RAYOVAC CORP
EXHIBIT 10.7
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>7
<FILENAME>a2031438zex-10_7.txt
<DESCRIPTION>EXHIBIT 10.7
<TEXT>


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                                                                   Exhibit 10.7
                              EMPLOYMENT AGREEMENT


                  THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of the 1st day of October, 2000, by and between Rayovac Corporation, a
Wisconsin corporation (the "Company"), and Stephen P. Shanesy (the "Executive").

                  WHEREAS, the Company and the Executive wish to terminate
Executive's Severance Agreement with the Company, dated October 1, 1998, because
the Company desires to employ the Executive upon the terms and conditions set
forth herein; and

                  WHEREAS, the Executive is willing and able to accept such
employment on such terms and conditions.

                  NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Executive hereby agree as follows:

1.       EMPLOYMENT DUTIES AND ACCEPTANCE. The Company hereby employs the
         Executive, and the Executive agrees to serve and accept employment with
         the Company as Executive Vice President of Global Brand Management.
         During the Term (as defined below), the Executive shall devote all of
         his working time to such employment and appointment, shall devote his
         best efforts to advance the interests of the Company and shall not
         engage in any other business activities, as an employee, director,
         consultant or in any other capacity, whether or not he receives any
         compensation therefor, without the prior written consent of the Board.

2.       TERM OF EMPLOYMENT. Subject to Section 4 hereof, the Executive's
         employment and appointment hereunder shall be for a term commencing on
         the date hereof and expiring on September 30, 2003 (the "Term"). Upon
         expiration of the Term, this Agreement shall automatically extend for
         successive periods of one (1) year, unless the Executive or the Company
         shall give notice to the other at least ninety (90) days prior to the
         end of the Term (or any annual extension thereof) indicating that it
         does not intend to renew the Agreement.

3.       COMPENSATION. In consideration of the performance by the Executive of
         his duties hereunder, the Company shall pay or provide to the Executive
         the following compensation which the Executive agrees to accept in full
         satisfaction for his services, it being understood that necessary
         withholding taxes, FICA contributions and the like shall be deducted
         from such compensation:

         (a)      BASE SALARY. The Executive shall receive a base salary equal
                  to Two Hundred Ninety Thousand Dollars ($290,000) per annum
                  effective October 1, 2000 for the duration of the Term ("Base
                  Salary"), which Base Salary shall be paid in equal
                  semi-monthly installments each year, to be paid semi-monthly

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                  in arrears. The Board will review from time to time the Base
                  Salary payable to the Executive hereunder and may, in its
                  discretion, increase the Executive's Base Salary. Any such
                  increased Base Salary shall be and become the "Base Salary"
                  for purposes of this Agreement.

         (b)      BONUS. The Executive shall receive a bonus for each fiscal
                  year ending during the Term, payable annually in arrears,
                  which shall be based on fifty percent (50%) of Base Salary,
                  provided the Company achieves certain annual performance goals
                  established by the Board from time to time (the "Bonus"). The
                  Board may, in its discretion, increase the annual Bonus. Any
                  such increased annual Bonus shall be and become the "Bonus"
                  for such fiscal year for purposes of this Agreement.

         (c)      INSURANCE COVERAGES AND PENSION PLANS. The Executive shall be
                  entitled to such insurance, pension and all other benefits as
                  are generally made available by the Company to its executive
                  officers from time to time.

         (d)      STOCK OPTIONS. All stock options previously granted to the
                  Executive shall remain in full force and effect in accordance
                  with their terms. If the Company implements a new stock option
                  program in the future, the Executive may participate to the
                  extent authorized by the Board.

         (e)      RESTRICTED STOCK AWARD. In connection with the Executive's
                  employment and appointment hereunder, the Executive is hereby
                  granted a Restricted Stock Award pursuant to The 1997 Rayovac
                  Incentive Plan (the "1997 Plan") and the terms and conditions
                  of the Rayovac Corporation Restricted Stock Award Agreement
                  attached hereto as Schedule A.

         (f)      VACATION. The Executive shall be entitled to four (4) weeks
                  vacation each year.

