UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2008

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-12725

Regis Corporation

(Exact name of registrant as specified in its charter)

Minnesota		41-0749934
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

7201 Metro Boulevard, Edina, Minnesota		55439
(Address of principal executive offices)		(Zip Code)

(952) 947-7777
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller
		reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Act).Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of February 6, 2009:

Common Stock, $.05 par value		43,213,321
Class		Number of Shares

Table of Contents

REGIS CORPORATION

INDEX

Part I.	Financial Information UNAUDITED

	Item 1.	Condensed Consolidated Financial Statements:

		Condensed Consolidated Balance Sheet as of December 31, 2008 and June 30, 2008	3

		Condensed Consolidated Statement of Operations for the three months ended December 31, 2008 and 2007	4

		Condensed Consolidated Statement of Operations for the six months ended December 31, 2008 and 2007	5

		Condensed Consolidated Statement of Cash Flows for the six months ended December 31, 2008 and 2007	6

		Notes to Condensed Consolidated Financial Statements	7

		Review Report of Independent Registered Public Accounting Firm	27

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51

	Item 4.	Controls and Procedures	51

Part II.	Other Information

	Item 1.	Legal Proceedings	52

	Item 1A.	Risk Factors	52

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

	Item 4.	Submission of Matters to a Vote of Security Holders	54

	Item 6.	Exhibits	54

	Signatures		56

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

as of December 31, 2008 and June 30, 2008
(In thousands, except share data)

	December 31, 2008		June 30, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	64,303	$	127,627
Receivables, net	36,423		37,824
Inventories	194,459		212,468
Deferred income taxes	72,179		15,954
Other current assets	47,659		51,278
Total current assets	415,023		445,151

Property and equipment, net	415,270		481,851
Goodwill	759,751		870,993
Other intangibles, net	130,390		144,291
Investment in and loans to affiliates	232,157		247,102
Other assets	46,266		46,483

Total assets	$	1,998,857	$	2,235,871

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Long-term debt, current portion	$	151,952	$	230,224
Accounts payable	77,037		69,693
Accrued expenses	195,231		207,605
Total current liabilities	424,220		507,522

Long-term debt and capital lease obligations	580,579		534,523
Other noncurrent liabilities	205,202		217,640
Total liabilities	1,210,001		1,259,685
Commitments and contingencies (Note 8)
Shareholders’ equity:
Common stock, $0.05 par value; issued and outstanding 43,213,321 and 43,070,927 common shares at December 31, 2008 and June 30, 2008, respectively	2,160		2,153
Additional paid-in capital	150,363		143,265
Accumulated other comprehensive income	39,757		101,973
Retained earnings	596,576		728,795

Total shareholders’ equity	788,856		976,186

Total liabilities and shareholders’ equity	$	1,998,857	$	2,235,871

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

Table of Contents

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
for the three months ended December 31, 2008 and 2007

(In thousands, except per share data)

	2008			2007
Revenues:
Service	$	445,078		$	450,851
Product	132,774			142,256
Royalties and fees	9,574			21,559
	587,426			614,666
Operating expenses:
Cost of service	256,838			259,402
Cost of product	65,078			69,036
Site operating expenses	47,620			44,079
General and administrative	72,531			83,060
Rent	81,981			89,191
Depreciation and amortization	27,519			28,254
Goodwill impairment	41,661			—
Lease termination costs	847			—
Total operating expenses	594,075			573,022

Operating (loss) income	(6,649		)	41,644

Other income (expense):
Interest expense	(10,878		)	(11,716		)
Interest income and other, net	3,462			2,090

(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies	(14,065		)	32,018

Income taxes	(9,383		)	(11,679		)
Equity in (loss) income of affiliated companies, net of income taxes	(2,338		)	386

(Loss) income from continuing operations	(25,786		)	20,725

(Loss) income from discontinued operations, net of income taxes (Note 2)	(117,466		)	1,831

Net (loss) income	$	(143,252	)	$	22,556

Net (loss) income per share:
Basic:
(Loss) income from continuing operations	(0.60		)	0.48
(Loss) income from discontinued operations, net of income taxes	(2.74		)	0.04
Net (loss) income per share, basic	$	(3.34	)	$	0.52

Diluted:
(Loss) income from continuing operations	(0.60		)	0.47
(Loss) income from discontinued operations, net of income taxes	(2.74		)	0.04
Net (loss) income per share, diluted	$	(3.34	)	$	0.51

Weighted average common and common equivalent shares outstanding:
Basic	42,897			43,369
Diluted	42,897			43,915

Cash dividends declared per common share	$	0.04		$	0.04

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

Table of Contents

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
for the six months ended December 31, 2008 and 2007

(In thousands, except per share data)

	2008			2007
Revenues:
Service	$	914,113		$	903,614
Product	266,957			275,916
Royalties and fees	19,885			42,466
	1,200,955			1,221,996
Operating expenses:
Cost of service	523,915			516,055
Cost of product	130,697			132,648
Site operating expenses	96,022			93,410
General and administrative	150,295			166,316
Rent	174,192			176,440
Depreciation and amortization	54,787			56,537
Goodwill impairment	41,661			—
Lease termination costs	1,998			—
Total operating expenses	1,173,567			1,141,406

Operating income	27,388			80,590

Other income (expense):
Interest expense	(21,098		)	(22,229		)
Interest income and other, net	5,197			4,245

Income from continuing operations before income taxes and equity in (loss) income of affiliated companies	11,487			62,606

Income taxes	(19,340		)	(22,485		)
Equity in (loss) income of affiliated companies, net of income taxes	(1,846		)	52

(Loss) income from continuing operations	(9,699		)	40,173

(Loss) income from discontinued operations, net of income taxes (Note 2)	(119,066		)	2,982

Net (loss) income	$	(128,765	)	$	43,155

Net (loss) income per share:
Basic:
(Loss) income from continuing operations	(0.23		)	0.92
(Loss) income from discontinued operations, net of income taxes	(2.78		)	0.07
Net (loss) income per share, basic	$	(3.01	)	$	0.99

Diluted:
(Loss) income from continuing operations	(0.23		)	0.91
(Loss) income from discontinued operations, net of income taxes	(2.78		)	0.07
Net (loss) income per share, diluted	$	(3.01	)	$	0.98

Weighted average common and common equivalent shares outstanding:
Basic	42,842			43,559
Diluted	42,842			44,172

Cash dividends declared per common share	$	0.08		$	0.08

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Information.

Table of Contents

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
for the six months ended December 31, 2008 and 2007

(In thousands)

	2008			2007
Cash flows from operating activities:
Net (loss) income	$	(128,765	)	$	43,155
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	57,562			57,271
Amortization	5,067			5,915
Equity in loss (income) of affiliated companies	1,846			(52		)
Deferred income taxes	(59,808		)	(1,202		)
Impairment on discontinued operations	171,004			—
Goodwill impairment	41,661			—
Excess tax benefits from stock-based compensation plans	(284		)	(1,295		)
Stock-based compensation	3,829			3,303
Other noncash items affecting earnings	(2,535		)	707
Changes in operating assets and liabilities:
Receivables	(3,072		)	(4,217		)
Inventories	(19,318		)	(9,686		)
Other current assets	(1,886		)	(8,062		)
Other assets	2,865			(2,270		)
Accounts payable	12,397			(8,572		)
Accrued expenses	(8,725		)	2,287
Other noncurrent liabilities	2,136			14,987
Net cash provided by operating activities	73,974			92,269

Cash flows from investing activities:
Capital expenditures	(48,793		)	(44,399		)
Proceeds from sale of assets	28			16
Asset acquisitions, net of cash acquired and certain obligations assumed	(30,965		)	(53,297		)
Proceeds from loans and investments	9,793			10,000
Disbursements for loans and investments	(5,971		)	(22,500		)
Transfer of cash related to contribution of schools	—			(7,254		)
Net cash used in investing activities	(75,908		)	(117,434		)

Cash flows from financing activities:
Borrowings on revolving credit facilities	3,711,400			4,773,800
Payments on revolving credit facilities	(3,813,500		)	(4,711,600		)
Proceeds from issuance of long-term debt	85,000			50,000
Repayments of long-term debt and capital lease obligations	(21,165		)	(63,612		)
Repurchase of common stock	—			(49,957		)
Excess tax benefits from stock-based compensation plans	284			1,295
Proceeds from issuance of common stock	2,306			7,372
Dividends paid	(3,453		)	(3,530		)
Other	(4,117		)	(653		)
Net cash (used in) provided by financing activities	(43,245		)	3,115

Effect of exchange rate changes on cash and cash equivalents	(18,145		)	10,120

Decrease in cash and cash equivalents	(63,324		)	(11,930		)

Cash and cash equivalents:
Beginning of period	127,627			184,785
End of period	$	64,303		$	172,855

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

Table of Contents

REGIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of December 31, 2008 and for the three and six months ended December 31, 2008 and 2007, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of December 31, 2008 and the consolidated results of its operations and its cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The Consolidated Balance Sheet data for June 30, 2008 was derived from audited Consolidated Financial Statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2008 and other documents filed or furnished with the Securities and Exchange Commission (SEC) during the current fiscal year.

The unaudited condensed consolidated financial statements of the Company as of December 31, 2008 and for the three and six month periods ended December 31, 2008 and 2007 included in this Form 10-Q, have been reviewed by PricewaterhouseCoopers LLP, an independent registered public accounting firm. Their separate report dated February 9, 2009 appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited financial information because that report is not a “report” or a “part” of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

Inventories:

Inventories consist principally of hair care products held either for use in services or for sale. Cost of product used in salon services is determined by applying estimated gross profit margins to service revenues, which are based on historical factors including product pricing trends and estimated shrinkage. In addition, the estimated gross profit margin is adjusted based on the results of physical inventory counts performed at least semi-annually and the monthly monitoring of factors that could impact the Company’s usage rate estimates. These factors include mix of service sales, discounting, and special promotions. Cost of product sold to salon customers is determined based on the weighted average cost of product to the Company, adjusted for an estimated shrinkage factor. Product and service inventories are adjusted based on the results of physical inventory counts performed at least semi-annually.

Stock-Based Employee Compensation:

Stock-based awards are granted under the terms of the 2004 Long Term Incentive Plan (2004 Plan) and the 2000 Stock Option Plan (2000 Plan). Additionally, the Company has outstanding stock options under its 1991 Stock Option Plan (1991 Plan), although the Plan terminated in 2001. Under these plans, four types of stock-based compensation awards are granted: stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs) and restricted stock units (RSUs). The stock-based awards, other than the RSUs, expire within ten years from the grant date. The RSUs cliff vest after five years, and payment of the RSUs is deferred until January 31 of the year following vesting. Unvested awards are subject to forfeiture in the event of termination of employment. The Company utilizes an option-pricing model to estimate the fair value of options and SARs at their grant date. Stock options and SARs are granted at not less than fair market value on the date of grant. The Company’s primary employee stock-based compensation grant occurs during the fourth fiscal quarter. The Company generally recognizes compensation expense for its stock-based compensation awards on a straight-line basis over a five-year vesting period. Awards granted do not contain acceleration of vesting terms for retirement eligible recipients.

Total compensation cost for stock-based payment arrangements totaled $3.8 and $3.3 million for the six months ended December 31, 2008 and 2007, respectively.

Table of Contents

Stock options outstanding, weighted average exercise price and weighted average fair values as of December 31, 2008 were as follows:

Options	Shares		Weighted Average Exercise Price
	(in thousands)
Outstanding at June 30, 2008	1,713		$	24.55
Granted	2		26.79
Exercised	(133	)	17.17
Forfeited or expired	(6	)	36.24
Outstanding at September 30, 2008	1,576		$	25.14
Granted	—		—
Exercised	(1	)	19.28
Forfeited or expired	(19	)	33.10
Outstanding at December 31, 2008	1,556		$	25.05
Exercisable at December 31, 2008	1,202		$	22.41

Outstanding options of 1,555,996 at December 31, 2008 had an intrinsic value of less than $0.1 million and a weighted average remaining contractual term of 4.0 years. Exercisable options of 1,202,296 at December 31, 2008 had an intrinsic value of less than $0.1 million and a weighted average remaining contractual term of 2.8 years. An additional 336,822 options are expected to vest with a $34.08 per share weighted average grant price and a weighted average remaining contractual life of 8.1 years and a total intrinsic value of zero.

All options granted relate to stock option plans that have been approved by the shareholders of the Company.

Stock options were granted under the 2004 Plan in fiscal year 2008.

Grants of RSAs, RSUs and SARs outstanding under the 2004 Plan, as well as other relevant terms of the awards, were as follows:

	Nonvested				SARs Outstanding
	Restricted Stock Outstanding Shares/Units		Weighted Average Grant Date Fair Value		Shares		Weighted Average Exercise Price
	(in thousands)				(in thousands)
Balance, June 30, 2008	523		$	36.76	527		$	35.70
Granted	—		—		—		—
Vested/Exercised	—		—		—		—
Forfeited or expired	(8	)	34.31		(14	)	38.27
Balance, September 30, 2008	515		$	36.80	513		$	35.69
Granted	—		—		—		—
Vested/Exercised	1		34.01		—		—
Forfeited or expired	—		—		—		—
Balance, December 31, 2008	516		$	36.80	513		$	35.69

Outstanding and unvested RSAs of 300,974 at December 31, 2008 had an intrinsic value of $4.4 million and a weighted average remaining contractual term of 1.8 years. An additional 288,162 awards are expected to vest with a total intrinsic value of $4.2 million.

Outstanding and unvested RSUs of 215,000 at December 31, 2008 had an intrinsic value of $3.1 million and a weighted average remaining contractual term of 3.2 years. All unvested RSUs are expected to vest.

Outstanding SARs of 513,150 at December 31, 2008 had a total intrinsic value of zero and a weighted average remaining contractual term of 7.6 years. Exercisable SARs of 176,980 at December 31, 2008 had a total intrinsic value of zero and a weighted average remaining contractual term of 6.5 years. An additional 326,435 rights are expected to vest with a $34.05 per share weighted average grant price, a weighted average remaining contractual life of 8.2 years and a total intrinsic value of zero.

Table of Contents

Total cash from the exercise of share-based instruments for the three and six months ended December 31, 2008 was less than $0.1 million and $2.3 million, respectively. Total cash received from the exercise of share-based instruments for the three and six months ended December 31, 2007 was $6.7 and $7.4 million, respectively.

As of December 31, 2008, the total unrecognized compensation cost related to all unvested stock-based compensation arrangements was $19.5 million. The related weighted average period over which such cost is expected to be recognized was approximately 3.3 years as of December 31, 2008.

The total intrinsic value of all stock-based compensation (the amount by which the respective December 31 stock price exceeded the exercise or grant date price) that was exercised during the three and six months ended December 31, 2008 and 2007 was less than $0.1 and $1.6 million, respectively. The total intrinsic value of all stock-based compensation (the amount by which the respective December 31 stock price exceeded the exercise or grant date price) that was exercised during the three and six months ended December 31, 2007 was $6.1 and $6.3 million, respectively.

The total fair value of awards vested during the six months ended December 31, 2008 and 2007 was zero and less than $0.1 million, respectively.

Recent Accounting Pronouncements:

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 establishes a single definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurements, and requires new disclosures of assets and liabilities measured at fair value based on their level in the hierarchy. This statement applies under other accounting pronouncements that require or permit fair value measurements, but does not change existing guidance as to whether or not an instrument is carried at fair value. In February 2008, the FASB issued FASB Staff Position (FSP) No. 157-1 and No. 157-2, which, respectively, removed leasing transactions from the scope of SFAS No. 157 and deferred for one year the effective date for SFAS No. 157 as it applies to certain nonfinancial assets and liabilities. On July 1, 2008, the Company adopted, on a prospective basis, SFAS No. 157 and became subject to the new disclosure requirements (excluding FSP 157-2) with respect to the Company’s fair value measurements of (a) nonfinancial assets and liabilities that are recognized or disclosed at fair value in our financial statements on a recurring basis (at least annually) and (b) all financial assets and liabilities. The Company’s adoption did not impact its consolidated financial position or results of operations as all fair value measurements were in accordance with SFAS No. 157 upon adoption. The additional disclosures required by SFAS No. 157 are included in Note 4 . The Company is evaluating the impact FSP No. 157-2 will have on its nonfinancial assets and liabilities that are measured at fair value, but are recognized or disclosed at fair value on a nonrecurring basis.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS No. 141(R)). SFAS No. 141(R) replaces SFAS No. 141, Business Combinations . SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interests in the acquiree and the goodwill acquired. Some of the key changes under SFAS No. 141(R) will change the accounting treatment for certain specific acquisition related items including: (1) accounting for acquired in process research and development as an indefinite-lived intangible asset until approved or discontinued rather than as an immediate expense; (2) expensing acquisition costs rather than adding them to the cost of an acquisition; (3) expensing restructuring costs in connection with an acquisition rather than adding them to the cost of an acquisition; (4) including the fair value of contingent consideration at the date of an acquisition in the cost of an acquisition; and (5) recording at the date of an acquisition the fair value of contingent liabilities that are more than likely than not to occur. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. SFAS No. 141(R) will be effective for the Company’s fiscal year 2010 and must be applied prospectively to all new acquisitions closing on or after July 1, 2009. Early adoption is prohibited. SFAS No. 141(R) is expected to have a material impact on how the Company will identify, negotiate and value future acquisitions and may materially impact the Company’s Consolidated Financial Statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS No. 161). SFAS No. 161 requires enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedge items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities , and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161

Table of Contents

is effective for fiscal years and interim periods beginning after November 15, 2008 (i.e. the Company’s third quarter of fiscal year 2009). The Company intends to comply with the disclosure requirements upon adoption.

2. DISCONTINUED OPERATIONS:

During the three months ended December 31, 2008, steps were taken to market and identify potential buyers of Trade Secret. The Company concluded that Trade Secret qualified as held for sale under Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS. No. 144), as of December 31, 2008 and is presented as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. The conclusion was based on management having the authority to commit the Company to sell Trade Secret within parameters approved by the Board of Directors, the salons being available for sale in present condition, negotiations were being held with a potential buyer and the sale was probable as of December 31, 2008. The operations and cash flows of Trade Secret will be eliminated from ongoing operations of the Company and there will be no significant continuing involvement in the operations after disposal pursuant to Emerging Issues Task Force (EITF) Issue No. 03-13, Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to Report Discontinued Operations . The agreement includes a provision that the Company will supply product to the buyer of Trade Secret and provide certain administrative services for a transition period of six months following the date of sale with possible extension to not more than eleven months.

As the proceeds the Company will receive from the sale of Trade Secret are negligible, the Company recognized an impairment charge during the three months ended December 31, 2008 set forth in the following table.

	(Dollars in thousands)
Inventories	$	33,599
Property and equipment, net	56,491
Goodwill	78,126
Other intangibles, net	7,187
Other assets	2,896
Other noncurrent liabilities	(6,477		)
Impairment loss before income taxes	$	171,822

The (loss) income from discontinued operations are summarized below:

	For the Periods Ended December 31,
	Three Months						Six Months
	2008			2007			2008			2007
	(Dollars in thousands)						(Dollars in thousands)
Revenues	$	67,807		$	67,575		$	134,547		$	127,770
(Loss) income from discontinued operations, before income taxes	(174,670		)	3,173			(177,445		)	5,168
Income tax benefit (provision) on discontinued operations	57,204			(1,342		)	58,379			(2,186		)
(Loss) income from discontinued operations, net of income taxes	$	(117,466	)	$	1,831		$	(119,066	)	$	2,982

Income taxes have been allocated to continuing and discontinued operations based on the methodology required by Financial Accounting Interpretation No. 18, Accounting for Income Taxes in Interim Periods an Interpretation of APB Opinion No. 28 (FIN 18) .

Pursuant to the agreement the Company will retain certain assets and liabilities of Trade Secret. These balances are classified in the Condensed Consolidated Balance Sheet within their natural balance sheet classification. Remaining Trade Secret assets and liabilities at December 31, 2008 to be retained consist of $1.3 million in cash and cash equivalents, $2.7 million in receivables, net, $8.9 million in inventory estimated to be sold prior to the expected closing date, $1.4 million in other currents assets, $14.5 million in accrued expenses, $0.9 million in other current

Table of Contents

liabilities, and $1.4 million in long-term debt and capital lease obligations. Pursuant to the agreement, the Company will reimburse the buyer for loss contingencies including any losses imposed against the buyer arising from existing litigation and for the termination of an existing office lease.

3. SHAREHOLDERS’ EQUITY:

Net Income Per Share:

The Company’s basic earnings per share is calculated as net income divided by weighted average common shares outstanding, excluding unvested outstanding RSAs and RSUs. The Company’s dilutive earnings per share is calculated as net income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company’s stock option plan and long-term incentive plan and dilutive securities. Stock-based awards with exercise prices greater than the average market value of the Company’s common stock are excluded from the computation of diluted earnings per share. For the three and six months ended December 31, 2008, diluted loss per share equals basic loss per share, as the assumed exercise of shares under the Company’s stock option plan and long-term incentive plan would have an anti-dilutive effect.

The following table sets forth a reconciliation of shares used in the computation of basic and diluted earnings per share:

	For the Periods Ended December 31,
	Three Months		Six Months
	2008	2007	2008	2007
	(Shares in thousands)
Weighted average shares for basic earnings per share	42,897	43,369	42,842	43,559
Effect of dilutive securities:
Dilutive effect of stock-based compensation (1)	—	442	—	509
Contingent shares issuable under contingent stock agreements	—	104	—	104
Weighted average shares for diluted earnings per share	42,897	43,915	42,842	44,172

(1) For the three and six months ended December 31, 2008, 2,040 and 166,343 common stock equivalents, respectively, of potentially dilutive Common Stock were not included in the diluted earnings per share calculation because to do so would have been anti-dilutive.

The following table sets forth the awards which are excluded from the various earnings per share calculations:

	For the Periods Ended December 31,
	Three Months		Six Months
	2008	2007	2008	2007
	(Shares in thousands)		(Shares in thousands)
Basic earnings per share:
RSAs (1)	301	247	301	247
RSUs (1)	215	215	215	215
	516	462	516	462
Diluted earnings per share:
Stock options (2)	1,560	494	803	482
SARs (2)	513	390	516	392
RSAs (2)	289	117	289	117
RSUs (2)	215	215	215	215
	2,577	1,216	1,823	1,206

(1) Shares were not vested

(2) Shares were anti-dilutive

Table of Contents

Additional Paid-In Capital:

The change in additional paid-in capital during the six months ended December 31, 2008 was due to the following:

	(Dollars in thousands)
Balance, June 30, 2008	$	143,265
Exercise of stock options	2,299
Tax benefit realized upon exercise of stock options	592
Stock-based compensation	3,829
Franchise stock incentive plan	380
Taxes related to restricted stock	(2		)
Balance, December 31, 2008	$	150,363

Comprehensive Income:

Components of comprehensive income for the Company include net income, changes in fair market value of financial instruments designated as hedges of interest rate or foreign currency exposure and foreign currency translation charged or credited to the cumulative translation account within shareholders’ equity. Comprehensive (loss) income for the three and six months ended December 31, 2008 and 2007 was as follows:

	For the Periods Ended December 31,
	Three Months						Six Months
	2008			2007			2008			2007
	(Dollars in thousands)						(Dollars in thousands)
Net (loss) income	$	(143,252	)	$	22,556		$	(128,765	)	$	43,155
Other comprehensive income (loss):
Changes in fair market value of financial instruments designated as cash flow hedges of interest rate exposure and foreign currency exposure, net of taxes	(3,150		)	(1,101		)	(3,097		)	(2,841		)
Change in cumulative foreign currency translation	(39,103		)	9,543			(59,119		)	21,737

Total comprehensive (loss) income	$	(185,505	)	$	30,998		$	(190,981	)	$	62,051

4. FAIR VALUE MEASUREMENTS:

As discussed in Note 1 to the Consolidated Financial Statements, the Company adopted SFAS No. 157, subject to the deferral provisions of FSP No. 157-2, on July 1, 2008. This standard defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by SFAS No. 157 contains three levels as follows:

Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

· Quoted prices for similar assets or liabilities in active markets;

· Quoted prices for identical or similar assets in non-active markets;

· Inputs other than quoted prices that are observable for the asset or liability; and

· Inputs that are derived principally from or corroborated by other observable market data.

Table of Contents

Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following table sets forth by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis at December 31, 2008, according to the valuation techniques the Company used to determine their fair values.

	Fair Value at		Fair Value Measurements Using Inputs Considered as
	December 31, 2008		Level 1	Level 2		Level 3
			(Dollars in thousands)
ASSETS

Noncurrent assets
Derivative instruments	$	1,014	—	$	1,014	—

LIABILITIES

Long-term liabilities
Derivative instruments	8,043		—	8,043		—
Equity put option	22,131		—	—		$	22,131

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Derivative instruments. The Company’s derivative instrument assets and liabilities consist of cash flow hedges represented by interest rate swaps and forward foreign currency contracts. The instruments are classified as Level 2 as the fair value is obtained using observable inputs available for similar assets and liabilities in active markets at the measurement date, as provided by sources independent from the Company.

Equity put option . The Company’s merger of the European franchise salon operations with the operations of the Franck Provost Salon Group on January 31, 2008 contained an equity put option and an equity call option. See further discussion within Note 6 of the Condensed Consolidated Financial Statements. The equity put option is valued using binomial lattice models that incorporate assumptions including the business enterprise value at that date, and future estimates of volatility and earnings before interest, taxes, and depreciation and amortization multiples based on available market data. At June 30, 2008, the fair value of the equity put option was $24.8 million. The value of the equity put option as of December 31, 2008 was determined to be consistent with the value recorded at June 30, 2008. The $2.7 million decrease in the fair value of the equity put option since June 30, 2008 relates to foreign currency translation and has been recorded in accumulated other comprehensive income in the December 31, 2008 Condensed Consolidated Balance Sheet. The Company determined the equity call option to have no value at December 31, 2008.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

As indicated in Note 1 to the Consolidated Financial Statements, the aspects of SFAS No. 157 for which the effective date was deferred for one year (i.e., the Company’s first quarter of fiscal year 2010) under FSP No. 157-2 relate to nonfinancial assets and liabilities that are measured at fair value, but are recognized or disclosed at fair value on a nonrecurring basis. This deferral applies to such items as nonfinancial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) or nonfinancial long-lived asset groups measured at fair value for an impairment assessment.

Table of Contents

5. GOODWILL AND OTHER INTANGIBLES:

The table below contains details related to the Company’s recorded goodwill as of December 31, 2008 and June 30, 2008:

	Salons						Hair Restoration
	North America			International			Centers		Consolidated
	(Dollars in thousands)
Balance at June 30, 2008	$	668,799		$	48,461		$	153,733	$	870,993
Goodwill acquired	24,615			(1,255		)	540		23,900
Translation rate adjustments	(9,810		)	(5,545		)	—		(15,355		)
Goodwill impairment	(78,126		)	(41,661		)	—		(119,787		)
Balance at December 31, 2008	$	605,478		$	—		$	154,273	$	759,751

Goodwill acquired includes adjustments to prior year acquisitions, primarily representing the finalization of purchase price allocations. For the six months ended December 31, 2008 the $1.3 million reduction to international goodwill related to the settlement of the escrow account on an acquisition that closed in September 2007.

Goodwill is tested for impairment annually or at the time of a triggering event in accordance with the provisions of SFAS No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). Fair values are estimated based on the Company’s best estimate of the expected present value of future cash flows and compared with the corresponding carrying value of the reporting unit, including goodwill. Where available and as appropriate comparative market multiples are used to corroborate the results of the present value method. The Company considers its various concepts to be reporting units when it tests for goodwill impairment because that is where the Company believes goodwill resides. The Company’s policy is to perform its annual goodwill impairment test during its third quarter of each fiscal year ending June 30.

During the three months ended December 31, 2008 the fair value of the Company’s stock declined such that it began trading below book value per share. Due to the adverse changes in operating results and the continuation of the Company’s stock trading below book value per share, the Company performed an interim impairment test of goodwill during the three months ended December 31, 2008. The fair value of the Company’s reporting units was estimated based on discounted cash flows that utilize estimates of revenues, driven by assumed same-store sales rates, estimated future gross margins and expense rates, as well as acquisition integration and maturation and appropriate discount rates.

The Regis, Mastercuts, SmartStyle, Supercuts and Promenade reporting units within the Company’s North America reportable segment had estimated fair values that exceeded carrying values by a minimum of approximately 30.0 percent as of December 31, 2008 and therefore goodwill in those reporting units was not impaired. The remaining reporting unit within the North America reportable segment is Trade Secret. See Note 2 of the Condensed Consolidated Financial Statements for discussion on the $78.1 million goodwill impairment of Trade Secret recorded within discontinued operations.

A $41.7 million impairment charge for the full carrying amount of goodwill within the salon concepts in the United Kingdom was recorded within continuing operations during the three months ended December 31, 2008. The recent performance challenges of the International salon operations indicated that the estimated fair value was less than the current carrying value of this reporting unit’s net assets, including goodwill.

The estimated fair value of Hair Restoration Centers exceeded its carrying value by approximately five percent at December 31, 2008 and therefore no goodwill impairment was recorded. The Hair Restoration Centers were acquired on December 1, 2004 at fair market value. Since the date of acquisition the financial performance of the Hair Restoration Centers has continued to meet or exceed the Company’s internal expectations, however, because of some of the inherent assumptions and estimates in determining fair value are outside the control of management, changes in these assumptions can adversely impact fair value.

Table of Contents

As of December 31, 2008, our estimated fair value as determined by the sum of our reporting units based upon discounted cash flow calculations reconciled to within a reasonable range of our market capitalization which included an assumed control premium. Subsequent to December 31, 2008, the fair value of our stock continues to fluctuate and regularly trades below our book value per share. Adverse changes in expected operating results, an extended period of our stock trading significantly below book value per share, and unfavorable changes in other economic factors may result in further impairments of goodwill. We will reassess the possible impairment of goodwill during the third quarter of fiscal year 2009 as part of our annual assessment.

No impairment of goodwill was recorded during the three months ended December 31, 2007.

The table below presents other intangible assets as of December 31, 2008 and June 30, 2008:

	December 31, 2008										June 30, 2008
			Accumulated			Trade Secret							Accumulated
	Cost		Amortization (1)			Impairment (2)			Net		Cost		Amortization (1)			Net
	(Dollars in thousands)
Amortized intangible assets:
Brand assets and trade names	$	80,336	$	(8,909	)	$	(1,733	)	$	69,694	$	81,407	$	(8,072	)	$	73,335
Customer lists	52,045		(20,542		)	—			31,503		51,316		(17,444		)	33,872
Franchise agreements	26,096		(6,603		)	(4,897		)	14,596		27,115		(6,363		)	20,752
Lease intangibles	14,729		(3,346		)	(475		)	10,908		14,771		(2,887		)	11,884
Non-compete agreements	703		(597		)	(35		)	71		785		(631		)	154
Other	6,743		(3,078		)	(47		)	3,618		7,974		(3,680		)	4,294

	$	180,652	$	(43,075	)	$	(7,187	)	$	130,390	$	183,368	$	(39,077	)	$	144,291

(1) Balance sheet accounts are converted at the applicable exchange rates effective as of the reported balance sheet dates, while income statement accounts are converted at the average exchange rates for the year-to-date periods presented.

(2) The net book value of the Trade Secret intangible assets as of December 31, 2008 was written off as of December 31, 2008 as part of the sale of Trade Secret (see Note 2).

All intangible assets have been assigned an estimated finite useful life and are amortized over the number of years that approximate their respective useful lives (ranging from one to 40 years). The cost of intangible assets is amortized to earnings in proportion to the amount of economic benefits obtained by the Company in that reporting period. The weighted average amortization periods, in total and by major intangible asset class, are as follows:

	Weighted Average
	Amortization Period
	(In years)
	December 31, 2008	June 30, 2008
Amortized intangible assets:
Brand assets and trade names	39	39
Customer lists	10	10
Franchise agreements	22	21
Lease intangibles	20	20
Non-compete agreements	4	5
Other	18	17
Total	26	26

Table of Contents

Total amortization expense related to the amortizable intangible assets was approximately $2.5 and $2.9 million during the three months ended December 31, 2008 and 2007, respectively, and $5.1 and $5.8 million during the six months ended December 31, 2008 and 2007, respectively. As of December 31, 2008, future estimated amortization expense related to amortizable intangible assets is estimated to be:

Fiscal Year	(Dollars in thousands)
2009 (Remainder: six-month period)	$	4,776
2010	9,656
2011	9,458
2012	9,258
2013	8,985

6. ACQUISITIONS, INVESTMENT IN AND LOANS TO AFFILIATES:

Acquisitions

During the six months ended December 31, 2008 and 2007, the Company made salon and hair restoration center acquisitions and the purchase prices have been allocated to assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. Operations of the acquired companies have been included in the operations of the Company since the date of the respective acquisition.

