REGIS CORP, S-4, 1999-04-08

REGIS CORP
S-4, 1999-04-08
PERSONAL SERVICES

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AS FILED WITH THE SECURITIES & EXCHANGE COMMISSION ON APRIL 8, 1999
REGISTRATION NO.
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------------

REGIS CORPORATION
(Exact name of issuer as specified in its charter)

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<S> <C> <C>
MINNESOTA 7231 41-0749934
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>

7201 METRO BOULEVARD, EDINA, MINNESOTA 55439
(612) 947-7777
(Address and telephone number of principal executive offices)

PAUL D. FINKELSTEIN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
REGIS CORPORATION
7201 METRO BOULEVARD
EDINA, MINNESOTA 55439
(612) 947-777

(Name, address and telephone number of agent for service)
------------------------------

COPIES OF COMMUNICATIONS TO:

Bert M. Gross, Esq. Joseph T. Kinning, Esq.
Eric A. Bakken, Esq. Scott A. Hendrickson, Esq.
Regis Corporation Gray, Plant, Mooty, Mooty & Bennett,
P.A.
7201 Metro Boulevard 33 South Sixth Street
Edina, Minnesota 55439 3400 City Center
(612) 947-7777 Minneapolis, Minnesota 55402
(612) 343-2800

------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AND THE
EFFECTIVE TIME OF THE PROPOSED MERGER OF REGIS MERGER SUB, INC., A NEWLY FORMED,
WHOLLY-OWNED SUBSIDIARY OF REGIS CORPORATION, WITH AND INTO THE BARBERS,
HAIRSTYLING FOR MEN & WOMEN, INC.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
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CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE OFFERING PRICE FEE(2)
<S> <C> <C> <C> <C>
Common Stock, par value $.05 per share...... 2,365,160 $11.75 $55,581,248 $15,451.59
</TABLE>

(1) The amount to be registered is the maximum number of shares of common stock,
par value $.05 per share ("Regis Common Stock"), of Regis Corporation
("Regis") issuable upon consummation of the merger (the "Merger") of Regis
Merger Sub, Inc., a wholly-owned subsidiary of Regis, with and into The
Barbers, Hairstyling for Men & Women, Inc. ("The Barbers"), at the
conversion ratio of 1/2 of one share of Regis Common Stock for one share of
common stock, par value $.10 per share, of The Barbers ("The Barbers Common
Stock") (adjusted to reflect the 3-for-2 stock split of Regis effective
March 1, 1999), assuming that The Barbers had 3,990,769 shares of The
Barbers Common Stock outstanding on April 5, 1999 and options and warrants
to purchase 739,550 shares of The Barbers Common Stock outstanding on April
5, 1999.

(2) Pursuant to Rule 457(f)(1) and (c), the registration fee was calculated
based on the average of the high and low price per share ($11.75) of The
Barbers Common Stock as reported on the Nasdaq National Market System on
April 5, 1999, multiplied by the maximum number of shares of such stock to
be canceled in the Merger (4,730,319 shares).
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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- --------------------------------------------------------------------------------
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[LOGO]
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
300 INDUSTRIAL BOULEVARD, N.E.
MINNEAPOLIS, MINNESOTA 55413

, 1999

Dear Shareholder:

You are cordially invited to attend a special meeting of the shareholders of
The Barbers, Hairstyling for Men & Women, Inc. ("The Barbers") to be held on
Thursday, May 20, 1999 at : .m., at . The Board of Directors
has called the special meeting for the shareholders to consider and vote upon
the acquisition of The Barbers by Regis Corporation ("Regis") pursuant to an
Agreement and Plan of Merger (the "Merger Agreement") dated January 25, 1999
between The Barbers, Regis, and Regis Merger Sub, Inc., a wholly-owned
subsidiary of Regis ("Merger Sub"). The acquisition will be accomplished by a
merger of The Barbers and Merger Sub, with The Barbers being the surviving
corporation (the "Merger"). As a result of the Merger, The Barbers will become a
wholly-owned subsidiary of Regis. A copy of the Merger Agreement is attached to
the enclosed Proxy Statement/Prospectus as Appendix A.

As consideration for the Merger, you will receive 1/2 of one share of common
stock of Regis for each share of common stock of The Barbers you own unless you
exercise your right to dissent from the Merger and receive the fair cash value
of your shares of common stock of The Barbers. The entire Board of Directors of
The Barbers has carefully considered the terms and conditions of the Merger and
has unanimously determined that the Merger is fair, from a financial point of
view, and is in the best interests of The Barbers' shareholders. In addition,
the independent, non-employee directors of The Barbers (the "Independent
Directors") meeting as a separate group have carefully considered the terms and
conditions of the Merger and have unanimously determined that the Merger is
fair, from a financial point of view, and is in the best interests of The
Barbers' shareholders.

THE ENTIRE BOARD OF DIRECTORS AND THE INDEPENDENT DIRECTORS UNANIMOUSLY
RECOMMEND THAT THE SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE
MERGER AGREEMENT AND TO APPROVE THE MERGER.

In connection with its approval of the Merger Agreement and the Merger, the
Board of Directors of The Barbers has received written opinions from its
financial advisor, U.S. Bancorp Piper Jaffray Inc. ("U.S. Bancorp Piper
Jaffray") dated as of January 25, 1999 (the date on which the Board of Directors
approved the Merger Agreement and the Merger) and dated as of ,
1999, to the effect that the consideration to be received by The Barbers'
shareholders in the Merger is fair, from a financial point of view, to the
shareholders of The Barbers. A copy of U.S. Bancorp Piper Jaffray's written
opinion dated , which sets forth a description of the assumptions
made, the matters considered, the scope and limitations of the review undertaken
and the procedures followed by U.S. Bancorp Piper Jaffray in rendering this
opinion is attached to the accompanying Proxy Statement/Prospectus as Appendix
B. The Board of Directors urges you to read carefully the opinion in its
entirety.

Approval of the Merger Agreement and the Merger requires the affirmative
vote of a majority of the shares present and entitled to vote at the special
meeting. As of March 15, 1999, the directors and executive officers of The
Barbers and their affiliates may be deemed to beneficially own approximately 68%
of the then outstanding common stock of The Barbers (not including common stock
that may be
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acquired on the exercise of outstanding stock options and warrants). Each of the
directors and executive officers of The Barbers has indicated that he or she
intends to vote these shares FOR the approval of the Merger Agreement and the
Merger. In addition, Florence F. Francis, Chairman of the Board of Directors of
The Barbers, who as of March 15, 1999 may be deemed to beneficially own
approximately 59% of the then outstanding common stock of The Barbers (not
including common stock that she may acquire on the exercise of outstanding stock
options and warrants) has agreed to vote all shares beneficially owned by her
FOR the approval of the Merger Agreement and the Merger. Therefore, the approval
of the Merger Agreement and the Merger by the shareholders of The Barbers is
assured.

The enclosed notice of special meeting and Proxy Statement/Prospectus
contain details concerning the Merger. In addition, you may obtain information
about Regis from documents filed by Regis with the Securities and Exchange
Commission and you may obtain information about The Barbers from documents filed
by The Barbers with the Securities and Exchange Commission some of which is
included in enclosed Proxy Statement/Prospectus. We urge you to read and
consider these documents carefully. Whether or not you plan to be at the special
meeting, please be sure to sign, date and return the enclosed proxy card in the
enclosed envelope as promptly as possible so that your shares may be represented
at the special meeting and voted in accordance with your wishes. Your vote is
important regardless of the number of shares you own.

Sincerely,

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<S> <C>
Florence F. Francis Frederick A. Huggins, Jr.
PRESIDENT AND CHIEF EXECUTIVE
CHAIRMAN OF THE BOARD OFFICER
</TABLE>
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
300 INDUSTRIAL BOULEVARD, N.E.
MINNEAPOLIS, MINNESOTA 55413

------------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1999

------------------------

TO THE SHAREHOLDERS OF THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.:

Notice is hereby given that a special meeting of the shareholders of The
Barbers, Hairstyling for Men & Women, Inc., a Minnesota corporation ("The
Barbers"), will be held on Thursday, May 20, 1999 at : .m., at
, for the following purposes:

(1) To consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Merger dated as of January 25, 1999 (the "Merger Agreement"), by and
among The Barbers, Regis Corporation, a Minnesota corporation ("Regis"), and
Regis Merger Sub, Inc., a Minnesota corporation and a wholly-owned
subsidiary of Regis ("Merger Sub").

Pursuant to the Merger Agreement,

- Merger Sub will merge with and into The Barbers, the separate existence
of Merger Sub will cease, and The Barbers will become a wholly-owned
subsidiary of Regis (the "Merger"), and

- Each outstanding share of common stock of The Barbers will be converted
into the right to receive 1/2 of one share of common stock of Regis.

(2) To transact any other business as may properly come before the special
meeting or any adjournment or postponement thereof.

Only holders of The Barbers common stock at the close of business on April
19, 1999 will be entitled to notice of and to vote at the special meeting or any
adjournment or postponement thereof.

Under Minnesota law, shareholders of The Barbers are entitled to exercise of
dissenters' rights and receive the fair value, in cash, of their shares. In
order to exercise your dissenters' rights, you must strictly comply with the
dissenters' rights procedures or you will lose your dissenters' rights. The
dissenters' rights procedures are described in the enclosed Proxy
Statement/Prospectus. See "The Merger--Dissenters' Rights of Appraisal."

YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY AS SOON AS POSSIBLE, WHETHER OF NOT YOU PLAN TO BE PRESENT AT THE SPECIAL
MEETING. Proxies are revocable at any time prior to the time they are voted, and
shareholders who are present at the special meeting may withdraw their proxies
and vote in person if they so desire.

By Order of the Board of Directors,
Patricia D. Kessler
SECRETARY
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The information in this Proxy Statement/Prospectus is not complete and may
be changed. Regis may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This Proxy
Statement/Prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 8, 1999

THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
PROXY STATEMENT
Special Meeting of Shareholders-May 20, 1999

REGIS CORPORATION
PROSPECTUS
Shares of Common Stock

The Barbers, Hairstyling for Men & Women, Inc. and Regis Corporation have
executed an Agreement and Plan of Merger pursuant to which Regis will acquire
The Barbers. The acquisition will be accomplished by a merger of The Barbers and
Regis Merger Sub, Inc., a wholly-owned subsidiary of Regis, with The Barbers
being the surviving corporation (the "Merger"). As a result of the Merger, The
Barbers will become a wholly-owned subsidiary of Regis.

If the Merger is completed, you will receive 1/2 of one share of common
stock of Regis ("Regis Common Stock") for each share of common stock of The
Barbers ("The Barbers Common Stock") you own unless you exercise your right to
dissent from the Merger and receive the fair cash value of your shares of The
Barbers Common Stock.

This document is a proxy statement for The Barbers to use in soliciting
proxies for a special meeting of shareholders called to consider and vote upon
the Merger. This document is also a prospectus of Regis relating to the issuance
of:

- Up to shares of Regis Common Stock to be issued to the
shareholders of The Barbers upon the consummation of the Merger, and

- shares of Regis Common Stock to be issued upon the exercise of
options and warrants to purchase shares of The Barbers Common Stock which
will be automatically converted into options and warrants to purchase
shares of Regis Common Stock upon the consummation of the Merger.

FOR RISKS IN CONNECTION WITH THE MERGER, SEE "RISK FACTORS" BEGINNING ON
PAGE OF THIS PROXY STATEMENT/PROSPECTUS.

The Nasdaq National Market lists Regis' common stock under the symbol
"RGIS". On , 1999, the last sale price of Regis' common stock, as
reported by the Nasdaq National Market, was $ per share. The Nasdaq
National Market lists The Barbers' common stock under the symbol "BBHF". On
, 1999, the last sale price of The Barbers' common stock, as
reported by the Nasdaq National Market, was $ per share.

This Proxy Statement/Prospectus, the accompanying notice of special meeting
and form of proxy are first being mailed to shareholders of The Barbers on or
about , 1999.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED BY THIS PROXY
STATEMENT/PROSPECTUS OR PASSED ON THE ADEQUACY OR ACCURACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Proxy Statement/Prospectus is , 1999.
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TABLE OF CONTENTS

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QUESTIONS AND ANSWERS ABOUT THE MERGER................................................. 1

SUMMARY................................................................................ 5
The Parties To The Merger............................................................ 5
The Merger........................................................................... 6
The Special Meeting.................................................................. 8
The Merger Agreement................................................................. 9
Regis Selected Historical Consolidated Financial Information......................... 11
The Barbers Selected Historical Consolidated Financial Information................... 12
Unaudited Comparative Per Share Data................................................. 13
Comparative Market Price Data........................................................ 14

RISK FACTORS........................................................................... 16
Risks Related to the Business........................................................ 16
Increased competition in the hair care industry could have a material adverse
effect on Regis' post-Merger business............................................. 16
Increased competition for retail sites could have a material adverse effect on
Regis' post-Merger business....................................................... 16
Regis' and The Barbers inability to retain and hire qualified employees for its
company-owned salons could have a material adverse effect on Regis' post-Merger
business.......................................................................... 16
Regis' and The Barbers' inability to retain and attract qualified franchisees could
have a material adverse effect on Regis' post-Merger business..................... 16
The inability of Regis' and The Barbers' franchisees to obtain adequate capital and
to overcome other factors affecting a franchisee's growth could have a material
adverse effect on Regis' post-Merger business..................................... 17
Changes in Regis' relationship with its suppliers could have a material adverse
effect on Regis' post-Merger business............................................. 17
Costs associated with year 2000 compliance issues could be greater than
anticipated....................................................................... 17
Risks Related to the Merger.......................................................... 18
The market price of Regis Common Stock will fluctuate.............................. 18
Difficulties related to the combination of the businesses of Regis and The Barbers
could have a material adverse effect on Regis' post-Merger business............... 18
Cost savings expected to result from the Merger are not achieved................... 18

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...................................... 19

THE BARBERS SPECIAL MEETING OF SHAREHOLDERS............................................ 20
General.............................................................................. 20
Date, Place, Time and Purpose........................................................ 20
Matters to be Considered at the Special Meeting...................................... 20
Record Date; Quorum.................................................................. 21
Record Date; Voting at the Meeting................................................... 21
Solicitation, Revocation and Use of Proxies.......................................... 21
</TABLE>

i
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How Shares Will be Voted at the Special Meeting...................................... 22
Expenses............................................................................. 22

THE MERGER............................................................................. 22
General.............................................................................. 22
Background of the Merger............................................................. 23
The Barbers' Reasons for the Merger; Recommendation of The Barbers' Board of
Directors.......................................................................... 25
Opinion of Financial Advisor to The Barbers.......................................... 27
Effective Time of the Merger......................................................... 33
Terms of the Merger.................................................................. 33
Regulatory Approval.................................................................. 33
Interests of Certain Persons in the Merger........................................... 34
Management of The Barbers After the Merger........................................... 35
Accounting Treatment................................................................. 35
Certain Federal Income Tax Consequences.............................................. 36
Nasdaq National Market Listing....................................................... 37
Exchange Procedures.................................................................. 37
Dissenters' Rights of Appraisal...................................................... 38
Resales of Regis Common Stock Issued in the Merger; Affiliate Agreements............. 40

THE MERGER AGREEMENT................................................................... 41
General.............................................................................. 41
Certain Representations and Warranties............................................... 41
Certain Covenants.................................................................... 43
Limitation on Solicitation by The Barbers............................................ 44
Indemnification and Insurance........................................................ 45
The Barbers Options.................................................................. 45
Conditions to Obligation to Close.................................................... 45
Amendment............................................................................ 47
Fees and Expenses.................................................................... 47

BUSINESS OF THE BARBERS................................................................ 47
General.............................................................................. 47
Franchising Overview................................................................. 48
History.............................................................................. 48
Franchised and Company Owned Salons.................................................. 49
Beauty Product and Equipment Distribution............................................ 50
Business Strategy.................................................................... 51
Competition.......................................................................... 51
Employees............................................................................ 52
Governmental Regulations............................................................. 52
Franchise Development................................................................ 52
Trademarks and Service Marks......................................................... 52
Properties........................................................................... 53
Legal Proceedings.................................................................... 54
Market for the Common Stock Equity and Related Stockholders Matters.................. 55
</TABLE>

ii
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THE BARBERS' MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................................................................... 55

DESCRIPTION OF REGIS CAPITAL STOCK..................................................... 63

COMPARISON OF SHAREHOLDER RIGHTS....................................................... 65

WHERE YOU CAN FIND MORE INFORMATION.................................................... 67

LEGAL MATTERS.......................................................................... 69

TAX OPINION............................................................................ 69

EXPERTS................................................................................ 69
</TABLE>

INDEX TO FINANCIAL STATEMENTS
LIST OF APPENDICES

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APPENDIX A: Agreement and Plan of Merger dated as of January 25, 1999, between
Regis Corporation, Regis Merger Sub, Inc. and The Barbers,
Hairstyling for Men & Women, Inc.
APPENDIX B: Opinion of U.S. Bancorp Piper Jaffray Inc.
APPENDIX C: Minnesota Statutes Relating to Dissenters' Rights (Minnesota
Statutes SectionSection 302A. 471 and 302A.473).
</TABLE>

iii
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QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHY SHOULD THE BARBERS MERGE WITH REGIS?

A: The Board of Directors considered many factors in making its determination
that The Barbers should merge with Regis. Among these factors were:

- The receipt of a fairness opinion from U.S. Bancorp Piper Jaffray Inc.,

- The chance for shareholders of The Barbers to recognize the intrinsic
value that The Barbers Board of Directors believes The Barbers Common
Stock contains but which they believe is not reflected in the trading
prices of The Barbers Common Stock, and

- The advantages a merger with Regis, a recognized leader in the hair care
industry, provides to The Barbers.

Q: WHO IS REGIS?

A: Regis is the largest owner and operator of mall-based hair and retail hair
product salons in the world. At December 31, 1998, Regis operated a total of
2,851 company-owned salons and franchised a total of 830 salons offering
high quality hair care services and products in 50 states and certain
foreign countries, principally the United Kingdom. Regis operates and
franchises its salons primarily under the names Regis
Hairstylists-Registered Trademark-, Supercuts-Registered Trademark-,
SmartStyle-Registered Trademark-, MasterCuts-Registered Trademark-, Trade
Secret-Registered Trademark-, HairMasters-Registered Trademark-,
StyleAmerica-Registered Trademark-, and Hair Express-Registered Trademark-.
Regis' executive offices are located at 7201 Metro Boulevard, Minneapolis,
Minnesota 55439, and its telephone number is (612) 947-7777. At December 31,
1998, Regis had total assets of approximately $422 million, total
liabilities of approximately $213 million and shareholders' equity of
approximately $209 million.

Q: WHO IS REGIS MERGER SUB, INC.?

A: Regis Merger Sub, Inc. is a Minnesota corporation and a wholly-owned
subsidiary of Regis formed for the purpose of facilitating the merger of
Regis and The Barbers.

Q: WHAT WILL I RECEIVE IN EXCHANGE FOR THE BARBERS COMMON STOCK THAT I OWN?

A: Unless you demand dissenters' rights and satisfy the procedures relating to
dissenters' rights, upon consummation of the Merger, each share of The
Barbers Common Stock you own will be converted automatically into the right
to receive 1/2 of a share of Regis Common Stock (the "Conversion Ratio").
Because the Conversion Ratio is fixed and the market price of the Regis
Common Stock that shareholders of The Barbers will receive in the Merger
will vary, you cannot be sure of the market value of Regis Common Stock you
will receive in the Merger. Based on the last sale price of the Regis common
stock on January 22, 1999, the last trading day immediately before the day
the Merger was first made public, the Conversion Ratio represents a premium
of approximately 27% over the average last sale price for The Barbers common
stock for the four week trading period immediately preceding the date on
which the Merger was first made public. The Regis Common Stock that you will
receive if the Merger is consummated will be publicly traded and will be
listed on the Nasdaq National Market under the symbol "RGIS".

Q: WHAT DO I NEED TO DO NOW?

A: After you have carefully read this document and other documents to which this
document refers you to, just indicate on the enclosed proxy card how you
want to vote. Sign and mail your proxy card in the

1
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enclosed prepaid return envelope marked "Proxy" as soon as possible so that
your shares may be represented and voted at the special meeting called to
consider and vote upon the Merger.

Q: WHAT VOTE IS REQUIRED TO APPROVE THE MERGER?

A: In order to approve the Merger, holders of a majority of the shares of The
Barbers Common Stock present at the special meeting and entitled to vote at
the special meeting must vote in favor of the Merger. As of March 15, 1999,
the directors and executive officers of The Barbers and their affiliates may
be deemed to beneficially own approximately 68% of the then outstanding
common stock of The Barbers (not including common stock that may be acquired
on the exercise of outstanding stock options and warrants). Each of the
directors and executive officers of The Barbers has indicated that he or she
intends to vote these shares FOR the approval of the Merger Agreement and
the Merger. In addition, Florence F. Francis, Chairman of the Board of
Directors of The Barbers, who as of March 15, 1999 may be deemed to
beneficially own approximately 59% of the then outstanding common stock of
The Barbers (not including common stock that she may acquire on the exercise
of outstanding stock options and warrants) has agreed to vote all shares
beneficially owned by her FOR the approval of the Merger Agreement and the
Merger. Therefore, the approval of the Merger Agreement and the Merger by
the shareholders of The Barbers is assured.

Although approval of the Merger Agreement and the Merger is assured, your
vote is important. The Board of Directors encourages you to complete the
enclosed proxy card and return it to us as soon as possible.

Q: WHERE AND WHEN IS THE SPECIAL MEETING?

A: The special meeting of the shareholders of The Barbers will be held on
Thursday, May 20, 1999 at : .m., at .

Q: WHO CAN VOTE AT THE SPECIAL MEETING?

A: Only holders of common stock of The Barbers at the close of business on April
19, 1999, may vote at the special meeting. Each share of common stock of The
Barbers is entitled to one vote.

Q: IF MY SHARES OF COMMON STOCK OF THE BARBERS ARE HELD IN "STREETNAME" BY MY
BROKER, WILL MY BROKER VOTE MY SHARES FOR ME?

A: No. The law does not allow your broker to vote your shares of common stock of
The Barbers without your instruction. Accordingly, if your shares are held
in "streetname" by your broker, you must instruct your broker how to vote
your shares at the special meeting. You will receive materials from your
broker on how to instruct him or her to vote your shares at the special
meeting. Shares that are not voted because you do not instruct your broker
are called "broker non-votes," and will be counted in determining whether a
quorum is present at the special meeting but will not be counted in
tabulating the vote.

Q: IF I SEND IN MY PROXY CARD BUT FORGET TO INDICATE MY VOTE, HOW WILL MY SHARES
BE VOTED?

A: If you sign and return your proxy card but do not indicate how to vote your
shares at the special meeting, the shares represented by your proxy will be
voted "FOR" the Merger Agreement and the Merger.

2
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Q: MAY I CHANGE MY VOTE AFTER I MAIL MY PROXY CARD?

A: Yes. You may change your vote at any time before your proxy is voted at the
special meeting. You can do this in three ways:

- You can send The Barbers a written statement that you revoke your proxy,
which to be effective must be received by The Barbers at its executive
offices prior to the vote at the special meeting; or

- You can send The Barbers a new proxy card prior to the vote at the special
meeting, which to be effective must be received by The Barbers prior to
the vote at the special meeting; or

- You can attend the special meeting and vote in person. Your attendance
alone will not revoke your proxy. You must attend the special meeting and
cast your vote at the special meeting.

You should send your revocation of a proxy or new proxy card to the
Secretary of The Barbers at the address on the notice of special meeting
accompanying this Proxy Statement/Prospectus. If your shares are held by a
broker, you must follow the directions provided by your broker to vote your
shares or to change your instructions.

Q: WILL I HAVE TO PAY TAXES AS A RESULT OF THE MERGER?

A: Regis and The Barbers intend for the Merger, for federal income tax purposes,
to be treated as a reorganization within the meaning of Section 368 of the
Internal Revenue Code (the "Code") and that each of The Barbers, Merger Sub
and Regis will be a party to the reorganization within the meaning of
Section 368(b) of the Code. If the Merger does qualify as a reorganization,
then your receipt of common stock of Regis as a result of the Merger will
not be a taxable event. Based on the facts, representations, warranties and
agreements set forth in the Merger Agreement, The Barbers, Merger Sub and
Regis believe that the Merger will qualify as a reorganization within the
meaning of Section 368 of the Code. However, no ruling has been requested
from the Internal Revenue Service (the "IRS") with respect to these matters.
Therefore, the IRS may determine that the Merger does not qualify to be
treated as a reorganization within the meaning of Section 368 of the Code.
If the Merger does not qualify as a reorganization, then your receipt of
Regis Common Stock as a result of the Merger will be taxable to you to the
extent that the value of shares of Regis Common Stock received by you
exceeds your tax basis in your shares of The Barbers Common Stock. In
addition, you will have to pay tax on any cash received by you as a result
of the Merger. You will receive cash as payment in lieu of the issuance of
fractional shares of common stock of Regis or as payment upon the exercise
of your dissenters' rights.

Q: WHAT WILL HAPPEN TO THE BARBERS AFTER THE MERGER?

A: After the Merger, The Barbers will no longer be a public company and the
common stock of The Barbers will not be publicly traded.

Q: WHAT RISKS ARE ASSOCIATED WITH THE MERGER?

A: There are numerous risks associated with the Merger, including:

- Increased competition in the hair care industry could have a material
adverse effect on Regis' post-Merger business.

- Competition for retail sites could have a material adverse effect on
Regis' post-Merger business.

3
<PAGE>
- Regis' inability to retain and hire qualified employees for its
company-owned salons could have a material adverse effect on Regis'
post-Merger business.

- Regis' inability to retain and attract qualified franchisees could have a
material adverse effect on Regis' post-Merger business.

- The inability of Regis' and The Barbers' franchisees to obtain adequate
capital and to overcome other factors affecting a franchisee's growth
could have a material adverse effect on Regis' post-Merger business.

- Changes in Regis' relationship with its suppliers could have a material
adverse effect on Regis' post-Merger business.

- Costs and other adverse effects associated with year 2000 compliance
issues could be greater than anticipated.

- Difficulties related to the combination of the businesses of Regis and The
Barbers could have a material adverse effect on Regis' post-Merger
business.

Q: ARE SHAREHOLDERS OF THE BARBERS ENTITLED TO DISSENTERS' RIGHTS?

A: Yes. Under Minnesota law, you are entitled to exercise dissenters' rights and
to receive the fair value, in cash, of your shares. In order to exercise
your dissenters' rights you must strictly comply with the dissenters' rights
procedures or you will lose your dissenters' rights. One of these rules is
that you must not vote FOR the Merger. If you vote FOR the Merger, you will
lose your dissenters' rights. The cash you receive upon the exercise of your
dissenters' rights may be more or less than the value of the Regis Common
Stock you would have received in the Merger if you had not exercised your
dissenters' rights.

Q: DO I SEND IN MY STOCK CERTIFICATES NOW?

A: No. If the Merger is consummated, Regis will send you written instructions
for exchanging your shares of The Barbers Common Stock for Regis Common
Stock.

4
<PAGE>
SUMMARY

THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THE MERGER AND THE OTHER
INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS, YOU SHOULD READ
CAREFULLY THIS ENTIRE PROXY STATEMENT/PROSPECTUS, AS WELL AS THE ADDITIONAL
DOCUMENTS TO WHICH IT REFERS. FOR INSTRUCTIONS ON OBTAINING MORE INFORMATION,
SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE .

THROUGHOUT THIS PROXY STATEMENT/PROSPECTUS THE TERM "MERGER" MEANS THE
MERGER OF REGIS MERGER SUB, INC., A WHOLLY-OWNED SUBSIDIARY OF REGIS CORPORATION
("MERGER SUB"), WITH AND INTO THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
("THE BARBERS"), WITH THE BARBERS BEING THE SURVIVING CORPORATION (THE
"SURVIVING CORPORATION"). AS A RESULT OF THE MERGER, THE BARBERS WILL BECOME A
WHOLLY-OWNED SUBSIDIARY OF REGIS CORPORATION ("REGIS"). THE TERM "MERGER
AGREEMENT" MEANS THE AGREEMENT AND PLAN OF MERGER DATED AS OF JANUARY 25, 1999,
BETWEEN THE BARBERS, REGIS, AND MERGER SUB. A COPY OF THE MERGER AGREEMENT IS
ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS AS APPENDIX A.

THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS WITH REGARD TO
REGIS COMMON STOCK AND THE NUMBER OF SHARES OF REGIS COMMON STOCK TO BE
EXCHANGED FOR EACH SHARE OF THE BARBERS COMMON STOCK AS A RESULT OF THE MERGER
HAS BEEN ADJUSTED TO REFLECT THE 3-FOR-2 STOCK SPLIT OF THE REGIS COMMON STOCK
EFFECTIVE MARCH 1, 1999. FOR EXAMPLE, THE MERGER AGREEMENT STATES THAT UPON
CONSUMMATION OF THE MERGER EACH SHARE OF THE BARBERS COMMON STOCK WILL BE
CONVERTED INTO THE RIGHT TO RECEIVE 1/3 OF ONE SHARE OF REGIS COMMON STOCK.
AFTER THE MARCH 1, 1999 REGIS STOCK SPLIT IS TAKEN INTO EFFECT, THIS CONVERSION
RATIO ADJUSTS SO THAT UPON CONSUMMATION OF THE MERGER EACH SHARE OF THE BARBERS
COMMON STOCK WILL BE CONVERTED INTO THE RIGHT TO RECEIVE 1/2 OF ONE SHARE OF
REGIS COMMON STOCK.

THE PARTIES TO THE MERGER

<TABLE>
<S> <C>
The Barbers......................... The Barbers develops, franchises, services and
operates a system of hair care salon concepts for
men, women, and children operating primarily under
the names Cost Cutters-Registered Trademark-, City
Looks-Registered Trademark-, and We Care
Hair-Registered Trademark-. At December 24, 1998, The
Barbers had a total of 979 salons consisting of 947
franchised salons and 32 company-owned salons. The
principal executive offices of The Barbers are
located at 300 Industrial Boulevard N.E.,
Minneapolis, Minnesota 55413 and its telephone number
is (612) 331-8500. At December 24, 1998, The Barbers
had total assets of approximately $14.6 million,
total liabilities of approximately $5.3 million and
shareholders' equity of approximately $9.3 million.

Regis............................... Regis is the largest owner and operator of mall-based
hair and retail hair product salons in the world. At
December 31, 1998, Regis operated a total of 2,851
company-owned salons and franchised a total of 830
salons offering high quality hair care services and
products in 50 states and certain foreign countries,
principally the United Kingdom. Regis operates and
franchises its salons primarily under the names Regis
Hairstylists-Registered Trademark-,
Supercuts-Registered Trademark-,
SmartStyle-Registered Trademark-,
MasterCuts-Registered Trademark-, Trade
Secret-Registered Trademark-,
HairMasters-Registered Trademark-,
StyleAmerica-Registered Trademark-, and Hair
Express-Registered Trademark-.
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
Regis' executive offices are located at 7201 Metro
Boulevard, Minneapolis, Minnesota 55439, and its
telephone number is (612) 947-7777. At December 31,
1998, Regis had total assets of approximately $422
million, total liabilities of approximately $213
million and shareholders' equity of approximately
$209 million.

Merger Sub.......................... Merger Sub is a Minnesota corporation and
wholly-owned first tier subsidiary of Regis which was
formed solely for the purpose of merging with and
into The Barbers and furthering the transactions
contemplated by the Merger Agreement. Merger Sub has
no other material operations.

THE MERGER

Reasons for the Merger.............. The Barbers' Board of Directors considered many
factors in making its determination that The Barbers
should merge with Regis. Among these factors were:

- The receipt of a fairness opinion from U.S. Bancorp
Piper Jaffray Inc.,

- The chance for shareholders of The Barbers to
recognize the intrinsic value that The Barbers Board
of Directors believes The Barbers Common Stock
contains but which they believe is not reflected in
the trading prices of The Barbers Common Stock, and

- The advantages a merger with Regis, a recognized
leader in the hair care industry, provides to The
Barbers.

Consideration You will Receive in
the Merger........................ Pursuant to the Merger Agreement, unless you demand
dissenters' rights and satisfy the procedures
relating to dissenters' rights, upon consummation of
the Merger, each share of The Barbers Common Stock
you own will be converted automatically into the
right to receive 1/2 of one share of Regis Common
Stock of Regis.

Total Value of the Merger........... Based on the number of shares of The Barbers Common
Stock outstanding on , 1999 and the last sale
price of the Regis Common Stock on that date, the
value of the Merger is approximately $
million.

Opinion of Financial Advisor........ U.S. Bancorp Piper Jaffray Inc. ("U.S. Bancorp Piper
Jaffray"), financial advisor to The Barbers Board of
Directors, provided an opinion to the Board of
Directors dated January 25, 1999 that, subject to
certain factors stated in the opinion, the
consideration to be received by The Barbers'
shareholders in the Merger is fair, from a financial
point of view, to holders of The Barbers Common
Stock. A copy of U.S. Bancorp Piper Jaffray's written
opinion, which
</TABLE>

6
<PAGE>

<TABLE>
<S> <C>
sets forth the assumptions made, the matters
considered, the scope and limitations of the review
undertaken and the procedures followed by U.S.
Bancorp Piper Jaffray in rendering this opinion, is
attached to this Proxy Statement/ Prospectus as
Appendix B. U.S. Bancorp Piper Jaffray's opinion was
provided solely for the information and assistance of
the Board of Directors and is not a recommendation as
to how you should vote at the special meeting. The
Board of Directors urges you to read carefully the
opinion in its entirety.

Conflicts of Interest............... Certain directors and executive officers of The
Barbers
have interests in the Merger in addition to and
separate from their interests as shareholders of The
Barbers. These interests include non-competition
agreements, employment agreements, consulting
agreements, stock options, and warrants. These
interests may conflict with your interests. See "The
Merger--Interests of Certain Persons in the Merger."

Dissenters' Rights.................. Under Minnesota law, you are entitled to exercise
dissenters' rights and to receive the fair value, in
cash, of your shares. In order to exercise your
dissenters' rights you must strictly comply with the
dissenters' rights procedures or you will lose your
dissenters' rights. One of these rules is that you
must not vote FOR the Merger. If you vote FOR the
Merger, you will lose your dissenters' rights. The
cash you receive upon the exercise of your
dissenters' rights may be more or less than the value
of the Regis Common Stock you would have received in
the Merger if you had not exercised your dissenters'
rights. See "The Merger--Dissenters' Rights of
Appraisal."

Federal Income Tax Consequences..... Regis and The Barbers intend for the Merger, for
federal income tax purposes, to be treated as a
reorganization within the meaning of Section 368 of
the Internal Revenue Code (the "Code") and that each
of The Barbers, Merger Sub and Regis will be a party
to the reorganization within the meaning of Section
368(b) of the Code. If the Merger does qualify as a
reorganization, then your receipt of common stock of
Regis as a result of the Merger will not be a taxable
event. Based on the facts, representations,
warranties and agreements set forth in the Merger
Agreement, The Barbers, Merger Sub and Regis believe
that the Merger will qualify as a reorganization
within the meaning of Section 368 of the Code.
However, no ruling has been requested from the
Internal Revenue Service (the "IRS") with respect to
these matters. Therefore, the IRS may determine that
the Merger does not qualify to be treated as a
reorganization within the
</TABLE>

7
<PAGE>

<TABLE>
<S> <C>
meaning of Section 368 of the Code. If the Merger
does not qualify as a reorganization, then your
receipt of Regis Common Stock as a result of the
Merger will be taxable to you to the extent that the
value of shares of Regis Common Stock received by you
exceeds your tax basis in your shares of The Barbers
Common Stock. In addition, you will have to pay tax
on any cash received by you as a result of the
Merger. You will receive cash as payment in lieu of
the issuance of fractional shares of common stock of
Regis or as payment upon the exercise of your
dissenters' rights.

Accounting Treatment................ The Merger will be accounted for by Regis under the
pooling-of-interests method of accounting.

Regulatory and Third-Party
Approvals......................... The consummation of the Merger will require the
amendment of filings with state franchise authorities
and will cause a temporary hold on the ability of The
Barbers and Regis to offer and sell franchises in
these states until these amendments have been
approved. Other than these state franchise authority
approvals and compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, there are no
material regulatory or third party approvals
required.

THE SPECIAL MEETING

Date, Place and Time of the Special
Meeting........................... This Proxy Statement/Prospectus is furnished to
holders of common stock of The Barbers for use at a
special meeting of the shareholders of The Barbers
called to consider and vote upon the Merger. The
special meeting will be held on Thursday, May 20,
1999 at : .m. at .

Record Date, Voting at the
Meeting........................... You will only be entitled to receive notice of the
special meeting and to vote at the special meeting if
you were a holder of shares of The Barbers Common
Stock as of the close of business on April 19, 1999.

Vote Required; Merger Assured;
Director and Officer Shares....... In order to approve the Merger Agreement and the
Merger, a majority of the shares of Barbers Common
Stock present and entitled to vote at the special
meeting must vote FOR the Merger Agreement and the
Merger. As of March 15, 1999, the directors and
executive officers of The Barbers and their
affiliates may be deemed to beneficially own
approximately 68% of the then outstanding common
stock of The Barbers (not including common stock that
may be acquired on the exercise of outstanding stock
options and warrants). Each of the directors and
executive officers of The Barbers has indicated that
he or she intends to vote these shares FOR the
approval of the Merger Agreement and the Merger. In
</TABLE>

8
<PAGE>

<TABLE>
<S> <C>
addition, Florence F. Francis, Chairman of the Board
of Directors of The Barbers, who as of March 15, 1999
may be deemed to beneficially own approximately 59%
of the then outstanding common stock of The Barbers
(not including common stock that she may acquire on
the exercise of outstanding stock options and
warrants) has agreed to vote all shares beneficially
owned by her FOR the approval of the Merger Agreement
and the Merger. Therefore, the approval of the Merger
Agreement and the Merger by the shareholders of The
Barbers is assured. As of March 15, 1999, the
directors and executive officers of Regis (and their
affiliates) owned approximately 18% of the then
outstanding shares of the Regis Common Stock (not
including common stock that may be acquired on the
exercise of outstanding stock options and warrants).

THE MERGER AGREEMENT

Conditions to the Merger............ The Merger will be completed only if a number of
conditions are met or waived by The Barbers and
Regis, as appropriate. These conditions include:

- Shareholders of The Barbers holding a majority of
the outstanding shares of The Barbers Common Stock
present and entitled to vote at the special meeting
approve the Merger Agreement and the Merger;

- Each of The Barbers and Regis comply with their
respective covenants contained in the Merger
Agreement;

- The SEC declares the Registration Statement
registering the shares of Regis Common Stock to be
issued in connection with the Merger effective;

- Nasdaq approves the shares of Regis Common Stock to
be issued in connection with the Merger for listing
on the Nasdaq National Market;

- Regis does not receive any objection from the SEC
regarding Regis' intent to account for the Merger
as a pooling-of-interests transaction;

- No injunction or order prohibiting the Merger shall
have been issued and remain in effect; and

- The applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 expires
or is terminated.

Termination of Merger Agreement;
Termination Fee................... Upon the occurrence of certain events, including
those set forth below, the Merger Agreement may be
terminated by:
</TABLE>

9
<PAGE>

<TABLE>
<S> <C>
- The Barbers if the closing price of Regis' common
stock falls below $21.07 for five consecutive trading
days during the time between the execution of the
Merger Agreement and the consummation of the
Merger.

- The Barbers if it accepts an acquisition offer from
a third party that the Board of Directors determines
is more favorable to The Barbers and its
shareholders than the Merger. If, however, The
Barbers determines to terminate the Merger
Agreement as a result of making such a
determination, then The Barbers must pay Regis
$1,500,000.

- Either Regis or The Barbers if the Merger has not
been consummated on or before August 31, 1999.

Either The Barbers or Regis may waive a right to
terminate the Merger Agreement in circumstances that,
under the terms of the Merger Agreement, would allow
them to terminate the Merger Agreement.

Amending or Waiving Terms of the
Merger Agreement.................. The Barbers and Regis may amend the Merger Agreement
by mutual consent before or after The Barbers'
shareholders vote on the Merger. After The Barbers'
shareholders approve the Merger, applicable law may
require that subsequent amendments be approved by the
shareholders of The Barbers.
</TABLE>

10
<PAGE>
REGIS SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The table below shows selected historical consolidated financial information
about Regis. You should read this information in conjunction with the audited
consolidated financial statements and accompanying notes and the unaudited
consolidated financial statements and accompanying notes of Regis which are not
included in this document but, to the extent indicated, are incorporated into
this document by reference. Regis derived the historical consolidated financial
data for fiscal years ended June 30, 1994 through 1998 from the consolidated
financial statements of Regis audited by PricewaterhouseCoopers LLP, independent
accountants. The consolidated statement of operations data for fiscal years
ended June 30, 1998, 1997, and 1996 and the consolidated balance sheet data for
fiscal years ended June 30, 1998 and 1997 are incorporated into this document by
reference. The consolidated statement of operations data for fiscal years ended
June 30, 1995 and 1994 and the balance sheet data for fiscal years ended June
30, 1996, 1995, and 1994 are not incorporated into this document by reference.

Regis derived the historical consolidated financial data for the six months
ended December 31, 1998 and 1997 from Regis' unaudited consolidated financial
statements which are not included in this document but are incorporated into
this document by reference, except for the balance sheet data for the six months
ended December 31, 1997 which are not incorporated into this document by
reference. In the opinion of Regis' management, the unaudited historical
consolidated financial statements reflect all adjustments, consisting only of
normal recurring items, that are necessary for the fair presentation of
consolidated financial position and results of operations for these periods. See
"Where You Can Find More Information" on page .

<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
---------------------------- -----------------------------------------------------
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997 1996 1995 1994
------------- ------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
[IN THOUSANDS, EXCEPT PER SHARE DATA]
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
Company-owned salons:
Service................................ $ 303,339 $ 264,110 $ 550,448 $ 498,559 $ 442,366 $ 378,943 $ 336,341
Product................................ 125,064 110,152 221,559 187,620 149,523 120,381 94,741
Franchise income......................... 12,964 13,371 26,137 27,040 25,418 24,929 22,479
------------- ------------- --------- --------- --------- --------- ---------
Total revenues............................. 441,367 387,633 798,144 713,219 617,307 524,253 453,561
Operating income(1)........................ 32,685 27,936 59,929 28,447 26,167 26,644 25,712
Net income(1).............................. 16,882 13,753 30,488 6,574 9,451 11,590 3,883
Diluted earnings per share(1)(2)........... $ 0.46 $ 0.38 $ 0.84 $ 0.19 $ 0.28 $ 0.35 $ 0.13
Average shares outstanding(3).............. 36,783 35,934 36,129 34,847 34,080 33,146 30,647
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 9,162 $ 10,845 $ 4,774 $ 8,935 $ 7,558 $ 3,182 $ 5,481
Working capital............................ 7,019 (11,982) (1,852) (15,051) (19,715) (15,583) (4,170)
Total assets............................... 421,616 349,485 382,350 331,535 303,954 244,836 226,944
Long-term debt, current portion............ 22,015 39,866 19,741 30,722 19,168 13,498 10,189
Long-term debt and capital lease
obligations.............................. 115,523 83,775 100,995 82,740 83,213 71,594 72,802
Total shareholders' equity................. 208,615 162,524 189,261 149,114 127,635 105,419 91,275
Cash dividends per common share (3)........ $ 0.04 $ 0.03 $ 0.06 $ 0.05 $ 0.04 $ 0.00 $ 0.00
</TABLE>

- ------------------------------

(1) Includes the impact of the following non-recurring items:

- June 30, 1998 and December 31, 1997, charge of $1,979 related to loss on
divesture of Anasazi business and assets.

- June 30, 1997, charge of $18,731 primarily related to Supercuts merger and
transaction costs and related litigation.

- June 30, 1996, charge of $12,823 primarily related to Supercuts litigation
and salon closures.

- June 30, 1995, nonoperating gain of $1,195 related to MEI litigation.

- June 30, 1994, charge of $10,000 related to MEI litigation.

(2) Exclusive of the non-recurring items, net income and diluted earnings per
share would have been $14,865 and $0.41, $31,600 and $0.88, $21,337 and
$0.61, $16,981 and $0.50, $10,885 and $0.33, and $9,883 and $0.33 for the
six months ended December 31, 1997, and for the fiscal years ended June 30,
1998, 1997, 1996, 1995, and 1994 respectively.

(3) Adjusted to reflect Regis' 3-for-2 stock split effective March 1, 1999.

11
<PAGE>
THE BARBERS SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The table below shows selected historical consolidated financial information
about The Barbers. You should read this information in conjunction with the
audited consolidated financial statements and accompanying notes and the
unaudited consolidated financial statements and accompanying notes of The
Barbers which, except as indicated, are included in this document. The Barbers
derived the historical consolidated financial data for fiscal years ended
September 29, 1994, September 28, 1995, September 26, 1996, September 25, 1997,
and September 24, 1998 from the consolidated financial statements of The Barbers
audited by Ernst & Young LLP, independent auditors. The consolidated statement
of operations data and balance sheet data for fiscal years ended September 24,
1998, September 25, 1997, and September 26, 1996 are included in this document.
The consolidated statement of operations data and balance sheet data for fiscal
years ended September 28, 1995 and September 29, 1994 are not included in this
document.

The Barbers derived the historical consolidated financial data for the three
months ended December 24, 1998 and December 25, 1997 from The Barbers' unaudited
consolidated financial statements which are included in this document, except
for the balance sheet data for the three months ended December 25, 1997 which
are not included in this document. In the opinion of The Barbers' management,
the unaudited historical consolidated financial statements reflect all
adjustments, consisting only of normal recurring items, that are necessary for
the fair presentation of consolidated financial position and results of
operations for these periods. See "Where You Can Find More Information" on page
.

<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR ENDED
---------------------------- -------------------------------------------------------------------------
DECEMBER 24, DECEMBER 25, SEPTEMBER 24, SEPTEMBER 25, SEPTEMBER 26, SEPTEMBER 28, SEPTEMBER 29,
1998 1997 1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
[IN THOUSANDS, EXCEPT
PER SHARE DATA]
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Revenues:
Franchise royalties... $ 2,150 $ 1,889 $ 8,397 $ 7,214 $ 6,035 $ 5,492 $ 4,845
Franchise fees........ 227 331 852 928 1,181 756 450
Company-owned salons.. 1,793 1,333 6,073 4,611 2,940 1,364 1,025
Beauty products and
equipment........... 2,723 2,661 10,192 8,885 8,019 7,137 5,940
Other................. 231 223 624 484 391 167 205
------------- ------------- ------------- ------------- ------------- ------------- -------------
Total revenues.......... 7,124 6,437 26,138 22,122 18,566 14,916 12,465
Operating income........ 608 517 2,888 2,393 1,673 1,346 933
Net income.............. 381 299 1,803 1,406 1,057 840 612
Diluted earnings per
share (1)............. $ 0.09 $ 0.07 $ 0.42 $ 0.33 $ 0.26 $ 0.21 $ 0.16
Average shares
outstanding (1)....... 4,428 4,298 4,341 4,210 4,113 3,965 3,850

CONSOLIDATED BALANCE
SHEET DATA:
Cash and cash
equivalents........... $ 2,868 $ 2,633 $ 2,931 $ 2,790 $ 1,317 $ 2,121 $ 1,674
Working capital......... 5,475 5,331 4,972 4,755 2,963 2,238 1,764
Total assets............ 14,630 13,177 14,332 12,909 8,248 7,582 6,901
Long-term debt, current
portion............... 192 366 188 339 87 97 302
Long-term debt and
capital lease
obligations........... 988 2,025 1,037 2,112 56 143 634
Total shareholders'
equity................ 9,305 7,266 8,885 6,937 5,446 4,287 3,394
Cash dividends per
common share.......... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
</TABLE>

- ------------------------------

(1) Adjusted to reflect The Barbers (a) 3-for-2 stock split effective October
31, 1996 and (b) 3-for-2 stock split effective April 17, 1998.

12
<PAGE>
UNAUDITED COMPARATIVE PER SHARE DATA

The table below sets forth:

- The historical and pro-forma earnings per basic and per diluted share and
dividends per common share of Regis for the six months ended December 31,
1998 and for the years ended June 30, 1998, 1997, and 1996.

- The historical and pro-forma book value per common share of Regis as of
December 31, 1998 and June 30, 1998.

- The historical earnings per basic and per diluted share and dividends per
common share of The Barbers for the three months ended December 24, 1998
and for the years ended September 24, 1998, September 26, 1996, and
September 25, 1997.

- The historical book value per common share of The Barbers as of December
24, 1998 and September 24, 1998.

- The equivalent pro-forma earnings per basic and per diluted share and
dividends per common share of The Barbers, recast to conform to Regis'
fiscal year end, for the six months ended December 31, 1998 and for the
years ended June 30, 1998, 1997, and 1996.

- The equivalent pro-forma book value per common share of The Barbers,
recast to conform to Regis' fiscal year end, as of December 31, 1998 and
June 30, 1998.

The term "unaudited pro-forma combined" refers to financial information that
reflects the merger of the two companies using the pooling of interests method
of accounting. In presenting pro-forma information for a particular period, the
pro-forma information assumes that the two companies had been merged throughout
the periods shown. The term "equivalent pro-forma" refers to unaudited pro-forma
combined per share data multiplied by 0.5, the conversion ratio.

The information set forth has been adjusted to reflect the 3-for-2 stock
split of the Regis Common Stock effective March 1, 1999, the 3-for-2 stock split
of The Barbers Common Stock effective October 31, 1996, and the 3-for-2 stock
split of The Barbers Common Stock effective April 17, 1998. Additionally, the
unaudited pro-forma combined and equivalent pro-forma information have been
adjusted to reflect the merger of Heidi's Inc. and Regis effective March 15,
1999. Regis issued 537,937 shares to effect this merger and the transaction will
be accounted for under the pooling-of-interests method of accounting. The
effects of this transaction are not significant to the historical operating
results or financial position of Regis.

Regis' fiscal year ends on June 30. The Barbers uses a 52-53 week reporting
period ending on the last Thursday of the month of September. Regis' annual
financial reporting period ending June 30 will be adopted by the combined
company. Accordingly, for the purposes of the following pro-forma equivalent
information, The Barbers information was recast to conform to the Regis fiscal
year end. The unaudited pro-forma combined per share data is not necessarily
indicative of the results of future operations of the

13
<PAGE>
combined company nor does it necessarily reflect the actual results that would
have been achieved had the companies been combined as of the dates and for all
periods indicated.