         (g)      OTHER EXPENSES. The Executive shall be entitled to
                  reimbursement of all reasonable and documented expenses
                  actually incurred or paid by the Executive in the performance
                  of the Executive's duties under this Agreement, upon
                  presentation of expense statements, vouchers or other
                  supporting information in accordance with Company policy. All
                  expense reimbursements and other perquisites of the Executive
                  are reviewable periodically by the Compensation Committee of
                  the Board, if there be one, or the Board.

         (h)      VEHICLE. Pursuant to the Company's policy for use of vehicles
                  by executives, Executive shall be provided the use of a leased
                  vehicle. Unless the Executive's employment is terminated by
                  the Company for Cause or by the Executive pursuant to Section
                  5(c), Executive shall be permitted to drive his Company
                  vehicle for the duration of the 12-month period following
                  termination; at the end of such 12-month period, Executive
                  will be permitted to purchase his Company vehicle at book
                  value as of such date.

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         (i)      D&O INSURANCE. The Executive shall be entitled to
                  indemnification from the Company to the maximum extent
                  provided by law, but not for any action, suit, arbitration or
                  other proceeding (or portion thereof) initiated by the
                  Executive, unless authorized or ratified by the Board. Such
                  indemnification shall be covered by the terms of the Company's
                  policy of insurance for directors and officers in effect from
                  time to time (the "D&O Insurance"). Copies of the Company's
                  charter, by-laws and D&O Insurance will be made available to
                  the Executive upon request.

         (j)      LEGAL FEES. The Company shall pay the Executive's actual and
                  reasonable legal fees incurred in connection with the
                  preparation of this Agreement.

4.       TERMINATION.

         (a)      TERMINATION BY THE COMPANY WITH CAUSE. The Company shall have
                  the right at any time to terminate the Executive's employment
                  hereunder without prior notice upon the occurrence of any of
                  the following (any such termination being referred to as a
                  termination for "Cause"):

                  (i)   the commission by the Executive of any deliberate and
                        premeditated act taken by the Executive in bad faith
                        against the interests of the Company;

                  (ii)  the Executive has been convicted of, or pleads NOLO
                        CONTENDERE with respect to, any felony, or of any
                        lesser crime or offense having as its predicate
                        element fraud, dishonesty or misappropriation of the
                        property of the Company;

                  (iii) the habitual drug addiction or intoxication of the
                        Executive which negatively impacts his job performance
                        or the Executive's failure of a Company-required drug
                        test;

                  (iv)  the willful failure or refusal of the Executive to
                        perform his duties as set forth herein or the willful
                        failure or refusal to follow the direction of the
                        President, the CEO or the Board, provided such failure
                        or refusal continues after thirty (30) days of the
                        receipt of notice in writing from the President, the CEO
                        or the Board of such failure or refusal, which notice
                        refers to this Section 4(a) and indicates the Company's
                        intention to terminate the Executive's employment
                        hereunder if such failure or refusal is not remedied
                        within such thirty (30) day period; or

                  (v)   the Executive breaches any of the terms of this
                        Agreement or any other agreement between the
                        Executive and the Company which breach is not cured
                        within thirty (30) days subsequent to notice from the
                        Company to the Executive of such breach, which notice
                        refers to this Section 4(a) and indicates the
                        Company's intention to terminate the Executive's
                        employment hereunder if such breach is not cured
                        within such thirty (30) day period.

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                  If the definition of termination for "Cause" set forth above
                  conflicts with such definition in the Executive's time-based
                  or performance- based Stock Option Agreements pursuant to the
                  1997 Plan or the Rayovac Corporation 1996 Stock Option Plan
                  (collectively, the "Stock Option Agreements") or any
                  agreements referred to therein, the definition set forth
                  herein shall control.