The components of the aggregate purchase prices of the acquisitions made during the six months ended December 31, 2008 and 2007 and the allocation of the purchase prices were as follows:

	For the Six Months Ended December 31,
Allocation of Purchase Prices	2008			2007
	(Dollars in thousands)
Components of aggregate purchase prices:
Cash	$	30,965		$	53,297
Deferred purchase price	75			2,602
	$	31,040		$	55,899
Allocation of the purchase price:
Current assets	$	986		$	2,022
Property and equipment	3,819			5,664
Deferred income taxes	1,788			—
Goodwill	23,900			41,636
Identifiable intangible assets	770			7,978
Other long-term assets	—			1,210
Accounts payable and accrued expenses	(140		)	(2,611		)
Other noncurrent liabilities	(83		)	—
	$	31,040		$	55,899

The majority of the purchase price in salon acquisitions is accounted for as residual goodwill rather than identifiable intangible assets. This stems from the value associated with the walk-in customer base of the acquired salons, which is not recorded as an identifiable intangible asset, as well as the limited value and customer preference associated with the acquired hair salon brand. Key factors considered by consumers of hair salon services include personal relationships with individual stylists, service quality and price point competitiveness. These attributes represent the “going concern” value of the salon.

Residual goodwill further represents the Company’s opportunity to strategically combine the acquired business with the Company’s existing structure to serve a greater number of customers through its expansion strategies. In the acquisitions of international salons and hair restoration centers, the residual goodwill primarily represents the growth prospects that are not captured as part of acquired tangible or identified intangible assets. Generally, the goodwill recognized in the North American salon transactions is expected to be fully deductible for tax purposes and the goodwill recognized in the international salon transactions is non-deductible for tax purposes. Goodwill generated in certain acquisitions is not deductible for tax purposes due to the acquisition structure of the transaction.

Table of Contents

During the six months ended December 31, 2008 and 2007, certain of the Company’s salon acquisitions were from its franchisees. The Company evaluated the effective settlement of the preexisting franchise contracts and associated rights afforded by those contracts in accordance with Emerging Issues Task Force (EITF) No. 04-1, Accounting for Preexisting Relationships Between the Parties to a Business Combination. The Company determined that the effective settlement of the preexisting franchise contracts at the date of the acquisition did not result in a gain or loss, as the agreements were neither favorable nor unfavorable when compared to similar current market transactions, and no settlement provisions exist in the preexisting contracts. Therefore, no settlement gain or loss was recognized with respect to the Company’s franchise buybacks.

Investment in and loans to affiliates

The table below presents the carrying amount of investments in and loans to affiliates as of December 31, 2008 and June 30, 2008:

	December 31, 2008		June 30, 2008
	(Dollars in thousands)
Provalliance	$	109,374	$	119,353
Empire Education Group, Inc.	101,659		109,307
Intelligent Nutrients, LLC	—		5,657
MY Style	16,095		7,756
Hair Club for Men, Ltd.	5,029		5,029
	$	232,157	$	247,102

Provalliance

On January 31, 2008, the Company merged its continental European franchise salon operations with the operations of the Franck Provost Salon Group in exchange for a 30.0 percent equity interest in the newly formed Provalliance entity (Provalliance). The merger with the operations of the Franck Provost Salon Group which are also located in continental Europe, created Europe’s largest salon operator with approximately 2,400 company-owned and franchise salons as of December 31, 2008.

The merger agreement contains a right (Equity Put) to require the Company to purchase additional ownership interest in Provalliance between specified dates in 2010 to 2018. The acquisition price is determined based on the earnings before interest, taxes, depreciation and amortization of Provalliance for a trailing twelve month period which is intended to approximate fair value. The estimated fair value of the Equity Put has been included as a component of the Company’s investment in Provalliance. A corresponding liability for the same amount as the Equity Put has been recorded in other noncurrent liabilities. Any changes in the fair value of the Equity Put in periods after fiscal year 2008, will be recorded in the Company’s consolidated statement of operations. The merger agreement also contains an option (Equity Call) whereby the Company can acquire additional ownership interest in Provalliance between specific dates in 2018 to 2020 at an acquisition price determined consistent with the Equity Put.

The Company’s investment in Provalliance is accounted for under the equity method of accounting. The Company concluded that Provalliance is a variable interest entity for which the Company is not the primary beneficiary. This assessment was based on the Company’s 30.0 percent equity ownership interest, and the impact and expected timing of the equity put option. During the six month period ended December 31, 2008, the Company recorded $2.9 million of equity in income related to its investment in Provalliance. The decline in investment balance above is due to translation. The exposure to loss related to the Company’s involvement with Provalliance is the carrying value of the investment and future changes in fair value of the Equity Put.

Empire Education Group, Inc.

On August 1, 2007, the Company contributed its 51 wholly-owned accredited cosmetology schools to Empire Education Group, Inc. (EEG) in exchange for a 49.0 percent equity interest in EEG. In January 2008, the Company’s effective ownership interest increased to 55.1 percent related to the buyout of EEG’s minority interest shareholder. This transaction leverages EEG’s management expertise, while enabling the Company to maintain a vested interest in the beauty school industry. Once the integration of the Regis schools is complete, the Company expects to share in significant synergies and operating improvements. EEG operates 86 accredited cosmetology schools.

Table of Contents

At December 31, 2008 the Company had $28.4 million in outstanding loans with EEG. During the three and six months ended December 31, 2008 and 2007 the Company recorded $0.3 and $0.7 million, respectively, and $0.2 and 0.3 million of interest income, respectively, related to the loan.

The Company accounts for the investment in EEG under the equity method of accounting as Empire Beauty School retains majority voting interest and has full responsibility for managing EEG. During the six months ended December 31, 2008 and 2007, the Company recorded $0.3 and $0.7 million, respectively, of equity earnings related to its investment in EEG. The exposure to loss related to the Company’s involvement with EEG is the carrying value of the investment and the outstanding loans.

Intelligent Nutrients LLC

The Company holds a 49.0 percent interest in Intelligent Nutrients, LLC. The Company’s ownership percentage decreased from 50.0 percent to 49.0 percent during the Company’s 2008 fiscal year due to the issuance of additional shares by Intelligent Nutrients, LLC to the other investor.

Intelligent Nutrients, LLC currently carries a wide variety of organic, harmonically grown™ products, including dietary supplements, coffees, teas and aromatics. In addition, professional hair care and personal care products are currently available. These products are offered at the Company’s corporate and franchise salons, and eventually in other independently owned salons. The Company’s investment in Intelligent Nutrients, LLC is accounted for under the equity method of accounting. The Company completed $3.0 million of loans to Intelligent Nutrients, LLC in August 2008 of which $3.0 million was outstanding as of December 31, 2008. During the three and six months ended December 31, 2008, the Company recorded less than $0.1 and less than $0.1 million of interest income related to the loans.

During the three months ended December 31, 2008, the Company determined that its investment in and loan to Intelligent Nutrients, LLC was impaired and the fair value was zero due to Intelligent Nutrients, LLC’s inability to develop a professional organic brand of shampoo and conditioner with broad consumer appeal. The Company also determined that the loss in value was “other-than-temporary” and recognized a pretax, non-cash impairment charge of $7.8 million for the full carrying value of the investment and loan as of December 31, 2008. The loss is included within the equity in loss of affiliated companies on the Statement of Operations. The Company has no further exposure to loss related to the Company’s involvement with Intelligent Nutrients, LLC.

MY Style

In April 2007, the Company purchased exchangeable notes issued by Yamano Holding Corporation (Exchangeable Note) and a loan obligation of a Yamano Holdings subsidiary, MY Style, formally known as Beauty Plaza Co. Ltd., (My Style Note) for an aggregate amount of 1.3 billion JPY ($11.3 million). In September 2008, the Company advanced an additional 300 million JPY ($2.9 million) to Yamano Holding Corporation and extended the maturity date of the existing Exchangeable Note to September 2011. In connection with the 300 million JPY advance the exchangeable portion of the Exchangeable Note increased from approximately 14.8 percent to 27.1 percent of the outstanding shares of MY Style. The exchangeable portion of the Exchangeable Note is recorded as an equity method investment as it is probable that the Company will exercise its right to exchange a portion of the note into equity of My Style.

As of December 31, 2008 the amount outstanding under the Exchangeable Note and My Style Note were $8.1 and $3.2 million, respectively. As of December 31, 2008, $1.8 and $9.5 million are recorded in the Condensed Consolidated Balance Sheet as current assets and investment in affiliates and loans, respectively representing the outstanding principal of the notes. The notes are due in installments in September of fiscal years 2010 through 2012. The Company recorded less than $0.1 and $0.1 million in interest income related to the Exchangeable Note and My Style Note during the three and six months ended December 31, 2008 and 2007, respectively. The exposure to loss related to the Company’s involvement with MY Style is the carrying value of the investment and the outstanding notes.

Yamano Holding Corporation and the Company have an agreement with respect to their joint pursuit of opportunities relating to retail hair salons in Asia.

Table of Contents

Hair Club for Men, Ltd.

The Company acquired a 50.0 percent interest in Hair Club for Men, Ltd. through its acquisition of Hair Club in fiscal year 2005. The Company accounts for its investment in Hair Club for Men, Ltd. under the equity method of accounting. Hair Club for Men, Ltd. operates Hair Club centers in Illinois and Wisconsin. During the six months ended December 31, 2008 and 2007 the Company recorded income of $0.3 and $0.8 million, respectively. The exposure to loss related to the Company’s involvement with Hair Club for Men, Ltd. is the carrying value of the investment.

Cool Cuts 4 Kids, Inc.

The Company holds an interest of less than 20 percent in the preferred stock of a privately held entity, Cool Cuts 4 Kids, Inc. This investment is accounted for under the cost method. During fiscal year 2006, the Company determined that its investment was impaired and recognized an impairment loss for the full carrying value of the investment. The Company’s securities purchase agreement contains a call provision, giving the Company the right of first refusal should the privately held entity receive a bona fide offer from another company, as well as the right to purchase all of the assets of the privately held entity during the period from April 1, 2008 to January 31, 2009 for a multiple of cash flow. The Company exercised the right to purchase all of the Cool Cuts 4 Kids, Inc. assets for which the purchase is expected to close within the current fiscal year.

7. LEASE TERMINATION COSTS:

In July 2008, the Company approved a plan to close up to 160 underperforming company-owned salons in fiscal year 2009. Approximately 100 locations are regional mall based concepts, another 40 locations are strip center concepts and 20 locations are in the United Kingdom. The timing of the closures is dependent on successfully completing lease termination agreements and is therefore subject to change. The Company expects to offer employment to associates affected by such closings at nearby Regis-owned salons. The decision is a result of a comprehensive evaluation of the Company’s salon portfolio, further continuing the Company’s initiatives to enhance profitability.

The Company anticipated the pre-tax charge for the store closings would total approximately $20 to $25 million. This included approximately $4.5 million, of incremental non-cash asset write-downs which were recognized in the fourth quarter of fiscal year 2008. The incremental non-cash asset write-down in the fourth quarter of fiscal year 2008 was $3.4 million for the North America reportable segment and $1.1 million for the International reportable segment. The balance of approximately $15 to $20 million was related to the original estimate of lease termination costs that were expected to be recognized primarily in fiscal year 2009.

As of December 31, 2008, 35 stores ceased using the right to use the leased property or negotiated a lease termination agreement with the lessor in which the Company will cease using the right to the leased property subsequent to December 31, 2008. Of the 35 stores, 34 stores were within the North America reportable segment and one store within the International segment. Lease termination costs from continuing operations are presented as a separate line item in the Consolidated Statement of Operations. Lease termination costs related to the Trade Secret salon concept are reported within discontinued operations. As lease settlements are negotiated the Company has found that some lessors are willing to negotiate rent reductions which has allowed the Company to keep operating certain stores. As a result, the Company expects that the number of stores to be closed will be less than the 160 stores originally communicated, reducing the estimated lease termination costs of $15 to $20 million to approximately $6.0 million. Therefore, we now expect future store closings expense to be approximately $3.5 million.

Table of Contents

Lease termination expense represents either the lease settlement or the net present value of remaining contractual lease payments related to closed stores, after reduction by estimated sublease rentals. The activity reflected in the accrual for lease termination costs is as follows:

	Accrual for lease terminations
	(Dollars in thousands)
Balance at July 1, 2008	$	—
Provision for lease termination expense:
Provisions associated with store closings	1,173
Change in assumptions about lease terminations and sublease income	—
Cash payments	(695		)
Balance at September 30, 2008	$	478
Provision for lease termination expense:
Increase in provisions associated with store closings	1,298
Change in assumptions about lease terminations and sublease income	—
Cash payments	(1,105		)
Balance at December 31, 2008	$	671

The $2.5 million of lease termination expense for the six months ended December 31, 2008 includes $0.9 million of lease termination expense associated with five salons within the Trade Secret concept, accounted for within the loss on discontinued operations as of December 31, 2008. Cash payments of $0.5 million have been made on three of the five salons within the Trade Secret concept.

8. LITIGATION:

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other large retail employers, the Company has been faced with allegations of purported class-wide wage and hour violations. Litigation is inherently unpredictable and the outcome of these matters cannot presently be determined. Although company counsel believes that the Company has valid defenses in these matters, it could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

9. DERIVATIVE FINANCIAL INSTRUMENTS:

The primary market risk exposure of the Company relates to changes in interest rates in connection with its debt, some of which bears interest at variable rates based on LIBOR plus an applicable borrowing margin. Additionally, the Company is exposed to foreign currency translation risk related to its net investments in its foreign subsidiaries and, to a lesser extent, foreign currency denominated transactions. The Company has established policies and procedures that govern the management of these exposures through the use of derivative financial instrument contracts. By policy, the Company does not enter into such contracts for the purpose of speculation.

Interest Rate Swaps

In November 2008 the Company entered into two interest rate swap contracts of $20.0 million each which pay fixed rates of interest and receive variable rates of interest (based on the one-month LIBOR rate). The Company will pay fixed rates of interest of 2.9825 percent and 3.345 percent on $20.0 and $20.0 million, respectively. The contracts are on an aggregate notional amount of indebtedness of $40.0 million related to the $85.0 million term loan, which the Company entered into in October 2008. The contracts expire in July 2011 and the debt matures in July 2012. These interest rate swap contracts were designed and are effective as cash flow hedges. They were recorded at fair value within other noncurrent liabilities in the Condensed Consolidated Balance Sheet, with corresponding offsets in deferred income taxes and other comprehensive income within shareholders’ equity.

Freestanding Derivative Forward Contract

Freestanding derivative forward contracts are used to offset the Company’s exposure to the change in value of certain foreign currency denominated intercompany assets and liabilities. These derivatives are not designated as hedges and therefore, changes in the value of these forward contracts are recognized currently in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. The aggregate foreign currency transaction gains were $3.0 million and zero for the three and six months ended

Table of Contents

December 31, 2008 and 2007, respectively, and were recognized within other income in the Condensed Consolidated Statement of Operations.

10. FINANCING ARRANGEMENTS:

On October 3, 2008, the Company completed an $85 million term loan that matures in July 2012. The monthly interest payments are based on a one-month LIBOR rate plus a 1.75% spread. The term loan includes customary financial covenants including a leverage ratio, fixed charge ratio and minimum net equity test. The Company used the proceeds from the term loan to pay down the Company’s revolving line of credit facility.

11. INCOME TAXES:

Income taxes have been allocated to continuing and discontinued operations based on the methodology required by FIN 18. Discontinued operations are excluded in determining the estimated effective income tax rate from continuing operations and the corresponding income tax expense (benefit). The determination of the annual effective income tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income of the Company in each tax jurisdiction in which it operates and the development of tax planning strategies during the year. In addition, as a global enterprise, the Company’s interim tax expense (benefit) can be impacted by changes in tax rates or laws, the finalization of tax audits or reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

During the three and six months ended December 31, 2008, the Company’s continuing operations recognized tax expense of $9.4 million and $19.3 million, respectively, with corresponding effective tax rates of 66.7 percent and 168.4 percent. This was compared to tax expense of $11.7 million and $22.5 million with corresponding effective tax rates of 36.5 percent and 35.9 in the comparable periods of the prior year. The increase in the effective tax rate during the three and six months ended December 31, 2008 is primarily due to substantially all of the $41.7 million goodwill impairment of the salon concepts in the United Kingdom not being deductible for tax purposes, which increased the tax provision by approximately $11.4 million for each of the three and six months ended December 31, 2008.

The Company accrues for the effects of open uncertain tax positions and the related potential penalties and interest. There were no material adjustments to our recorded liability for unrecognized tax benefits during the three and six months ended December 31, 2008. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next 12 months; however, we do not expect the change to have a significant effect on our consolidated results of operations or financial position.

The Company files tax returns and pays tax primarily in the United States, Canada, the United Kingdom, and the Netherlands as well as states, cities, and provinces within these jurisdictions. In the United States, fiscal years 2005 and after remain open for federal tax audit. For state tax audits, the statute of limitations generally spans three to four years, resulting in a number of states remaining open for tax audits dating back to fiscal year 2004. However, the company is under audit in a number of states in which the statute of limitations has been extended to fiscal years 2000 and forward. Internationally (including Canada), the statute of limitations for tax audits varies by jurisdiction, but generally ranges from three to five years.

12. SEGMENT INFORMATION:

As of December 31, 2008, the company owned, franchised, or held ownership interests in over 13,600 worldwide locations. The Company’s locations consisted of 10,271 North American salons (located in the United States, Canada and Puerto Rico), 469 international salons, 94 hair restoration centers and approximately 2,800 locations in which the Company maintains an ownership interest. The Company operates its North American salon operations through six primary concepts: Regis Salons, MasterCuts, Trade Secret, SmartStyle, Supercuts and Promenade salons. The concepts offer similar products and services, concentrate on the mass market consumer marketplace and have consistent distribution channels. All of the company-owned and franchise salons within the North American salon concepts are located in high traffic, retail shopping locations that attract mass market consumers, and the individual salons display similar economic characteristics. The salons share interdependencies and a common support base.

See Note 2 of the Condensed Consolidated Financial Statements on the classification of the Trade Secret concept as

Table of Contents

a discontinued operation as of December 31, 2008. The locations listed above include 659 company-owned salons and 62 franchised salons that are within the Trade Secret concept being accounted for as a discontinued operation.

The Company operates its international salon operations, primarily in the United Kingdom, through three primary concepts: Regis, Supercuts, and Sassoon salons. Consistent with the North American concepts, the international concepts offer similar products and services, concentrate on the mass market consumer marketplace and have consistent distribution channels. All of the international salon concepts are company-owned and are located in malls, leading department stores, and high-street locations Individual salons display similar long-term economic characteristics. The salons share interdependencies and a common support base.

The Company’s company-owned and franchise hair restoration centers are located in the United States and Canada. The Company’s hair restoration centers offer three hair restoration solutions; hair systems, hair transplants and hair therapy, which are targeted at the mass market consumer. Hair restoration centers are located primarily in office and professional buildings within larger metropolitan areas.

Based on the way the Company manages its business, it has reported its North American salons, International salons and hair restoration centers as three separate reportable segments.

Financial information for the Company’s reporting segments is shown in the following tables:

Total Assets by Segment	December 31, 2008		June 30, 2008
	(Dollars in thousands)
North American salons	$	1,001,963	$	1,249,827
International salons	63,705		120,443
Hair restoration centers	328,651		284,898
Unallocated corporate	604,538		580,703
Consolidated	$	1,998,857	$	2,235,871

Table of Contents

	For the Three Months Ended December 31, 2008(1)
	Salons					Hair Restoration		Unallocated
	North America		International			Centers		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	399,961	$	28,823		$	16,294	$	—		$	445,078
Product	102,491		12,445			17,838		—			132,774
Royalties and fees	8,961		—			613		—			9,574
	511,413		41,268			34,745		—			587,426
Operating expenses:
Cost of service	232,126		15,670			9,042		—			256,838
Cost of product	52,762		7,052			5,264		—			65,078
Site operating expenses	42,801		3,535			1,284		—			47,620
General and administrative	30,086		4,387			7,750		30,308			72,531
Rent	69,057		10,088			2,272		564			81,981
Depreciation and amortization	18,538		1,466			2,780		4,735			27,519
Goodwill impairment	—		41,661			—		—			41,661
Lease termination costs	847		—			—		—			847
Total operating expenses	446,217		83,859			28,392		35,607			594,075

Operating income (loss)	65,196		(42,591		)	6,353		(35,607		)	(6,649		)

Other income (expense):
Interest expense	—		—			—		(10,878		)	(10,878		)
Interest income and other, net	—		—			—		3,462			3,462
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies	$	65,196	$	(42,591	)	$	6,353	$	(43,023	)	$	(14,065	)

(1) As of December 31, 2008, the Trade Secret concept within the North American reportable segment was accounted for as a discontinued operation. All comparable periods will reflect Trade Secret as a discontinued operation. See further discussion at Note 2 in these Notes to the Condensed Consolidated Financial Statements.

Table of Contents

	For the Three Months Ended December 31, 2007(1)
	Salons				Hair Restoration		Unallocated
	North America		International		Centers		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	392,360	$	43,224	$	15,267	$	—		$	450,851
Product	106,363		19,133		16,760		—			142,256
Royalties and fees	9,782		10,699		1,078		—			21,559
	508,505		73,056		33,105		—			614,666
Operating expenses:
Cost of service	227,092		24,091		8,219		—			259,402
Cost of product	53,993		10,117		4,926		—			69,036
Site operating expenses	39,064		3,708		1,307		—			44,079
General and administrative	30,310		11,786		7,357		33,607			83,060
Rent	72,747		14,284		1,728		432			89,191
Depreciation and amortization	18,340		2,589		2,552		4,773			28,254
Goodwill impairment	—		—		—		—			—
Lease termination costs	—		—		—		—			—
Total operating expenses	441,546		66,575		26,089		38,812			573,022

Operating income (loss)	66,959		6,481		7,016		(38,812		)	41,644

Other income (expense):
Interest expense	—		—		—		(11,716		)	(11,716		)
Interest income and other, net	—		—		—		2,090			2,090
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies	$	66,959	$	6,481	$	7,016	$	(48,438	)	$	32,018

Table of Contents

	For the Six Months Ended December 31, 2008(1)
	Salons					Hair Restoration		Unallocated
	North America		International			Centers		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	817,511	$	64,221		$	32,381	$	—		$	914,113
Product	205,204		25,494			36,259		—			266,957
Royalties and fees	18,633		—			1,252		—			19,885
	1,041,348		89,715			69,892		—			1,200,955
Operating expenses:
Cost of service	471,781		34,421			17,713		—			523,915
Cost of product	105,676		14,078			10,943		—			130,697
Site operating expenses	87,141		6,179			2,702		—			96,022
General and administrative	61,656		8,554			16,454		63,631			150,295
Rent	146,364		22,434			4,324		1,070			174,192
Depreciation and amortization	36,730		3,282			5,484		9,291			54,787
Goodwill impairment	—		41,661			—		—			41,661
Lease termination costs	1,998		—			—		—			1,998
Total operating expenses	911,346		130,609			57,620		73,992			1,173,567

Operating income (loss)	130,002		(40,894		)	12,272		(73,992		)	27,388

Other income (expense):
Interest expense	—		—			—		(21,098		)	(21,098		)
Interest income and other, net	—		—			—		5,197			5,197
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies	$	130,002	$	(40,894	)	$	12,272	$	(89,893	)	$	11,487

Table of Contents

	For the Six Months Ended December 31, 2007(1)(2)
	Salons				Hair Restoration		Unallocated
	North America		International		Centers		Corporate			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	792,544	$	81,653	$	29,417	$	—		$	903,614
Product	208,074		34,426		33,416		—			275,916
Royalties and fees	19,813		20,258		2,395		—			42,466
	1,020,431		136,337		65,228		—			1,221,996
Operating expenses:
Cost of service	455,573		44,512		15,970		—			516,055
Cost of product	104,161		18,728		9,759		—			132,648
Site operating expenses	83,918		6,915		2,577		—			93,410
General and administrative	60,208		23,600		14,516		67,992			166,316
Rent	145,229		26,913		3,385		913			176,440
Depreciation and amortization	36,936		5,048		5,049		9,504			56,537
Goodwill impairment	—		—		—		—			—
Lease termination costs	—		—		—		—			—
Total operating expenses	886,025		125,716		51,256		78,409			1,141,406

Operating income (loss)	134,406		10,621		13,972		(78,409		)	80,590

Other income (expense):
Interest expense	—		—		—		(22,229		)	(22,229		)
Interest income and other, net	—		—		—		4,245			4,245
Income (loss) from continuing operations before income taxes and equity in (loss) income of affiliated companies	$	134,406	$	10,621	$	13,972	$	(96,393	)	$	62,606

(1) On August 1, 2007, the Company contributed its accredited cosmetology schools to Empire Education Group, Inc. For the six months ended December 31, 2007, the results of operations for the month ended July 31, 2007 for the accredited cosmetology schools are reported in the North American salons segment. The Company retained ownership of its one North America and four United Kingdom Vidal Sassoon schools. Subsequent to August 1, 2007 results of operations for the Vidal Sassoon schools are included in the respective North American and international salon segments.

(2) As of December 31, 2008, the Trade Secret concept within the North American reportable segment was accounted for as a discontinued operation. All comparable periods will reflect Trade Secret as a discontinued operation. See further discussion at Note 2 in these Notes to the Condensed Consolidated Financial Statements.

Table of Contents

REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of Regis Corporation:

We have reviewed the accompanying condensed consolidated balance sheet of Regis Corporation as of December 31, 2008 and the related condensed consolidated statements of operations for the three and six month periods ended December 31, 2008 and 2007 and of cash flows for the six month periods ended December 31, 2008 and 2007. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 4 to the Condensed Consolidated Financial Statements, Regis Corporation changed the manner it which it measures fair value for certain assets and liabilities effective July 1, 2008. As discussed in Note 11 to the Condensed Consolidated Financial Statements, Regis Corporation changed the manner in which it accounts for unrecognized income tax benefits effective July 1, 2007.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of June 30, 2008, and the related consolidated statements of operations, of changes in shareholders’ equity and comprehensive income and of cash flows for the year then ended (not presented herein), and in our report dated August 29, 2008, we expressed an unqualified opinions on those financial statements. In our opinion, the accompanying consolidated balance sheet information as of June 30, 2008, is fairly stated, in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

PRICEWATERHOUSECOOPERS LLP

Minneapolis, Minnesota
February 9, 2009

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in five sections:

· Management’s Overview

· Critical Accounting Policies

· Overview of Results

· Results of Operations

· Liquidity and Capital Resources

MANAGEMENT’S OVERVIEW

Regis Corporation (RGS, we, our, or us) owns, franchises or holds ownership interests in beauty salons, hair restoration centers and educational institutions. As of December 31, 2008, we owned, franchised or held ownership interests in over 13,600 worldwide locations. Our locations consisted of 10,740 system wide North American and International salons, 94 hair restoration centers and approximately 2,800 locations in which we maintain an ownership interest. Our salon concepts offer generally similar products and services and serve mass market consumers. Our salon operations are organized to be managed based on geographical location. Our North American salon operations include 10,271 salons, including 2,102 franchise salons, operating in the United States, Canada and Puerto Rico primarily under the trade names of Regis Salons, MasterCuts, Trade Secret, SmartStyle, Supercuts and Cost Cutters. Our International salon operations include 469 company-owned salons, located in the United Kingdom. Our hair restoration centers, operating under the trade name Hair Club for Men and Women, include 94 North American locations, including 33 franchise locations. As of December 31, 2008, we had approximately 65,000 corporate employees worldwide.

On January 26, 2009, the Company entered into an agreement to sell its Trade Secret salon concept (Trade Secret). The Company concluded, after a comprehensive review of strategic and financial options, to divest Trade Secret. The sale of Trade Secret includes 659 company-owned salons and 62 franchise salons, all of which have historically been reported within the Company’s North America reportable segment. The sale of Trade Secret is expected to close on February 15, 2009, and will reduce the worldwide locations noted above by the 659 company-owned salons and 62 franchise salons. The sale of Trade Secret includes Cameron Capital I, Inc. (CCI). CCI owns and operates PureBeauty and BeautyFirst salons and was acquired by the Company on February 20, 2008.

On August 1, 2007, we contributed our 51 accredited cosmetology schools to Empire Education Group, Inc., creating the largest beauty school operator in North America. As of December 31, 2008, we own a 55.1 percent equity interest in Empire Education Group, Inc. (EEG). Our investment in EEG is accounted for under the equity method as Empire Beauty School retains majority voting interest and has full responsibility for managing EEG. This transaction leverages EEG’s management expertise, while enabling us to maintain a vested interest in the beauty school industry. The combined Empire Education Group, Inc. includes 86 accredited cosmetology schools with annual revenues of approximately $130 million. Results of operations of the accredited beauty schools for the month ended July 31, 2007 are reported in the North American salons segment. The Company retained ownership of its one North American and four United Kingdom Vidal Sassoon schools. Results of operations for the Vidal Sassoon schools are included in the respective North American and International salon segments.

On January 31, 2008, we merged our continental European franchise salon operations with the Franck Provost Salon Group in exchange for a 30.0 percent equity interest in the newly formed entity, Provalliance. This transaction is expected to create significant growth opportunities for Europe’s salon brands. The Provost Salon Group management structure has a proven platform to build and acquire company-owned stores as well as a strong franchise operating group that is positioned for expansion. Provalliance operates over 2,400 company-owned and franchise salons.

Over the next twelve to eighteen months our strategy is to focus on strengthening our balance sheet by reducing our overall combined current and long-term debt to below $700.0 million. This will be achieved by moderating our acquisition and capital expenditure spending, as well as focusing on reducing overhead expenses. Our long-term growth strategy consists of

Table of Contents

two primary, but flexible, components. Through a combination of organic and acquisition growth, we seek to achieve six to ten percent annual revenue growth. We anticipate that going forward, the mix of organic and acquisition growth will be roughly equal. However, depending on several factors, including the ability of our salon development program to keep pace with the availability of real estate for new construction, hair restoration lead generation, the availability of attractive acquisition candidates and same-store sales trends, this mix will vary from year to year.

We are in compliance with all covenants and other requirements of our financing arrangements as of December 31, 2008. However, the continued global economic downturn and credit crisis have negatively impacted our operating results in the three and six months ended December 31, 2008. Accordingly we continue to take action to reduce debt and interest expense by utilizing intercompany borrowings on a short-term basis as allowed by a recently expanded IRS ruling. We are also focused on reducing capital expenditure and acquisition budgets, reducing inventory levels, and reducing overhead.

Salon Business

The strength of our salon business is in the fundamental similarity and broad appeal of our salon concepts that allow flexibility and multiple salon concept placements in shopping centers and neighborhoods. Each concept generally targets the middle market customer, however, each attracts a different demographic. We believe there are growth opportunities in all of our salon concepts. When commercial opportunities arise, we anticipate testing and developing new salon concepts to complement our existing concepts.

We execute our salon growth strategy by focusing on real estate. Our salon real estate strategy is to add new units in convenient locations with good visibility and customer traffic, as well as appropriate trade demographics. Our various salon and product concepts operate in a wide range of retailing environments, including regional shopping malls, strip centers and Wal-Mart Supercenters. We believe that the availability of real estate will augment our ability to achieve the aforementioned long-term growth objectives.

Organic salon revenue growth is achieved through the combination of new salon construction and salon same-store sales increases. During the next twelve to eighteen months we will be slowing our capital expenditures which includes building new salons. Once the economy normalizes we expected we will continue with our historical trend of building several hundred company-owned salons. We anticipate our franchisees will open approximately 80 to 120 salons as well. Older, unprofitable salons will be closed or relocated. Our long-term outlook for our salon business is for annual consolidated low single digit same-store sales increases.

Historically, our salon acquisitions have varied in size from as small as one salon to over one thousand salons. The median acquisition size is approximately ten salons. From fiscal year 1994 to December 31, 2008, we acquired 7,952 salons, net of franchise buybacks. We anticipate adding several hundred company-owned salons each year from acquisitions. Some of these acquisitions may include buying salons from our franchisees.

Hair Restoration Business

In December 2004, we acquired Hair Club for Men and Women. Hair Club for Men and Women is a provider of hair loss solutions with an estimated five percent share of the $4 billion domestic market. This industry is comprised of numerous locations domestically and is highly fragmented. As a result, we believe there is an opportunity to consolidate this industry through acquisition. Expanding the hair loss business organically and through acquisition would allow us to add incremental revenue which is neither dependent upon, nor dilutive to, our existing salon business.