<TABLE>
<CAPTION>
REGIS CORPORATION THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
--------------------------------------------- ------------------------------------------------------------
SIX MONTHS FISCAL YEAR ENDED THREE MONTHS FISCAL YEAR ENDED
ENDED ------------------------------ ENDED ---------------------------------------------
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30, DECEMBER 24, SEPTEMBER 24, SEPTEMBER 25, SEPTEMBER 26,
1998 1998 1997 1996 1998 1998 1997 1996
------------ -------- -------- -------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL:
Earnings per share:
Basic............. $0.47 $0.87 $0.19 $0.29 $0.10 $0.46 $0.36 $0.28
Diluted(1)........ $0.46 $0.84 $0.19 $0.28 $0.09 $0.42 $0.33 $0.26
Dividends per common
share............. $0.04 $0.06 $0.05 $0.04 $0.00 $0.00 $0.00 $0.00
Book value per
share............. $5.81 $5.30 -- -- $2.34 $2.24 -- --

UNAUDITED PRO-FORMA
COMBINED:
Earnings per share:
Basic............. $0.48 $0.86 $0.23 $0.32 -- -- -- --
Diluted........... $0.46 $0.84 $0.22 $0.30 -- -- -- --
Dividends per common
share(2).......... $0.04 $0.06 $0.05 $0.03 -- -- -- --
Book value per
share............. $5.72 $5.20 -- -- -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS
ENDED FISCAL YEAR ENDED
DECEMBER 31, ---------------------------------------------
1998 JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1996
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUIVALENT
PRO-FORMA:
Earnings per share:
Basic............. -- -- -- -- $0.24 $0.43 $0.12 $0.16
Diluted........... -- -- -- -- $0.23 $0.42 $0.11 $0.15
Dividends per common
share(2).......... -- -- -- -- $0.02 $0.03 $0.02 $0.02
Book value per
share............. -- -- -- -- $2.86 $2.60 -- --
</TABLE>

- ------------------------------

(1) Excluding the non-recurring items referred to in Note 1 of Regis Selected
Historical Consolidated Financial Information Regis historical net income
per diluted share would have been $0.41, $0.88, $0.61, and $0.50 for the six
months ended December 31, 1997, and for the fiscal years ended June 30,
1998, 1997, and 1996 respectively.

(2) Assumes no changes in the historical cash dividends declared per share of
Regis Common Stock.

COMPARATIVE MARKET PRICE DATA

Regis' common stock is quoted on the Nasdaq National Market under the symbol
"RGIS" and The Barbers' common stock is quoted on the Nasdaq National Market
under the symbol "BBHF." The table below sets forth the closing price per share
of Regis Common Stock and The Barbers Common Stock, as reported by the Nasdaq
National Market, and the equivalent per share price of The Barbers Common Stock
giving effect to the Merger on January 22, 1999 which is the last trading day
preceding the public announcement that Regis and The Barbers had entered into
the Merger Agreement. The prices shown do not include adjustment for retail
markups, markdowns or commissions. The equivalent per share price of

14
<PAGE>
The Barbers Common Stock at January 22, 1999 was calculated by multiplying the
closing market price of a share of Regis Common Stock on such date ($25.54)
(adjusted to reflect Regis' 3-for-2 stock split effective March 1, 1999) by the
conversion ratio of 1/2 of one share of Regis Common Stock for one share of The
Barbers Common Stock.

<TABLE>
<CAPTION>
REGIS
HISTORICAL THE BARBERS
COMMON HISTORICAL COMMON THE BARBERS EQUIVALENT
STOCK PRICE STOCK PRICE PER SHARE STOCK PRICE
--------------- ------------------- -----------------------
<S> <C> <C> <C>
Market Value Per Share at:
January 22, 1999............... $ 25.54 $ 11.00 $ 12.77
</TABLE>

The Barbers shareholders should obtain current market quotations for Regis
Common Stock. No assurance can be given concerning the market price of Regis
Common Stock before or after the consummation of the Merger.

In connection with the Merger, The Barbers Common Stock will be canceled
and, as a result, will no longer be quoted on the Nasdaq National Market.

15
<PAGE>
RISK FACTORS

YOU SHOULD CONSIDER THE FOLLOWING MATTERS IN DECIDING WHETHER TO VOTE IN
FAVOR OF THE MERGER. YOU SHOULD ALSO CONSIDER THE OTHER INFORMATION INCLUDED IN
THIS DOCUMENT AND INCORPORATED INTO THIS DOCUMENT BY REFERENCE. CERTAIN
STATEMENTS SET FORTH BELOW CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. PLEASE REFER TO
THE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" ON PAGE FOR MORE
INFORMATION.

RISKS RELATED TO THE BUSINESS

INCREASED COMPETITION IN THE HAIR CARE INDUSTRY COULD HAVE A MATERIAL
ADVERSE EFFECT ON REGIS' POST-MERGER BUSINESS. The hair care industry is highly
competitive and has limited barriers to entry. In every locality in which Regis
and The Barbers currently operate, there are competitors offering similar
services and products. These competitors may be single salon operators or
national chains such as Great Clips, and, in some localities, Regis and The
Barbers compete against each other. In many cases, Regis and The Barbers face
one or more competitors within malls in which they operate, including companies
operating salons as departments within department stores, salon chains,
independently owned salons, and salons operating under franchises from other
franchising companies. After the Merger is consummated, competition will remain
and could increase. Any increased competition from these competitors could
negatively effect sales volume of both Regis' company-owned and franchised
salons. In turn, this would reduce Regis' company-owned salons' revenue and
profits and reduce royalty revenue from Regis' franchised locations and could
have a material adverse effect on the business, results of operations, and
financial position of Regis.

INCREASED COMPETITION FOR RETAIL SITES COULD HAVE A MATERIAL ADVERSE EFFECT
ON REGIS' POST-MERGER BUSINESS. Regis' and The Barbers' ability to grow depends
upon their ability to obtain attractive retail sites for new company-owned
salons and the ability of their franchisees to obtain attractive retail sites
for new franchised salons. A salon's success depends significantly on the
quality of the site selected for a new salon. Regis, The Barbers, and their
franchisees face intense competition for retail sites from other companies
operating in the hair care industry and from retailers operating in other
industries. The failure of Regis, The Barbers, or their franchisees to obtain
adequate retail sites could have a material adverse effect on the business,
results of operations and financial position of Regis and The Barbers. After the
Merger is consummated, competition for such sites will remain and could
increase. Any increased competition for retail sites could result in higher
occupancy and other costs for new salons. In turn, this could have a material
adverse effect on the business, results of operations, and financial position of
Regis.

REGIS' AND THE BARBERS INABILITY TO RETAIN AND HIRE QUALIFIED EMPLOYEES FOR
ITS COMPANY-OWNED SALONS COULD HAVE A MATERIAL ADVERSE EFFECT ON REGIS'
POST-MERGER BUSINESS. Regis' and The Barbers' growth is dependent, in part,
upon their ability to retain and hire qualified employees to work in their
company-owned salons. Although Regis and The Barbers have each established
criteria to evaluate prospective employees, there is no assurance that potential
future employees will have the qualifications and skills necessary or desirable
for Regis' and The Barbers' business to grow. In addition, after the
consummation of the Merger, there is no assurance that Regis' existing employees
will remain with Regis or that The Barbers' existing employees will remain with
The Barbers. The inability to retain or hire qualified employees could have a
material adverse effect on the post-Merger business, results of operations, and
financial position of Regis.

REGIS' AND THE BARBERS' INABILITY TO RETAIN AND ATTRACT QUALIFIED
FRANCHISEES COULD HAVE A MATERIAL ADVERSE EFFECT ON REGIS' POST-MERGER
BUSINESS. Regis' and The Barbers' growth is dependent, in part, upon their
ability to retain qualified franchisees and to attract new franchisees. Although
Regis and The Barbers have each

16
<PAGE>
established criteria to evaluate prospective franchisees, there is no assurance
that Regis' or The Barbers' existing or future franchisees will have the
business abilities or access to financial resources necessary to open new
locations or that they will successfully develop and operate these salons in a
manner consistent with Regis' and The Barbers' standards. In addition, after the
consummation of the Merger, there is no assurance that Regis' existing
franchisees will remain with Regis or that The Barbers' existing franchisees
will remain with The Barbers. The inability to retain qualified franchisees or
attract new qualified franchisees could have a material adverse effect on the
post-Merger business, results of operations, and financial position of Regis.

THE INABILITY OF REGIS' AND THE BARBERS' FRANCHISEES TO OBTAIN ADEQUATE
CAPITAL AND TO OVERCOME OTHER FACTORS AFFECTING A FRANCHISEE'S GROWTH COULD HAVE
A MATERIAL ADVERSE EFFECT ON REGIS' POST-MERGER BUSINESS. The ability of Regis
and The Barbers to meet their growth objectives depends not only on Regis' and
The Barbers' ability to find qualified franchisees for new locations but also on
the ability of these franchisees to obtain financing or investment capital
adequate to meet their market development obligations. In addition, the
development of a franchised location depends on a number of factors, including
the ability to obtain various government permits and licenses necessary to
operate a franchised location, that are beyond the control of Regis, The
Barbers, and the franchisee. If these franchisees are unable to obtain the
financing or investment capital to meet their market development obligations or
are unable to overcome the factors that affect their development, this failure
could have a material adverse effect on the post-Merger business, results of
operations, and financial position of Regis.

CHANGES IN REGIS' RELATIONSHIP WITH ITS SUPPLIERS COULD HAVE A MATERIAL
ADVERSE EFFECT ON REGIS' POST-MERGER BUSINESS. Both Regis and The Barbers are
dependent upon their relationships with their suppliers who supply Regis and The
Barbers with hair care and other beauty products that Regis and The Barbers, in
turn, sell to their customers through company-owned salons and sell to their
franchisees for resale to such franchisee's customers. Although neither Regis
nor The Barbers presently has any reason to believe that any of their major
beauty product suppliers will cancel their distribution agreements with Regis
and/or The Barbers as a result of the Merger or for any other reason, if these
suppliers did cancel their distribution agreements with Regis and/or The
Barbers, this could cause a reduction in the sale of beauty products and the
loss of those corresponding margins. Any such cancellation of distribution could
have a material adverse effect on the post-Merger business, results of
operations, and financial position of Regis.

COSTS ASSOCIATED WITH YEAR 2000 COMPLIANCE ISSUES COULD BE GREATER THAN
ANTICIPATED. Regis has initiated a comprehensive project to prepare its
computer systems for the year 2000. Regis has completed the awareness,
assessment, and remediation phases of the project and is in the process of
validation and implementation. Based on Regis' most recent assessment, the
associated expense to be incurred is estimated to be approximately $5 million
and will be charged to earnings, primarily over the next nine months. The
validation and implementation phases are planned to be completed by late summer
of calendar year 1999. Accordingly, management of Regis believes the year 2000
will not have a significant impact on operations. If necessary modification and
conversions are not completed on a timely basis, the year 2000 could have an
adverse effect on Regis' operations. At this time, Regis believes it is
unnecessary to adopt a contingency plan covering the possibility that the
project will not be completed in a timely manner, but as part of the overall
project, Regis will continue to assess the need for a contingency plan.

Regis is in contact with critical suppliers of products and services to
assess whether the suppliers' operations and the products and services they
provide are year 2000 capable or to monitor their progress

17
<PAGE>
toward year 2000 compliance. There can be no absolute assurance that another
company's failure to ensure year 2000 compliance would not have an adverse
effect on Regis.

Time and cost estimates are based on currently available information and are
Regis' best estimates. However, there is no guarantee that these estimates will
be achieved, and actual results may differ materially from those anticipated.
Developments which could affect estimates include, but are not limited to, the
availability and cost of trained personnel; the ability to locate and correct
all relevant computer code and equipment; and planning and modification success
of third party suppliers of products and services.

RISKS RELATED TO THE MERGER

THE MARKET PRICE OF REGIS COMMON STOCK WILL FLUCTUATE. At the time the
Merger is consummated, each share of The Barbers Common Stock will be converted
into the right to receive 1/2 of one share of Regis Common Stock. This
conversion ratio will not be adjusted in the event of any increase or decrease
in the price of Regis Common Stock or The Barbers Common Stock that occurs prior
to the consummation of the Merger. Therefore, the value of the Regis Common
Stock received by shareholders of The Barbers will vary with fluctuations in the
value of Regis Common Stock. Although the value of the Regis Common Stock to be
received by shareholders of The Barbers fluctuates, The Barbers may terminate
the Merger Agreement if the closing price of Regis' common stock falls below
$21.07 for five consecutive trading days during the time between the execution
of the Merger Agreement and the consummation of the Merger.

DIFFICULTIES RELATED TO THE COMBINATION OF THE BUSINESSES OF REGIS AND THE
BARBERS COULD HAVE A MATERIAL ADVERSE EFFECT ON REGIS' POST-MERGER BUSINESS. If
Regis and The Barbers cannot successfully combine their business operations,
Regis may experience a material adverse effect on its post-Merger business,
results of operations, or financial position. The Merger involves the combining
of two companies that have previously operated on a stand-alone basis. This
combination presents a number of risks including:

- Demands on management to integrate the business and the diversion of their
attention from normal business operations.

- Difficulty in combining operations and systems.

- Difficulties in the assimilation and retention of employees.

COST SAVINGS EXPECTED TO RESULT FROM THE MERGER ARE NOT ACHIEVED. Regis and
The Barbers expect cost savings and other benefits from the Merger that neither
company could achieve separately. These cost savings estimates are based on many
assumptions, including future sales levels and operating results, that are
beyond the control of Regis and The Barbers. If any of these assumptions prove
to be incorrect, then the actual cost savings, if any, as a result of the Merger
could differ from the expected cost savings and these differences could be
material. In addition, there may be unforeseen costs and expenses associated
with the Merger that will offset the expected cost savings of the Merger.

18
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Proxy Statement/Prospectus and the documents incorporated by reference
in this Proxy Statement/Prospectus contain forward-looking statements about the
Merger and about the financial position, results of operations, plans,
objectives, future performance, and business of Regis and The Barbers. This
includes information relating to:

- Cost savings and benefits anticipated to result from the Merger, and

- Estimated costs of combining Regis and The Barbers.

This Proxy Statement/Prospectus and the documents incorporated by reference
in this Proxy Statement/Prospectus also contain statements using words like
"may," "will," "expect," "anticipate," "intend," "believe," "estimate,"
"should," or "continue" or the negatives thereof or other similar expressions.
These forward-looking statements involve risks and uncertainties. Actual results
may differ materially from those predicted or anticipated by the forward looking
statements because of factors and possible events such as:

- Increased competition in the hair care industry could have a material
adverse effect on Regis' post-Merger business.

- Competition for retail sites could have a material adverse effect on
Regis' post-Merger business.

- Regis' inability to retain and hire qualified employees for its
company-owned salons could have a material adverse effect on Regis'
post-Merger business.

- Regis' inability to retain and attract qualified franchisees could have a
material adverse effect on Regis' post-Merger business.

- Changes in Regis' relationship with its suppliers could have a material
adverse effect on Regis' post-Merger business.

- Costs and other adverse effects associated with year 2000 compliance
issues could be greater than anticipated

- Difficulties related to the combination of the businesses of Regis and The
Barbers could have a material adverse effect on Regis' post-Merger
business.

- The risk that Regis incorrectly analyzes these risks and difficulties, or
that the strategies Regis develops to address them are unsuccessful.

Because these forward-looking statements involve risks and uncertainties,
actual results may differ significantly from those predicted in these
forward-looking statements. You should not place undue reliance on these
statements. These statements speak only as of the date of this Proxy Statement/
Prospectus or, in the case of documents incorporated by reference in this Proxy
Statement/Prospectus, the date of that document.

All subsequent written and oral forward-looking statements attributable to
Regis or The Barbers or any person acting on our behalf are qualified by the
cautionary statements in this section. Regis and The Barbers will have no
obligation to revise these forward-looking statements.

19
<PAGE>
THE BARBERS SPECIAL MEETING OF SHAREHOLDERS

GENERAL

This Proxy Statement/Prospectus is being furnished to holders of The Barbers
Common Stock in connection with the solicitation of proxies by the Board of
Directors of The Barbers for use at a special meeting of the shareholders of The
Barbers. Each copy of this Proxy Statement/Prospectus which is being mailed or
delivered to shareholders of The Barbers is accompanied by a Notice of Special
Meeting of Shareholders of The Barbers and a proxy card. This Proxy
Statement/Prospectus, the Notice of Special Meeting of Shareholders of The
Barbers, and the accompanying proxy card are first being mailed to shareholders
of The Barbers on or about , 1999.

This Proxy Statement/Prospectus is also being furnished to holders of The
Barbers Common Stock by Regis as a prospectus in connection with the issuance of
Regis Common Stock upon the consummation of the Merger.

The principal executive offices of The Barbers are located at 300 Industrial
Boulevard, N.E., Minneapolis, Minnesota, 55413 and its telephone number is (612)
331-8500.

THE BARBERS SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH
THEIR PROXY CARDS.

DATE, TIME, AND PLACE OF THE SPECIAL MEETING

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING

At the special meeting, holders of The Barbers Common Stock will vote upon
the recommendation of The Barbers' Board of Directors to

(1) To approve and adopt the Agreement and Plan of Merger dated as of
January 25, 1999, by and among The Barbers, Regis, and Merger Sub.

(2) To transact any other business as may properly come before the special
meeting or any adjournment or postponement thereof.

Pursuant to the Merger Agreement,

- Merger Sub will merge with and into The Barbers, the separate existence of
Merger Sub will cease and The Barbers will become a wholly-owned
subsidiary of Regis, and

- Each outstanding share of common stock of The Barbers will be converted
into the right to receive 1/2 of one share of common stock of Regis,
unless the holder thereof exercises the right to dissent from the Merger
and receive the fair cash value of shares of The Barbers Common Stock
owned by such holder.

20
<PAGE>
RECORD DATE; QUORUM

You will only be entitled to receive notice of the special meeting and to
vote at the special meeting if you were a holder of shares of The Barbers Common
Stock as of the close of business on April 19, 1999. As of April 19, 1999 there
were shares of The Barbers Common Stock outstanding. The Barbers
Common Stock is the only authorized and outstanding voting securities of The
Barbers. Holders of a majority of the outstanding shares of The Barbers Common
Stock entitled to vote, present in person or by proxy at the special meeting,
will constitute a quorum for the transaction of business at the special meeting.
If a quorum is not present, the special meeting may be adjourned from time to
time until a quorum is present. Abstentions will be counted for purposes of
determining the presence of a quorum at the special meeting, and will also be
counted as a vote AGAINST any matters submitted to a vote of the holders of The
Barbers Common Stock. Broker non-votes will be counted for purposes of
determining the presence of a quorum at the special meeting, but will not be
counted for purposes determining approval of matters submitted to a vote at the
special meeting.

You will be entitled to cast one vote in person or by proxy for each share
of The Barbers Common Stock held by you upon each matter properly submitted for
the vote of the shareholders at the special meeting. The Inspector of Election
appointed by The Barbers will tabulate the votes at the special meeting.

VOTES REQUIRED FOR APPROVAL OF THE MERGER

Approval of the principal terms of the Merger Agreement requires the
affirmative vote of holders of a majority of the outstanding shares of The
Barbers Common Stock present and entitled to vote at the special meeting.
Brokers, and in many cases nominees, do not have discretionary power to vote on
the matters to be presented at the special meeting. Accordingly, if your shares
are held in "streetname" by your broker, you must instruct your broker how to
vote your shares at the special meeting. You will receive materials from your
broker on how to instruct him or her to vote your shares at the special meeting.

As of March 15, 1999, the directors and executive officers and their
affiliates may be deemed to beneficially own approximately 68% of the then
outstanding common stock of The Barbers (not including common stock that may be
acquired on the exercise of outstanding stock options and warrants). Each of the
directors and executive officers of The Barbers has indicated that he or she
intends to vote these shares FOR the approval of the Merger Agreement and the
Merger. In addition, Florence F. Francis, Chairman of the Board of Directors of
The Barbers, who as of March 15, 1999 may be deemed to beneficially own
approximately 59% of the then outstanding common stock of The Barbers (not
including common stock that she may acquire on the exercise of outstanding stock
options and warrants) has agreed to vote all shares beneficially owned by her
FOR the approval of the Merger Agreement and the Merger. Therefore, the approval
of the Merger Agreement and the Merger by the shareholders of The Barbers is
assured.

SOLICITATION AND REVOCATION OF PROXIES

The enclosed proxy is being solicited by the Board of Directors of The
Barbers. In addition to solicitation by mail, directors, officers and employees
of The Barbers, who will not be specifically compensated for such services, may
solicit proxies from the shareholders of The Barbers personally or by telephone,
telegram or other forms of communication.

21
<PAGE>
After you give your proxy, you may change your vote at any time before such
proxy is voted at the special meeting. You can do this in three ways:

- You can send The Barbers a written statement that you revoke your proxy,
which to be effective must be received by The Barbers at its executive
offices prior to the vote at the special meeting; or

- You can send The Barbers a new proxy card prior to the vote at the special
meeting, which to be effective must be received by The Barbers prior to
the vote at the special meeting; or

- You can attend the special meeting and vote in person. Your attendance
alone will not revoke your proxy. You must attend the special meeting and
cast your vote at the special meeting.

You should send your revocation of a proxy or new proxy card to the
Secretary of The Barbers at the address on the cover of this Proxy
Statement/Prospectus. If your shares are held by a broker, you must follow the
directions provided by your broker to vote your shares or to change your
instructions.

HOW SHARES WILL BE VOTED AT THE SPECIAL MEETING

Subject to proper revocation, all shares of The Barbers Common Stock
represented at the special meeting by properly executed proxies received by The
Barbers will be voted in accordance with the instructions contained in such
proxies. If you execute your proxy but do not instruct the proxy how to vote
your shares, your shares will be voted as follows:

- FOR approval of the Merger Agreement and the transactions contemplated
thereby; and

- In the proxy's discretion on such other matters that may properly come
before the special meeting.

EXPENSES

Regis and The Barbers will bear the expenses of printing and mailing this
Proxy Statement/Prospectus and the accompanying proxy and other materials and
all other expenses incurred in connection with the solicitation of proxies from
the shareholders of The Barbers. Regis and The Barbers will also pay the
standard charges and expenses of brokerage houses, voting trustees, banks,
associations and other custodians, nominees and fiduciaries, who are record
holders of The Barbers Common Stock not beneficially owned by them, for
forwarding such materials to and obtaining proxies from the beneficial owners of
The Barbers Common Stock entitled to vote at the special meeting.

THE MERGER

GENERAL

The Merger Agreement provides for the merger of Merger Sub with and into The
Barbers, with The Barbers surviving the Merger as a direct, wholly-owned
subsidiary of Regis. The obligations of the parties to consummate the Merger are
subject to the satisfaction of certain conditions, including the approval of the
Merger Agreement by the shareholders of The Barbers. See "The Merger
Agreement--Conditions to the Merger" and "The Merger--Regulatory Approvals."

22
<PAGE>
BACKGROUND OF THE MERGER

The first contact between the two companies in which a possible business
combination was broached occurred in December 1997 when Paul Finkelstein, Chief
Executive Officer of Regis, contacted Frederick A. Huggins, Jr., President of
The Barbers, to inquire as to The Barbers interest in a possible business
combination with Regis. The parties had brief discussions, but determined not to
pursue a transaction at that time. In May 1998, Mr. Finkelstein again contacted
Mr. Huggins regarding The Barbers interest in a possible business combination
with Regis. The parties again had brief discussions, but determined not to
pursue a transaction at that time.

In early December, 1998, Mr. Finkelstein again contacted Mr. Huggins
regarding The Barbers interest in a possible business combination with Regis. On
December 7, 1998, Mr. Finkelstein, Randy L. Pearce, Chief Financial Officer of
Regis, and Bert M. Gross, General Counsel of Regis, Florence F. Francis,
Chairman of the Board of Directors of The Barbers, Frederick A. Huggins, Jr.,
Chief Executive Officer of The Barbers, J. Brent Hanson, Chief Financial Officer
of The Barbers, and their outside legal counsel had a brief conversation in
which the potential for a business combination between the two companies was
discussed. There was no discussion about terms, form or conditions of any such
possible business combination.

On January 4, 1999, Regis delivered to The Barbers a draft letter of intent
and draft definitive merger agreement outlining the terms on which Regis would
acquire The Barbers. The letter of intent and merger agreement contemplated a
tax-free, stock-for-stock merger to be accounted for as a pooling-of-interests.
The letter of intent and merger agreement contemplated a fixed conversion ratio
of 1/2 of one share of Regis Common Stock for each share of The Barbers Common
Stock (adjusted to reflect Regis' 3-for-2 stock split effective March 1, 1999).

Upon receipt of this proposal, management of The Barbers called a meeting of
its Board of Directors to inform the Board of Directors of the receipt of the
proposal and to discuss a course of action. On January 5, 1999, the Board of
Directors of The Barbers met to discuss the Regis proposal. At this meeting, the
Board of Directors discussed the possible responses to the proposal and
determined to:

- Take the proposal under advisement,

- Inform Regis that the proposal had been received and was being considered
by The Barbers, and

- Establish a sub-committee of the Board of Directors to recommend to the
full Board of Directors an investment banking firm to represent The
Barbers in connection with any potential transaction.

On January 7, 1999, a sub-committee of the Board of Directors consisting of
Richard H. King and James L. Reissner met with The Barbers outside legal counsel
to discuss the selection of a financial advisor to represent The Barbers. The
sub-committee first established several criteria that it believed any financial
advisor hired by The Barbers should possess, including knowledge of the hair
care industry and the ability and experience to represent The Barbers in any
negotiations that may occur. After contacting several financial advisors as to
their willingness to act as a financial advisor to The Barbers and the costs
they would charge to perform such services, the sub-committee determined to
recommend to the Board of Directors that it engage U.S. Bancorp Piper Jaffray
Inc. ("U.S. Bancorp Piper Jaffray") to act as The Barbers financial advisor in
connection with any potential transaction.

On January 8, 1999, the Board of Directors of The Barbers met again to
discuss the Regis proposal. At that time, the Board of Directors met with
representatives of U.S. Bancorp Piper Jaffray to gain a better of

23
<PAGE>
understanding of the experience and expertise that U.S. Bancorp Piper Jaffray
could bring to any potential transaction. After such discussion, the Board of
Directors, upon the recommendation of the sub-committee, voted (with Ms.
Francis, Ms. Goldstein and Mr. Huggins abstaining) to retain U.S. Bancorp Piper
Jaffray as it financial advisor and arranged for U.S. Bancorp Piper Jaffray to
begin its analysis of Regis and The Barbers. The Board of Directors also
determined to accept U.S. Bancorp Piper Jaffray's recommendation to reject the
letter of intent and proceed directly to the negotiation of a definitive merger
agreement if agreement on economic and other material terms could be reached.

On January 14, 1999, the Board of Directors of The Barbers met again to
discuss the Regis proposal. At this meeting, representatives of U.S. Bancorp
Piper Jaffray presented The Barbers Board of Directors in detail its analysis of
Regis, The Barbers, Regis' proposal to acquire The Barbers, and other strategic
alternatives. The Board of Directors of The Barbers met again on January 15,
1999 to further discuss the Regis proposal. On that date, the Board of Directors
continued its discussions with U.S. Bancorp Piper Jaffray regarding the Regis
proposal and discussed with U.S. Bancorp Piper Jaffray potential issues for
negotiation. In addition, the Board of Directors authorized U.S. Bancorp Piper
Jaffray to negotiate certain points of Regis' proposal.

On January 20, 1999 representatives of U.S. Bancorp Piper Jaffray met with
Regis to discuss the following items:

- Reducing the proposed break-up fee to be paid by The Barbers to Regis if
the offer to merge was accepted but not consummated due to the receipt by
The Barbers of a third party acquisition offer that was superior to Regis'
offer,

- Placing a collar around the offer price to protect The Barbers if the
price of the Regis Common Stock declined prior to the closing of the
proposed transaction, and

- The price of the offer.

Each of these matters was taken under advisement by Regis. On January 21,
1999 Regis responded to these points as follows:

- Regis was willing to reduce the proposed break-up fee if the offer to
merge was accepted but not consummated from $2,000,000 to $1,500,000,

- Regis was willing to negotiate a price collar to protect The Barbers if
the price of the Regis Common Stock declined prior to the closing of the
proposed merger, and

- Regis was not willing to negotiate the price of the offer and stated that
the 1 for 2 conversion ratio (adjusted to reflect Regis' 3-for-2 stock
split effective March 1, 1999) that Regis originally proposed was all that
Regis was willing to offer.

The Board of Directors of The Barbers met again on January 22, 1999. At this
meeting, U.S. Bancorp Piper Jaffray made a presentation to the Board of
Directors discussing the results of U.S. Bancorp Piper Jaffray's negotiations
with Regis and updating certain analysis presented to the Board of Directors on
January 14, 1999. On January 25, 1999, the Board of Directors met to discuss the
Regis proposal. At the meeting, the Board of Directors was informed that, after
further negotiation between U.S. Bancorp Piper Jaffray, The Barbers outside
legal counsel, and Regis, Regis had agreed to a price collar that would permit
The Barbers to terminate the merger agreement if the closing price of Regis'
common stock fell below $21.07 (adjusted to reflect Regis' 3-for-2 stock split
effective March 1, 1999) for five consecutive trading days during the time
between the execution of the merger agreement and the consummation of the

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<PAGE>
merger. At the meeting, the Board of Directors reviewed the proposed Agreement
and Plan of Merger and discussed with U.S. Bancorp Piper Jaffray its views
regarding the financial aspects of the transaction. At that time, U.S. Bancorp
Piper Jaffray indicated that is was prepared to issue an opinion that the
consideration to be received by The Barbers' shareholders in the proposed
transaction was fair, from a financial point of view, to The Barbers'
shareholders. After the completion of these discussions, due to their potential
interests in the Merger other than their interests as shareholders of The
Barbers, Ms. Francis, Mr. Huggins, and Ms. Goldstein excused themselves from the
meeting so that the independent, non-employee members of the Board of Directors
(the "Independent Directors") could meet to discuss the proposed transaction.
All potential conflicts were discussed. After thorough discussion, the
Independent Directors decided, by a vote of four to zero, to accept the proposed
transaction from Regis. Subsequent to this approval Ms. Francis, Mr. Huggins,
and Ms. Goldstein rejoined the meeting and the entire Board of Directors
decided, by a vote of seven to zero, to accept the proposed transaction from
Regis. Immediately thereafter, Regis and The Barbers executed the Merger
Agreement and issued a joint press release regarding the execution of the Merger
Agreement.

THE BARBERS' REASONS FOR THE MERGER; RECOMMENDATION OF THE BARBERS' BOARD OF
DIRECTORS

The Barbers' Board of Directors has unanimously approved the Merger
Agreement and the Merger and recommends approval of the Merger Agreement and the
Merger by the shareholders of The Barbers. In reaching its decision to approve
the Merger Agreement and the Merger, the Board of Directors of The Barbers
considered a number of factors, including the following material factors:

- OPINION OF FINANCIAL ADVISOR. The financial presentation of U.S. Bancorp
Piper Jaffray (including the assumptions and methodologies underlying its
analyses and presentations of the stand-alone value of The Barbers and of
the market valuation and historical trading performance of Regis) made to
the Board of Directors and the oral opinion of U.S. Bancorp Piper Jaffray
(subsequently confirmed in writing) to the effect that, as of January 25,
1999, the consideration to be received by the shareholders of The Barbers
in the Merger was fair to such holders from a financial point of view. See
"The Merger--Opinion of Financial Advisor to The Barbers."

- INTRINSIC VALUE. The Board of Directors' belief that the value of the
combined company would more accurately reflect the value of The Barbers
which, in the opinion of the Board of Directors, could not be fully
recognized in the foreseeable future if The Barbers remained independent
due to its relatively small market capitalization.

- STOCK COMPENSATION. The ability of The Barbers' shareholders to continue
to participate in The Barber's business as part of Regis after the Merger
and to benefit from the potential growth and appreciation of the business
conducted by the combined company while realizing an immediate premium for
their shares of The Barbers Common Stock on a tax-free basis.

- STRATEGIC ADVANTAGE. A review of strategic alternatives, including
possible business combinations, and based on the foregoing, the belief
that a transaction with another company could not reasonably be expected
to offer terms and advantages comparable to those of a business
combination involving Regis.

- ECONOMIES OF SCALE. The Board of Directors' belief that significant
economies of scale exist in the hair care industry and that a larger
company has more opportunity to spread administrative and corporate
overhead costs over a larger revenue base, and the Board of Directors'
conclusion that

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<PAGE>
the Merger should result in a strong combined company that should enhance
shareholder value through efficiency of operations.

- EFFECT ON FRANCHISE SYSTEM. The intention of Regis to retain the
management of The Barbers to manage the newly-acquired entity and that
consequently the Merger was not likely to adversely affect The Barbers'
relationships with its employees and franchisees or to have an adverse
effect on The Barbers' franchise system.

- MANAGEMENT. The experienced management team Regis would provide to support
and grow the business of The Barbers and its franchisees thereby enabling
those members of The Barbers' management team approaching retirement, such
as Florence F. Francis and Frederick A. Huggins, Jr., to retire from
day-to-day management of The Barbers while being confident that The
Barbers would continue to be well-managed.

- FINANCIAL INFORMATION. A review of the business, earnings, operations,
financial position and prospects of The Barbers and Regis, both
individually and on a combined basis, including information with respect
to the past earnings performance of each of The Barbers and Regis.

- BUSINESS OBJECTIVES AND ALTERNATIVES. A review of The Barber's management,
strategic objectives, prospects and competitive position and a
consideration of alternatives to the Merger, including the alternative of
remaining independent, and the risks associated with those alternatives,
especially the risks associated with the transition of management
responsibilities upon the retirement of senior management such as Florence
F. Francis and Frederick A. Huggins, Jr.

- TAX BENEFITS; ACCOUNTING TREATMENT. The potential advantage to The
Barbers' shareholders of the qualification of the Merger under the
Internal Revenue Code as a tax-free reorganization and the fact that the
Merger would be accounted for as a pooling-of-interests transaction.

- FRANCHISEE EXIT STRATEGY. Regis' historical willingness to acquire
franchised locations if a franchisee desired to sell his or her location
and the potential exit strategy such a practice provided to franchisees of
The Barbers should they desire to sell their business.

- TERMS OF MERGER AGREEMENT. A review of the terms and conditions of the
Merger Agreement, including the fact that the Merger Agreement permits The
Barbers' Board of Directors, in the exercise of its fiduciary duties,
under certain conditions, to furnish information to, or engage in
negotiations with, third parties in response to unsolicited acquisition
proposals, and to terminate the Merger Agreement, subject to payment of a
break-up fee of $1,500,000, if The Barbers' Board of Directors determines
that a superior acquisition proposal has been made. See "The Merger
Agreement."

The discussion above describes the material factors considered by The
Barbers' Board of Directors in its consideration of the Merger. After such
consideration, and taking into account the recommendation of management, the
Board of Directors concluded that the Merger was in the best interests of The
Barbers and its shareholders. Because of the variety of factors considered, the
Board of Directors did not find it practicable to, and did not make specific
assessments of, quantity or otherwise assign relative weights to the specific
factors considered in reaching its determination. The determination was made
after consideration of all the factors together. In addition, different members
of The Barbers Board of Directors may have given different weights to different
factors.

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<PAGE>
THE BOARD OF DIRECTORS OF THE BARBERS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE BARBERS VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT AND
THE MERGER.

OPINION OF FINANCIAL ADVISOR TO THE BARBERS

The Barbers retained U.S. Bancorp Piper Jaffray by letter agreement dated
January 8, 1999, to act as financial advisor to the Board of Directors of The
Barbers in evaluating a proposal from Regis, considering other potential courses
of action, and effecting a business combination with any party (including Regis)
if the Board of Directors determined to undertake that course of action. Under
the terms of the agreement, if The Barbers determined to proceed with a business
combination, U.S. Bancorp Piper Jaffray would also render an opinion to The
Barbers' Board of Directors concerning the fairness, from a financial point of
view, of the consideration to be received by The Barbers' shareholders.

On January 25, 1999, U.S. Bancorp Piper Jaffray delivered its written
opinion to The Barbers' Board of Directors. The opinion stated that, as of the
date of the opinion, based on and subject to the assumptions, factors and
limitations contained in the opinion and as described below, the consideration
to be received by The Barbers' shareholders in the Merger under the terms of the
Merger Agreement, was fair, from a financial point of view, to the shareholders.
A copy of the opinion is attached as Appendix B to this Proxy
Statement/Prospectus and is incorporated into this Proxy Statement/Prospectus by
reference. We urge shareholders of The Barbers to read the attached opinion in
its entirety.

U.S. Bancorp Piper Jaffray was not requested to make, and did not make, any
recommendation to The Barbers' Board of Directors as to the form of the
consideration to be received by The Barbers' shareholders in the Merger. The
opinion was rendered to The Barbers' Board of Directors and is not a
recommendation to any shareholder of The Barbers as to how such shareholder
should vote at the special meeting. U.S. Bancorp Piper Jaffray was not requested
to opine as to, and the opinion does not address, The Barbers' underlying
business decision to proceed with or effect the Merger.

In arriving at its opinion, U.S. Bancorp Piper Jaffray reviewed, among other
things:

- a draft of the Agreement and Plan of Merger dated January 22, 1999,

- certain publicly available financial, operating, securities and business
information related to The Barbers,

- certain internal financial information of The Barbers on a stand-alone
basis prepared for financial planning purposes and furnished by The
Barbers management,

- to the extent publicly available, financial terms of certain acquisition
transactions deemed similar to the proposed merger of The Barbers and
Regis and financial and market data of selected public companies deemed
comparable to The Barbers and Regis,

- certain publicly available information relative to Regis,

- certain publicly available Regis financial and securities data, and

- information related to The Barbers and Regis on a pro forma combined
basis.

In addition, U.S. Bancorp Piper Jaffray had discussions with members of
Regis management regarding various matters including the background and
rationale for the proposed transaction, the financial position, current
operating performance and balance sheet characteristics of Regis and the
prospects for The Barbers and Regis on a combined basis. U.S. Bancorp Piper
Jaffray also had discussions with members

27
<PAGE>
of The Barbers' management regarding various matters, including the background
and rationale for the proposed transaction, the financial condition, current
operating performance and balance sheet characteristics of The Barbers and the
prospects for The Barbers and Regis on a combined basis.

In connection with delivering the opinion, U.S. Bancorp Piper Jaffray
prepared and delivered to The Barbers' Board of Directors certain written
materials containing analyses and other information material to the opinion. Set
forth below is a summary of these materials.

IMPLIED VALUE OF MERGER CONSIDERATION

Based on the 5-day average closing price of $24.97 (adjusted to reflect
Regis' 3-for-2 stock split effective March 1, 1999) for Regis Common Stock for
the period ended January 20, 1999 and the proposed conversion ratio, U.S.
Bancorp Piper Jaffray estimated an implied value per share for each share of The
Barbers Common Stock in the Merger of $12.48. U.S. Bancorp Piper Jaffray also
calculated an implied total equity value of The Barbers of $58.77 million by
multiplying the five-day average closing price of Regis Common Stock times the
number of Regis shares to be issued to The Barbers' shareholders, optionholders,
and warrantholders in the Merger.

MARKET ANALYSIS

U.S. Bancorp Piper Jaffray reviewed selected market data relating to
ownership, price, volume and analyst coverage for each of The Barbers and Regis.
In addition, U.S. Bancorp Piper Jaffray compared the daily stock price and
volume performance as well as the trading volume at various prices for both The
Barbers Common Stock and Regis Common Stock.

COMPARABLE COMPANY ANALYSIS

U.S. Bancorp Piper Jaffray compared certain financial information and
valuation ratios relating to The Barbers to corresponding data and ratios from
ten publicly traded companies deemed comparable to The Barbers (the "Comparable
Company Group"). This group was selected from companies that:

- are publicly traded companies whose primary business activities correspond
to the Standard Industrial Classification ("SIC") codes for miscellaneous
retail stores, personal services, beauty shops, barber shops or
miscellaneous personal services,

- are publicly traded branded consumer service providers and franchisers,
and

- have a market capitalization greater than $50 million.

The valuation ratios calculated by U.S. Bancorp Piper Jaffray for the
Comparable Company Group included Company Value (equity value plus debt less
cash) to Latest Twelve Month ("LTM") Revenue, Company Value to LTM Operating
Income, Company Value to LTM Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA"), Equity Value to LTM Net Income and Equity Value to

28
<PAGE>
Estimated Calendar 1999 Net Income. The range of valuation multiples calculated
by U.S. Bancorp Piper Jaffray appear in the table below:

COMPARABLE COMPANY MULTIPLE DATA

<TABLE>
<CAPTION>
IMPLIED
MULTIPLE MEAN MEDIAN TRANSACTION
VALUATION MULTIPLE RANGE MULTIPLE MULTIPLE MULTIPLE(1)
- ----------------------------------------------------------------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Company Value/LTM Revenue.............................................. 0.1x- 4.0x 1.4x 1.2x 2.1x
Company Value/LTM Operating Income..................................... 6.9x-24.7x 15.2x 15.9x 19.1x
Company Value/LTM EBITDA............................................... 4.6x-16.9x 10.1x 9.8x 16.1x
Equity Value/LTM Net Income............................................ 14.3x-37.6x 27.1x 26.9x 32.6x
Equity Value to Calendar 1999 Estimated Net Income..................... 8.3x-27.7x 19.0x 18.3x 27.2x
</TABLE>

- ------------------------

(1) Based on the estimated value of the merger consideration of $12.48 per
share.

After comparing the financial performance and other parameters of The
Barbers with the Comparable Company Group, U.S. Bancorp Piper Jaffray deemed the
respective medians and means of the above valuation multiple ranges to be most
appropriate for purposes of valuing The Barbers Common Stock. Applying these
selected valuation multiples to The Barbers' financial parameters and adjusting
for the effects of in-the-money stock options outstanding, U.S. Bancorp Piper
Jaffray determined a range of values for The Barbers Common Stock under this
approach of $9.75 to $11.00 per share.

MERGER AND ACQUISITION MULTIPLE ANALYSIS

U.S. Bancorp Piper Jaffray reviewed certain merger and acquisition
transactions which it deemed comparable to the proposed merger. It selected
these transactions by searching SEC filings, public company disclosures, press
releases, industry and popular press reports, databases and other sources and
applying the following criteria:

- deals in which the targets' primary business activities corresponded to
the SIC codes for miscellaneous retail stores, personal services, beauty
shops, barber shops or miscellaneous personal services,

- deals in which the acquiring company purchased at least 50% of the target
with cash, stock or a combination thereof, and

- transaction values of greater than $20 million.

Specifically, U.S. Bancorp Piper Jaffray analyzed 25 transactions, excluding
share buy-backs, that satisfied the above criteria, not all of which had
available financial data.

The valuation ratios calculated by U.S. Bancorp Piper Jaffray for the
comparable transaction group included Company Value to LTM Revenue, Company
Value to LTM Operating Income, Company Value

29
<PAGE>
to LTM EBITDA and Equity Value to LTM Net Income. The range of valuation
multiples calculated by U.S. Bancorp Piper Jaffray appear in the table below:

<TABLE>
<CAPTION>
IMPLIED
MULTIPLE MEAN MEDIAN TRANSACTION
VALUATION MULTIPLE RANGE MULTIPLE MULTIPLE MULTIPLE
- ----------------------------------------------------------------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Company Value/LTM Revenue.............................................. 0.1x- 1.9x 0.9x 0.7x 2.1x
Company Value/LTM Operating Income..................................... 7.0x-20.7x 15.0x 17.4x 19.1x
Company Value/LTM EBITDA............................................... 6.6x-27.9x 12.0x 9.5x 16.1x
Equity Value/LTM Net Income............................................ 12.1x-46.1x 26.2x 23.2x 32.6x
</TABLE>

U.S. Bancorp Piper Jaffray deemed the respective medians and means of the
above valuation multiples ranges to be most appropriate for purposes of valuing
The Barbers Common Stock. Applying these selected valuation multiples to The
Barbers' financial parameters and adjusting for the effects of in-the-money
stock options outstanding, U.S. Bancorp Piper Jaffray determined a range of
values for The Barbers Common Stock under this approach of $9.00 to $10.00 per
share.

DISCOUNTED CASH FLOW ANALYSIS

U.S. Bancorp Piper Jaffray estimated a range of theoretical values for The
Barbers based on the net present value of its projected annual cash flows and an
estimated terminal value of The Barbers for the period subsequent to such
projections. U.S. Bancorp Piper Jaffray applied a range of terminal value
multiples of 9.0x to 11.0x to projected operating income at the end of fiscal
year 2003 and a range of discount rates of 14% to 18%. The projected financial
data for The Barbers was prepared by The Barbers' management. This analysis
yielded a range of per share equity values of The Barbers of $9.51 to $12.99,
with a midpoint of $11.13. Based on this methodology, U.S. Bancorp Piper Jaffray
determined a range of values for The Barbers Common Stock of approximately
$10.00 to $12.00 per share.

PREMIUM ANALYSIS

U.S. Bancorp Piper Jaffray analyzed the premiums (relative to
pre-announcement prices) paid by acquirors of publicly held companies in
transactions where control changed hands and applied the results of such
analyses to the publicly traded price of The Barbers Common Stock. As part of
its analysis, U.S. Bancorp Piper Jaffray reviewed premiums paid in domestic
transactions announced and reported since 1995 with a transaction value between
$25 million and $100 million ("Market Premium") as well as premiums paid in
announced and reported transactions involving only companies having SIC codes
for miscellaneous retail stores, personal services, beauty shops, barber shops
or miscellaneous personal services ("Related Company Premium"). U.S. Bancorp
Piper Jaffray determined the premium by reviewing the target company's stock
price at each of one day, one week and one month prior to announcement of the
transaction.

<TABLE>
<CAPTION>
ONE DAY ONE WEEK ONE MONTH
----------- ------------- -------------
<S> <C> <C> <C>
MARKET PREMIUM--MEDIAN.......................................................... 23.1% 28.5% 31.6%
RELATED COMPANY PREMIUM--MEDIAN................................................. 33.3 22.3 28.9
IMPLIED PREMIUM TO BE PAID IN MERGER............................................ 13.5 23.3 69.2
</TABLE>

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<PAGE>
U.S. Bancorp Piper Jaffray used the results of this analysis to arrive at a
range of implied per share values for The Barbers of $13.00 to $17.50 based on
The Barbers five-day average closing price as of January 20, 1999 and a range of
$12.00 to $14.00 based on The Barbers five-day average closing price as of
January 15, 1999. Due to stock price volatility at the time U.S. Bancorp Piper
Jaffray rendered its opinion, U.S. Bancorp Piper Jaffray believed that the
January 15, 1999 five-day average would be a better indicator of implied value
under this approach.

CONTRIBUTION ANALYSIS

U.S. Bancorp Piper Jaffray analyzed the expected contributions of each of
Regis and The Barbers to the combined projected revenue, earnings before
interest and taxes and net income of the proposed combined company for the years
ending June 30, 1999 through 2003. U.S. Bancorp Piper Jaffray analyzed three pro
forma scenarios in which the combined company generated $0, $1.5 million and
$2.5 million of annual operating income synergies, all of which synergies were
deemed to have been contributed by The Barbers. The results were then compared
to the approximately 6% equity interest in the combined company that would be
owned by The Barbers' shareholders based on the proposed exchange ratio.

Without assumed synergies inuring to the benefit of the combined company,
U.S. Bancorp Piper Jaffray estimated a range of implied contribution for The
Barbers to revenue of 3.4% to 5.4%, to EBIT of 4.4% to 6.5% and to net income of
5.2% to 7.6%. Assuming $1.5 million in synergies inuring to the benefit of the
combined company, U.S. Bancorp Piper Jaffray estimated a range of implied
contribution for The Barbers to revenue of 3.4% to 5.4%, to EBIT of 4.9% to
7.6%, and to net income of 6.0% to 8.8%. Assuming $2.5 million in synergies
inuring to the benefit of the combined company, U.S. Bancorp Piper Jaffray
estimated a range of implied contribution for The Barbers to revenue of 3.4% to
5.4%, to EBIT of 6.9% to 8.3%, and to net income of 7.8% to 9.6%.

ACCRETION/DILUTION ANALYSIS

U.S. Bancorp Piper Jaffray examined the hypothetical effect of the Merger,
as if it had occurred on March 31, 1999, on earnings per share of the combined
company, by combining estimates by management and research analysts of the
projected financial results of Regis and estimates by management of the
projected financial results of The Barbers. U.S. Bancorp Piper Jaffray focused
on the effect of the proposed transaction on the earnings of the combined
company for the first full fiscal year after the assumed date of consummation
for the transaction (i.e. fiscal year ending June 30, 2000). U.S. Bancorp Piper
Jaffray performed the accretion/dilution analysis at various levels of
post-transaction operating synergies identified to U.S. Bancorp Piper Jaffray by
management of the companies, assuming the transaction was accounted for as a
pooling-of-interests. U.S. Bancorp Piper Jaffray determined that in a
transaction accounted for as a pooling-of-interests and at each assumed level of
operating synergies, the proposed transaction would be slightly accretive to the
earnings per share of the combined company for fiscal year 2000. U.S. Bancorp
Piper Jaffray also determined that the transaction would be slightly dilutive to
the earnings per share of the combined company if no synergies were realized by
the combined company.

The actual operating and financial results achieved by the combined company
may vary from projected results and variations may be material as a result of
business and market risks, the timing and amount of synergies, the costs
associated with achieving the synergies and other factors.

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<PAGE>
In reaching its conclusion as to the fairness of the consideration to be
received by The Barbers' shareholders upon consummation of the Merger from a
financial point of view and in its presentation to The Barbers' Board of
Directors, U.S. Bancorp Piper Jaffray did not rely on any single analysis or
factor described above, assign relative weights to the analyses or factors
considered by it, or make any conclusions as to how the results of any given
analysis, taken alone, supported its opinion. The preparation of a fairness
opinion is a complex process and not necessarily susceptible to partial analyses
or summary description. U.S. Bancorp Piper Jaffray believes that its analyses
must be considered as a whole and that selecting portions of its analyses and of
the factors considered by it, without considering all factors and analyses,
would create a misleading view of the processes underlying the opinion.

The analyses of U.S. Bancorp Piper Jaffray are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by the analyses. Analyses relating to the value of
companies do not purport to be appraisals or valuations or necessarily reflect
the price at which companies may actually be sold. No company or transaction
used in any analysis for purposes of comparison is identical to Regis, The
Barbers or the Merger. Accordingly, an analysis of the results of the
comparisons is not mathematical; rather, it involves complex considerations and
judgments about differences in the companies to which Regis and The Barbers were
compared and other factors that could affect the public trading value of the
companies.

For purposes of the opinion, U.S. Bancorp Piper Jaffray relied upon and
assumed the accuracy, completeness and fairness of the financial statements and
other information made available to it and did not assume responsibility to
independently verify the information. U.S. Bancorp Piper Jaffray relied upon the
assurances of the companies' management that (1) the information provided was
prepared on a reasonable basis in accordance with industry practice, (2) the
financial planning data reflects the best currently available estimates and good
faith judgments of the companies' management as to the expected future financial
performance of the companies, and (3) each management team was not aware of any
information or facts that would make the information provided to U.S. Bancorp
Piper Jaffray incomplete or misleading.

For purposes of the opinion, U.S. Bancorp Piper Jaffray, with The Barbers'
consent, assumed that The Barbers and Regis are not a party to any material
pending transaction, including external financing, recapitalizations,
acquisitions or merger discussions, other than the Merger or in the ordinary
course of business.