         (b)      TERMINATION BY COMPANY FOR DEATH OR DISABILITY. The Company
                  shall have the right at any time to terminate the Executive's
                  employment hereunder upon thirty (30) days prior written
                  notice upon the Executive's inability to perform his duties
                  hereunder by reason of any mental, physical or other
                  disability for a period of at least six (6) consecutive months
                  (for purposes hereof, "disability" has the same meaning as in
                  the Company's disability policy), if within 30 days after such
                  notice of termination is given, the Executive shall not have
                  returned to the full-time performance of his duties. The
                  Company's obligations hereunder shall, subject to the
                  provisions of Section 5(b), also terminate upon the death of
                  the Executive.

         (c)      TERMINATION BY COMPANY WITHOUT CAUSE. The Company shall have
                  the right at any time to terminate the Executive's employment
                  for any other reason without Cause upon sixty (60) days prior
                  written notice to the Executive.

         (d)      VOLUNTARY TERMINATION BY EXECUTIVE. The Executive shall be
                  entitled to terminate his employment and appointment hereunder
                  upon sixty (60) days prior written notice to the Company. Any
                  such termination shall be treated as a termination by the
                  Company for "Cause" under Section 5.

         (e)      NOTICE OF TERMINATION.  Any termination by the Company for
                  Cause shall be communicated by Notice of Termination to the
                  other party hereto given in accordance with Section 8. For
                  purposes of this Agreement, a "Notice of Termination" means a
                  written notice given prior to the termination which
                 (i) indicates the specific termination provision in this
                  Agreement relied upon, (ii) sets forth in reasonable detail
                  the facts and circumstances claimed to provide a basis for
                  termination of the Executive's employment under the provision
                  so indicated and (iii) if the termination date is other than
                  the date of receipt of such notice, specifies the termination
                  date of this Agreement (which date shall be not more than
                  fifteen (15) days after the giving of such notice). The
                  failure by the Company to set forth in the Notice of
                  Termination any fact or circumstance which contributes to a
                  showing of Cause shall not waive any right of the Company
                  hereunder or preclude the Company from asserting such fact or
                  circumstance in enforcing its rights hereunder.

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5.       EFFECT OF TERMINATION OF EMPLOYMENT.

         (a)      WITH CAUSE. If the Executive's employment is terminated with
                  Cause, the Executive's salary and other benefits specified in
                  Section 3 shall cease at the time of such termination, and the
                  Executive shall not be entitled to any compensation specified
                  in Section 3 which was not required to be paid prior to such
                  termination; provided, however, that the Executive shall be
                  entitled to continue to participate in the Company's medical
                  benefit plans to the extent required by law.

         (b)      WITHOUT CAUSE, DEATH OR DISABILITY. If the Executive's
                  employment is terminated by the Company without Cause or by
                  reason of death or disability, then the Company shall pay the
                  Executive the amounts and provide the Executive the benefits
                  as follows:

                  (i)      The Company shall pay to the Executive as severance,
                           an amount in cash equal to double the sum of (i) the
                           Executive's Base Salary, and (ii) the annual Bonus
                           (if any) earned by the Executive pursuant to any
                           annual bonus or incentive plan maintained by the
                           Company in respect of the fiscal year ending
                           immediately prior to the fiscal year in which the
                           termination occurs, such cash amount to be paid to
                           the Executive ratably monthly in arrears over the
                           Non-Competition Period (as defined below).

                  (ii)     For the greater of (i) the 24-month period
                           immediately following such termination or (ii) the
                           remainder of the Term, the Company shall arrange to
                           provide the Executive and his dependents the
                           additional benefits specified in Section 3(c).
                           Benefits otherwise receivable by the Executive
                           pursuant to this Section 5(b)(ii) shall cease
                           immediately upon the discovery by the Company of the
                           Executive's breach of the covenants contained in
                           Section 6 or 7 hereof.

                  (iii)    The Executive's accrued vacation (determined in
                           accordance with Company policy) at the time of
                           termination shall be paid as soon as reasonably
                           practicable.

                  (iv)     Any payments provided for hereunder shall be paid net
                           of any applicable withholding required under federal,
                           state, or local law and any additional withholding to
                           which the Executive has agreed.

                  (v)      If the Executive's employment with the Company
                           terminates during the Term, the Executive shall not
                           be required to seek other employment or to attempt in
                           any way to reduce any amounts payable to the
                           Executive by the Company pursuant to this Section 5.