Our organic growth plans for hair restoration include the construction of a modest number of new locations in untapped markets domestically and internationally. However, the success of our hair restoration business is not dependent on the same real estate criteria used for salon expansion. In an effort to provide confidentiality for our customers, hair restoration centers operate primarily in professional or medical office buildings. Further, the hair restoration business is more marketing intensive. As a result, organic growth at our hair restoration centers will be dependent on successfully generating new leads and converting them into hair restoration customers. Our growth expectations for our hair restoration business are not dependent on referral business from, or cross marketing with, our hair salon business, but these concepts are continually evaluated closely for additional growth opportunities.

Table of Contents

CRITICAL ACCOUNTING POLICIES

The Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the Condensed Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the Condensed Consolidated Financial Statements. We base these estimates on historical experience and other assumptions believed to be reasonable under the circumstances. Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made, and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Changes in these estimates could have a material effect on our Condensed Consolidated Financial Statements.

Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of the June 30, 2008 Annual Report on Form 10-K, as well as Note 1 to the Condensed Consolidated Financial Statements contained within this Quarterly Report on Form 10-Q. We believe the accounting policies related to the valuation of goodwill, the valuation and estimated useful lives of long-lived assets, purchase price allocations, revenue recognition, the cost of product used and sold, self-insurance accruals, stock-based compensation expense, legal contingencies and estimates used in relation to tax liabilities and deferred taxes are most critical to aid in fully understanding and evaluating our reported financial condition and results of operations. Discussion of each of these policies is contained under “Critical Accounting Policies” in Part II, Item 7 of our June 30, 2008 Annual Report on Form 10-K. Other than the valuation of goodwill, there were no significant changes in or application of our critical accounting policies during the three months ended December 31, 2008.

Goodwill:

As disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008, we perform our impairment analysis of goodwill during the third quarter of each fiscal year in accordance with Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). Fair values are estimated based on our best estimate of the expected present value of future cash flows and compared with the corresponding carrying value of the reporting unit, including goodwill. Where available and as appropriate comparative market multiples are used to corroborate the results of the present value method. We consider our various concepts to be reporting units when we test for goodwill impairment because that is where we believe goodwill resides.

Table of Contents

OVERVIEW OF RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2008

· Trade Secret was classified as held for sale and reported as a discontinued operation. Reported as part of the loss on discontinued operations was a pre-tax $171.8 million non-cash write-off of the net assets associated with the sale of Trade Secret ($115.8 million, net of tax). The locations include 659 company-owned salons and 62 franchised salons that are within the Trade Secret concept.

· Revenues from continuing operations decreased 4.4 percent to $587.4 million, primarily related to a consolidated same-store sales decrease of 3.8 percent during the three months ended December 31, 2008.

· During the three months ended December 31, 2008, we acquired two corporate locations, both of which were franchise location buybacks (neither of which were hair restoration centers). We built 46 corporate locations and closed, converted or relocated 82 locations. Our franchisees constructed 28 locations and closed, sold back to us, converted or relocated 22 locations during the three months ended December 31, 2008. As of December 31, 2008, we had 8,638 company-owned locations, 2,102 franchise locations and 94 hair restoration centers (61 company-owned and 33 franchise locations).

· A pre-tax, non-cash goodwill impairment charge of $41.7 million was associated with our United Kingdom salon division.

· Lease termination costs of $1.3 million ($0.8 million pre-tax, or $0.5 million net of tax is included in continuing operations, with $0.5 million pre-tax, or $0.3 million net of tax, included in loss from discontinued operations) were incurred as a result of 14 stores that ceased using the right to use the leased property or negotiated a lease termination agreement in connection with the Company’s planned closure of up to 160 underperforming company-owned salons .

· The Company recorded a $6.8 million reduction to our self-insurance accruals primarily for workers’ compensation ($6.7 million included in continuing operations or $4.1 million, net of tax and $0.1 million, included, net of tax, in loss from discontinued operations ).

· A pre-tax, non-cash impairment charge of $7.8 million was related to our equity method investment in and loans to Intelligent Nutrients, LLC (the charge of $4.8 million, net of tax, is included in equity in loss of affiliated companies).

RESULTS OF OPERATIONS

As of December 31, 2008 the Trade Secret concept within the North American reportable segment was accounted for as a discontinued operation. All comparable periods will reflect Trade Secret as a discontinued operation. The following discussion of results of operations will reflect results from continuing operations. Discontinued operations will be discussed at the end of this section.

Consolidated Results of Continuing Operations

The following table sets forth, for the periods indicated, certain information derived from our Condensed Consolidated Statement of Operations, expressed as a percent of revenues. The percentages are computed as a percent of total consolidated revenues, except as noted.

Table of Contents

	For the Periods Ended December 31,
	Three Months				Six Months
Results of Operations as a Percent of Revenues	2008		2007		2008		2007
Service revenues	75.8	%	73.4	%	76.1	%	73.9	%
Product revenues	22.6		23.1		22.2		22.6
Franchise royalties and fees	1.6		3.5		1.7		3.5
Operating expenses:
Cost of service (1)	57.7		57.5		57.3		57.1
Cost of product (2)	49.0		48.5		49.0		48.1
Site operating expenses	8.1		7.2		8.0		7.6
General and administrative	12.3		13.5		12.5		13.6
Rent	14.0		14.5		14.5		14.4
Depreciation and amortization	4.7		4.6		4.6		4.6
Goodwill impairment	7.1		—		3.5		—
Lease termination costs	0.1		—		0.2		—

Operating (loss) income	(1.1	)	6.8		2.3		6.6
(Loss) income from continuing operations before income taxes and equity in (loss) income of affiliated companies	(2.4	)	5.2		1.0		5.1
Income taxes	1.6		1.9		1.6		1.8
Equity in affiliates	(0.4	)	0.1		(0.2	)	0.0
(Loss) income from continuing operations	(4.4	)	3.4		(0.8	)	3.3
(Loss) income from discontinued operations	(20.0	)	0.3		(9.9	)	0.2
Net (loss) income	(24.4	)	3.7		(10.7	)	3.5

(1) Computed as a percent of service revenues and excludes depreciation expense.

(2) Computed as a percent of product revenues and excludes depreciation expense.

Consolidated Revenues

Consolidated revenues primarily include revenues of company-owned salons, product and equipment sales to franchisees, hair restoration center revenues, and franchise royalties and fees. As compared to the respective prior fiscal year, consolidated revenues decreased 4.4 percent to $587.4 million during the three months ended December 31, 2008 and decreased 1.7 percent to $1,201.0 million during the six months ended December 31, 2008. The following table details our consolidated revenues by concept. All service revenues, product revenues (which include product and equipment sales to franchisees), and franchise royalties and fees are included within their respective concept within the table.

	For the Periods Ended December 31,
	Three Months						Six Months
	2008			2007			2008			2007
	(Dollars in thousands)
North American salons:
Regis	$	121,020		$	128,971		$	243,343		$	256,568
MasterCuts	42,083			43,879			85,514			87,468
SmartStyle	127,785			122,179			259,041			244,282
Strip Center(1)	220,525			213,476			453,450			426,555
Other(2)	—			—			—			5,558
Total North American salons (5)	511,413			508,505			1,041,348			1,020,431
International salons(1)(3)	41,268			73,056			89,715			136,337
Hair restoration centers(1)	34,745			33,105			69,892			65,228
Consolidated revenues	$	587,426		$	614,666		$	1,200,955		$	1,221,996
Percent change from prior year	(4.4		)%	5.2		%	(1.7		)%	5.5		%
Salon same-store sales (decrease) increase(4)	(3.8		)%	0.1		%	(1.9		)%	1.0		%

Table of Contents

The percent changes in consolidated revenues during the three and six months ended December 31, 2008 and 2007, respectively, were driven by the following:

	For the Periods Ended December 31,
	Three Months				Six Months
Percentage Increase (Decrease) in Revenues	2008		2007		2008		2007
Acquisitions (previous twelve months)	6.1	%	4.3	%	6.5	%	3.9	%
Organic growth	(4.7	)	3.3		(3.8	)	4.2
Foreign currency	(2.8	)	1.7		(1.6	)	1.5
Franchise revenues(3)	(1.8	)	0.1		(1.7	)	0.1
Closed salons(2)(3)	(1.2	)	(4.2	)	(1.1	)	(4.2	)
	(4.4)	%	5.2	%	(1.7	)%	5.5	%

(1)		Includes aggregate franchise royalties and fees of $9.6 and $21.6 million for the three months ended December 31, 2008 and 2007, respectively, and $19.9 and $42.5 million for the six months ended December 31, 2008 and 2007, respectively. North American salon franchise royalties and fees represented 93.6 and 45.4 percent of total franchise revenues in the three months ended December 31, 2008 and 2007, respectively, and 93.7 and 46.7 percent of total franchise revenues in the six months ended December 31, 2008, and 2007, respectively. The decrease in aggregate franchise, royalties, and fees and increase in North American salon franchise royalties and fees as a percent of total franchise revenues for the three and six months ended December 31, 2008 is a result of the deconsolidation of the Company’s European franchise salon operations.

(2)		On August 1, 2007, the Company contributed its 51 accredited cosmetology schools to Empire Education Group, Inc. Accordingly, revenue growth was negatively impacted as a result of the deconsolidation. For the three and six months ended December 31, 2007, the accredited cosmetology schools generated revenue of $0.0 and $5.6 million, respectively, which represented 0.0 and 0.5 percent of consolidated revenues, respectively.

(3)		On January 31, 2008, the Company deconsolidated the results of operations of its European franchise salon operations. Accordingly, revenue growth was negatively impacted as a result of the deconsolidation. For the three and six months ended December 31, 2007 the European franchise salon operations generated revenue of $16.6 and $31.2 million which represented 2.7 and 2.6 percent of consolidated revenues, respectively.

(4)		Salon same-store sales increases or decreases are calculated on a daily basis as the total change in sales for company-owned salons which were open on a specific day of the week during the current period and the corresponding prior period. Quarterly and year-to-date salon same-store sales increases are the sum of the same-store sales increases computed on a daily basis. Relocated salons are included in same-store sales as they are considered to have been open in the prior period. International same-store sales are calculated in local currencies so that foreign currency fluctuations do not impact the calculation. Management believes that same-store sales, a component of organic growth, are useful in determining the increase in salon revenues attributable to its organic growth (new salon construction and same-store sales growth) versus growth from acquisitions.

(5)		As of December 31, 2008, the Trade Secret concept within the North American reportable segment was accounted for as a discontinued operation. All periods presented reflect Trade Secret as a discontinued operation. Accordingly, Trade Secret revenues are excluded from this presentation.

We acquired 323 salons (including 159 franchise salon buybacks and two hair restoration centers) during the twelve months ended December 31, 2008. The organic growth decrease was due to the salon same-store sales decrease, partially offset by the construction of 248 company-owned salons during the twelve months ended December 31, 2008. We closed 268 salons (including 65 franchise salons) during the twelve months ended December 31, 2008.

During the three and six months ended December 31, 2008, the foreign currency impact was driven by the strengthening of the United States dollar against the Canadian dollar, British pound, and Euro, as compared to the exchange rates for the comparable prior periods. The impact of foreign currency was calculated by multiplying current year revenues in local currencies by the change in the foreign currency exchange rate between the current and prior fiscal year.

We acquired 350 salons (including 111 franchise salon buybacks) and eight hair restoration centers (seven of which were franchise buybacks) during the twelve months ended December 31, 2007. The organic growth increase was due to the salon

Table of Contents

same-store sales increase and the construction of 348 company-owned salons during the twelve months ended December 31, 2007. We closed 304 salons (including 171 franchise salons) during the twelve months ended December 31, 2007.

During the three and six months ended December 31, 2007, the foreign currency impact was driven by the weakening of the United States dollar against the Canadian dollar, British pound and Euro as compared to the exchange rates for the comparable prior period. The impact of foreign currency was calculated by multiplying current year revenues in local currencies by the change in the foreign currency exchange rate between the current fiscal year and the prior fiscal year.

Consolidated revenues are primarily comprised of service and product revenues, as well as franchise royalties and fees. Fluctuations in these three major revenue categories were as follows:

Service Revenues. Service revenues include revenues generated from company-owned salons and service revenues generated by hair restoration centers. Total service revenues for the three and six months ended December 31, 2008 and 2007 were as follows:

			(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Revenues		Dollar			Percentage
	(Dollars in thousands)
*Three Months*
2008	$	445,078	$	(5,773	)	(1.3	)%
2007	450,851		17,911			4.1
*Six Months*
2008	$	914,113	$	10,499		1.2	%
2007	903,614		43,577			5.1

The decrease in service revenues during the three months ended December 31, 2008 was due to same-store service sales decreasing 3.0 percent as compared to flat same-store service sales during the comparable prior period. Same-store service sales decreased 3.0 percent due to a significant decline in customer visits, primarily in the month of December. Also, service revenues decreased due to the strengthening of the United States dollar against the Canadian dollar, Euro and British Pound and deconsolidation of the European franchise salon operations on January 31, 2008. Partially offsetting the decrease was growth due to acquisitions during the previous twelve months and an increase in average ticket.

Growth during the six months ended December 31, 2008 was not as robust due to same-store service sales decreasing 1.2 percent compared to increasing 1.2 percent during the six months ended December 31, 2007. Consistent with the three months ended December 31, 2008, service revenues decreased due to the strengthening of the United States dollar against the Canadian dollar, Euro and British Pound and the deconsolidation of the European franchise salon operations. In addition, service revenues decreased due to the deconsolidation of our 51 accredited cosmetology schools to Empire Education Group, Inc. on August 1, 2007. Offsetting the factors that negatively impacted services revenues was growth due to acquisitions during the previous twelve months and an increase in average ticket.

The growth in service revenues in the three and six months ended December 31, 2007 was driven by acquisitions and new salon construction (a component of organic growth). Growth was negatively impacted as a result of the deconsolidation of our 51 accredited cosmetology schools to Empire Education Group, Inc. on August 1, 2007. Same-store service sales were flat during the three months ended December 31, 2007 and increased 1.2 percent during the six months ended December 31, 2007, as compared to an increase of 1.4 percent and 0.8 percent during the comparable prior periods.

Product Revenues. Product revenues are primarily sales at company-owned salons, hair restoration centers and sales of product and equipment to franchisees. Total product revenues for the three and six months ended December 31, 2008 and 2007 were as follows:

Table of Contents

			(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Revenues		Dollar			Percentage
	(Dollars in thousands)
*Three Months*
2008	$	132,774	$	(9,482	)	(6.7	)%
2007	142,256		10,393			7.9
*Six Months*
2008	$	266,957	$	(8,959	)	(3.2	)%
2007	275,916		16,996			6.6

The decrease in product revenues during the three and six months ended December 31, 2008 was due to same-store product sales decreasing 6.4 and 4.4 percent, respectively, as compared to increases of 0.4 and 0.3 percent during the comparable prior periods. Same-store product sales decreased during the current periods due to a decline in customer visits and a mix play, as a larger than expected percentage of product sales came from promotional items.

Growth during the three and six months ended December 31, 2007 was not as robust as compared to the comparable prior periods due to a slower than expected holiday selling season, product diversion and increased appeal of mass hair care lines to the consumer. Consolidated same-store product sales increased 0.4 and 0.3 percent during the three and six months ended December 31, 2007 as compared to decreases of 0.3 and 0.5 percent during the comparable prior periods.

Royalties and Fees. Total franchise revenues, which include royalties and fees, for the three and six months ended December 31, 2008 and 2007 were as follows:

			(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Revenues		Dollar			Percentage
	(Dollars in thousands)
*Three Months*
2008	$	9,574	$	(11,985	)	(55.6	)%
2007	21,559		1,814			9.2
*Six Months*
2008	$	19,885	$	(22,581	)	(53.2	)%
2007	42,466		3,094			7.9

Total franchise locations open at December 31, 2008 were 2,073, including 33 franchise hair restoration centers, as compared to 3,786, including 35 franchise hair restoration centers, at December 31, 2007. We purchased 159 of our franchise salons and two franchise hair restoration centers during the twelve months ended December 31, 2008. The decrease in consolidated franchise revenues during the three and six month periods ended December 31, 2008 was primarily due to the merger of the 1,587 European franchise salon operations with Franck Provost Salon Group on January 31, 2008.

Total franchise locations open at December 31, 2007 were 3,786, including 35 franchise hair restoration centers, as compared to 3,808, including 41 franchise hair restoration centers, at December 31, 2006. We purchased 111 of our franchise salons and six franchise hair restoration centers during the twelve months ended December 31, 2007 and acquired a franchisor of product-focused salons which operates 42 franchise locations, which drove the overall decrease in the number of franchise salon between periods. The increase in consolidated franchise revenues during the three and six months ended December 31, 2007 and 2006 was primarily due to the weakening of the United States dollar against the Canadian dollar, British pound and Euro as compared to the exchange rates for the comparable prior period, partially offset by a decreased number of franchise salons, as discussed above.

Gross Margin (Excluding Depreciation)

Our cost of revenues primarily includes labor costs related to salon and hair restoration center employees, the cost of product used in providing services and the cost of products sold to customers and franchisees. The resulting gross margin for the three and six months ended December 31, 2008 and 2007 was as follows:

Table of Contents

	Gross		Margin as % of Service and Product		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Margin		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	255,936	44.3	%	$	(8,733	)	(3.3	)%	(30	)
2007	264,669		44.6		7,659			3.0		(90	)
*Six Months*
2008	$	526,458	44.6	%	$	(4,369	)	(0.8	)%	(40	)
2007	530,827		45.0		21,572			4.2		(50	)

(1) Represents the basis point change in gross margin as a percent of service and product revenues as compared to the corresponding periods of the prior fiscal year.

Service Margin (Excluding Depreciation). Service margin for the three and six months ended December 31, 2008 and 2007 was as follows:

	Service		Margin as % of Service		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Margin		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	188,240	42.3	%	$	(3,209	)	(1.7	)%	(20	)
2007	191,449		42.5		1,390			0.7		(140	)
*Six Months*
2008	$	390,198	42.7	%	$	2,639		0.7	%	(20	)
2007	387,559		42.9		9,468			2.5		(110	)

(1) Represents the basis point change in service margin as a percent of service revenues as compared to the corresponding periods of the prior fiscal year.

The basis point decrease in service margin as a percent of service revenues during the three and six months ended December 31, 2008 was primarily due to slightly higher cost of goods used in service as a result of price increases implemented by suppliers along with higher bank charges due to increased credit card usage by customers. Additionally, for the six months ended December 31, 2008, the basis point decrease was due to hurricanes Gustav and Ike and recent salon acquisitions, which have higher cost payroll plans.

The basis point decrease in service margin as a percent of service revenues during the three and six months ended December 31, 2007 was primarily due to the absence of the beauty school segment service revenue from consolidated service revenues, which accounted for 60 of the total 140 basis point deterioration. The deterioration was also due to a change made during the first fiscal quarter as a result of refinements made to our inventory tracking systems. The refinements resulted in better tracking and accounting for retail products that our salon stylists transfer from retail shelves to the back bar for use in servicing customers. The cost of these products had historically been included as a component of our product gross margin, whereas they are now more appropriately included in our service margin. These retail-to-shop transfers amount to approximately $1.0 million each quarter. For the three and six months ended December 31, 2007, reclassification accounted for approximately 30 basis points of the total 140 and 110 basis point deterioration, respectively, and had no impact on total gross margin. Also contributing to the basis point deterioration was a planned increase in North America service payroll costs related to recent salon acquisitions and negative payroll leverage due to negative same-store sales in our international salon segment.

Table of Contents

Product Margin (Excluding Depreciation). Product margin for the three and six months ended December 31, 2008 and 2007 was as follows:

	Product		Margin as % of Product		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Margin		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	67,696	51.0	%	$	(5,524	)	(7.5	)%	(50	)
2007	73,220		51.5		6,268			9.4		70
*Six Months*
2008	$	136,260	51.0	%	$	(7,008	)	(4.9	)%	(90	)
2007	143,268		51.9		12,104			9.2		120

(1) Represents the basis point change in product margin as a percent of product revenues as compared to the corresponding periods of the prior fiscal year.

The basis point decrease in product margin as a percent of product revenues during the three and six months ended December 31, 2008 was primarily due to a mix play, as a larger than expected percentage of our product sales came from lower-margin promotional items. We are not promoting or discounting at a higher rate, but we are seeing consumers continuing to be more value-focused through buying promotional items at a higher rate than prior periods.

The basis point improvement in product margins as a percent of product revenues during the three and six months ended December 31, 2007 was primarily due refinements made to our inventory tracking systems.

Site Operating Expenses

This expense category includes direct costs incurred by our salons and hair restoration centers such as on-site advertising, workers’ compensation, insurance, utilities and janitorial costs. Site operating expenses for the three and six months ended December 31, 2008 and 2007 were as follows:

	Site		Expense as % of Consolidated		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Operating		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	47,620	8.1	%	$	3,541		8.0	%	90
2007	44,079		7.2		(5,973		)	(11.9	)	(140	)
*Six Months*
2008	$	96,022	8.0	%	$	2,612		2.8	%	40
2007	93,410		7.6		(8,080		)	(8.0	)	(120	)

(1) Represents the basis point change in site operating expenses as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

The basis point increase in site operating expenses as a percent of consolidated revenues during the three and six months ended December 31, 2008 was primarily due to the reclassification from rent for rubbish removal and utilities that we pay our landlords as part of our operating lease agreements. This increase was partially offset by a $6.7 million reduction in self insurance accruals primarily related to prior years’ workers’ compensation reserves as a result of successful safety and return-to-work programs implemented over the past few years.

The basis point improvement in site operating expenses as a percent of consolidated revenues during the three and six months ended December 31, 2007 was primarily due to a reduction of $4.8 million in self insurance accruals, primarily workers’ compensation, as a result of successful safety and return-to-work programs implemented over the past few years. In addition, the absence of the beauty school segment site operating expenses from consolidated site operating expenses and decreased janitorial and advertising expense contributed to the basis point improvement.

Table of Contents

General and Administrative

General and administrative (G&A) includes costs associated with our field supervision, salon training and promotions, product distribution centers and corporate offices (such as salaries and professional fees), including costs incurred to support franchise and hair restoration center operations. G&A expenses for the three and six months ended December 31, 2008 and 2007 were as follows:

			Expense as % of Consolidated		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	G&A		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	72,531	12.3	%	$	(10,529	)	(12.7	)%	(120	)
2007	83,060		13.5		4,431			5.5		—
*Six Months*
2008	$	150,295	12.5	%	$	(16,021	)	(9.6	)%	(110	)
2007	166,316		13.6		12,424			8.1		30

(1) Represents the basis point change in G&A as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

The basis point improvement in G&A costs as a percent of consolidated revenues during the three and six months ended December 31, 2008 was primarily due to cost savings initiatives implemented by the Company, the deconsolidation of the European franchise salon operations and the absence of professional fees that were incurred in the comparable periods related to investment transactions and cost saving initiatives.

The basis point decrease in G&A costs as a percent of consolidated revenues during the three and six months ended December 31, 2007 was primarily due increased professional fees of $2.3 million related to investment transactions.

Rent

Rent expense, which includes base and percentage rent, common area maintenance, and real estate taxes, for the three and six months ended December 31, 2008 and 2007, was as follows:

			Expense as % of Consolidated		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Rent		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	81,981	14.0	%	$	(7,210	)	(8.1	)%	(50	)
2007	89,191		14.5		6,272			7.6		30
*Six Months*
2008	$	174,192	14.5	%	$	(2,248	)	(1.3	)%	10
2007	176,440		14.4		11,563			7.0		20

(1) Represents the basis point change in rent as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

The basis point improvement in rent expense as a percent of consolidated revenues during the three months ended December 31, 2008 was primarily due to the reclassification to site operating expense for rubbish removal and utilities that we pay our landlords as part of our operating lease agreements. Partially offsetting the basis point improvement was negative leverage in this fixed cost category due to negative same-store sales.

The basis point decrease in rent expense as a percent of consolidated revenues during the six months ended December 31, 2008 is primarily due to negative leverage in this fixed cost category due to negative same-store sales. Partially offsetting the basis point decrease was the reclassification to site operating expense for rubbish removal and utilities as discussed above.

Table of Contents

The basis point decrease in rent expense as a percent of consolidated revenues during the three and six months ended December 31, 2007 was primarily due to negative leverage in this fixed cost category, as salon rents are increasing at a slightly faster rate than our overall same-store sales.

Depreciation and Amortization

Depreciation and amortization expense (D&A) for the three and six months ended December 31, 2008 and 2007 was as follows:

			Expense as %
			of Consolidated		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	D&A		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	27,519	4.7	%	$	(735	)	(2.6	)%	10
2007	28,254		4.6		1,002			3.7		(10	)
*Six Months*
2008	$	54,787	4.6	%	$	(1,750	)	(3.1	)%	—
2007	56,537		4.6		2,756			5.1		—

(1) Represents the basis point change in D&A as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

The basis point increase in D&A as a percent of consolidated revenues during the three months ended December 31, 2008 was primarily due to the decrease in same-store-sales. D&A as a percent of consolidated revenues during the six months ended December 31, 2008 was consistent with prior year D&A as a percent of consolidated revenues.

D&A as a percent of consolidated revenues during the three and six months ended December 31, 2007 was consistent with prior year D&A as a percent of consolidated revenues.

Goodwill impairment

Goodwill impairment expenses for the three and six months ended December 31, 2008 and 2007 were as follows:

			Expense as %
	Goodwill		of Consolidated		Increase Over Prior Fiscal Year
Periods Ended December 31,	impairment		Revenues		Dollar		Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	41,661	7.1	%	$	41,661	100.0	%	710
2007	—		—		—		—		—
*Six Months*
2008	$	41,661	3.5	%	$	41,661	100.0	%	350
2007	—		—		—		—		—

(1) Represents the basis point change in goodwill impairment as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

The Company recorded a $41.7 million goodwill impairment charge related to the salon concepts in the United Kingdom during the three and six months ended December 31, 2008. The recent performance challenges of the International salon operations indicated that the estimated fair value of the International salon operations was less than the current carrying value of this reporting unit’s net assets, including goodwill. There is no remaining goodwill recorded within the salon concepts in the United Kingdom. No impairment of goodwill was recorded during the three and six months ended December 31, 2007.

Table of Contents

Lease Termination Costs

Lease termination costs for the three and six months ended December 31, 2008 and 2007 were as follows:

	Lease		Expense as %
	termination		of Consolidated		Increase Over Prior Fiscal Year
Periods Ended December 31,	costs		Revenues		Dollar		Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	847	0.1	%	$	847	100.0	%	10
2007	—		—		—		—		—
*Six Months*
2008	$	1,998	0.2	%	$	1,998	100.0	%	20
2007	—		—		—		—		—

(1) R epresents the basis point change in lease termination costs as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

The lease termination costs are associated with the Company’s plan to close up to 160 underperforming company-owned salons in fiscal year 2009. During the three and six months ended December 31, 2008 we closed 19 and 35 salons, respectively. See further discussion within Note 7 of the Condensed Consolidated Financial Statements.

Interest

Interest expense for the three and six months ended December 31, 2008 and 2007 was as follows:

			Expense as % of Consolidated		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Interest		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	10,878	1.9	%	$	(838	)	(7.2	)%	—
2007	11,716		1.9		1,065			10.0		10
*Six Months*
2008	$	21,098	1.8	%	$	(1,131	)	(5.1	)%	—
2007	22,229		1.8		1,763			8.6		—

(1) Represents the basis point change in interest expense as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

Interest expense as a percent of consolidated revenues during the three and six months ended December 31, 2008 was consistent with prior year interest as a percent of total revenues.

The basis point increase in interest expense as a percent of consolidated revenues during the three months ended December 31, 2007 was primarily due to increased debt levels used to fund customary acquisitions and investments and the repurchase of $50.0 million of our outstanding common stock.

Table of Contents

Income Taxes

Our reported effective income tax rate for the three and six months ended December 31, 2008 and 2007 was as follows:

			Basis Point(1)
Periods Ended December 31,	Effective Rate		Increase
Three Months
2008	66.7	%	3,020
2007	36.5		890
*Six Months*
2008	168.4	%	13,250
2007	35.9		530

(1) Represents the basis point change in income tax expense as a percent of consolidated revenues as compared to the corresponding periods of the prior fiscal year.

The basis point increase in our overall effective income tax rate for the three and six months ended December 31, 2008 was due primarily to substantially all of the $41.7 million goodwill impairment of the salon concepts in the United Kingdom not being deductible for tax purposes, which increased the tax provision by approximately $11.4 million for each of the three and six months ended December 31, 2008.

The decrease in our overall effective tax rate for the three and six months ended December 31, 2007 was due to the impact of state income taxes and the impact of certain non-deductible professional fees. The prior year rates were favorably impacted by the retroactive reinstatement of the Work Opportunity and Welfare-to-Work Tax Credits. The adoption of FIN 48 at the beginning of fiscal year 2008 caused the Company’s second quarter tax rate to be higher than the estimated annual rate.

Equity in (Loss) Income of Affiliated Companies, Net of Income Taxes

Equity in income (loss) of affiliates, represents the income or loss generated by our equity investment in Empire Education Group, Inc., Provalliance, and other equity method investments, for the three and six months ended December 31, 2008 and 2007, was as follows:

				(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Equity in (loss) income			Dollar			Percentage
				(Dollars in thousands)
*Three Months*
2008	$	(2,338	)	$	(2,724	)	(705.7	)%
2007	386			386			100.0
*Six Months*
2008	$	(1,846	)	$	(1,898	)	(3,650.0	)%
2007	52			52			100.0

The equity in loss of affiliated companies, net of income taxes for the three and six months ended December 31, 2008 was due to the impairment loss of $4.8 million, net of tax, on our investment in and loans to Intelligent Nurtrients, LLC. The impairment charge was based on Intelligent Nutrients, LLC’s inability to develop a professional organic brand of shampoo and conditioner with broad consumer appeal. The Company determined the loss in value was “other-than-temporary.” Partially offsetting the impairment loss was equity in income recorded for our investment in Provalliance, Empire Education Group, Inc., and Hair Club for Men, Ltd. See Note 6 to the Condensed Consolidated Financial Statements for further discussion on each respective affiliated company.

Table of Contents

(Loss) Income from Discontinued Operations

(Loss) income from discontinued operations for the three and six months ended December 31, 2008 and 2007was as follows:

	(Loss) income from			(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	discontinued operations			Dollar			Percentage
				(Dollars in thousands)
*Three Months*
2008	$	(117,466	)	$	(119,297	)	(6,515.4	)%
2007	1,831			(4,225		)	(69.8	)
*Six Months*
2008	$	(119,066	)	$	(122,048	)	(4,092.8	)%
2007	2,982			(7,761		)	(72.2	)

During the three and six months ended December 31, 2008, we concluded that Trade Secret was held for sale and presented as a discontinued operation for all comparable prior periods. The loss for the three and six months ended December 31, 2008 is the result of the operating losses, net of tax, and the impairment loss on the sale of Trade Secret, net of tax. Income from discontinued operations for the three and six months ended December 31, 2007 is the result of the operating income, net of tax. See Note 2 to the Condensed Consolidated Financial Statements for further discussion.

Recent Accounting Pronouncements

Recent accounting pronouncements are discussed in Note 1 to the Condensed Consolidated Financial Statements.

Effects of Inflation

We compensate some of our salon employees with percentage commissions based on sales they generate, thereby enabling salon payroll expense as a percent of company-owned salon revenues to remain relatively constant. Accordingly, this provides us certain protection against inflationary increases, as payroll expense and related benefits (our major expense components) are variable costs of sales. In addition, we may increase pricing in our salons to offset any significant increases in wages. Therefore, we do not believe inflation has had a significant impact on the results of our operations.

Table of Contents

Constant Currency Presentation

The presentation below demonstrates the effect of foreign currency exchange rate fluctuations from year to year. To present this information, current period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the average exchange rates in effect during the corresponding period of the prior fiscal year, rather than the actual average exchange rates in effect during the current fiscal year. Therefore, the foreign currency impact is equal to current year results in local currencies multiplied by the change in the average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year. During the three and six months ended December 31, 2008, foreign currency translation had an unfavorable impact on consolidated revenues due to the weakening of the Canadian dollar, British pound, and Euro as compared to the comparable prior periods. During the three and six months ended December 31, 2007, foreign currency translation had a favorable impact on consolidated revenues due to the strengthening of the Canadian dollar, British pound and Euro as compared to the comparable prior periods.

	Impact on Revenues					Impact on Income Before Income Taxes
(Unfavorable) Favorable Impact of Foreign Currency Exchange Rate Fluctuations	December 31, 2008			December 31, 2007		December 31, 2008			December 31, 2007
	(Dollars in thousands)
*Three Months*
Canadian dollar	$	(6,938	)	$	4,634	$	(1,122	)	$	790
British pound	(10,355		)	3,615		6,451			164
Euro	(132		)	1,962		(63		)	426
Total	$	(17,425	)	$	10,211	$	5,266		$	1,380
*Six Months*
Canadian dollar	$	(6,303	)	$	6,660	$	(1,019	)	$	1,158
British pound	(12,810		)	7,091		6,398			309
Euro	77			3,179		72			597
Total	$	(19,036	)	$	16,930	$	5,451		$	2,064

Results of Operations by Segment

Based on our internal management structure, we report three segments: North American salons, International salons and hair restoration centers. Significant results of operations are discussed below with respect to each of these segments.