In arriving at its opinion, U.S. Bancorp Piper Jaffray was not engaged to
perform any appraisals or valuations of specific assets or liabilities
(contingent or otherwise) of Regis or The Barbers and was not furnished with any
such appraisals or evaluations, made no physical inspection of the properties or
assets of The Barbers and expressed no opinion regarding the liquidation value
of any entity. U.S. Bancorp Piper Jaffray expressed no opinion regarding the
price at which shares of Regis Common Stock have traded or at which the shares
may trade at any future time. The opinion is based on information available to
U.S. Bancorp Piper Jaffray and the facts and circumstances as they existed and
were subject to evaluation on the date of the opinion. Events occurring after
that date could materially affect the assumptions used in preparing the opinion.
In its capacity as financial advisor, U.S. Bancorp Piper Jaffray was not
requested to solicit, and did not solicit, other potential candidates for a
business combination with The Barbers.

U.S. Bancorp Piper Jaffray, as a customary part of its investment banking
business, evaluates businesses and their securities in connection with mergers
and acquisitions, underwritings and secondary distributions of securities,
private placements and valuations for estate, corporate and other purposes. The

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<PAGE>
Barbers' Board of Directors selected U.S. Bancorp Piper Jaffray because of its
expertise, reputation and familiarity with the industry in general and The
Barbers in particular. In the ordinary course of its business, U.S. Bancorp
Piper Jaffray and its affiliates may actively trade securities of Regis or The
Barbers for their own accounts or the accounts of their customers and,
accordingly, may at any time hold a long or short position in these securities.

Under the terms of the engagement letter dated January 8, 1999, as amended,
The Barbers agreed to pay U.S. Bancorp Piper Jaffray $50,000 upon its engagement
and $100,000 upon completion of an analysis of The Barbers completed by U.S.
Bancorp Piper Jaffray on January 14, 1999. The Barbers also agreed to pay an
additional fee of $125,000 upon delivery of the opinion and will pay, upon
consummation of the Merger, a cash fee equal to $700,000, less the $275,000 paid
for the analysis and opinion. The contingent nature of a portion of these fees
may have created a potential conflict of interest in that The Barbers would be
unlikely to consummate the Merger unless it had received the opinion. Whether or
not the Merger is consummated, The Barbers has agreed to pay the reasonable
out-of-pocket expenses of U.S. Bancorp Piper Jaffray and to indemnify U.S.
Bancorp Piper Jaffray against certain liabilities incurred (including
liabilities under the federal securities laws) in connection with the engagement
of U.S. Bancorp Piper Jaffray by The Barbers.

EFFECTIVE TIME OF THE MERGER

The Merger will be effective upon the filing of the Certificate of Merger
with the Secretary of State of the State of Minnesota (the "Effective Time").
Such filing will occur only after all applicable waiting periods (and extensions
thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") shall have expired or been terminated, the approval of the Merger
Agreement by the requisite vote of The Barbers' shareholders, and the
satisfaction or waiver of all other conditions to the Merger. See "The
Merger--Conditions to Obligation to Close."

TERMS OF THE MERGER

At the Effective Time, Merger Sub will be merged with and into The Barbers,
and each share of The Barbers Common Stock issued and outstanding immediately
prior to the Effective Time will, on and after the Effective Time, be converted
into 1/2 of one share of Regis Common Stock. Upon consummation of the Merger,
The Barbers will become a direct, wholly-owned subsidiary of Regis. No
fractional shares will be issued in the Merger.

REGULATORY APPROVAL

The consummation of the Merger will require the amendment of filings with
state franchise authorities and will cause a temporary hold on the ability of
The Barbers and Regis to offer and sell franchises in these states until these
amendments have been approved.

In addition, under the HSR Act and the rules promulgated thereunder by the
Federal Trade Commission (the "FTC"), Regis and The Barbers must give notice and
certain information to the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") and the FTC, followed by certain waiting
period requirements, before consummating the Merger.

Regis and The Barbers each filed with the Antitrust Division and the FTC a
Notification and Report Form with respect to the Merger on March 22, 1999. Under
the HSR Act, the Merger may not be consummated until the expiration of a waiting
period of at least 30 days following the receipt of each filing,

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unless the waiting period is earlier terminated by the FTC and the Antitrust
Division. On April 2, 1999, the FTC advised counsel for Regis and counsel for
The Barbers that early termination of the waiting period has been granted.

The FTC and the Antitrust Division frequently scrutinize the legality of
transactions such as the Merger under the antitrust laws. At any time before or
after the Effective Time, the FTC or the Antitrust Division could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including:

- Seeking to enjoin the Merger or seeking the divestiture of The Barbers by
Regis, in whole or in part; or

- Requiring the divestiture of substantial assets of The Barbers, Regis or
their respective subsidiaries.

State Attorneys General and private parties may also bring legal actions
under the federal or state antitrust laws under certain circumstances. Based
upon an examination of information available to Regis and The Barbers relating
to the businesses in which Regis, The Barbers and their respective subsidiaries
are engaged, Regis and The Barbers believe that the consummation of the Merger
will not violate the antitrust laws. Nevertheless, there can be no assurance
that a challenge to the proposed Merger on antitrust grounds will not be made
or, if such a challenge is made, that Regis and The Barbers will prevail.

Neither Regis nor The Barbers is aware of any other material governmental
approvals or actions that may be required for consummation of the Merger except
as described above. Should any such approval or action be required, it is
presently contemplated that such approval or action would be sought. There is no
assurance, however, that any such approval or action, if needed, could be
obtained and would not be conditioned in a manner that would cause the parties
to abandon the Merger.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of The Barbers' Board of Directors with
respect to the Merger, the Merger Agreement and the transactions contemplated by
the Merger Agreement, you should be aware that certain members of The Barbers'
management and Board of Directors (identified in the following paragraphs) have
interests in the Merger that may be in conflict with your interests. The Board
of Directors of The Barbers and the Independent Directors were aware of these
interests and considered them, among other matters, in approving the Merger
Agreement and the Merger. These interests are discussed below:

- In connection with the Merger, Florence F. Francis, Chairman of the Board
of Directors of The Barbers, and Regis entered into a Non-Competition
Agreement (the "Francis Non-Competition Agreement") effective upon the
consummation of the Merger. Pursuant to the Francis Non-Competition
Agreement, Ms. Francis has agreed not to compete with Regis, directly or
indirectly, for eight years after the consummation of the Merger. As
consideration for her agreement not to compete with Regis, Ms. Francis
will receive $580,000, to be paid over five years in equal monthly
installments. Regis has also agreed to pay Ms. Francis' legal fees
incurred in connection with the negotiation and preparation of the Francis
Non-Competition Agreement.

- In connection with the Merger, Florence F. Francis and Regis entered into
a Transition Agreement (the "Francis Transition Agreement") effective upon
the consummation of the Merger. Pursuant to the Francis Transition
Agreement, Ms. Francis will act as a good-will ambassador on behalf of
Regis with the franchisees of The Barbers until September 28, 2002. As
consideration for the Francis

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Transition Agreement, Ms. Francis will receive her current base salary and
bonus through September 28, 1999 an will receive, beginning on September
29, 1999 and continuing for four years thereafter, an annual salary of
$50,000, health insurance benefits, reimbursement of out-of-pocket
expenses incurred in connection with the performance of her duties, and a
company car. Regis has also agreed to pay Ms. Francis' legal fees incurred
in connection with the negotiation and preparation of the Francis
Transition Agreement.

- In connection with the Merger, John W. Francis, son of Florence F. Francis
and Vice President of Strategy and Credit of The Barbers, and Regis
entered into an Employment Agreement (the "Francis Employment Agreement")
effective upon consummation of the Merger. Pursuant to the Francis
Employment Agreement, Mr. Francis will be employed as a vice president of
Regis. As consideration for the Francis Employment Agreement, Mr. Francis
will receive an annual salary of $80,000 (with a guaranteed bonus of
$20,000) and will be eligible to participate in Regis' benefit plans.

- Upon consummation of the Merger, The Francis Family Limited Partnership, a
partnership in which Florence F. Francis, John W. Francis, and Susan F.
Goldstein are limited partners, and Regis agreed to amend the lease under
which The Barbers currently leases its headquarters office space from The
Francis Family Limited Partnership. This lease will be amended to permit
Regis to terminate the lease upon six months notice and the payment of a
$500,000 termination fee to the Francis Family Limited Partnership. This
$500,000 fee is subject to adjustment after analysis of the value of such
a termination right by an independent appraiser, but if it is valued below
$400,000, then Regis will not be able to terminate the lease without the
consent of The Francis Family Limited Partnership.

- In connection with the Merger the directors and executive officers of The
Barbers will be granted options and warrants to purchase shares of Regis
Common Stock in replacement of currently outstanding options and warrants
to purchase The Barbers Common Stock. These options and warrants will have
similar terms and exercise prices and the options and warrants which they
replace, after taking into account an adjustment of the exercise price and
number of shares subject to the option or warrant based on the conversion
ratio of 1/2 of one share of Regis Common Stock for each share of The
Barbers Common Stock.

MANAGEMENT OF THE BARBERS AFTER THE MERGER

Regis intends to operate The Barbers business as a separate subsidiary after
the Merger. Regis anticipates that most of the current executive officers of The
Barbers will be retained by Regis to be responsible for the operations of The
Barbers as a subsidiary of Regis, under the direction and control of Regis'
Chief Executive Officer and the Regis Board of Directors.

ACCOUNTING TREATMENT

Regis and The Barbers intend that the Merger qualify as a
pooling-of-interests for accounting and financial reporting purposes. The
obligation of each of Regis and The Barbers to consummate the Merger is
conditioned upon Regis not having received any objection to the qualification of
the Merger as a pooling-of-interests treatment from the SEC. For information
concerning certain restrictions to be imposed on the transferability of the
Regis Common Stock received by affiliates of The Barbers in the

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Merger in order, among other things, to assure the availability of pooling of
interests accounting treatment. See "The Merger--Resales of Regis Common Stock
Issued In The Merger; Affiliate Agreements."

Under the pooling-of-interests method of accounting, the historical bases of
the assets and liabilities of The Barbers and Regis will be retroactively
combined when the Merger becomes effective as if the companies had always been
combined, and carried forward at their previously recorded amounts, the
shareholders' equity accounts of The Barbers and Regis will be combined on
Regis' consolidated balance sheet, and no goodwill or other intangible assets
will be created. Pursuant to the pooling-of-interests method of accounting in
accordance with Accounting Principles Board Opinion No. 16, conforming
accounting adjustments will be recorded, if necessary, to adjust the historical
combined financial statements of The Barbers to the same basis of generally
accepted accounting principles applied by Regis in its consolidated financial
statements, consistent with the intent to present the financial statements of
the combined entities as though they have always been combined. Financial
statements of Regis issued after consummation of the Merger will be restated
retroactively to reflect the consolidated operations of The Barbers and Regis as
if the Merger had been in effect for the periods presented therein.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the material federal income tax
consequences of the Merger to you. The discussion does not address all aspects
of federal income taxation that may apply to shareholders subject to special
rules, including foreign persons, insurance companies, tax-exempt entities,
retirement plans and persons who acquired their The Barbers Common Stock
pursuant to the exercise of employee stock options or otherwise as compensation.
In addition, the following discussion does not address either the effect of
applicable state, local or foreign tax laws on you or the effect of any federal
tax laws other than those pertaining to federal income tax on you.

The Barbers expects to receive an opinion from Gray, Plant, Mooty, Mooty &
Bennett, P.A. to the effect that, assuming that the Merger occurs in accordance
with the Merger Agreement, the Merger will constitute a "reorganization" within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended (the "Code"). This opinion will be based on the Code,
regulations and rulings then in effect, current administrative rulings and
practice and judicial precedent, all of which are subject to change. Any change,
which may or may not be retroactive, could alter the tax consequences discussed
below. The opinion will also be based on certain assumptions regarding the
factual circumstances at the effective time of the Merger, including certain
representations and agreements made by Regis, The Barbers and certain of The
Barbers' shareholders. The inaccuracy of any of these factual assumptions may
affect the tax consequences of the Merger. The discussion below applies to
shareholders of The Barbers who hold their shares of The Barbers Common Stock as
a "capital asset" within the meaning of Section 1221 of the Code.

Assuming that the Merger qualifies as a "reorganization":

- Neither Regis, Merger Sub nor The Barbers will recognize any gain or loss
in the Merger.

- If you exchange your shares of The Barbers Common Stock for shares of
Regis Common Stock pursuant to the Merger, you will not recognize any gain
or loss upon this exchange, except that, as noted below, you may recognize
gain or loss with respect to cash received instead of a fractional share
interest.

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- Your aggregate adjusted tax basis of the shares of Regis Common Stock you
receive in the Merger (including a fractional share interest deemed
received, as explained below) will be equal to your aggregate adjusted tax
basis of your shares of The Barbers Common Stock surrendered in the
Merger.

- Your holding period of the shares of Regis Common Stock will include your
holding period of the shares of The Barbers Common Stock surrendered in
the Merger.

- If you receive cash in the Merger instead of a fractional share of Regis
Common Stock, you will be treated as having received that fractional share
in the Merger and then as having received cash in redemption of that
fractional share interest by Regis. Your receipt of this cash should cause
you to recognize capital gain or loss equal to the difference between the
amount of cash received and the portion of your adjusted tax basis in the
shares of The Barbers Common Stock allocable to the fractional share
interest.

- If you exercise dissenters' rights in the Merger, you will recognize gain
or loss upon your receipt of cash for the fair value of your shares of The
Barbers Common Stock. Your capital gain or loss will be equal to the
difference between the amount of cash received and your adjusted tax basis
in your shares of The Barbers Common Stock.

The Merger Agreement provides that The Barbers is not obligated to
consummate the Merger unless it shall have received the opinion from Gray,
Plant, Mooty, Mooty & Bennett, P.A., counsel to The Barbers, substantially to
the effect that under applicable law, for federal income tax purposes, the
Merger will constitute a "reorganization" under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.

THE FOREGOING DISCUSSION OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION PURPOSES ONLY. THE OPINION OF GRAY, PLANT, MOOTY, MOOTY &
BENNETT, P.A. IS NOT BINDING ON THE INTERNAL REVENUE SERVICE. BECAUSE OF THE
COMPLEXITY OF THE TAX LAWS, AND BECAUSE THE TAX CONSEQUENCES TO YOU MAY BE
AFFECTED BY MATTERS NOT DISCUSSED IN THIS PROXY STATEMENT/PROSPECTUS, YOU ARE
URGED TO CONSULT YOUR OWN TAX ADVISER WITH RESPECT TO YOUR OWN PARTICULAR
CIRCUMSTANCES AND WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO
YOU, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS, ESTATE TAX LAWS AND PROPOSED CHANGES IN APPLICABLE TAX LAWS.

NASDAQ NATIONAL MARKET LISTING

Regis will file an application to list the shares of Regis Common Stock to
be issued in the Merger on the Nasdaq National Market. A condition to the
consummation of the Merger is that such Regis Common Stock be authorized for
listing, upon notice of issuance, on the Nasdaq National Market.

EXCHANGE PROCEDURES

As soon as practicable after the consummation of the Merger, Norwest Bank
Minnesota, N.A., the financial institution appointed to effect the exchange (the
"Exchange Agent"), will mail to you a letter of transmittal which is to be used
by you to return to the Exchange Agent the stock certificates representing The
Barbers Common Stock owned by you (the "Old Certificates"), which certificates
should be duly endorsed in blank by you. As soon as practicable after receiving
the Old Certificates from you together with the duly executed letter of
transmittal and any other items specified by the letter of transmittal, the
Exchange Agent will deliver to you new certificates ("New Certificates")
representing the appropriate number of shares of Regis Common Stock to be issued
to you under the terms of the Merger Agreement,

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together with a check for payment of cash in lieu of fractional shares. No
dividends or other distributions that are declared on Regis Common Stock will be
paid to you until you have surrendered your Old Certificates in exchange for New
Certificates, but upon your surrender of your Old Certificates, you will
received such dividends or other distributions, if any, that have been paid on
the Regis Common Stock from and after the consummation of the Merger. You will
not be paid any interest on the cash or the value of the Regis Common Stock into
which your shares of The Barbers Common Stock will be converted.

If you want the Regis Common Stock and/or the cash, or any part thereof,
that you are entitled to receive upon consummation of the Merger to be paid to
another person, then you must:

- Properly endorse your Old Certificates or include with your Old
Certificates appropriate stock powers transferring the shares represented
by your Old Certificates to such person, and

- Pay to the Exchange Agent any transfer or other taxes payable by reason of
the transfer or establish to the satisfaction of Regis that such taxes
have been paid or are not required to be paid.

DISSENTERS' RIGHTS OF APPRAISAL

Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act
(the "MBCA") entitle you to exercise dissenters' rights and receive cash equal
to the "fair value" of your shares of The Barbers Common Stock instead of shares
of Regis Common Stock upon consummation of the Merger. Set forth below is a
summary of the procedures relating to the exercise of such dissenters' rights.
This summary does not purport to be a complete statement of dissenters' rights.
If you think that you might exercise your dissenters' rights in connection with
the Merger, you should carefully review the text of Appendix C attached to this
document, particularly the specified procedural steps required to perfect
dissenters' rights, which are complex, and you should also consult your legal
counsel. Your dissenters' rights will be lost if you do not fully and precisely
satisfy the procedural requirements of sections 302A.471 and 302A.473 of the
MBCA.

Under the MBCA, if you (i) file with The Barbers before the special meeting
written notice of your intent to demand the fair value for your shares of The
Barbers Common Stock if the Merger is consummated and becomes effective and (ii)
do not vote your shares of The Barbers Common Stock at the special meeting in
favor of the proposal to approve the Merger Agreement and the Merger, then you
will be entitled, if the Merger is approved and effected, to receive a cash
payment equal to the fair value of your shares of The Barbers Common Stock upon
compliance with the applicable statutory procedural requirements. If you vote
FOR the proposal to approve the Merger Agreement and the Merger you will have no
dissenters' rights under the MBCA, however, your failure to vote AGAINST the
proposal to approve the Merger Agreement and the Merger, this failure will not,
in and of itself, constitute a waiver of your dissenters' rights.

If you intend to demand payment for your shares of The Barbers Common Stock,
you must file a notice of such intent with The Barbers at 300 Industrial
Boulevard N.E., Minneapolis, Minnesota 55413, Attn: Corporate Secretary, before
the vote on the Merger Agreement and the Merger at the special meeting. A vote
against the Merger Agreement and the Merger at the special meeting will not
constitute the notice required under the MBCA. If you do not satisfy each of the
requirements of Sections 302A.471 and 302A.473 of the MBCA, you will not be
entitled to payment for your shares of The Barbers Common Stock under the
dissenters' rights provisions of the MBCA. Instead, you will be bound by the
terms of the Merger Agreement if the Merger is consummated.

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If the Merger is approved at the special meeting, The Barbers must send
written notice to all shareholders who have given written notice of dissent and
not voted in favor of the Merger a notice containing:

- The address where the demand for payment and certificates must be sent and
the date by which they must be received,

- Any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received,

- A form to be used to certify the date on which the shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired the
shares (or an interest in them) and to demand payment, and

- A copy of the provisions of the MBCA set forth in Appendix C with a brief
description of the procedures to be followed under those provisions.

If your are sent such a notice and wish to assert dissenters' rights, you
must demand payment and deposit your certificates with The Barbers within 30
days after such notice is given. Prior to the Effective Time, you will retain
all other rights of a shareholder. From and after the Effective Time, if you are
a dissenting shareholder, you will no longer be entitled to any rights of a
shareholder, including, but not limited to, the right to receive notice of
meetings, to vote at any meetings or to receive dividends, and you will only be
entitled to any rights of appraisal as provided by the MBCA. If you fail to
perfect your dissenters' rights, your shares of The Barbers Common Stock will
thereafter be deemed to have been converted into the right to receive the
consideration provided for by the Merger Agreement.

After the Effective Time or upon receipt of a valid demand for payment,
whichever is later, The Barbers must remit to you, if you complied with the
requirements of the dissenters' rights statutes, the amount The Barbers
estimates to be the fair value of your shares of The Barbers Common Stock, plus
interest accrued from the Effective Time to the date of payment. The payment
also must be accompanied by certain financial data relating to The Barbers, The
Barbers' estimate of the fair value of the shares and a description of the
method used to reach such estimate, and a copy of the applicable provisions of
the MBCA with a brief description of the procedures to be followed in demanding
supplemental payment. If you believe that the amount remitted is less than the
fair value of such shares plus interest, you may give written notice to The
Barbers of your own estimate of the fair value of the shares, plus interest,
within 30 days after The Barbers mails its remittance, and demand payment of the
difference.

If The Barbers receives a demand from you to pay such difference, it must,
within 60 days after receiving your demand, either pay to you the amount
demanded or agreed to by you after discussion with The Barbers or file in court
a petition requesting that the court determine the fair value of the shares.

The court may appoint one or more appraisers to receive evidence and make
recommendations to the court on the amount of the fair value of your shares. The
court shall determine whether you have complied with the requirements of Section
302A.473 of the MBCA and shall determine the fair value of your shares, taking
into account any and all factors the court finds relevant, computed by any
method or combination of methods that the court, in its discretion, sees fit to
use. The fair value of the shares as determined by the court is binding on all
dissenting shareholders.

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Costs of the court proceeding shall be determined by the court and assessed
against The Barbers, except that part or all of the costs may be assessed
against you if your actions in demanding supplemental payments are found by the
court to be arbitrary, vexatious or not in good faith.

If the court finds that The Barbers did not substantially comply with the
relevant provisions of the MBCA, the court may assess the fees and expenses, if
any, of attorneys or experts as the court deems equitable against The Barbers.
Such fees and expenses may also be assessed against any party in bringing the
proceedings if the court finds that such party has acted arbitrarily,
vexatiously or not in good faith, and may be awarded to a party injured by those
actions. The court may award, in its discretion, fees and expenses of an
attorney for the dissenting shareholders out of the amount awarded to such
shareholders, if any.

You may assert dissenters' rights as to fewer than all of the shares
registered in your name only if you dissent with respect to all shares
beneficially owned by you on behalf of any one beneficial shareholder and you
notify The Barbers in writing of the name and address of each person on whose
behalf you are asserting dissenters' rights. In such a situation, your rights as
a dissenting shareholder are determined as if the shares as to which you are
dissenting and your other non-dissenting shares were registered in the names of
different shareholders.

Under Subdivision 4 of Section 302A.471 of the MBCA, you have no right, at
law or in equity, to set aside the approval of the Merger Agreement or the
consummation of the Merger except if the adoption or consummation of the Merger
was fraudulent with respect to you or The Barbers.

RESALES OF REGIS COMMON STOCK ISSUED IN THE MERGER; AFFILIATE AGREEMENTS

Regis Common Stock to be issued to you in connection with the Merger has
been registered under the Securities Act of 1933, as amended (the "Securities
Act"). This Regis Common Stock will be freely transferable under the Securities
Act, except for shares issued to any person who may be deemed to be an
"affiliate" of The Barbers or Regis within the meaning of Rule 145 under the
Securities Act. "Affiliate" is generally defined as a person who controls, is
controlled by, or is under common control with The Barbers or Regis at the time
of the special meeting (generally, directors, certain executive officers and
major shareholders). Affiliates of The Barbers or Regis may not sell their
shares of Regis Common Stock acquired in connection with the Merger, except
pursuant to an effective registration statement under the Securities Act
covering the sale of such shares or in compliance with Rule 145 or another
applicable exemption from the registration requirements of the Securities Act.
In general, under Rule 145, for one year following the Effective Time, an
Affiliate (together with certain related persons) is entitled to sell shares of
Regis Common Stock acquired in connection with the Merger only through
unsolicited "broker transactions" or in transactions directly with a "market
maker," as such terms are defined in Rule 144 under the Securities Act.
Additionally, the number of shares to be sold by an Affiliate (together with
certain related persons and certain persons acting in concert) within any
three-month period during such one-year period for purposes of Rule 145 may not
exceed the greater of 1% of the outstanding shares of Regis Common Stock or the
average weekly trading volume of such stock during the four calendar weeks
preceding such sale. Rule 145 would remain available to Affiliates only if Regis
remained current with its informational filings with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). One year after
the Effective Time, an Affiliate would be able to sell such Regis Common Stock
without such manner of sale or volume limitations, provided that Regis was
current with its Exchange Act informational filings and such Affiliate was not
then an affiliate of Regis. Two years after the Effective Time, an Affiliate
would be able to sell such shares of Regis Common Stock without any restrictions
as

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long as such Affiliate was not then, and had not been for at least three months
prior thereto, an affiliate of Regis.

It is a condition to the obligation of Regis to consummate the Merger that
The Barbers cause each current executive officer or director identified as a
possible Affiliate of The Barbers to execute and deliver to Regis, on or prior
to the Effective Time, an agreement (the "Affiliate Agreements") providing that
such Affiliate will not sell, pledge, transfer or otherwise dispose of any Regis
Common Stock obtained as a result of the Merger (1) unless (a) such sale,
transfer or other disposition is made in compliance with Rule 145, or (b) in the
opinion of counsel reasonably acceptable to Regis, such sale, transfer or other
disposition is otherwise exempt from registration under the Securities Act; and
(2) until after such time as financial results covering at least 30 days of post
Merger combined operations of Regis and The Barbers have been published. See
"The Merger Agreement--Conditions to Obligation to Close."

THE MERGER AGREEMENT

The following is a brief summary of the material provisions of the Merger
Agreement. This description does not purport to be complete. For a complete
information with regard to any of the information set forth below, you should
refer to the copy of the Merger Agreement included as Appendix A to this Proxy
Statement/Prospectus and incorporated herein by reference. You are urged to read
the Merger Agreement in its entirety. See also "THE MERGER."

GENERAL

The Merger Agreement provides that, upon the satisfaction or waiver of
certain conditions, Merger Sub will be merged with and into The Barbers, The
Barbers will continue as the surviving corporation, and the separate existence
of Merger Sub will cease. Following the Merger, The Barbers will be a
wholly-owned subsidiary of Regis. Upon consummation of the Merger, (1) each
outstanding share of common stock of Merger Sub will be converted into one share
of common stock of The Barbers and (2) each outstanding share of The Barbers
Common Stock will be converted into 1/3 of one share of Regis Common Stock,
subject to adjustments for, among other things, stock dividends by either The
Barbers or Regis occurring after the date of the Merger Agreement. As a result
of the 3-for-2 Regis stock split effective on March 1, 1999, the conversion
ration has been adjusted to be 1/2 of one share of Regis Common Stock for each
outstanding shares of The Barbers Common Stock.

CERTAIN REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains customary representations and warranties of
The Barbers relating to, among other things:

- Organization, qualification and corporate powers;

- The Barbers' capital structure;

- The authorization, execution, delivery, performance and enforceability of
the Merger Agreement;

- The need to obtain any third party consents;

- Documents filed by The Barbers with the SEC and the accuracy of
information contained therein;

- The Barbers' financial statements;

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- The absence of certain changes or events since September 24, 1998;

- Pending or threatened material litigation;

- Filing of tax returns and payment of taxes;

- Certain labor matters;

- Benefit plans and other matters relating to the Employee Retirement Income
Security Act of 1974, as amended, and employment matters;

- The Barbers' material compliance with all environmental laws;

- Material contracts;

- Ownership of or rights to use The Barbers intellectual property;

- Brokers' fees and expenses;

- The approval by the Board of Directors of The Barbers of the Merger;

- The accuracy of information supplied by The Barbers in connection with
this Proxy Statement; and

- The ability to account for the Merger as a pooling-of-interests in
accordance with generally accepted accounting principles.

The Merger Agreement also contains customary representations and warranties
of Regis relating to, among other things:

- Organization, qualification and corporate powers;

- Regis' capital structure;

- The authorization, execution, delivery, performance and enforceability of
the Merger Agreement and related matters;

- The need to obtain any third party consents;

- Documents filed by Regis with the SEC and the accuracy of information
contained therein;

- Regis' financial statements;

- The absence of certain changes or events since Regis' most recent Fiscal
Quarter End;

- Brokers' fees and expenses;

- Regis intention to continue at least one historic business line of The
Barbers;

- Pending or threatened material litigation;

- Filing of tax returns and payment of taxes;

- Certain labor matters;

- Benefit plans and other matters relating to the Employee Retirement Income
Security Act of 1974, as amended, and employment matters;

- Regis' material compliance with all environmental laws;

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- Material contracts;

- Ownership of or rights to use Regis intellectual property;

- The approval by the Board of Directors of Regis of the Merger; and

- The accuracy of information supplied by Regis in connection with this
Proxy Statement.

The representations and warranties of The Barbers contained in the Merger
Agreement do not survive the consummation of the Merger. The representations and
warranties of Regis contained in the Merger Agreement survive for a period of
one year after the consummation of the Merger.

CERTAIN COVENANTS

Pursuant to the Merger Agreement, The Barbers has agreed that, prior to the
Effective Time, except as expressly permitted by the Merger Agreement or as
otherwise consented to by Regis, The Barbers will, and will cause its
subsidiaries to, among other things (subject to certain exceptions):

- Conduct its business only in, and not take any action except in the
ordinary and usual course of business consistent with past practice;

- Use reasonable efforts to preserve intact its business organization, keep
available the services of its present officers and key employees and
preserve the goodwill of third parties with whom it has business
relationships;

- Not amend or change its articles of incorporation or bylaws (or comparable
governing instruments);

- Not issue or sell any shares of capital stock or any other securities
(other than pursuant to stock options or employee stock purchase plans) or
issue any securities convertible into or exchangeable for, or options,
warrants to purchase, script, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or enter into any
contract, understanding or arrangement with respect to the issuance of,
any shares of its capital stock or other securities or purchase or enter
into any arrangement or contract with respect to the purchase or voting of
shares of its capital stock, or adjust, split, combine or reclassify any
of its capital stock or other securities or make any other changes in its
capital structure;

- Not declare, set aside, pay or make any dividend or distribution or
payment with respect to, or purchase or redeem, any shares of its capital
stock;

- Not amend or adopt any benefit plan or increase the compensation or fringe
benefits of any director, officer or employee or pay or grant any benefit
not required under any existing arrangement;

- Not assume or incur any indebtedness, except in the ordinary course of
business and expenses incurred in connection with the consummation of the
Merger or, except in the ordinary course of business consistent with past
practice, make any loans, advances or capital contributions to or
investments in, any other person other by The Barbers to, in or from a
wholly-owned subsidiary;

- Not acquire (a) any business organization or division thereof or (b) any
assets, except purchases of inventory or supplies or other purchases in
the ordinary course of business consistent with past practice;

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- Not sell, lease, mortgage or otherwise encumber or dispose of any of its
properties or assets, except sales of inventory in the ordinary course of
business consistent with past practices and strategic sales of corporate
stores to franchisees;

- Not make any material tax election other than tax elections in the
ordinary course of business and consistent with past practices or settle
or compromise any material income tax or other tax liability or refund;

- Not pay, discharge or satisfy any claims, liabilities or obligations other
than in the ordinary course of business consistent with past business
practice or in accordance with their terms except for existing litigation;
and

- Not take any action that would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a)(1)(A) and 368(a)(2)(E)
of the Code.

LIMITATION ON SOLICITATION BY THE BARBERS

Under the Merger Agreement, The Barbers has agreed not to directly or
indirectly solicit, initiate or encourage (including by way of furnishing
information) any Acquisition Proposal (as hereinafter defined) from any person,
or engage in or continue discussions or negotiations relating to any Acquisition
Proposal and to use its reasonable best efforts to prevent any of its directors,
officers, attorneys, financial advisors and other authorized representatives
from directly or indirectly taking any such action. As defined in the Merger
Agreement, Acquisition Proposal means any bona fide proposal which proposes a:

- Merger, consolidation or similar transaction involving The Barbers;

- Sale, lease or other disposition directly or indirectly, by merger,
consolidation, share exchange or otherwise, of substantially all of the
assets of The Barbers and its subsidiaries taken together;

- Issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into,
such securities) representing a majority of the voting power of The
Barbers; or

- A transaction in which any person, including, without limitation, The
Barbers and any subsidiary, or any affiliate thereof (other than Regis)
shall acquire beneficial ownership (as such term is defined in Rule 13d3
under the Exchange Act), or the right to acquire beneficial ownership of
50% or more of the outstanding common stock of The Barbers, or if any
person shall have commenced a tender or exchange offer for 50% or more (or
which, assuming the maximum amount of securities which could be purchased,
would result in any person beneficially owning 50% or more) of the then
outstanding common stock of The Barbers.

Notwithstanding this agreement, if, prior to the consummation of the Merger,
The Barbers receives an Acquisition Proposal that the Board of Directors of The
Barbers, based upon the advice of its outside counsel, reasonably believes it
has a fiduciary duty to consider, and which it reasonably and in good faith
believes is more favorable to The Barbers and its shareholders than the Merger
then, after notification to Regis, The Barbers may furnish information to the
party making such Acquisition Proposal. If thereafter, The Barbers' Board of
Directors reasonably and in good faith determines that such Acquisition Proposal
is more favorable to The Barbers and its shareholders than the Merger, then upon
written notice to Regis, The Barbers may terminate the Merger Agreement, subject
to the payment to Regis of a break up fee in the amount of $1,500,000. See "The
Merger Agreement--Fees and Expenses."

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INDEMNIFICATION AND INSURANCE

In the Merger Agreement, Regis has agreed that, from and after the
consummation of the Merger, it will indemnify and hold harmless the current and
future directors, officers, agents, and other representatives of The Barbers who
have acted in such capacity prior to or after the date of the Merger Agreement
against any claim or similar action, which is based on or relates to:

- The Merger Agreement;

- This Proxy Statement/Prospectus; or

- Any transactions relating to the Merger,

excluding any successful claim based on violation of Section 16(b) of
the Exchange Act or Section 10(b) of the Exchange Act, or Rule 10b-5
thereunder.

Regis has also agreed to (i) indemnify the officers and directors of The
Barbers in connection with the enforcement of the indemnification obligations of
Regis; and to (ii) assume, from and after the consummation of the Merger, any
and all obligations of The Barbers to indemnify the current officers and
directors of The Barbers, whether pursuant to applicable law, The Barbers
Articles of Incorporation or Bylaws, or by agreement between The Barbers and the
officers and directors of The Barbers.

THE BARBERS OPTIONS

Upon consummation of the Merger, Regis will assume the obligation to issue
Regis Common Stock upon exercise of currently outstanding stock option and
warrants of The Barbers. Accordingly, upon the consummation of the Merger, The
Barbers Common Stock will no longer be received upon exercise of such options
and warrants and in lieu of The Barbers Common Stock, such stock options and
warrants shall be exercisable for a number of shares of Regis Common Stock equal
to the number of shares of The Barbers Common Stock subject to such stock
options outstanding multiplied by the Conversion Ratio. The per share exercise
price for each such stock option and warrant shall be the current exercise price
per share of The Barbers Common Stock divided by the Conversion Ratio.

As of the date hereof, each of The Barbers executive officers and directors
and some key employees of The Barbers currently hold either stock options and/or
warrants to purchase The Barbers Common Stock which will become stock options
and warrants to purchase Regis Common Stock upon the consummation of the Merger.
In the aggregate, as of March 15, 1999 the executive officers and directors of
The Barbers and some key employees of The Barbers hold stock options and/or
warrants to buy approximately 739,550 shares of The Barbers Common Stock.

CONDITIONS TO OBLIGATION TO CLOSE

Each party's respective obligations to effect the Merger are subject to
various conditions, including the following, unless waived to the extent
permitted by applicable law:

- The representations and warranties of each of the parties as set forth in
the Merger Agreement shall be true and correct in all material respects at
and as of the closing date of the Merger as though made on and as of such
date (provided those representations or warranties made as of a particular
date need only be true and correct as of such date), except for such
inaccuracies which do not have a material adverse effect;

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- Each of the parties shall have performed in all material respects all
covenants required to be performed by it under the Merger Agreement
through the closing of the Merger;

- The holders of The Barbers Common Stock shall have approved the Merger and
the Merger Agreement by the requisite vote;

- No preliminary or permanent injunction or other order by any federal or
state court which prevents the consummation of the Merger shall have been
issued and remain in effect;

- All applicable waiting periods and any extension thereof under the HSR Act
shall have expired or been terminated;

- The Registration Statement for the Regis Common Stock shall have been
declared effective by the SEC;

- Each party shall have received legal opinions from counsel to the other
party in a form satisfactory to such party; and

- Each party shall have received officer's certificates from the other party
attesting to the satisfaction of certain conditions to closing.

The obligations of Regis and Merger Sub to effect the Merger are subject to
the satisfaction of the following additional conditions unless waived by Regis
and Merger Sub:

- Regis shall not have received any objection from the SEC to the accounting
for the Merger as a pooling-of-interests;

- Regis shall have received Affiliate Agreements from each current executive
officer and director of The Barbers identified as a possible Affiliate of
The Barbers;

- The lease between The Barbers and the Francis Family Limited Partnership
shall have been amended to allow the termination of such lease on six
months notice; and

- There shall have been no material adverse change from the date of the
Merger Agreement in the business, financial position or operations of The
Barbers, except changes contemplated, permitted or required by the Merger
Agreement and changes resulting from a change in general economic
conditions.

The obligation of The Barbers to affect the Merger is subject to the
satisfaction of the following additional conditions, unless waived by The
Barbers:

- The shares of Regis Common Stock to be issued in connection with the
Merger shall have been approved for listing on Nasdaq National Market,
subject to official notice of issuance;

- The Barbers shall have received a written opinion from U.S. Bancorp Piper
Jaffray dated as of the date of this Proxy Statement/Prospectus that the
Merger is fair, from a financial point of view, to The Barber's
shareholders; and

- The Barbers shall have received from Gray, Plant, Mooty, Mooty & Bennett,
P.A. a written opinion confirming that the Merger will be treated as a
"reorganization" within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.

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TERMINATION

The Merger Agreement may be terminated at any time prior to the Effective
Time, either before or after the special meeting (notwithstanding approval of
the Merger Agreement and the Merger by the shareholders of The Barbers) by:

- Mutual written consent of The Barbers and Regis;

- Either Regis or The Barbers if the Effective Time shall not have occurred
on or before August 31, 1999, provided, however, such right to terminate
the Merger Agreement shall not be available to any party that is then in
material breach of its representations, warranties or obligations under
the Merger Agreement;

- Either Regis or The Barbers if any court of competent jurisdiction in the
United States shall have issued an order, decree, or ruling or taken any
other action restraining, enjoining or otherwise prohibiting or declaring
the Merger invalid or unlawful and such order, decree, ruling or other
action shall have become final and nonappealable;

- The Barbers upon the receipt of a superior Acquisition Proposal and the
payment of a $1,500,000 break-up fee to Regis. See "The Merger
Agreement--Limitation on Solicitation by The Barbers"; or

- The Barbers if the closing price of Regis' common stock falls below $21.07
for five consecutive trading days during the time between the execution of
the Merger Agreement and the consummation of the Merger.

In the event of termination of the Merger Agreement by either Regis or The
Barbers, the Merger Agreement will become void and there will be no liability on
the part of Regis, Merger Sub or The Barbers except that under certain
circumstances The Barbers will be required to pay to Regis a breakup fee of
$1,500,000, as described under "Fees and Expenses."

AMENDMENT

Subject to applicable law, the Merger Agreement may be amended by action
taken by or on behalf of the respective Boards of Directors of Regis, Merger Sub
or The Barbers at any time prior to the Effective Time. The Merger Agreement may
be amended after the approval of the Merger Agreement and the Merger by the
shareholders The Barbers, subject to any limitation contained on such amendments
under applicable law.

FEES AND EXPENSES

Under the Merger Agreement, all expenses incurred by Regis or The Barbers
shall be borne solely and entirely by the party that has incurred the same,
except for the payment of $1,500,000 by The Barbers to Regis upon termination of
the Merger Agreement because of the receipt by The Barbers of a superior
Acquisition Proposal.

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BUSINESS OF THE BARBERS

GENERAL

The Barbers develops, franchises, services and operates a system of hair
care salon concepts which provide hair care services and products for men, women
and children. The Barbers implements its retail concepts through nationwide
franchise systems that The Barbers supports with a comprehensive package of
centralized services. The Barbers primarily earns revenue through its franchise
operations from franchise initial fees, franchise royalties and sales of beauty
products, salon equipment and consumer appliances.

The Barbers markets three different hair care salon concepts that target a
broad spectrum of the hair care market. Most franchises do business under the
names "Cost Cutters Family Hair Care-Registered Trademark-" ("Cost Cutters"),
"City Looks Salons International-Registered Trademark-" ("City Looks"), or "We
Care Hair-Registered Trademark-" ("We Care Hair"). The Barbers also has a
limited number of franchises operating under the names "The
Barbers-Registered Trademark-" ("The Barbers"), "The Barbers, Hairstyling for
Men & Women-Registered Trademark-", "The Hair Performers-Registered Trademark-"
and "Family Haircut Stores-Registered Trademark-". The Barbers currently sells
franchises only in the Cost Cutters, City Looks, and We Care Hair concepts.

Each franchise concept is specifically tailored to satisfy a particular
market niche. Cost Cutters franchises provide value-priced hair care services
targeted to price sensitive customers. City Looks franchises provide full
service, high-fashion hair care as well as various personal grooming and spa
services, including facials, manicures, massages and tanning facilities targeted
to customers who place a premium on full service. We Care Hair franchises
provide hair care services, tanning, nail care and waxing services targeted at
adults aged 18 to 40.

At December 24, 1998, The Barbers had a total of 979 salons consisting of
947 franchised salons and 32 company-owned salons. The principal executive
offices of The Barbers are located at 300 Industrial Boulevard N.E.,
Minneapolis, Minnesota 55413 and its telephone number is (612) 331-8500.

FRANCHISING OVERVIEW

Franchising is a method of distributing goods and services which has
experienced rapid growth in recent years. The franchisor typically develops the
business concept and operations systems for the franchised business. Franchisees
are granted rights to use the franchisor's service marks and must operate their
businesses in accordance with the systems, specifications, standards and formats
developed by the franchisor. Virtually all types of retail businesses are
currently franchised, including clothing, computers and electronics, sporting
goods and various specialty retail businesses.

Pursuant to their franchise agreement with The Barbers, each franchisee pays
an initial fee and ongoing royalty and advertising fees to The Barbers. These
fees vary depending upon the particular franchise and the age of the franchise
agreement, but are generally as follows: initial fees for the first franchise
location are currently $19,500 for Cost Cutters, City Looks and We Care Hair
franchises; initial fees for each additional franchise location are $12,500.
Royalty fees are generally four to six percent of gross revenues for Cost
Cutters franchises; two to four percent of gross revenues for City Looks
franchises; and six to eight percent of gross revenues for We Care Hair
franchises. Advertising fees are generally four to six percent of gross revenues
for Cost Cutters franchises; three to five percent of gross revenues for City
Looks franchises; and four percent of gross revenues for We Care Hair
franchises.

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HISTORY

The Barbers was incorporated under the laws of Minnesota on October 1, 1968.
It quickly established a chain of company-owned, full service hairstyling
businesses throughout the United States under the name "The Barbers, Hairstyling
for Men". In 1970, The Barbers began selling franchises for the operation of
hairstyling businesses doing business under the names "The Barbers" and "The
Barbers, Hairstyling for Men & Women". Recognizing the need to update the market
focus and decor of the salons, in 1987 The Barbers began selling franchises for
the operation of hairstyling businesses under the name "City
Looks-Registered Trademark- By The Barbers" and The Barbers began to convert the
existing "The Barbers" locations to this business format. This trade name was
revised to "City Looks-Registered Trademark- Salons" in 1991 and to "City Looks
Salons International-Registered Trademark-" in 1993, although some salons
continue to operate under the older names.

The Barbers began selling franchises for the operation of hairstyling
businesses doing business under the name "Cost Cutters Family Hair
Care-Registered Trademark-" in 1982. In 1986, The Barbers decided to focus
principally on doing business as a franchisor and reduced its number of
company-owned stores in the United States from 69 in 1986 to 3 in 1994. Since
then, The Barbers has capitalized on the opportunity of developing the Cost
Cutters chain within major mass merchandisers. As part of this business
strategy, The Barbers has built over 30 new company-owned stores since 1995.
Most of these new stores are located within Wal-Mart Supercenters.

On January 25, 1997, The Barbers, through its subsidiary WCH, Inc., acquired
substantially all of the franchise assets (trademarks, franchise agreements and
certain other assets) of 139 "We Care Hair-Registered Trademark-" salons from We
Care Hair Development, Inc. in exchange for $2,000,000 cash plus a contingent
earn-out equal to 40% of all initial franchise fees and royalties collected
pursuant to certain specified franchise contracts during the six year period
ending January 24, 2003. Under the terms of the acquisition agreement, The
Barbers, through its subsidiary WCH, may deduct the purchase price of specific
franchise contracts from future payments if the salons close within one year of
the acquisition date. As of January 24, 1998, 19 franchises valued at $646,724
had either closed or taken down their signs. The Barbers is presently in
litigation with several of these franchisees. See "Business of The
Barbers--Legal Proceedings." The Barbers, through its subsidiary WCH, began
offering We Care Hair franchises in June 1997.

FRANCHISED AND COMPANY OWNED SALONS

The Barbers provides franchise services, including initial and ongoing
operational training, financial analysis services, advertising and marketing
services, and sells beauty products, salon equipment and consumer appliances to
a total of 939 franchised salons worldwide (as of September 24, 1998). The
Barbers franchises and company owned stores operate primarily under the names
Cost Cutters, City Looks, and We Care Hair.

COST CUTTERS. Cost Cutters franchises provide value-priced hair care
services for men, women and children. In addition, Cost Cutters franchises sell
a complete line of hair care products, merchandise and appliances. The Barbers
created the Cost Cutters business system to meet the demand of the general
public for high quality, value-priced family hair care services and products. At
September 24 1998, The Barbers had 794 franchised and 29 company owned Cost
Cutters salons producing $175,606,000 in store level revenue from the sale of
services and beauty products. Cost Cutters franchises operate throughout the
United States.

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CITY LOOKS. City Looks franchises provide men, women and children with
high-fashion, full service hair care including, cutting, perming, coloring,
shampooing, conditioning, hairstyling, and other hair care services. City Looks
franchises also provide spa services and personal grooming services such as nail
care, manicures, makeovers and sell related products. The Barbers developed the
City Looks business system to meet the demand of the general public for a
complete line of high-fashion hair care services and products. At September 24
1998, The Barbers had 74 franchised and one company owned City Looks salons
producing $23,064,000 in store level revenue from the sale of services and
beauty products. City Looks franchises operate primarily in the Midwest. City
Looks also has 25 franchised locations in France and two franchised locations in
Russia.

WE CARE HAIR. We Care Hair franchises target men and women between the ages
of 18 and 40 with hair care services, tanning, nail care, and waxing services.
We Care Hair franchises also sell hair care and nail care products. The Barbers
purchased the business system during fiscal 1997. At September 24 1998, The
Barbers had 71 franchised and no company owned We Care Hair salons producing
$12,759,000 in store level revenue from the sale of services and beauty
products. We Care Hair franchises operate throughout the United States and two
locations operate in Mexico.

BEAUTY PRODUCT AND EQUIPMENT DISTRIBUTION

The Barbers distributes beauty products, salon equipment and consumer
appliances primarily to its franchisees. The beauty products, which include
shampoos, conditioners and finishing products, consist of private label and
nationally recognized licensed brands, both of which The Barbers purchases from
third party suppliers. The Barbers does not own or operate any product
manufacturing or labeling operations. Private label products are available under
the names of Cost Cutters-Registered Trademark-, City Looks Salons
International-Registered Trademark- and The Barbers-Registered Trademark- and
are designed to be sold by the franchise bearing that particular product's name.
The ingredients of The Barbers' private label products are widely available from
a number of suppliers, and thus, The Barbers is not dependent upon any one
supplier. The licensed brands available from The Barbers include Paul
Mitchell-Registered Trademark-, Sebastian-Registered Trademark-,
KMS-Registered Trademark-, Back to Basics-Registered Trademark-, American
Crew-Registered Trademark-, and Joico-Registered Trademark-. Due to the great
diversity of licensed products currently offered to franchisees through The
Barbers, The Barbers is not dependent upon any one brand, and continually
reviews and adds to its licensed brand product lines. The Paul Mitchell brand is
the largest selling brand, making up 33% of The Barbers' beauty product sales
volume for the year ended September 24, 1998. Private label products were
approximately 16% of The Barbers' beauty products sales volume for the year
ended September 24, 1998. The Barbers' franchisees are required to maintain a
minimum inventory of private label products. Although the franchisees are not
required to purchase any national brand product from The Barbers, the
franchisees may enjoy significant discounts as a result of The Barbers'
purchasing power. The Barbers carries $2,000,000 of product liability insurance
with an additional $20,000,000 provided as excess coverage.

The Barbers also sells salon equipment and consumer appliances to
franchisees. Salon equipment available for purchase from The Barbers includes
everything necessary to equip a franchise store, such as chairs, work stations,
shampoo bowls, store displays and point of sale material. In addition to
franchise store equipment, The Barbers provides consumer appliances such as blow
dryers, styling combs and curling irons. The consumer appliances are sold to
franchisees, who in turn sell them to their retail customers.

BUSINESS STRATEGY

The Barbers' business strategy is to develop value-oriented retail salon
concepts based on a mix of the value-priced hair care market and the full
service, high-fashion hair and body care market and to

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implement these concepts through a nationwide franchise system that provides
comprehensive support services to its franchisees. The key elements of this
strategy include:

- NICHE MARKET MERCHANDISING. The Barbers, promoting Cost Cutters, City
Looks, and We Care Hair franchises, reaches three distinct market niches.
Cost Cutters provides its customers with high quality services at low, a
la carte prices. Cost Cutters customers may choose from numerous services
and select one or any combination of them. City Looks provides
high-fashion, full service hair and body care and hair and body products
as well as personal grooming services such as nail care, manicures,
facials, massages, tanning facilities and make-overs to customers who
prefer full service hair and body care. We Care Hair provides hair care
services, tanning, nail care, and waxing services and targets adults aged
18 to 40.

- FRANCHISE SUPPORT. The Barbers provides, pursuant to each franchise
agreement, initial and ongoing operational training, advertising and
marketing services, and financial analysis services to all of its
franchises. The Barbers sells all salon equipment necessary to equip a
franchise store as well as supplying franchise stores with retail consumer
goods, such as beauty and hair care products and appliances.

- NATIONAL AND LOCAL ADVERTISING. Pursuant to the franchise agreement, each
franchisee, depending upon the particular franchise and the age of the
franchise agreement, pays up to six percent of their gross sales into an
advertising fund managed by The Barbers. The Barbers uses a portion of the
fund to provide market research, production materials, ad slicks,
brochures, radio and television commercials to all franchisees. The
balance of the fund is used for advertising and promotion development for
franchisees. In addition, each franchisee is also required to spend one
percent of its gross sales on local advertising.

