 

16

 

hire
any employee of the Corporation, assist in such hiring by any person or
encourage any employee to terminate his or her 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.

 

(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 

 

17

 

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.  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 all or a portion 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 “qualified domestic relations order” as 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).

 

(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.

 

18

 

(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.

 

(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:

  	
  Randy
  L. Pearce

  
	
   

  	
   

  
	
   

  	
  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 

 

19

 

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.

 

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

  

 

20

 

	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Randy L. Pearce

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Randy
  L. Pearce

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Executive Vice President, 

  Chief Financial and Administrative Officer

  

 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]