North American Salons

North American Salon Revenues. Total North American salon revenues for the three and six months ended December 31, 2008 and 2007 were as follows:

			Increase Over Prior Fiscal Year				Same-Store Sales Increase
Periods Ended December 31,	Revenues		Dollar		Percentage		(Decrease)
	(Dollars in thousands)
*Three Months*
2008	$	511,413	$	2,908	0.6	%	(3.3	)%
2007	508,505		36,034		7.6		0.2
*Six Months*
2008	$	1,041,348	$	20,917	2.0	%	(1.6	)%
2007	1,020,431		78,516		8.3		1.1

Table of Contents

The percentage increases (decreases) during the three and six months ended December 31, 2008 and 2007 were due to the following factors:

	For the Periods Ended December 31,
	Three Months				Six Months
Percentage Increase (Decrease) in Revenues	2008		2007		2008		2007
Acquisitions (previous twelve months)	6.8	%	4.2	%	6.9	%	4.1	%
Organic growth	(4.1	)	2.8		(3.7	)	3.9
Foreign currency	(1.4	)	1.0		(0.6	)	0.7
Franchise revenues	—		—		—		0.1
Closed salons	(0.7	)	(0.4	)	(0.6	)	(0.5	)
	0.6	%	7.6	%	2.0	%	8.3	%

We acquired 321 North American salons during the twelve months ended December 31, 2008, including 159 franchise buybacks. The decline in organic growth was the result of same-store sales decrease of 3.3 and 1.6 percent for the three and six months ended December 31, 2008, respectively, and the deconsolidation of EEG on August 1, 2007. The foreign currency impact during the three and six months ended December 31, 2008 was driven by the strengthening of the United States dollar against the Canadian dollar as compared to the prior period’s exchange rate.

We acquired 323 North American salons during the twelve months ended December 31, 2007, including 109 franchise buybacks. The organic growth was due primarily to the construction of 325 company-owned salons in North America during the twelve months ended December 31, 2007. The foreign currency impact during the six months ended December 31, 2007 was driven by the weakening of the United States dollar against the Canadian dollar as compared to the prior period’s exchange rate.

North American Salon Operating Income. Operating income for the North American salons for the three and six months ended December 31, 2008 and 2007 was as follows:

	Operating		Operating Income as % of Total		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Income		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	65,196	12.7	%	$	(1,763	)	(2.6	)%	(50	)
2007	66,959		13.2		7,352			12.3		60
*Six Months*
2008	$	130,002	12.5	%	$	(4,404	)	(3.3	)%	(70	)
2007	134,406		13.2		13,399			11.1		40

(1) Represents the basis point change in North American salon operating income as a percent of North American salon revenues as compared to the corresponding periods of the prior fiscal year.

The basis point decrease in North American salon operating income as a percent of North American salon revenues for the three and six months ended December, 31 2008 was primarily lower due to a decline in product margins from mix play, as a larger than expected percentage of our product sales came from lower-margin promotional items, negative leverage in fixed cost categories due to negative same-store sales and lease termination costs associated with the Company’s plan to close underperforming company-owned salons.

The basis point improvement in North American salon operating income as a percent of North American salon revenues for the three and six months ended December 31, 2007 was primarily due to a reduction in workers’ compensation costs as a result of continued improvement of our safety and return-to-work programs over the recent years.

International Salons

On January 31, 2008 the Company merged its continental European franchise salon operations with the Franck Provost Salon Group for a 30.0 percent interest in Provalliance. The Company’s investment in Provalliance is accounted for under the equity method of accounting and the results of operations of our European franchise salon operations were deconsolidated. As a result of the deconsolidation, International salon revenue and International salon operating income for the first two

Table of Contents

quarters of fiscal year 2009 will be negatively impacted.

International Salon Revenues. Total International salon revenues for the three and six months ended December 31, 2008 and 2007 were as follows:

			(Decrease) Increase Over Prior Fiscal Year					Same- Store Sales
Periods Ended December 31,	Revenues		Dollar			Percentage		(Decrease)
	(Dollars in thousands)
*Three Months*
2008	$	41,268	$	(31,788	)	(43.5	)%	(10.7	)%
2007	73,056		12,687			21.0		(4.7	)
*Six Months*
2008	$	89,715	$	(46,622	)	(34.2	)%	(7.2	)%
2007	136,337		20,093			17.3		(4.3	)

The percentage increases (decreases) during the three and six months ended December 31, 2008 and 2007 were due to the following factors:

	For the Periods Ended December 31,
	Three Months				Six Months
Percentage Increase (Decrease) in Revenues	2008		2007		2008		2007
Acquisitions (previous twelve months)	—	%	5.4	%	2.1	%	3.2	%
Organic growth	(8.8	)	7.1		(6.4	)	6.1
Foreign currency	(14.4	)	9.2		(9.3	)	8.8
Franchise revenues	(14.6	)	0.6		(14.9	)	0.4
Closed salons	(5.7	)	(1.3	)	(5.7	)	(1.2	)
	(43.5	)%	21.0	%	(34.2	)%	17.3	%

We did not acquire any international salons during the twelve months ended December 31, 2008. The decrease in organic growth was primarily due to same-store sales decreases of 10.7 and 7.2 percent during the three and six months ended December 31, 2008. The foreign currency impact during the three and six months ended December 31, 2008 was driven by the strengthening of the United States dollar against the British pound and the Euro as compared to the comparable prior period. The decrease in franchise revenues and closed salons was due to the merger of our continental European franchise salon operations with the Franck Provost Salon Group on January 31, 2008.

We acquired 27 international salons during the twelve months ended December 31, 2007, including two franchise buybacks. The organic growth was due primarily to the construction of 23 company-owned international salons during the twelve months ended December 31, 2007 and the inclusion of the four United Kingdom Vidal Sassoon schools, partially offset by a same-store sales decrease of 4.3 percent during the six months ended December 31, 2007. The foreign currency impact during the three and six months ended December 31, 2007 was driven by the weakening of the United States dollar against the British pound and the Euro as compared to the exchange rates for the comparable prior period.

International Salon Operating Income. Operating income for the international salons for the three and six months ended December 31, 2008 and 2007 was as follows:

	Operating			Operating Income as % of Total		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Income			Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	(42,591	)	(103.2	)%	$	(49,072	)	(757.2	)%	(11,210	)
2007	6,481			8.9		2,194			51.2		180
*Six Months*
2008	$	(40,894	)	(45.6	)%	$	(51,515	)	(485.0	)%	(5,340	)
2007	10,621			7.8		1,820			20.7		20

(1) Represents the basis point change in International salon operating income as a percent of International salon revenues as compared to the corresponding periods of the prior fiscal year.

Table of Contents

The basis point decrease in International salon operating income as a percent of International salon revenues during the three and six months ended December 31, 2008 was primarily due to the goodwill impairment of the United Kingdom division, the deconsolidation of our European franchise salon operations, and greater negative same-store sales than comparable prior periods.

The basis point improvement in international salon operating income as a percent of international salon revenues during the three and six months ended December 31, 2007 was primarily due to the migration to a new, lower-cost product distribution model in the United Kingdom which includes shipping product from our United States distribution centers to the United Kingdom, a favorable inventory adjustment following our most recent physical inventory count, a reduction in franchise advertising expense, and the inclusion of the Vidal Sassoon academies, partially offset by negative payroll leverage and a retroactive rent increase assessment for one of our London Vidal Sassoon salons following a rent review.

Hair Restoration Centers

Hair Restoration Revenues. Total hair restoration revenues for the three and six months ended December 31, 2008 and 2007 were as follows:

			Increase Over Prior Fiscal Year				Same- Store Sales (Decrease)
Periods Ended December 31,	Revenues		Dollar		Percentage		Increase
	(Dollars in thousands)
*Three Months*
2008	$	34,745	$	1,640	5.0	%	(1.5	)%
2007	33,105		3,373		11.3		6.8
*Six Months*
2008	$	69,892	$	4,664	7.2	%	(0.2	)%
2007	65,228		6,399		10.9		7.5

The percentage increases (decreases) during the three and six months ended December 31, 2008 and 2007, were due to the following factors:

	For the Periods Ended December 31,
	Three Months				Six Months
Percentage Increase (Decrease) in Revenues	2008		2007		2008		2007
Acquisitions (previous twelve months)	8.5	%	6.6	%	9.6	%	5.2	%
Organic growth	(2.1	)	5.0		(0.7	)	5.7
Franchise revenues	(1.4	)	(0.3	)	(1.7	)	—
	5.0	%	11.3	%	7.2	%	10.9	%

Hair restoration revenues increased during the three and six month periods ended December 31, 2008 and 2007 due to acquisition of seven hair restoration centers through franchise buybacks and construction of four new corporate locations during the twelve months ended December 31, 2008. Organic growth decreased due to negative same-store sales. Franchise revenues decreased due to the reduction in franchise centers.

We acquired eight hair restoration centers during the twelve months ended December 31, 2007, including seven franchise buybacks. Hair restoration revenue from acquisitions increased over six percent primarily due to these franchise buybacks. Organic hair restoration revenue increased five percent due to strong recurring and new customer revenue and surgical hair transplant management fees. Franchise revenues decreased slightly due to the reduction in franchise centers.

Table of Contents

Hair Restoration Operating Income. Operating income for our hair restoration centers for the three and six months ended December 31, 2008 and 2007 was as follows:

	Operating		Operating Income as % of Total		(Decrease) Increase Over Prior Fiscal Year
Periods Ended December 31,	Income		Revenues		Dollar			Percentage		Basis Point(1)
	(Dollars in thousands)
*Three Months*
2008	$	6,353	18.3	%	$	(663	)	(9.5	)%	(290	)
2007	7,016		21.2		627			9.8		(30	)
*Six Months*
2008	$	12,272	17.6	%	$	(1,700	)	(12.2	)%	(380	)
2007	13,972		21.4		1,648			13.4		50

(1) Represents the basis point change in hair restoration operating income as a percent of hair restoration revenues as compared to the corresponding periods of the prior fiscal year.

The basis point decrease in hair restoration operating income as a percent of hair restoration revenues during the three and six months ended December 31, 2008 is primarily due to the lower operating margins on newly constructed and acquired centers and higher legal costs and financial due diligence associated with a terminated potential acquisition.

The slight basis point reduction in hair restoration operating income as a percent of hair restoration revenues during the three months ended December 31, 2007 resulted from decreased gross margins due to sales mix and increases in bonus and commissions and advertising expense, partially offset by reduced workers’ compensation insurance costs. The basis point improvement in hair restoration operating income as a percent of hair restoration revenues during the six months ended December 31, 2007 was due to strong recurring and new customer revenues and the acquisition of franchise centers over the past year, partially offset by an increase in bonus and commissions.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We continue to maintain a strong balance sheet to support system growth and financial flexibility. Our debt to capitalization ratio, calculated as total debt as a percentage of total debt and shareholders’ equity at fiscal quarter end, was as follows:

	Debt to		Basis Point
Periods Ended	Capitalization		Increase (1)
December 31, 2008	48.1	%	420
June 30, 2008	43.9		20

(1) Represents the basis point change in total debt as a percent of total debt and shareholders’ equity as compared to prior fiscal year end (June 30).

The increase in the debt to capitalization ratio as of December 31, 2008 compared to June 30, 2008 was primarily due to a decrease in shareholder’s equity from the non-cash goodwill impairment within the United Kingdom salon division, the non-cash impairment related to the sale of Trade Secret and foreign currency due to the strengthening of the United States dollar against the Canadian dollar, Euro and British Pound.

The basis point increase in the debt to capitalization ratio during the twelve months ended June 30, 2008 was primarily due to increased debt levels stemming from share repurchases, acquisitions and timing of customary income tax payments made during the twelve months ended June 30, 2008.

Table of Contents

Total assets at December 31, 2008 and June 30, 2008 were as follows:

	December 31,		June 30,		$ Decrease Over			% Decrease Over
	2008		2008		Prior Period(1)			Prior Period(1)
	(Dollars in thousands)
Total Assets	$	1,998,857	$	2,235,871	$	(237,014	)	(10.6	)%

(1) Change as compared to prior fiscal year end (June 30).

The non-cash goodwill impairment within the United Kingdom salon division and non-cash impairment related to the sale of Trade Secret salon concept were the primary factors for the decrease in total assets as of December 31, 2008 compared to June 30, 2008.

Total shareholders’ equity at December 31, 2008 and June 30, 2008 was as follows:

	December 31,		June 30,		$ Decrease Over			% Decrease Over
	2008		2008		Prior Period(1)			Prior Period(1)
	(Dollars in thousands)
Shareholders’ Equity	$	788,856	$	976,186	$	(187,330	)	(19.2	)%

(1) Change as compared to prior fiscal year end (June 30).

The decrease in shareholders’ equity from June 30, 2008 to December 31, 2008 was primarily due to the non-cash goodwill impairment within the United Kingdom salon division, the non-cash impairment related to the sale of Trade Secret and foreign currency due to the strengthening of the United States dollar against the Canadian dollar, Euro and British Pound.

Cash Flows

As we reconciled to net (loss) income per the Condensed Consolidated Statement of Cash Flows, the presentation below includes the operations of Trade Secret.

Operating Activities

Net cash provided by operating activities was $74.0 and $92.3 million during the six months ended December 31, 2008 and 2007, respectively, and was the result of the following:

	For the Six Months Ended December 31,
Operating Cash Flows	2008			2007
	(Dollars in thousands)
Net (loss) income	$	(128,765	)	$	43,155
Depreciation and amortization	62,629			63,186
Deferred income taxes	(59,808		)	(1,202		)
Impairment on discontinued operations	171,004			—
Goodwill impairment	41,661			—
Receivables	(3,072		)	(4,217		)
Inventories	(19,318		)	(9,686		)
Other current assets	(1,886		)	(8,062		)
Accounts payable and accrued expenses	3,672			(6,285		)
Other non-current liabilities	2,136			14,988
Other	5,721			392
	$	73,974		$	92,269

Cash provided by operating activities decreased during the six months ended December 31, 2008 compared to the six months ended December 31, 2007 due a decline in operating cash flow as a result of negative same-store sales of 1.9 percent.

Table of Contents

Investing Activities

Net cash used in investing activities was $75.9 and $117.4 million during the six months ended December 31, 2008 and 2007, respectively, and was the result of the following:

	For the Six Months Ended December 31,
Investing Cash Flows	2008			2007
	(Dollars in thousands)
Capital expenditures for remodels or other additions	$	(23,069	)	$	(16,969	)
Capital expenditures for the corporate office (including all technology-related expenditures)	(11,309		)	(5,680		)
Capital expenditures for new salon construction	(14,415		)	(21,750		)
Proceeds from sale of assets	28			16
Business and salon acquisitions	(30,965		)	(53,297		)
Proceeds from loans and investments	9,793			10,000
Disbursements for loans and investments	(5,971		)	(22,500		)
Cash portion of beauty school assets contributed	—			(7,254		)
	$	(75,908	)	$	(117,434	)

Cash used by investing activities was lower during the six months ended December 31, 2008 compared to the six months ended December 31, 2007 due to the planned reduction in acquisitions and investing and a $16.5 million decrease in disbursements for loans and investments to equity method investments. In addition, during the six months ended December 31, 2007, there was a $7.3 million cash contribution to Empire Education Group, Inc. associated with 51 contributed accredited cosmetology schools.

The company-owned constructed and acquired locations (excluding franchise buybacks) consisted of the following number of locations in each concept:

	For the Six Months Ended December 31, 2008		For the Six Months Ended December 31, 2007
	Constructed	Acquired	Constructed	Acquired
Regis Salons	7	23	9	—
MasterCuts	12	—	5	—
Trade Secret (1)	8	—	8	2
SmartStyle	37	—	84	—
Strip Centers	30	3	39	6
International	3	—	13	25
	97	26	158	33

Financing Activities

Net cash (used in) provided by financing activities was ($43.2) and $3.1 million during the six months ended December 31, 2008 and 2007, respectively, was the result of the following:

	For the Six Months Ended December 30,
Financing Cash Flows	2008			2007
	(Dollars in thousands)
Net borrowings (payments) on revolving credit facilities	$	(102,100	)	$	62,200
Net (repayments) proceeds of long-term debt	63,835			(13,612		)
Proceeds from the issuance of common stock	2,306			7,372
Repurchase of common stock	—			(49,957		)
Excess tax benefits from stock-based compensation plans	284			1,295
Dividend paid	(3,453		)	(3,530		)
Other	(4,117		)	(653		)
	$	(43,245	)	$	3,115

Table of Contents

Cash was used by financing activities during the six months ended December 31, 2008 due to the net repayment on revolving credit facilities being greater than the net proceeds from long-term debt as reducing debt levels is one step we are taking to help us continue to be in compliance with our financial debt covenants.

Acquisitions

The acquisitions during the six months ended December 31, 2008 consisted of 83 franchise buybacks and 26 acquired corporate salons. The acquisitions during the six months ended December 31, 2007 consisted of 77 franchise buybacks, and 33 acquired corporate salons. The acquisitions were funded primarily from operating cash flow and debt.

Contractual Obligations and Commercial Commitments

As a part of our salon development program, we continue to negotiate and enter into leases and commitments for the acquisition of equipment and leasehold improvements related to future salon locations, and continue to enter into transactions to acquire established hair care salons and businesses.

Financing

Financing activities are discussed above and derivative activities are discussed in Item 3, “Quantitative and Qualitative Disclosures about Market Risk.” There were no other significant financing activities during the three and six months ended December 31, 2008.

We believe that cash generated from operations and amounts available under our existing debt facilities will be sufficient to fund anticipated capital expenditures, acquisitions and required debt repayments for the foreseeable future.

On October 3, 2008, we completed an $85 million term loan that matures in July 2012. The proceeds from the term loan were used to pay down the revolving credit facility, allowing for additional availability on the revolving credit facility if needed in the future. In the current economic environment, we maintain our strong position to access financing as we continue to have a predictable business model, strong operating cash flow and balance sheet. See further discussion of the term loan within Note 10 of the Condensed Consolidated Financial Statements.

Dividends

We paid dividends of $0.08 per share during the six months ended December 31, 2008 and 2007. On January 29, 2008, our Board of Directors declared a $0.04 per share quarterly dividend payable February 26, 2009 to shareholders of record on February 12, 2009.

SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward—looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, “may,” “believe,” “project,” “forecast,” “expect,” “estimate,” “anticipate” and “plan.” In addition, the following factors could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include competition within the personal hair care industry, which remains strong, both domestically and internationally, price sensitivity; changes in economic condition; changes in consumer tastes and fashion trends; the ability of the Company to implement its planned spending and cost reduction plan and to continue to maintain compliance with the financial covenants in its credit agreements; labor and benefit costs; legal claims; risk inherent to international development (including currency fluctuations); the continued ability of the Company and its

Table of Contents

franchisees to obtain suitable locations for new salon development; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify, acquire and integrate salons that support its growth objectives; the ability of the company to maintain satisfactory relationships with suppliers; the ability of the Company to consummate the planned closure of salons and the related realization of the anticipated costs, benefits and time frame; the ability of the Company to consummate the planned sale transaction of Trade Secret; or other factors not listed above. The ability of the Company to meet its expected revenue growth is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set forth in the Company’s Annual Report on Form 10-K for the year ended June 30, 2008. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The primary market risk exposure of the Company relates to changes in interest rates in connection with its debt, some of which bears interest at variable rates based on LIBOR plus an applicable borrowing margin. Additionally, the Company is exposed to foreign currency translation risk related to its net investments in its foreign subsidiaries and, to a lesser extent, changes in the Canadian dollar exchange rate. The Company has established policies and procedures that govern the management of these exposures through the use of derivative financial instrument contracts. By policy, the Company does not enter into such contracts for the purpose of speculation.

The Company has established an interest rate management policy that attempts to minimize its overall cost of debt, while taking into consideration the earnings implications associated with the volatility of short-term interest rates. As part of this policy, the Company has elected to maintain a combination of variable and fixed rate debt. Considering the effect of interest rate swaps and including $0.1 and $0.3 million related to the fair value swaps at December 31, 2008 and June 30, 2008, respectively, the Company had the following outstanding debt balances:

	December 31,		June 30,
	2008		2008
	(Dollars in thousands)
Fixed rate debt	$	600,531	$	525,647
Floating rate debt	132,000		239,100
	$	732,531	$	764,747

The Company manages its interest rate risk by continually assessing the amount of fixed and variable rate debt. On occasion, the Company uses interest rate swaps to further mitigate the risk associated with changing interest rates and to maintain its desired balances of fixed and floating rate debt.

For additional information, including a tabular presentation of the Company’s debt obligations and derivative financial instruments, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the Company’s June 30, 2008 Annual Report on Form 10-K. Other than the information included above, there have been no material changes to the Company’s market risk and hedging activities during the three and six months ended December 31, 2008.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Our Disclosure Committee, consisting of certain members of management, assists in this evaluation. The Disclosure Committee meets on a quarterly basis and more often if necessary.

With the participation of management, the Company’s chief executive officer and chief financial officer evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-5(e) and 15d-15(e) promulgated under the Exchange Act) at the conclusion of the period ended June 30, 2008. Based upon this

Table of Contents

evaluation, the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Controls

Based on management’s most recent evaluation of the Company’s internal control over financial reporting, management determined that there were no changes in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

If we are not able to increase our number of salons, we may not be able to grow our revenue and earnings.

The key driver of our revenue and earnings growth is the number of salons we and our franchisees acquire or construct. Acquiring and constructing new salons is subject to the ability of our company and our franchisees to identify suitable sites and obtain financing for development. While we believe that substantial future acquisition and organic growth opportunities exist, any inability to identify and successfully complete future acquisitions or increase our same-store sales would have a material adverse effect on our revenue and earnings growth.

Changes in the general economic environment may impact our business and results of operations.

Changes to the United States, Canadian, United Kingdom and other European economies have an impact on our business. As a result of our recent entrance into the Asian market, changes in the Asian economies may also impact our business. General economic factors that are beyond our control, such as interest rates, recession, inflation, deflation, tax rates and policy, energy costs, unemployment trends, and other matters that influence consumer confidence and spending, may impact our business. In particular, visitation patterns to our salons and hair restoration centers can be adversely impacted by changes in unemployment rates and discretionary income levels.

If we continue to have negative same store sales our business and results of operations may be affected.

Our success depends, in part, upon our ability to improve sales, as well as both gross margins and operating margins. A variety of factors affect comparable same store sales, including fashion trends, competition, current economic conditions, changes in our product assortment, the success of marketing programs and weather conditions. These factors may cause our comparable same store sales results to differ materially from prior periods and from our expectations. Our comparable same store sales results excluding the Trade Secret salons presented within discontinued operations for the three and six months ended December 31, 2008 declined 3.8 and 1.9 percent, respectively, compared to the three and six months ended December 31, 2007.

If we are unable to improve our comparable same store sales on a long-term basis or offset the impact with operational savings, our financial results may be affected. Furthermore, continued decline in same store sales performance may cause us to be in default of certain covenants in our financing arrangements.

Changes in our key relationships may adversely affect our operating results.

We maintain key relationships with certain companies, including Wal-Mart. Termination or modification of any of these relationships could significantly reduce our revenues and have an adverse impact on our ability to grow or future operating results.

Table of Contents

Changes in fashion trends may impact our revenue.

Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer hair may reduce the number of visits to, and therefore, sales at our salons.

Changes in regulatory and statutory laws may result in increased costs to our business.

With approximately 13,600 locations and approximately 65,000 employees worldwide, our financial results can be adversely impacted by regulatory or statutory changes in laws. Due to the number of people we employ, laws that increase minimum wage rates or increase costs to provide employee benefits may result in additional costs to our company. Compliance with new, complex and changing laws may cause our expenses to increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict our ability to market certain products, which could adversely affect our business, financial condition and results of operations. We are also subject to laws that affect the franchisor-franchisee relationship.

If we are not able to successfully compete in our business segments, our financial results may be affected.

Competition on a market by market basis remains strong. Therefore, our ability to raise prices in certain markets can be adversely impacted by this competition. If we are not able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be impaired.

If our joint ventures are unsuccessful our financial results may be affected.

We have entered into joint venture arrangements with other companies in the retail hair salon and beauty school businesses in order to maintain and expand our operations in the United States, Asia and continental Europe. If our joint venture partners are unwilling or unable to devote their financial resources or marketing and operational capabilities to our joint venture businesses, or if any of our joint ventures are terminated, we may not be able to realize anticipated revenues and profits in the countries where our joint ventures operate and our business could be materially adversely affected. If our joint venture arrangements are not successful, we may have a limited ability to terminate or modify these arrangements. If any of our joint ventures are terminated, there can be no assurance that we will be able to attract new joint venture partners to continue the activities of the terminated joint venture or to operate independently in the countries in which the terminated joint venture conducted business.

Termination of the sale of Trade Secret prior to closing may adversely affect our earnings

The Company entered into a Stock Purchase Agreement on January 26, 2009 to sell all the issued and outstanding shares of the Capital Stock of Trade Secret Inc. Termination prior to closing may adversely affect our earnings as Trade Secret is projected to have an operating loss for the remainder of the fiscal year.

Changes in manufacturers’ choice of distribution channels may negatively affect our revenues.

The retail products that we sell are licensed to be carried exclusively by professional salons. The products we purchase for sale in our salons are purchased pursuant to purchase orders, as opposed to long-term contracts and generally can be terminated by the producer without much advance notice. Should the various product manufacturers decide to utilize other distribution channels, such as large discount retailers, it could negatively impact the revenue earned from product sales.

Changes to interest rates and foreign currency exchange rates may impact our results from operations.

Changes in interest rates will have an impact on our expected results from operations. Currently, we manage the risk related to fluctuations in interest rates through the use of variable rate debt instruments and other financial instruments. During fiscal year 2008, the National Association of Insurance Commissioners downgraded Regis’ private placement debt from investment-grade private placement to non-investment grade. The downgrade did not have any immediate effect on the private placement debt outstanding and corresponding interest rate. Any future non-investment grade private placement debt would result in a substantially higher interest rate. The downgrade has no impact on the Company’s current revolving credit facility or its ability to secure future bank borrowings. See discussion in Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” in the Company’s June 30, 2008 Annual Report on Form 10-K for additional information.

Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not repurchase any of its common stock through its share repurchase program during the three months ended December 31, 2008.

Item 4. Submission of Matters to a Vote of Security Holders

On October 23, 2008, at the annual meeting of the shareholders of the Company, a vote on the election of the Company’s directors, the ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm, and the transaction of such other business as may properly come up before the meeting or any adjournment or postponement thereof took place with the following results:

Election of Directors:

AUTHORITY	FOR	WITHHOLD
Rolf F. Bjelland	38,674,545	328,505
Paul D. Finkelstein	38,622,379	380,671
Thomas L. Gregory	38,670,927	332,123
Van Zandt Hawn	38,675,565	327,485
Susan S. Hoyt	38,686,715	316,335
David B. Kunin	38,347,687	655,363
Stephen Watson	38,719,045	284,005

Ratification of PricewaterhouseCoopers LLP as independent registered public accounting firm:

For		38,573,077
Against		411,933
Abstain		18,038

Transact other business as may properly come before the meeting:

For		13,274,084
Against		23,931,885
Abstain		1,797,080

Item 6. Exhibits

Exhibit 10(a)(*)		Regis Corporation Executive Retirement Savings Plan Adoption Agreement and Trust Agreement, dated November 15, 2008 between the Company and Fidelity Management Trust Company (The CORPORATE Plan for Retirement EXECUTIVE PLAN basic plan document is incorporated by reference to Exhibit 10(c) to the Company’s Report on Form 10-K filed on August 29, 2007, for the year ended June 30, 2007).

Exhibit 10(b)(*)		Employment Agreement, as Amended and Restated effective December 31, 2008, between the Company and Paul D. Finkelstein.

Exhibit 10(c)(*)		Employment Agreement, as Amended and Restated effective December 31, 2008, between the Company and Randy L. Pearce.

Exhibit 10(d)(*)		Amended and Restated Senior Officer Employment and Deferred Compensation Agreement, dated December 31, 2008, between the Company and Gordon Nelson.

Exhibit 10(e)(*)		Form of Amended and Restated Senior Officer Employment and Deferred Compensation Agreement, dated December 31, 2008, between the Company and certain senior executive officers.

Exhibit 10(f)(*)		Amendment to Amended and Restated Compensation Agreement, dated December 23, 2008, between the Company and Myron Kunin.

Exhibit 10(g)(*)		2004 Long Term Incentive Plan as Amended and Restated effective December 31, 2008.

Exhibit 15		Letter Re: Unaudited Interim Financial Information.

Table of Contents

Exhibit 31.1		Chairman of the Board of Directors, President and Chief Executive Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2		Senior Executive Vice President, Chief Financial and Administrative Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1		Chairman of the Board of Directors, President and Chief Executive Officer of Regis Corporation: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2		Senior Executive Vice President, Chief Financial and Administrative Officer of Regis Corporation: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(*)	Management contract, compensatory plan or arrangement required to be filed as an exhibit to the Company’s Report on Form 10-Q.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	REGIS CORPORATION

Date: February 9, 2009	By:	/s/ Randy L. Pearce
		Randy L. Pearce
		Senior Executive Vice President, Chief Financial and
		Administrative Officer

		Signing on behalf of the registrant and as principal
		accounting officer

Exhibit No. 10(a)(*)

The CORPORATE plan for Retirement SM
EXECUTIVE P LAN

Adoption Agreement

IMPORTANT NOTE

This document has not been approved by the Department of Labor, the Internal Revenue Service or any other governmental entity. An Employer must determine whether the plan is subject to the Federal securities laws and the securities laws of the various states. An Employer may not rely on this document to ensure any particular tax consequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees” under the Employee Retirement Income Security Act with respect to the Employer’s particular situation. Fidelity Management Trust Company, its affiliates and employees cannot and do not provide legal or tax advice or opinions in connection with this document. This document does not constitute legal or tax advice or opinions and is not intended or written to be used, and it cannot be used by any taxpayer, for the purposes of avoiding penalties that may be imposed on the taxpayer. This document must be reviewed by the Employer’s attorney prior to adoption.

Plan Number: 44352		ECM NQ 2007 AA
(07/2007)		10/29/2008

ADOPTION AGREEMENT

ARTICLE 1

1.01 PLAN INFORMATION

(a) Name of Plan:

This is the Regis Corporation Executive Retirement Savings Plan (the “Plan”).

(b) Plan Status ( Check one.) :

(1) Adoption Agreement effective date: 11/15/2008.

(2) The Adoption Agreement effective date is (Check (A) or check and complete (B)) :

(A) o A new Plan effective date.

(B) x An amendment and restatement of the Plan. The original effective date of
the Plan was: 7/24/1988.

1.02 EMPLOYER

(a) Employer Name: Regis Corporation

(b) The term “Employer” includes the following Related Employer(s) (as defined in Section 2.01(a)(25)) participating in the Plan:

1.03 COVERAGE

(Check (a) and/or (b).)

(a) x The following Employees are eligible to participate in the Plan (Check (1) or (2)) :

(1) o Only those Employees designated in writing by the Employer, which writing is hereby incorporated herein.

(2) x Only those Employees in the eligible class described below:

All Company officers and all Highly Compensated Employees as defined in Code Section 414(q), except those who the Administrator determines would not be considered a member of a select group of management or a highly compensated employee within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

(b) o The following Directors are eligible to participate in the Plan (Check (1) or (2)) :

(1) o Only those Directors designated in writing by the Employer, which writing is hereby incorporated herein.

(2) o All Directors, effective as of the later of the date in 1.01(b) or the date the Director becomes a Director.

(Note: A designation in Section 1.03(a)(1) or Section 1.03(b)(1) or a description in Section 1.03(a)(2) must include the effective date of such participation.)

1.04 COMPENSATION

(If Section 1.03(a) is selected, select (a) or (b). If Section 1.03(b) is selected, complete (c))

For purposes of determining all contributions under the Plan:

(a) o Compensation shall be as defined, with respect to Employees, in the Plan maintained by the Employer:

(1) o to the extent it is in excess of the limit imposed under Code section 401(a)(17).

(2) o notwithstanding the limit imposed under Code section 401(a)(17).

(b) x Compensation shall be as defined in Section 2.01(a)(9) with respect to Employees (Check (1), and/or (2) below, if, and as, appropriate) :

(1) x but excluding the following:

Overtime Pay, Commissions, The value of a qualified or a non-qualified stock option granted to an Employee by the Employer to the extent such value is includable in the Employee’s taxable income, Severance Pay and Third Party Payments of Sick Pay.

(2) o but excluding bonuses, except those bonuses listed in the table in Section 1.05(a)(2).