- CONVENIENT LOCATIONS. The Barbers' franchises are typically located in
grocery anchored strip shopping centers, regional malls, power shopping
centers (shopping centers which include one grocery store and one major
softgoods store) and inside of major mass merchandisers. The Barbers has
also opened some salons in "outlet malls" and intends to pursue further
opportunities as other outlet mall sites become available. This location
strategy insures that each franchise will be easily accessible by a large
number of potential customers.

- EXPANSION TO NEW MARKETS. The Barbers intends to expand and build upon its
existing markets in an effort to increase its market share in those areas.
The Barbers is also committed to introducing its franchise concepts into
new markets. Expansion may come from the granting of franchises in
geographic areas where The Barbers currently has only a limited number of
salons, the continued development of salons inside Wal-Mart Supercenters,
or acquisitions of suitable candidates.

COMPETITION

The hair care business is highly competitive and fragmented, with limited
barriers to entry. The Barbers' franchised and company-owned salons compete with
traditional, independent hair care stores, regional and national chains,
regional and national franchises and various other businesses which offer spa
services similar to that of The Barbers' franchises. The principal bases of
competition in the hair care industry are price, convenience, quality and name
recognition. The Barbers believes that it competes favorably in these areas.

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EMPLOYEES

As of March 15, 1999, The Barbers employed 390 people. The Barbers employed
91 full-time employees and one part-time employee at its corporate headquarters.
The Barbers employed 268 full-time and 30 part-time employees at its
company-owned salons. The Barbers considers its employee relations to be good.
None of The Barbers' employees are covered under a collective bargaining
agreement.

GOVERNMENTAL REGULATIONS

The Barbers is subject to various federal, state and local laws affecting
its business as well as a variety of regulatory provisions relating to zoning of
store sites, sanitation, health and safety of its company-owned salons. The
Barbers must also satisfy various federal and state franchise laws and
regulations. The Barbers has registered its offering of franchises with the
regulatory authorities of those states in which it offers franchises and in
which such registration is required. Although The Barbers believes it is
currently in material compliance with existing federal and state laws, there is
a trend toward increased government regulation of franchising.

Twenty states and the Federal Trade Commission impose pre-sale franchise
registration or some level of disclosure or filing requirements on franchisors.
In addition, a number of states and the District of Columbia have statutes that
regulate substantive aspects of the franchisor-franchisee relationship such as
termination, nonrenewal, transfer, discrimination and competition.

Additional legislation is currently pending both at the federal and state
levels which could expand pre-sale disclosure requirements, further regulate
substantive aspects of the franchise relationship, and impose additional filing
requirements on franchisors. The Barbers cannot predict the effect of future
franchise legislation, but does not believe that legislation currently under
consideration will have a material adverse impact on its operations.

FRANCHISE DEVELOPMENT

The Barbers' North American growth strategy focuses on development from
existing franchisees. Existing franchisees opened 72 of the 73 new franchised
salons opened during fiscal 1998. The Barbers also signed development agreements
with seven new franchisees in fiscal 1998. The Barbers' international growth
strategy relies primarily on contractual relationships with master franchisees.
The Barbers opened 11 salons in France and one salon in Russia during fiscal
1998.

TRADEMARKS AND SERVICE MARKS

The Barbers holds numerous trademarks and service marks registered on the
principal register of the United States Patent and Trademark Office and
registered in several foreign countries. The Barbers believes that its
trademarks and service marks have significant value and are important to the
marketing of its franchises. There are no agreements currently in effect which
significantly limit the rights of The Barbers to use or license the use of its
trademarks, service marks, trade names, logotypes or other commercial symbols in
any manner material to The Barbers. The Barbers has expended considerable
resources to protect its franchise identity.

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PROPERTIES

The Barbers does not own any real estate. The Barbers creates revenue from
franchise related activities and does not anticipate directing its resources
toward investment in real estate nor in equity interests in those entities which
primarily invest in real estate.

The Barbers' interest in real estate is limited to the lease of its
corporate headquarters, the lease of commercial property for its company-owned
salons and the lease of commercial properties subleased to franchisees.

The Barbers leases two properties, its corporate headquarters and a parking
lot, from the Francis Family Limited Partnership. Florence F. Francis, Chairman
of the Board of Directors for The Barbers, Susan Goldstein, a member of The
Barbers' Board of Directors, and John W. Francis, an officer of The Barbers, are
limited partners in the Francis Family Limited Partnership.

- LEASE OF THE BARBERS HEADQUARTERS. The Barbers leases approximately
65,400 square feet for its corporate headquarters. The lease expires on
October 31, 2002. The rental payments for the corporate headquarters were
$394,000 in fiscal 1998. The current corporate headquarters space is
sufficient to meet The Barbers' office space needs for the next few years.
The Barbers subleases 29,100 square feet of its corporate headquarters
office space to a third party. As a result, The Barbers earned rental
income of $114,000 in fiscal 1998. The sublease expires in December 2000.

- LEASE OF THE BARBERS PARKING LOT. The Barbers also leases its parking lot
from the Francis Family Limited Partnership. The lease expires September
30, 2002. Rental payments were $18,000 in fiscal 1998.

The Barbers relocated its warehouse operations to a new 18,500 square foot
location during fiscal 1998. The lease on this location expires October 31,
2002. Rent on this location was $64,000 in fiscal 1998.

The Barbers leases commercial property for its company-owned stores. The
Barbers paid $817,421 for 29,840 square feet of lease space in fiscal 1998. The
leases expire at various times between 1998 and 2003. Most of these leases are
renewable for an additional term of five years.

The Barbers also leases commercial property for 149 retail stores, which it
subleases to franchisees. The Barbers is the primary obligor or guarantor on
leases for these salons. In addition, The Barbers leases commercial property for
97 retail stores through its wholly-owned subsidiary, We Care Hair Realty, Inc.,
which in turn are subleased to We Care Hair franchisees. We Care Hair Realty,
Inc. is the primary obligor or guarantor on leases for these salons. Generally,
the franchisee personally guarantees the sublease to The Barbers or We Care Hair
Realty, Inc. The Barbers subleases the space to the franchisees with
substantially the same terms as the primary lease. However, on approximately 60%
of these subleases, The Barbers receives an additional charge from the
franchisee over and above the amount of rent paid to the landlord. The Barbers
or its subsidiary is liable for the rent payments on these locations, even if a
franchisee defaults on the payment of rent. The Barbers expects that it will be
able to renew its leases on satisfactory terms as they expire.

Total facility lease obligations for The Barbers and its subsidiary,
including properties subleased to franchisees for which The Barbers or its
subsidiary is liable if the franchisee defaults, for fiscal years ending
September 1999, 2000, 2001, 2002, and 2003 are approximately $5,806,000;
$4,947,000; $3,545,000; $2,344,000; and $536,000 respectively.

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<PAGE>
LEGAL PROCEEDINGS

Other than as set forth below, The Barbers is not currently a party to any
material pending legal proceedings. From time to time The Barbers may become
involved in routine litigation incidental to its business.

LELA BISHOP, ET AL. V. DOCTOR'S ASSOCIATES, INC., FREDERICK DELUCA, PETER H.
BUCK, FRANCHISE WORLD HEADQUARTERS, INC., WE CARE HAIR DEVELOPMENT, INC.,
JOHN AMICO, SR., FRED FLORIO, THE BARBERS, HAIRSTYLING FOR MEN & WOMEN,
INC., WE CARE HAIR REALTY, INC., FRANCHISE REAL ESTATE LEASING CORP., JOHN
F. AMICO & COMPANY, WCH, INC. AND JAMI INTERNATIONAL, INC. (Circuit Court,
Third Judicial Circuit, Madison County, Illinois, Cause No. 97-L-231, filed
February 4, 1997). Approximately 58 present or former We Care
Hair-Registered Trademark- franchisees have joined in this lawsuit and
requested certification of the lawsuit as a class action pursuant to 735
ILCS Section 5/2-801 et seq. on behalf of all past and present We Care
Hair-Registered Trademark- franchisees. This lawsuit has been brought
against the above defendants for alleged breaches of fiduciary duty. The
plaintiffs further allege that We Care Hair Development, Inc. and all other
defendants in this lawsuit have violated the Illinois Anti-trust Statute,
740 ILCS Section 10/3 (2) or (3), by requiring We Care
Hair-Registered Trademark-franchisees to purchase alleged unusable hair care
products. The plaintiffs further allege that We Care Development, Inc. and
all other defendants in this lawsuit have violated the Illinois Franchise
Disclosure Act by using a standard franchise agreement for We Care
Hair-Registered Trademark- franchises that violated the anti-waiver
provisions of 815 ILCS Section 705/41, and by engaging in fraudulent
practices and selling franchises at certain times during which We Care
Development, Inc.'s registration with the Illinois Attorney General's Office
had lapsed. The Barbers and its subsidiary, WCH, Inc., have been named as
defendants in this lawsuit under the theory that they acted with all other
defendants pursuant to a civil conspiracy and/or mutual scheme with
concerted action for the purpose of constructively terminating the We Care
Hair-Registered Trademark- franchises throughout the country by convincing
We Care Hair-Registered Trademark- franchisees to execute new franchise
agreements with The Barbers to operate as Cost Cutters franchisees and
decrease and/or eliminate all services and advertising for the remaining We
Care Hair-Registered Trademark- franchisees in violation of the Illinois
Franchise Disclosure Act. We Care Hair Realty, Inc., a wholly-owned
subsidiary of WCH, Inc., has been named as a defendant in this lawsuit under
the theory that it also participated in the conspiracy or scheme by
attempting to transfer the We Care Hair-Registered Trademark-subleases to
The Barbers and WCH, Inc. The plaintiffs seek to recover an award of actual
damages, punitive damages, treble damages and attorneys fees in an amount
not to exceed, in the aggregate, under all counts of the complaint, against
all defendants, the sum of $74,950 for each franchisee, and for court costs.

This case is in the early pretrial stage. The Barbers, WCH, Inc. and We Care
Hair Realty, Inc. have initiated an action in Illinois Federal District Court
seeking to compel arbitration of the claims of the plaintiffs and are awaiting
the Court's decision on their pending motion to compel arbitration. The
co-defendants have initiated a separate action in Illinois Federal District
Court also seeking to compel arbitration of the claims of the plaintiffs. By
order dated September 25, 1997, the Federal District Court, in the
co-defendants' action, compelled all non-Illinois plaintiffs to arbitrate their
disputes with the co-defendants, and enjoined all non-Illinois plaintiffs from
continuing the lawsuit against all defendants, including The Barbers, WCH, Inc.
and We Care Hair Realty, Inc. The plaintiffs have appealed this ruling. In
addition, on March 9, 1998, the Appellate Court of Illinois--Fifth District
ordered the State Court proceeding to be transferred to the Circuit Court of
Cook County, Illinois.

54
<PAGE>
MARKET FOR THE COMMON STOCK EQUITY AND RELATED STOCKHOLDERS MATTERS

The Barbers Common Stock is listed on The Nasdaq National
Market-Registered Trademark- and traded under the symbol BBHF. As of
, 1999, there were outstanding shares with
shareholders of record. Based upon quotes obtained from Nasdaq (which reflect
inter-dealer prices, without retail mark-up, mark-down, or commissions and may
not represent actual transactions), the following table sets forth for the
periods indicated the high and low bid prices for The Barbers' Common Stock,
prior year prices have been adjusted to reflect the 3-for-2 stock splits which
were effective October 31, 1996 and April 17, 1998:

<TABLE>
<CAPTION>
THE BARBERS COMMON STOCK
------------------------
HIGH BID LOW BID
----------- -----------
<S> <C> <C>
FISCAL 1997
First Quarter............................................................ $ 5.33 $ 3.50
Second Quarter........................................................... $ 5.50 $ 4.33
Third Quarter............................................................ $ 6.00 $ 4.33
Fourth Quarter........................................................... $ 5.75 $ 4.59

FISCAL 1998
First Quarter............................................................ $ 6.33 $ 4.17
Second Quarter........................................................... $ 9.00 $ 5.17
Third Quarter............................................................ $ 11.00 $ 7.17
Fourth Quarter........................................................... $ 10.00 $ 6.13

FISCAL 1999
First Quarter............................................................ $ 8.38 $ 5.25
Second Quarter........................................................... $ 14.00 $ 8.00
</TABLE>

The Barbers does not pay cash dividends on its common stock. The Barbers is
prohibited from paying cash dividends under its loan agreement with Norwest
Bank.

THE BARBERS' MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Barbers is engaged in the business of franchising three different hair
care salon concepts which provide hair care services and products for men,
women, and children. The Barbers had 979 franchised and company-owned salons in
operation as of December 24, 1998, compared to 962 at December 25, 1997. The
Barbers primarily earns revenue through its franchise operations from initial
franchise fees, franchise royalties, and sales of beauty products and equipment
to the franchisees. The Barbers uses a 52-53 week reporting period. The years
ended September 24, 1998, September 25, 1997, and September 26, 1996, each
included 52 weeks of operations.

55
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth the percentage relationship to total revenues
of certain items included in The Barbers' Consolidated Statements of Income:

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
---------------------------- -------------------------------------------
DECEMBER 24, DECEMBER 25, SEPTEMBER 24, SEPTEMBER 25, SEPTEMBER 26,
1998 1997 1998 1997 1996
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Franchise royalties.......... 30.2% 29.4% 32.1% 32.6% 32.5%
Franchise fees............... 3.2% 5.1% 3.3% 4.2% 6.4%
Company-owned salons......... 25.2% 20.7% 23.2% 20.8% 15.8%
Beauty products &
equipment.................. 38.2% 41.3% 39.0% 40.2% 43.2%
Other........................ 3.2% 3.5% 2.4% 2.2% 2.1%
----- ----- ----- ----- -----
Total revenues................. 100.0% 100.0% 100.0% 100.0% 100.0%
COSTS AND EXPENSES:
Franchise operations......... 12.6% 14.8% 12.7% 13.8% 14.7%
Company-owned salons......... 24.7% 19.6% 22.8% 20.1% 16.8%
Distribution & general
administration............. 54.2% 57.6% 53.5% 55.3% 59.5%
----- ----- ----- ----- -----
OPERATING INCOME............... 8.5% 8.0% 11.0% 10.8% 9.0%
OTHER INCOME (EXPENSE):
Interest income.............. 0.9% 0.8% 1.0% 0.8% 0.7%
Interest expense............. -0.4% -0.8% -0.8% -0.6% -0.2%
Net gain on disposal of
assets..................... 0.0% 0.0% 0.5% 0.0% 0.3%
----- ----- ----- ----- -----
NET INCOME BEFORE INCOME
TAXES........................ 9.0% 8.0% 11.7% 11.0% 9.8%
INCOME TAXES................... 3.7% 3.4% 4.8% 4.6% 4.1%
----- ----- ----- ----- -----
NET INCOME..................... 5.3% 4.6% 6.9% 6.4% 5.7%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

QUARTER ENDED DECEMBER 24, 1998 COMPARED TO QUARTER ENDED DECEMBER 25, 1997

REVENUES. The Barbers' total revenues were $7,123,729 for the first quarter
of fiscal 1999, an increase of $686,901 or 10.7% over the first quarter of the
previous year. Franchise royalties totaled $2,150,143 for the first quarter of
fiscal 1999, which is an increase of 13.8% over the comparable period for the
previous year. This increase was due to an increase in per store sales by
franchised salons as well as an increase in the number of salons in operation in
fiscal 1999 as compared to fiscal 1998. Franchise fee revenue (initial franchise
fees) decreased $103,864 or 31.4% to $226,636 for the first quarter of fiscal
1999. The decrease in franchise fee revenue was due to a decrease in the number
of new salons opened during the comparable periods. A total of 18 franchised and
two company-owned salons opened in the first quarter of fiscal 1999 compared to
31 new franchised salons in the first quarter of the previous year. Revenue from
company-owned salons was $1,793,239 for the first quarter, an increase of 34.6%
over the first quarter of the previous year. The increase in revenue from
company-owned salons is due primarily to the addition of nine new company-owned
salons opened over the last twelve months and sales growth at salons opened in
previous years. Beauty product and equipment sales for the first quarter of
fiscal 1999 were $2,722,920, an increase of $61,705 or 2.3% from the first
quarter of the previous year. Beauty product sales increased

56
<PAGE>
16.4%, however equipment sales decreased 18.2% because of fewer openings of new
salons versus the first quarter of last year.

COSTS & EXPENSES--FRANCHISE OPERATIONS. Total franchise operations expenses
were $898,593 for the first quarter of fiscal 1999. This was a decrease of 6.0%
from the first quarter of fiscal 1998. Several factors contributed to this
reduction in expenses. There was a decrease in franchise sales commissions paid
due to the decrease in the number of franchised salons opened during the
quarter. Some staff positions were repositioned to administrative departments.
Travel, vehicle and printing costs were also less than the prior year.

COSTS & EXPENSES--COMPANY-OWNED SALONS. The Barbers presently owns and
operates 32 salons: 31 operate as Cost Cutters salons and one operates as a City
Looks. 25 of the Cost Cutters operate inside Wal-Mart Supercenters. This
compares to 23 salons open during the first quarter of the prior fiscal year.
First quarter operating costs for The Barbers-owned salons were $1,757,199 as
compared to $1,258,668 for the first quarter of the previous year, an increase
of 39.6%. This increase was primarily due to an increase in the number of salons
in operation and an increase in the direct costs associated with increased sales
of services and beauty products.

COSTS & EXPENSES--DISTRIBUTION AND GENERAL ADMINISTRATION. Total operating
expenses for distribution and general administration for the first quarter of
fiscal 1999 were $3,859,832 which is a increase of $154,695 or 4.2% from the
first quarter of the prior year. The first quarter cost of products and
equipment sold was $2,053,204 versus a prior year cost of $2,090,946, a decrease
of 1.8%. Margins on the sale of products and equipment were 24.6% versus 21.4%
the previous year. The increase in margins is primarily due to changes in
product mix: more beauty products and less equipment. Salaries and benefits were
$901,372 for the first quarter of fiscal 1999 versus $797,716 for the first
quarter of fiscal 1998, an increase of 13.0%. This increase was due to increases
in staff size and an average increase in salaries of 4.0%. General and
administrative expenses for the first quarter increased by $88,781 or 10.9% from
the previous year to $905,256. This increase was due to increased depreciation
costs associated with The Barbers' new distribution center and professional fees
incurred in a secondary stock offering. This stock offering was announced in
September 1998 and withdrawn in January 1999.

OPERATING INCOME. Operating income was $608,105 for the first quarter of
fiscal 1999 as compared to $517,343 for the comparable period of the prior year,
an increase of 17.5%. Operating income as a percent of revenue was 8.5% for the
first quarter of fiscal 1999 versus 8.0% for the comparable period of the
previous fiscal year.

INTEREST INCOME AND EXPENSE. Interest income was $63,361 for the first
quarter of fiscal 1999, which is an increase of $10,575 or 20.0% from the
interest income of the first quarter of fiscal 1998. Interest expense was
$26,966 for the first quarter of fiscal 1999 compared to $54,119 for the
comparable period of fiscal 1998. This decrease in interest expense was due to
early repayment of long-term debt associated with the acquisition of We Care
Hair.

INCOME TAXES. The Barbers' effective tax rates for the first quarter of
fiscal 1999 and fiscal 1998 were 41.0% and 42.1%, respectively. The Barbers
anticipates that the rate for the balance of fiscal 1999 will be approximately
41%.

57
<PAGE>
NET INCOME. The Barbers' net income for the first quarter of 1999 was
$380,650 or $.09 per diluted share. This was an increase of $81,640 or 27.3%
over the first quarter of fiscal 1998 net income and an increase of $.02 per
diluted share.

YEAR ENDED SEPTEMBER 24, 1998 COMPARED TO YEAR ENDED SEPTEMBER 25, 1997:

SYSTEM-WIDE REVENUES. System-wide revenues of all salons, franchised and
company-owned, were $211.4 million for fiscal 1998, an increase of $26.6 million
or 14.4% over fiscal 1997. This increase was attributable to the addition of new
stores, new promotional programs and service price increases. During fiscal year
1998, The Barbers opened 81 new salons, including 13 company-owned locations in
North America. The Barbers also opened 13 in foreign markets. This compares to a
total of 75 new salon openings in fiscal 1997. System-wide there were 969 salons
as of September 24, 1998 versus 935 salons as of the end of the prior year.

REVENUES. The Barbers' total revenues were $26,138,485 for fiscal 1998, an
increase of $4,016,685 or 18.2% over fiscal 1997. Franchise royalties increased
$1,183,197, or 16.4% which was due to new salon openings, increases in same
store sales, and reflects a full year of royalties from the We Care Hair salon
chain versus eight months of royalty revenue in fiscal 1997. Franchise fees
decreased by $75,938, or 8.2%, due to incentives offered to large multi-store
developments and a decrease in the number of salons opened by first time
franchisees. Revenue from company-owned salons increased $1,462,035, or 31.7%
due to the maturing of salons built in the previous years and the net addition
of seven new company-owned salons during fiscal 1998. Revenue from beauty
products and equipment increased $1,307,407 or 14.7% from fiscal 1997. The
increases in beauty products and equipment revenue were attributable to the
addition of new salons and volume increases in sales to existing salons.

COSTS AND EXPENSES--FRANCHISE OPERATIONS. Total expenses of franchise
operations were $3,325,619, an increase of $266,783, or 8.7% over fiscal 1997.
Salaries and benefits for fiscal 1998 were $2,199,236, an increase of $223,191
or 11.3% over fiscal 1997. This increase was due to the growth in field staff to
service the new salons and general salary increases. General and administrative
expenses for fiscal 1998 were $1,126,383, an increase of $43,592 or 4.0% over
fiscal 1997.

COSTS AND EXPENSES--COMPANY-OWNED SALONS. The Barbers owned and operated 30
salons as of the end of fiscal 1998. Six of these salons are located in product
outlet centers and 23 are located in Wal-Mart Supercenters. The Barbers opened
eight new salons, purchased five franchised salons and sold six salons to
franchisees during fiscal 1998. The total cost of operations for the
company-owned salons in fiscal 1998 was $5,949,989, an increase of $1,502,609,
or 33.8%. Salaries and benefits for fiscal 1998 were $3,220,159, an increase of
$752,986, or 30.5% from fiscal 1997. Most salon employees are paid on a
commission basis against the services they perform and the retail products they
sell. The increase in salaries and benefits in fiscal 1998 reflects the increase
in the number of salons owned as well as sales increases at the salons built in
prior years. General and administrative expenses in fiscal 1998 were $1,559,685,
an increase of $337,640 or 27.6% from fiscal 1997. This was due to the increase
in the number of salons owned and annualization of the operating costs of salons
built in the previous year. Costs of products sold in fiscal 1998 were
$1,170,145, an increase of $411,983, or 54.3% over fiscal 1997.

COSTS AND EXPENSES--DISTRIBUTION AND GENERAL ADMINISTRATION. The total
operating expenses for distribution and general administration for fiscal 1998
were $13,974,624, an increase of $1,751,563, or 14.3% from fiscal 1997. The cost
of products and equipment sold was $7,801,958 in fiscal 1998. This was an
increase of $1,074,597, or 16.0% from fiscal 1997. Gross margins on the sale of
products and equipment

58
<PAGE>
were 23.5% in fiscal 1998 compared to 24.3% in fiscal 1997. The change in
margins was due primarily to changes in the mix of products sold. Salaries and
benefits were $3,473,048, an increase of $446,909, or 14.8% versus fiscal 1997.
This increase was due to the addition of staff in distribution; staff additions
in administrative departments to handle the increases in workload created by the
expansion of Company-owned salons; increases in incentive compensation for
employees and general salary increases. General and administrative expenses for
fiscal 1998 were $2,699,618, an increase of $230,057, or 9.3% versus fiscal
1997. Increases in general and administrative expenses were due to primarily
legal and professional fees associated with the newly acquired We Care Hair
salons and costs to relocate The Barbers' warehouse.

OPERATING INCOME. Operating income for fiscal 1998 was $2,888,253, a 20.7%
increase over fiscal 1997. Operating income as a percent of sales was 11.0% for
fiscal 1998 as compared to 10.8% for fiscal 1997.

INTEREST INCOME AND EXPENSE. Interest income increased $70,629, or 38.2%
over fiscal 1997 due to increases in notes receivable from franchisees and
increases in daily cash investment balances. Interest expense for fiscal 1998
was $207,354, an increase of $56,220 versus fiscal 1997. The large increase in
interest expense was due to loans taken by The Barbers to purchase the We Care
Hair salon chain.

NET GAIN ON DISPOSAL OF ASSETS. The Barbers recorded a gain on disposal of
assets in fiscal 1998 of $116,866, which compares to a loss in the previous year
of $1,831. The gains recorded in fiscal 1998 were due to the sale of six
company-owned salons, and miscellaneous assets. The loss recorded in fiscal 1997
was due to the sale of five company-owned salons and miscellaneous assets.

INCOME TAXES. The Barbers' effective income tax rate for fiscal 1998 was
40.9%, this compares to 42.0% for the previous year.

NET INCOME. The Barbers' net income for fiscal 1998 was $1,803,249, or $.42
per diluted share. This is an increase of $396,836 or 28.2% over fiscal 1997 net
income and an increase per diluted share of $.09. Earnings per share have been
adjusted to reflect the 3-for-2 stock split which was issued April 17, 1998.

YEAR ENDED SEPTEMBER 25, 1997 COMPARED TO YEAR ENDED SEPTEMBER 26, 1996:

SYSTEM-WIDE REVENUES. System-wide revenues of all salons, franchised and
company-owned, were $184.8 million for fiscal 1997, an increase of $27.9 million
or 17.8% over fiscal 1996. This increase was attributable to the addition of new
stores, notably the We Care Hair salons which contributed $10.5 million. New
promotional programs and service price increases also favorably impacted the
increase in revenue. During fiscal year 1997, The Barbers opened 75 new salons,
including six company-owned locations. This compares to 115 new salon openings
in fiscal 1996. System-wide there were 935 salons as of September 25, 1997; this
compares to 786 salons as of the end of the prior year.

REVENUES. The Barbers' total revenues were $22,121,800 for fiscal 1997, an
increase of $3,556,049 or 19.2% over fiscal 1996. Franchise royalties increased
$1,178,873, or 19.5% which was due to new salon openings, increases in same
store sales, and the addition of the We Care Hair salon chain. Franchise fees
decreased by $253,221, or 21.4%, due to the decrease in the number of new salons
opened in fiscal 1997 versus fiscal 1996. Revenue from company-owned salons
increased $1,670,897, or 56.8% due to the maturing of salons built in the
previous years and the net addition of one new company-owned salon during fiscal
1997. Revenue from beauty products and equipment increased $866,418 or 10.8%
from fiscal

59
<PAGE>
1996. The increases in beauty products and equipment revenue were attributable
to the addition of new salons and volume increases in sales to existing salons.

COSTS AND EXPENSES--FRANCHISE OPERATIONS. Total expenses of franchise
operations were $3,058,836, an increase of $333,648, or 12.2% over fiscal 1996.
Salaries and benefits for fiscal 1997 were $1,976,045, an increase of $194,258
or 10.9% over fiscal 1996. This increase was due to the growth in field staff to
service the new salons and general salary increases which averaged about 4.0%.
General and administrative expenses for fiscal 1997 were $1,082,791, an increase
of $139,390 or 14.8% over fiscal 1996. More than half of these increases were
due to the addition of the We Care Hair franchises.

COSTS AND EXPENSES--COMPANY-OWNED SALONS. The Barbers owned and operated 23
salons as of the end of fiscal 1997, including six new salons opened during
fiscal 1997. Three of these new salons are located in product outlet centers and
three are located in Wal-Mart Supercenters. The Barbers also sold five salons
during fiscal 1997. The total cost of operations for the company-owned salons in
fiscal 1997 was $4,447,380, an increase of $1,322,639, or 42.3%. Salaries and
benefits for fiscal 1997 were $2,467,173, an increase of $764,224, or 44.9% from
fiscal 1996. Most salon employees are paid on a commission basis against the
services they perform and the retail products they sell. The increase in
salaries and benefits in fiscal 1997 reflects the increase in the number of
salons owned as well as sales increases at the salons built in prior years.
General and administrative expenses in fiscal 1997 were $1,222,045, an increase
of $290,411 or 31.2% from fiscal 1996. This was due to the increase in the
number of salons owned and annualization of the operating costs of salons built
in the previous year. Costs of products sold in fiscal 1997 were $758,162, an
increase of $268,004, or 54.7% over fiscal 1996.

COSTS AND EXPENSES--DISTRIBUTION AND GENERAL ADMINISTRATION. The total
operating expenses for distribution and general administration for fiscal 1997
were $12,223,061, an increase of $1,179,779, or 10.7% from fiscal 1996. The cost
of products and equipment sold was $6,727,361 in fiscal 1997. This was an
increase of $564,831, or 9.2% from fiscal 1996. Gross margins on the sale of
products and equipment were 24.3% in fiscal 1997 compared to 23.1% in fiscal
1996. Salaries and benefits were $3,026,139, an increase of $425,331, or 16.4%
versus fiscal 1996. This increase was due to the addition of staff in
distribution; staff additions in administrative departments to handle the
increases in workload created by the We Care Hair acquisition; increases in
incentive compensation for employees and general salary increases which averaged
4.0%. General and administrative expenses for fiscal 1997 were $2,469,561, an
increase of $189,617, or 8.3% versus fiscal 1996. Increases in general and
administrative expenses were primarily legal and professional fees associated
with the newly acquired We Care Hair salons and additions in The Barbers' bad
debt reserves.

OPERATING INCOME. Operating income for fiscal 1997 was $2,392,523, a 43.0%
increase over fiscal 1996. Operating income as a percent of sales was 10.8% for
fiscal 1997 as compared to 9.0% for fiscal 1996.

INTEREST INCOME AND EXPENSE. Interest income increased $50,842, or 37.9%
over fiscal 1996 due to increases in notes receivable from franchisees and
increases in daily cash investment balances. Interest expense for fiscal 1997
was $151,134, an increase of $111,766 versus fiscal 1996. The large increase in
interest expense was due to loans taken by The Barbers to purchase the We Care
Hair salon chain.

NET GAIN ON DISPOSAL OF ASSETS. The Barbers recorded a loss on disposal of
assets in fiscal 1997 of $1,831, which compares to a gain in the previous year
of $55,169. The loss recorded in fiscal 1997 was due to the sale of five
company-owned salons and miscellaneous assets. The gains recorded in fiscal 1996
were due to the sale of one company-owned salon, one piece of real estate, and
miscellaneous assets.

60
<PAGE>
INCOME TAXES. The Barbers' effective income tax rate for fiscal 1997 and
1996 was 42.0%.

NET INCOME. The Barbers' net income for fiscal 1997 was $1,406,413, or $.33
per diluted share. This is an increase of $349,059 or 33.0% over fiscal 1996 net
income and an increase per share of $.07. Earnings per share have been adjusted
to reflect the 3-for-2 stock split which was issued April 17, 1998 and the 3-for
2 stock split which was issued October 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

The Barbers has generally been able to produce sufficient cash from
operations to support the routine expansion of its business, and expects to
continue to do the same in fiscal 1999. Cash generated from operating
activities, net of interest expense, totaled $2,097,230 and $1,745,265 in fiscal
years 1998 and 1997, respectively. Cash used by operations in fiscal 1996 was
$169,684. During fiscal 1996, The Barbers invested a portion of its capital to
fund accounts receivable and promissory notes to franchisees who were developing
new salons.

Capital expenditures were $1,040,657, $387,826, and $576,813 in fiscal years
1998, 1997, and 1996, respectively. Capital expenditures during fiscal 1998 were
primarily for equipment for The Barbers' new warehouse and new company-owned
salons. The Barbers will continue to expand its company-owned salons operations
as well as invest in new computer technology during the next fiscal year.
Capital expenditures for fiscal 1999 are anticipated to be about $1,000,000 to
$1,500,000.

The Barbers has a bank credit agreement that provides for a maximum line of
credit of $1,500,000. The line bears interest at the prime lending rate (8.5% at
September 24, 1998), expires June 30, 1999, is secured by accounts receivable,
inventories, general intangibles, and property and equipment, and requires The
Barbers to maintain certain financial ratios. There are no compensating balance
requirements. As of September 24, 1998, there are no borrowings against this
line of credit.

During fiscal year 1997, The Barbers acquired the We Care Hair salon chain.
The Barbers paid $2,000,000 for the franchise agreements, trademarks, and other
assets. This purchase was funded by increases in bank debt.

The Barbers secured two bank loans totaling $2,500,000 to finance the
purchase of the We Care Hair salon chain and to fund additional working capital,
such as inventory and accounts receivable, necessary to support the new chain.
The first loan was in the amount of $1,500,000 and bears a fixed interest rate
of 8.82% and is payable over seven years and is secured by all assets of The
Barbers. The balance of this loan as of December 24, 1998 was $1,179,418. The
second loan was in the amount of $1,000,000 with a floating interest rate equal
to the bank's prime rate and was also payable over seven years. The Barbers
repaid this loan during fiscal 1998.

Management believes that cash generated from operating activities, together
with available funds from its operating line of credit or replacement financing
will be sufficient to fund its anticipated operations, capital expenditures and
required debt repayments for the foreseeable future.

YEAR 2000

The Year 2000 issue focuses on whether computer systems will properly
recognize date-sensitive information in the Year 2000 and beyond. Many installed
computer systems and software products are coded to accept only two digit
entries in the date code field. As the Year 2000 approaches, these code fields
will need to accept four digit entries to distinguish years beginning with "19"
from those beginning with

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<PAGE>
"20." This inability to recognize or properly treat the Year 2000 may cause
systems to process financial and operational information incorrectly. As a
result, in the next year, computer systems and/or software products used by many
companies may need to be upgraded to comply with such Year 2000 requirements.
The Barbers is dependent on computer processing in its business activities and
the Year 2000 issue creates risk for The Barbers from unforeseen problems in The
Barbers' computer system and from third parties with whom The Barbers does
business. The failure of The Barbers' computer system and/or third parities
computer systems from unforeseen problems could have a material adverse effect
on The Barbers' ability to conduct its business.

The Barbers is in the process of conducting an assessment of its computer
hardware and software for Year 2000 compliance. The Barbers does not have a
scheduled completion date for this assessment, but it anticipates that all
necessary upgrades and corrections necessitated by the results of this
assessment will be completed before January 1, 2000. As part of this assessment,
The Barbers is also examining whether it needs to develop contingency plans
related to Year 2000 issues. The Barbers does not currently have any such
contingency plans. The Barbers believes that the results of this assessment will
indicate that The Barbers' primary computer system is Year 2000 compliant. The
Barbers also believes that the results of this assessment will require the
company to upgrade certain of its computer hardware and software to replace
obsolete equipment and to ensure that all such hardware and software is Year
2000 compliant. The Barbers anticipates that the aggregate costs of this upgrade
will be $500,000 to $1,000,000 and that such costs will be incurred during the
next two fiscal years. If The Barbers encounters any unanticipated delays in, or
costs associated with the upgrading or replacement of this system, or if this
assessment indicates that The Barbers' primary computer is not Year 2000
compliant, The Barbers may incur additional costs.

The Barbers has completed an assessment of its non-information technology
systems. As a result of this assessment, The Barbers is in the process of
replacing its phone system in order to insure that it is Year 2000 compliant.
The estimated cost of this phone system replacement is $60,000. If The Barbers
encounters any unanticipated delays in, or costs associated with the upgrading
or replacement of this system, The Barbers may incur additional costs.

As part of its assessment of its computer hardware and software for Year
2000 compliance, the Company has also contacted each of its vendors and
suppliers who provide computer hardware and software products to The Barbers on
a regular basis with regard to Year 2000 compliance. The Barbers has received
assurances from these vendors and suppliers that the hardware and software
currently being purchased by The Barbers from these vendors and suppliers is
Year 2000 compliant. The Barbers is in the process of developing procedures to
test hardware and software products previously purchased from these vendors and
suppliers to determine if those products are Year 2000 compliant. As an
additional part of this assessment, The Barbers intends to contact its
significant vendors and suppliers of products other than computer hardware and
software regarding their Year 2000 compliance. The failure to be Year 2000
compliant by any of The Barbers' significant vendors and suppliers could result
in an interruption in or a failure of, certain normal business activities or
operations of The Barbers. Such failures could materially and adversely affect
The Barbers' business, results of operations, and financial condition. Due to
the general uncertainty inherent in the Year 2000 problem, resulting from the
uncertainty of the Year 2000 readiness of The Barbers' significant vendors and
suppliers, The Barbers is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on The Barbers'
business, results of operations, or financial condition.

The Barbers is also working with its franchisees to assist them in
identifying Year 2000 issues. Although The Barbers' current version of its point
of sale software is Year 2000 compliant, The Barbers

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<PAGE>
believes that many of its franchisee's hardware systems are not Year 2000
compliant. The Barbers is in the process of developing test procedures to assist
its franchisees in testing their hardware systems for Year 2000 compliance. The
Barbers does not anticipate incurring significant costs related to assisting its
franchisees in this manner.

DESCRIPTION OF REGIS CAPITAL STOCK

GENERAL

Regis is authorized to issue 50,000,000 shares of capital stock, par value
$.05 per share. As of , 1999, there were issued and outstanding
shares of Regis Common Stock, and shares of Regis Common
Stock were reserved for issuance upon the exercise of stock options under the
Regis 1991 Stock Option Plan (not including shares of Regis Common Stock to be
reserved for issuance under such plan pursuant to the terms of the Merger
Agreement). The Board of Directors of Regis is authorized, without further
action of the shareholders, to establish classes or series of stock from the
authorized and unissued shares and to fix the relative rights and preferences of
any such class or series. As of , 1999, other than the preferred
stock authorized for issuance under the Regis shareholder rights plan, the Board
of Directors had not authorized for issuance any class or series of stock or
Regis other than the Regis Common Stock. For a description of the Regis
Shareholder Rights Plan, see "Description of Regis Capital Stock--Antitakeover
Provisions." Regis has no present plans to establish any other classes or series
of stock.

REGIS COMMON STOCK

GENERAL. Holders of Regis Common Stock have no preemptive rights. The
outstanding shares of Regis Common Stock are, and the Regis Common Stock offered
hereby will be, fully paid and nonassessable.

VOTING. Regis common shareholders are entitled to one vote for each share
held on each matter submitted to a vote of the holders of Regis Common Stock.
Cumulative voting for the election of directors is not permitted.

DIVIDENDS. Subject to the preferential dividend rights of any issued and
outstanding preferred stock, holders of Regis Common Stock are entitled to
receive dividends as and when declared by the Board of Directors of Regis. Regis
currently pays a dividend of $0.12 per share annually. Under Minnesota corporate
law, Regis may declare and pay dividends if the Regis Board of Directors
determines that Regis will be able to pay its debts in the ordinary course of
business after making the dividend. No dividends on Regis Common Stock may be
declared, however, if payment of the dividend would reduce the remaining net
assets of Regis below the aggregate preferential amount payable in the event of
liquidation to holders of shares having preferential rights. There is no
assurance that the Board of Directors will continue to pay dividends on its
common stock.

LIQUIDATION. If Regis were liquidated, the holders of Regis Common Stock
would be entitled to receive, pro rata, all assets available for distribution to
them after full satisfaction of Regis' liabilities and any payment applicable to
any preferential shares then outstanding.

TRANSFER AGENT AND REGISTRAR. The transfer agent and registrar for the
Regis Common Stock is Norwest Bank Minnesota, N.A.

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<PAGE>
ANTITAKEOVER PROVISIONS

Regis' Articles of Incorporation require a vote of at least 80% of the
outstanding voting shares for certain mergers, sales or transfers of
substantially all of Regis' assets, or a liquidation, unless such transaction is
first approved by a majority of Regis' directors who were directors prior to the
time any shareholder (except Curtis Squire, Inc.) became the owner of 10% of
Regis Common Stock. If such director approval is obtained, a simple majority of
the outstanding shares will be sufficient to effect these transactions. An 80%
shareholders' vote is also required to amend this provision. The effect of these
provisions may be to deter or discourage hostile takeover attempts by making it
more difficult for a person who has gained a substantial equity interest in
Regis effectively to exercise control.

Regis has a shareholders' rights plan pursuant to which one preferred share
purchase right is held by shareholders for each outstanding share of common
stock. The rights become exercisable only following the acquisition by a person
or group, without the prior consent of the Board of Directors of Regis, of 20%
or more of the Regis' voting stock, or following the announcement of a tender
offer or exchange offer to acquire an interest of 20% or more of Regis' voting
stock. If the rights become exercisable, these rights entitle all holders of
Regis Common Stock, except the take-over bidder, to purchase one one-hundredth
of a share of preferred stock at an exercise price of $120, subject to
adjustment, or instead of purchasing the preferred stock, to purchase for the
same exercise price Regis Common Stock (or in certain cases common stock of an
acquiring company) having a market value of twice the exercise price of a right.

In addition, Regis is subject to Sections 302A.671 and 302A.673 of the
Minnesota Business Corporation Act. Section 302A. 671 applies, with certain
exceptions, to any acquisition of voting stock of Regis (from a person other
than Regis, and other than in connection with certain mergers and exchanges to
which Regis is a party) resulting in the beneficial ownership of 20 percent or
more of the voting stock then outstanding. Section 302A.671 of the Minnesota
Business Corporation Act requires approval of any such acquisitions by a
majority vote of the shareholders of Regis prior to its consummation. In
general, shares acquired in the absence of such approval are denied voting
rights and are redeemable at their then fair market value by Regis within 30
days after the acquiring person has failed to give a timely information
statement to Regis or the date the shareholders voted not to grant voting rights
to the acquiring person's shares.

Section 302A.673 of the Minnesota Business Corporation Act generally
prohibits any business combination by Regis, or any subsidiary of Regis, with
any shareholder which purchases ten percent or more of the Regis' voting shares
(an "interested shareholder") within four years following such interested
shareholder's share acquisition date, unless the business combination is
approved by a committee of all of the disinterested members of the Board of
Directors of Regis before the interested shareholder's share acquisition date.

LIMITED LIABILITY AND INDEMNIFICATION

Regis' Articles of Incorporation include a provision permitted by the
Minnesota Business Corporation Act which limits the liability of directors of
Regis. The provision provides that no director shall be personally liable to
Regis or its shareholders for monetary damages for breach of fiduciary duty as a
director, excluding, however, liability for:

- Breach of a director's duty of loyalty;

- Acts or omissions not in good faith;

64
<PAGE>
- Intentional violations of law;

- Transactions where the director derived an improper personal benefit;

- Illegal distributions; or

- Violations of securities laws.

In addition, Minnesota law and Regis' Bylaws provide for broad
indemnification by Regis of its officers, directors and employees. Accordingly,
shareholders of Regis will have more limited recourse against those individuals
than would be the case in the absence of such provisions.

Insofar as the indemnity for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling Regis
pursuant to the foregoing provisions, Regis has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act of 1933 and is therefore unenforceable. Regis believes that
its Articles of Incorporation and Bylaws provisions are necessary to attract and
retain qualified persons as directors and officers.

COMPARISON OF SHAREHOLDER RIGHTS

The Barbers and Regis are both Minnesota corporations. The rights of the
shareholders of The Barbers and the shareholders of Regis are both governed by
the MBCA. The rights of the shareholders of The Barbers are also governed by the
Articles of Incorporation ("The Barbers Articles"), and the Amended and Restated
Bylaws of The Barbers ("The Barbers Bylaws"). The rights of the shareholders of
Regis are governed by the Articles of Incorporation of Regis, as amended (the
"Regis Articles"), and the Bylaws of Regis (the "Regis Bylaws"). The following
is a summary of certain material differences between the rights of shareholders
of The Barbers and the rights of shareholders of Regis, as contained in
provisions of the MBCA, The Barbers Articles and The Barbers Amended Bylaws, and
the Regis Articles and Regis Bylaws.

The following does not purport to be a complete statement of the rights of
The Barbers' shareholders under applicable Minnesota law and The Barbers
Articles and The Barbers Amended Bylaws as compared with the rights of Regis
shareholders under applicable Minnesota law and the Regis Articles and Regis
Bylaws. The identification of certain specific differences is not meant to
indicate that other equally or more significant differences do not exist.

AUTHORIZED CAPITAL STOCK

The Barbers Articles authorize the issuance of up to 7,500,000 shares, $.10
par value per share. As of , 1999, shares of The Barbers common
stock were issued and outstanding.

The Regis Articles authorize the issuance of up to 50,000,000 shares, $.05
par value per share. As of , 1999, shares of Regis common stock were
issued and outstanding.

BOARD OF DIRECTORS

The MBCA provides that the board of directors of a Minnesota corporation
shall consist of one or more directors as fixed by the Articles of Incorporation
or Bylaws. The MBCA also permits the board of directors to be divided into
classes without regard to the size of the board of directors. Under The Barbers
Articles, the number of directors of the Corporation shall be fixed by the
shareholders at each regular meeting; provided, that between regular meetings
the authorized number of directors may be increased by

65
<PAGE>
the shareholders or by the board or decreased by the shareholders. Currently,
The Barbers board currently consists of seven members.

Regis Bylaws provide that number of directors shall be fixed from time to
time by resolution of the whole board of directors. Currently, the Regis board
consists of eight members. Neither The Barbers' nor Regis' Board of Directors
are classified.

The Barbers Bylaws provide that vacancies on the board shall be filled by
the remaining members of the Board, though less than a quorum, but that any
vacancy resulting from an increase in the authorized number of directorships
shall be filled by the affirmative vote of two-thirds of the directors serving
at the time of the increase.

The Regis Bylaws provide that vacancies on the board shall be filled by the
remaining members of the Board, though less than a quorum, and that any vacancy
resulting from an increase in the authorized number of directorships shall be
filled by the affirmative vote of a majority of the directors serving at the
time of the increase.

NOTICE OF SHAREHOLDER MEETINGS

The Regis Bylaws provide that except where a shareholder meeting is
announced at the time of adjournment of a meeting, notice of all meetings shall
be given to each shareholder of record entitled to vote at such meeting not less
than ten nor more than sixty days prior to the date of the meeting.

The Barbers Bylaws provides that notice of any meeting shall be mailed to
each shareholders entitled to vote at least ten days prior to the date of the
meeting. Notice of any meeting at which an agreement of merger or consolidation
is to be considered shall be mailed to all shareholders of record, whether or
not entitled to vote, at least two weeks prior to the date of the meeting.

AMENDMENTS TO ARTICLES OF INCORPORATION

The MBCA provides that an amendment to a corporation's articles must be by
resolution approved by the affirmative vote of a majority of the directors
present or proposed by a shareholder or shareholders holding 3% or more of the
voting shares entitled to vote thereon. Under the MBCA, any such amendment must
be approved by the affirmative vote of a majority of the shareholders entitled
to vote thereon, except that the articles may provide for a specified proportion
or number larger than a majority. The Regis Articles provides that the
affirmative vote of the holders of two-thirds of the outstanding shares of
capital stock entitled to vote is required in order to amend provisions
concerning certain mergers, disposition of assets, or the liquidation of the
corporation. The Barbers Articles contains no such provision.

MERGERS AND CONSOLIDATION

The MBCA provides that a resolution containing a plan of merger or exchange
must be approved by the affirmative vote of a majority of the directors present
at a meeting and submitted to the shareholders and approved by the affirmative
vote of the holders of a majority of the voting power of all shares entitled to
vote. The MBCA requires that any class of shares of a Minnesota corporation must
approve the plan if it contains a provision which, if contained in a proposed
amendment to the corporation's articles of incorporation, would entitle such
class to vote as a class. The Regis Articles require the affirmative vote of not
less than two-thirds of the outstanding shares entitled to vote for approval of
certain mergers,

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<PAGE>
disposition of assets, or the liquidation of the corporation. The Barbers
Articles contain no such provision. Therefore, under the MBCA, the shareholders
of The Barbers can approve mergers, disposition of assets, or the liquidation of
The Barbers by a majority vote. In addition, the Regis Board of Directors has
adopted a shareholder rights plan which limits the ability of Regis to be
acquired in a hostile takeover. This shareholder rights plan could have the
effect of preventing the occurrence of an acquisition or takeover of Regis that
the shareholders of Regis are in favor of. The Barbers Board of Directors has
not adopted any such plan. For a further description of the provisions of the
Regis Articles and the Regis Shareholder Rights Plan, see "Description of Regis
Capital Stock--Antitakeover Provisions."

WHERE YOU CAN FIND MORE INFORMATION

Regis has filed with the SEC a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933 that registers the
distribution of the shares of Regis Common Stock to be issued in the Merger. The
Registration Statement, including attached exhibits and schedules, contains
additional relevant information about Regis and The Barbers. The rules and
regulations of the SEC allow us to omit some information included in the
Registration Statement from this Proxy Statement/Prospectus.

In addition, Regis and The Barbers file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any document Regis or The Barbers files with the SEC at the following
locations of the SEC:

<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Washington, D.C. 20549 Suite 1300 500 West Madison Street
New York, New York 10048 Suite 1400
Chicago, Illinois 60661
</TABLE>

You can call the SEC at 1-800-SEC-0300 (1-800-732-0300) for further
information on the operation of public reference rooms. You can also obtain
copies of this information from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC also
maintains an internet site that contains reports, proxy and information
statements, and other information regarding issuers who file information
electronically with the SEC, including Regis and The Barbers. The address of
this internet site is http://www.sec.gov.

The SEC allows Regis to "incorporate by reference" the information Regis
files with them (File No. 011230) into this Proxy Statement/Prospectus. This
means that Regis can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be a
part of this Proxy Statement/Prospectus, except for information that is
superseded by information that is included directly in this Proxy
Statement/Prospectus. This Proxy Statement/Prospectus incorporates by reference
the documents listed below that Regis has previously filed with the SEC. They
contain important information about Regis, its businesses, financial position,
and results of operations. These documents are:

- Regis' Annual Report on Form 10-K for the year ended June 30, 1998.

- Regis' Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.

- Regis' Quarterly Report on Form 10-Q for the quarter ended December 31,
1998.

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<PAGE>
- The information contained in Regis' Proxy Statement dated September 17,
1998 for its Annual Meeting of Shareholders held on October 13, 1998.

- The description of Regis' common stock contained in its Registration
Statement on Form 8-A, dated May 7, 1991.

- Regis' Current Report on Form 8-K dated January 25, 1999.

- All other documents filed by Regis pursuant to Section 13(a), 13(c), 14,
or 15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the consummation of the Merger.

You can obtain any of the documents incorporated by reference in this Proxy
Statement/Prospectus through Regis or from the SEC in the manner discussed
above. The documents incorporated by reference are available from Regis without
charge, excluding exhibits to those documents unless the exhibit is specifically
incorporated by reference in this Proxy Statement/Prospectus, by requesting them
in writing or by telephone from Regis at the following address and phone number:

Mr. Bert M. Gross
Secretary
Regis Corporation
7201 Metro Boulevard
Minneapolis, Minnesota 55439
(612) 947-7777

If you would like to request documents, please do so by , 1999
to receive them before the special meeting. If you request any incorporated
documents from Regis, Regis will mail them to you by first class mail, or
another equally prompt means, within one business day after Regis receives your
request.

Neither Regis nor The Barbers has authorized anyone to give any information
or make any representation about the Merger or the companies that differs from,
or adds to, the information in this document or in the documents incorporated by
reference in this document. Therefore, if anyone does give you different or
additional information, you should not rely on it.