1.05 CONTRIBUTIONS ON BEHALF OF EMPLOYEES

(a) Deferral Contributions (Complete all that apply):

(1) x Deferral Contributions. Subject to any minimum or maximum deferral amount provided below, the Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year).

Deferral Contributions	Dollar Amount		% Amount
Type of Compensation	Min	Max	Min	Max
Base-Salary			0	100

(Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)

(2) x Deferral Contributions with respect to Bonus Compensation only. The Employer requires Participants to enter into a special salary reduction agreement to make Deferral Contributions with respect to one or more Bonuses, subject to minimum and maximum deferral limitations, as provided in the table below.

Treated As

Dollar Amount

% Amount

Deferral Contributions
Type of Bonus

Performance
Based

Non-
Performance
Based

Min

Max

Min

Max

Incentive Compensation

Yes

100

	(Note: With respect to each type of Bonus, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages. In the event a bonus identified as a Performance-based Bonus above does not constitute a Performance-based Bonus with respect to any Participant, such Bonus will be treated as a Non-Performance-based Bonus with respect to such Participant.)

(b)	Matching Contributions (Choose (1) or (2) below, and (3) below, as applicable):

	(1)	x	The Employer shall make a Matching Contribution on behalf of each Employee Participant in an amount described below:

		(A)	o % of the Employee Participant’s Deferral Contributions for the calendar year.

		(B)	o The amount, if any, declared by the Employer in writing, which writing is hereby incorporated herein.

		(C)	x Other:		The Employer shall make a Matching Contribution on each deferral of salary or bonus compensation made by a Participant who is an officer of the Corporation in an amount equal to the following percentage of the officer’s salary and/or bonus contribution for the applicable period: Senior Vice Presidents —25% Chief Operating Officers — 20% Vice Presidents — 10%

	(2)	o	Matching Contribution Offset. For each Employee Participant who has made elective contributions (as defined in 26 CFR section 1.401(k)-6 (“QP Deferrals”)) of the maximum permitted under Code section 402(g), or the maximum permitted under the terms of the Plan (the “QP”), to the QP, the Employer shall make a Matching Contribution in an amount equal to (A) minus (B) below:

		(A)	The matching contributions (as defined in 26 CFR section 1.401(m)-1 (a)(2) (“QP Match”)) that the Employee Participant would have received under the QP on the sum of the Deferral Contributions and the Participant’s QP Deferrals, determined as though—

			·	no limits otherwise imposed by the tax law applied to such QP match; and
			·	the Employee Participant’s Deferral Contributions had been made to the QP.

		(B)	The QP Match actually made to such Employee Participant under the QP for the applicable calendar year.

Provided, however, that the Matching Contributions made on behalf of any Employee Participant pursuant to this Section 1.05(b)(2) shall be limited as provided in Section 4.02 hereof.

			(3)	x	Matching Contribution Limits (Check the appropriate box (es)) :

				(A)	x	Deferral Contributions in excess of % of the Employee Participant’s Compensation for the calendar year shall not be considered for Matching Contributions. See Attachment B.

				(B)	x	Matching Contributions for each Employee Participant for each calendar year shall be limited to $ . See Attachment B.

		(c)	Employer Contributions

			(1) x	Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Employee Participant in an amount determined as described below:

				For each Employer fiscal year (July 1 through June 30) that the Employer provides certain executive Employee Participants with a perquisite account under the Regis Corporation Executive Perquisite Program (the “Perk Plan Participants”), the Employer shall make a fixed Employer Contribution (in addition to the discretionary Employer Contribution for such fiscal year, if any) on behalf of the Perk Plan Participants who elect to defer a portion of their perquisite account. The amount of the fixed Employer Contribution on behalf of each such Perk Plan Participant shall be equal to the amount designated by written election made no later than the last day of the prior fiscal year.

			(2) x	Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Employee Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time in a writing, which is hereby incorporated herein.

1.06	CONTRIBUTIONS ON BEHALF OF DIRECTORS

		(a) o	Director Deferral Contributions

				The Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Director Participant who has an executed deferral agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year), which deferral agreement shall be subject to any minimum and/or maximum deferral amounts provided in the table below.

Deferral Contributions	Dollar Amount		% Amount
Type of Compensation	Min	Max	Min	Max

(Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)

(b) Matching and Employer Contributions:

(1) o Matching Contributions. The Employer shall make a Matching Contribution on behalf of each Director Participant in an amount determined as described below:

(2) o Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Director Participant in an amount determined as described below:

(3) o Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Director Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time, in a writing, which is hereby incorporated herein.

1.07 DISTRIBUTIONS

The form and timing of distributions from the Participant’s vested Account shall be made consistent with the elections in this Section 1.07.

(a) (1) Distribution options to be provided to Participants

(A) Specified
Date

(B) Specified
Age

(D) Earlier of
Separation or
Age

(E) Earlier of
Separation or
Specified Date

(F) Disability

(G)
Change
in
Control

(H) Death

Deferral Contribution

x Lump Sum
x Installments

o Lump Sum
o Installments

x Lump Sum
x Installments

o Lump Sum
o Installments

o Lump
Sum

o Lump Sum
o Installments

Matching Contributions

x Lump Sum
x Installments

o Lump Sum
o Installments

x Lump Sum
x Installments

o Lump Sum
o Installments

o Lump
Sum

o Lump Sum
o Installments

Employer Contributions

x Lump Sum
x Installments

o Lump Sum
o Installments

x Lump Sum
x Installments

o Lump Sum
o Installments

o Lump
Sum

o Lump Sum
o Installments

(Note: If the Employer elects (F), (G), or (H) above, the Employer must also elect (A), (B), (C), (D), or (E) above, and the Participant must also elect (A), (B), (C), (D), or (E) above. In the event the Employer elects only a single payment trigger and/or payment method above, then such single payment trigger and/or payment method shall automatically apply to the Participant. If the employer elects to provide for payment upon a specified date or age, and the employer applies a vesting schedule to amounts that may be subject to such payment trigger(s), the employer must apply a minimum deferral period, the number of years of which must be greater than the number of years required for 100% vesting in any such amounts. If the employer elects to provide for payment upon disability and/or death, and the employer applies a vesting schedule to amounts that may be subject to such payment trigger, the employer must also elect to apply 100% vesting in any such amounts upon disability and/or death.)

(2) x A Participant incurs a Disability when the Participant (Check at least one if Section 1.07(a) (1) (F) or if Section 1.08(e) (3) is elected) :

(A) o is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

(B) x is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a

continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer.

(D) o is determined to be disabled pursuant to the following disability insurance program: the definition of disability under which complies with the requirements in regulations under Code section 409A.

(Note: If more than one box above is checked, then the Participant will have a Disability if he satisfies at least one of the descriptions corresponding to one of such checked boxes.)

(3) x Regardless of any payment trigger and, as applicable, payment method, to which the Participant would otherwise be subject pursuant to (1) above, the first to occur of the following Plan-level payment triggers will cause payment to the Participant commencing pursuant to Section 1.07(c)(1) below in a lump sum, provided such Plan-level payment trigger occurs prior to the payment trigger to which the Participant would otherwise be subject.

Payment Trigger

(A) x Separation from Service prior to: Attainment of Normal Retirement Age of 50.

(B) o Separation from Service

(D) x Change in Control

(b) Distribution Election Change

A Participant

(1) x shall

(2) o shall not

be permitted to modify a scheduled distribution election in accordance with Section 8.01(b) hereof.

(1) Each lump sum distribution and the first distribution in a series of installment payments (if applicable) shall commence as elected in (A), (B) or (C) below:

(A) x	Monthly on the 1 st day of the month which day next follows the applicable triggering event described in 1.07(a).
(B) o	Quarterly on the day of the following months , , , or (list one month in each calendar quarter) which day next follows the applicable triggering event described in 1.07(a).
(C) o	Annually on the day of (month) which day next follows the applicable triggering event described in 1.07(a).

(Note: Notwithstanding the above: a six-month delay shall be imposed with respect to certain distributions to Specified Employees; a Participant who chooses payment on a Specified Date will choose a month, year or quarter (as applicable) only, and payment will be made on the applicable date elected in (A), (B) or (C) above that falls within such month, year or quarter elected by the Participant.)

(2) The commencement of distributions pursuant to the events elected in Section 1.07(a)(1) and Section 1.07(a)(3) shall be modified by application of the following:

(A) o Separation from Service Event Delay — Separation from Service will be treated as not having occurred for months after the date of such event.

(B) o Plan Level Delay — all distribution events (other than those based on Specified Date or Specified Age) will be treated as not having occurred for days (insert number of days but not more than 30).

(d) Installment Frequency and Duration

If installments are available under the Plan pursuant to Section 1.07(a), a Participant shall be permitted to elect that the installments will be paid (Complete 1 and 2 below):

(1) at the following intervals:

(A) x Monthly commencing on the day elected in Section 1.07(c)(1).

(B) x Quarterly commencing on the day elected in Section1.07(c)(1) (with payments made at three-month intervals thereafter).

(2) over the following term(s) (Complete either (A) or (B)) :

(A) x Any term of whole years between 1 (minimum of 1) and 20 (maximum of 30).

(B) o Any of the whole year terms selected below.

q 1	q 2	q 3	q 4	q 5	q 6
q 7	q 8	q 9	q 10	q 11	q 12
q 13	q 14	q 15	q 16	q 17	q 18
q 19	q 20	q 21	q 22	q 23	q 24
q 25	q 26	q 27	q 28	q 29	q 30

(Note: Only elect a term of one year if Section 1.07(d)(1)(A) and/or Section 1.07(d)(1)(B) is elected above.)

(e) Conversion to Lump Sum

o Notwithstanding anything herein to the contrary, if the Participant’s vested

Account at the time such Account becomes payable to him hereunder does not exceed $ distribution of the Participant’s vested Account shall automatically be made in the form of a single lump sum at the time prescribed in Section 1.07(c)(1).

(f) Distribution Rules Applicable to Pre-effective Date Accruals

o Benefits accrued under the Plan (subject to Code section 409A) prior to the date in Section 1.01 (b)( 1) above are subject to distribution rules not described in Section 1.07(a) through (e), and such rules are described in Attachment A Re: PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES.

1.08 VESTING SCHEDULE

(a) (1) The Participant’s vested percentage in Matching Contributions elected in Section 1.05(b) shall be based upon the following schedule and unless Section 1.08(a)(2) is checked below will be based on the elapsed time method as described in Section 7.03(b).

Years of Service		Vesting %
0		100

(2) o Vesting shall be based on the class year method as described in Section 7.03(c).

(b) (1) The Participant’s vested percentage in Employer Contributions elected in Section 1.05(c) shall be based upon the following schedule and unless Section 1.08(b)(2) is checked below will be based on the elapsed time method as described in Section 7.03(b).

Years of Service		Vesting %
0		0
1		0
2		20
3		40
4		60
5		80
6		100

(2) o Vesting shall be based on the class year method as described in Section 7.03(c).

(1) o for new plans, service prior to the Effective Date as defined in Section 1.01(b)(2)(A).

(2) o for existing plans converting from another plan document, service prior to the original Effective Date as defined in Section 1.01(b)(2)(B).

(Note: Do not elect to apply this Section 1.08(c) if vesting is based only on the class year method.)

(d) o Notwithstanding anything to the contrary herein, a Participant will forfeit his Matching Contributions and Employer Contributions (regardless of whether vested) upon the occurrence of the following event(s):

(Note: Contributions with respect to Directors, which are 100% vested at all times, are subject to the rule in this subsection (d).)

(e) A Participant will be 100% vested in his Matching Contributions and Employer Contributions upon (Check the appropriate box(es)) :

(1) x Retirement eligibility is the date the Participant attains age 50 and completes 0 Years of Service, as defined in Section 7.03(b).

(2) x Death.

(3) x The date on which the Participant becomes disabled, as determined under Section 1.07(a)(2).

(Note: Participants will automatically vest upon Change in Control if Section 1.07(a)(1)(G) is elected.)

(f) x Years of Service in Section 1.08 (a)(1) and Section 1.08 (b)(1) shall include service with the following employers:

all Related Employers as defined in Sec. 2.01(a)(25)

1.09 INVESTMENT DECISIONS

A Participant’s Account shall be treated as invested in the Permissible Investments as directed by the Participant unless otherwise provided below:

Participants listed below shall be permitted to direct the Employer that their Account be invested in investments other than the Permissible Investments, as approved by the Employer; provided however, that the Account of any such Participant shall be transferred to a separate trust but shall remain subject to all the Plan terms (other than the terms related to Investment Decisions), including those terms governing distributions and elections with respect thereto:

Myron Kunin

1.10 ADDITIONAL PROVISIONS

The Employer may elect Option below and complete the Superseding Provisions Addendum to describe overriding provisions that are not otherwise reflected in this Adoption Agreement.

x The Employer has completed the Superseding Provisions Addendum to reflect the provisions of the Plan that supersede provisions of this Adoption Agreement and/or the Basic Plan Document.

EXECUTION PAGE
(Fidelity’s Copy)

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this 10 th day of November , 20 08 .

	Employer	Regis Corporation


	By	/s/ Eric A. Bakken


	Title	Senior Vice President & General Counsel

EXECUTION PAGE
(Employer’s Copy)

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this 10 th day of November , 20 08 .

	Employer	Regis Corporation


	By	/s/ Eric A. Bakken


	Title	Senior Vice President & General Counsel

AMENDMENT EXECUTION PAGE
(Fidelity’s Copy)

Plan Name: Regis Corporation Executive Retirement Savings Plan (the “Plan”)

Employer: Regis Corporation

(Note: These execution pages are to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to these execution pages.)

The following section(s) of the Plan are hereby amended effective as of the date(s) set forth below:

Section Amended		Effective Date

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed on the date below.

	Employer:

	By:

	Title:

	Date:

AMENDMENT EXECUTION PAGE
(Employer’s Copy)

Plan Name: Regis Corporation Executive Retirement Savings Plan (the “Plan”)

Employer: Regis Corporation

Section Amended		Effective Date

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed on the date below.

	Employer:

	By:

	Title:

	Date:

ATTACHMENT A

Re: PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES

Plan Name: Regis Corporation Executive Retirement Savings Plan (the “Plan”)

ATTACHMENT B

Re: SUPERSEDING PROVISIONS
for

Plan Name: Regis Corporation Executive Retirement Savings Plan (the “Plan”)

(a) Superseding Provision(s) – The following provisions supersede other provisions of this Adoption Agreement and/or the Basic Plan Document as described below:

(1) The following additional provision shall be added to Section 1 .04(b)(1): For purposes of calculating Employer Contributions, Compensation shall also exclude Bonuses and the Employer match on contributions under the Employer’s Contributory Stock Purchase Plan for the applicable period

(2) The following additional Payment Trigger shall be added to the end of Section 1.07(a)(3): The Participant’s Separation from Service due to (a) (i) a felony conviction under any Federal or state statute which is materially detrimental to the financial interests of the Employer, or (ii) the willful non-performance by Participant of his material employment duties other than by reason of his physical or mental incapacity after reasonable written notice to Participant and reasonable opportunity (not less than thirty (30) days) to cease such non-performance; or (b) the Participant’s willfully engaging in fraud or gross misconduct which is materially detrimental to the financial interests of the Employer.

(3) Section 1.05(c)(2) is modified by adding the following: “Except to the extent otherwise provided in any such writing, an Employer Contribution will be made to the Accounts of only those Employee Participants who are employed by the Employer on the last day of the period to which the Employer Contribution relates and have completed 1,000 hours of service with the Employer or a Related Employer during such period.”

(4) The following exclusion shall be added at the end of Section 2.01(a)(6): “, but excluding any unscheduled, discretionary bonus award made to a Participant that is outside of the Employer’s regular incentive bonus arrangement

(5) Section 8.01(a)(3) shall be modified by adding the following new proviso to the end of the first sentence: “; provided, however, that an election choosing a payment method with respect to the Employer Contributions credited to a Participant’s Account shall be effective for all Employer Contributions thereafter credited to a Participant’s Account and may only be modified as provided under Section 8.01(b)

(6) The following Plan Level Delay will be added at subsection 1.07(c)(2)(B): - all distributions to a beneficiary on account of a Participant’s death will be treated as not having occurred for 30 days.

(7) The following provision shall be added at 1.07(a)(1)(E): Distribution shall begin upon earlier of Separation or Specified Date upon either Participant’s death or a Separation from Service prior to age 50.

(8) 1. The following new sentence is added to the end of Section 1.05(a)(2):

Any special salary reduction agreement for a Deferral Contribution of any portion of a Participant’s Bonus Compensation that is entered into on or before the December 31 preceding the end of the applicable Bonus period shall apply to the calendar year next following the election.

2. Section 4.01 shall be amended by deleting the fifth sentence thereof and replacing it with the following two sentences:

A new election will be effective as of the first day of the following calendar year and will apply only to Compensation (other than Bonus Compensation) payable with respect to services rendered after such date. A separate election for Bonus Compensation made pursuant to Section 1.05(a)(2) will be effective as of the first day of the following calendar year if made on or before the December 31 preceding the end of the period during which the services on which the Bonus is based are performed (the “Bonus Period”), and will apply to Bonus Compensation attributable to such Bonus Period, including any portion of the Bonus Period that precedes the date of the Section 1.05(a)(2) separate election.

1. Section 1.01(b)(2) is replaced in its entirety by the following:

(2) The Adoption Agreement effective date is (Check (A) or check and complete (B)) :

(A) o A new Plan effective date.

(B) x An amendment and restatement of the Plan. The original effective date of the Nonqualified Deferred Salary Plan: 7/24/1988. The original effective date of the Executive Profit Sharing Plan: 7/1/1992 .

1. Section 1.05(b)(3) is replaced in its entirety by the following:

(3) x Matching Contribution Limits (Check the appropriate box (es)) :

(A) o Deferral Contributions in excess of % of the Employee Participant’s Compensation for the calendar year shall not be considered for Matching Contributions.

(B) x Matching Contributions for each Employee Participant for each calendar year shall be limited to: Aggregate Salary and Bonus Contributions in excess of $100,000 for the applicable period shall not be considered for Matching Contributions

TRUST AGREEMENT

Between

Regis Corporation

And

FIDELITY MANAGEMENT TRUST COMPANY

Regis Corporation Executive Retirement Savings Plan Trust

Dated as of November 15, 2008

Plan Number: 44352		ECM NQ 2007 TA
(07/2007)		09/10/2008

TABLE OF CONTENTS

Section		Page

1	Definitions	1

2	Trust	2
	(a) Establishment
	(b) Grantor Trust
	(c) Trust Assets
	(d) Non-Assignment

3	Payments to Sponsor	3

4	Disbursement	4
	(a) Directions from Sponsor
	(b) Limitations

5	Investment of Trust	4
	(a) Selection of Investment Options
	(b) Available Investment Options
	(c) Investment Directions
	(d) Funding Mechanism
	(e) Mutual Funds
	(f) Trustee Powers

6	Recordkeeping and Administrative Services to Be Performed	7
	(a) Accounts
	(b) Inspection and Audit
	(c) Notice of Plan Amendment
	(d) Returns, Reports and Information

7	Compensation and Expenses	7

8	Directions and Indemnification	8
	(a) Directions from Sponsor
	(b) Directions from Participants
	(c) Indemnification
	(d) Survival

9	Resignation or Removal of Trustee	8
	(a) Resignation and Removal
	(b) Termination
	(c) Notice Period
	(d) Transition Assistance
	(e) Failure to Appoint Successor

TABLE OF CONTENTS

(Continued)

Section		Page

10	Successor Trustee	9
	(a) Appointment
	(b) Acceptance
	(c) Corporate Action

11	Resignation, Removal, and Termination Notices	10

12	Duration	10

13	Insolvency of Sponsor	10

14	Amendment or Modification	11

15	Electronic Services	11

16	General	13
	(a) Performance by Trustee, its Agent or Affiliates
	(b) Entire Agreement
	(c) Waiver
	(d) Successors and Assigns
	(e) Partial Invalidity
	(f) Section Headings

17	Assignment	13

18	Force Majeure	13

19	Confidentiality	14

20	Situs of Trust Assets	14

21	Governing Law	14
	(a) Massachusetts Law Controls
	(b) Trust Agreement Controls

TRUST AGREEMENT , dated as of the 15 th day of November 2008, between Regis Corporation, a Minnesota entity, having an office at 7201 Metro Boulevard, Edina, MN 55439 (the “Sponsor”), and FIDELITY MANAGEMENT TRUST COMPANY , a Massachusetts trust company, having an office at 82 Devonshire Street, Boston, Massachusetts 02109 (the “Trustee”).

WITNESSETH :

WHEREAS , the Sponsor is the sponsor of the Plan; and

WHEREAS, the Sponsor wishes to restate, in its entirety, by entering into this Agreement, the irrevocable trust originally established on Original Trust Date , with regard to the Plan effective on the date the assets of which are transferred to the Trustee, and to contribute to the Trust assets that shall be held therein, subject to the claims of Sponsor’s creditors in the event of Sponsor’s Insolvency, as herein defined, until paid to Participants and their beneficiaries in such manner and at such times as specified in the Plan;

WHEREAS, it is the intention of the parties that the Trust shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”);

WHEREAS, it is the intention of the Sponsor to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan; and

WHEREAS , the Trustee is willing to hold and invest the aforesaid assets in trust among several investment options selected by the Sponsor.

NOW, THEREFORE , in consideration of the foregoing premises and the mutual covenants and agreements set forth below, the Sponsor and the Trustee agree as follows:

Section 1. Definitions . The following terms as used in this Trust Agreement have the meanings indicated unless the context clearly requires otherwise:

(a) “ Agreement ” shall mean this Trust Agreement, as the same may be amended and in effect from time to time.

(b) “ Business Day ” shall mean any day on which the New York Stock Exchange (NYSE) is open.

to time.

(d) “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as it has been or may be amended from time to time.

(e) “ Fidelity Mutual Fund ” shall mean any investment company advised by Fidelity Management & Research Company or any of its affiliates.

(f) “ Insolvency ” shall mean that the Sponsor is or has become insolvent as defined in Section 13(a).

(g) “ Mutual Fund ” shall refer both to Fidelity Mutual Funds and Non-Fidelity Mutual Funds.

(h) “ Non-Fidelity Mutual Fund ” shall mean certain investment companies not advised by Fidelity Management & Research Company or any of its affiliates.

(i) “ Participant ” shall mean, with respect to the Plan, any individual who has accrued a benefit under the Plan, which has not yet been fully distributed and/or forfeited, and shall include the designated beneficiary(ies) with respect to the benefit of such an individual until such benefit has been fully distributed and/or forfeited.

(j) “ Permissible Investment ” shall mean any of the investments specified by the Sponsor as available for investment of assets of the Trust and agreed to by the Trustee. The Permissible Investments shall be listed in the Service Agreement.

(k) “ Plan ” shall mean the plan or plans described in the Service Agreement.

(l) “ Reconciliation Period ” shall mean the period beginning on the date of the initial transfer of assets to the Trust and ending on the date of the completion of the reconciliation of Participant records.

(m) “ Reporting Date ” shall mean the last day of each calendar quarter, the date as of which the Trustee resigns or is removed pursuant to this Agreement and the date as of which this Agreement terminates pursuant to Section 9 hereof.

(n) “ Service Agreement ” shall mean the agreement between the Trustee and the Sponsor for the Trustee, through certain affiliates and related companies, to provide administrative and recordkeeping services for the Plan.

(o) “ Sponsor ” shall mean Regis Corporation, as identified in the first paragraph of this Agreement, or any successor to all or substantially all of its businesses which, by agreement, operation of law or otherwise, assumes the responsibility of the Sponsor under this Agreement.

(p) “ Trust ” shall mean the Regis Corporation Executive Retirement Savings Plan Trust, being the trust restated by the Sponsor and the Trustee pursuant to the provisions of the Agreement.

(q) “ Trustee ” shall mean Fidelity Management Trust Company, a Massachusetts trust company and any successor to all or substantially all of its trust business. The term Trustee shall also include any successor trustee appointed pursuant to this Agreement to the extent such successor agrees to serve as Trustee under the Agreement.

Section 2. Trust .

(a) Establishment . The Sponsor hereby establishes the Trust with the Trustee. The Trust shall consist of an initial contribution of money or other property acceptable to the Trustee in its sole discretion, made by the Sponsor or transferred from a previous trustee, such additional sums of money as

shall from time to time be delivered to the Trustee, all investments made therewith and proceeds thereof, and all earnings and profits thereon, less the payments that are made by the Trustee as provided herein, without distinction between principal and income. The Trustee hereby accepts the Trust on the terms and conditions set forth in this Agreement. In accepting this Trust, the Trustee shall be accountable for the assets received by it, subject to the terms and conditions of the Agreement.

(b) Grantor Trust . The Trust is intended to be a grantor trust, of which the Sponsor is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code, and shall be construed accordingly.

(c) Trust Assets . The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the Sponsor and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. Participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and the Agreement shall be mere unsecured contractual rights of Participants and their beneficiaries against the Sponsor. Any assets held by the Trust will be subject to the claims of the Sponsor’s general creditors under federal and state law in the event of Insolvency, as defined in this Agreement.

(d) Non-Assignment . Benefit payments to Participants and their beneficiaries from the Trust may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered, or subjected to attachment, garnishment, levy, execution, or other legal or equitable process. Nothwithstanding anything in this Agreement to the contrary, the Sponsor can direct the Trustee to disperse monies pursuant to a domestic relations order as defined in Code section 414(p)(1)(B) in accordance with Section 4(a).

Section 3. Payments to Sponsor . Except as provided under the Agreement, the Sponsor shall have no right to retain or divert to others any of the Trust assets before all benefit payments have been made to the Participants and their beneficiaries pursuant to the terms of the Plan. The Sponsor may direct the Trustee in writing to pay the Sponsor any amount in excess of the amount needed to pay all of the benefits accrued under the Plan as of the date of such payment.

Section 4. Disbursements .

(a) Directions from Sponsor .

(i) If the Service Agreement provides that the Trustee will make distributions of Plan benefits directly to Participants and beneficiaries, the Trustee shall disburse monies to Participants and their beneficiaries for benefit payments in the amounts that the Sponsor directs from time to time in writing. The Trustee shall have no responsibility to ascertain whether the Sponsor’s direction complies with the terms of the Plan or of any applicable law. The Trustee shall be responsible for federal or state income tax reporting or withholding with respect to such Plan benefits. The Trustee shall not be responsible for tax reporting or withholding of FICA (Social Security and Medicare), any federal or state unemployment, or local tax with respect to Plan distributions.

(ii) If the Service Agreement provides that the Sponsor shall be responsible for making distributions of benefits to Participants and beneficiaries, then the Trustee shall disburse monies to the Sponsor for benefit payments in the amounts that the Sponsor directs from time to time in writing. The Trustee shall have no responsibility to ascertain whether the Sponsor’s direction complies with the terms of the Plan or any applicable law. The Trustee shall not be responsible for: (1) making benefit payments to Participants under the Plan; or, (2) any federal, state or local tax reporting or withholding of any kind with respect to such Plan benefits.

(b) Limitations . The Trustee shall not be required to make any disbursement in excess of the net realizable value of the assets of the Trust at the time of the disbursement.

Section 5. Investment of Trust .

(a) Selection of Investment Options . The Trustee shall have no responsibility for the selection of investment options under the Trust and shall not render investment advice to any person in connection with the selection of such options.

(b) Available Investment Options . The Sponsor shall direct the Trustee as to what investment options the Trust shall be invested in (i) during the Reconciliation Period, and (ii) following the Reconciliation Period, subject to the following limitations. The Sponsor may include only Permissible Investments as described in the Service Agreement; provided, however, that the Trustee shall not be considered a fiduciary with investment discretion. The Sponsor may add or remove investment options with the consent of the Trustee and upon mutual amendment of the Service Agreement to reflect such additions.

(c) Investment Directions . In order to provide for an accumulation of assets comparable to the contractual liabilities accruing under the Plan, the Sponsor may direct the Trustee in writing to invest

the assets held in the Trust to correspond to the hypothetical investments made for Participants in accordance with their direction under the Plan.

(d) Funding Mechanism . The Sponsor’s designation of available investment options under paragraphs (a) and (b) above, the maintenance of accounts for each Participant under the Plan and the crediting of investments to such accounts, and the exercise by Participants of any powers relating to investments under this Section 5 are solely for the purpose of providing a mechanism for measuring the obligation of the Sponsor to any particular Participant under the Plan. As further provided in the Agreement, no Participant or beneficiary will have any preferential claim to or beneficial ownership interest in any asset or investment held in the Trust, and the rights of any Participant and his or her beneficiaries under the Plan and the Agreement are solely those of an unsecured general creditor of the Sponsor with respect to the benefits of the Participant under the Plan.

(e) Mutual Funds . The Sponsor hereby acknowledges that it has received from the Trustee a copy of the prospectus for each Mutual Fund selected by the Sponsor as a Permissible Investment. Trust investments in Mutual Funds shall be subject to the following limitations:

(i) Execution of Purchases and Sales . Purchases and sales of Permissible Investments (other than for Exchanges) shall be made on the date on which the Trustee receives from the Sponsor in good order all information and documentation necessary to accurately effect such purchases and sales (or in the case of a purchase, the subsequent date on which the Trustee has received a wire transfer of funds necessary to make such purchase) . Exchanges of Permissible Investments shall be made on the same Business Day that the Trustee receives a proper direction if received before market close (generally 4:00 p.m. eastern time); if the direction is received after market close (generally 4:00 p.m. eastern time), the exchange shall be made the following Business Day.

(ii) Voting . At the time of mailing of notice of each annual or special stockholder’s meeting of any Mutual Fund, the Trustee shall send a copy of the notice and all proxy solicitation materials to the Sponsor, together with a voting direction form for return to the Trustee or its designee. The Trustee shall vote the shares held in the Trust in the manner as directed by the Sponsor. The Trustee shall not vote shares for which it has received no corresponding directions from the Sponsor. The Sponsor shall also have the right to direct the Trustee as to the manner in which all shareholder rights, other than the right to vote, shall be exercised. The Trustee shall have no duty to solicit directions from the Sponsor.

(f) Trustee Powers . The Trustee shall have the following powers and authority:

(i) Subject to paragraphs (b), (c) and (d) of this Section 5, to sell, exchange, convey,
transfer, or otherwise dispose of any property held in the Trust, by private contract or at public auction. No person dealing with the Trustee shall be bound to see to the application of the purchase money or other property delivered to the Trustee or to inquire into the validity, expediency, or propriety of any such sale or other disposition.

(ii) To cause any securities or other property held as part of the Trust to be registered in the Trustee’s own name, in the name of one or more of its nominees, or in the Trustee’s account with the Depository Trust Company of New York and to hold any investments in bearer form, but the books and records of the Trustee shall at all times show that all such investments are part of the Trust.

(iii) To keep that portion of the Trust in cash or cash balances as the Sponsor may, from time to time, deem to be in the best interest of the Trust.

(iv) To make, execute, acknowledge, and deliver any and all documents of transfer or conveyance and to carry out the powers herein granted.

(v) To settle, compromise, or submit to arbitration any claims, debts, or damages due to or arising from the Trust; to commence or defend suits or legal or administrative proceedings; to represent the Trust in all suits and legal and administrative hearings; and to pay all reasonable expenses arising from any such action, from the Trust if not paid by the Sponsor.

(vi) To employ legal, accounting, clerical, and other assistance as may be required in carrying out the provisions of this Agreement and to pay their reasonable expenses and compensation from the Trust if not paid by the Sponsor.

(vii) To do all other acts although not specifically mentioned herein, as the Trustee may deem necessary to carry out any of the foregoing powers and the purposes of the Trust.

Notwithstanding any powers granted to the Trustee pursuant to the Agreement or to applicable law, the Trustee shall not have any power that could give the Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Code.

Section 6. Recordkeeping and Administrative Services to Be Performed .

(a) Accounts . The Trustee shall keep accurate accounts of all investments, receipts, disbursements, and other transactions hereunder, and shall report the value of the assets held in the Trust periodically and on the date on which the Trustee resigns or is removed as provided in the Agreement or is terminated as provided in the Agreement. Within thirty (30) days following each Reporting Date or within sixty (60) days in the case of a Reporting Date caused by the resignation or removal of the Trustee, or the termination of the Agreement, the Trustee shall file with the Sponsor a written account setting forth all investments, receipts, disbursements, and other transactions effected by the Trustee between the Reporting Date and the prior Reporting Date, and setting forth the value of the Trust as of the Reporting Date. Except as otherwise required under applicable law, upon the expiration of six (6) months from the date of filing such account with the Sponsor, the Trustee shall have no liability or further accountability to anyone with respect to the propriety of its acts or transactions shown in such account, except with respect to such acts or transactions as to which the Sponsor shall within such six (6) month period file with the Trustee written objections.

(b) Inspection and Audit . All records generated by the Trustee in accordance with paragraphs (a) shall be open to inspection and audit, during the Trustee’s regular business hours prior to the termination of the Agreement, by the Sponsor or any person designated by the Sponsor.

(c) Effect of Plan Amendment . The Sponsor must deliver to the Trustee a copy of any amendment to the Plan as soon as administratively feasible following the amendment’s adoption and the Sponsor must provide the Trustee on a timely basis with all additional information the Sponsor deems necessary for the Trustee to perform the its duties hereunder as well as such other information as the Trustee may reasonably request.

(d) Returns, Reports and Information . Except as set forth in the Service Agreement, the Sponsor shall be responsible for the preparation and filing of all returns, reports, and information required of the Trust by law. The Trustee shall provide the Sponsor with such information as the Sponsor may reasonably request to make these filings. The Sponsor shall also be responsible for making any disclosures to Participants required by law.

Section 7. Compensation and Expenses . Sponsor shall pay to Trustee, within thirty (30) days of receipt of the Trustee’s bill, the fees for services in accordance with the Service Agreement. All fees for services are specifically outlined in the Service Agreement and are based on any assumptions identified therein.

All expenses of the Trustee relating directly to the acquisition and disposition of investments

constituting part of the Trust, and all taxes of any kind whatsoever that may be levied or assessed under existing or future laws upon or in respect of the Trust or the income thereof, shall be a charge against and paid from the appropriate Participants’ accounts.

Section 8. Directions and Indemnification .

(a) Directions from Sponsor . Whenever the Sponsor provides a direction to the Trustee, the Trustee shall not be liable for any loss, or by reason of any breach, arising from the direction if the direction is contained in a writing (or is oral and immediately confirmed in a writing) signed by any individual whose name and signature have been submitted (and not withdrawn) in writing to the Trustee by the Sponsor in the manner described in the Service Agreement, provided the Trustee reasonably believes the signature of the individual to be genuine. Such direction may be made via electronic data transfer (“EDT”) in accordance with procedures agreed to by the Sponsor and the Trustee; provided, however, that the Trustee shall be fully protected in relying on such direction as if it were a direction made in writing by the Sponsor. The Trustee shall have no responsibility to ascertain any direction’s (i) accuracy, (ii) compliance with the terms of the Plan or any applicable law, or (iii) effect for tax purposes or otherwise.

(b) Directions from Participants . The Trustee shall not be liable for any loss resulting from any Participant’s exercise or non-exercise of rights under this Agreement to direct the investment of the hypothetical assets in the Participant’s accounts.

(c) Indemnification . The Sponsor shall indemnify the Trustee against, and hold the Trustee harmless from, any and all loss, damage, penalty, liability, cost, and expense, including without limitation, reasonable attorneys’ fees and disbursements, that may be incurred by, imposed upon, or asserted against the Trustee by reason of any claim, regulatory proceeding, or litigation arising from any act done or omitted to be done by any individual or person with respect to the Plan or the Trust, excepting only any and all loss, etc., arising solely from the Trustee’s negligence or bad faith.

(d) Survival . The provisions of this Section 8 shall survive the termination of this Agreement.

Section 9. Resignation or Removal of Trustee .

(a) Resignation and Removal .

(i) The Trustee may resign at any time in accordance with the notice provisions set forth below.

(ii) The Sponsor may remove the Trustee at any time in accordance with the

notice provisions set forth below.

(b) Termination . The Agreement may be terminated at any time by the Sponsor upon prior written notice to the Trustee in accordance with the notice provisions set forth below.

(c) Notice Period . In the event either party desires to terminate the Agreement or any Services hereunder, the party shall provide at least sixty-(60) days prior written notice of the termination date to the other party; provided, however, that the receiving party may agree, in writing, to a shorter notice period.

(d) Transition Assistance . In the event of termination of the Agreement, if requested by Sponsor, the Trustee shall assist Sponsor in developing a plan for the orderly transition of the Plan data, cash and assets then constituting the Trustee and recordkeeping services provided by the Trustee hereunder to Sponsor or its designee. The Trustee shall provide such assistance for a period not extending beyond sixty (60) days from the termination date of this Agreement. The Trustee shall provide to Sponsor, or to any person designated by Sponsor, at a mutually agreeable time, one file of the Plan data prepared and maintained by the Trustee in the ordinary course of business, in the Trustee’s format. The Trustee may provide other or additional transition assistance as mutually determined for additional fees, which shall be due and payable by the Sponsor prior to any termination of the Agreement.

(e) Failure to Appoint Successor . If, by the termination date, the Sponsor has not notified the Trustee in writing as to the individual or entity to which the assets and cash are to be transferred and delivered, the Trustee may bring an appropriate action or proceeding for leave to deposit the assets and cash in a court of competent jurisdiction. The Trustee shall be reimbursed by the Sponsor for all costs and expenses of the action or proceeding including, without limitation, reasonable attorneys’ fees and disbursements.

Section 10. Successor Trustee .

(a) Appointment . If the office of Trustee becomes vacant for any reason, the Sponsor may in writing appoint a successor trustee under this Agreement. The successor trustee shall have all of the rights, powers, privileges, obligations, duties, liabilities, and immunities granted to the Trustee under the Agreement. After a successor trustee accepts appointment, a prior trustee shall not be liable for the acts or omissions of the Trustee with respect to the Trust occurring after the time of the appointment.

(b) Acceptance . When the successor trustee accepts its appointment under the Agreement, title to the Trust assets shall immediately vest in the Trustee without any further action on the part of the

prior trustee. The prior trustee shall execute all instruments and do all acts that reasonably may be necessary or reasonably may be requested in writing by the Sponsor or the Trustee to evidence the vesting of title to all Trust assets in the Trustee or to deliver all Trust assets to the Trustee.

(c) Corporate Action . Any successor of the Trustee, through sale or transfer of the business or trust department of the Trustee, or through reorganization, consolidation, or merger, or any similar transaction, shall, upon consummation of the transaction, become the Trustee under this Agreement.

Section 11. Resignation, Removal, and Termination Notices . All notices of resignation, removal, or termination under this Agreement must be in writing and mailed to the party to which the notice is being given by certified or registered mail, return receipt requested, to the Sponsor at the address designated in the Service Agreement, and to the Trustee c/o Fidelity Investments - ECM Client Services Relationship Manager, P.O. Box 770001, Cincinnati, OH 45277-0026, or to such other addresses as the parties have notified each other of in the foregoing manner.

Section 12. Duration . The Trust shall continue in effect without limit as to time, subject, however, to the provisions of the Agreement relating to amendment, modification, and termination thereof.

Section 13. Insolvency of Sponsor .

(a) Trustee shall cease disbursement of funds for payment of benefits to Participants and their beneficiaries if the Sponsor is Insolvent. Sponsor shall be considered “Insolvent” for purposes of the Agreement if (i) Sponsor is unable to pay its debts as they become due, or (ii) Sponsor is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

(b) All times during the continuance of the Trust, the principal and income of the Trust shall be subject to claims of general creditors of the Sponsor under federal and state law as set forth below.

(i) The Board of Directors (or other body governing the entity under state law) and the Chief Executive Officer of the Sponsor shall have the duty to inform the Trustee in writing of the Sponsor’s Insolvency. If a person claiming to be a creditor of the Sponsor alleges in writing to the Trustee that the Sponsor has become Insolvent, the Trustee shall determine whether the Sponsor is Insolvent and, pending such determination, the Trustee shall discontinue disbursements for payment of benefits to Participants or their beneficiaries.

(ii) Unless the Trustee has actual knowledge of the Sponsor’s Insolvency, or has received notice from the Sponsor or a person claiming to be a creditor alleging that the Sponsor is

Insolvent, the Trustee shall have no duty to inquire whether the Sponsor is Insolvent. The Trustee may in all events rely on such evidence concerning the Sponsor’s solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Sponsor’s solvency.

(iii) If at any time the Trustee has determined that the Sponsor is Insolvent, the Trustee shall discontinue disbursements for payments to Participants or their beneficiaries and shall hold the assets of the Trust for the benefit of the Sponsor’s general creditors. Nothing in this Agreement shall in any way diminish any rights of Participants or their beneficiaries to pursue their rights as general creditors of the Sponsor with respect to benefits due under the Plan or otherwise.

(iv) Trustee shall resume disbursements for the payment of benefits to Participants or their beneficiaries in accordance with this Agreement only after the Trustee has determined that the Sponsor is not Insolvent (or is no longer Insolvent).

(c) If the Sponsor permits the employees of another member of the same controlled group (as defined in IRC Section 414(b) or (c)) to participate in the Plan, all of the assets held by the Trust will be subject to the claims of the general creditors of both the Sponsor and all of such participating affiliates and, for purposes of Section 13(a), the Sponsor is considered Insolvent if any such affiliate meets the definition of Insolvent.

(d) Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 13(a) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants or their beneficiaries under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Participants or their beneficiaries by the Sponsor in lieu of the payments provided for hereunder during any such period of discontinuance.

Section 14. Amendment or Modification . This Agreement may be amended or modified at any time and from time to time only by an instrument executed by both the Sponsor and the Trustee.

Section 15. Electronic Services .

(a) The Trustee may provide communications and services (“Electronic Services”) and/or software products (“Electronic Products”) via electronic media, including, but not limited to Fidelity Plan Sponsor WebStation. The Sponsor and its agents agree to use such Electronic Services and Electronic Products only in the course of reasonable administration of or participation in the Plan and to keep confidential and not publish, copy, broadcast, retransmit, reproduce, commercially exploit or otherwise

redisseminate the Electronic Products or Electronic Services or any portion thereof without the Trustee’s written consent, except, in cases where the Trustee has specifically notified the Sponsor that the Electronic Products or Services are suitable for delivery to Participants, for non-commercial personal use by the Participants or beneficiaries with respect to their participation in the Plan or for their other retirement planning purposes.

(b) The Sponsor shall be responsible for installing and maintaining all Electronic Products, (including any programming required to accomplish the installation) and for displaying any and all content associated with Electronic Services on its computer network and/or intranet so that such content will appear exactly as it appears when delivered to the Sponsor. All Electronic Products and Services shall be clearly identified as originating from the Trustee or its affiliate. The Sponsor shall promptly remove Electronic Products or Services from its computer network and/or intranet, or replace the Electronic Products or Services with updated products or services provided by the Trustee, upon written notification (including written notification via facsimile) by the Trustee.

(c) All Electronic Products shall be provided to the Sponsor without any express or implied legal warranties or acceptance of legal liability by the Trustee, and all Electronic Services shall be provided to the Sponsor without acceptance of legal liability related to or arising out of the electronic nature of the delivery or provision of such Services. Except as otherwise stated in this Agreement, no rights are conveyed to any property, intellectual or tangible, associated with the contents of the Electronic Products or Services and related material. The Trustee hereby grants to the Sponsor a non-exclusive, nontransferable revocable right and license to use the Electronic Products and Services in accordance with the terms and conditions of the Agreement.

(d) To the extent that any Electronic Products or Services utilize Internet services to transport data or communications, the Trustee will take, and the Sponsor agrees to follow, reasonable security precautions, however, the Trustee disclaims any liability for interception of any such data or communications. The Trustee reserves the right not to accept data or communications transmitted via electronic media by the Sponsor or a third party if it determines that the media does not provide adequate data security, or if it is not administratively feasible for the Trustee to use the data security provided. The Trustee shall not be responsible for, and makes no warranties regarding access, speed or availability of Internet or network services, or any other service required for electronic communication. The Trustee shall not be responsible for any loss or damage related to or resulting from any changes or modifications to the Electronic Products or Services after delivering it to the Sponsor.

Section 16. General .

(a) Performance by Trustee, its Agents or Affiliates . The Sponsor acknowledges and authorizes that the services to be provided under the Agreement shall be provided by the Trustee, its agents or affiliates, including but not limited to Fidelity Investments Institutional Operations Company, Inc. or its successor, and that certain of such services may be provided pursuant to one or more other contractual agreements or relationships.

(b) Entire Agreement . This Agreement contains all of the terms agreed upon between the parties with respect to the subject matter hereof.

(c) Waiver . No waiver by either party of any failure or refusal to comply with an obligation hereunder shall be deemed a waiver of any other or subsequent failure or refusal to so comply.

(d) Successors and Assigns . The stipulations in this Agreement shall inure to the benefit of, and shall bind, the successors and assigns of the respective parties.

(e) Partial Invalidity . If any term or provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of the Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of the Agreement shall be valid and enforceable to the fullest extent permitted by law.

(f) Section Headings . The headings of the various sections, subsections and paragraphs of this Agreement have been inserted only for the purposes of convenience and are not part of the Agreement and shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of the Agreement.

Section 17. Assignment . This Agreement, and any of its rights and obligations hereunder, may not be assigned by any party without the prior written consent of the other party(ies), and such consent may be withheld in any party’s sole discretion. Notwithstanding the foregoing, Trustee may assign this Agreement in whole or in part, and any of its rights and obligations hereunder, to a subsidiary or affiliate of Trustee without consent of the Sponsor. All provisions in the Agreement shall extend to and be binding upon the parties hereto and their respective successors and permitted assigns.

Section 18. Force Majeure . No party shall be deemed in default of the Agreement to the extent that any delay or failure in performance of its obligation(s) results, without its fault or negligence, from any cause beyond its reasonable control, such as acts of God, acts of civil or military authority, embargoes,

epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, power outages or strikes. This clause shall not excuse any of the parties to the Agreement from any liability which results from failure to have in place reasonable disaster recovery and safeguarding plans adequate for protection of all data each of the parties to the Agreement are responsible for maintaining for the Plan.

Section 19. Confidentiality . Both parties to this Agreement recognize that in the course of implementing and providing the services described herein, each party may disclose to the other confidential information. All such confidential information, individually and collectively, and other proprietary information disclosed by either party shall remain the sole property of the party disclosing the same, and the receiving party shall have no interest or rights with respect thereto if so designated by the disclosing party to the receiving party. Each party agrees to maintain all such confidential information in trust and confidence to the same extent that it protects its own proprietary information, and not to disclose such confidential information to any third party without the written consent of the other party. Each party further agrees to take all reasonable precautions to prevent any unauthorized disclosure of confidential information. In addition, each party agrees not to disclose or make public to anyone, in any manner, the terms of the Agreement, except as required by law, without the prior written consent of the other party.

Section 20. Situs of Trust Assets . The Sponsor and the Trustee agree that no assets of the Trust shall be located or transferred outside of the United States.

Section 21. Governing Law .

(a) Massachusetts Law Controls . This Agreement is being made in the Commonwealth of Massachusetts, and the Trust shall be administered as a Massachusetts trust. The validity, construction, effect, and administration of the Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts, except to the extent those laws are superseded under Section 514 of ERISA.

(b) Trust Agreement Controls . The Trustee is not a party to the Plan, and in the event of any conflict between the provisions of the Plan and the provisions of the Agreement, the provisions of the Agreement shall control.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.

Plan Sponsor Name:	Regis Corporation


	By:	/s/ Eric A. Bakken

	Name:	Eric A. Bakken

	Title:	Senior Vice President & General Counsel

	Date:	November 10, 2008



	FIDELITY MANAGEMENT TRUST COMPANY


	By:

	Name:

	Title:

	Date:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.

Plan Sponsor Name:	Regis Corporation


	By:	/s/ Eric A. Bakken

	Name:	Eric A. Bakken

	Title:	Senior Vice President & General Counsel

	Date:	November 10, 2008



	FIDELITY MANAGEMENT TRUST COMPANY


	By:

	Name:

	Title:

	Date:

AMENDMENT No. 2

TO THE TRUST AGREEMENT FOR THE

REGIS CORPORATION

EXECUTIVE RETIREMENT SAVINGS PLAN

WHEREAS , Regis Corporation (the “Sponsor”) adopted the Trust Agreement Between Regis Corporation And Fidelity Management Trust Company (“FMTC”), effective January 1, 2008 (the “Trust”); and

WHEREAS , the Sponsor, with the consent of FMTC, desires to amend the Trust.

NOW, THEREFORE , the Trust is hereby amended, effective as of March 1, 2007, as follows:

1. A new Section 1(p) and a new Section 1(q) are added as follows, the existing Section 1(p) is re-designated as Section 1(r), and the existing Section 1(q) is re-designated as Section 1(s):

(p) “ Sponsor Stock ” shall mean the common stock of the Sponsor or such other publicly traded stock of the Sponsor.

(q) “ Stock Fund ” shall mean the investment option consisting of Sponsor Stock.

2. A new Section 5(f) provided below is inserted, and the existing Section 5(f) is re-designated as Section 5(g):

(f) Sponsor Stock . Trust investments in Sponsor Stock shall be made via the Stock Fund.

(i) Acquisition Limit . Pursuant to the Plan, the Trust may be invested in Sponsor Stock to the extent necessary to comply with investment directions under this Agreement. The Sponsor shall be responsible for providing specific direction on any acquisition limits required by the Plan or applicable law.

(ii) Duty . The Sponsor shall continually monitor the suitability of acquiring and holding Sponsor Stock. The Trustee shall not be liable for any loss or expense which arises from the directions of the Sponsor with respect to the acquisition and holding of Sponsor Stock, unless it is clear on their face that the actions to be taken under those directions would be prohibited by any applicable law or would be contrary to the terms of this Agreement.

(iii) Purchases and Sales of Sponsor Stock . The applicable provisions of the Service Agreement between the Sponsor and the Trustee, along with (A) and (B) below (except as otherwise provided in such Service Agreement) shall govern purchases and sales of Sponsor Stock.

(A) Purchases and Sales from or to Sponsor . If directed by the Sponsor in writing prior to the trading date, the Trustee may purchase or sell Sponsor Stock from or to the Sponsor if the purchase or sale is for adequate consideration and no commission is charged. If Sponsor contributions (employer) or contributions made by the Sponsor to hypothetical Participants (employee) accounts under the Plan are to be invested in Sponsor Stock, the Sponsor may transfer Sponsor Stock in lieu of cash to the Trust.

(B) Use of an Affiliated Broker . The Sponsor hereby directs the Trustee to use NFSLLC to provide brokerage services in connection with any purchase or sale of Sponsor Stock. NFSLLC shall execute such directions directly or through any of its affiliates. The provision of brokerage services shall be subject to the following:

(1) As consideration for such brokerage services, the Sponsor agrees that NFSLLC shall be entitled to remuneration under this direction provision in the amount of $0.029 commission on each share of Sponsor Stock in a singular transaction. Any increase in such remuneration may be made only by a written agreement between Sponsor and Trustee.

(2) Any successor organization of NFSLLC, through reorganization, consolidation, merger or similar transactions, shall, upon consummation of such transaction, become the successor broker in accordance with the terms of this authorization provision.

(3) The Trustee and NFSLLC shall continue to rely on this direction provision until notified to the contrary. The Sponsor reserves the right to terminate this direction upon written notice to NFSLLC (or its successor) and the Trustee, in accordance with this Agreement.

(iv) Securities Law Reports . The Sponsor shall be responsible for filing all reports required under Federal or state securities laws with respect to the Trust’s ownership of Sponsor Stock, including, without limitation, any reports required under section 13 or 16 of the Securities Exchange Act of 1934, and shall immediately notify the Trustee in writing of any requirement to stop purchases or sales of Sponsor Stock pending the filing of any report. The Sponsor shall be responsible for the registration of any Plan interests to the extent required under Federal or state securities law. The Trustee shall provide to the Sponsor such information on the Trust’s ownership of Sponsor Stock as the Sponsor may reasonably request in order to comply with Federal or state securities laws.

(v) Voting and Tender Offers . Notwithstanding any other provision of this Agreement, the provisions of this Section shall govern the voting

and tendering of Sponsor Stock held under the Trust. The Sponsor shall provide direction to the Trustee with respect to any proxy voting, any tender or exchange offer, or any other similar shareholder right, and the Trustee shall vote, tender or exchange shares of Sponsor Stock in accordance with timely, written direction from the Sponsor. Unless otherwise required by applicable law, the Trustee shall not take any action with respect to a vote, tender, exchange or similar shareholder right in the absence of instruction from the Sponsor. For these purposes, a timely direction is one that is received at a time that reasonably allows the Trustee to exercise shareholder rights, through a custodian, if applicable.

(vi) Genera l. With respect to all shareholder rights other than the right to vote, the right to tender, and the right to withdraw shares previously tendered, the Trustee shall follow the directions of the Sponsor in accordance with the procedures described in (v) above.

(vii) Conversion . All provisions in this Section 5(f) shall also apply to any securities received as a result of a conversion of Sponsor Stock.

IN WITNESS WHEREOF , the Sponsor and the Trustee have caused this Amendment to be executed by duly authorized individuals as of the day and year first written above.

REGIS CORPORATION (Sponsor)

By:	/s/ Eric A. Bakken
Name:	Eric A. Bakken
Title:	Senior Vice President & General Counsel
Date:	November 10, 2008


FIDELITY MANAGEMENT TRUST
COMPANY (FMTC)


By:
	FMTC Authorized Signatory
Name:

Date:

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.

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

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

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;

(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).

(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.

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.

(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:

(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:

(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:

(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

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).

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 (7 th ) 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

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.

“ 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;

(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.

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.

(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.

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.

(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.

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

Exhibit 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

AGREEMENT

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 ”).

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.

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.

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.

(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:

(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.

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

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:

(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.

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.

7. PAYMENTS UPON TERMINATION .

(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.

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.

(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.

(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).

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

(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

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).

(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.

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 (7 th ) month following separation from service, without adjustment for interest or earnings during the period of delay.

“ 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:

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

“ 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:

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

(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;

“ 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	%

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.

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

(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 or her relationship with the Corporation.

11. CLAIMS PROCEDURE .

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 .

(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.

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

Section 11, shall be settled exclusively by binding arbitration in the manner set forth in Section 10(c).

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/ Randy L. Pearce

	Name:		Randy L. Pearce

	Title:		Senior Executive Vice President, Chief Financial and Administrative Officer

Exhibit No. 10(d)(*)

AMENDED AND RESTATED

SENIOR OFFICER EMPLOYMENT AND

DEFERRED COMPENSATION AGREEMENT

This SENIOR OFFICER EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT (this “ Agreement ”), is hereby amended and restated as of December 31, 2008 (the “ Effective Date ”), between REGIS CORPORATION , hereinafter referred to as the “ Corporation ,” and Gordon Nelson, hereinafter referred to as “ Employee .”

WHEREAS , this Agreement was initially entered into as of April 14, 1998, and was last amended and restated June 29, 2007; and

WHEREAS , Employee and the Corporation wish to amend and restate this Agreement as of the date hereof to incorporate and supersede all prior amendments hereto and to make certain changes to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);

NOW, THEREFORE, IN CONSIDERATION of the mutual agreements hereinafter contained, the parties hereby agree as follows:

1. Definitions.

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

“Cause” shall mean: (a) (i) 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 Employee of his material employment duties other than by reason of his physical or mental incapacity after reasonable written notice to Employee and reasonable opportunity (not less than thirty (30) days) to cease such non-performance; or (b) Employee willfully engaging in fraud or gross misconduct which is materially detrimental to the financial interests of the Corporation.

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

(c) individuals who constitute the Corporation’s Board of Directors on the 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 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 be an amount determined by discounting Employee’s Vested Monthly Benefit to present value based on the number of months between (a) the Employee’s age at the date of his Separation from Service or, if he elects to defer payment or commencement pursuant to subparagraph 6(d) of this Agreement, the date of payment or commencement, and (b) the date of Employee’s 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 Employee’s 65th birthday.

“Good Reason” shall mean the occurrence, without the express written consent of Employee, of any of the following: (a) any adverse alteration in the nature of Employee’s reporting responsibilities, titles, or offices, or any removal of Employee from, or any failure to reelect Employee to, any such positions, except in connection with a termination of the employment of Employee for Cause, permanent disability, or as a result of Employee’s death or a termination of employment by Employee other than for Good Reason; (b) a reduction by the Corporation in Employee’s base salary as then in effect; (c) failure by the Corporation to continue in effect (without substitution of a

substantially equivalent plan or a plan of substantially equivalent value) any compensation plan, bonus or incentive plan, stock purchase plan, stock option plan, life insurance plan, health plan, disability plan or other benefit plan or arrangement in which Employee is then participating; (d) any material breach by the Corporation of any provisions of the Agreement; (e) the requirement by the Corporation that Employee’s principal place of employment be relocated outside of a thirty (30) mile radius from its existing location; or (f) 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 Employee notifies the Corporation of such condition set forth in clause (a), (b), (c), (d), (e) or (f) within 90 days of its initial existence and the Corporation fails to remedy such condition within 30 days of receiving such notice.

“Monthly Benefit” shall be an amount equal to the greater of (i) forty percent (40%) of Employee’s average monthly compensation, excluding bonuses, for the sixty (60) months immediately preceding Employee’s Separation From Service or disability (provided that for purposes of such calculation the Monthly Benefit shall be increased by Two Thousand Five Hundred Dollars ($2,500.00) unless Employee’s employment terminates on or before February 8, 2012 by the Company for Cause or by Employee without Good Reason), and (ii) Five Thousand Dollars ($5,000.00).

“Separation From Service” shall be a separation from service with the Corporation and its affiliates (other than due to death or disability) within the meaning of Code Section 409A(a)(2)(A)(i) and Treas. Reg. Section 1.409A-1(h).

“Vested Monthly Benefit” shall be a percentage of Employee’s Monthly Benefit determined on the basis of the number of Employee’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	%

A year of service for purposes of vesting shall be a consecutive 12-month period during which Employee is employed by the Corporation.

2. Employment. The Corporation agrees to continue to employ Employee, and Employee agrees to continue to serve the Corporation, upon the terms and conditions hereinafter set forth.

3. Term. The employment of Employee pursuant to this Agreement has commenced as of the date of this Agreement and shall continue until terminated by either of the parties hereto. The parties agree and acknowledge that the employment of Employee pursuant to this Agreement is at will and may be terminated by either party without notice. Notwithstanding the termination of employment of Employee, this Agreement shall remain in full force and effect during such time as Employee is or may be entitled to any Monthly Benefit under this Agreement.

4. Duties. Employee agrees to serve the Corporation faithfully and to the best of his ability under the direction of the President and the Board of Directors of the Corporation, devoting his entire business time, energy and skill to such employment, and to perform from time to time such services and act in such office or capacity as the President and the Board of Directors shall request.

5. Compensation. The Corporation agrees to pay to Employee during the term of his employment hereunder as salary for his full time active services such compensation as may be mutually agreed upon from time to time.

6. Deferred Compensation. The Corporation shall pay to Employee, if living, or, in the event of his death, to Employee’s surviving spouse, or to such other person or persons as Employee shall have designated in writing (or in the absence of either, to Employee’s estate) (the “Beneficiary”), the following sums upon the terms and conditions and for the periods hereinafter set forth:

a] Payments upon Retirement. On the last day of the month next following the month in which Employee has a Separation From Service with the Corporation at or after age 65, or upon the last day of the month next following the month in which he reaches age 65 if he is then disabled within the meaning of subparagraph (c), the Corporation shall pay to Employee 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:

(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 Employee’s Separation From Service.

(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 6(a), Employee shall be entitled, by written election to the Corporation’s Board of Directors, to receive, in connection with a Separation From Service at or after age 65, to have his Vested Monthly Benefit paid in monthly payments rather than the lump-sum described above, provided (x) Employee makes such written election more than 12 months before Employee 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 Separation From Service (or if earlier, upon death or disability pursuant to subparagraphs 6(b) and 6(c), 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 Employee dies before receiving all two hundred and forty (240) monthly payments specified herein, the Corporation shall pay to Employee’s Beneficiary the remaining unpaid monthly payments as they become due as provided above.

b] Payments upon Death before Separation . If the Employee dies while employed by the Corporation, during the first six (6) months of disability, or while disability payments are being paid under subparagraph (c), the Corporation shall pay to Employee’s Beneficiary a lump sum cash payment of an amount equal to the present value of Employee’s Monthly Benefit (based on the assumptions listed in subparagraph (a), but with the 30-year Treasury Note rate determined at the Employee’s death), provided, however, that if Employee elected to receive monthly payments rather than a lump sum (as provided under subparagraph (a) and (d), as applicable based on the age of the Employee at death), the Corporation shall pay to Employee’s Beneficiary Employee’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 Employee’s death.

c] Payments during Disability. In addition to the payments provided in subparagraphs (a) and (b), should Employee become disabled while employed by the Corporation, and such disability continues for a period of six months, the Corporation shall pay to Employee his Monthly Benefit during each month that Employee remains disabled until he attains age 65 or until his death prior to attaining such age, at which time the payment provided in subparagraph (a) or (b), as applicable, shall be paid or begin (in the case of a sump sum, the 30-year Treasury Note rate shall be determined at age 65 or death, as applicable). The first payment under this subparagraph (c) 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 subparagraph (c) only if Employee is disabled within the meaning of the disability clause of an applicable policy’s waiver of premium provision and within the meaning of “disability” as set forth in Treas. Reg. Section 1.409A—3(i)(4).

d] Early Separation

(i) In the event Employee has a Separation From Service with the Corporation before reaching age 65 (unless the Employee is terminated by the Corporation for Cause, or if the separation is by reason of disability pursuant to subparagraph (c), or by reason of death), then on the last day of the month next following the month of Employee’s Separation From Service, the Corporation shall pay to Employee 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 Employee’s Separation From Service.

(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.

Notwithstanding the foregoing in this subparagraph 6(d)(i), Employee shall be entitled, by written election to the Corporation’s Board of Directors, to receive, in connection with Employee’s Separation From Service 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) Employee makes such written election more than 12 months before Employee’s Separation From Service (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 Separation From Service (or if earlier, upon death or disability pursuant to subparagraphs 6(b) and 6(c), 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 Employee dies before receiving all two hundred and forty (240) monthly payments specified herein, the Corporation shall pay to Employee’s Beneficiary the remaining unpaid monthly payments as they become due as provided above.

(ii) If Employee’s employment is terminated (i) for any reason after February 8, 2012 but before reaching age 65, or (ii) on or prior to February 8, 2012 by Employee with Good Reason, due to death or Disability, or by the Corporation without Cause, then in satisfaction of any continuation coverage Employee may be entitled to receive under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”), during the period commencing on such termination of employment and continuing through Employee’s attainment of age 65 (or with respect to Employee’s wife, Beverly A. Nelson (“ Employee’s wife ”), through her attainment of age 65), Employee and Employee’s wife shall each 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 Employee’s termination of employment, as if Employee had continued to be an executive employee of the Corporation. In the event that Employee or Employee’s wife is ineligible under the terms of such health or other insurance or applicable law to continue to be so covered without the imposition of adverse tax consequences on Employee, the Corporation, at its option, shall provide Employee or Employee’s wife with substantially equivalent coverage through other sources or will reimburse Employee or Employee’s wife (as applicable) for actual premiums paid for such alternative coverage (such as Medicare Part A, Part B and prescription drug coverage) that Employee 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.

e] Termination for Cause . If Employee’s employment with the Corporation is terminated at any time for Cause, the Corporation shall have no obligation to make any payments to Employee or his Beneficiary under this Agreement and all future payments shall be forfeited.

The Corporation is the owner and beneficiary of certain insurance policies on Employee’s life and insuring against Employee’s disability. No payments shall be required under subparagraphs (a), (b), (c) or (d)(i) of this paragraph, if because of any act by Employee, either (i) the applicable policy is canceled by the insurance company issuing such policy or (ii) the insurance company refuses to pay the proceeds of said policy. The provisions of the preceding sentence shall be inapplicable and of no further force or effect upon and after a Change in Control.

Notwithstanding the foregoing provisions of this paragraph 6 or paragraph 7, to the extent required in order to be made without triggering any tax or penalty under Section 409A of the Code if Employee is a “specified employee” for purposes of Section 409A of the Code, amounts that would otherwise be payable under this paragraph 6 during the six-month period immediately following the Employee’s Separation From Service shall instead be paid on the first business day after the date that is six months following Employee’s Separation From Service, or, if earlier, the date of Employee’s death.

7. Change in Control .

(a) Notwithstanding any other provision of the Agreement, in the event that Employee’s employment is terminated by the Corporation without Cause or by Employee with Good Reason within two years after a Change in Control, Employee shall be paid, within thirty (30) days after such employment termination, an amount equal to three times the sum of (i) Employee’s annual base salary, and (ii) the largest annual bonus paid to or earned by Employee during the thirty-six (36) months immediately preceding the Change in Control.

(b) Notwithstanding any other provision of the Agreement, if Employee’s employment with the Corporation terminates following a Change in Control, whether such termination is initiated by Employee or by the Corporation (unless the termination is by the Corporation for Cause), the lump sum benefit payable under Section 6(a) or (d), as applicable, will equal the Employee’s Aggregate Benefit (without any reduction for vesting or for discounting).