If you are in a jurisdiction where it is unlawful to offer to exchange or
sell, or ask for offers to exchange or buy, the securities offered by this
document or to ask for proxies, or if you are a person to whom it is unlawful to
direct these activities, then the offer presented by this document does not
extend to you.

The information contained in this document speaks only as of its date unless
the information specifically indicates that another date applies. The
information contained in this document with respect to Regis and its
subsidiaries has been provided by Regis. The information contained in this
document with respect to The Barbers and its subsidiaries has been provided by
The Barbers. Neither Regis and its subsidiaries nor The Barbers and its
subsidiaries warrants the accuracy of information relating to the other parties.

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<PAGE>
LEGAL MATTERS

The validity of the Regis Common Stock offered hereby and certain other
matters will be passed upon for Regis by Bert M. Gross, General Counsel for
Regis. Certain legal matters in connection with the Merger will be passed upon
for The Barbers by Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis,
Minnesota.

TAX OPINION

The opinion described under "The Merger--Certain Federal Income Tax
Consequences" will be rendered by Gray, Plant, Mooty, Mooty & Bennett, P.A.

EXPERTS

The consolidated balance sheets of Regis as of June 30, 1998 and 1997, and
the consolidated statements of operations, changes in shareholders' equity and
cash flows for each of the three years in the period ended June 30, 1998,
incorporated by reference in this Proxy Statement/Prospectus and Registration
Statement, have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing. With respect to the unaudited
interim financial information for the periods ended September 30, 1998 and 1997
and December 31, 1998 and 1997, incorporated by reference in this prospectus,
the independent accountants have reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report included in the Company's quarterly
report on Form 10-Q for the quarters ended September 30, 1998 and 1997 and
December 31, 1998 and 1997, and incorporated by reference herein, states that
they did not audit and they do not express an opinion on that interim 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. The accountants are not subject to the liability provisions
of Section 11 of the Securities Act of 1933 for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Act. See "Where You Can Find More
Information."

The consolidated financial statements of The Barbers at September 24, 1998,
September 25, 1997, and September 26, 1996 and for each of the years then ended
appearing in this Proxy Statement/Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report appearing elsewhere herein and is included in reliance upon such report
given upon the authority of said firm as experts in accounting and auditing. See
"Where You Can Find More Information."

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<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS

THE BARBERS, HAIRSTYLING FOR
MEN & WOMEN, INC.

YEARS ENDED SEPTEMBER 24, 1998,
SEPTEMBER 25, 1997 AND SEPTEMBER 26, 1996
<PAGE>
INDEX TO FINANCIAL STATEMENTS
THE BARBERS HAIRSTYLING FOR MEN & WOMEN, INC.

<TABLE>
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors....................................................... F-2
Consolidated Balance Sheets at September 24, 1998, September 25, 1997, and September
26, 1996........................................................................... F-3
Consolidated Statements of Income as of September 24, 1998, September 25, 1997, and
September 26, 1996................................................................. F-4
Consolidated Statement of Shareholders' Equity as of September 24, 1998, September
25, 1997, and September 26, 1996................................................... F-5
Consolidated Statement of Cash Flows as of September 24, 1998, September 25, 1997,
and September 26, 1996............................................................. F-6
Notes to Consolidated Financial Statements........................................... F-7

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet at December 24, 1998............................ F-20
Condensed Consolidated Statements of Income for the three months ended December 24,
1998 and December 25, 1997......................................................... F-21
Condensed Consolidated Statement of Cash Flows for the three months ended December
24, 1998 and December 25, 1997..................................................... F-24
Notes to Unaudited Condensed Consolidated Financial Statements....................... F-25
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
The Barbers, Hairstyling for Men & Women, Inc.

We have audited the accompanying consolidated balance sheets of The Barbers,
Hairstyling for Men & Women, Inc. at September 24, 1998, September 25, 1997 and
September 26, 1996, and the related consolidated statements of income,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The Barbers,
Hairstyling for Men & Women, Inc. at September 24, 1998, September 25, 1997 and
September 26, 1996, and the consolidated results of its operations and its cash
flows for each of the years then ended in conformity with generally accepted
accounting principles.

/s/ ERNST & YOUNG LLP

Minneapolis, Minnesota
November 2, 1998

F-2
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 24, SEPTEMBER 25, SEPTEMBER 26,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 2,931,376 $ 2,789,933 $ 1,317,448
Trade receivables, less allowance for doubtful accounts of
$400,000 in 1998, $450,000 in 1997 and $315,000 in 1996......... 2,693,108 2,574,179 2,163,968
Notes receivable.................................................. 398,585 596,635 235,206
Inventories held for resale....................................... 2,166,420 1,684,312 1,199,939
Prepaid expenses.................................................. 111,682 120,744 74,372
Deferred income taxes............................................. 419,000 360,000 287,000
------------- ------------- -------------
Total current assets................................................ 8,720,171 8,125,803 5,277,933
Notes receivable, less current portion and allowance for doubtful
notes of $200,000 in 1998, $125,000 in 1997 and $100,000 in
1996.............................................................. 975,394 621,877 733,924
Equipment and leasehold improvements, at cost:
Equipment......................................................... 2,807,858 2,044,204 1,918,682
Leasehold improvements............................................ 1,012,700 945,150 852,109
------------- ------------- -------------
3,820,558 2,989,354 2,770,791
Less accumulated depreciation..................................... 2,370,837 2,094,285 1,816,151
------------- ------------- -------------
Net equipment and leasehold improvements............................ 1,449,721 895,069 954,640
Investment in franchise contracts, less accumulated amortization of
$563,741 in 1998, $419,260 in 1997 and $221,805 in 1996........... 2,416,635 2,593,522 733,419
Deferred income taxes............................................... 417,000 386,000 338,000
Other assets........................................................ 353,191 286,271 210,287
------------- ------------- -------------
Total assets........................................................ $14,332,112 $12,908,542 $ 8,248,203
------------- ------------- -------------
------------- ------------- -------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and capital lease
obligations..................................................... $ 187,576 $ 339,150 $ 86,675
Accounts payable.................................................. 858,097 573,088 481,897
Deferred franchise fees........................................... 60,500 90,000 113,750
Committed advertising............................................. 1,087,310 933,502 521,208
Accrued compensation and related payroll taxes.................... 1,187,813 935,653 741,704
Other accrued expenses............................................ 264,853 296,548 287,011
Income taxes payable.............................................. 101,983 202,934 82,943
------------- ------------- -------------
Total current liabilities........................................... 3,748,132 3,370,875 2,315,188
Long-term debt and capital lease obligations........................ 1,036,866 2,111,689 56,250
Deferred franchise fees............................................. 298,250 201,000 226,000
Deferred compensation............................................... 363,857 287,786 204,278

Commitments and contingencies

Shareholders' equity:
Common stock, $.10 par value:
Authorized shares--7,500,000
Issued and outstanding shares--3,975,243 in 1998, 3,887,928 in
1997 and 3,852,411 in 1996.................................... 397,524 388,793 385,241
Additional paid-in capital........................................ 463,894 328,059 247,319
Retained earnings................................................. 8,023,589 6,220,340 4,813,927
------------- ------------- -------------
Total shareholders' equity.......................................... 8,885,007 6,937,192 5,446,487
------------- ------------- -------------
Total liabilities and shareholders' equity.......................... $14,332,112 $12,908,542 $ 8,248,203
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See accompanying notes.

F-3
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------
SEPTEMBER 24, SEPTEMBER 25, SEPTEMBER 26,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Franchise royalties............................................... $ 8,396,932 $ 7,213,735 $ 6,034,862
Franchise fees.................................................... 852,080 928,018 1,181,239
Company-owned salons.............................................. 6,072,688 4,610,653 2,939,756
Beauty products and equipment..................................... 10,192,685 8,885,278 8,018,860
Other............................................................. 624,100 484,116 391,034
------------- ------------- -------------
Total revenues...................................................... 26,138,485 22,121,800 18,565,751
Costs and expenses:
Franchise operations:
Salaries and benefits........................................... 2,199,236 1,976,045 1,781,787
General and administrative...................................... 1,126,383 1,082,791 943,401
------------- ------------- -------------
3,325,619 3,058,836 2,725,188
Company-owned salons:
Salaries and benefits........................................... 3,220,159 2,467,173 1,702,949
General and administrative...................................... 1,559,685 1,222,045 931,634
Cost of products sold........................................... 1,170,145 758,162 490,158
------------- ------------- -------------
5,949,989 4,447,380 3,124,741
Distribution and general administration:
Salaries and benefits........................................... 3,473,048 3,026,139 2,600,808
General and administrative...................................... 2,699,618 2,469,561 2,279,944
Cost of products and equipment sold............................. 7,801,958 6,727,361 6,162,530
------------- ------------- -------------
13,974,624 12,223,061 11,043,282
------------- ------------- -------------
Operating income.................................................... 2,888,253 2,392,523 1,672,540
Other income (expense):
Interest income................................................... 255,484 184,855 134,013
Interest expense.................................................. (207,354) (151,134) (39,368)
Net gain on disposal of assets.................................... 116,866 (1,831) 55,169
------------- ------------- -------------
Income before income taxes.......................................... 3,053,249 2,424,413 1,822,354
Income tax expense.................................................. 1,250,000 1,018,000 765,000
------------- ------------- -------------
Net income.......................................................... $ 1,803,249 $ 1,406,413 $ 1,057,354
------------- ------------- -------------
------------- ------------- -------------
Earnings per share:
Basic............................................................. $ .46 $ .36 $ .28
Diluted........................................................... .42 .33 .26
------------- ------------- -------------
------------- ------------- -------------
Average shares outstanding:
Basic............................................................. 3,925,891 3,857,775 3,817,394
Diluted........................................................... 4,341,084 4,210,409 4,113,201
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See accompanying notes.

F-4
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
NUMBER OF COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS TOTAL
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at September 28, 1995........................... 3,808,239 $ 380,824 $ 149,923 $ 3,756,573 $ 4,287,320
Net income for 1996................................... -- -- -- 1,057,354 1,057,354
Issuance of common stock to outside directors......... 3,600 360 11,640 -- 12,000
Issuance of common stock to employees................. 4,388 439 15,634 -- 16,073
Issuance of common stock under Designer Salon
Program............................................. 13,684 1,368 44,247 -- 45,615
Issuance of common stock under stock option plan...... 22,500 2,250 25,875 -- 28,125
---------- ---------- ---------- ------------ ------------
Balance at September 26, 1996........................... 3,852,411 385,241 247,319 4,813,927 5,446,487
Net income for 1997................................... -- -- -- 1,406,413 1,406,413
Issuance of common stock to outside directors......... 4,725 473 18,427 -- 18,900
Issuance of common stock to employees................. 45 4 176 -- 180
Issuance of common stock under Designer Salon
Program............................................. 9,372 937 39,675 -- 40,612
Issuance of common stock under stock option plan...... 21,375 2,138 22,462 -- 24,600
---------- ---------- ---------- ------------ ------------
Balance at September 25, 1997........................... 3,887,928 388,793 328,059 6,220,340 6,937,192
Net income for 1998................................... -- -- -- 1,803,249 1,803,249
Issuance of common stock to outside directors......... 3,825 383 20,017 -- 20,400
Issuance of common stock to employees................. 45 5 235 -- 240
Issuance of common stock under Designer Salon
Program............................................. 11,741 1,174 55,535 -- 56,709
Issuance of common stock under stock option plan...... 71,704 7,169 60,048 -- 67,217
---------- ---------- ---------- ------------ ------------
Balance at September 24, 1998........................... 3,975,243 $ 397,524 $ 463,894 $ 8,023,589 $ 8,885,007
---------- ---------- ---------- ------------ ------------
---------- ---------- ---------- ------------ ------------
</TABLE>

See accompanying notes.

F-5
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 24, SEPTEMBER 25, SEPTEMBER 26,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.......................................................... $ 1,803,249 $ 1,406,413 $ 1,057,354
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation and amortization................................... 535,708 531,027 384,158
Provision for losses on accounts and notes receivable........... 245,419 217,009 232,578
(Gain) loss on disposal of assets............................... (116,866) 1,831 (35,883)
Deferred income taxes........................................... (90,000) (121,000) (115,000)
Stock compensation.............................................. 20,640 19,080 28,073
Stock awarded to franchisees under the Designer Salon Program... 56,709 40,612 45,615
Changes in operating assets and liabilities:
Accounts and notes receivable................................. (519,815) (604,698) (1,168,529)
Inventories held for resale................................... (482,108) (484,373) (146,955)
Prepaid expenses.............................................. 9,062 (46,372) (37,535)
Other assets.................................................. (66,920) (75,984) (17,833)
Payables and accrued expenses................................. 735,353 790,479 (293,607)
Deferred franchise fees....................................... 67,750 (48,750) (142,227)
Income taxes payable.......................................... (100,951) 119,991 40,107
------------- ------------- -------------
Net cash provided by (used in) operating activities................. 2,097,230 1,745,265 (169,684)

INVESTING ACTIVITIES
Proceeds from disposal of assets.................................... 244,050 111,994 53,975
Capital expenditures................................................ (1,040,657) (387,826) (576,813)
Investment in franchise contracts................................... -- (2,329,462) (42,501)
------------- ------------- -------------
Net cash used in investing activities............................... (796,607) (2,605,294) (565,339)

FINANCING ACTIVITIES
Principal payments on long-term debt................................ (1,226,397) (180,411) (75,000)
Principal payments on capital lease obligations..................... -- (11,675) (21,964)
Proceeds from issuance of stock options............................. 67,217 24,600 28,125
Proceeds from issuance of long-term debt............................ -- 2,500,000 --
------------- ------------- -------------
Net cash (used in) provided by financing activities................. (1,159,180) 2,332,514 (68,839)
------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents................ 141,443 1,472,485 (803,862)
Cash and cash equivalents at beginning of year...................... 2,789,933 1,317,448 2,121,310
------------- ------------- -------------
Cash and cash equivalents at end of year............................ $ 2,931,376 $ 2,789,933 $ 1,317,448
------------- ------------- -------------
------------- ------------- -------------
Cash paid during the year for:
Interest.......................................................... $ 207,354 $ 151,134 $ 39,368
Income taxes...................................................... 1,440,951 1,019,009 839,893
</TABLE>

See accompanying notes.

F-6
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 24, 1998

1. SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE COMPANY

The Barbers, Hairstyling for Men & Women, Inc. (the Company) operates and
sells franchises to operate Cost Cutters Family Hair Care salons, City Looks
salons, Hair Performers salons, Family Haircut Store salons and We Care Hair
salons. The Company operates primarily in the United States with a limited
number of franchisees in France, Mexico and Russia.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of The Barbers,
Hairstyling for Men & Women, Inc. and its wholly-owned subsidiaries, WCH, Inc.,
CLS International, Inc., Hair Performers International, Inc. and The Barbers
Export, Inc.

Certain prior year balances have been reclassified to conform to the 1998
presentations.

The Company uses a 52-53 week reporting period. Under this method, certain
years will include 53 weeks of operations as opposed to 52 weeks. The years
ended September 24, 1998, September 25, 1997 and September 26, 1996 each include
52 weeks of operations.

BUSINESS SEGMENT INFORMATION

The Company is engaged in principally one business segment: developing,
licensing, franchising, and servicing several systems of retail hair salons.

As of September 24, 1998, the Company owned and operated 30 salons and
franchised 939 salons.

CASH AND CASH EQUIVALENTS

All investments with a maturity of three months or less at the time of
purchase are considered cash equivalents. Cash equivalents are carried at cost
which approximates market value.

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of accounts and notes
receivable.

Accounts receivable are generally unsecured but are personally guaranteed by
the respective franchisees. Concentrations of credit risk with respect to these
receivables are limited due to the large numbers of franchisees and their
dispersion across many geographic areas. Notes receivable are generally secured
by equipment or the existing franchise agreements. (See Notes 2 and 8.)

F-7
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES

Inventories, principally goods held for resale, are carried at the lower of
cost (first-in, first-out) or market.

INVESTMENT IN FRANCHISE CONTRACTS

On January 24, 1997, the Company acquired the franchise contracts of 139 We
Care Hair Salons in exchange for $2,000,000 in cash plus a contingent earn-out
equal to 40% of all initial franchise fees and royalties collected pursuant to
certain specified franchise contracts during the six year period ending January
24, 2003. The total purchase price, including acquisition expenses, was
allocated to Investment in Franchise Contracts at the acquisition date and is
amortized on a straight-line basis over 15 years.

On June 1, 1993, the Company acquired the franchise contract rights of 22
Family Haircut Store salons for $599,214. The investment is amortized on a
straight-line basis over 15 years, the estimated average remaining life at the
time of acquisition.

During fiscal 1992, the Company acquired the franchise contract rights of
certain Hair Performers salons in exchange for conditional future payments based
upon royalties collected by the Company through 1997. All payments to the seller
ceased as of April 1, 1997. An investment in franchise contracts of $350,751 was
recorded based upon the amount of actual payments made to the seller. The
investment balance is amortized on a straight-line basis over 15 years.

The investment balance in franchise contract rights is individually
allocated to specific contracts. On a monthly basis, individual valuations are
reviewed and at any time the value of a contract is deemed permanently impaired,
a write-down is recorded to the extent the contract value exceeds the future
revenues expected to be realized related to the contract.

DEPRECIATION

Equipment and leasehold improvements are stated at cost. Depreciation of
equipment is provided on the straight-line method over estimated useful lives of
three to seven years. Leasehold improvements are being depreciated over the
related lease terms or estimated useful life, whichever is shorter.

REVENUE RECOGNITION OF FRANCHISE, DEVELOPMENT AND ROYALTY FEES

All fees from franchised operations are included in revenue as earned. The
Company enters into area development agreements with franchisees which require
fees based upon the number of salons to be opened within the specified
development area. Development and initial franchise fees are earned when the
related salon opens, with the development fees being recognized ratably as the
salons within the development area open. Development and initial franchise fees
paid prior to salon openings are recorded

F-8
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
as deferred franchise fees. Royalty fees are based on the franchised salons'
revenues and are recorded by the Company in the period the related franchised
salons' revenues are earned.

INCOME TAXES

The Company accounts for income taxes under the Statement of Financial
Accounting Standards No. 109. Accordingly, deferred tax assets and liabilities
are recorded based on the "temporary differences" between the assets and
liabilities recorded for financial reporting purposes and such amounts as
measured by tax laws and regulations.

COMMITTED ADVERTISING

Committed advertising represents unexpended amounts received from
franchisees to finance national and regional advertising programs.

STOCK-BASED COMPENSATION

The Company applies APB 25, "Accounting for Stock Issued to Employees" in
accounting for stock options and presents in Note 5 pro forma net earnings as if
the accounting prescribed by SFAS 123, "Accounting for Stock-Based Compensation"
had been applied.

EARNINGS PER SHARE

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement No. 128 replaced the previously reported primary
and fully diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options and warrants.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all periods have
been presented, and where necessary, restated to conform to the Statement 128
requirements. All share and per share amounts have been adjusted to reflect the
3-for-2 stock splits that were approved by the Board of Directors on September
19, 1996 and March 12, 1998.

F-9
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following table sets forth the computation of basic and diluted earnings
per share:

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from the estimates.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company will record impairment losses of long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount.

F-10
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

2. NOTES RECEIVABLE

Notes receivable consist of the following:

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
10% franchise development notes, secured by franchise development
licenses, due upon salon opening...................................... $ 12,500 $ 7,500 $ 17,000
8% to 15% notes, due in varying monthly installments, secured by salon
equipment, leasehold improvements and inventory....................... 1,258,112 1,028,836 556,621
Non-interest bearing notes, due in varying monthly installments, secured
by salon equipment, leasehold improvements and inventory.............. 41,970 71,220 --
8.5% to 14% notes, unsecured............................................ 250,755 230,550 480,823
Unsecured, non-interest bearing note.................................... 10,642 -- 12,500
Accrued interest........................................................ -- 5,406 2,186
------------ ------------ ------------
1,573,979 1,343,512 1,069,130
Less allowance for doubtful notes....................................... 200,000 125,000 100,000
------------ ------------ ------------
1,373,979 1,218,512 969,130
Less current portion.................................................... 398,585 596,635 235,206
------------ ------------ ------------
$ 975,394 $ 621,877 $ 733,924
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

3. LINE OF CREDIT

The Company has a credit agreement which provides for a maximum line of
credit of $1.5 million. The line bears interest at the prime lending rate (8.5%
at September 24, 1998), expires June 30, 1999, is secured by accounts
receivable, inventories, general intangibles, and property and equipment and
requires the Company to maintain certain financial ratios. There are no
compensating balance requirements for this credit facility. As of September 24,
1998, there were no outstanding borrowings under this line of credit. An
outstanding $50,000 standby letter of credit reduces the availability under the
line at that date.

F-11
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

4. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ---------
<S> <C> <C> <C>
Note payable, due in monthly installments of $23,997, including interest at
8.82%, with remaining balance due in January 2004, secured by all assets
of the Company........................................................... $ 1,224,442 $ 1,394,589 $ --
Note payable, due in monthly installments of $13,888, plus interest at
prime.................................................................... -- 1,000,000 --
Note payable, due in monthly installments of $6,250, plus interest at .75%
above prime.............................................................. -- 56,250 131,250
Obligations under capitalized leases....................................... -- -- 11,675
------------ ------------ ---------
1,224,442 2,450,839 142,925
Less current maturities.................................................... 187,576 339,150 86,675
------------ ------------ ---------
$ 1,036,866 $ 2,111,689 $ 56,250
------------ ------------ ---------
------------ ------------ ---------
</TABLE>

Approximate maturities of long-term debt are as follows:

<TABLE>
<S> <C>
1999............................................................ $ 187,576
2000............................................................ 204,806
2001............................................................ 223,618
2002............................................................ 244,158
2003............................................................ 266,585
Thereafter...................................................... 97,699
---------
$1,224,442
---------
---------
</TABLE>

The carrying amount of the Company's debt instruments in the balance sheet
at September 24, 1998 approximates fair value.

5. SHAREHOLDERS' EQUITY

The Company's 1991 Stock Option Plan has reserved 675,000 shares of common
stock for key employees and 225,000 shares of common stock for non-employee
directors. The Plan requires the option price to be the average of the bid and
ask prices of the common stock on the date of grant. The employee options vest
and become exercisable at the rate of 25% on each anniversary from the date of
grant. Non-employee directors' options vest and become exercisable on the six
month anniversary of the date of grant. The options expire ten years from date
of grant.

F-12
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

5. SHAREHOLDERS' EQUITY (CONTINUED)
No compensation expense has been recorded for the stock option plans under
APB 25. Had compensation expense for the stock option plans been determined
based on the fair value at the date of grant for awards in fiscal 1998, 1997 and
1996, consistent with the provisions of SFAS No. 123, the Company's net earnings
and earnings per share for the fiscal years shown below would have been reported
as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Net earnings--as reported............................................................ $ 1,803 $ 1,406 $ 1,057
Net earnings--pro forma.............................................................. 1,732 1,370 1,037
Earnings per share--as reported:
Basic.............................................................................. $ .46 $ .36 $ .28
Diluted............................................................................ .42 .33 .26
Earnings per share--pro forma:
Basic.............................................................................. .44 .36 .27
Diluted............................................................................ .40 .33 .25
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Expected dividend yield...................................................... 0% 0% 0%
Expected stock price volatility.............................................. 33% 31% 29%
Risk-free interest rate...................................................... 4.5% 6.0% 6.0%
Expected life of options..................................................... 5.0 YEARS 5.0 years 5.0 years
</TABLE>

The pro forma effect on net income and earnings per share is not
representative of the pro forma net earnings in future years because it does not
take into consideration pro forma compensation expense related to grants made
prior to 1996.

F-13
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

5. SHAREHOLDERS' EQUITY (CONTINUED)

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not provide a reliable single measure of the
fair value of its employee stock options.

The weighted average fair value for options granted during fiscal 1998, 1997
and 1996 is $3.05, $1.81 and $1.30 per share, respectively.

As of September 24, 1998 there were 80,050 options outstanding with exercise
prices between $1.05 and $1.31, 130,000 options outstanding with exercise prices
between $1.33 and $2.17, 112,500 options outstanding with exercise prices
between $3.50 and $5.17 and 45,000 options with exercise prices between $6.00
and $9.00. At September 24, 1998 outstanding options had a weighted-average
remaining contractual life of six years.

The number of options exercisable at September 24, 1998, September 25, 1997
and September 26, 1996 were 277,550, 289,125 and 254,250, respectively, at
weighted average exercise prices of $2.56, $1.85 and $1.51 per share,
respectively.

5. STOCK OPTIONS AND WARRANTS (CONTINUED)

Stock option activity is summarized as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
OPTIONS ----------------------------
AVAILABLE WEIGHTED AVERAGE
FOR GRANT NUMBER PRICE PER SHARE
---------------- --------- -----------------
<S> <C> <C> <C>
Balance September 28, 1995.................... 567,000 333,000 $ 1.45
Granted..................................... (45,000) 45,000 3.50
Exercised................................... -- (22,500) 1.25
------- --------- -----
Balance September 26, 1996.................... 522,000 355,500 1.72
Granted..................................... (67,500) 67,500 4.71
Exercised................................... -- (21,375) 1.15
Canceled.................................... 5,625 (5,625) 1.33
------- --------- -----
Balance September 25, 1997.................... 460,125 396,000 2.27
Granted..................................... (45,000) 45,000 7.50
Exercised................................... -- (73,450) 1.17
------- --------- -----
Balance September 24, 1998.................... 415,125 367,550 $ 3.15
------- --------- -----
------- --------- -----
</TABLE>

F-14
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

5. STOCK OPTIONS AND WARRANTS (CONTINUED)
In July 1991, the Company granted warrants to the President to purchase
112,500 shares of the Company's common stock at an exercise price of $1.05 per
share. On October 13, 1994, the Company granted warrants to the Chairman and
President to purchase 112,500 shares, respectively, of the Company's common
stock at an exercise price of $1.78 per share. The warrants would expire one
year after termination of employment with the Company. 292,500 warrants were
exercisable at September 24, 1998. The Company has reserved 337,500 shares for
issuance under these warrants.

The Company issued 3,825, 4,725, and 3,600 shares of stock to outside
directors as part of their compensation plan in 1998, 1997, and 1996,
respectively.

All share numbers and per share prices have been adjusted to reflect the
3-for-2 stock splits authorized by the Board of Directors September 19, 1996 and
March 12, 1998.

6. INCOME TAXES

Income tax expense is summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ -----------
<S> <C> <C> <C>
Current.............................................. $ 1,340,000 $ 1,139,000 $ 880,000
Deferred............................................. (90,000) (121,000) (115,000)
------------ ------------ -----------
$ 1,250,000 $ 1,018,000 $ 765,000
------------ ------------ -----------
------------ ------------ -----------
</TABLE>

The Company's provision for income taxes differs from the federal rate of
34% for the following reasons:

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ----------
<S> <C> <C> <C>
Federal income tax at statutory rate.................. $ 1,038,000 $ 824,000 $ 620,000
State income tax, net................................. 167,000 145,000 107,000
Expenses not deductible for tax purposes.............. 45,000 49,000 38,000
------------ ------------ ----------
$ 1,250,000 $ 1,018,000 $ 765,000
------------ ------------ ----------
------------ ------------ ----------
</TABLE>

F-15
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

6. INCOME TAXES (CONTINUED)
Components of deferred tax assets and liabilities are:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Deferred tax assets:
Deferred franchise deposits............................ $ 122,000 $ 99,000 $ 116,000
Bad debt reserves...................................... 204,000 195,000 141,000
Depreciation........................................... 135,000 109,000 86,000
Inventory capitalization adjustment.................... 53,000 44,000 35,000
Payroll related........................................ 249,000 202,000 163,000
Other reserves......................................... 73,000 97,000 89,000
Deferred tax liabilities:
Installment sales gains................................ -- -- (5,000)
---------- ---------- ----------
Net deferred tax assets.................................. $ 836,000 $ 746,000 $ 625,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

7. DEFERRED COMPENSATION

The Company has entered into employment agreements with the Chairman of the
Board and President which include deferred compensation equal to 10% of their
base salaries. Additionally, certain key executives may voluntarily elect to
defer up to $25,000 of their annual compensation.

8. TRANSACTIONS WITH RELATED PARTIES

The Company leases space for its headquarters from its Chairman, the
majority shareholder. Rental payments, including real estate taxes and
insurance, were $412,000, $437,000 and $426,000 in 1998, 1997 and 1996,
respectively.

The majority shareholder is a minority investor in a company which operates
20 franchised salons. The Company recognized revenue from these franchises as
follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Product sales............................................ $ 212,000 $ 187,000 $ 210,000
Equipment sales.......................................... 5,000 45,000 25,000
Royalty fees............................................. 151,000 126,000 168,000
Franchise fees........................................... -- 25,000 3,000
---------- ---------- ----------
$ 368,000 $ 383,000 $ 406,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

Trade receivables for 1998, 1997 and 1996 include approximately $88,000,
$106,000 and $48,000, respectively, from these franchises.

F-16
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

9. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company conducts its operations in leased facilities. The initial lease
periods are generally five to ten years. Some of the lease agreements contain
renewal options for additional periods up to five years. The Company also has
entered into operating leases for equipment over various periods. Minimum annual
commitments under these operating leases are approximately as follows:

<TABLE>
<CAPTION>
COMPANY- COMPANY
OWNED HEADQUARTERS COMPANY
SALONS (SEE NOTE 8) WAREHOUSE EQUIPMENT
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Years ending:
1999.................................. $ 827,252 $ 300,000 $ 57,360 $ 379,208
2000.................................. 771,632 319,250 62,618 251,615
2001.................................. 571,002 321,000 63,096 160,311
2002.................................. 462,943 321,000 63,096 3,877
2003.................................. 156,316 26,750 5,258 --
Thereafter............................ 142,465 -- -- --
------------ ------------ ----------- -----------
$ 2,931,610 $1,288,000 $ 251,428 $ 795,011
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</TABLE>

Certain of the salon leases provide for payment of additional rentals based
on a percentage of sales over a fixed amount and for the payment of taxes,
insurance and other charges.

Total rent expense is as follows:

<TABLE>
<CAPTION>
MINIMUM LESS
RENTALS AND SUBLEASE TOTAL
OTHER CHARGES RENTALS EXPENSE
------------- ----------- ------------
<S> <C> <C> <C>
1998............................................... $ 1,287,783 $ (114,000) $ 1,173,783
1997............................................... 1,074,059 (109,271) 964,788
1996............................................... 881,525 (111,901) 769,624
</TABLE>

The Company also is the primary obligor on leases for the salons operated by
certain franchisees. The Company subleases the space to the franchisees, and
generally the franchisees personally guarantee the subleases. On 60% of these
subleases, the Company receives an upcharge from the franchisee over and

F-17
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
above the amount of rent paid to the landlord. The Company's remaining
commitments, should the franchisees fail to make the scheduled rental payments,
are approximately as follows:

<TABLE>
<S> <C>
Years ending:
1999......................................................... $4,621,568
2000......................................................... 3,793,581
2001......................................................... 2,589,752
2002......................................................... 1,496,631
2003......................................................... 348,038
Thereafter................................................... 234,036
----------
$13,083,606
----------
----------
</TABLE>

Included above is approximately $429,320 of leases held by the majority
shareholder and guaranteed by the Company. These leases were originally
guaranteed by the Company for Company-owned salons which were sold in 1986 to a
company in which the majority shareholder is an investor (see Note 8).
Generally, as renewals of leases occur, the guarantees are withdrawn.

RENTAL INCOME

The Company is subleasing office space to another party through December
2000. As a result, the Company earned rental income of approximately $114,000,
$109,000 and $101,000 during 1998, 1997 and 1996, respectively.

10. 401(k) PROFIT SHARING PLAN

During fiscal 1991, the Company established The Barbers, Hairstyling for Men
& Women, Inc. 401(k) Plan (the Plan), a profit sharing plan. All employees who
meet certain eligibility requirements may join the Plan. Plan participants elect
to have a percentage of their salary contributed to the Plan. The Company makes
a matching contribution to the Plan of 100% of the first one percent and 25% of
the next four percent of salary contributed by employees. In addition, the
Company may elect to make a discretionary contribution to the Plan. The
Company's contributions vest based on the employee's length of service with the
Company and are 100% vested after three years of service if hired before March
1, 1996 and 100% vested after five years of service if hired on or after March
1, 1996. In 1998, 1997 and 1996, the Company made matching contributions of
$75,645, $66,205 and $51,057, respectively, and no discretionary contributions.

F-18
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 24, 1998

11. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
----------- ----------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FISCAL YEAR 1996
Revenue........................................................ $ 4,488 $ 4,363 $ 4,913 $ 4,802 $ 18,566
Operating income............................................... 295 382 478 517 1,672
Net income..................................................... 204 234 286 333 1,057

Diluted earnings per share..................................... $ .05 $ .06 $ .07 $ .08 $ .26

FISCAL YEAR 1997
Revenue........................................................ $ 4,843 $ 5,584 $ 5,598 $ 6,097 $ 22,122
Operating income............................................... 353 567 609 864 2,393
Net income..................................................... 219 331 340 516 1,406

Diluted earnings per share..................................... $ .05 $ .08 $ .08 $ .12 $ .33

FISCAL YEAR 1998
Revenue........................................................ $ 6,437 $ 6,443 $ 6,503 $ 6,755 $ 26,138
Operating income............................................... 517 771 662 938 2,888
Net income..................................................... 299 460 435 609 1,803

Diluted earnings per share..................................... $ .07 $ .11 $ .10 $ .14 $ .42
</TABLE>

F-19
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
UNAUDITED FIRST QUARTER FINANCIAL STATEMENTS

F-20
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

FIRST QUARTER F1999

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
DECEMBER DECEMBER
24, 25,
1998 1997
----------- -----------
<S> <C> <C>
REVENUES
Franchise Royalties............................................... $2,150,143 $1,889,429
Franchise Fees.................................................... 226,636 330,500
Company-Owned Salons.............................................. 1,793,239 1,332,704
Beauty Products & Equipment....................................... 2,722,920 2,661,215
Other............................................................. 230,791 222,980
----------- -----------
Total Revenues.................................................... 7,123,729 6,436,828
COSTS & EXPENSES
FRANCHISE OPERATIONS
Salaries & Benefits............................................. 542,135 553,305
General & Administrative........................................ 356,458 402,375
----------- -----------
Total............................................................. 898,593 955,680
----------- -----------
COMPANY-OWNED SALONS
Salaries & Benefits............................................. 942,677 689,241
General & Administrative........................................ 452,387 327,364
Cost of Products & Services..................................... 362,135 242,063
----------- -----------
Total............................................................. 1,757,199 1,258,668
----------- -----------
DISTRIBUTION & GENERAL ADMINISTRATION
Salaries & Benefits............................................. 901,372 797,716
General & Administrative........................................ 905,256 816,475
Cost of Products & Equipment.................................... 2,053,204 2,090,946
----------- -----------
Total............................................................. 3,859,832 3,705,137
----------- -----------
OPERATING INCOME.................................................... 608,105 517,343
OTHER INCOME (EXPENSE)
Interest Income................................................... 63,361 52,786
Interest Expense.................................................. (26,966) (54,119)
Net Gain on Disposal of Assets.................................... 150 --
----------- -----------
INCOME BEFORE INCOME TAXES.......................................... 644,650 516,010
INCOME TAX EXPENSE.................................................. 264,000 217,000
----------- -----------
NET INCOME.......................................................... $ 380,650 $ 299,010
----------- -----------
----------- -----------
AVERAGE SHARES OUTSTANDING.......................................... 3,978,750 3,891,146
----------- -----------
BASIC EARNINGS PER SHARE............................................ $ 0.10 $ 0.08
----------- -----------
----------- -----------
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING.... 4,427,753 4,297,793
----------- -----------
----------- -----------
DILUTED EARNINGS PER SHARE.......................................... $ 0.09 $ 0.07
----------- -----------
----------- -----------
</TABLE>

See notes to condensed consolidated financial statements.

F-21
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
DECEMBER 24, SEPTEMBER 24,
1998 1998
------------- -------------
(UNAUDITED) (NOTE 1)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................................. $ 2,867,984 $ 2,931,376
Trade receivable, less allowance for doubtful accounts of $410,000 in December
1998 and $400,000 in September 1998............................................ 3,114,599 2,693,108
Notes receivable................................................................. 498,081 398,585
Inventories held for resale...................................................... 2,108,232 2,166,420
Prepaid expenses................................................................. 123,267 111,682
Deferred income taxes............................................................ 419,000 419,000
------------- -------------
Total current assets............................................................... 9,131,163 8,720,171
Notes receivable, less current portion and allowance for doubtful notes of $200,000
in December 1998 and $200,000 in September 1998.................................. 829,334 975,394
Property, equipment and leasehold impovements, at cost:
Equipment........................................................................ 2,975,260 2,807,858
Leasehold improvements........................................................... 1,012,700 1,012,700
------------- -------------
3,987,960 3,820,558
Less accumulated depreciation.................................................... 2,463,697 2,370,837
------------- -------------
Net property, equipment and leasehold improvements................................. 1,524,263 1,449,721
Investment in franchise contracts, less accumulated amortization of $628,766 in
December 1998 and $563,741 in September 1998..................................... 2,351,610 2,416,635
Deferred income taxes.............................................................. 417,000 417,000
------------- -------------
Other assets....................................................................... 376,976 353,191
------------- -------------
Total assets....................................................................... $ 14,630,346 $ 14,332,112
------------- -------------
------------- -------------
</TABLE>

F-22
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 24, SEPTEMBER 24,
1998 1998
------------- -------------
(UNAUDITED) (NOTE 1)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt............................................. $ 191,743 $ 187,576
Accounts payable................................................................. 479,292 858,097
Deferred franchise fees.......................................................... 83,376 60,500
Committed advertising............................................................ 1,255,011 1,087,310
Accrued compensation and related payroll taxes................................... 958,472 1,187,813
Other accrued expenses........................................................... 402,538 264,853
Income taxes payable............................................................. 285,663 101,983
------------- -------------
Total current liabilities.......................................................... 3,656,095 3,748,132
Long term debt and capital lease obligations....................................... 987,675 1,036,866
Deferred franchise fees............................................................ 298,250 298,250
Deferred compensation.............................................................. 383,624 363,857
Shareholders' equity:
Common stock..................................................................... 398,319 397,524
Additional paid in capital....................................................... 502,144 463,894
Retained earnings................................................................ 8,404,239 8,023,589
------------- -------------
Total shareholder's equity......................................................... 9,304,702 8,885,007
------------- -------------
Total liabilities and shareholders' equity......................................... $ 14,630,346 $ 14,332,112
------------- -------------
------------- -------------
</TABLE>

Note 1: The balance sheet at September 24, 1998 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Certain fiscal 1998 items have been
reclassified to conform with the fiscal 1999 presentation.

See notes to condensed consolidated financial statements.

F-23
<PAGE>
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
DECEMBER 24, DECEMBER 25,
1998 1997
------------ ------------
<S> <C> <C>
Operating activities
Net income........................................................................... $ 380,650 $ 299,010
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization........................................................ 157,884 116,345
Provision for losses on accounts and notes receivable................................ 42,973 66,835
Gain on sales of property and equipment.............................................. (150) --
Stock compensation................................................................... 35,895 20,400
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts and notes receivable........................................................ (417,900) (401,230)
Inventories held for resale.......................................................... 58,188 (117,557)
Prepaid expenses..................................................................... (11,585) 6,390
Other assets......................................................................... (23,785) (15,820)
(Decrease) increase in:
Payables and accrued expenses........................................................ (282,993) (86,416)
Deferred franchise fees.............................................................. 22,876 47,500
Income taxes payable................................................................. 183,680 37,736
------------ ------------
Net cash provided by (used in) operating activities.................................. 145,733 (26,807)
Investing activities
Proceeds from sale of property and equipment......................................... 150 --
Capital expenditures................................................................. (167,401) (79,967)
Investment in franchise contracts.................................................... -- --
------------ ------------
Net cash used in investing activities................................................ (167,251) (79,967)
Financing activities
Principle payments on long-term debt................................................. (45,024) (59,516)
Proceeds from issuance of stock options.............................................. 3,150 9,480
------------ ------------
Net cash used in financing activities................................................ (41,874) (50,036)
------------ ------------
Net decrease in cash and cash equivalents............................................ (63,392) (156,810)
Cash and cash equivalents at beginning of period..................................... 2,931,376 2,789,933
------------ ------------
Cash and cash equivalents at end of period........................................... $2,867,984 $2,633,123
------------ ------------
------------ ------------
Cash paid during period for:
Interest............................................................................. $ 26,966 $ 54,119
Taxes................................................................................ $ 80,320 $ 179,264
</TABLE>

See notes to condensed consolidated financial statements.

F-24
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting solely of normal recurring accruals) considered necessary for a fair
presentation of results have been included. Operating results for the three
months ended December 24, 1998, are not necessarily indicative of the results
that may be expected for the year ended September 30, 1999. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report for the fiscal year ended
September 24, 1998.

NOTE B--EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings
per share as defined by the Statement of Financial Accounting Standards No. 128,
EARNINGS PER SHARE:

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------
DECEMBER 24, DECEMBER 25,
1998 1997
------------ ------------
<S> <C> <C>
Numerator:
Net Income......................................................................... $ 380,650 $ 299,010
------------ ------------
Denominator:
Denominator for basic earnings per share--weighted average shares.................. 3,978,750 3,891,146
Effect of dilutive stock options and warrants...................................... 449,003 406,647
------------ ------------
Denominator for diluted earnings per share--adjusted weighted average shares....... 4,427,753 4,297,793
------------ ------------
Basic earnings per share........................................................... $ 0.10 $ 0.08
------------ ------------
------------ ------------
Diluted earnings per share......................................................... $ 0.09 $ 0.07
------------ ------------
------------ ------------
</TABLE>

F-25
<PAGE>

Appendix A

AGREEMENT AND PLAN OF MERGER

BETWEEN

REGIS CORPORATION, REGIS MERGER SUB, INC.

AND

THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
<PAGE>

TABLE OF CONTENTS

PAGE

1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

2. BASIC TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.3 Actions at the Closing . . . . . . . . . . . . . . . . . . . . . .5
2.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . .6
2.5 Conversion and Dissenting Shareholders . . . . . . . . . . . . . .6
2.6 Stock Options and Related Matters. . . . . . . . . . . . . . . . .7
2.7 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . .7
2.8 SUB Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
2.9 Procedure for Payment. . . . . . . . . . . . . . . . . . . . . . .8
2.10 Closing of Transfer Records. . . . . . . . . . . . . . . . . . . .9
2.11 Taking of Necessary Action; Future Action. . . . . . . . . . . . 10

3. REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . . . . . . . . . 10
3.1 Organization, Qualification and Corporate Power. . . . . . . . . 10
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Authorization of Transaction . . . . . . . . . . . . . . . . . . 11
3.4 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Filings with the SEC . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Events Subsequent to Most Recent Fiscal Year End . . . . . . . . 12
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . 15
3.12 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 18
3.13 Material Contract and Agreements . . . . . . . . . . . . . . . . 19
3.14 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 19
3.15 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.16 COMPANY Board of Directors Action. . . . . . . . . . . . . . . . 20
3.17 Registration Statement and Proxy Statement . . . . . . . . . . . 20
3.18 Pooling of Interests Accounting. . . . . . . . . . . . . . . . . 20
3.19 Non-Survival of Certain Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 21

4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . 21
4.1 Organization, Qualification and Corporate Power. . . . . . . . . 21
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Authorization of Transaction . . . . . . . . . . . . . . . . . . 21
4.4 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . 22

i
<PAGE>

4.5 Filings with the SEC . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Events Subsequent to Most Recent Fiscal Year End . . . . . . . . 22
4.8 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9 Continuity of Business Enterprise. . . . . . . . . . . . . . . . 23
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.13 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . 25
4.14 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 27
4.15 Material Contract and Agreements . . . . . . . . . . . . . . . . 28
4.16 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 29
4.17 BUYER Board of Directors Action. . . . . . . . . . . . . . . . . 29
4.18 COMPANY Proxy Statement. . . . . . . . . . . . . . . . . . . . . 29
4.19 Non-Survival of Certain Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 29

5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Interim Operations . . . . . . . . . . . . . . . . . . . . . . . 30
5.2 Access and Information . . . . . . . . . . . . . . . . . . . . . 32
5.3 Certain Filings, Consents and Arrangements . . . . . . . . . . . 32
5.4 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . 32
5.5 Indemnification and Insurance. . . . . . . . . . . . . . . . . . 32
5.6 Special COMPANY Meeting. . . . . . . . . . . . . . . . . . . . . 33
5.7 COMPANY Proxy Statement; Registration Statement. . . . . . . . . 33
5.8 Compliance with the Securities Act; Pooling;
Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.9 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . 34
5.10 Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . 35
5.11 Best Efforts to List Shares. . . . . . . . . . . . . . . . . . . 36
5.12 Updated Schedules. . . . . . . . . . . . . . . . . . . . . . . . 36

6. CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . 37
6.1 Conditions to Obligation of BUYER and SUB. . . . . . . . . . . . 37
6.2 Conditions to Obligation of COMPANY. . . . . . . . . . . . . . . 38

7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.1 Termination Prior to the Effective Time. . . . . . . . . . . . . 39
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 40

8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.1 Press Releases and Public Announcements. . . . . . . . . . . . . 40
8.2 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 40
8.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 40
8.4 Succession and Assignment. . . . . . . . . . . . . . . . . . . . 41
8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ii
<PAGE>

8.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.9 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 42
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.12 Specific Performance . . . . . . . . . . . . . . . . . . . . . . 43
8.13 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.14 Incorporation of Schedules . . . . . . . . . . . . . . . . . . . 43

iii
<PAGE>

AGREEMENT AND PLAN OF MERGER

Agreement entered into as of January 25, 1999 by and between Regis
Corporation, a Minnesota corporation ("BUYER"), Regis Merger Sub, Inc., a
Minnesota corporation ("SUB") and The Barbers, Hairstyling for Men & Women,
Inc., a Minnesota corporation ("COMPANY"). BUYER, SUB and COMPANY are referred
to individually herein as a "PARTY" and collectively herein as the "PARTIES."

This Agreement contemplates a merger of SUB, a newly formed, wholly owned
first tier subsidiary of BUYER with and into COMPANY in a reorganization
pursuant to Code Section 368(a)(1)(A) and 368(a)(2)(E) whereby the COMPANY
stockholders will receive voting common stock of BUYER in exchange for all of
their capital stock in COMPANY, all pursuant to the plan of reorganization set
forth herein.

Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:

1. DEFINITIONS.

"ACQUISITION PROPOSAL" means any BONA FIDE proposal by a Person which
proposes a (A) merger, consolidation or similar transaction involving COMPANY,
(B) sale, lease or other disposition directly or indirectly, by merger,
consolidation, share exchange or otherwise, of substantially all of the assets
of COMPANY and its Subsidiaries taken together, (C) issuance, sale or other
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing a majority of the
voting power of COMPANY or (D) a transaction in which any Person, including,
without limitation, COMPANY and any Subsidiary, or any affiliate thereof (other
than BUYER) shall acquire beneficial ownership (as such term is defined in Rule
13d-3 under the Exchange Act), or the right to acquire beneficial ownership of
50% or more of the outstanding Common Stock of COMPANY, or if any Person shall
have commenced a tender or exchange offer for 50% or more (or which, assuming
the maximum amount of securities which could be purchased, would result in any
Person beneficially owning 50% or more) of the then outstanding Common Stock.

"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

"BENEFIT PLANS" has the meaning set forth in Section 3.11 below.

"BREAK-UP FEE" has the meaning set forth in Section 5.10(b).
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"BUYER" has the meaning set forth in the preface above.

"BUYER SHARE" means any share of the Common Stock, $.05 par value per
share, of BUYER.

"BUYER'S KNOWLEDGE" means the actual knowledge of any of either Myron
Kunin, Paul D. Finkelstein, Randy L. Pearce, Christopher A. Fox, Mary Andert,
Bruce D. Johnson, Gordon Nelson, Mark Kartarik and/or Bert M. Gross.

"CERTIFICATE" and "CERTIFICATES" have the meanings set forth in Section
2.9(a) below.

"CERTIFICATE OF INCORPORATION" has the meaning set forth in Section 2.4(b)
below.

"CERTIFICATE OF MERGER" has the meaning set forth in Section 2.3 below.

"CLAIM" and "CLAIMS" have the meanings set forth in Section 5.5(a) below.

"CLOSING" has the meaning set forth in Section 2.2 below.

"CLOSING AGREEMENT" has the meaning set forth in Section 3.9(s)(iv) below.

"CLOSING DATE" has the meaning set forth in Section 2.2 below.

"CODE" means the Internal Revenue Code of 1986, as amended.

"COMPANY" has the meaning set forth in the preface above.

"COMPANY PROXY STATEMENT" has the meaning set forth in Section 3.17(ii)
below.

"COMPANY SHARE" means any share of the Common Stock, $.10 par value per
share, of COMPANY.

"COMPANY STOCKHOLDER" means any Person who or which holds any COMPANY
Shares.

"COMPANY'S KNOWLEDGE" means the actual knowledge of any of either Florence
F. Francis, Frederick A. Huggins, Jr., Connie L. Boltinghouse, John A. Fox,
James W. George, J. Brent Hanson, Donna R. Hazelton, Patricia D. Kessler,
Kathryn L. Waycaster, and/or John W. Francis.

"CONVERSION RATIO" has the meaning set forth in Section 2.5 below.

"DISCLOSURE SCHEDULE" has the meaning set forth in Article 3 below.

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"EFFECTIVE TIME" has the meaning set forth in Section 2.4(a) below.

"ENVIRONMENTAL LAWS" has the meaning set forth in Section 3.12(a) below.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"EXCHANGE AGENT" has the meaning set forth in Section 2.9(b) below.

"EXPENSES" has the meaning set forth in Section 8.1 below.

"FAIRNESS OPINION" has the meaning set forth in Section 6.2(i) below.

"GAAP" means United States generally accepted accounting principles as in
effect from time to time.

"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 3.12(b) below.

"INDEMNITEE" has the meaning set forth in Section 5.5(a) below.

"IRS" means the Internal Revenue Service.

"LOSS" and "LOSSES" have the meanings set forth in Section 5.5(a) below.

"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 3.1 below.

"MATERIAL SUBSIDIARIES" means WCH, Inc., CLS International, Inc., and The
Barbers Export, Inc.

"MERGER" has the meaning set forth in Section 2.1 below.

"MERGER CONSIDERATION" has the meaning set forth in Section 2.5 below.

"MINNESOTA BUSINESS CORPORATION ACT" means the Minnesota Business
Corporation Act, Minnesota Statutes Chapter 302A, as amended.

"MOST RECENT FISCAL QUARTER END" has the meaning set forth in Section 4.6
below.

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"MULTIEMPLOYER PENSION PLANS" has the meaning set forth in Section 3.11(c)
below.

"OPTION PLANS" has the meaning set forth in Section 2.6 below.

"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).

"PARTIES" has the meaning set forth in the preface above.