(c) Upon a Change in Control, Employee automatically shall receive 40,000 shares of the Corporation’s common stock free of any restrictions on exercisability (except as may be imposed by law). Any such shares awarded under this subparagraph 7(c) shall be subject to automatic adjustment by the appropriate Board committee or its delegate 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 date hereof.

(d) In addition to the payments and stock grant provided in subparagraphs 7(a), (b) and (c) above, and at the time such payments and grant are made to Employee, the Corporation shall pay to Employee an amount equal to any excise tax imposed on Employee by Section 4999 of the Code and by any comparable and applicable state tax law (collectively, “ Excise Taxes ”), as a result of the payments and stock grant provided in subparagraphs 7(a), (b) and (c) and as a result of any accelerated vesting of Employee’s options to acquire shares of the Corporation, and shall further pay to Employee on a “grossed-up” basis all additional federal and state income taxes and Excise Taxes payable by Employee as a result of the payments provided in this subparagraph 7(d), so that the net after-tax amount received by Employee pursuant to this paragraph 7 is equal to the amount that Employee would have received if no Excise Taxes had been imposed on income received by or imputed to Employee by reason of the payments or stock grant pursuant to paragraph 7 hereof or by reason of

accelerated vesting of Employee’s options. All amounts payable pursuant to this subparagraph 7(d) 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.

All payments required by this paragraph 7 shall be in addition to, and not in lieu of, any other payments to which Employee is entitled under any other agreement with the Corporation.

The amounts paid to Employee pursuant to this paragraph shall be in consideration of Employee’s past services to the Corporation and Employee’s continued services from the date of this amendment. The payments required hereunder shall not be reduced or offset by any future earnings by Employee.

8. Restrictive Covenant.

a] Employee expressly agrees, as a condition to the performance by the Corporation of its obligations hereunder, that during the term of this Agreement and during the further period that such payments to him are provided by this Agreement, or, if longer, for a period of twenty-four (24) months following Employee’s Separation From Service with the Corporation, he will not, directly or indirectly, own any interest in, render any services of any nature to, become employed by, or participate or engage in the licensed beauty salon business, except with the prior written consent of the Corporation.

b] If Employee voluntarily incurs a Separation From Service with the Corporation, and Employee violates the restrictive covenant set forth in subparagraph (a) above during the first twenty-four (24) months after such Separation From Service, and such violation continues for thirty (30) days after Employee is notified in writing by the Corporation that Employee is in violation of the restrictive covenant, then the Corporation shall have no further obligation to make any payments to Employee under this Agreement and all such future payments shall be forfeited. If such violation occurs after twenty-four (24) months after such termination and continues for thirty (30) days after notice as provided hereinabove, Employee shall forfeit one (1) month of Employee’s Vested Monthly Benefit for each month that Employee is in violation of the restrictive covenant.

c] If Employee’s employment with the Corporation is terminated by the Corporation without Cause, and if Employee at any time after such termination continues to violate the restrictive covenant for thirty (30) days after being notified in writing by the Corporation that Employee is in violation of the restrictive covenant, Employee shall forfeit one (1) month of Employee’s Vested Monthly Benefit for each month or portion of a month that Employee continues in violation of the restrictive covenant.

d] The provisions of paragraph 8 of the Agreement shall be inapplicable and of no further force or effect upon and after a Change in Control.

9. Trust Agreement. The Corporation has established a Trust Agreement under the Regis Corporation Deferred Compensation Agreement and said Trust Agreement is hereby incorporated by reference into this Agreement and made a part hereof.

10. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Minnesota.

11. Arbitration. All controversies or claims arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in Minneapolis, Minnesota, administered by the American Arbitration Association under its then current Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in the District Court of Hennepin County, Minnesota.

12. Prohibition against Assignment. Employee agrees, on behalf of himself and his personal representatives, and any other person claiming any benefits under him by virtue of this Agreement, that this Agreement and the rights, interests and benefits hereunder shall not be assigned, transferred or pledged in any way by Employee or any person claiming under him by virtue of this Agreement, and shall not be subject to execution, attachment, garnishment or similar process.

13. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successor of the Corporation, and any successor shall be deemed substituted for the Corporation under the terms of this Agreement. 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.

14. Prior Agreements. This Agreement supersedes all prior Employment and Deferred Compensation Agreements, and any amendments or supplements thereto, between the parties to this Agreement.

15. Consulting Arrangement. Within 60 days after Employee’s termination of employment with the Corporation (other than for Cause, by reason of death or Disability, or, on or prior to February 8, 2012, by Employee without Good Reason), the Corporation and Employee shall enter into a three-year consulting agreement with regard to the Corporation’s DVD training program (or its successor) on terms to be reasonably and mutually agreed.

IN WITNESS WHEREOF , the parties hereto have duly executed this Agreement as of the day and year first above written.

	REGIS CORPORATION


	By:	/s/ Paul D. Finkelstein
		Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer

		/s/ Gordon Nelson
		Gordon Nelson

Exhibit No. 10(e)(*)

AMENDED AND RESTATED

SENIOR OFFICER EMPLOYMENT AND

DEFERRED COMPENSATION AGREEMENT

This SENIOR OFFICER EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENT (this “ Agreement ”), is hereby amended and restated as of December 31, 2008 (the “ Effective Date ”), between REGIS CORPORATION , hereinafter referred to as the “ Corporation ,” and [***NAME***], hereinafter referred to as “ Employee .”

WHEREAS , this Agreement was initially entered into as of [***DATE***] and was last amended and restated June 22, 2007; and

NOW, THEREFORE, IN CONSIDERATION of the mutual agreements hereinafter contained, the parties hereby agree as follows:

1. Definitions.

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

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

“Discounted Vested Monthly Benefit” shall be an amount determined by discounting Employee’s Vested Monthly Benefit to present value based on the number of months between (a) the Employee’s age at the time of [his OR her] Separation From Service or, if [he OR she] elects to defer payment or commencement pursuant to subparagraph 6(d) of this Agreement, the date of payment or commencement, and (b) the date of Employee’s 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 Employee’s 65th birthday.

substantially equivalent plan or a plan of substantially equivalent value) any compensation plan, bonus or incentive plan, stock purchase plan, stock option plan, life insurance plan, health plan, disability plan or other benefit plan or arrangement in which Employee is then participating; (d) any material breach by the Corporation of any provisions of the Agreement; (e) the requirement by the Corporation that Employee’s principal place of employment be relocated outside of a thirty (30) mile radius from its existing location; or (f) 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 Employee notifies the Corporation of such condition set forth in clause (a), (b), (c), (d), (e) or (f) within 90 days of its initial existence and the Corporation fails to remedy such condition within 30 days of receiving such notice.

“Monthly Benefit” shall be an amount equal to the greater of (i) forty percent (40%) of Employee’s average monthly base salary for the sixty (60) months immediately preceding Employee’s Separation From Service or disability, and (ii) Five Thousand Dollars ($5,000.00).

“ Separation From Service ” shall be a separation from service with the Corporation and its affiliates (other than due to death or disability) within the meaning of Code Section 409A(a)(2)(A)(i) and Treas. Reg. Section 1.409A-1(h).

“Vested Monthly Benefit” shall be a percentage of Employee’s Monthly Benefit determined on the basis of the number of Employee’s completed years of service during which Employee has been a party to this Agreement or a prior deferred compensation agreement with the Company, 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	%

A year of service for purposes of vesting shall be a consecutive 12-month period.

2. Employment. The Corporation agrees to continue to employ Employee, and Employee agrees to continue to serve the Corporation, upon the terms and conditions hereinafter set forth.

a] Payments upon Retirement. On the last day of the month next following the month in which Employee has a Separation From Service with the Corporation at or after age 65, or upon the last day of the month next following the month in which he reaches age 65 if he is then disabled within the meaning of subparagraph 6(c), the Corporation shall pay to Employee 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:

(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 Employee’s Separation From Service.

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

to have his Vested Monthly Benefit paid in monthly payments rather than the lump-sum described above, provided (x) Employee makes such written election more than 12 months before Employee 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 Separation From Service (or if earlier, upon death or disability pursuant to subparagraphs 6(b) and 6(c), 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.

b] Payments upon Death before Separation. If Employee dies while employed by the Corporation, during the first six (6) months of disability, or while disability payments are being paid under subparagraph (c), the Corporation shall pay to Employee’s Beneficiary a lump sum cash payment of an amount equal to the present value of Employee’s Monthly Benefit (based on the assumptions listed in subparagraph (a) above); provided, however, that if Employee elected to receive monthly payments rather than a lump sum (as provided under subparagraph (d)), the Corporation shall pay to Employee’s Beneficiary Employee’s full Monthly Benefit for two hundred and forty (240) months. The lump sum payment or the first monthly payment as applicable will be paid within thirty (30) days after Employee’s death.

c] Payments during Disability. In addition to the payments provided in subparagraphs (a) and (b), should Employee become disabled while employed by the Corporation, and such disability continues for a period of six (6) months, the Corporation shall pay to Employee [his OR her] Monthly Benefit during each month that Employee remains disabled until [he OR she] attains age 65 or until [his OR her] death prior to attaining such age, at which time the payments provided in subparagraph (a) or (b), as applicable, shall begin. The first payment under this subparagraph (c) 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 subparagraph (c) only if Employee is disabled within the meaning of the disability clause of an applicable policy’s waiver of premium provision and within the meaning of “disability” as set forth in Treas. Reg. Section 1.409A-3(i)(4).

d] Early Separation. In the event Employee has a Separation From Service with the Corporation before reaching age 65 (unless the Employee is terminated by the Corporation for Cause, or if the separation is by reason of disability pursuant to subparagraph 6(c), or by reason of death), then on the last day of the month next following the month of Employee’s Separation From Service, the Corporation shall pay to Employee 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 Employee’s Separation From Service.

(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.

Notwithstanding the foregoing in this subparagraph 6(d), Employee shall be entitled, by written election to the Corporation’s Board of Directors, to receive, in connection with Employee’s Separation From Service 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) Employee makes such written election more than 12 months before Employee’s Separation From Service (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 Separation From Service (or if earlier, upon death or disability pursuant to subparagraphs 6(b) and 6(c), 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 Employee dies before receiving all two hundred and forty (240) monthly payments specified herein, the Corporation shall pay to Employee’s Beneficiary the remaining unpaid monthly payments as they become due as provided above. If Employee dies after [his OR her] Separation From Service but

prior to the date on which [he OR she] elected to receive payment, the Corporation shall pay to Employee’s Beneficiary the Discounted Vested Monthly Benefit or the Vested Monthly Benefit that Employee had otherwise elected to receive for two hundred and forty (240) months. The first such payment shall begin within thirty (30) days after Employee’s death.

The Corporation is the owner and beneficiary of certain insurance policies on Employee’s life and insuring against Employee’s disability. No payments shall be required under subparagraphs (a), (b), (c) or (d) of this paragraph, if because of any act by Employee, either (i) the applicable policy is canceled by the insurance company issuing such policy or (ii) the insurance company refuses to pay the proceeds of said policy. The provisions of the preceding sentence shall be inapplicable and of no further force or effect upon and after a Change in Control.

Notwithstanding the foregoing provisions of this paragraph 6 or of the following paragraph 7, to the extent required in order to be made without triggering any tax or penalty under Section 409A of the Code if Employee is a “specified employee” for purposes of Section 409A of the Code, amounts that would otherwise be payable under this paragraph 6 during the six-month period immediately following the Employee’s Separation From Service shall instead be paid on the first business day after the date that is six months following Employee’s Separation From Service, or, if earlier, the date of Employee’s death.

7. Change in Control .

(c) Upon a Change in Control, Employee automatically shall receive shares of the Corporation’s common stock free of any restrictions on

exercisability (except as may be imposed by law). Any such shares awarded under this subparagraph 7(c) shall be subject to automatic adjustment by the appropriate Board committee or its delegate 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 date hereof.

All payments required by this paragraph 7 shall be in addition to, and not in lieu of, any other payments to which Employee is entitled under any other agreement with the Corporation.

8. Restrictive Covenant.

a] Employee expressly agrees, as a condition to the performance by the Corporation of its obligations hereunder, that during the term of this Agreement and for a period of twenty-four (24) months following Employee’s Separation From Service with the Corporation and its affiliates, [he OR she] will not, directly or indirectly, own any interest in, render any services of any nature to, become employed by, or participate or engage in the licensed beauty salon business, except with the prior written consent of the Corporation.

b] If Employee voluntarily incurs a Separation From Service with the Corporation, and Employee violates the restrictive covenant set forth in subparagraph a] above during the first twenty-four (24) months after such Separation From Service, and

such violation continues for thirty (30) days after Employee is notified in writing by the Corporation that Employee is in violation of the restrictive covenant, then the Corporation shall have no further obligation to make any payments to Employee under this Agreement and all such future payments shall be forfeited. If such violation occurs after twenty-four (24) months after such separation and continues for thirty (30) days after notice as provided hereinabove, Employee shall forfeit one (1) month of Employee’s Vested Monthly Benefit for each month that Employee is in violation of the restrictive covenant.

d] The provisions of paragraph 8 of the Agreement shall be inapplicable and of no further force or effect upon and after a Change in Control.

10. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Minnesota.

12. Prohibition against Assignment. Employee agrees, on behalf of himself and his personal representatives, and any other person claiming any benefits under him or her by virtue of this Agreement, that this Agreement and the rights, interests and benefits hereunder shall not be assigned, transferred or pledged in any way by Employee or any person claiming under him or her by virtue of this Agreement, and shall not be subject to execution, attachment, garnishment or similar process.

14. Prior Agreements. This Agreement supersedes all prior Employment and Deferred Compensation Agreements, and any amendments or supplements thereto, between the parties to this Agreement.

IN WITNESS WHEREOF , the parties hereto have duly executed this Agreement as of the day and year first above written.

	REGIS CORPORATION


	By:	/s/ Paul D. Finkelstein
		Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer


		[*NAME*]

Exhibit No. 10(f)(*)

AMENDMENT TO

AMENDED AND RESTATED COMPENSATION AGREEMENT

FOR MYRON KUNIN

This Amendment (the “Amendment”) to the Amended and Restated Compensation Agreement entered into between Regis Corporation, a Minnesota corporation (the “Corporation”), and Myron Kunin (“Kunin”) as of June 29, 2007 is hereby entered into as of December 23, 2008 (the “Effective Date”). The Corporation and Kunin shall be referred to herein together as “the Parties.”

WHEREAS, the Parties previously entered into a Compensation and Non-Competition Agreement, dated May 7, 1997 (the “Original Agreement”); and

WHEREAS, the Original Agreement was amended from time to time and was last amended and restated as of June 29, 2007 (the “Restated Agreement”); and

WHEREAS, the Parties wish to amend the Restated 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”);

NOW, THEREFORE, IN CONSIDERATION of the mutual agreements hereinafter contained, the parties hereby agree as follows:

1. Paragraph 1 of the Restated Agreement shall be amended by deleting it in its entirety and replacing it as follows:

Continued Compensation Payments . The Corporation shall continue to pay Kunin the amount specified under the Agreement, that is, $600,000 per year, increased each year, commencing July 1, 1997, in proportion to any increase in the consumer price index (as defined in the Original Agreement) from July 1, 1996, to each July 1 thereafter in which payments are made to Kunin under the Restated Agreement. Such amount shall be paid to Kunin on a monthly basis for his lifetime. Under no circumstances shall the annual amount payable to Kunin pursuant to this paragraph 1 be decreased in any year.

2. Paragraph 5 of the Restated Agreement shall be amended by deleting it in its entirety and replacing it as follows:

Change in Control Benefits . In addition to the benefits payable to Kunin under other provisions of this Restated Agreement, in the event a Change in Control of the Corporation occurs at any time prior to Kunin’s death, the Corporation shall provide to Kunin the benefits described in (a), (b), (c), (d) and (e) below:

(a) In lieu of the monthly payments provided under paragraph 1 above, the Corporation shall pay to Kunin within five (5) days after a

Change in Control occurs (provided that for this purpose the Change in Control must also be a change in control event under Treas. Reg. Section 1.409A-3(i)(5)) a single lump sum payment equal to the then present value of the future monthly payments described under paragraph 1 above. The discount rate to be used for this purpose shall be equal to the yield to maturity, at the date of the Change in Control, of U.S. Treasury Notes with a maturity date nearest the Joint Life Expectancy (as defined in Section 6(d) below) of Kunin and his spouse.

(b) On the day on which a Change in Control occurs, the Corporation shall pay to Kunin an amount equal to three times the annual compensation described in paragraph 1, above, for the 12-month period immediately preceding the Change in Control.

(c) The excess of: (i) Kunin’s “adjusted annual compensation” multiplied by the Joint Life Expectancy (as defined in Section 6(d) below) of Kunin and his spouse, as determined as of the date of the Change in Control, with no discount for present value; over (ii) the present value of the future monthly benefits payable to Kunin pursuant to paragraph 5(a) above as of the date of the Change in Control. Such amount shall be paid to Kunin in a single sum within thirty (30) days following the date of the Change in Control. For purposes of this subparagraph (c), Kunin’s “adjusted annual compensation” shall mean the annual amount payable to Kunin pursuant to paragraph 1 above as of the date of the Change in Control, increased by four percent (4%) for each year in the Joint Life Expectancy.

(d) 200,000 shares of the Corporation’s common stock free of any restrictions on exercisability (except as may be imposed by law), deliverable to Kunin upon the Change in Control. Any such shares awarded under this subparagraph 5(d) shall be subject to automatic adjustment by the appropriate Board committee or its delegate 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 date hereof.

(e) An amount equal to any excise tax imposed on Kunin by Section 4999 of the Code and by any comparable and applicable state law (collectively, “Excise Taxes”), as a result of the payments and stock grant provided under subparagraphs (a), (b),(c) and (d) of this paragraph 5, and as a result of any accelerated vesting of Kunin’s options to acquire shares of the Corporation, and shall further pay to Kunin on a “grossed-up” basis all additional federal and state income taxes and Excise Taxes payable by Kunin as a result of the payments provided in this subparagraph 5(e), so that the net after-tax amount received by Kunin pursuant to this paragraph 5 is equal to the amount that Kunin would have received if no Excise

Taxes had been imposed on income received by or imputed to him by reason of the payments or stock grant pursuant to this paragraph 5 or by reason of accelerated vesting of Kunin’s options. All amounts payable to Kunin pursuant to this subparagraph 5(e) shall be paid by the end of his taxable year next following his taxable year in which the related taxes are remitted to the taxing authority.

3. Paragraph 6(b) of the Restated Agreement shall be deleted in its entirety and replaced with the following new paragraph 6(b):

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

(i) 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 (A) the then outstanding shares of Common Stock of the Corporation (the “Outstanding Common Stock”) or (B) 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 (1) and (2) of subparagraph (ii) applies;

(ii) consummation of (A) a merger or consolidation of the Corporation with or into another entity, (B) a statutory share exchange or (C) 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, (1) 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 (2) 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

(iii) individuals who constitute the Corporation’s Board of Directors on the 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 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.

4. A new paragraph 6(d) shall be added to the Restated Agreement as follows:

(d) “Joint Life Expectancy” shall mean the number of years of life expectancy of Kunin and his spouse at the time of a Change in Control, as determined by the Joint Life and Last Survivor Expectancy table published in IRS Publication 590, a successor publication, or in the absence of either, a comparable table or tables published by a recognized non-public authority. If Kunin’s spouse is not living at the time of a Change in Control, the Single Life Expectancy table shall be used in lieu of the Joint Life and Last Survivor Expectancy table.

IN WITNESS WHEREOF, the Parties hereto have executed Amendment as of the day and year first above written.

	REGIS CORPORATION


	By:	/s/ Paul D. Finkelstein
		Paul D. Finkelstein, Chairman of the Board of Directors,
		President and Chief Executive Officer


		/s/ Myron Kunin
		Myron Kunin

Exhibit No. 10(g)(*)

REGIS CORPORATION

2004 LONG TERM INCENTIVE PLAN

AS AMENDED AND RESTATED EFFECTIVE DECEMBER 31, 2008

TABLE OF CONTENTS

		Page

ARTICLE I	ESTABLISHMENT AND PURPOSE	1
1.1	Establishment	1
1.2	Purpose	1
1.3	Compliance with 409A	1

ARTICLE II	DEFINITIONS	1
2.1	Affiliate	1
2.2	Agreement	1
2.3	Award	1
2.4	Beneficiary	2
2.5	Board of Directors or Board	2
2.6	Cause	2
2.7	Change in Control	2
2.8	Code	4
2.9	Commission	4
2.10	Committee	4
2.11	Common Stock	4
2.12	Company	4
2.13	Covered Employees	4
2.14	Disability	4
2.15	Effective Date	4
2.16	Exchange Act	4
2.17	Exercise Price	4
2.18	Fair Market Value	4
2.19	Grant Date	5
2.20	Incentive Stock Option	5
2.21	Non-Qualified Stock Option	5
2.22	Option Period	5
2.23	Participant	5
2.24	Performance Unit	5
2.25	Plan	5
2.26	Representative	6
2.27	Restricted Stock	6
2.28	Restricted Stock Unit	6
2.29	Rule 16b-3	6
2.30	Stock Appreciate Right	6
2.31	Stock Option or Option	6
2.32	Termination of Employment	6

ARTICLE III	ADMINISTRATION	7
3.1	Committee Structure and Actions	7
3.2	Committee Authority	7

ARTICLE IV	SHARES SUBJECT TO PLAN	8
4.1	Number of Shares	8
4.2	Release of Shares	8
4.3	Restrictions on Shares	9

4.4	Shareholder Rights	9
4.5	Effect of Certain Changes	9

ARTICLE V	ELIGIBILITY	10
5.1	Eligibility	10

ARTICLE VI	STOCK OPTIONS	10
6.1	General	10
6.2	Grant	10
6.3	Terms and Conditions	10
6.4	Termination by Reason of Death	11
6.5	Termination by Reason of Disability	11
6.6	Other Termination	12

ARTICLE VII	STOCK APPRECIATION RIGHTS	12
7.1	General	12
7.2	Grant	12
7.3	Terms and Conditions	12

ARTICLE VIII	RESTRICTED STOCK	13
8.1	General	13
8.2	Grant, Awards and Certificates	13
8.3	Terms and Conditions	14

ARTICLE IX	PERFORMANCE AWARDS	15
9.1	General	15
9.2	Earning Performance Unit Awards	15
9.3	Termination of Employment Due to Death, Disability or Retirement or at the Request of the Company without Cause	15
9.4	Nontransferability	15
9.5	Election to Defer	16

ARTICLE X	CHANGE IN CONTROL PROVISIONS	16
10.1	Impact of Event	16
10.2	Additional Discretion	16

ARTICLE XI	PROVISIONS APPLICABLE TO SHARES ACQUIRED UNDER THIS PLAN	16
11.1	No Company Obligation	16

ARTICLE XII	MISCELLANEOUS	17
12.1	Amendments and Termination	17
12.2	Unfunded Status of Plan	17
12.3	Provisions Relating to Internal Revenue Code Section 162(m)	17
12.4	No Additional Obligation	19
12.5	Withholding	19
12.6	Controlling Law	19
12.7	Offset	20
12.8	Nontransferability; Beneficiaries	20
12.9	Gross-Up for Excise Tax	20
12.10	No Rights with Respect to Continuance of Employment	20

12.11	Awards in Substitution for Awards Granted by Other Corporations	21
12.12	Foreign Alternatives	21
12.13	Delivery of Stock Certificates	21
12.14	Headings	21
12.15	Severability	21
12.16	Successors and Assigns	22
12.17	Entire Agreement	22

iii

REGIS CORPORATION

2004 LONG TERM INCENTIVE PLAN

ARTICLE I

ESTABLISHMENT AND PURPOSE

1.1 Establishment . The Regis Corporation 2004 Long Term Incentive Plan (“Plan”) is hereby established by Regis Corporation (“Company”), effective as of the Effective Date, and restated effective as of December 31, 2008 to incorporate and supersede all prior amendments hereto and to make certain changes to comply with Section 409A of the Internal Revenue Code of 1986.

1.2 Purposes . The purpose of the Plan is to foster and promote the long-term financial success of the Company and materially increase shareholder value by motivating performance through incentive compensation. The Plan also is intended to encourage Participant ownership in the Company, attract and retain talent, and enable Participants to participate in the long-term growth and financial success of the Company. The Plan and the grant of Awards thereunder are expressly conditioned upon the Plan’s approval by the shareholders of the Company.

1.3 Compliance with 409A . The Plan is intended to meet the requirements of paragraph (2), (3) and (4) of Code Section 409A(a) to the extent applicable, and the terms and provisions of the Plan should be interpreted and applied in a manner consistent with such requirements, including the regulations and other guidance issued under Code Section 409A.

ARTICLE II

DEFINITIONS

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

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

2.2 “ Agreement ” means any agreement entered into pursuant to the Plan by which an Award is granted to a Participant, and any amendments thereto.

2.3 “ Award ” means any Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Performance Unit granted to a Participant under the Plan. Awards shall be subject to the terms and conditions of the Plan and shall be evidenced by an Agreement containing such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable.

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

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

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

2.7 “ Change in Control ” means:

(1) with respect to Awards granted before January 1, 2009, the first to occur of any of the following events:

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

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

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

(d) the approval by the shareholders of the Company of a complete liquidation of the Company or a sale or disposition of all or substantially all the assets of the Company; and

(2) with respect to Awards granted on or after January 1, 2009, the first to occur of any of the following events:

(a) any “person” within the meaning of Section 2(a)(2) of the Securities Act of 1933 and Section 14(d) of 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 Company (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 Company 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 Company (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 Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s voting stock immediately prior to such Business Combination) as their beneficial ownership of the Company’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 Company’s Board of Directors on the 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 Effective Date whose election, or nomination for election by the Company’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;

provided, however, that for any payment with respect to any Award under the Plan that is subject to Section 409A of the Code, the Change in Control must also be a change in control event under Treas. Reg. Section 1.409A-3(i)(5).

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

2.9 “ Commission ” means the Securities and Exchange Commission or any successor thereto.

2.10 “ Committee ” means the committee of the Board responsible for granting Awards under the Plan, which shall be the Compensation Committee of the Board, until such time as the Board may designate a different committee. The Committee shall consist solely of two or more directors, each of whom is a “Non-Employee Director” within the meaning of Rule 16b-3 and each of whom is also an “outside director” under Section 162(m) of the Code. In addition, each member of the Committee must be an “independent director” as determined under the corporate governance rules of the New York Stock Exchange, as amended from time to time.

2.11 “ Common Stock ” means the shares of the Company’s common stock, $0.05 par value, whether presently or hereafter issued, and any other stock or security resulting from adjustment thereof as described hereinafter, or the common stock of any successor to the Company which is designated for the purpose of the Plan.

2.12 “ Company ” means Regis Corporation , a Minnesota corporation, and includes any successor or assignee corporation or corporations into which the Company may be merged, changed or consolidated; any corporation for whose securities the securities of the Company shall be exchanged; and any assignee of or successor to substantially all of the assets of the Company.

2.13 “ Covered Employee ” means a Participant who is a “covered employee” within the meaning of Section 162(m) of the Code.

2.14 “ Disability ” means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

2.15 “ Effective Date ” means May 26, 2004, subject to shareholder approval at the Company’s annual meeting of shareholders on October 28, 2004.

2.16 “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2.17 “ Exercise Price ” means the price at which the Common Stock may be purchased under an Option or may be obtained under a Stock Appreciation Right. In no event may the Exercise Price per share of Common Stock covered by an Option, or the Exercise Price of a Stock Appreciation Right, be reduced through the technique commonly known as “repricing.”

2.18 “ Fair Market Value ” means the value of one share of Common Stock, determined pursuant to the applicable method described below, without regard to whether the Common Stock is restricted or represents a minority interest:

(1) if the Common Stock is listed on a securities exchange or quoted on The Nasdaq Stock Market (“Nasdaq”), the closing price of a share of Common Stock on the grant date (or, if such date is not a business day or a day on which quotations are reported, then on the immediately preceding date on which quotations were reported) or if a closing price was not reported on the grant date, then the arithmetic mean of the high and low prices on that date or on the first preceding trading date, as reported by the principal national exchange on which such shares are traded (in the case of an exchange) or by Nasdaq, as the case may be;

(2) if the Common Stock is not listed on a national securities exchange or quoted on Nasdaq, but is actively traded in the over-the counter market, the average of the closing bid and asked prices for a share of the Common Stock on the grant date (or, if such date is not a business day or a day on which quotations are reported, then on the immediately preceding date on which quotations were reported), or the most recent preceding date for which such quotations are reported; and

(3) if, on the relevant date, the Common Stock is not publicly traded or reported as described in (1) or (2) above, the value determined by the reasonable application of a reasonable valuation method which is consistent with Treas. Reg. § 1.409A-1(b)(5)(iv), selected in good faith by the Board.

2.19 “ Grant Date ” means the date as of which an Award is granted pursuant to the Plan.

2.20 “ Incentive Stock Option ” means any Stock Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code. Members of the Board who are not otherwise employees of the Company do not qualify for Incentive Stock Options.

2.21 “ Non-Qualified Stock Option ” means an Option to purchase Common Stock in the Company granted under the Plan, the taxation of which is pursuant to Section 83 of the Code.

2.22 “ Option Period ” means the period during which the Option shall be exercisable in accordance with an Agreement and Article VI.

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

2.24 “ Performance Unit ” shall have the meaning set forth in Section 9.1 hereof.

2.25 “ Plan ” means the Regis Corporation 2004 Long Term Incentive Plan, as herein set forth and as may be amended from time to time.

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

2.27 “ Restricted Stock ” means Common Stock granted to a Participant under Section 8.1 hereof and which is subject to certain restrictions and to a risk of forfeiture or repurchase by the Company.

2.28 “ Restricted Stock Unit “ means an Award to a Participant under Section 8.1 hereof under which no Common Stock actually is awarded to the Participant on the date of grant. Each Award of a Restricted Stock Unit entitles a Participant to receive a share of Common Stock as of a future date, subject to certain restrictions and to a risk of forfeiture.

2.29 “ Rule 16b-3 ” means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Commission under Section 16 of the Exchange Act.

2.30 “ Stock Appreciation Right ” means a right granted under Article VII.

2.31 “ Stock Option ” or “ Option ” means a right, granted to a Participant under Section 6.1 hereof, to purchase Common Stock at a specified price during specified time periods.

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

With respect to any person who is not an employee with respect to the Company or an Affiliate (such as a non-employee member of the Board), the Agreement shall establish what act or event shall constitute a Termination of Employment for purposes of the Plan. A Termination of Employment shall occur with respect to an employee who is employed by an Affiliate if the Affiliate shall cease to be an Affiliate and the Participant shall not immediately thereafter become an employee of the Company or an Affiliate. To the extent that an Award granted under the Plan is subject to Internal Revenue Code Section 409A, a Termination of Employment shall mean a “separation from service” under Code Section 409A and the regulations and guidance issued with respect thereto (all references herein to Code Section 409A shall include such regulations and guidance).

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

ARTICLE III

ADMINISTRATION

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

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

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

(2) to determine whether and to what extent Awards are to be granted hereunder;

(3) to determine the number of shares of Common Stock to be covered by each Award granted hereunder;

(4) to determine the terms and conditions of any Award granted hereunder, provided that the Exercise Price of any Option or Stock Appreciation Right shall not be less than the Fair Market Value per share as of the Grant Date;

(5) to adjust the terms and conditions, at any time or from time to time, of any Award, subject to the limitations of Section 12.1;

(6) to determine to what extent and under what circumstances shares of Common Stock and other amounts payable with respect to an Award shall be deferred;

(7) to provide for the forms of Agreement to be utilized in connection with this Plan;

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

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

(10) to require as a condition of the exercise of an Award or the issuance or transfer of a certificate (or other representation of title) of Common Stock, the withholding from a Participant of the amount of any taxes as may be necessary in order for the Company or any other employer to obtain a deduction or as may be otherwise required by law;

(11) to determine whether and with what effect an individual has incurred a Termination of Employment (or, as applicable, a “separation from service” pursuant to Code Section 409A);

(12) to determine the restrictions or limitations on the transfer of Common Stock;

(13) to determine whether an Award is to be adjusted, modified or purchased, or is to become fully exercisable, under the Plan or the terms of an Agreement;

(14) to determine the permissible methods of Award exercise and payment within the terms and conditions of the Plan and the particular Agreement;

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

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

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

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

ARTICLE IV

SHARES SUBJECT TO PLAN

4.1 Number of Shares . Subject to the adjustment under Section 4.5, the total number of Common Stock reserved and available for distribution pursuant to Awards under the Plan shall be 2,500,000 shares of Common Stock which are hereby authorized for issuance on the Effective Date. Such shares may consist, in whole or in part, of authorized and unissued shares or shares acquired from a third party.