"PARTY" has the meaning set forth in the preface above.

"PENSION PLANS" has the meaning set forth in Section 3.11 below.

"PERSON" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).

"PROSPECTUS" means the final prospectus relating to the registration of the
BUYER Shares under the Securities Act.

"PUBLIC REPORTS" has the meaning set forth in Sections 3.5 and 4.5 below.

"REGISTRATION STATEMENT" has the meaning set forth in Section 3.18(i)
below.

"REQUISITE COMPANY STOCKHOLDER APPROVAL" means the affirmative vote of a
majority of the COMPANY shares in favor of this Agreement and the Merger.

"SEC" means the Securities and Exchange Commission.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, OTHER THAN (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.

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"SPECIAL COMPANY MEETING" has the meaning set forth in Section 5.6 below.

"STOCK OPTION" has the meaning set forth in Section 2.6 below.

"SUB" has the meaning set forth in the preface above.

"SUB SHARE" means any share of Common Stock, $1.00 par value per share, of
SUB.

"SUBSIDIARY" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.

"SURVIVING CORPORATION" has the meaning set forth in Section 2.1 below.

"TAXES" has the meaning set forth in Section 3.9(s)(i) below.

"TAX RETURN" has the meaning set forth in Section 3.9(s)(ii) below.

"TAX RULING" has the meaning set forth in Section 3.9(s)(iii) below.

"WILLFUL BREACH" has the meaning set forth in Section 7.1(c) below.

2. BASIC TRANSACTION.

2.1 THE MERGER. At the Effective Time, on and subject to the terms and
conditions of this Agreement, SUB will merge with and into COMPANY (the
"MERGER"). The separate existence of SUB shall cease, and COMPANY shall be the
corporation surviving the Merger (the "SURVIVING CORPORATION") and shall be
governed by the laws of the State of Minnesota.

2.2 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of the BUYER, 7201
Metro Boulevard, Minneapolis, Minnesota, commencing at 9:00 a.m. local time on
the second business day following the satisfaction or waiver of the conditions
set forth in Section 6 (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "CLOSING DATE").

2.3 ACTIONS AT THE CLOSING. At the Closing, (i) COMPANY will deliver to
BUYER and SUB the various certificates, instruments, and documents referred to
in Section 6.1 below, (ii) BUYER and SUB will deliver to COMPANY the various
certificates, instruments, and documents referred to in Section 6.2 below, (iii)

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SUB and COMPANY will file with the Secretary of State of the State of Minnesota
a Certificate of Merger in such form as required by, and executed and certified
in accordance with, the relevant provisions of the Minnesota Business
Corporation Act (the "CERTIFICATE OF MERGER"), and (iv) BUYER will deliver to
the Exchange Agent in the manner provided below in this Article 2 the
certificate evidencing the BUYER Shares issued in the Merger.

2.4 EFFECT OF MERGER.

(a) GENERAL. The Merger shall become effective at the time (the
"EFFECTIVE TIME") SUB and COMPANY file the Certificate of Merger with the
Secretary of State of the State of Minnesota. The Merger shall have the effect
set forth in the Minnesota Business Corporation Act. The Surviving Corporation
may, at any time after the Effective Time, take any action (including executing
and delivering any document) in the name and on behalf of either SUB or COMPANY
in order to carry out and effectuate the transactions contemplated by this
Agreement.

(b) CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of SUB
in effect at and as of the Effective Time will be the Certificate of
Incorporation of the Surviving Corporation upon and following the Merger.

(c) BYLAWS. The Bylaws of SUB in effect at and as of the Effective Time
will be the Bylaws of the Surviving Corporation upon and following the Merger.

(d) DIRECTORS AND OFFICERS. The directors and officers of SUB in office
at and as of the Effective Time will be the directors and officers of the
Surviving Corporation upon and following the Merger.

2.5 CONVERSION AND DISSENTING SHAREHOLDERS.

(a) CONVERSION. At and as of the Effective Time, except as otherwise
provided in Section 2.5(b) below and subject to Section 2.9, each COMPANY Share
shall be canceled and retired and shall be converted into the right to receive
one-third (1/3) of one BUYER Share (the ratio of one-third (1/3) of one BUYER
Share to one COMPANY Share is referred to herein as the "CONVERSION RATIO" and
the BUYER Shares so received are referred to as the "MERGER CONSIDERATION"),
PROVIDED, HOWEVER, that the Conversion Ratio shall be subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split,
or other change in the number of COMPANY Shares outstanding. No COMPANY Share
shall be deemed to be outstanding or to have any rights other than those set
forth above in this Section 2.5 after the Effective Time. From the date of this
Agreement to the Closing Date, COMPANY's Board of Directors shall not adopt any
new "poison pill," stockholder rights plan or other similar plan applicable to
the transactions contemplated by this Agreement.

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(b) DISSENTING SHAREHOLDERS. Notwithstanding anything in this Agreement
to the contrary, any COMPANY Shares held by a person (a "Dissenting
Shareholder") who duly demands appraisal of his or its COMPANY Shares pursuant
to the Minnesota Business Corporation Act and complies with all the provisions
of the Minnesota Business Corporation Act concerning the right of holders of
COMPANY Shares to demand appraisal of their shares in connection with the Merger
shall not be converted as described in Section 2.5(a), but shall become the
right to receive such cash consideration as may be determined to be due to such
Dissenting Shareholder as provided in the Minnesota Business Corporation Act.
If, however, such Dissenting Shareholder withdraws his demand for appraisal or
fails to perfect or otherwise loses his or its right of appraisal, in any case
pursuant to the Minnesota Business Corporation Act, such shares shall be deemed
to be converted as of the Effective Time into the right to receive BUYER Shares,
without interest, pursuant to Section 2.5(a). The COMPANY shall give BUYER (i)
prompt notice of any demands for appraisal of shares received by the COMPANY and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demand. The COMPANY shall not, without the
prior written consent of BUYER, make any payment with respect to, or settle,
offer to settle or otherwise negotiate any such demands.

2.6 STOCK OPTIONS OR WARRANTS AND RELATED MATTERS. Prior to the
expiration of twenty business days after the date hereof, COMPANY shall deliver
to BUYER a list setting forth each stock option and warrant issued by the
COMPANY outstanding on the date hereof, whether or not fully exercisable
(collectively, "STOCK OPTIONS" and individually, a "STOCK OPTION"), to purchase
COMPANY Shares pursuant to all Stock Option Plans of COMPANY, in each case as
amended and in effect as of the date of this Agreement (collectively, the
"OPTION PLANS"). Prior to the Effective Time, the COMPANY shall use its best
efforts to (i) cancel the rights of holders of Stock Options to purchase COMPANY
Shares, and (ii) amend all Stock Options so that, effective at the Effective
Time, COMPANY Shares shall no longer be deliverable upon exercise thereof and in
lieu of COMPANY Shares, such Stock Options shall be exercisable for a number of
BUYER Shares equal to the number of COMPANY Shares subject to such Stock Options
outstanding multiplied by the Conversion Ratio. The per share exercise price
for each such Stock Option shall be the current exercise price per COMPANY Share
divided by the Conversion Ratio. Effective as of the Effective Time, BUYER
shall assume all obligations of COMPANY with respect to such Stock Options, as
so modified. Promptly following the Effective Time, BUYER shall issue option
agreements representing such Stock Options, as so modified.

2.7 NO FRACTIONAL SHARES. No fraction of a BUYER Share will be issued,
but in lieu thereof each holder of COMPANY Shares who would otherwise be
entitled to a fraction of a BUYER Share will, upon surrender thereof to the
Exchange Agent, be paid an amount in cash equal to the value of such fraction of
a share based on the closing sale price for BUYER Shares on the Nasdaq National
Market

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on the last day prior to the Closing Date on which BUYER Shares were traded. No
interest shall be paid on such amount.

2.8 SUB SHARES. Each SUB Share issued and outstanding at and as of the
Effective Time shall be canceled and retired and shall be converted into the
right to receive one share of the Surviving Corporation.

2.9 PROCEDURE FOR PAYMENT.

(a) MERGER CONSIDERATION. Except as set forth herein, from and after the
Effective Time, each holder of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of COMPANY stock
("CERTIFICATE" or "CERTIFICATES") shall be entitled to receive in exchange
therefor, upon surrender thereof to the Exchange Agent, the Merger Consideration
for each share of COMPANY stock so represented by the Certificate or
Certificates surrendered by such holder thereof.

(b) EXCHANGE AGENT. Immediately after the Effective Time, (A) BUYER will
furnish to Norwest Bank Minnesota, N.A. (the "EXCHANGE AGENT") a stock
certificate (issued in the name of the Exchange Agent or its nominee)
representing that number of BUYER Shares equal to the product of (I) the
Conversion Ratio TIMES (II) the number of outstanding COMPANY Shares plus the
number of such shares subject to options and (B) BUYER will cause the Exchange
Agent to mail a letter of transmittal (with instructions for its use) to each
record holder of outstanding COMPANY Shares for the holder to use in
surrendering the Certificates which represented his or its COMPANY Shares in
exchange for a Certificate representing the number of BUYER Shares to which he
or it is entitled. Such letter of transmittal shall specify that delivery shall
be effected, and risk of loss and title to the Certificate or Certificates shall
pass, only upon proper delivery of the Certificate or Certificates to the
Exchange Agent, shall advise such holder of the effectiveness of the Merger and
the procedures to be used in effecting the surrender of the Certificate or
Certificates for exchange therefor. Upon surrender to the Exchange Agent of a
Certificate or Certificates, together with such letter of transmittal duly
executed and completed in accordance with the instructions thereon, and such
other documents as may be reasonably requested, the Exchange Agent shall,
pursuant to the Merger, promptly deliver to the person entitled to the Merger
Consideration for each share of COMPANY stock so represented by the Certificate
or Certificates surrendered by such holder thereof, and such Certificate or
Certificates shall forthwith be canceled.

(c) TRANSFER. If delivery of all or part of the Merger Consideration is
to be made to a person other than the person in whose name a surrendered
Certificate is registered, it shall be a condition of such delivery or exchange
that the Certificate so surrendered shall be properly endorsed or shall be
otherwise in

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proper form for transfer and that the person requesting such delivery or
exchange shall have paid any transfer and other taxes required by reason of such
delivery or exchange in a name other than that of the registered holder of the
Certificate surrendered or shall have established to the reasonable satisfaction
of BUYER that such tax either has been paid or is not payable.

(d) RIGHT TO MERGER CONSIDERATION. Until surrendered and exchanged in
accordance with this Section 2.9, each such Certificate shall, after the
Effective Time, represent solely the right to receive the Merger Consideration,
multiplied by the number of shares of COMPANY Shares evidenced by such
Certificate, and shall have no other rights. No interest shall accrue or be
payable on any Merger Consideration. Neither BUYER nor COMPANY shall be liable
to any holder of shares of COMPANY Shares for any Merger Consideration (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.

(e) DIVIDENDS ON BUYER SHARES. From and after the Effective Time, no
holder of a Certificate or Certificates shall be entitled to receive any
dividend or other distribution from BUYER until surrender of such holder of
Certificate or Certificates for a Certificate or Certificates representing BUYER
Shares. Upon such surrender, there shall be paid to the holder the amount of
any dividends or other distributions (without interest) that theretofore became
payable by BUYER, but were not paid by reason of the foregoing with respect to
the number of whole shares of BUYER Shares represented by the Certificate or
Certificates issued upon such surrender. From and after the Effective Time,
BUYER shall, however, be entitled to treat such Certificate or Certificates that
have not yet been surrendered or exchanged as evidencing the ownership of the
aggregate Merger Consideration into which such BUYER Shares represented by such
Certificate or Certificates shall have been converted, notwithstanding any
failure to surrender such Certificate or Certificates.

(f) TERMINATION OF EXCHANGE AGENT. BUYER may cause the Exchange Agent to
return any BUYER Shares remaining unclaimed 180 days after the Effective Time,
and thereafter each remaining record holder of outstanding COMPANY Shares shall
be entitled to look to BUYER (subject to abandoned property, escheat, and other
similar laws) as a general creditor thereof with respect to the BUYER Shares and
dividends and distributions thereon to which he or it is entitled upon surrender
of his or its certificates.

(g) FEES OF EXCHANGE AGENT. BUYER shall pay all charges and expenses of
the Exchange Agent.

2.10 CLOSING OF TRANSFER RECORDS. As of and after the Effective Time,
transfers of COMPANY Shares outstanding prior to the Effective Time shall not be
made on the stock transfer books of the Surviving Corporation.

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2.11 TAKING OF NECESSARY ACTION; FUTURE ACTION. Each of the parties will
take all such reasonable and lawful action as may be necessary or appropriate in
order to effectuate the Merger as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of both Parties, the officers and directors of the
Surviving Corporation are fully authorized in the name of their corporation or
otherwise to take, and will take, all such lawful and necessary action.

3. REPRESENTATIONS AND WARRANTIES OF COMPANY.

Except as set forth in the Public Reports (as defined below) of the COMPANY
or the disclosure schedule accompanying this Agreement (the "DISCLOSURE
SCHEDULE"), which shall be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Article 3, COMPANY represents and
warrants to BUYER that:

3.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of COMPANY and
its Material Subsidiaries is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation. Each
of COMPANY and its Subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required except for such failures to be so qualified and in good standing that
would not, individually or in the aggregate, have a Material Adverse Effect on
COMPANY. As used in this Agreement, the term "MATERIAL ADVERSE EFFECT" means
with respect to any person, any change or effect that is materially adverse to
the financial condition, business or results of operations of such person and
its subsidiaries, taken as a whole. Each of COMPANY and its Subsidiaries has
full corporate power and authority to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. COMPANY
beneficially owns all of the outstanding capital stock of each of its
Subsidiaries, except as described in the Disclosure Schedule.

3.2 CAPITALIZATION. The entire authorized capital stock of COMPANY
consists of 7,500,000 COMPANY Shares, of which as of December 31, 1998,
3,983,269 COMPANY Shares are issued and outstanding and no COMPANY Shares are
held in treasury. All of the issued and outstanding COMPANY Shares have been
duly authorized and are validly issued, fully paid, and nonassessable. Except as
set forth in the Disclosure Schedule, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require COMPANY to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
Except as set forth in the Disclosure Schedule, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to COMPANY.

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3.3 AUTHORIZATION OF TRANSACTION. COMPANY has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder subject to receiving the Requisite COMPANY Stockholder Approval. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the board of
directors of the COMPANY and no other corporate proceedings on the part of the
COMPANY or its shareholders are necessary to authorize this Agreement and to
consummate the transactions so contemplated other than the Requisite COMPANY
Stockholder Approval and the filing of the Certificate of Merger. Assuming that
this Agreement constitutes a valid and binding obligation of BUYER, this
Agreement has been duly executed and delivered and constitutes the valid and
legally binding obligation of COMPANY, enforceable in accordance with its terms
and conditions except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally; and
(ii) the remedy of specific performance and injunctive and other forms of
equitable remedies may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.

3.4 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) materially violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of COMPANY and its Subsidiaries is
subject or any provision of the charter or bylaws of any of COMPANY and its
Subsidiaries or (ii) materially conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material agreement, contract, lease, license, instrument or other arrangement to
which any of COMPANY and its Subsidiaries is a party or by which it is bound or
to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets). Other than in connection with the
provisions of the Hart-Scott-Rodino Act, the Minnesota Business Corporation Act,
the Securities Exchange Act, the Securities Act, and the state securities laws,
none of COMPANY and its Subsidiaries needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.

3.5 FILINGS WITH THE SEC. COMPANY has made all filings with the SEC that
it has been required to make under the Securities Act and the Securities
Exchange Act (collectively, the "PUBLIC REPORTS"). Each of the Public Reports
has complied with the Securities Act and the Securities Exchange Act in all
material

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respects. None of the Public Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. BUYER and SUB
acknowledge that (i) the COMPANY's Public Reports contain projections, (ii)
BUYER and SUB have not relied on such projections in entering into this
Agreement, and (iii) that the COMPANY may not achieve such projections.

3.6 FINANCIAL STATEMENTS. COMPANY has filed an Annual Report on Form
10-KSB for the fiscal year ended September 24, 1998. The financial statements
included in or incorporated by reference into this Public Report (including the
related notes and schedules) have been prepared in accordance with GAAP applied
on a consistent basis throughout the period covered thereby, present fairly the
financial condition of COMPANY and its Subsidiaries as of the indicated dates
and the results of operations of COMPANY and its Subsidiaries for the indicated
periods, and are consistent with the books and records of COMPANY and its
Subsidiaries.

3.7 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except as set forth
in the Disclosure Schedule, since September 24, 1998, there has not been (a) any
material adverse change in the business, financial condition or operations of
COMPANY and its Subsidiaries taken as a whole (except for changes resulting from
a change in general economic conditions), (b) in the case of the COMPANY, any
declaration, setting aside or payment of any dividend or any other distribution
with respect to its capital stock, or (c) any change by the COMPANY in
accounting principles or methods.

3.8 LITIGATION. Except as set forth in the Disclosure Schedule, or as
disclosed in the COMPANY Public Reports, there are no claims, actions, suits,
investigations or proceedings pending or, to the knowledge of COMPANY,
threatened against or adversely affecting the COMPANY or any of its Subsidiaries
or any of their respective properties at law or in equity, before or by any
federal, state, municipal or other governmental agency or authority, or before
any arbitration board or panel which individually or in the aggregate are likely
to have a Material Adverse Effect on COMPANY; PROVIDED, HOWEVER, the Disclosure
Schedule lists all pending lawsuits against the COMPANY or any of its
Subsidiaries except for lawsuits as of the date hereof covered by insurance
maintained by the COMPANY.

3.9 TAX MATTERS. Except as set forth in the Disclosure Schedule:

(a) FILING OF TIMELY TAX RETURNS. COMPANY and each of its Subsidiaries
have filed (or there has been filed on its behalf) all material Tax Returns (as
hereinafter defined) required to be filed by each of them under applicable law.
All such Tax Returns were filed on a timely basis. To the extent requested by
BUYER, COMPANY has delivered to BUYER correct and complete copies of all

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Tax Returns, examination reports, statements of deficiencies assessed against or
agreed to by any of COMPANY and its Subsidiaries since January 2, 1996 and all
Tax Rulings and Closing Agreements.

(b) PAYMENT OF TAXES. COMPANY and each of its Subsidiaries have, within
the time and in the manner prescribed by law, paid all material Taxes (as
hereinafter defined) that are currently due and payable except for those
contested in good faith and for which adequate reserves have been taken.

(c) TAX RESERVES. COMPANY and its Subsidiaries have established on their
books and records reserves adequate to pay all Taxes and reserves for deferred
income taxes in accordance with GAAP.

(d) TAX LIENS. There are no Tax liens upon the assets of COMPANY or any
of its Subsidiaries except liens for Taxes not yet due or being contested in
good faith through appropriate proceedings.

(e) WITHHOLDING TAXES. COMPANY and each of its Subsidiaries have complied
in all material respects with the provisions of the Code relating to the
withholding of Taxes, as well as similar provisions under any other laws, and
have, within the time and in the manner prescribed by law, withheld from any
employee wages and any amounts owed to any independent contractor, creditor,
stockholder, or other third party and paid over to the proper governmental
authorities all amounts required.

(f) EXTENSIONS OF TIME FOR FILING TAX RETURNS. Neither COMPANY nor any of
its Subsidiaries has requested any extension of time within which to file any
material Tax Return, which Tax Return has not since been timely filed.

(g) WAIVERS OF STATUTE OF LIMITATIONS. Neither COMPANY nor any of its
Subsidiaries has executed any outstanding waivers of comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.

(h) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any material Taxes or Tax Returns of COMPANY or any of its
Subsidiaries.

(i) POWERS OF ATTORNEY. No power of attorney currently in force has been
granted by COMPANY or any of its Subsidiaries concerning any material Tax
matter.

(j) TAX RULINGS. Neither COMPANY nor any of its Subsidiaries has received
a Tax Ruling (as hereinafter defined) or entered into a Closing Agreement (as
hereinafter defined) with any taxing authority that would have a continuing
material adverse effect after the Closing Date.

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(k) TAX SHARING AGREEMENTS. Neither COMPANY nor any Subsidiary is a party
to any agreement relating to allocating or sharing of Taxes.

(l) CODE SECTIONS 280G AND 162(m). Neither COMPANY nor any of its
Subsidiaries is a party to any agreement, contract, or arrangement that could
result, on account of the transactions contemplated hereunder, separately or in
the aggregate, in the payment of any "EXCESS PARACHUTE PAYMENTS" within the
meaning of SECTION 280G of the Code or nondeductible compensation under Code
Section 162(m).

(m) LIABILITY FOR OTHERS. None of COMPANY or any of its Subsidiaries (A)
has any liability for Taxes of any person other than COMPANY and its
Subsidiaries (i) under Treasury Regulations SECTION 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferee or successor, (ii) by
contract, or (iii) otherwise.

(n) CONTINUITY OF BUSINESS ENTERPRISES. COMPANY operates at least one
significant historic business line, or owns at least a significant portion of
its historic business assets, in each case within the meaning of Treasury Reg.
Section 1.368-1(d).

(o) TAX-FREE REORGANIZATION. Neither the COMPANY nor any of its
Subsidiaries has through the date of this Agreement taken or agreed to take any
action that would prevent the Merger from qualifying as a reorganization under
the Code. COMPANY and its Subsidiaries will not, at the time of the
transaction, have any outstanding warrants, options, convertible securities, or
any other type of right pursuant to which any person could acquire stock in the
COMPANY that, if exercised or converted, would affect BUYER's acquisition or
retention of "control" of COMPANY within the meaning of Section 368(c) of the
Code.

(p) OTHER. None of the COMPANY and its Subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. None of the
COMPANY and its Subsidiaries has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii).

(q) As used in this Agreement:

(i) "TAXES" means any Federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental

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entity, and includes any interest and penalties (civil or criminal) on or
additions to any such taxes;

(ii) "TAX RETURN" means a report, return or other information
required to be supplied to a governmental entity with respect to Taxes
including, where permitted or required, combined or consolidated returns
for a group of entities;

(iii) "TAX RULING" means a written ruling of a taxing authority
relating to Taxes; and

(iv) "CLOSING AGREEMENT" means a written and legally binding
agreement with a taxing authority relating to Taxes.

3.10 LABOR MATTERS. Except as set forth in Schedule 3.10, there are no
collective bargaining or other labor union agreements to which the COMPANY or
any of its Subsidiaries is a party or by which any of them is bound. Except as
set forth in Schedule 3.10, neither the COMPANY nor any of its Subsidiaries has
encountered any labor union organizing activity, or had any actual or, to
COMPANY's Knowledge, threatened employee strikes, work stoppages, slowdowns or
lockouts.

3.11 ERISA COMPLIANCE.

(a) Schedule 3.11 contains a list of all "employee pension benefit plans"
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to herein as "PENSION PLANS"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
other bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, Christmas bonus,
hospitalization, medical or other plan, arrangement or understanding (whether or
not legally binding) maintained, or contributed to, by the COMPANY or any of its
Subsidiaries for the benefit of any officers, employees or directors of the
COMPANY or any of its Subsidiaries currently or within the last five years
(collectively, "BENEFIT PLANS"). The COMPANY agrees to deliver or make
available to BUYER within fourteen (14) days after the date of this Agreement
true, complete and correct copies of (1) each Benefit Plan (or, in the case of
any unwritten Benefit Plans, descriptions thereof), (2) the most recent annual
report on Form 5500 filed with the Internal Revenue Service with respect to each
Benefit Plan (if any such report was required), (3) the most recent summary plan
description for each Benefit Plan for which such summary plan description is
required, (4) each trust agreement and group annuity contract relating to any
Benefit Plan, and (5) the most recent actuarial report relating to any Benefit
Plan.

(b) Except as disclosed in Schedule 3.11, all Pension Plans have been the
subject of determination letters from the Internal Revenue Service to the effect
that such Pension Plans are

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qualified and exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been revoked
nor, to the knowledge of the COMPANY, has revocation been threatened, nor has
any such Pension Plan been amended since the date of its most recent
determination letter or application therefore in any respect that would
adversely affect its qualification or materially increase its costs.

(c) Except as disclosed on Schedule 3.11, no Pension Plan that the COMPANY
or any of its Subsidiaries maintains, or to which the COMPANY or any of its
Subsidiaries is or was previously obligated to contribute, other than any
Pension Plan that is a "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA; collectively, the "MULTIEMPLOYER PENSION PLANS"), had, as
of the respective last annual valuation date for each such Pension Plan, any
"unfunded benefit liabilities" (as such term is defined in Section 4001(a)(18)
of ERISA), based on actuarial assumptions which have been furnished to BUYER.
None of the COMPANY's Pension Plans has an "accumulated funding deficiency" (as
such term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived. To the best knowledge of the COMPANY, none of the
COMPANY, any of its Subsidiaries, any officer of the COMPANY or any of its
Subsidiaries or any of the Benefit Plans which are subject to ERISA, including
the Pension Plans, or any trusts created thereunder, or any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) or any other
breach of fiduciary responsibility that could subject the COMPANY, any of its
Subsidiaries or any officer of the COMPANY or any of its Subsidiaries to the tax
or penalty on prohibited transactions imposed by such Section 4975 or to any
liability under Sections 502(i) or 502(1) of ERISA. Except as disclosed on
Schedule 3.12, neither any of such Pension Plans nor any of such trusts have
been terminated, nor has there been any "reportable event" (as that term is
defined in Section 4043 of ERISA) with respect to which the 30-day notice
requirement has not been waived and the COMPANY is not aware of any other
reportable events with respect thereto during the last five years. Neither the
COMPANY nor any of its Subsidiaries has suffered or otherwise caused a "complete
withdrawal" or a "partial withdrawal" (as such terms are defined in Section 4203
and Section 4205, respectively, of ERISA) since the effective date of such
Sections 4203 and 4205 with respect to any of the Multiemployer Pension Plans.
Neither the COMPANY nor any of its Subsidiaries is secondarily liable for any
withdrawal liability as a result of the sale of assets within the meaning of
Section 4204 of ERISA. To the knowledge of the COMPANY, in the event a
"complete withdrawal" currently occurred with respect to any of the
Multiemployer Pension Plans, there would be no withdrawal liability assessed
against the COMPANY or any of its Subsidiaries.

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(d) With respect to any Benefit Plan that is an employee welfare benefit
plan, except as disclosed in Schedule 3.11, (i) no such Benefit Plan is unfunded
or funded through a welfare benefits fund, as such term is defined in Section
419(e) of the Code, (ii) each such Benefit Plan that is a group health plan, as
such term is defined in Section 5000(b)(1) of the Code, complies in all material
respects with the applicable requirements of Section 4980B(f) of the Code and
Section 1862(b)(1) of the Social Security Act and (iii) each such Benefit Plan
(including any such Plan covering retirees or other former employees) may be
amended or terminated without material liability to the COMPANY or any of its
Subsidiaries on or at any time after the Effective Time.

(e) Except as disclosed on Schedule 3.11, each Benefit Plan conforms in
all material respects and, to the knowledge of the COMPANY, in form and
operation to all applicable laws and regulations, and all reports or information
relating to such Benefit Plan required to be filed with any governmental entity
or disclosed to participants have been timely filed and disclosed. Except as
disclosed on Schedule 3.11, no Pension Plan holds any employer security or
employer real property within the meaning of Section 407 of ERISA.

(f) Except as disclosed on Schedule 3.11, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of the COMPANY or any Subsidiary thereof to severance pay,
unemployment compensation or any other payment or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due to any such
employee or former employee.

(g) Except as disclosed on Schedule 3.11, neither the COMPANY nor any of
its Subsidiaries has announced a plan to create or a legally binding commitment
to amend any Benefit Plan or to create any new arrangement which would be a
Benefit Plan.

(h) All insurance premiums with respect to any Benefit Plan (including
premiums to the Pension Benefit Guaranty Corporation) have been paid in full.
Except as disclosed on Schedule 3.11, there are no retrospective adjustments
provided for under any insurance contracts maintained pursuant to any Benefit
Plan with regard to policy years or other periods ending on or before the
Effective Time.

(i) Except as disclosed in Schedule 3.11, no Benefit Plan or the deduction
of any contributions thereto by the COMPANY or any of its Subsidiaries has been
the subject of audit by the Internal Revenue Service or the Department of Labor,
and no litigation or asserted claims exist against the COMPANY or any of its
Subsidiaries or any Benefit Plan or fiduciary with respect thereto (other than
such benefit claims as are made in the normal operation of a Benefit Plan). To
the knowledge of the COMPANY, there are no facts which would give rise to or
could give rise to any action, suit, grievance, arbitration or other claim.

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3.12 ENVIRONMENTAL MATTERS.

(a) Except as set forth on Schedule 3.12, to the COMPANY's Knowledge, the
COMPANY and each of its Subsidiaries are in material compliance with all
applicable federal, state, regional and local laws, statutes, ordinances,
judgments, rulings and regulations relating to any matters of pollution,
protection of the environment or environmental regulation or control
(collectively, "ENVIRONMENTAL LAWS"). Neither the COMPANY nor any of its
Subsidiaries has received any written notice (i) of any violation of an
Environmental Law or (ii) of the institution of any suit, action, claim, or
proceedings alleging such violation or investigation by any Governmental Entity
or any third party of any such violation.

(b) Except as disclosed on Schedule 3.12 and as to matters that are not
anticipated to have a Material Adverse Effect on the COMPANY, to the COMPANY's
Knowledge, neither the COMPANY nor any of its Subsidiaries has (i) released,
transported or disposed of any Hazardous Substances (as hereinafter defined) on,
under, or at any of the COMPANY's or any of its Subsidiaries' properties or any
other properties, (ii) reason to know of the release or disposal of any
Hazardous Substances on, under or at any of COMPANY's or any of its
Subsidiaries' properties, arising from the conduct of operations on the
COMPANY's or any of its Subsidiaries' properties, or (iii) received any written
notice which has not been paid, settled or otherwise resolved (w) of any
violation of any Environmental Law or any other law, statute, rule or regulation
regarding Hazardous Substances on or under any of the COMPANY's or any of its
Subsidiaries' properties or any other properties, (x) of the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party of any such violation, (y) of any actual
or potential liability for the response to or remediation of Hazardous Substance
at or arising from any of the COMPANY's or any of its Subsidiaries' properties
or any other properties, or (z) of any actual or potential liability for the
costs of response to or remediation of Hazardous Substances at or arising from
any of the COMPANY's or any of its Subsidiaries' properties or any other
properties. For purposes of this Agreement, the term "HAZARDOUS SUBSTANCE"
shall mean any toxic or hazardous materials or substances, including asbestos,
buried contaminants, chemicals, flammable explosives, radioactive materials,
petroleum and petroleum products and any substances defined as, or included in
the definition of, "hazardous substances", "hazardous wastes", "hazardous
materials" or "toxic substances" under any Environmental Law.

(c) To the COMPANY's Knowledge, no Environmental Law imposes any
obligation upon the COMPANY or its Subsidiaries arising out of or as a condition
to any transaction contemplated hereby, including, without limitation, any
requirement to modify or to transfer any permit or license, any requirement to
file any notice

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<PAGE>

or other submission with any Governmental Entity, the placement of any notice,
acknowledgement, or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order, or consent decree. To
the COMPANY's Knowledge, no lien has been placed upon any of the COMPANY's
properties or its Subsidiaries' properties under any Environmental Law.

3.13 MATERIAL CONTRACT AND AGREEMENTS.

(a) Except as listed on Schedule 3.13, there are no contracts or
agreements that are material to the business, financial condition, properties,
assets, liabilities or results of operations of the COMPANY and its Subsidiaries
taken as a whole.

(b) As of the date hereof and except as disclosed on Schedule 3.13, no
default in performance or failure to perform under, and no anticipatory breach
of, any of the contracts listed on Schedule 3.13 has occurred or is continuing,
and none of the parties to any such contract has alleged that the other has
defaulted in performance or failed to perform, other than (i) a default in
payment that shall not have continued more than 60 days from the date on which
the payment was originally due pursuant to the terms of the applicable
contracts, and (ii) a default or failure that is immaterial with respect to all
such contracts. To COMPANY's Knowledge, as of the date hereof and except as
disclosed on Schedule 3.13, there are no legal, administrative or other
proceedings threatened, pending or outstanding relating to the performance or
status of any of such contracts. As of the date hereof and except as disclosed
on Schedule 3.13, the COMPANY has not received notice of any anticipatory
breach, pending dispute or anticipated litigation arising from or relating to
any of such contracts, or notice that any of such contracts has been or will be
canceled, revoked or otherwise terminated.

(c) Except as listed on Schedule 3.13, neither the COMPANY nor any
Subsidiary is subject to any agreement which restricts competition with any
other person or provides that the COMPANY, any Subsidiary or affiliate may not
engage in any business or sell or distribute any product or service.

3.14 INTELLECTUAL PROPERTY. The COMPANY and its Subsidiaries own, or are
licensed or otherwise have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, copyrights and other proprietary intellectual property
rights and computer programs currently used in the business. Except as set
forth on Schedule 3.14, no claims are pending or, to the knowledge of the
COMPANY, threatened that the COMPANY is infringing or otherwise adversely
affecting the rights of any person with regard to any patent, license,
trademark, trade name, service mark, copyright or other intellectual property
right. To the knowledge of the COMPANY, no person is infringing the rights of
the COMPANY with respect to any patent, license, trademark, trade name, service
mark, copyright or other intellectual property

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right.

3.15 CERTAIN FEES. Except for fees payable to Piper Jaffray, Inc., none of
the COMPANY and its Subsidiaries has any liability or obligation to pay any fees
or commissions to any financial advisor, broker, finder, or agent with respect
to the transactions contemplated by this Agreement.

3.16 COMPANY BOARD OF DIRECTORS ACTION. The Board of Directors of COMPANY
(at a meeting duly called and held) has by the requisite vote of all directors
present, (a) determined that the Merger is advisable and in the best interest of
the COMPANY and its shareholders, and (b) resolved to recommend the approval of
this Agreement and the Merger by the holders of the COMPANY Shares and directed
that the Merger be submitted for consideration by the holders of the COMPANY
Shares at the Meeting.

3.17 REGISTRATION STATEMENT AND PROXY STATEMENT.

None of the information supplied or to be supplied by or on behalf of
COMPANY for inclusion or incorporation by reference in:

(i) the registration statement on Form S-4 to be filed with the SEC by
BUYER in connection with the issuance of BUYER Shares in the Merger (the
"REGISTRATION STATEMENT") will, at the time the Registration Statement is
filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading; and

(ii) the COMPANY proxy statement, in definitive form, relating to the
meeting of COMPANY shareholders to be held in connection with the Merger
(the "COMPANY PROXY STATEMENT") will, at the date mailed to shareholders
and at the time of the meeting of shareholders to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading;

3.18 POOLING OF INTERESTS ACCOUNTING. After review and discussion with
Ernst & Young LLP, independent certified public accountants for COMPANY, to
COMPANY's Knowledge there is no fact pertaining to it which would prevent the
Merger from being accounted for as a pooling of interests in accordance with
GAAP.

To COMPANY's Knowledge, neither the COMPANY nor any of its Subsidiaries has
through the date of this Agreement taken or agreed to take any action that would
prevent the COMPANY and the BUYER from accounting for the business combination
to be effected by the Merger as a "pooling of interests" in conformity with
GAAP.

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<PAGE>

3.19 NON-SURVIVAL OF CERTAIN REPRESENTATIONS AND WARRANTIES. No
representations or warranties contained in Section 3 of this Agreement shall
survive the Merger.

4. REPRESENTATIONS AND WARRANTIES OF BUYER. Except as set forth in the
disclosure schedule accompanying this Agreement and initialed by the Parties
(the "DISCLOSURE SCHEDULE"), which shall be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Article 4, BUYER
represents and warrants to COMPANY that:

4.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of BUYER and
its Material Subsidiaries is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation. Each
of BUYER and its Material Subsidiaries is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required except for such failures to be so qualified and in
good standing that would not, individually or in the aggregate, have a Material
Adverse Effect on BUYER. BUYER beneficially owns all of the outstanding capital
stock of each of its Subsidiaries, except as described in the Disclosure
Schedule.

4.2 CAPITALIZATION. The entire authorized capital stock of BUYER consists
of 50,000,000 BUYER Shares, of which as of December 31, 1998, 23,935,080 BUYER
Shares are issued and outstanding. The total number of shares subject to options
is 721,118. All of the BUYER Shares to be issued in the Merger have been duly
authorized and, upon consummation of the Merger, will be validly issued, fully
paid, and nonassessable. The entire authorized capital stock of SUB consists of
1,000 SUB Shares, all of which are issued and outstanding.

4.3 AUTHORIZATION OF TRANSACTION. BUYER and SUB have full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the board of directors of the BUYER and no other corporate proceedings on the
part of the BUYER or its shareholders are necessary to authorize this Agreement
and to consummate the transactions so contemplated other than the filing of the
Certificate of Merger. Assuming that this Agreement constitutes a valid and
binding obligation of COMPANY, this Agreement has been duly executed and
delivered and constitutes the valid and legally binding obligation of BUYER,
enforceable in accordance with its terms and conditions except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally; and (ii) the remedy of specific performance and
injunctive and other forms of equitable remedies may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

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4.4 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) materially violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which BUYER or any of its Subsidiaries is
subject or any provision of the charter or bylaws of BUYER or any of its
Subsidiaries or (ii) materially conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material agreement, contract, lease, license, instrument or other arrangement to
which BUYER or any of its Subsidiaries is a party or by which it is bound or to
which any of its assets is subject. Other than in connection with the provisions
of the Hart-Scott-Rodino Act, the Minnesota Business Corporation Act, the
Securities Exchange Act, the Securities Act, and the state securities laws,
BUYER does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.

4.5 FILINGS WITH THE SEC. BUYER has made all filings with the SEC that it
has been required to make under the Securities Act and the Securities Exchange
Act (collectively the "PUBLIC REPORTS"). Each of the Public Reports has
complied with the Securities Act and the Securities Exchange Act in all material
respects. None of the Public Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.

4.6 FINANCIAL STATEMENTS. BUYER has filed a Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1998 (the "MOST RECENT FISCAL QUARTER
END"), and an Annual Report on Form 10-K for the fiscal year ended June 30,
1998. The financial statements included in or incorporated by reference into
these Public Reports (including the related notes and schedules) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
period covered thereby, present fairly the financial condition of BUYER and its
Subsidiaries as of the indicated dates and the results of operations of BUYER
and its Subsidiaries for the indicated periods, and are consistent with the
books and records of BUYER and its Subsidiaries; PROVIDED, HOWEVER, that the
interim statements are subject to normal year-end adjustments.

4.7 EVENTS SUBSEQUENT TO MOST RECENT FISCAL QUARTER END. Except as set
forth in the Disclosure Schedule, since the Most Recent Fiscal Quarter End,
there has not been (a) any material adverse change in the business, financial
condition, operations or results of operations, of BUYER and its Subsidiaries
taken as a

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<PAGE>

whole, (b) in the case of the BUYER, any declaration, setting aside or payment
of any dividend or any other distribution with respect to its capital stock, or
(c) any material change by the BUYER in accounting principles or methods.

4.8 CERTAIN FEES. None of BUYER and its Subsidiaries has any liability or
obligation to pay any fees or commissions to any financial advisor, broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.

4.9 CONTINUITY OF BUSINESS ENTERPRISE. It is the present intention of
BUYER to continue at least one significant historic business line of COMPANY, or
to use at least a significant portion of COMPANY's historic business assets in a
business, in each case within the meaning of Treasury Reg. Section 1.368-1(d).

4.10 LITIGATION. Except as set forth in the Disclosure Schedule, or as
disclosed in the BUYER Public Reports, there are no claims, actions, suits,
investigations or proceedings pending or, to the knowledge of BUYER, threatened
against or adversely affecting the BUYER or any of its Subsidiaries or any of
their respective properties at law or in equity, before or by any federal,
state, municipal or other governmental agency or authority, or before any
arbitration board or panel which individually or in the aggregate are likely to
have a Material Adverse Effect on BUYER.

4.11 TAX MATTERS. Except as set forth in the Disclosure Schedule:

(a) FILING OF TIMELY TAX RETURNS. BUYER and each of its Subsidiaries have
filed (or there has been filed on its behalf) all material Tax Returns (as
hereinafter defined) required to be filed by each of them under applicable law.
All such Tax Returns were filed on a timely basis. To the extent requested in
writing by COMPANY, BUYER has delivered to COMPANY correct and complete copies
of all Tax Returns, examination reports, statements of deficiencies assessed
against or agreed to by any of COMPANY and its Subsidiaries since July 1, 1995
and all Tax Rulings and Closing Agreements.

(b) PAYMENT OF TAXES. BUYER and each of its Subsidiaries have, within the
time and in the manner prescribed by law, paid all material Taxes (as
hereinafter defined) that are currently due and payable except for those
contested in good faith and for which adequate reserves have been taken.

(c) TAX RESERVES. BUYER and its Subsidiaries have established on their
books and records reserves adequate to pay all Taxes and reserves for deferred
income taxes in accordance with GAAP.

(d) TAX LIENS. There are no Tax liens upon the assets of BUYER or any of
its Subsidiaries except liens for Taxes not yet

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due or being contested in good faith through appropriate proceedings.

(e) WITHHOLDING TAXES. BUYER and each of its Subsidiaries have complied
in all material respects with the provisions of the Code relating to the
withholding of Taxes, as well as similar provisions under any other laws, and
have, within the time and in the manner prescribed by law, withheld from any
employee wages and any amounts owed to any independent contractor, creditor,
stockholder, or other third party and paid over to the proper governmental
authorities all amounts required.

(f) EXTENSIONS OF TIME FOR FILING TAX RETURNS. Neither BUYER nor any of
its Subsidiaries has requested any extension of time within which to file any
material Tax Return, which Tax Return has not since been timely filed.

(g) WAIVERS OF STATUTE OF LIMITATIONS. Neither BUYER nor any of its
Subsidiaries has executed any outstanding waivers of comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.

(i) POWERS OF ATTORNEY. No power of attorney other than to
PricewaterhouseCoopers currently in force has been granted by BUYER or any of
its Subsidiaries concerning any material Tax matter.

(j) TAX RULINGS. Neither BUYER nor any of its Subsidiaries has received a
Tax Ruling (as hereinafter defined) or entered into a Closing Agreement (as
hereinafter defined) with any taxing authority that would have a continuing
material adverse effect after the Closing Date.

(k) TAX SHARING AGREEMENTS. Neither BUYER nor any Subsidiary is a party
to any agreement relating to allocating or sharing of Taxes.

(l) CODE SECTIONS 280G AND 162(m). Neither BUYER nor any of its
Subsidiaries is a party to any agreement, contract, or arrangement that could
result, on account of the transactions contemplated hereunder, separately or in
the aggregate, in the payment of any "EXCESS PARACHUTE PAYMENTS" within the
meaning of SECTION 280G of the Code or nondeductible compensation under Code
Section 162(m).

(m) LIABILITY FOR OTHERS. None of BUYER or any of its Subsidiaries (A)
has any material liability for Taxes of any person other than BUYER and its
Subsidiaries (i) under Treasure

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Regulations SECTION 1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee or successor, (ii) by contract, or (iii) otherwise.

(n) TAX-FREE REORGANIZATION. Neither the BUYER nor any of its
Subsidiaries has through the date of this Agreement taken or agreed to take any
action that would prevent the Merger from qualifying as a reorganization under
the Code.

(o) OTHER. None of the BUYER and its Subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. None of the
BUYER and its Subsidiaries has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii).

4.12 LABOR MATTERS. Except as set forth in Schedule 4.12, there are no
collective bargaining or other labor union agreements to which the BUYER or any
of its Subsidiaries is a party or by which any of them is bound. Except as set
forth in Schedule 4.12, neither the BUYER nor any of its Subsidiaries has
encountered any labor union organizing activity, or had any actual or, to
BUYER's Knowledge, threatened employee strikes, work stoppages, slowdowns or
lockouts.

4.13 ERISA COMPLIANCE.

(a) Except as disclosed in Schedule 4.13, all Pension Plans have been the
subject of determination letters from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from federal income taxes under
Section 401(a) and 501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the knowledge of the BUYER, has revocation been
threatened, nor has any such Pension Plan been amended since the date of its
most recent determination letter or application therefore in any respect that
would adversely affect its qualification or materially increase its costs.

(b) Except as disclosed on Schedule 4.13, no Pension Plan that the BUYER
or any of its Subsidiaries maintains, or to which the BUYER or any of its
Subsidiaries is or was previously obligated to contribute, other than any
Pension Plan that is a "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA; collectively, the "MULTIEMPLOYER PENSION PLANS"), had, as
of the respective last annual valuation date for each such Pension Plan, any
"unfunded benefit liabilities" (as such term is defined in Section 4001(a)(18)
of ERISA). None of the BUYER's Pension Plans has an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived. To the best knowledge of the BUYER, none of
the BUYER, any of its Subsidiaries, any officer of the BUYER or any of its
Subsidiaries or any of the Benefit Plans which are subject to ERISA, including
the Pension Plans, or any

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trusts created thereunder, or any trustee or administrator thereof, has engaged
in a "prohibited transaction" (as such term is defined in Section 406 of ERISA
or Section 4975 of the Code) or any other breach of fiduciary responsibility
that could subject the BUYER, any of its Subsidiaries or any officer of the
BUYER or any of its Subsidiaries to the tax or penalty on prohibited
transactions imposed by such Section 4975 or to any liability under Sections
502(i) or 502(1) of ERISA. Except as disclosed on Schedule 4.13, neither any of
such Pension Plans nor any of such trusts have been terminated, nor has there
been any "reportable event" (as that term is defined in Section 4043 of ERISA)
with respect to which the 30-day notice requirement has not been waived and the
BUYER is not aware of any other reportable events with respect thereto during
the last five years. Neither the BUYER nor any of its Subsidiaries has suffered
or otherwise caused a "complete withdrawal" or a "partial withdrawal" (as such
terms are defined in Sections 4203 and Section 4205, respectively, of ERISA)
since the effective date of such Sections 4203 and 4205 with respect to any of
the Multiemployer Pension Plans. Neither the BUYER nor any of its Subsidiaries
is secondarily liable for any withdrawal liability as a result of the sale of
assets within the meaning of Section 4204 of ERISA. To the knowledge of the
BUYER, in the event a "complete withdrawal" currently occurred with respect to
any of the Multiemployer Pension Plans, there would be no withdrawal liability
assessed against the BUYER or any of its Subsidiaries.

(c) With respect to any Benefit Plan that is an employee welfare benefit
plan, except as disclosed in Schedule 4.13, (i) no such Benefit Plan is unfunded
or funded through a welfare benefits fund, as such term is defined in Section
419(e) of the Code, (ii) each such Benefit Plan that is a group health plan, as
such term is defined in Section 5000(b)(1) of the Code, complies in all material
respects with the applicable requirements of Section 4980B(f) of the Code and
Section 1862(b)(1) of the Social Security Act and (iii) each such Benefit Plan
(including any such Plan covering retirees or other former employees) may be
amended or terminated without material liability to the BUYER or any of its
Subsidiaries on or at any time after the Effective Time.

(d) Except as disclosed on Schedule 4.13, each Benefit Plan conforms in
all material respects, and to the knowledge of the BUYER, in form and operation
to all applicable laws and regulations, and all reports or information relating
to such Benefit Plan required to be filed with any governmental entity or
disclosed to participants have been timely filed and disclosed. Except as
disclosed on Schedule 4.13, no Pension Plan holds any employer security or
employer real property within the meaning of Section 407 of ERISA.

(e) Except as disclosed on Schedule 4.13, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of the BUYER or any Subsidiary thereof to severance pay,
unemployment compensation or

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any other payment or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee or former employee.

(f) Except as disclosed on Schedule 4.13, neither the BUYER nor any of its
Subsidiaries has announced a plan to create or a legally binding commitment to
amend any Benefit Plan or to create any new arrangement which would be a Benefit
Plan.

(g) All insurance premiums with respect to any Benefit Plan (including
premiums to the Pension Benefit Guaranty Corporation) have been paid in full.
Except as disclosed on Schedule 4.13, there are no retrospective adjustments
provided for under any insurance contracts maintained pursuant to any Benefit
Plan with regard to policy years or other periods ending on or before the
Effective Time.

(h) Except as disclosed in Schedule 4.11, no Benefit Plan or the deduction
of any contributions thereto by the BUYER or any of its Subsidiaries has been
the subject of audit by the Internal Revenue Service or the Department of Labor,
and no litigation or asserted claims exist against the COMPANY or any of its
Subsidiaries or any Benefit Plan or fiduciary with respect thereto (other than
such benefit claims as are made in the normal operation of a Benefit Plan). To
the knowledge of the BUYER, there are no facts which would give rise to or could
give rise to any action, suit, grievance, arbitration or other claim.

4.14 ENVIRONMENTAL MATTERS.

(a) Except as set forth on Schedule 4.14, to the BUYER's Knowledge, the
BUYER and each of its Subsidiaries are in material compliance with all
applicable federal, state, regional and local laws, statutes, ordinances,
judgments, rulings and regulations relating to any matters of pollution,
protection of the environment or environmental regulation or control
(collectively, "ENVIRONMENTAL LAWS"). Neither the BUYER nor any of its
Subsidiaries has received any written notice (i) of any violation of an
Environmental Law or (ii) of the institution of any suit, action, claim,
proceedings or investigation by any Governmental Entity or any third party of
any such violation.

(b) Except as disclosed on Schedule 4.14 and as to matters that are not
anticipated to have a Material Adverse Effect on the BUYER, to the BUYER's
Knowledge, neither the BUYER nor any of its Subsidiaries has (i) released,
transported or disposed of any Hazardous Substances (as hereinafter defined) on,
under, or at any of the BUYER's or any of its Subsidiaries' properties or any
other properties, (ii) reason to know of the release or disposal of any
Hazardous Substances on, under or at any of BUYER's or any of its Subsidiaries'
properties, arising from the conduct of operations on the BUYER's or any of its
Subsidiaries' properties, or (iii) received any written notice which has not
been paid, settled or otherwise resolved (w) of any violation of any
Environmental Law

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or any other law, statute, rule or regulation regarding Hazardous Substances on
or under any of the BUYER's or any of its Subsidiaries' properties or any other
properties, (x) of the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party of any
such violation, (y) of any actual or potential liability for the response to or
remediation of Hazardous Substance at or arising from any of the BUYER's or any
of its Subsidiaries' properties or any other properties, or (z) of any actual or
potential liability for the costs of response to or remediation of Hazardous
Substances at or arising from any of the BUYER's or any of its Subsidiaries'
properties or any other properties. For purposes of this Agreement, the terms
"HAZARDOUS SUBSTANCE" shall mean any toxic or hazardous materials or substances,
including asbestos, buried contaminants, chemicals, flammable explosives,
radioactive materials, petroleum and petroleum products and any substances
defined as, or included in the definition of, "hazardous substances", "hazardous
wastes", "hazardous materials" or "toxic substances" under any Environmental
Law.

(c) To the BUYER's Knowledge, no Environmental Law imposes any obligation
upon the BUYER or its Subsidiaries arising out of or as a condition to any
transaction contemplated hereby, including, without limitation, any requirement
to modify or to transfer any permit or license, any requirement to file any
notice or other submission with any Governmental Entity, the placement of any
notice, acknowledgement, or covenant in any land records, or the modification of
or provision of notice under any agreement, consent order, or consent decree. To
the BUYER's Knowledge, no lien has been placed upon any of the BUYER's
properties or its Subsidiaries' properties under any Environmental Law.

4.15 MATERIAL CONTRACT AND AGREEMENTS.

(a) As of the date hereof and except as disclosed on Schedule 4.15, no
default in performance or failure to perform under, and no anticipatory breach
of, any of the BUYER's material contracts has occurred or is continuing, and
none of the parties to any such contract has alleged that the other has
defaulted in performance or failed to perform, other than (i) a default in
payment that shall not have continued more than 30 days from the date on which
the payment was originally due pursuant to the terms of the applicable
contracts, and (ii) a default or failure that is immaterial with respect to all
such contracts. To BUYER's Knowledge, as of the date hereof and except as
disclosed on Schedule 3.14, there are no legal, administrative or other
proceedings threatened, pending or outstanding relating to the performance or
status of any of such contracts. As of the date hereof and except as disclosed
on Schedule 3.14, the BUYER has not received notice of any anticipatory breach,
pending dispute or anticipated litigation arising from or relating to any of
such contracts, or notice that any of such contracts has been or will be
canceled, revoked or otherwise terminated.

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<PAGE>

(b) Except as listed on Schedule 4.15, neither the BUYER nor any
Subsidiary is subject to any material agreement which restricts competition with
any other person or provides that the BUYER, any Subsidiary or affiliate may not
engage in any business or sell or distribute any product or service.

4.16 INTELLECTUAL PROPERTY. The BUYER and its Subsidiaries own, or are
licensed or otherwise have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, copyrights and other proprietary intellectual property
rights and computer programs which are material to the business, financial
condition or results of operations of the BUYER and its Subsidiaries taken as a
whole. Except as set forth on Schedule 4.16, no claims are pending or, to the
knowledge of the BUYER, threatened that the BUYER is infringing or otherwise
adversely affecting the rights of any person with regard to any patent, license,
trademark, trade name, service mark, copyright or other intellectual property
right. To the knowledge of the BUYER, no person is infringing the rights of the
BUYER with respect to any patent, license, trademark, trade name, service mark,
copyright or other intellectual property right.

4.17 BUYER BOARD OF DIRECTORS ACTION.

(a) The Board of Directors of BUYER at a meeting duly called and held has
by the requisite vote of all directors present determined that the Merger is
advisable and in the best interests of the BUYER and its shareholders.

(b) The Board of Directors of SUB at a meeting duly called and held has by
the requisite vote of all directors present determined that the Merger is
advisable and in the best interests of the SUB and its shareholders.

4.18 COMPANY PROXY STATEMENT. (a) None of the information supplied or to
be supplied by or on behalf of BUYER for inclusion or incorporation by reference
in the COMPANY Proxy Statement, in definitive form, relating to the meeting of
the COMPANY shareholders to be held in connection with the Merger will, at the
date mailed to shareholders and at the time of the meeting of shareholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.

(b) The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act and the Exchange Act,
respectively, and the applicable rules and regulations thereunder.

4.19 SURVIVAL OF CERTAIN REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in Section 4 of this

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<PAGE>

Agreement shall survive the Merger for one year after the Effective Time.

5. COVENANTS.

5.1 INTERIM OPERATIONS. During the period from the date of this Agreement
to the Effective Time, except as specifically contemplated by this Agreement, or
as otherwise approved in advance by BUYER in writing:

(a) CONDUCT OF BUSINESS. The COMPANY will, and will cause each of its
Subsidiaries to, conduct their respective businesses only in, and not take any
action except in, the ordinary and usual course of business and consistent with
past practice. The COMPANY will use reasonable efforts to preserve intact the
business organization of the COMPANY and each of its Subsidiaries, to keep
available the service of its and their present officers and key employees and to
preserve the goodwill of those having business relationships with it or its
Subsidiaries.

(b) ARTICLES AND BYLAWS. The COMPANY will not and will not permit any of
its Subsidiaries to make any change or amendment to their respective articles of
incorporation or bylaws (or comparable governing instruments).

(c) CAPITAL STOCK. The COMPANY will not, and will not permit any of its
Subsidiaries to, issue or sell any shares of capital stock or any other
securities of any of them (other than pursuant to Stock Options and the Employee
Stock Purchase Plan) or issue any securities convertible into or exchangeable
for, or options, warrants to purchase, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or enter into any contract,
understanding or arrangement with respect to the issuance of, any shares of
capital stock or any other securities of any of them or purchase or enter into
any arrangement or contract with respect to the purchase or voting of shares of
their capital stock, or adjust, split, combine or reclassify any of their
capital stock or other securities or make any other changes in their capital
structures.

(d) DIVIDENDS. The COMPANY will not and will not permit any of its
Subsidiaries to declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with respect to, or
purchase or redeem, any shares of the capital stock of any of them.

(e) EMPLOYEE PLANS, COMPENSATION, ETC. Except in the ordinary course of
its business, the COMPANY will not, and will not permit any of its Subsidiaries
to, amend any Benefit Plan or to adopt any arrangement which would be a "Benefit
Plan" or, except as provided in Schedule 5.1 or pursuant to collective
bargaining agreements as presently in effect, increase the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any existing plan or

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<PAGE>

arrangement or take any action or grant any benefit not required under the terms
of any existing agreements, trusts, plans, funds or other such arrangements to
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.

(f) DEBT. The COMPANY and its Subsidiaries will not, (a) assume or incur
any indebtedness or, except (i) in the ordinary course of business and (ii) with
respect to expenses incurred in connection with the consummation of the Merger,
or (b) except in the ordinary course of business consistent with past practice,
make any loans, advances or capital contributions to, or investments (other than
short-term investments pursuant to customary cash management systems of the
COMPANY) in, any other person other than such of the foregoing as are made by
the COMPANY to, in or from a wholly owned Subsidiary of the COMPANY. The
COMPANY will not enter into any new credit agreements but may enter into
amendments or modifications or replacements of any existing credit agreements.

(g) REPRESENTATION AND WARRANTY. The COMPANY will advise BUYER and BUYER
will advise COMPANY within 48 hours of any information which becomes known to it
or to any Subsidiary of COMPANY or BUYER that would make any representation or
warranty of the COMPANY herein materially not true or not correct.

(h) ACQUISITIONS. The COMPANY and its Subsidiaries will not acquire (i) by
merging or consolidating with, or by purchasing a substantial portion of the
stock or assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
(ii) any assets, except purchases of inventory items or supplies or other
purchases in the ordinary course of business consistent with past practice, and
strategic purchases of franchised stores.

(i) ASSETS SALES. The COMPANY and its Subsidiaries will not sell, lease,
mortgage or otherwise encumber or otherwise dispose of any of its properties or
assets, except sales of inventory in the ordinary course of business consistent
with past practice and strategic sales of corporate stores and franchises.

(j) TAX SETTLEMENTS. The COMPANY and its Subsidiaries will not make any
material tax election other than tax elections in the ordinary course and
consistent with past practices or settle or compromise any material income tax
or other tax liability or refund.

(k) OTHER SETTLEMENTS. The COMPANY and its Subsidiaries will not pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business consistent with
past practice or in accordance with their terms except for any existing
scheduled litigations.

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5.2 ACCESS AND INFORMATION. Subject to a confidentiality agreement
between COMPANY and BUYER, COMPANY and BUYER will (and will cause each of their
respective representatives to) afford to the other (or representatives of the
COMPANY or BUYER, including without limitation directors, officers and employees
of COMPANY and BUYER or their affiliates and counsel, accountants and other
professionals retained by COMPANY and BUYER) such access throughout the period
prior to the Effective Time to books, records (including without limitation tax
returns and work papers of independent auditors), agreements, properties
(including for the purpose of making any reasonable Phase I environmental
investigation), personnel, suppliers and franchisees as COMPANY or BUYER
requests from the other.

5.3 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. BUYER and the COMPANY
will (a) promptly make their respective filings, and will thereafter use their
best efforts to promptly make any required submissions, under the
Hart-Scott-Rodino Act with respect to the Merger and the other transactions
contemplated by this Agreement and (b) cooperate with one another (i) in
promptly determining whether any filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained under any other
federal, state or foreign law or regulation and (ii) in promptly making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such consents, approvals, permits or authorizations.

5.4 EMPLOYEE MATTERS. On and after the Effective Time, the Surviving
Corporation will honor (but only in accordance with their terms in effect at the
date hereof) those employment, executive bonus program, indemnification,
severance, termination, consulting and retirement agreements to which the
COMPANY or any of its Subsidiaries is presently a party.

5.5 INDEMNIFICATION AND INSURANCE.

(a) From and after the Effective Time, BUYER will indemnify and hold
harmless each of the current directors, officers, agents and other
representatives, who have acted in such capacity prior to or after the date
hereof, of the COMPANY or any of its Subsidiaries (collectively, the
"INDEMNITEES" and individually, an "INDEMNITEE") against any and all claims,
damages, liabilities, losses, costs, charges, expenses (including without
limitation reasonable costs of investigation, and the fees and disbursements of
legal counsel and other advisers and experts), judgments, fines, penalties and
amounts paid in settlement, asserted against, incurred by or imposed upon any
Indemnitee (collectively, "LOSSES" and individually, a "LOSS"), (i) in
connection with or arising out of any threatened, pending or completed claim,
action, suit or proceeding (whether civil, criminal, administrative or
investigative), including without limitation any and all claims, actions, suits,
proceedings or investigations by or on behalf of or in the right of or against
the COMPANY or any of its

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<PAGE>

Subsidiaries or their affiliates, or by any present or former shareholder of the
COMPANY (collectively, "CLAIMS" and individually, a "CLAIM"), which is based
upon, arises out of or in any way relates to the Merger, the COMPANY Proxy
Statement, or any of the transactions contemplated by this Agreement, excluding
any successful Claim that such indemnitee has violated Section 16(b) of the
Exchange Act or Section 10(b) of the Exchange Act, or Rule 10b-5 promulgated
thereunder, and (ii) in connection with or arising out of the enforcement of the
obligations of BUYER set forth in this Section 5.5. This Section 5.5(a) will be
construed as an agreement, as to which the Indemnitees are intended to be third
party beneficiaries, between BUYER and the Indemnitees, as unaffiliated third
parties, and is not subject to any limitations to which BUYER may be subject to
indemnifying its own directors.

(b) From and after the Effective Time, any and all obligations of COMPANY
to indemnify the current officers and directors of COMPANY, whether pursuant to
applicable law, COMPANY's Certificate of Incorporation or Bylaws or by agreement
between COMPANY and the officers and directors, shall be assumed and paid and
performed to the fullest extent permitted by law by BUYER. BUYER will promptly
after the Effective Time, confirm to each such executive officer and director of
COMPANY in writing of such assumption of COMPANY's obligations.

(c) In the event the Surviving Corporation or any of its successors or
assign (i) reorganizes or consolidates with or merges into or enters into
another business combination transaction with any other person or entity and is
not the resulting, continuing or surviving corporation or entity of such
consolidation, merger or transaction (ii) liquidates, dissolves or transfers all
or substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision will be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in this
Section 5.5.

5.6 SPECIAL COMPANY MEETING. The COMPANY shall take all action necessary,
in accordance with applicable law and its certificate of incorporation and
bylaws, to convene a special meeting of the holders of COMPANY Shares ("SPECIAL
COMPANY MEETING") as promptly as practicable for the purpose of considering and
taking action upon this Agreement. The board of directors of the COMPANY will
recommend that holders of COMPANY Shares vote in favor of and approve the Merger
and this Agreement at the Special COMPANY Meeting.

5.7 COMPANY PROXY STATEMENT; REGISTRATION STATEMENT.

(a) As soon as practicable after the date hereof, the COMPANY shall
prepare the COMPANY Proxy Statement, file it with the SEC, use its best efforts
to respond to comments of the Staff of the SEC and clear the COMPANY Proxy
Statement with the Staff of the SEC. Promptly after such clearance the COMPANY
shall mail the

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<PAGE>

COMPANY Proxy Statement to all holders of record of COMPANY Shares who are
holders on the record date for the meeting of shareholders of the COMPANY.
BUYER and the COMPANY shall cooperate with each other in the preparation of the
COMPANY Proxy Statement and the processing thereof with the SEC.

(b) BUYER shall prepare and file the Registration Statement with the SEC
as soon as is reasonably practicable following receipt of comments from the
Staff of the SEC on the COMPANY Proxy Statement or advice that such Staff will
not review such filing (or earlier in the discretion of BUYER and COMPANY) and
shall use its best efforts to have the Registration Statement declared effective
by the SEC as promptly as practicable and to maintain the effectiveness of such
Registration Statement until the Effective Time. BUYER shall also use its best
efforts to take any action required to be taken under state blue sky or
securities laws in connection with the issuance of the BUYER Common Stock
pursuant to the Merger, and the COMPANY shall furnish BUYER all information
concerning the COMPANY and the holders of its capital stock and shall take any
action as BUYER may reasonably request in connection with any such action.

5.8 COMPLIANCE WITH THE SECURITIES ACT; POOLING; REORGANIZATION.

(a) Prior to the Effective Time, the COMPANY shall cause to be delivered
to BUYER an opinion of legal counsel of the COMPANY, identifying all persons who
were in its opinion, as of the date of the COMPANY Proxy Statement, "affiliates"
of the COMPANY as that term is used in Paragraphs (c) and (d) of Rule 145 under
the Securities Act (the "AFFILIATES"). The COMPANY shall cause the person
rendering such opinion to deliver to BUYER at the Closing a second opinion
updating such opinion to the time at which the holders of Common Stock vote on
the Merger.

(b) The COMPANY shall obtain a written agreement from each current
executive officer and director who is identified as a possible Affiliate in the
opinions referred to in clause (a) above, in a form reasonably acceptable to
BUYER, that (i) such person will not offer to sell, sell or otherwise dispose of
any of the BUYER Common Stock issued to such person pursuant to the Merger,
except in compliance with Rule 145 or another exemption from the registration
requirements of the Securities Act and (ii) such person will not sell or in any
other way reduce such person's risk relative to any shares of BUYER Common Stock
received in the Merger (within the meaning of the SEC's rules and relating to
pooling of interest accounting), until such time as financial results (including
combined sales and net income) covering at least 30 days of post-merger
operations have been published. The COMPANY shall deliver such written
agreements to BUYER on or prior to the Closing.

5.9 ADDITIONAL AGREEMENTS. (a) Subject to the terms and conditions herein
provided each of the parties hereto agrees to

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use its best efforts to take promptly, or cause to be taken, all actions and to
do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its best efforts to
obtain all necessary actions or non-actions, extensions, waivers, consents and
approvals from all applicable Governmental Entities, effecting all necessary
registrations and filings (including without limitation filings under the
Hart-Scott-Rodino Act) and obtaining any required contractual consents. If, at
any time after the Effective Time, the Surviving Corporation considers or is
advise that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the
Constituent Corporations acquire or to be acquired by the Surviving Corporation
as a result of, or in connection with the Merger or otherwise to carry out the
purposes of this Agreement, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the name and on behalf
of each of the Constituent Corporations or otherwise, as such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out the purposes of this
Agreement.

(b) The COMPANY and BUYER shall use their best efforts to file as soon as
reasonably practicable notifications under the HSR Act in connection with the
Merger and the transactions contemplated hereby and to respond as promptly as
practicable to any inquiries received from the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Entity in connection with antitrust
matters. The COMPANY and BUYER shall take such actions as are necessary to
overcome any objections which may be raised by the FTC or Antitrust Division.

5.10 CERTAIN COVENANTS.

(a) NO SOLICITATION. COMPANY shall not directly or indirectly, solicit,
initiate or encourage (including by way of furnishing information) any Takeover
Proposal (as hereinafter defined) from any person, or engage in or continue
discussions or negotiations relating to any Takeover Proposal, and will use its
reasonable best efforts to prevent any of its directors, officers, attorneys,
financial advisors and other authorized representatives from, directly or
indirectly, taking any such action, PROVIDED,

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HOWEVER, that if, prior to the Effective Time, COMPANY shall receive an
Acquisition Proposal that the Board of Directors of COMPANY, based upon the
advice of its outside counsel, reasonably believes that it has a fiduciary duty
to consider, and which it reasonably and in good faith believes is more
favorable to COMPANY and its shareholders than the transactions herein
contemplated then COMPANY shall notify BUYER and thereupon, COMPANY, without
violating this Agreement, may thereafter furnish information to such third party
and, if thereafter, COMPANY's Board of Directors reasonably and in good faith
determines that such Acquisition Proposal is more favorable to COMPANY and its
shareholders than the transactions herein contemplated, then upon written notice
to BUYER, COMPANY may terminate this Agreement and the transactions contemplated
thereby.

(b) BREAK-UP FEE. Upon any termination by COMPANY of this Agreement
permitted by subsection (a) hereof COMPANY shall within ten (10) days after such
termination pay to BUYER the sum of $1,500,000 ("Break-Up Fee").

(c) CERTAIN ACTIONS. BUYER and COMPANY shall not, nor shall either permit
any of its Subsidiaries to, take or consent to be taken any action, whether
before or after the Effective Time, which would disqualify the Merger as
"reorganization" within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code.

5.11 BEST EFFORTS TO LIST SHARES. BUYER shall use its best efforts to
ensure that, prior to the Effective Time, the BUYER Shares that will be issued
in the Merger will be approved for trading on the NASDAQ National Market System
subject to official notice of issuance.

5.12 UPDATED SCHEDULES. Fifteen (15) business days prior to the Effective
Time and at the Effective Time, BUYER and COMPANY will each update their
respective Schedules referred to in this Agreement in the event that changes
with respect to items required to be set forth in any such Schedule result in
any such Schedule omitting or misstating information. A Schedule to this
Agreement shall be updated only for the purpose of making the representations
and warranties contained in this Agreement to which such Schedule relates true
and correct in all material respects as of the date such Schedule is updated,
and an updated Schedule shall not have the effect of making any representation
or warranty contained in this Agreement true and correct in all material
respects as of a date prior to the date of such updated Schedule.
Representations and warranties may only be updated as of a subsequent date on or
prior to the Effective Time only for occurrences or events subsequent to the
date hereof, or subsequent to the most recent updated representations and
warranties, as applicable. The parties hereby acknowledge that such update in
and of itself does not constitute a breach of any such representation or
warranty.

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<PAGE>

6. CONDITIONS TO OBLIGATION TO CLOSE.

6.1 CONDITIONS TO OBLIGATION OF BUYER AND SUB. The obligation of BUYER
and SUB to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:

(a) REPRESENTATIONS TRUE. The representations and warranties set forth in
Article 3 above shall be true and correct in all material respects at and as of
the Closing Date (after giving effect to any updated Schedules as contemplated
by Section 5.13) except for any representation and warranty made expressly with
respect to a specific date and except for such failures to be true and correct
as do not have a Material Adverse Effect (after giving effect to any
insurance/indemnification) on the COMPANY and its Subsidiaries, taken as a
whole;

(b) COVENANTS. COMPANY shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;

(c) NO INJUNCTION. No preliminary or permanent injunction or other order
by any federal or state court in the United States which prevents the
consummation of the Merger shall have been issued and remain in effect (COMPANY
and BUYER agreeing to use their reasonable best efforts to have any such
injunction lifted).

(d) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
received the Requisite COMPANY Stockholder Approval;

(e) HSR WAITING PERIOD. All applicable waiting periods (and any
extensions thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated;

(f) REGISTRATION STATEMENT. The Registration Statement shall have become
effective under the Securities Act;

(g) LEGAL OPINION. BUYER shall have received an acceptable opinion from
counsel to the COMPANY.

(h) POOLING OF INTERESTS ACCOUNTING. BUYER shall not have received a
final objection from the SEC to BUYER's accounting for the Merger as a "pooling
of interests."

(i) LEASE TERMINATION. The lease between the COMPANY and the Francis
Family Limited Partnership for the COMPANY's headquarters shall be amended to
provide that the lease may be terminated at the option of the lessee upon six
(6) months' notice.

(j) MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change from the date hereof in the business, condition or operations of COMPANY,
except changes contemplated, permitted or required by this Agreement and changes
resulting from

37
<PAGE>

a change in general economic conditions;

(k) OFFICER'S CERTIFICATE. COMPANY shall have delivered to BUYER a
certification of one of its executive officers in such person's capacity as an
officer and without personal liability to the effect that each of the conditions
specified in Section 6.1(a)-(d) is satisfied in all respects.

BUYER may waive any condition specified in this Section 6.1 if it executes
a writing so stating at or prior to the Closing.

6.2 CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of COMPANY to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

(a) REPRESENTATIONS TRUE. The representations and warranties set forth in
Section 4 above shall be true and correct in all material respects at and as of
the Closing Date (after giving effect to any updated Schedules as contemplated
by Section 5.13) except for any representation and warranty made expressly with
respect to a specific date and except for such failures to be true and correct
as do not have a Material Adverse Effect (after giving effect to any
insurance/indemnification) on the BUYER and its Subsidiaries, taken as a whole;

(b) COVENANTS. BUYER shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;

(d) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
received the Requisite COMPANY Stockholder Approval;

(e) HART-SCOTT-RODINO ACT. All applicable waiting periods (and any
extension thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Section 3.4 and Section 4.4 above;

(f) REGISTRATION STATEMENT. The Registration Statement shall have become
effective under the Securities Act;

(g) LISTING OF BUYER SHARES. The BUYER Shares that will be issued in the
Merger shall have been approved for listing on the NASDAQ National Market
System, subject to official notice of issuance;

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<PAGE>

(h) LEGAL OPINION. COMPANY shall have received an acceptable opinion from
BUYER's general counsel;

(i) FAIRNESS OPINION. The Board of Directors of COMPANY shall have
received from Piper Jaffray, Inc. a written opinion, dated as of the date of
mailing the COMPANY Proxy Statement to holders of COMPANY Common Stock
reasonably satisfactory in form and substance to such board, to the effect that
the terms of the Merger are fair to the COMPANY Stockholders from a financial
point of view;

(j) OFFICER'S CERTIFICATE. BUYER shall have delivered to COMPANY a
certificate of one of its executive officers in such person's capacity as an
officer and without personal liability to the effect that each of the conditions
specified above in Section 6.2(a)-(d), (g) is satisfied in all respects (other
than with respect to Requisite COMPANY Stockholder Approval);

(k) TAX OPINION. COMPANY shall have received from Gray, Plant, Mooty,
Mooty & Bennett, PA, dated as of the Closing Date and based upon certain
factual representations from officers of COMPANY, BUYER and SUB that such
counsel may reasonably request and upon such other facts, representations,
assumptions, and agreements as counsel may reasonably deem relevant, a
written opinion in a form reasonably satisfactory to COMPANY confirming that
the Merger will be treated as a "reorganization" within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code;

COMPANY may waive any condition specified in this Section 6.2 if it
executes a writing so stating at or prior to the Closing.

7. TERMINATION.

7.1 TERMINATION PRIOR TO THE EFFECTIVE TIME. This Agreement may be
terminated and the Merger contemplated hereby may be abandoned at any time
(except as provided in Section 7.1(e) below), notwithstanding approval thereof
by the stockholders, but prior to the Effective Time:

(a) By mutual written consent of each of BUYER and the COMPANY (upon board
approval of each); or

(b) By either the BUYER or the COMPANY, if the Merger has not occurred on
or before August 31, 1999; provided, however, if the reason that the Merger has
not occurred by such date is the failure of the Securities and Exchange
Commission to act promptly with respect to the Registration Statement on Form
S-4 filed by BUYER therewith, or the failure of the Federal Trade Commission or
the Justice Department to grant termination, or early termination, of the
waiting period under the Hart Scott Rodino Act, and such failure of the
Securities and Exchange Commission, the Federal Trade Commission or the Justice
Department is not the result of action or inaction of the parties hereto, then
the right to terminate pursuant to this Section 7.1(b) shall not be available

39
<PAGE>

until November 30, 1999.

(c) By the BUYER or the COMPANY if any court of competent jurisdiction in
the United States shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger or
declaring same invalid or unlawful and such order, decree, ruling or other
action shall have become final and nonappealable; or

(d) By the COMPANY pursuant to Section 5.10(a) hereof, upon payment of the
Break-Up Fee.

(e) By the COMPANY in the event that the closing price of the BUYER Share
closes below $31.60 on any five (5) consecutive trading days between the
execution of this Agreement and the Effective Time, provided that notice of
termination for such event shall be given by the COMPANY to the BUYER not more
than ten (10) days after the expiration of the five (5) day-trading period
referred to herein.

7.2 EFFECT OF TERMINATION.

If any Party terminates this Agreement pursuant to Section 7.1(a), (b) (c)
or (e) above, all rights and obligations by the Parties hereunder shall
terminate without any liability of any Party to any other Party; provided that
nothing in this Section 7.2 shall relieve either party hereto for liability
resulting from the breach of any covenant contained in this Agreement and except
for the provisions of Section 5.10(b) which shall survive such termination.

8. MISCELLANEOUS.

8.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior approval of the other Party; PROVIDED, HOWEVER,
each Party agrees not to unreasonably withhold consent to the other Party's
request to make any public disclosure that the requesting Party believes in good
faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities.

8.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that (i) the provision in
Section 2 above concerning issuance of the BUYER Shares and are intended for the
benefit of the COMPANY Stockholders and, (ii) the provisions in Section 5.11(c)
are intended for the benefit of the holders of COMPANY Shares, (iii) the
provisions in Section 5.5 above concerning indemnification are intended for the
benefit of the individuals specified therein and their respective legal
representatives.

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<PAGE>

8.3 ENTIRE AGREEMENT. No discussions regarding, or exchange of drafts or
comments in connection with, the transactions contemplated herein shall
constitute an agreement among the parties hereto. Any agreement among the
parties shall exist only when the parties have fully executed and delivered this
Agreement. This Agreement (including any other documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.

8.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.

8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

8.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

8.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:

If to COMPANY:

The Barbers, Hairstyling for Men & Women, Inc.
300 Industrial Boulevard N.E.
Minneapolis, MN 55413
Attention: President

Copy to:

Joseph T. Kinning, Esq.
Gray, Plant, Mooty, Mooty & Bennett, P.A.
33 South Sixth Street
3400 City Center
Minneapolis, MN 55402

41
<PAGE>

If to BUYER or SUB:

Regis Corporation
7201 Metro Boulevard
Minneapolis, MN 55439
Attention: President

Copy to:

Bert M. Gross, Esq.
Regis Corporation
7201 Metro Boulevard
Minneapolis, MN 55439

Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Minnesota without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Minnesota or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Minnesota.

8.9 AMENDMENTS AND WAIVERS. The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time with the prior
authorization of their respective board of directors; PROVIDED, HOWEVER, that
any amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the Minnesota Business Corporation Act. No amendment
of any provision of this Agreement shall be valid unless the same shall be in
writing and signed by both of the Parties. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
effect in any way any rights arising by virtue of any prior or subsequent such
occurrence.

8.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

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<PAGE>

8.11 EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby, except as otherwise contemplated by
Sections 5.11 and 7.2 hereof.

8.12 SPECIFIC PERFORMANCE. The parties hereto agree that if for any
reason any party hereto shall have failed to perform its obligations under this
Agreement, then any other party hereto seeking to enforce this Agreement against
such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief.

8.13 CONSTRUCTION. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context otherwise requires. The word
"including" shall mean including without limitation.

8.14 INCORPORATION OF SCHEDULES. The Exhibits and Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.

THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
("COMPANY")

By:
--------------------------------
Title:
----------------------------

REGIS CORPORATION
("BUYER")

By:
--------------------------------
Title:
----------------------------

REGIS MERGER SUB, INC.
("SUB")

By:
--------------------------------
Title:
----------------------------

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<PAGE>
APPENDIX B

April , 1999
Board of Directors
The Barbers, Hairstyling for Men & Women, Inc.
300 Industrial Boulevard, N.E.
Minneapolis, MN 55413

Members of the Board:

We understand that The Barbers, Hairstyling for Men & Women, Inc. ("The Barbers"
or the "Company"), Regis Merger Sub, Inc. ("Merger Subsidiary") and Regis
Corporation ("Regis") have entered into an Agreement and Plan of Merger dated
January 25, 1999 (the "Merger Agreement"), pursuant to which The Barbers will be
acquired through the merger of Merger Subsidiary with and into The Barbers (the
"Transaction"). Pursuant to the Merger Agreement, and subject to certain
exceptions, at the effective time of the Transaction, each share of common
stock, $.10 par value per share, of The Barbers will be converted into one half
of a share of common stock, $.05 par value per share, of Regis (the "Merger
Consideration"). You have requested our opinion as to whether, as of the date
hereof, the Merger Consideration to be received by the shareholders of The
Barbers pursuant to the Merger Agreement is fair, from a financial point of
view, to the shareholders of The Barbers.

Piper Jaffray Inc. ("Piper Jaffray"), as a customary part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, underwritings and secondary
distributions of securities, private placements, and valuations for estate,
corporate and other purposes. For our services in rendering this opinion, The
Barbers will pay us a fee and indemnify us against certain liabilities. A
significant portion of Piper Jaffray's fee is contingent on consummation of the
Transaction. In the ordinary course of our business, we and our affiliates may
actively trade securities of The Barbers and Regis for our own account or the
accounts of our customers and, accordingly, may at any time hold a long or short
position in such securities. In addition, we have acted as advisor to Regis in
prior public offerings of Regis common stock and in connection with prior
acquisition transactions and received compensation for rendering such services.

In arriving at our opinion, we have undertaken such reviews, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among
other things, we have:

1. Reviewed the Merger Agreement.

2. Reviewed the Reports on Form 10-KSB for The Barbers for the three fiscal
years ended September 26, 1996, September 25, 1997 and September 24, 1998.

3. Reviewed the Reports on Form 10-K for Regis for the three fiscal years
ended June 30, 1998.

4. Reviewed the Reports on Form 10-Q for The Barbers for the quarter ended
December 31, 1998.

5. Reviewed the Reports on Form 10-Q for Regis for the quarters ended
September 30, 1998, and December 31, 1998.

6. Reviewed financial forecasts for The Barbers prepared by Company management
for the fiscal years ending September 30, 1999 through 2003 ("Five-Year
Financial Forecasts").

B-1
<PAGE>
7. Conducted discussions with members of senior management of The Barbers,
including the Chief Executive Officer and Chief Financial Officer. Topics
discussed included, but were not limited to, the background and rationale
of the proposed Transaction, the financial condition, operating performance
and the balance sheet characteristics of The Barbers and the prospects for
the Company and Regis on a combined basis.

8. Conducted discussions with members of senior management of Regis, including
the Chief Executive Officer and Chief Financial Officer. Topics discussed
included, but were not limited to, the background and rationale of the
proposed Transaction, the financial condition, operating performance and
the balance sheet characteristics of Regis and the prospects for the
Company and Regis on a combined basis.

9. Reviewed the historical prices and trading activity for The Barbers' and
Regis' common stock.

10. Reviewed the financial terms, to the extent publicly available, of certain
comparable merger and acquisition transactions which were deemed relevant.

11. Performed discounted cash flow analyses on the Five-Year Financial
Forecasts.

12. Analyzed the premiums paid in recent public company acquisitions.

13. Performed certain financial analyses for Regis and The Barbers on a pro
forma combined basis.

14. Compared certain financial data of The Barbers and Regis with certain
financial and securities data of companies deemed similar to The Barbers
and Regis or representative of the business sector in which both companies
operate.

15. Reviewed such other financial data, performed such other analyses and
considered such other information as we deemed necessary and appropriate
under the circumstances.

We have relied upon and assumed the accuracy and completeness of the financial
statements and other information provided by The Barbers and Regis or otherwise
made available to us and have not assumed responsibility independently to verify
such information. We have further relied upon the assurances of The Barbers' and
Regis' managements that the information provided has been prepared on a
reasonable basis in accordance with industry practice and, with respect to
projected financial planning data, reflects the best currently available
estimates and judgment of The Barbers' and Regis' managements as to the expected
future financial performance of The Barbers and Regis, and that they are not
aware of any information or facts that would make the information provided to us
incomplete or misleading. Without limiting the generality of the foregoing, for
the purpose of this opinion, we have assumed that neither The Barbers nor Regis
are a party to any material pending transaction, including external financing,
recapitalizations, acquisitions or merger discussions, other than the
Transaction or in the ordinary course of business.

In arriving at our opinion, we have not performed any appraisals or valuations
of specific assets or liabilities of The Barbers or Regis and have not been
furnished with any such appraisals or valuations, have made no physical
inspection of the properties or assets of The Barbers or Regis and express no
opinion regarding the liquidation value of The Barbers or Regis. Without
limiting the generality of the foregoing, we have undertaken no independent
analysis of any pending or threatened litigation, possible unasserted claims or
other contingent liabilities, to which either The Barbers or Regis or their
respective affiliates are a party or may be subject and at The Barbers'
direction and with its consent, our opinion makes no assumption concerning and
therefore does not consider, the possible assertion of claims, outcomes or
damages arising out of any such matters.

B-2
<PAGE>
Our opinion is necessarily based upon information available to us, facts and
circumstances and economic, market and other conditions as they exist and are
subject to evaluation on the date hereof; events occurring after the date hereof
could materially affect the assumptions used in preparing this opinion. We are
not expressing any opinion herein as to the prices at which shares of The
Barbers' or Regis' common stock have traded or at which such shares may trade at
any future time. Our opinion addresses only the Merger Consideration to be
received by the shareholders of The Barbers and specifically does not address
any consideration to be received by shareholders of the Company for consulting,
non-compete or severance agreements with the Barbers or with Regis.

We have not been authorized by the Board of Directors to solicit other
purchasers for the Company or alternative transactions to the Transaction. We
were not requested to opine as to, and this opinion does not in any manner
address, The Barbers' underlying decision to proceed with or effect the
Transaction or structure thereof.

This opinion is solely for the benefit of the Board of Directors of The Barbers
in evaluating the Transaction and shall not be published or otherwise used by
any other persons for any other purposes nor shall any public references to
Piper Jaffray be made without our prior written consent. However,
notwithstanding the foregoing, we consent to inclusion of this opinion in the
Registration Statement and Company Proxy Statement (as those terms are defined
in the Merger Agreement) to be issued in connection with the Transaction and in
any filings or disclosures required by law, provided that we are given the right
to review and approve the form and content of any reference to Piper Jaffray or
this opinion in the Registration Statement and Company Proxy Statement.

This opinion is not intended to be and does not constitute a recommendation to
any shareholder as to how such shareholder should vote in the Transaction.

Based upon and subject to the foregoing and based upon such other factors as we
consider relevant, it is our opinion that, as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to the shareholders of
the Barbers.

Sincerely,

PIPER JAFFRAY INC.

B-3
<PAGE>
APPENDIX C

302A. 471. RIGHTS OF DISSENTING SHAREHOLDERS

SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:

(a) An amendment of the articles that materially and adversely affects
the rights or preferences of the shares of the dissenting shareholder in
that it:

(1) alters or abolishes a preferential right of the shares;

(2) creates, alters, or abolishes a right in respect of the
redemption of the shares, including a provision respecting a sinking fund
for the redemption or repurchase of the shares;

(3) alters or abolishes a preemptive right of the holder of the
shares to acquire shares, securities other than shares, or rights to
purchase shares or securities other than shares;

(4) excludes or limits the right of a shareholder to vote on a
matter, or to cumulate votes, except as the right may be excluded or
limited through the authorization or issuance of securities of an
existing or new class or series with similar or different voting rights;
except that an amendment to the articles of an issuing public corporation
that provides that section 302A.671 does not apply to a control share
acquisition does not give rise to the right to obtain payment under this
section;

(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation, but not
including a transaction permitted without shareholder approval in section
302A.661, subdivision 1, or a disposition in dissolution described in
section 302A.725, subdivision 2, or a disposition pursuant to an order of a
court, or a disposition for cash on terms requiring that all or
substantially all of the net proceeds of disposition be distributed to the
shareholders in accordance with their respective interests within one year
after the date of disposition;

(c) A plan of merger, whether under this chapter or under chapter 322B,
to which the corporation is a party, except as provided in subdivision 3;

(d) A plan of exchange, whether under this chapter or under chapter
322B, to which the corporation is a party as the corporation whose shares
will be acquired by the acquiring corporation, if the shares of the
shareholder are entitled to be voted on the plan; or

(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their
shares.

SUBD. 2. BENEFICIAL OWNERS. (a) A shareholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the
shareholder, unless the shareholder dissents with respect to all the shares that
are beneficially owned by another person but registered in the name of the
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter
shall be determined as if the shares as to which the shareholder has dissented
and the other shares were registered in the names of different shareholders.

C-1
<PAGE>
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of this
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the
shareholder.

SUBD. 3. RIGHTS NOT TO APPLY. (a) Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment
under this section does not apply to a shareholder of the surviving corporation
in a merger, if the shares of the shareholder are not entitled to be voted on
the merger.

(b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of and to vote on an
action described in subdivision 1, only shareholders as of the date fixed, and
beneficial owners as of the date fixed who hold through shareholders, as
provided in subdivision 2, may exercise dissenter's rights.

SUBD. 4. OTHER RIGHTS. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.

302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS

SUBDIVISION 1. DEFINITIONS. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.

(b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.

(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.

(d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.

SUBD. 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.

SUBD. 3. NOTICE OF DISSENT. If the proposed action must be approved by the
shareholders, a shareholder who is entitled to dissent under section 302A.471
and who wishes to exercise dissenters' rights must file with the corporation
before the vote on the proposed action a written notice of intent to demand the
fair value of the shares owned by the shareholder and must not vote the shares
in favor of the proposed action.

SUBD. 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES. (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the
corporation shall send to all shareholders who have

C-2
<PAGE>
complied with subdivision 3 and to all shareholders entitled to dissent if no
shareholder vote was required, a notice that contains:

(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;

(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;

(3) A form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and

(4) A copy of section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.

(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a shareholder until the proposed action takes effect.

SUBD. 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever
is later, the corporation shall remit to each dissenting shareholder who has
complied with subdivisions 3 and 4 the amount the corporation estimates to be
the fair value of the shares, plus interest, accompanied by:

(1) The corporation's closing balance sheet and statement of income for
a fiscal year ending not more than 16 months before the effective date of
the corporate action, together with the latest available interim financial
statements;

(2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and

(3) A copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.

(b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with
subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for withholding
the remittance, and an offer to pay to the dissenter the amount listed in the
materials if the dissenter agrees to accept that amount in full satisfaction.
The dissenter may decline the offer and demand payment under subdivision 6.
Failure to do so entitles the dissenter only to the amount offered. If the
dissenter makes demand, subdivisions 7 and 8 apply.

(c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.

C-3
<PAGE>
SUBD. 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.

SUBD. 7. PETITION; DETERMINATION. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.

SUBD. 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs
and expenses of a proceeding under subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.

(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.

(c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.

C-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Minnesota Statutes Section 302A.521 provides that a corporation shall
indemnify any person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of such person against
judgments, penalties, fines (including, without limitation, excise taxes
assessed against such person with respect to any employee benefit plan),
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan; (2) acted in good faith; (3) received no
improper personal benefit and Section 302A.255 (with respect to director
conflicts of interest), if applicable, has been satisfied; (4) in the case of a
criminal proceeding, had no reasonable cause to believe the conduct was
unlawful; and (5) reasonably believed that the conduct was in the best interests
of the corporation in the case of acts or omissions in such person's official
capacity for the corporation or reasonably believed that the conduct was not
opposed to the best interests of the corporation in the case of acts or
omissions in such person's official capacity for other affiliated organizations.

Regis carries a directors' and officers' liability insurance policy.

ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES.

(a) EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2 Agreement and Plan of Merger, dated as of January 25, 1999 between Regis Corporation, Regis Merger
Sub, Inc., and The Barbers, Hairstyling for Men & Women, Inc. (included as Appendix A to the Proxy
Statement/Prospectus that forms a part of this Registration Statement on Form S-4 (schedules
omitted--the Registrant agrees to furnish a copy of any schedule to the SEC upon request)).

3.1 Election of the Registrant to become governed by Minnesota Statutes Chapter 302A and Restated
Articles of Incorporation of the Registrant, dated March 11, 1983; Articles of Amendment to Restated
Articles of Incorporation, dated October 29, 1984; Articles of Amendment to Restated Articles of
Incorporation, dated August 14, 1987; Articles of Amendment to Restated Articles of Incorporation,
dated October 21, 1987. (Filed as Exhibit 3(a) to the Registrant's Registration Statement on Form S-1
(Reg. No. 40142) and incorporated herein by reference).

3.2 ByLaws of the Registrant. (Filed as Exhibit 3(c) to the Registrant's Registration Statement on Form
S-1 (Reg. No. 40142) and incorporated herein by reference).

4.1 Shareholder Rights Agreement dated December 23, 1996. (Filed as Exhibit 4 to the Registrant's Report
on Form 8-A12G dated February 4, 1996 and incorporated herein by reference).

5* Opinion of Bert M. Gross regarding the validity of the Registrant's common stock to be issued in the
Merger.
</TABLE>

II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
8* Form of opinion of Gray, Plant, Mooty, Mooty & Bennett, P.A. regarding certain tax matters relating
to the Merger.

10.1 Employment and Deferred Compensation Agreement dated April 14, 1998 between the Registrant and Paul
D. Finkelstein. (Filed as Exhibit 10(a) to the Registrant's Annual Report on Form 10-K dated
September 17, 1998 for the year ended June 30, 1998 (File No. 0-11230) and incorporated herein by
reference).

10.2 Form of Employment and Deferred Compensation Agreement between the Registrant and six executive
officers. (Filed as Exhibit 10(b) to the Registrant's Annual Report on Form 10-K dated September 24,
1997 for the year ended June 30, 1997 (File No. 0-11230) and incorporated herein by reference).

10.3 Northwestern Mutual Life Insurance Company Policy Number 10327324, dated June 1, 1987, face amount
$400,000 owned by the Registrant, insuring the life of Paul D. Finkelstein and providing for division
of death proceeds between the Registrant and the insured's designated beneficiary (split-dollar
plan). (Filed as Exhibit 10(g) to the Registrant's Registration Statement on Form S-1 (Reg. No.
40142) and incorporated herein by reference).

10.4 Schedule of omitted split-dollar insurance policies. (Filed as Exhibit 10(h) to the Registrant's
Registration Statement on Form S-1 (Reg. No. 40142) and incorporated herein by reference).

10.5 Note Agreement dated as of June 21, 1991 between the Registrant and The Prudential Insurance Company
of America. (Filed as Exhibit 10(o) to the Registrant's Annual Report on Form 10-K dated September
26, 1991 for the year ended June 30, 1991 (File No. 0-11230) and incorporated herein by reference).

10.6 Modification of Note Agreement between the Registrant and The Prudential Insurance Company of America
dated July 21, 1995. (Filed as Exhibit 10(g) to the Registrant's Annual Report on Form 10-K dated
September 27, 1995 for the year ended June 30, 1995 (File No. 0-11230) and incorporated herein by
reference).

10.7 Employee Stock Ownership Plan and Trust Agreement dated as of May 15, 1992 between the Registrant and
Myron Kunin and Paul D. Finkelstein, Trustees. (Filed as Exhibit 10(q) to the Registrant's Annual
Report on Form 10-K dated September 27, 1993 for the year ended June 30, 1993 (File No. 0-11230) and
incorporated herein by reference).

10.8 Executive Stock Award Plan and Trust Agreement dated as of July 1, 1992 between the Registrant and
Myron Kunin, Trustee. (Filed as Exhibit 10(r) to the Registrant's Annual Report on Form 10-K dated
September 27, 1993 for the year ended June 30, 1993 (File No. 0-11230) and incorporated herein by
reference).

10.9 Revolving Credit Agreement dated as of June 21, 1994 between the Registrant and LaSalle National Bank
and Bank Hapoalim. (Filed as Exhibit 10(r) to the Registrant's Annual Report on Form 10-K dated
September 28, 1994 for the year ended June 30, 1994 (File No. 0-11230) and incorporated herein by
reference).

10.10 Modification to Senior Revolving Credit Agreement between the Registrant and LaSalle National Bank
and Bank Hapoalim dated July 20, 1995. (Filed as Exhibit 10(n) to the Registrant's Annual Report on
Form 10-K dated September 27, 1995 for the year ended June 30, 1995 (File No. 0-11230) and
incorporated herein by reference).
</TABLE>

II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.11 Employee Profit Sharing Plan and Trust Agreement, amended June 22, 1994 between the Registrant and
Myron Kunin, Trustee. (Filed as Exhibit 10(t) to the Registrant's Annual Report on Form 10-K dated
September 28, 1994 for the year ended June 30, 1994 (File No. 0-11230) and incorporated herein by
reference).

10.12 Survivor Benefit Agreement dated June 27, 1994 between Regis and Myron Kunin. (Filed as Exhibit 10(t)
to the Registrant's Annual Report on Form 10-K dated September 28, 1994 for the year ended June 30,
1994 (File No. 0-11230) and incorporated herein by reference).

10.13 Private Shelf Agreement dated as of July 25, 1995 between the Registrant and the Prudential Insurance
Company of America (Filed as Exhibit 10(m) to the Registrant's Quarterly Report on Form 10-Q dated
May 3, 1996 for the quarter ended March 31, 1996 (File No. 0-11230) and incorporated herein by
reference).

10.14 Modification to Senior Revolving Credit Agreement between the Registrant and LaSalle National Bank
and Bank Hapoalim dated March 19, 1996 (Filed as Exhibit 10(t) to the Registrant's Quarterly Report
on Form 10-Q dated May 3, 1996 for the quarterly period ended March 31, 1996 (File No. 0-11230) and
incorporated herein by reference).

10.15 Series A Senior Note dated as of February 21, 1996 drawn from Private Shelf Agreement between the
Registrant and the Prudential Insurance Company of America. (Filed as Exhibit 10(s) to the
Registrant's Quarterly Report on Form 10-Q dated May 3, 1996 for the quarter ended March 31, 1996
(File No. 0-11230) and incorporated herein by reference).

10.16 Modification to Revolving Credit Agreement between the Registrant and LaSalle National Bank and Bank
Hapoalim dated March 19, 1996. (Filed as Exhibit 10(t) to the Registrant's Quarterly Report on Form
10-Q dated May 3, 1996 for the quarter ended March 31, 1996 (File No. 0-11230) and incorporated
herein by reference).

10.17 Asset Purchase Agreement between the Registrant and National Hair Care Centers LLC. (Filed as Exhibit
B to the Registrant's Report on Form 8-K dated May 9, 1996 (File No. 0-11230) and incorporated herein
by reference).

10.18 Series B Senior Note dated as of June 10, 1996 drawn from Private Shelf Agreement between the
Registrant and the Prudential Insurance Company of America. (Filed as Exhibit 10(v) to the
Registrant's Annual Report on Form 10-K dated September 16, 1996 for the year ended June 30, 1996
(File No. 0-11230) and incorporated herein by reference).

10.19 Modification to Revolving Credit Agreement between the Registrant and LaSalle National Bank and Bank
Hapoalim dated July 9, 1996. (Filed as Exhibit 10(w) to the Registrant's Annual Report on Form 10-K
dated September 16, 1996 for the year ended June 30, 1996 (File No. 0-11230) and incorporated herein
by reference).

10.20 Agreement and Plan of Merger between the Registrant and Supercuts, Inc. (Filed as Exhibit 2.1 to the
Registrant's Report on Form 8-K dated July 15, 1996 (File No. 0-11230) and incorporated herein by
reference).
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.21 Series C Senior Note dated as of October 28, 1996 drawn from Private Shelf Agreement between the
Registrant and the Prudential Insurance Company of America. (Filed as Exhibit 10(x) to the
Registrant's Quarterly Report on Form 10-Q dated November 5, 1996 for the quarter ended September 30,
1996 (File No. 0-11230) and incorporated herein by reference).

10.22 Term Note A Agreement between the Registrant and LaSalle National Bank dated October 28, 1996. (Filed
as Exhibit 10(y) to the Registrant's Quarterly Report on Form 10-Q dated November 5, 1996 for the
quarter ended September 30, 1996 (File No. 0-11230) and incorporated herein by reference).

10.23 Series D Senior Note dated as of December 13, 1996 drawn from Private Shelf Agreement between the
Registrant and the Prudential Insurance Company of America. (Filed as Exhibit 10(w) to the
Registrant's Annual Report on Form 10-K dated September 24, 1997 for the year ended June 30, 1997
(File No. 0-11230) and incorporated herein by reference).

10.24 Modification to Revolving Credit Agreement between the Registrant and LaSalle National Bank and Bank
Hapoalim dated March 19, 1997. (Filed as Exhibit 10(x) to the Registrant's Annual Report on Form 10-K
dated September 24, 1997 for the year ended June 30, 1997 (File No. 0-11230) and incorporated herein
by reference).

10.25 Series E Senior Note dated as of April 7, 1997 drawn from Private Shelf Agreement between the
Registrant and the Prudential Insurance Company of America. (Filed as Exhibit 10(y) to the
Registrant's Annual Report on Form 10-K dated September 24, 1997 for the year ended June 30, 1997
(File No. 0-11230) and incorporated herein by reference).

10.26 Compensation and Non-competition Agreement dated May 7, 1997 between the Registrant and Myron Kunin.
(Filed as Exhibit 10(z) to the Registrant's Annual Report on Form 10-K dated September 24, 1997 for
the year ended June 30, 1997 (File No. 0-11230) and incorporated herein by reference).

10.27 Term Note B Agreement between the Registrant and LaSalle National Bank dated July 11, 1997. (Filed as
Exhibit 10(aa) to the Registrant's Annual Report on Form 10-K dated September 24, 1997 for the year
ended June 30, 1997 (File No. 0-11230) and incorporated herein by reference).

10.28 Modification of Private Shelf Agreement between the Registrant and the Prudential Insurance Company
of America dated July 11, 1997. (Filed as Exhibit 10(bb) to the Registrant's Annual Report on Form
10-K dated September 24, 1997 for the year ended June 30, 1997 (File No. 0-11230) and incorporated
herein by reference).

10.29 Series F Senior Note dated as of July 28, 1997 drawn from Private Shelf Agreement between the
Registrant and the Prudential Insurance Company of America. (Filed as Exhibit 10(cc) to the
Registrant's Annual Report on Form 10-K dated September 24, 1997 for the year ended June 30, 1997
(File No. 0-11230) and incorporated herein by reference).

10.30 Modification of Private Shelf Agreement between the Registrant and the Prudential Insurance Company
of America dated October 1, 1997. (Filed as Exhibit 10(ff) to the Registrant's Quarterly Report on
Form 10-Q dated February 9, 1998 for the quarter ended December 31, 1997 (File No. 0-11230) and
incorporated herein by reference).
</TABLE>

II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.31 Private Shelf Agreement dated as of December 19, 1997 between the Registrant and INC Investment
Management, Inc. (Filed as Exhibit 10(gg) to the Registrant's Quarterly Report on Form 10-Q dated
February 9, 1998 for the quarter ended December 31, 1997 (File No. 0-11230) and incorporated herein
by reference).