4.2 Release of Shares . Subject to Section 4.1, the Committee shall have full authority to determine the number of shares of Common Stock available for Awards, and in its discretion may include (without limitation) as available for distribution any shares of Common Stock that have ceased to be subject to an Award; any shares of Common Stock subject to any Award that have been previously forfeited; any shares under an Award that otherwise terminates without issuance of Common Stock being made to a Participant; or any shares of Common Stock that are received by the Company in connection with the exercise of an Award, including the satisfaction of any tax liability or tax withholding obligation. Any shares that are available immediately prior

to the termination of the Plan, or any shares of Common Stock returned to the Company for any reason subsequent to the termination of the Plan, may be transferred to a successor plan.

4.3 Restrictions on Awards . Common Stock issued upon exercise of an Award shall be subject to the terms and conditions specified herein and to such other terms, conditions and restrictions as the Committee in its discretion may determine or provide in the Award Agreement. The Company shall not be required to issue or deliver any certificates for Common Stock, cash or other property prior to (i) the completion of any registration or qualification of such shares under federal, state or other law, or any ruling or regulation of any government body which the Committee determines to be necessary or advisable; (ii) the satisfaction of any applicable withholding obligation in order for the Company or an Affiliate to obtain a deduction or discharge its legal obligation with respect to the exercise of an Award; or (iii) where required by Code Section 409A for payments or transfers made upon a Participant’s “separation from service” as defined in Code Section 409A to a Participant who is a “specified employee” under Code Section 409A, the first business day after the expiration of the six month period following such separation from service or if earlier, the date of Participant’s death. The Company may cause any certificate (or other representation of title) for any shares of Common Stock to be delivered to be properly marked with a legend or other notation reflecting the limitations on transfer of such Common Stock as provided in this Plan or as the Committee may otherwise require. The Committee may require any person exercising an Award to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the Common Stock in compliance with applicable law or otherwise. Fractional shares shall not be delivered, but shall be rounded to the next lower whole number of shares.

4.4 Shareholder Rights . No person shall have any rights of a shareholder as to Common Stock subject to an Award until, after proper exercise of the Award or other action required, such shares shall have been recorded on the Company’s official shareholder records as having been issued and transferred. Upon exercise of the Award or any portion thereof, the Company will have a reasonable period in which to issue and transfer the shares, and the Participant will not be treated as a shareholder for any purpose whatsoever prior to such issuance and transfer. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such shares are recorded as issued and transferred in the Company’s official shareholder records, except as provided herein or in an Agreement.

4.5 Effect of Certain Changes . In the event of any Company share dividend, share split, combination or exchange of shares, recapitalization or other change in the capital structure of the Company, corporate separation or division of the Company (including, but not limited to, a split-up, spin-off, split-off or distribution to Company shareholders other than a normal cash dividend), reorganization, rights offering, a partial or complete liquidation, or any similar transaction, Company share offering or other event that causes the value of the Company’s Common Stock to change, then the Committee shall proportionately adjust the number of Common Stock available for Awards under the Plan, the number of shares of Common Stock covered by outstanding Awards, the exercise price per share of outstanding Awards, and any other characteristics or terms of the Awards as the Committee may deem necessary or appropriate to result in an equitable adjustment; provided, however, that any fractional shares resulting from such adjustment shall be eliminated by rounding to the next lower whole number of shares with proportionate payment for such fractional share as shall reasonably be determined by the Committee.

ARTICLE V

ELIGIBILITY

5.1 Eligibility . Except as herein provided, the persons who shall be eligible to participate in the Plan and be granted Awards shall be those persons who are common law employees of the Company or any Affiliate, non-employee members of the Board, or other individuals selected by the Committee. Of those persons described in the preceding sentence, the Committee may, from time to time, select persons to be granted Awards and shall determine the terms and conditions with respect thereto. In making any such selection and in determining the form of the Award, the Committee shall give consideration to such factors deemed appropriate by the Committee.

ARTICLE VI

STOCK OPTIONS

6.1 General . The Committee shall have authority to grant Options under the Plan at any time or from time to time. An Option shall entitle the Participant to receive Common Stock upon exercise of such Option, subject to the Participant’s satisfaction in full of any conditions, restrictions or limitations imposed in accordance with the Plan or an Agreement (the terms and provisions of which may differ from other Agreements) including, without limitation, payment of the Option Price.

6.2 Grant . The grant of an Option shall occur as of the Grant Date determined by the Committee. Stock Options may be granted alone or in connection with other Awards. An Award of Options shall be evidenced by, and subject to the terms of, an Agreement. Only a person who is a common-law employee of the Company, any parent corporation of the Company, or a subsidiary (as such terms are defined in Section 424 of the Code) on the date of grant shall be eligible to be granted an Incentive Stock Option. To the extent that any Option is not designated as an Incentive Stock Option or even if so designated does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.

6.3 Terms and Conditions . Options shall be subject to such terms and conditions as shall be determined by the Committee, including the following:

(1) Exercise Price . The Exercise Price per share shall not be less than the Fair Market Value per share as of the Grant Date. If an Option intended to qualify as an Incentive Stock Option is granted to an individual who owns or who is deemed to own shares possessing more than ten percent (10%) of the combined voting power of all classes of shares of the Company, a corporation which is a parent corporation of the Company, or any subsidiary of the Company (each as defined in Section 424 of the Code) (a “10% Owner”), the Exercise Price per share shall not be less than one hundred ten percent (110%) of such Fair Market Value per share.

(2) Option Period . The Option Period of each Option shall be fixed by the Committee, provided that no Option shall be exercisable more than ten (10) years

after the date the Option is granted. In the case of an Incentive Stock Option granted to a 10% Owner, the Option Period shall not exceed five (5) years. No Option which is intended to be an Incentive Stock Option shall be granted more than ten (10) years from the date the Plan is adopted by the Company or the date the Plan is approved by the shareholders of the Company, whichever is earlier.

(3) Exercisability . Subject to Section 10.1 and the terms set by the Committee, Options shall be exercisable at the rate of twenty percent (20%) of the total number of shares as of each anniversary of the Grant Date. In addition, the Committee may at any time accelerate the exercisability of all or part of any Option. If the Committee intends that an Option be able to qualify as an Incentive Stock Option, the Committee may, in its discretion, provide that the aggregate Fair Market Value (determined at the date of grant of the Option) of the Common Stock as to which such Incentive Stock Option held by a Participant which is exercisable for the first time during any calendar year (including all other incentive stock options held by the Participant issued under all plans of the Company and its Affiliates), shall not exceed $100,000.

(4) Method of Exercise . Subject to the provisions of this Article VI and the Agreement, a Participant may exercise Options, in whole or in part, during the Option Period by giving written notice of exercise on a form provided by the Committee to the Company specifying the number of shares of Common Stock subject to the Option to be purchased or in such other manner as is prescribed by the Committee or its delegates. Such notice shall be accompanied by payment in full of the purchase price by cash or certified check or such other form of payment as the Company may accept. If permitted by the Committee, payment in full or in part may also be made by (i) delivering Common Stock already owned by the Participant having a total Fair Market Value on the date of such delivery equal to the Option Price; (ii) the delivery of cash by a broker-dealer as a “cashless” exercise, provided such method of payment may not be used by a director or executive officer of the Company to the extent it would violate the Sarbanes-Oxley Act of 2002; or (iii) any combination of the foregoing.

(5) Non-transferability of Options . Except as provided under the Plan or an Agreement, or as otherwise approved by the Committee, no Option shall be sold, assigned, margined, transferred, encumbered, conveyed, gifted, alienated, hypothecated, pledged, or otherwise disposed of, other than by will or by the laws of descent and distribution, and all Options shall be exercisable during the Participant’s lifetime only by the Participant.

6.4 Termination by Reason of Death . Unless otherwise provided in an Agreement or determined by the Committee, if a Participant incurs a Termination of Employment due to death or dies within three (3) months after a termination described in Section 6.6, any unexpired and unexercised Option held by such Participant shall thereafter be fully exercisable for a period of one (1) year immediately following the date of such death or until the expiration of the Option Period, whichever period is the shorter.

6.5 Termination by Reason of Disability . Unless otherwise provided in an Agreement or determined by the Committee, if a Participant incurs a Termination of Employment

due to a Disability, any unexpired and unexercised Option held by such Participant shall thereafter be fully exercisable by the Participant for a period of one (1) year immediately following the date of such Disability or until the expiration of the Option Period, whichever period is the shorter, and the Participant’s death at any time following such Termination of Employment due to Disability shall not affect the foregoing.

6.6 Other Termination . Unless otherwise provided in an Agreement or determined by the Committee, if a Participant incurs a Termination of Employment that is involuntary on the part of the Participant (but is not due to death, Disability or with Cause) or is voluntary on the part of the Participant, any Option held by such Participant shall thereupon terminate, except that such Option, to the extent then exercisable, may be exercised for the lesser of the ninety (90) consecutive day period commencing with the date of such Termination of Employment or until the expiration of the Option Period whichever period is the shorter. If the Participant incurs a Termination of Employment for Cause, the Option shall terminate immediately. Unless otherwise provided in an Agreement, the death or Disability of a Participant after a Termination of Employment otherwise provided herein shall not extend the time permitted to exercise an Option.

ARTICLE VII

STOCK APPRECIATION RIGHTS

7.1 General . The Committee shall have authority to grant Stock Appreciation Rights under the Plan at any time or from time to time. Stock Appreciation Rights may be awarded either alone or in addition to other Awards granted under the Plan. Subject to the Participant’s satisfaction in full of any conditions, restrictions or limitations imposed in accordance with the Plan or an Agreement, a Stock Appreciation Right shall entitle the Participant to surrender to the Company the Stock Appreciation Right and to be paid therefore in Common Stock the amount described in Section 7.3(2).

7.2 Grant . The grant of a Stock Appreciation Right shall occur as of the Grant Date determined by the Committee. In no event shall the Exercise Price per share be less than the Fair Market Value per share as of the Grant Date. A Stock Appreciation Right entitles a Participant to receive Common Stock as described in Section 7.3(2). An Award of Stock Appreciation Rights shall be evidenced by, and subject to the terms of an Agreement, which shall become effective upon execution by the Participant.

7.3 Terms and Conditions . Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Committee, including the following:

(1) Period and Exercise . The term of a Stock Appreciation Right shall be established by the Committee. A Stock Appreciation Right shall be for such period and shall be exercisable at such times and to the extent provided in the Agreement. Subject to Section 10.1 and the terms set by the Committee, Stock Appreciation Rights shall be exercisable at the rate of twenty percent (20%) as of each anniversary of the Grant Date. In addition, the Committee may at any time accelerate the exercisability of all or part of any Stock Appreciation Right. Stock Appreciation Rights shall be exercised by the Participant’s giving written notice of exercise on a form provided by the Committee (if available) to the Company specifying the

portion of the Stock Appreciation Right to be exercised or in such other manner as is prescribed by the Committee or its delegates.

(2) Amount . Upon the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in Common Stock equal in value to the excess of the Fair Market Value per share of Common Stock over the Exercise Price per share of Common Stock specified in the related Agreement, multiplied by the number of shares in respect of which the Stock Appreciation Right is exercised The aggregate Fair Market Value per share of Common Stock shall be determined as of the date of exercise of such Stock Appreciation Right.

(3) Non-transferability of Stock Appreciation Rights . Except as provided in the Plan or in an Agreement, no Stock Appreciation Rights shall be sold, assigned, margined, transferred, encumbered, conveyed, gifted, alienated, hypothecated, pledged or otherwise disposed of, other than by will or the laws of descent and distribution, and all Stock Appreciation Rights shall be exercisable during the Participant’s lifetime only by the Participant.

(4) Termination . A Stock Appreciation Right shall be forfeited or terminated at such time as an Option would be forfeited or terminated under the Plan, unless otherwise provided in an Agreement.

ARTICLE VIII

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

8.1 General . The Committee shall have authority to grant Restricted Stock and/or Restricted Stock Units under the Plan at any time or from time to time. The Committee shall determine the number of shares of Restricted Stock and/or the number of Restricted Stock Units to be awarded to any Participant, the time or times within which such Awards may be subject to forfeiture, and any other terms and conditions of the Awards. Each Award shall be confirmed by, and be subject to the terms of, an Agreement which shall become effective upon execution by the Participant.

8.2 Grant, Awards and Certificates . An Award of Restricted Stock or of Restricted Stock Units shall occur as of the Grant Date determined by the Committee and as provided in an Agreement. Restricted Stock and Restricted Stock Units may be awarded either alone or in addition to other Awards granted under the Plan. Notwithstanding the limitations on issuance of Common Stock otherwise provided in the Plan, each Participant receiving an Award of Restricted Stock shall be issued a certificate (or other representation of title) in respect of such Restricted Stock. Such certificate shall be registered in the name of such Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award as determined by the Committee. The Committee may require that the certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of Restricted Stock, the Participant shall have delivered a share power, endorsed in blank, relating to the Common Stock covered by such Award.

8.3 Terms and Conditions . Restricted Stock and Restricted Stock Units shall be subject to such terms and conditions as shall be determined by the Committee, including the following:

(1) Limitations on Transferability . The issue prices for Restricted Stock and Restricted Stock Units shall be set by the Committee and may be zero. Subject to the provisions of the Plan and the Agreement, during a period set by the Committee (and, in the case of Restricted Stock Units, until the date of delivery of Common Stock), commencing with the date of such Award (the “Restriction Period “), the Participant shall not be permitted to sell, assign, margin, transfer, encumber, convey, gift, alienate, hypothecate, pledge or otherwise dispose of Restricted Stock or Restricted Stock Units.

(2) Rights . Except as provided in Section 8.3(1), the Participant shall have, with respect to the Restricted Stock, all of the rights of a shareholder of the Company holding the class of Common Stock that is the subject of the Restricted Stock, including, if applicable, the right to vote the shares and the right to receive any cash dividends, except as limited by this Section 8.3(2). A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder but shall, to the extent provided in an Agreement, have the right to receive (with respect to such Restricted Stock Units) cash payments equivalent in value to, and payable at the same time as, the cash dividends payable on a like number shares of Common Stock. Unless otherwise determined by the Committee, cash dividends on Restricted Stock shall not be distributed prior to vesting of the Restricted Stock, but shall instead be accumulated and distributed as additional shares of Common Stock after vesting of the Restricted Stock.

(3) Criteria . Based on service, performance by the Participant or by the Company or the Affiliate, including any division or department for which the Participant is employed, or such other factors or criteria as the Committee may determine, the Committee may provide for the lapse of restrictions in installments and may accelerate the vesting of all or any part of any Award of Restricted Stock and waive the restrictions for all or any part of such Award of Restricted Stock.

(4) Forfeiture . Unless otherwise provided in an Agreement or determined by the Committee, if the Participant incurs a Termination of Employment due to death or Disability during the Restriction Period, the restrictions shall lapse and the Participant shall be fully vested in the Restricted Stock or Restricted Stock Units. Except to the extent otherwise provided in the applicable Agreement and the Plan, upon a Participant’s Termination of Employment for any reason during the Restriction Period other than a Termination of Employment due to death or Disability, all shares of Restricted Stock and Restricted Stock Units still subject to restriction shall be forfeited by the Participant, except the Committee shall have the discretion to waive in whole or in part any or all remaining restrictions with respect to any or all of such Participant’s Restricted Stock .

(5) Delivery . If a share certificate is issued in respect of Restricted Stock, the certificate shall be registered in the name of the Participant but shall be held by the Company for the account of the Participant until the end of the Restricted

Period. If and when the Restriction Period expires without a prior forfeiture of Restricted Stock or Restricted Stock Units subject to such Restriction Period, unlegended certificates (or other representation of title) for Common Stock shall be delivered to the Participant at the time and subject to the conditions provided in the Agreement governing such Award.

(6) Election . A Participant may elect to further defer receipt of the Restricted Stock or payment of Common Stock with respect to Restricted Stock Units for a specified period or until a specified event, subject to the Committee’s approval and to such terms as are determined by the Committee. Subject to any exceptions adopted by the Committee, such election must be made one at least (1) year prior to completion of the Restriction Period and in compliance with the terms and conditions of Section 409A of the Code.

ARTICLE IX

PERFORMANCE UNITS

9.1 General . The Committee shall have authority to grant Performance Units under the Plan at any time or from time to time. A Performance Unit (“ Performance Unit ”) consists of the right to receive cash upon achievement of certain goals relating to performance (“ Performance Goals ”) and may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall have complete discretion to determine the number of Performance Units granted to each Participant. Each Performance Unit Award shall be evidenced by, and be subject to the terms of, an Agreement which will become effective upon execution by the Participant. The time period during which a Performance Unit Award shall be earned shall be the “Performance Period,” and shall be at least one (1) fiscal year in length. Performance Units may be subject to Performance Goals which shall be established by the Committee.

9.2 Earning Performance Unit Awards . After the applicable Performance Period shall have ended, the Committee shall determine the extent to which the established Performance Goals have been achieved.

9.3 Termination of Employment Due to Death or Disability . In the event of a Termination of Employment due to death or Disability during a Performance Period, the Participant shall receive a pro rata share of the cash award earned with respect to the Participant’s Performance Units relating to such Performance Period. Unless otherwise determined by the Committee, in the event that a Participant’s employment terminates for any other reason, all Performance Units shall be forfeited by the Participant to the Company. Distribution of earned Performance Units on account of Termination of Employment due to death or Disability may be made at the same time payments are made to Participants who did not incur a Termination of Employment during the applicable Performance Period

9.4 Nontransferability . Unless otherwise provided in an Agreement, Performance Units may not be sold, assigned, margined, transferred, encumbered, conveyed, gifted, alienated, hypothecated, pledged, or otherwise disposed of, other than by will or by the laws of descent and distribution.

9.5 Election to Defer . A Participant may elect to defer receipt of the cash award with respect to Performance Units for a specified period or until a specified event, subject to the Committee’s approval and to such terms are determined by the Committee. Subject to any exceptions adopted by the Committee, such election must be made at least one (1) year prior to completion of the Performance Period.

9.6 Payment . Payment with respect to Performance Units shall be made in accordance with the related Agreement. In no event, however, shall any payment with respect to a Performance Unit be made after the fifteenth day of the third month after the last day of the applicable Performance Period.

ARTICLE X

CHANGE IN CONTROL PROVISIONS

10.1 Impact of Event. Notwithstanding any other provision of the Plan to the contrary and unless otherwise provided in an Agreement, in the event of a Change in Control:

(1) Any Stock Options and Stock Appreciation Rights outstanding as of the date of such Change in Control and not then exercisable shall become fully exercisable to the full extent of the original grant;

(2) The restrictions applicable to any Restricted Stock and Restricted Stock Unit Awards shall lapse. Such Restricted Stock shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant, and such Restricted Stock Units shall become free of all restrictions, fully vested, and payable in shares of Common Stock; and

(3) Any Performance Goal or other condition with respect to any Performance Units shall be deemed to have been satisfied in full, and such Award shall be fully distributable.

10.2 Additional Discretion . In the event of a Change in Control, the Committee shall make a proportional adjustment of the terms of Awards granted hereunder in whatever manner as the Committee deems appropriate to equitably reflect the change (if any) in the value of the Common Stock due to the Change in Control. Notwithstanding anything herein or in an Agreement to the contrary, upon a Change in Control, the Committee shall have full discretion with respect to an outstanding Award to provide that the securities of another entity be substituted hereunder for the Common Stock and to make equitable adjustment with respect thereto.

ARTICLE XI

PROVISIONS APPLICABLE TO SHARES ACQUIRED UNDER THIS PLAN

11.1 No Company Obligation . Except to the extent required by applicable securities laws, none of the Company, an Affiliate or the Committee shall have any duty or obligation to affirmatively disclose material information to a record or beneficial holder of Common Stock or

an Award, and such holder shall have no right to be advised of any material information regarding the Company or any Affiliate at any time prior to, upon, or in connection with receipt, exercise or distribution of an Award. The Company makes no representation or warranty as to the future value of the Common Stock issued or acquired in accordance with the provisions of the Plan.

ARTICLE XII

MISCELLANEOUS

12.1 Amendments and Termination . The Board may amend, alter, or discontinue the Plan at any time, but no amendment, alteration or discontinuation shall be made which would impair the rights of a Participant under an Award theretofore granted without the Participant’s consent, except such an amendment (a) made to cause the Plan to comply with applicable law, including without limitation an amendment to bring the Award into compliance with, or obtain an exemption from, the requirements of Code Section 409A; or (b) made to permit the Company or an Affiliate a tax deduction under applicable law. The Committee may amend, alter or discontinue the terms of any Award theretofore granted, prospectively or retroactively, on the same conditions and limitations (and exceptions to limitations) as apply to the Board, and further subject to any approval or limitations the Board may impose. Notwithstanding the foregoing, any material amendments (as determined under the rules of the New York Stock Exchange, as amended from time to time) to the Plan shall require shareholder approval.

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

12.3 Provisions Relating to Internal Revenue Code Section 162(m) . It is the intent of the Company that Awards granted to persons who are Covered Employees within the meaning of Section 162(m) of the Code shall constitute “qualified performance-based compensation” satisfying the requirements of Code Section 162(m). Accordingly, the Plan shall be administered and the provisions of the Plan shall be interpreted in a manner consistent with Code Section 162(m). If any provision of the Plan or any Agreement relating to such an Award does not comply or is inconsistent with the requirements of Code Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements. In addition, the following provisions shall apply to the Plan or an Award to the extent necessary to obtain a tax deduction for the Company or an Affiliate:

(1) Not later than the date required or permitted for “qualified performance-based compensation” under Code Section 162(m), the Committee shall determine the Participants who are Covered Employees who will receive Awards that are intended as qualified performance-based compensation and the amount or method for determining the amount of such compensation.

(2) During any three-consecutive calendar year period, the maximum number of shares of Common Stock for which Options and Stock Appreciation Rights, in

the aggregate, may be granted to any Participant shall not exceed 800,000 shares. For Performance Unit Awards that are intended to be “performance-based compensation” (as that term is used in Code Section 162(m), no more than $2,000,000 may be subject to such Awards granted to any Participant during any three-consecutive calendar year period. If, after amounts have been earned with respect to Performance Unit Awards, the payment of such amounts is deferred, any additional amounts attributable to earnings during the deferral period shall be disregarded for purposes of this limit.

(3) Performance Goals . Awards may be subject to Performance Goals (as defined in Section 9.1) which shall be measured in a specific Performance Period (as defined in Section 9.1) established by the Committee which shall be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, as the Committee may determine: sales; cash flow; cash flow from operations; operating profit or income; net income; operating margin; net income margin; return on net assets; economic value added; return on total assets; return on common equity; return on total capital; total shareholder return; revenue; revenue growth; earnings before interest, taxes, depreciation and amortization (“EBITDA”); EBITDA growth; funds from operations per share and per share growth; cash available for distribution; cash available for distribution per share and per share growth; share price performance on an absolute basis and relative to an index of earnings per share or improvements in the Company’s attainment of expense levels; and implementing or completion of critical projects. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify: extraordinary, unusual or non-recurring items; effects of accounting changes; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiatives; other non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation activities and settlements. Any such performance criterion or combination of such criteria may apply to the Participant’s Award opportunity in its entirety or to any designated portion or portions of the Award opportunity, as the Committee may specify. Unless the Committee determines otherwise for any Performance Period, extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the Award (including but not limited to the criterion of net income) shall be excluded or included in determining on the extent to which the corresponding performance goal has been achieved, whichever will produce the higher Award. In the event applicable tax or other laws change to permit the Committee discretion to alter the governing performance measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.

(4) Earning Performance Awards . After the applicable Performance Period shall have ended, the Committee shall certify the extent to which the established Performance Goals have been achieved. Payment with respect to Performance Units for Covered Employees shall be a direct function of the extent to which the Company’s Performance Goals have been achieved. A Performance Unit Award to a Participant who is a Covered Employee shall (unless the Committee

determines otherwise) provide that in the event of the Participant’s Termination of Employment prior to the end of the Performance Period for any reason, such Award will be payable only (a) if the applicable Performance Goals are achieved and (b) to the extent, if any, as the Committee shall determine.

(5) Other Section 162(m) Provisions . In the manner required by Section 162(m) of the Code, the Committee shall, promptly after the date on which the necessary financial and other information for a particular Performance Period becomes available, certify the extent to which Performance Goals have been achieved with respect to any Performance Unit Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code. The Committee may not increase the amount of any Performance Unit Award payable to any Participant above the amount established in accordance with the relevant Performance Goals with respect to any Performance Unit Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code

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

12.5 Withholding . No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect to any Award, the Participant shall pay to the Company (or other entity identified by the Committee), or make arrangements satisfactory to the Company or other entity identified by the Committee regarding the payment of, any federal, state, or local taxes of any kind required by law to be withheld with respect to such income. Unless otherwise determined by the Committee, withholding obligations may be settled with Common Stock, including shares of Common Stock that are part of the Award that give rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant. Subject to approval by the Committee, a Participant may elect to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Common Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the required statutory minimum (but no more than such required minimum) with respect to the Company’s withholding obligation, or (ii) transferring to the Company shares of Common Stock owned by the Participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the required statutory minimum (but no more than such required minimum) with respect to the Company’s withholding obligation.

12.6 Controlling Law . The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of Minnesota (other than its law respecting choice of law). The Plan shall be construed to comply with all applicable law and to avoid liability to the Company, an Affiliate or a Participant. The Board and the Committee shall administer the Plan, and shall exercise all authority and discretion under the Plan to satisfy the requirements of Code Section 409A

12.7 Offset . Any amounts owed to the Company or an Affiliate by the Participant of whatever nature may be offset by the Company from the value of any Award to be transferred to the Participant.

12.8 Nontransferability; Beneficiaries . No Award shall be assignable or transferable by the Participant, otherwise than by will or the laws of descent and distribution or pursuant to a beneficiary designation, and Awards shall be exercisable during the Participant’s lifetime only by the Participant (or by the Participant’s legal representatives in the event of the Participant’s incapacity). Each Participant may designate a Beneficiary to exercise any Option or Stock Appreciation Right or receive any Award held by the Participant at the time of the Participant’s death or to be assigned any other Award outstanding at the time of the Participant’s death. If a deceased Participant has named no Beneficiary, any Award held by the Participant at the time of death shall be transferred as provided in his or her will or by the laws of descent and distribution. Except in the case of the holder’s incapacity, only the holder may exercise an Option or Stock Appreciation Right. Notwithstanding the foregoing, the Board or the Committee may, in its discretion and subject to such limitations and conditions as the Board or the Committee deems appropriate, permit the transfer of an Award by a Participant to a Participant’s children, stepchildren, grandchildren, parents, stepparents, grandparents, spouse (including an ex-spouse incident to divorce), siblings, in-laws, or persons related by reason of legal adoption (collectively, the “Family Members”), or to a trust for the exclusive benefit of the Grantee’s Family Members or a partnership, corporation or limited liability the equity interests of which are owned by the Grantee and/or the Grantee’s Family Members.

12.9 Gross-Up for Excise Tax. If all or any portion of the payments and benefits (including any acceleration of vesting) provided under this Plan, either alone or together with other payments and benefits which a Participant receives or is then entitled to receive from the Company or an Affiliate, would constitute a “parachute payment” within the meaning of Section 280G of the Code, the Company shall pay to the Participant, within ten (10) business days of the determination that the payment would constitute a parachute payment, a tax “gross-up” payment to the extent necessary so that the net after-tax benefit to the Participant shall be equal to the net after-tax benefit if the excise tax associated with the “parachute payment” were not imposed. The “net after-tax benefit” for these purposes shall mean the sum of (i) the total amount payable to the Participant under the Plan, plus (ii) all other payments and benefits which the Participant receives or is then entitled to receive from the Company or any Affiliate that would constitute a “parachute payment” within the meaning of Section 280G of the Code, less (iii) the amount of federal income taxes payable with respect to the foregoing calculated at the maximum marginal income tax rate for each year in which the foregoing shall be paid to the Participant (based upon the rate in effect for such year as set forth in the Code at the time of the payment), less (iv) the amount of excise taxes imposed with respect to the payments and benefits described in (i) and (ii) above by Section 4999 of the Code. The determination on whether or not all or any portion of the payments and benefits provided to the Participant would constitute parachute payments shall be made by a national certified public accounting firm selected by the Company, and such determination shall be conclusive and binding on the Participant.

12.10 No Rights with Respect to Continuance of Employment . Nothing contained herein shall be deemed to alter the relationship between the Company or an Affiliate and a Participant, or the contractual relationship between a Participant and the Company or an Affiliate if there is a written contract regarding such relationship. Nothing contained herein shall be construed to constitute a contract of employment between the Company or an Affiliate and a Participant. The Company or an Affiliate and each of the Participants continue to have the right to

terminate the employment or service relationship at any time for any reason, except as provided in a written contract. The Company or an Affiliate shall have no obligation to retain the Participant in its employ or service as a result of this Plan. There shall be no inference as to the length of employment or service hereby, and the Company or an Affiliate reserves the same rights to terminate the Participant’s employment or service as existed prior to the individual becoming a Participant in this Plan.

12.11 Awards in Substitution for Awards Granted by Other Corporations . Awards may be granted under the Plan from time to time in substitution for awards held by employees, directors or service providers of other corporations who are about to become officers, directors or employees of the Company or an Affiliate as the result of a merger or consolidation of the employing corporation with the Company or an Affiliate, or the acquisition by the Company or an Affiliate of the assets of the employing corporation, or the acquisition by the Company or Affiliate of the share of the employing corporation, as the result of which it becomes a designated employer under the Plan. The terms and conditions of the Awards so granted may vary from the terms and conditions set forth in this Plan at the time of such grant as the majority of the members of the Committee may deem appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which they are granted.

12.12 Foreign Alternatives . Notwithstanding the other provisions of the Plan, in the case of any Award to any Participant who is an employee of a foreign subsidiary or foreign branch of the Company or held by a Participant who is in any other category specified by the Committee, the Committee may specify that such Award shall not be represented by Common Stock or other securities but shall be represented by rights approximately equivalent (as determined by the Committee) to the rights that such Participant would have received if shares of Common Stock or other securities had been issued in the name of such Participant otherwise in accordance with the Plan (such rights being hereinafter called “Share Equivalents”). The Share Equivalents representing any such Award may subsequently, at the option of the Committee, be converted into cash or an equivalent number of shares of Common Stock or other securities under such circumstances and in such manner as the Committee may determine.

12.13 Delivery of Stock Certificates . To the extent the Company uses certificates to represent shares of Common Stock, certificates to be delivered to Participants under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the Participant, at the Participant’s last known address on file with the Company. Any reference in this Section 12.13 or elsewhere in the Plan or an Agreement to actual stock certificates and/or the delivery of actual stock certificates shall be deemed satisfied by the electronic record-keeping and electronic delivery of shares of Common Stock or other mechanism then utilized by the Company and its agents for reflecting ownership of such shares.

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

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

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

12.17 Entire Agreement . This Plan and each Agreement constitute the entire agreement with respect to the subject matter hereof and thereof, provided that in the event of any inconsistency between the Plan and each Agreement, the terms and conditions of this Plan shall control.

Exhibit No. 15

February 9, 2009

Securities and Exchange Commission

100 F Street, N.E.

Washington DC 20549

RE:

Regis Corporation Registration Statements on Form S-3 (File No. 333-100327, No. 333-51094, No. 333-28511,
No. 333-78793, No. 333-49165, No. 333-89279, No. 333-90809, No. 333-31874, No. 333-57092, No. 333-72200,
No. 333-87482, No. 333-102858 and No. 333-116170), and Form S-8 (File No. 33-44867 and No. 33-89882)

Commissioners:

We are aware that our report dated February 9, 2009, on our reviews of the interim financial statements of Regis Corporation for the three and six month periods ended December 31, 2008 and 2007 and included in the Company’s Quarterly Report on Form 10-Q for the three months ended December 31, 2008, is incorporated by reference in the above referenced registration statements.

Yours very truly,

/s/ PRICEWATERHOUSECOOPERS LLP

PRICEWATERHOUSECOOPERS LLP

Minneapolis, Minnesota

Exhibit No. 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Paul D. Finkelstein, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

February 9, 2009

/s/ Paul D. Finkelstein
Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer

Exhibit No. 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Randy L. Pearce, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Regis Corporation;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

February 9, 2009

/s/ Randy L. Pearce
Randy L. Pearce, Senior Executive Vice President, Chief Financial and Administrative Officer

Exhibit No. 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Regis Corporation (the Registrant) on Form 10-Q for the fiscal quarter ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof, I, Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarter Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

February 9, 2009

/s/ Paul D. Finkelstein
Paul D. Finkelstein, Chairman of the Board of Directors, President and Chief Executive Officer

Exhibit No. 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Regis Corporation (the Registrant) on Form 10-Q for the fiscal quarter ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof, I, Randy L. Pearce, Senior Executive Vice President, Chief Financial and Administrative Officer of the Registrant, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

February 9, 2008

/s/ Randy L. Pearce
Randy L. Pearce, Senior Executive Vice President, Chief Financial and Administrative Officer