10.32 Series R-1 Senior Note dated as of December 19, 1997 drawn from Private Shelf between Registrant and
INC Investment Management, Inc. (Filed as Exhibit 10(hh) to the Registrant's Quarterly Report on Form
10-Q dated February 9,1998 for the quarter ended December 31, 1997 (File No. 0-11230) and
incorporated herein by reference).

10.33 Series R-2 Senior Note dated as of December 19, 1997 drawn from Private Shelf between Registrant and
INC Investment Management, Inc. (Filed as Exhibit 10(u) to the Registrant's Quarterly Report on Form
10-Q dated February 9, 1998 for the quarter ended December 31, 1997 (File No. 0-11230) and
incorporated herein by reference).

10.34 Modification to Revolving Credit Agreement between the Registrant and LaSalle National Bank and Bank
Hapoalim dated December 30, 1997. (Filed as Exhibit 10(jj) to the Registrant's Quarterly Report on
Form 10-Q dated February 9, 1998 for the quarter ended December 31, 1997 (File No. 0-11230) and
incorporated herein by reference).

10.35 Revolving Credit Agreement dated as of May 5, 1998 between the Registrant and Bank of America
National Trust and Savings Association. (Filed as Exhibit 10(ii) to the Registrant's Annual Report on
Form 10-K dated September 17, 1998 for the year ended June 30, 1998 (File No. 0-11230) and
incorporated herein by reference).

10.36 Series G Senior Note dated as of July 10, 1998 between the Registrant and Prudential Insurance
Company of America. (Filed as Exhibit 10(hh) to the Registrant's Annual Report on Form 10-K dated
September 17, 1998 for the year ended June 30, 1998 (File No. 0-11230) and incorporated herein by
reference).

10.37 Modification to Revolving Credit Agreement between the Registrant and LaSalle National Bank and Bank
Hapoalim dated September 1, 1998. (Filed as Exhibit 10(jj) to the Registrant's Annual Report on Form
10-K dated September 17, 1998 for the year ended June 30, 1998 (File No. 0-11230) and incorporated
herein by reference).

10.38 Variation and Restatement Agreement dated as of August 10, 1998 between Regis Europe Limited and
National Westminster Bank Plc. (Filed as Exhibit 10(ll) to the Registrant's Annual Report on Form
10-K dated September 17, 1998 for the year ended June 30, 1998 (File No. 0-11230) and incorporated
herein by reference).

10.39 Term Note C Agreement between the Registrant and LaSalle National Bank dated September 1, 1998.
(Filed as Exhibit 10(mm) to the Registrant's Quarterly Report on Form 10-Q dated November 9, 1998 for
the quarter ended September 30, 1998 (File No. 0-11230) and incorporated herein by reference).

21* Subsidiaries of the Registrant

23.1* Consent of PricewaterhouseCoopers LLP with respect to the audited consolidated financial statements
of Regis Corporation
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
23.2* Consent of Ernst & Young LLP with respect to the financial statements of The Barbers, Hairstyling for
Men & Women, Inc.

23.3* Consent of U.S. Bancorp Piper Jaffray Inc. (contained in Appendix B to this Proxy Statement/
Prospectus)

23.4* Consent of Bert M. Gross, General Counsel of Regis (contained in Exhibit 5)

23.5* Consent of Gray, Plant, Mooty, Mooty & Bennett, P.A. (contained in Exhibit 8)

24* Powers of Attorney (see signature page)

99.1* Form of The Barbers, Hairstyling for Men & Women, Inc. Proxy Card

99.2* Florence F. Francis Voting Agreement

99.3* Florence F. Francis Noncompetition Agreement

99.4* Florence F. Francis Transition Agreement

99.5* John W. Francis Employment Agreement

99.6* Side Letter Regarding Lease between The Francis Family Limited Partnership and the Registrant

99.7* Interim Earnings Release Side Letter between Florence F. Francis and the Registrant
</TABLE>

- ------------------------

* Filed herewith.

(b) FINANCIAL STATEMENT SCHEDULES.

All schedules are omitted because the required information is not applicable
or is included in the Financial Statements of the Registrant and related notes.

The opinion of U.S. Bancorp Piper Jaffray Inc. is attached as Appendix B to
the Proxy Statement/ Prospectus that forms a part of this Registration
Statement.

ITEM 22. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the

II-6
<PAGE>
applicable registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
Items of the applicable form.

(c) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such posteffective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of the receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.

(e) The undersigned registrant hereby undertakes to supply by means of a
posteffective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.

(f) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act, and will be governed by the final
adjudication of such issue.

II-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on April 5, 1999.

<TABLE>
<S> <C> <C>
REGIS CORPORATION

By: /s/ PAUL D. FINKELSTEIN
-----------------------------------------
Paul D. Finkelstein
CHIEF EXECUTIVE OFFICER
</TABLE>

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Paul D. Finkelstein and Bert M. Gross, and each
of them, his/her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for him/her and in his/her name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full powers and authority to do and perform each and
every act and things requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their or his/her substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

<C> <S> <C>
/s/ MYRON KUNIN
- ------------------------------ Chairman of the Board and April 5, 1999
Myron Kunin Director

/s/ PAUL D. FINKELSTEIN
- ------------------------------ President, Chief Executive April 5, 1999
Paul D. Finkelstein Officer and Director

Senior Vice
/s/ RANDY L. PEARCE President-Finance, Chief
- ------------------------------ Financial Officer, and April 5, 1999
Randy L. Pearce Chief Accounting Officer
</TABLE>

II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

<C> <S> <C>
/s/ CHRISTOPHER A. FOX
- ------------------------------ Executive Vice President April 5, 1999
Christopher A. Fox and Director

- ------------------------------ Director
Rolf F. Bjelland

/s/ THOMAS L. GREGORY
- ------------------------------ Director April 5, 1999
Thomas L. Gregory

/s/ VAN ZANDT HAWN
- ------------------------------ Director April 5, 1999
Van Zandt Hawn

/s/ SUSAN S. HOYT
- ------------------------------ Director April 5, 1999
Susan S. Hoyt

/s/ DAVID B. KUNIN
- ------------------------------ Director April 5, 1999
David B. Kunin
</TABLE>

II-9

<PAGE>

Exhibit 5

#380

April ___, 1999

Regis Corporation
7201 Metro Boulevard
Minneapolis, MN 55439

Gentlemen:

I have acted as counsel to Regis Corporation, a Minnesota corporation (the
"Company"), in connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), relating to
the proposed issuance of up to ____________ shares of the Company's Common
Stock, par value $.05 (the "Common Stock"). The Common Stock is being registered
in connection with the merger of Regis Merger Sub, Inc. (the "Merger Sub"), a
wholly owned subsidiary of the Company, with and into The Barbers, Hairstyling
for Men & Women, Inc. ("Barbers") (the "Merger") pursuant to an Agreement and
Plan of Merger among the Company, Merger Sub, and Barbers, dated as of January
25, 1999, as amended (the "Merger Agreement"). The Common Stock is described in
the Proxy Statement/Prospectus included in the Registration Statement to which
this opinion is an exhibit.

I have examined an executed copy of the Registration Statement (including the
exhibits thereto), the Articles of Incorporation of the Company filed with the
Secretary of State of the State of Minnesota and such corporate records,
documents and other instruments and have made such other examinations and
inquiries as I have deemed necessary to enable me to express the opinions set
forth herein.

Based upon the foregoing and subject to the qualifications and limitations
stated herein, and assuming the effectiveness of the Registration Statement
under the Act, I am of the opinion that:

The shares of Common Stock issuable upon the Merger have been
duly authorized and, upon issuance, delivery and exchange as described
in the Merger Agreement, will be validly issued, fully paid and
nonassessable.

The opinions set forth herein relate solely to the laws of the State of
Minnesota and the federal laws of the United States.
<PAGE>

Letter to
April , 1999
Page 2

I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of my name under the heading "Legal Matters" in the
prospectus forming a part of the Registration Statement.

Very truly yours,

REGIS CORPORATION

By
---------------------------
Bert M. Gross

<PAGE>

EXHIBIT 8

___________, 1999

The Barbers Hairstyling for Men & Women, Inc.
300 Industrial Boulevard N.E.
Minneapolis, MN 55413

Ladies and Gentlemen:

We have acted as counsel to you, The Barbers Hairstyling for Men &
Women, Inc. (the "Company"), in connection with the transaction (the "Merger")
whereby Regis Merger Sub, Inc. ("Merger Sub"), a direct, wholly-owned subsidiary
of Regis Corporation ("Regis"), will merge with and into the Company pursuant to
that certain Agreement and Plan of Merger dated as of January 25, 1999 (the
"Agreement") among Regis, Merger Sub, and the Company. We are delivering this
opinion, relating to certain federal income tax consequences of the Merger,
pursuant to Section 6.2(k) of the Agreement. Terms used herein but not defined
herein have the same meaning as in the Agreement.

In the Merger, Merger Sub shall be merged with and into the Company by
a statutory merger in accordance with the Minnesota Business Corporation Act
(the "MBCA"). The separate existence of Merger Sub shall cease and the Company
shall be the surviving entity. Pursuant to the Agreement, each share of Company
Common Stock which shall be outstanding immediately prior to the Merger shall be
converted into a portion of a share of Common Stock, $.05 par value per share,
of Regis ("Regis Stock"). In addition, each share of Merger Sub stock
outstanding immediately prior to the Merger shall be converted into a share of
Company Common Stock. No fractional shares of Regis Stock shall be issued in the
Merger, but instead fractional shares shall be converted into cash. Company
shareholders may exercise dissenter's rights in accordance with the MBCA.

In rendering our opinion, we have examined and relied upon the accuracy
and completeness of the facts, information, covenants, representations, and
warranties contained in originals or copies, certified or otherwise, identified
to our satisfaction, of the Agreement, the combined Proxy Statement of the
Company and Prospectus of Regis (the "Proxy Statement/Prospectus") which is
included in the Registration Statement on Form S-4, Registration No. _________,
filed on ___________, 1999 with the Securities and Exchange Commission, the
Continuity of Interest Agreements given in connection with the Merger among
Regis, the Company and certain shareholders of the Company who are signatories
thereto, and such other documents, including, but not limited to, schedules
prepared by the Company or the Exchange Agent, as we have deemed necessary or
appropriate as a basis for the opinion set forth below. In addition, as to
certain facts material to our opinion which we did not independently establish
or verify, we have relied upon the accuracy of written representations made by
an authorized officer or representative of each of Regis, the Company, and
Merger Sub in letters dated the date hereof and addressed to us. Our opinion is
conditioned on, among other things, the accuracy and completeness, as of the
Effective Time, of such facts, information, covenants, agreements,
representations, and warranties referred to above.

In our examination of documents in connection with this opinion, we
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as copies and
the authenticity of the originals of such documents, and that all documents are
legally binding and enforceable in accordance with their terms. In rendering our
opinion, we have also assumed (i) that the

<PAGE>

The Barbers Hairstyling for Men & Women, Inc.
Page 2
________, 1999

Merger will be consummated (A) in accordance with the Agreement, and that
none of the material terms or conditions contained therein has been waived or
modified in any respect and (B) as described in the Proxy/Statement
Prospectus, and (ii) that the Merger qualifies as a statutory merger under
the laws of the State of Minnesota. A change or inaccuracy in any of the
facts or assumptions set forth herein may adversely affect our opinion.

Our opinion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), as of the date hereof and currently applicable Treasury
Regulations promulgated under the Code (including proposed Treasury
Regulations), published administrative positions of the Internal Revenue Service
in revenue rulings and revenue procedures, and judicial decisions. Such legal
authorities are all subject to change, either prospectively or retroactively. No
assurance can be provided as to the effect of any such change upon our opinion.

The opinions set forth herein have no binding effect on the Internal
Revenue Service or the courts. No assurance can be given that, if contested, a
court would agree with the opinions set forth herein. The opinions set forth
herein represent rather our best legal judgment as to the likely outcome of the
issues addressed herein if such issues were litigated.

Based upon and subject to the foregoing, it is our opinion that the
Merger will qualify as a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code and that each of Regis, Merger Sub,
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code.

In the case of a transaction as complex as the Merger, many federal,
state and local income and other tax consequences arise. We have been asked only
to address the issues specifically set forth in the immediately preceding
paragraph. No opinion is expressed regarding any other issues.

This opinion letter is being delivered solely for the benefit of the
Company and its shareholders as of the date of the Merger. It may not be relied
upon for any other purpose or by any other person for any purpose without our
prior written consent.

We hereby consent to the filing of a copy of this opinion with the
Registration Statement and to the reference to our firm contained in the
Registration Statement.

Very truly yours,

GRAY, PLANT, MOOTY,
MOOTY & BENNETT, P.A.

<PAGE>

REGIS CORPORATION SUBSIDIARIES

Trade Secret, Inc., a Colorado corporation
TRADE NAME(S): TRADE SECRET, BEAUTY EXPRESS

Supercuts, Inc., a Delaware corporation
TRADE NAME(S): SUPERCUTS

Regis Merger Sub, Inc., a Minnesota corporation

Regis Acquisition Sub, Inc., a Minnesota corporation
TRADE NAME(S): HEIDI'S SALON

N.A.H.C. Acquisition LLC, a Minnesota limited liability company
TRADE NAME(S): NO APPOINTMENT FAMILY HAIRCUTTERS

Regis Europe Ltd., an England and Wales company
TRADE NAME(S): HAIR EXPRESS, REGIS HAIRSTYLISTS

Regis Hairstylists Ltd., an Ontario corporation
TRADE NAME(S): REGIS HAIRSTYLISTS, MASTERCUTS, TRADE SECRET

Supercuts Canada Ltd., a Yukon Territory corporation
TRADE NAME(S): SUPERCUTS

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration
statement of Regis Corporation on Form S-4 of our reports dated August 21, 1998,
on our audits of the consolidated financial statements and financial statement
schedule of Regis Corporation which reports are included in or incorporated by
reference into its Annual Report on Form 10-K for the year ended June 30, 1998.
We also consent to the reference to our firm under the captions "Regis Selected
Historical Consolidated Financial Information" and "Experts."

/s/ PricewaterhouseCoopers LLP

PRICEWATERHOUSECOOPERS LLP

Minneapolis, Minnesota
April 6, 1999

<PAGE>

EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP

We consent to the reference to our firm under the captions "Experts" and "The
Barbers Selected Historical Consolidated Financial Information" and to the
use of our report dated November 2, 1998, with respect to the financial
statements of The Barbers, Hairstyling for Men and Women, Inc. included in
the Proxy Statement/Prospectus, that is made a part of the Registration
Statement (Form S-4) of Regis Corporation.

/s/ ERNST & YOUNG LLP

Minneapolis, Minnesota
April 5, 1999

<PAGE>

EXHIBIT 99.1

THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned having duly received the Notice of Special Meeting and
the Proxy Statement/Prospectus dated _____________, 1999, hereby appoints the
Chairman of the Board, Florence F. Francis, and the Chief Executive Officer,
Frederick A. Huggins, Jr., as proxies (each with the power to act alone and with
the power of substitution and revocation) to represent the undersigned and to
vote, as designated below, all common shares of The Barbers, Hairstyling for Men
& Women, Inc., held of record by the undersigned on April 19, 1999, at the
Special Meeting of Shareholders to be held on Thursday, May 20, 1999 at
_______________, at __:__ p.m. Central Time, and at any adjournment thereof.

1. PROPOSAL TO APPROVE THE MERGER, / / FOR / / AGAINST / / ABSTAIN
THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREIN.

2. IN THEIR DISCRETION, THE PROXIES / / FOR / / AGAINST / / ABSTAIN
ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.

(CONTINUED ON OTHER SIDE)

<PAGE>

(CONTINUED FROM OTHER SIDE)

This Proxy, when properly executed, will be voted in the manner directed on
the Proxy be the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.

Please sign exactly as your name appears on this card. When shares are
held by joint tenants, both should sign. If signing as attorney, guardian,
executor, administrator or trustee, please give full title as such. If a
corporation, please sign in the corporate name by the president or other
authorized officer. If a partnership, please sign in the partnership name by an
authorized person.

--------------------------------------------
(Signature)

--------------------------------------------
(Signature, if held jointly)

Dated: ___________________________, 1999

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
RETURN ENVELOPE.

<PAGE>

PERSONAL & CONFIDENTIAL

January 25, 1999

Ms. Florence F. Francis
The Barbers, Hairstyling for Men & Women, Inc.
300 Industrial Boulevard N.E.
Minneapolis, MN 55413

Dear Ms. Francis:

This letter will confirm our agreement with respect to your voting the shares of
The Barbers, Hairstyling for Men and Women, Inc. (the "Barbers") owned by you at
a Barbers shareholders meeting called to consider a proposed merger between the
Barbers and Regis Corporation ("Regis). We have agreed as follows:

1. You will vote, or cause to be voted, all Barbers shares owned by you in
favor of the proposed merger between the Barbers and Regis, subject to
the provisions of the following paragraph.

2. In the event that the Board of Directors of the Barbers determines,
pursuant to Section 5.10(a) of the Agreement and Plan of Merger that
the Board has a fiduciary obligation to consider another transaction,
or to terminate the Agreement and Plan of Merger, you will not be
required to vote your shares in favor of the merger while such other
transaction is being considered, or after termination of the Agreement
and Plan of Merger.

3. In consideration of your agreement as set forth in paragraph 1 above,
Regis agrees to indemnify you and hold you harmless from and against
any and all claims or liabilities asserted against you by any third
party arising from this agreement or any actions taken by you pursuant
to this agreement.

4. We agree that irreparable damage would occur if any provision of this
agreement is not performed in accordance with its terms and that the
parties shall be entitled to specific performance of the terms hereof,
in addition to any other remedy at law or in equity.

5. This agreement will terminate on the earlier to occur of the
termination of the merger agreement in accordance with Section 7.1
thereof, or the closing of the merger transaction.
<PAGE>

Letter to Florence Francis
Page 2
January 25, 1999

If you are in agreement with the terms of this letter, please sign and return to
me a copy of this letter acknowledging your agreement.

Best regards.

Sincerely,

REGIS CORPORATION

/s/ Paul D. Finkelstein
- --------------------------------------
Paul D. Finkelstein
President

PDF:peb

The terms and conditions set forth above are hereby agreed to and accepted this
___ day of January, 1999.

/s/ Florence F. Francis
- --------------------------------------
Florence F. Francis

<PAGE>

NON-COMPETITION AGREEMENT

This Non-competition Agreement (this "Agreement") is made as of February 3,
1999, by and between Regis Corporation, a Minnesota corporation ("Regis"), and
Florence F. Francis ("Francis").

RECITALS

A. Concurrently with the execution and delivery of this Agreement, Regis is
acquiring all of the outstanding shares (the "Shares") of common stock, par
value $.10 per share, of The Barbers, Hairstyling for Men & Women, Inc. (the
"Company") pursuant to the terms and conditions of an Agreement and Plan of
Merger made as of January 25, 1999, (the "Merger Agreement").

B. Francis is presently the Chairman of the Board of Directors the Company, has
been a member of the Board of Directors of the Company since 1989, is a major
shareholder of the Company, and has directed public relations and franchisee
relations for the Company since 1988.

C. It is of the utmost importance to the future business operations of Regis and
the Company after the merger that Francis not enter into a competitive business.

AGREEMENT

The parties, intending to be legally bound, agree as follows:

1. DEFINITIONS

Capitalized terms not expressly defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement.

2. ACKNOWLEDGMENTS BY FRANCIS

Francis acknowledges that (a) she has occupied a position of trust and
confidence with the Company prior to the date hereof and has become familiar
with the following, any and all of which constitute confidential information of
the Company, (collectively the "Confidential Information"): (i) any and all
trade secrets concerning the business and affairs of the Company, product
specifications, data, past, current and planned research and development,
current and planned manufacturing and distribution methods and processes,
customer lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs, methods and
information of the Company and any other information, however documented, of the
Company that is a trade secret; (ii) any and all information concerning the
business and affairs of the Company (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials) however documented; and (iii)
any and all notes, analysis, compilations, studies, summaries, and
<PAGE>

other material prepared by or for the Company containing or based, in whole or
in part, on any information included in the foregoing, (b) the business of the
Company is international in scope, (c) its products and services are marketed
throughout the World; (d) the Company competes with other businesses that are or
could be located in any part of the World; (e) Regis has required that Francis
make the covenants set forth in Sections 3 and 4 of this Agreement as a
condition to the Merger Agreement; (f) the provisions of Sections 3 and 4 of
this Agreement are reasonable and necessary to protect and preserve the Company'
business, and (g) the Company would be irreparably damaged if Francis were to
breach the covenants set forth in Sections 3 and 4 of this Agreement.

3. CONFIDENTIAL INFORMATION

Francis acknowledges and agrees that all Confidential Information known or
obtained by Francis, whether before or after the date hereof, is the property of
the Company. Therefore, Francis agrees that she will not, at any time, disclose
to any unauthorized Persons or use for her own account or for the benefit of any
third party any Confidential Information, whether Francis has such information
in her memory or embodied in writing or other physical form, without Regis'
written consent, unless and to the extent that the Confidential Information is
or becomes generally known to and available for use by the public other than as
a result of Francis' fault or the fault of any other Person bound by a duty of
confidentiality to Regis or the Company.

4. NON-COMPETITION

As an inducement for Regis to enter into the Merger Agreement and the
consideration to be paid under this Agreement, Francis agrees that:

(a) For a period of eight (8) years after the Closing:

(i) Francis will not, directly or indirectly, engage or invest
in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed
by, associated with, or in any manner connected with, or render
services or advice to, any business whose products or activities
compete in whole or in part with the products or activities of Regis or
the Company, anywhere in the World; provided, however, that the
purchase or other shares acquisition and ownership by Francis of
securities not aggregating more than 5% of the outstanding capital
stock of any corporation listed on a national securities exchange or
Nasdaq shall not constitute a breach of this Section 4(a).

(ii) Francis will not, directly or indirectly, either for
herself or any other Person, (A) induce or attempt to induce any
employee of the Company or Regis to leave the employ of the Company or
Regis, (B) in any way interfere with the relationship between the
Company or Regis and any employee of the Company or Regis, or (C)
induce or attempt to induce any customer, supplier, licensee, or
business relation of the Company or Regis to cease doing business with
the Company or Regis, or in any way interfere with the relationship
between any customer, supplier, licensee, or business

2
<PAGE>

relation of the Company or Regis.

(b) Francis will not, at any time during or after the eight year
period, disparage Regis or the Company, or any of their shareholders, directors,
officers, employees, or agents; provided, however, that nothing in this Section
4(b) shall prohibit Francis from testifying when legally compelled to do so or
when required to enforce her rights under this Agreement or other Agreements
between Francis and the Company or Regis, and no such testimony shall be deemed
a breach hereunder.

5. COMPENSATION

As consideration for the covenants in Section 4 of this Agreement, Regis will
pay Francis the sum of Five Hundred Eighty Thousand and 00/100 Dollars
($580,000.00) over a period of five years, payable in equal and successive
monthly installments of $9,666.67.

6. REMEDIES

If Francis breaches the covenants set forth in Sections 3 or 4 of this
Agreement, Regis will be entitled to the following remedies:

(a) Damages from Francis;

(b) To discontinue payment of any and all amounts owing to Francis
under Section 5 of this Agreement; and

(c) In addition to its right to damages and any other rights it
may have, to obtain injunctive or other equitable relief to restrain any breach
or threatened breach or otherwise to specifically enforce the provisions of
Sections 3 and 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate Regis and would be an inadequate remedy for
such breach.

(d) The rights and remedies of the parties to this Agreement are
cumulative and not alternative.

7. SUCCESSORS AND ASSIGNS

This Agreement will be binding upon Regis and Francis and will inure to the
benefit of Regis and its affiliates, successors and assigns and Francis and
Francis' assigns, heirs and legal representatives.

8. WAIVER

The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial

3
<PAGE>

exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of such party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement.

9. GOVERNING LAW

This Agreement will be governed by the laws of the State of Minnesota without
regard to conflicts of laws principles.

10. JURISDICTION; SERVICE OF PROCESS

Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of Minnesota, County of Hennepin, or, if it has or
can acquire jurisdiction, in the United States District Court for the District
of Minnesota, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.

11. SEVERABILITY

Whenever possible each provision and term of this Agreement will be interpreted
in a manner to be effective and valid but if any provision or term of this
Agreement is held to be prohibited by or invalid, then such provision or term
will be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the covenants set forth in Section 4 of this Agreement are held to be
unreasonable, arbitrary, or against public policy, such covenants will be
considered divisible with respect to scope, time, and geographic area, and in
such lesser scope, time and geographic area, will be effective, binding and
enforceable against Francis.

12. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

4
<PAGE>

13. NOTICES

All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by certified
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth below (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other parties):

To Florence F. Francis:

Florence F. Francis
c/o The Barbers, Hairstyling for Men & Women, Inc.
300 Industrial Boulevard N.E.
Minneapolis, MN 55413
Facsimile No.: (612) 331-2821

with a copy to:

Thomas Martin, Esq.
Dorsey & Whitney
220 South Sixth Street
Minneapolis, MN 55402
Facsimile No.: (612) 340-2868

To Regis Corporation:

Regis Corporation
7201 Metro Boulevard
Minneapolis, MN 55439
Attention: President
Facsimile No: (612) 947-7900

With a copy to:

Bert M. Gross, Esq.
Regis Corporation
7201 Metro Boulevard
Minneapolis, MN 55439
Facsimile No: (612) 947-7301

5
<PAGE>

IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.

REGIS CORPORATION

By: /s/ Paul D. Finkelstein
------------------------------------
Paul D. Finkelstein, President

/s/ Florence F. Francis
---------------------------------------
Florence F. Francis

<PAGE>

EXHIBIT 99.4

TRANSITION AGREEMENT

TRANSITION AGREEMENT (this "Agreement") dated as of January 25, 1999
between Regis Corporation (the "Company"), a Minnesota corporation, and Florence
F. Francis ("Executive"), a Minnesota resident.

WHEREAS, Executive has been Chairperson for five years and an executive
officer for than twenty years of The Barbers, Hairstyling for Men & Women, Inc.
(the "Barbers");

WHEREAS, simultaneous with the date of this Transition Agreement, the
Barbers has signed an Agreement and Plan of Merger pursuant to which, and
subject to the terms contained therein, the Barbers will be acquired through
merger (the "Merger") with a wholly owned subsidiary of the Company;

WHEREAS, the Barbers has developed one of the most successful franchised
systems for hair care in the world, with one of the highest ratings for
franchisee satisfaction, in part through the personal relationships established
by Executive;

WHEREAS, the Company wishes to retain the services of Executive after the
Merger on a part time basis to act as a good-will ambassador for the Barbers'
franchisees and franchise system;

WHEREAS, the Executive is willing to continue to assist the Barbers, as a
subsidiary of the Company, subject to the terms and conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein set forth and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:

1. EFFECTIVE TIME. This Agreement shall be effective only at and after
the effective time of the Merger (the "Effective Time") and, if the Merger is
not consummated, shall be of no further force or effect.

2. RETENTION OF EXECUTIVE; SERVICES TO BE PERFORMED. Effective the
Effective Time, the Company hereby retains Executive to act as a good-will
ambassador on behalf of the Company with Barbers franchisees, and in connection
therewith, to attend meetings and conventions of Barbers franchisees, to attend
board meetings and conventions of the International Franchise Association
("IFA") and to contact, discuss and consult with franchisees of the Barbers from
time to time at the request of the Company. Executive hereby accepts such
engagement and agrees to perform such services for the Company upon the terms
and conditions set forth in this Agreement. During the Term (as defined in
Section 2), Executive shall devote such portion of her time, attention, skill
and energy to the business of the Company as may be reasonably required to
perform the services required by this Agreement, and shall assume and perform to
the best of her ability the responsibilities and duties pursuant to this
Agreement. Executive shall report to Paul Finkelstein, and shall not be
required to take direction from any other officer or employee of the Company.

Executive shall perform the services hereunder from her current office at
the Barbers at 300 Industrial Boulevard Northeast, Minneapolis, Minnesota 55413
and the Company shall make such office available to Executive as long as it
occupies such premises. Thereafter, Executive may perform the services from a
home office, or at such other location as the Company and Executive shall
mutually agree.

3. TERM. The term of this Agreement shall commence as of the Effective
Time and shall continue until September 28, 2002 (the "Term").

4. COMPENSATION. (a) From the Effective Time through the end of the
current fiscal year of the Barbers (September 28, 1999), the Company shall
continue Executive's salary and benefits at the level maintained by the Barbers,
as previously disclosed to the Company. The Company acknowledges that, because
the Executive

<PAGE>

will no longer have operating control over the operations that give rise to the
bonus plan of the Barbers and because of substantial disruption in such
operations that may occur because of the Merger, the $128,775 bonus established
by the Barbers for Executive shall be payable regardless of achievement of plan
objectives.

(b) From September 28, 1999 through September 28, 2002, the Company shall
provide the following salary and benefits to the Executive:

(i) a base salary of $50,000 per year, less deductions and
withholdings, which salary shall be paid on a monthly basis in arrears
in accordance with the Company's normal payroll procedures and
policies.

(ii) Health insurance benefits (but not disability benefits)
under the Company's plans, with coverage at least equal to the
coverage afforded Executive under the plans of the Barbers.

(iii) Reimbursement of the Executive for all reasonable and
necessary out-of-pocket expenses incurred by Executive in the
performance of her duties under this Agreement, including, without
limitation, reimbursement for travel and lodging for Executive to the
conventions and meetings that Executive is required to attend during
the term of this Agreement, including, to the extent approved by Paul
Finkelstein, the annual Cost Cutters, City Looks and We Care Hair
meetings in 1999, 2000 and 2001, the annual Groupe Gerard Glemain
meetings in 1999, 2000 and 2001, and membership dues in, and travel
and lodging to meetings of the board of directors of, the IFA in 1999,
2000 and 2001.

(iv) Continued use of the automobile currently provided to the
Executive by the Barbers.

(c) At the Effective Time, the Company will reimburse Executive for the
fees of counsel to the Executive in connection with this and related agreements,
to the extent not previously reimbursed by the Barbers.

5. TERMINATION. Notwithstanding any contrary provision contained
elsewhere in this Agreement, this Agreement and the rights and obligations of
the Company and Executive hereunder shall be terminated immediately upon the
occurrence of any of the following events:

(a) Executive's death;

(b) Executive becomes physically or mentally disabled such that she is
unable to adequately perform the services hereunder for a continuous period of
180 days;

(d) Executive has engaged in willful misconduct that is materially
detrimental to the interests of the Company (for such purposes no act, or
failure to act, on Executive's part shall be considered "willful" unless done,
or omitted to be done, by Executive in bad faith and without reasonable belief
that her action or omission was in the best interests of the Company).

If this Agreement is terminated pursuant to this Section 5, Executive shall
be entitled to receive her pro rata compensation through the date of
termination, but all other rights to receive consulting fees shall terminate on
such date.

6. MISCELLANEOUS.

(a) ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties hereto with respect to the services to be provided by
Executive after the Merger and, effective at the Effective Time, shall

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<PAGE>

supersede any prior understandings, agreements or representations, written or
oral, relating to such subject matter, including, without limitation, that
certain Chairman's Compensation Program between the Barber's and Executive dated
as of October 13, 1994.

(b) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken together
shall constitute one and the same agreement, and any party hereto may execute
this Agreement by signing any such counterpart.

(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives and, to the extent permitted by subsection (e), successors and
assigns.

(e) ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereunder shall not be assignable, in whole or in part, by either party
without the prior written consent of the other party.

(g) NOTICES. All notices, consents, requests, instructions, approvals or
other communications provided for herein shall be in writing and delivered by
personal delivery, overnight courier, mail, electronic facsimile or e-mail
addressed to the receiving party at the address set forth below. All such
communications shall be effective when received.

Regis Corporation
7201 Metro Boulevard
Minneapolis, MN 55439
Attention: Paul D. Finkelstein

Florence F. Francis
1201 Yale Place #2102
Minneapolis, MN 55403

Any party may change the address set forth above by notice to each other party
given as provided herein.

(h) HEADINGS. The headings and any table of contents contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

(i) GOVERNING LAW. ALL MATTERS RELATING TO THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW PROVISIONS THEREOF.

(j) THIRD-PARTY BENEFIT. Nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights, remedies, obligations or
liabilities of any nature whatsoever.

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<PAGE>

(k) NO WAIVER. No delay on the part of the Company in exercising any
right hereunder shall operate as a waiver of such right. No waiver, express or
implied, by the Company of any right or any breach by Executive shall constitute
a waiver of any other right or breach by Executive.

(l) JURISDICTION AND VENUE. THIS AGREEMENT MAY BE ENFORCED IN FEDERAL
COURT OR STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA, AND EACH PARTY
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT VENUE IN SUCH FORUM IS NOT CONVENIENT. IF ANY PARTY COMMENCES ANY ACTION
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT IN ANOTHER JURISDICTION OR VENUE, ANY
OTHER PARTY TO THIS AGREEMENT SHALL HAVE THE OPTION OF TRANSFERRING THE CASE TO
THE ABOVE DESCRIBED VENUE OR JURISDICTION OR, IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

(m) REMEDIES. The parties agree that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party
may, in its discretion, apply to any court of law or equity of competent
jurisdiction for specific performance and injunctive relief in order to enforce
or prevent any violations this Agreement, and any party against whom such
proceeding is brought hereby waives the claim or defense that such party has an
adequate remedy at law and agrees not to raise the defense that the other party
has an adequate remedy at law.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth in the first paragraph.

REGIS CORPORATION

By /s/ Paul D. Finkelstein
--------------------------------
Paul D. Finkelstein
Its: President

/s/ Florence F. Francis
--------------------------------
Florence F. Francis

<PAGE>

EXHIBIT 99.5

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this "Agreement") dated as of January 25, 1999,
between Regis Corporation (the "Company"), a Minnesota corporation, and John W.
Francis (the "Employee"), a resident of the State of Minnesota.

WHEREAS, the Employee is currently employed as an executive officer of The
Barbers, Hairstyling for Men & Women, Inc. (the "Barbers"); and

WHEREAS, The Company, has agreed to acquire the Barbers through a merger
(the "Merger") of the Barbers with a wholly-owned subsidiary of the Company; and

WHEREAS, the Company desires to retain the services of the Employee
subsequent to the Merger and the Employee desires to be employed by the Company,
on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises, the mutual agreements set
forth herein and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:

1. EMPLOYMENT. Effective only on and after the effective time of the
Merger (the "Effective Time"), the Company hereby employs the Employee, and the
Employee accepts such employment and agrees to perform services for the Company,
for the period and upon the other terms and conditions set forth in this
Agreement.

2. TERM. Unless terminated at an earlier date in accordance with
Section 5 of this Agreement, the term of the Employee's employment hereunder
shall be for a period of three years, commencing at the Effective Time.
Thereafter, the term of this Agreement shall be automatically extended for
successive one-year periods unless either party objects to such extension by
written notice to the other party at least 30 days prior to the expiration of
the initial term or any extension term.

3. POSITION AND DUTIES.

(a) SERVICE WITH COMPANY. During the term of the Employee's employment,
the Employee agrees to perform such reasonable employment duties as the Board of
Directors of the Company shall assign to him from time to time. The Employee
also agrees to serve, for any period for which he is elected, as an officer of
the Company. The Employee's title shall initially be as a "Vice President" of
the Company.

(b) PERFORMANCE OF DUTIES. The Employee agrees to serve the Company
faithfully and to the best of his ability and to devote his full time, attention
and efforts to the business and affairs of the Company during his employment by
the Company. The Employee hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement and
that during the term of this Agreement, he will not render or perform services
for any other corporation, firm, entity or person which are inconsistent with
the provisions of this Agreement. While he remains employed by the Company, the
Employee may participate in reasonable charitable activities and personal
investment activities so long as such activities do not interfere with the
performance of his obligations under this Agreement.

4. COMPENSATION.

(a) BASE SALARY. As compensation in full for all services to be
rendered by the Employee under this Agreement, the Company shall pay to the
Employee a base salary of $80,000, less deductions and withholdings, which
salary shall be paid on a monthly basis in arrears in accordance with the
Company's normal payroll procedures and policies. The compensation payable to
the Employee during each year after the first year of the Employee's employment
shall be established by the Company's Board of Directors following an annual

<PAGE>

performance review, but in no event shall the salary for any subsequent year be
less than the salary in effect for the prior year.

(b) BONUS. In addition to the base compensation described in section
4(a), the Company shall also create and maintain an incentive plan in which
Employee shall participate in bonuses on the same basis as it established by the
Company for other, similarly situated executives; provided, however, that
Employee shall be guaranteed a bonus of at least $20,000 per year. In addition
to such bonus plan, Employee shall be entitled to participate in such other
incentive compensation plans as may be established by the Board of Directors of
the Company from time to time and that would be applicable to the Employee or
any executive of the Company with a position similar to Employee.

(c) PARTICIPATION IN BENEFIT PLANS. While he is employed by the
Company, the Employee shall also be eligible to participate in all employee
benefit plans or programs (including vacation time) of the Company to the extent
that the Employee meets the requirements for each individual plan, including, to
the extent appropriate for an executive in a similar position, the Company's
stock option program and including a disability insurance policy designed to
provide benefits equivalent to 60% of Employee's salary.

(d) EXPENSES. The Company will pay or reimburse the Employee for all
reasonable and necessary out-of pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the Company's normal
policies for expense verification. Without limiting the generality of the
foregoing, the Company shall pay the member expenses of Employee in Inner Circle
and the International Franchise Association and shall, to the extent provided to
other executives of the Company, pay the dues of membership of Employee in a
health club chosen by Employee. In addition, the Company shall continue to
provide the Employee with an automobile expense reimbursement allowance for the
automobile leased by the Employee as of the date of this Agreement and for which
the Barbers provides reimbursement, and after termination of such lease, an
automobile allowance of a magnitude equivalent to the allowance provided to
similarly situated executives of the Company.

(e) INDEMNIFICATION AND E & O INSURANCE. The Company will maintain a
policy of indemnification of officers to the maximum extent allowed by Minnesota
Statutes Section 302A.251 and shall maintain a policy of errors and omissions
insurance covering acts by Employee within the scope of his employment.

5. TERMINATION OF EMPLOYMENT.

(a) GROUNDS FOR TERMINATION. The Employee's employment shall terminate
prior to the expiration of the initial term set forth in Section 2 or any
extension thereof in the event that at any time:

(i) The Employee dies,

(ii) The Employee becomes "disabled", so that he cannot
perform the essential functions of his position with or without
reasonable accommodation,

(iii) The Board of Directors of the Company elects to
terminate this Agreement for "cause" and notifies the Employee in
writing of such election,

(iv) The Board of Directors of the Company elects to
terminate this Agreement without "cause" and notifies the Employee in
writing of such election, or

(v) The Employee elects to terminate this Agreement and
notifies the Company in writing of such election.

If this Agreement is terminated pursuant to clause (i), (ii) or (iii) of
this Section 5(a), such termination shall be effective immediately. If this
Agreement is terminated pursuant to clause (iv) or (v) of this Section 5(a),
such termination shall be effective 30 days after delivery of the notice of
termination.

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<PAGE>

(b) "CAUSE" DEFINED. "Cause" means:

(i) The Employee has engaged in willful and material
misconduct and has failed to cure such default within 30 days after
receipt of written notice of default from the Company,

(ii) The Employee has committed fraud, misappropriation or
embezzlement in connection with the Company's business, or

(iii) The Employee has been convicted or has pleaded nolo
contendere to criminal misconduct of a type reflecting poorly on the
Company through his relationship therewith.

In the event that the Company terminates the Employee's employment for "cause"
pursuant to clause (i) of this Section 5(b) and the Employee objects in writing
to the Board's determination that there was proper "cause" for such termination
within 20 days after the Employee is notified of such termination, the matter
shall be resolved by arbitration in accordance with the provisions of Section
6(a). If the Employee fails to object to any such determination of "cause" in
writing within such 20-day period, he shall be deemed to have waived his right
to object to that determination. If such arbitration determines that there was
not proper "cause" for termination, such termination shall be deemed to be a
termination pursuant to clause (iv) of Section 5(a) and the Employee's sole
remedy shall be to receive the wage continuation benefits contemplated by
Section 5(f).

(c) EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Employee, in consideration of his employment hereunder to the
date of such termination, shall remain bound by the provisions of this Agreement
which specifically relate to periods, activities or obligations upon or
subsequent to the termination of the Employee's employment.

(d) "DISABLED" DEFINED. "Disabled" means any mental or physical
condition that renders the Employee unable to perform the essential functions of
his position, with or without reasonable accommodation, for a period in excess
of six months.

(e) SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with the Company, the Employee shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof that relate in
any way to the business, products, practices or techniques of the Company, and
all other property, trade secrets and confidential information of the Company,
including, but not limited to, all documents that in whole or in part contain
any trade secrets or confidential information of the Company, which in any of
these cases are in his/her possession or under his/her control.

(f) SALARY CONTINUATION. If the Employee's employment by the Company is
terminated by the Company pursuant to clause (ii) or (iv) of Section 5(a), the
Company shall continue to pay to the Employee his base salary (less any payments
received by the Employee from any disability income insurance policy provided to
him by the Company) and shall continue to provide health insurance benefits for
the Employee through the remainder of the term of this Agreement. If this
Agreement is terminated pursuant to clauses (i), (iii) or (v) of Section 5(a),
the Employee's right to base salary and benefits shall immediately terminate,
except as may otherwise be required by applicable law.

In either event, if the Employee's employment by the Company terminates
within six months of the end of any fiscal year of the Company, the Employee
shall also be entitled to receive a pro rata portion (based on the number of
days of employment during that fiscal year) of any bonus payment that would have
been payable to him for that fiscal year pursuant to Section 4(b) if the
Employee had been in the employ of the Company for the full fiscal year. No
bonus will be payable to the Employee with respect to any fiscal year in which
the Employee was employed by the Company for less than six months or with
respect to any fiscal year after the fiscal year in which the Employee's
employment terminated.

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<PAGE>

6. SETTLEMENT OF DISPUTES.

(a) ARBITRATION. Except as provided in Section 6(b), any claims or
disputes of any nature between the Company and the Employee arising from or
related to the performance, breach, termination, expiration, application or
meaning of this Agreement or any matter relating to the Employee's employment
and the termination of that employment by the Company shall be resolved
exclusively by arbitration in Minneapolis, Minnesota, in accordance with the
applicable rules of the American Arbitration Association. In the event of
submission of any dispute to arbitration, each party shall, not later than 30
days prior to the date set for hearing, provide to the other party and to the
arbitrator(s) a copy of all exhibits upon which the party intends to rely at the
hearing and a list of all persons each party intends to call at the hearing.
The fees of the arbitrator(s) and other costs incurred by the Employee and the
Company in connection with such arbitration shall be paid by the party that is
unsuccessful in such arbitration.

The decision of the arbitrator(s) shall be final and binding upon both
parties. Judgment of the award rendered by the arbitrator(s) may be entered in
any court of competent jurisdiction.

(b) RESOLUTION OF CERTAIN CLAIMS - INJUNCTIVE RELIEF. Section 6(a)
shall have no application to claims by the Company asserting a violation of
Section 5(e) or seeking to enforce, by injunction or otherwise, the terms of
Section 5(e). Such claims may be maintained by the Company in a lawsuit subject
to the terms of Section 6(c). The Employee acknowledges that it would be
difficult to fully compensate the Company for damages resulting from any breach
by him/her of the provisions of this Agreement. Accordingly, the Employee
agrees that, in addition to, but not to the exclusion of any other available
remedy, the Company shall have the right to enforce the provisions of Sections
5(e) by applying for and obtaining temporary and permanent restraining orders or
injunctions from a court of competent jurisdiction without the necessity of
filing a bond therefor, and without the necessity of proving actual damages, and
the Company shall be entitled to recover from the Employee its reasonable
attorneys' fees and costs in enforcing the provisions of Sections 5(e).

(c) VENUE. Any action at law, suit in equity or judicial proceeding
arising directly, indirectly, or otherwise in connection with, out of, related
to or from this Agreement, or any provision hereof, shall be litigated only in
the courts of the State of Minnesota, County of Hennepin. The Employee and the
Company consent to the jurisdiction of such courts over the subject matter set
forth in Section 5(b). The Employee waives any right the Employee may have to
transfer or change the venue of any litigation brought against the Employee by
the Company.

7. MISCELLANEOUS.

(a) ENTIRE AGREEMENT. This Agreement (including the exhibits, schedules
and other documents referred to herein) contains the entire understanding
between the parties hereto with respect to the subject matter hereof and
supersedes any prior understandings, agreements or representations, written or
oral, relating to the subject matter hereof.

(c) SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule, the validity,
legality and enforceability of the other provision of this Agreement will not be
affected or impaired thereby. In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or business activities
covered by, any provision of this Agreement be in excess of that which is valid
and enforceable under applicable law, then such provision shall be construed to
cover only that duration, extent or activities which may validly and enforceably
be covered. The Employee acknowledges the uncertainty of the law in this
respect and expressly stipulates that this Agreement be given the construction
which renders its provision valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.

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<PAGE>

(e) ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable (including by operation of law) by either party without the prior
written consent of the other party to this Agreement, except that the Company
may, without the consent of the Employee, assign its rights and obligations
under this Agreement to any corporation, firm or other business entity with or
into which the Company may merge or consolidate, or to which the Company may
sell or transfer all or substantially all of its assets, or of which 50% or more
of the equity investment and of the voting control is owned, directly or
indirectly, by, or is under common ownership with, the Company. After any such
assignment by the Company, the Company shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be the
Company for the purposes of all provisions of this Agreement including this
Section 7.

(f) MODIFICATION, AMENDMENT, WAIVER OR TERMINATION. No provision of
this Agreement may be modified, amended, waived or terminated except by an
instrument in writing signed by the parties to this Agreement. No course of
dealing between the parties will modify, amend, waive or terminate any provision
of this Agreement or any fights or obligations of any part under or by reason of
this Agreement. No delay on the part of the Company in exercising any right
hereunder shall operate as a waiver of such right. No waiver, express or
implied, by the Company of any right or any breach by the Employee shall
constitute a waiver of any other right or breach by the Employee.

(g) NOTICES. All notices, consents, requests, instructions, approvals
or other communications provided for herein shall be in writing and delivered by
personal delivery, overnight courier, mail, electronic facsimile or e-mail
addressed to the receiving party at the address set forth herein. All such
communications shall be effective when received.

John Francis
2014 Pinehurst Avenue
Saint Paul, MN 55116

Any party may change the address set forth above by notice to each other party
given as provided herein.

(h) HEADINGS. The headings and any table of contents contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

(j) THIRD-PARTY BENEFIT. Nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights, remedies, obligations or
liabilities of any nature whatsoever.

(k) WITHHOLDING TAXES. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth in the first paragraph.

REGIS CORPORATION

By /s/ Paul D. Finkelstein
----------------------------------------
Paul D. Finkelstein
Its: President

/s/ John Francis
---------------------------------------------
JOHN FRANCIS

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<PAGE>

EXHIBIT 99.6
Florence F. Francis
c/o The Barbers
300 Industrial Boulevard N.E.
Minneapolis, MN 55413

Dear Ms. Francis:

This is to confirm our intentions with respect to the lease at 300
Industrial Boulevard N.E., Minneapolis, Minnesota. We understand that these
facilities are leased by The Francis Family Limited Partnership to The Barbers,
Hairstyling For Men & Women, Inc. (the "Barbers") pursuant to a five-year lease
(the "Lease") that expires in 2003. Section 6.1(i) of the Agreement and Plan of
Merger (the "Merger Agreement") being executed on or about the date hereof
between the Barbers, Regis Corporation and Regis Merger Sub, Inc. requires, as a
condition to closing of the merger contemplated by the Merger Agreement, that
the Lease be amended to provide that it is terminable upon six months notice.
Please accept this as our agreement that any such amendment will provide that
Regis Corporation will pay on the effective date of any such termination, in
consideration of release of its obligations to pay rental payments for the
balance of the lease term, a termination fee of $500,000; provided, however,
that if a firm of independent real estate valuation experts chosen jointly by
Regis and you determines that such payment is not a reasonable payment for
release of such obligations, after taking into account the value of the lease
payments for the balance of the Lease term, the costs of remodeling, the costs
of obtaining a new tenant (including lost revenue during any period the property
is likely to be vacant, brokerage commissions, etc.), and any other costs or
expenses reasonably related to such termination, the termination fee shall be
equal to the payment such independent valuation firm determines is reasonable;
provided, further, that if such independent valuation expert determines that a
reasonable payment is less than $400,000, at the option of the Francis Family
Limited Partnership, the payment may be rejected, the Lease shall remain in full
force and effect, and the obligations of the Barbers under Section 6.1(i) of the
Merger Agreement shall be deemed fully satisfied. In the event the Lease is
terminated, we also agree to assign to you at termination, at your option, the
sublease for the subtenant currently occupying a portion of the leased premises.

We undertake to draft an amendment to the Lease incorporating these
provisions as soon as possible after execution of the Merger Agreement. If
these terms are acceptable to you, we ask that you confirm by countersigning in
the space below.

Dated: January 25, 1999

Regis Corporation

By /s/ Paul D. Finkelstein
--------------------------------
Paul D. Finkelstein, President
and Chief Executive Officer
Agreed to this 29th day of January, 1999
The Francis Family Limited Partnership

By /s/ Florence Francis
------------------------------------
Florence Francis, General Partner

<PAGE>

EXHIBIT 99.7
Florence F. Francis
c/o The Barbers
300 Industrial Boulevard N.E.
Minneapolis, MN 55413

Dear Ms. Francis:

This is to confirm our representations to you with respect to an interim
earnings release by Regis Corporation ("Regis") after the completion of the
merger of The Barbers, Hairstyling For Men & Women, Inc. (the "Barbers") with
Regis Merger Sub, Inc. ("Sub") pursuant to that certain Agreement and Plan of
Merger (the "Merger Agreement") being executed on or about the date hereof
between the Barbers, Regis and Sub. As you know, the SEC requires that "no
affiliate of either combining company may reduce its risk relative to its common
shareholder position within the time period beginning 30 days prior to
consummation of a business combination and ending when financial results
covering at least 30 days of post-merger combined operations have been
published" (See Accounting Staff Release No. 135). Under these restrictions,
absent an interim release of operating results, you could be prohibited from
disposing of Regis shares for up to five months if the Merger is consummated
within thirty days of a quarter end. Accordingly, in the event that the Merger
is not consummated within the time period of between 30 and 60 days of a quarter
end, we agree to make an early release of earnings for a monthly period that
will contain at least 30 days of post-merger combined operations as soon as the
financial results for such combined operations are available.

We understand that you will be relying on this representation in agreeing
to execute the voting agreement we are requiring in connection with the Merger
and to otherwise support the Merger as a shareholder, officer and Director of
the Barbers.

Regis Corporation

By /s/ Paul D. Finkelstein
---------------------------------
Paul D. Finkelstein, President
and Chief Executive Officer