6.       AGREEMENT NOT TO COMPETE.

         (a)      The Executive agrees that during the Non-Competition Period
                  (as defined below), he will not, directly or indirectly, in

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                  any capacity, either separately, jointly or in association
                  with others, as an officer, director, consultant, agent,
                  employee, owner, principal, partner or stockholder of any
                  business, or in any other capacity, engage or have a financial
                  interest in any business which is involved in the design,
                  manufacturing, marketing or sale of batteries or battery
                  operated lighting devices (excepting only the ownership of not
                  more than 5% of the outstanding securities of any class listed
                  on an exchange or the Nasdaq Stock Market). The
                  "Non-Competition Period" is (a) the longer of the Executive's
                  employment hereunder or time period which he serves as a
                  director of the Company plus (b) a period of one (1) year
                  thereafter.

         (b)      Without limiting the generality of clause (a) above, the
                  Executive further agrees that during the Non-Competition
                  Period, he will not, directly or indirectly, in any capacity,
                  either separately, jointly or in association with others,
                  solicit or otherwise contact any of the Company's customers or
                  prospects, as shown by the Company's records, that were
                  customers or prospects of the Company at any time during the
                  Non-Competition Period if such solicitation or contact is for
                  the general purpose of selling products that satisfy the same
                  general needs as any products that the Company had available
                  for sale to its customers or prospects during the
                  Non-Competition Period.

         (c)      The Executive agrees that during the Non-Competition Period,
                  he shall not, other than in connection with employment for the
                  Company, solicit the employment or services of any employee of
                  Company who is or was an employee of Company at any time
                  during the Non-Competition Period. During the Non-Competition
                  Period, the Executive shall not hire any employee of Company
                  for any other business.

         (d)      If a court determines that the foregoing restrictions are too
                  broad or otherwise unreasonable under applicable law,
                  including with respect to time or space, the court is hereby
                  requested and authorized by the parties hereto to revise the
                  foregoing restrictions to include the maximum restrictions
                  allowed under the applicable law.

         (e)      For purposes of this Section 6 and Section 7, the "Company"
                  refers to the Company and any incorporated or unincorporated
                  affiliates of the Company.

7.       SECRET PROCESSES AND CONFIDENTIAL INFORMATION.

         (a)      The Executive agrees to hold in strict confidence and, except
                  as the Company may authorize or direct, not disclose to any
                  person or use (except in the performance of his services
                  hereunder) any confidential information or materials received
                  by the Executive from the Company and any confidential
                  information or materials of other parties received by the
                  Executive in connection with the performance of his duties
                  hereunder. For purposes of this Section 7(a), confidential
                  information or materials shall include existing and potential
                  customer information, existing and potential supplier

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                  information, product information, design and construction
                  information, pricing and profitability information, financial
                  information, sales and marketing strategies and techniques and
                  business ideas or practices. The restriction on the
                  Executive's use or disclosure of the confidential information
                  or materials shall remain in force until such information is
                  of general knowledge in the industry through no fault of the
                  Executive or any agent of the Executive. The Executive also
                  agrees to return to the Company promptly upon its request any
                  Company information or materials in the Executive's possession
                  or under the Executive's control.

         (b)      The Executive will promptly disclose to the Company and to no
                  other person, firm or entity all inventions, discoveries,
                  improvements, trade secrets, formulas, techniques, processes,
                  know-how and similar matters, whether or not patentable and
                  whether or not reduced to practice, which are conceived or
                  learned by the Executive during the period of the Executive's
                  employment with the Company, either alone or with others,
                  which relate to or result from the actual or anticipated
                  business or research of the Company or which result, to any
                  extent, from the Executive's use of the Company's premises or
                  property (collectively called the "Inventions"). The Executive
                  acknowledges and agrees that all the Inventions shall be the
                  sole property of the Company, and the Executive hereby assigns
                  to the Company all of the Executive's rights and interests in
                  and to all of the Inventions, it being acknowledged and agreed
                  by the Executive that all the Inventions are works made for
                  hire. The Company shall be the sole owner of all domestic and
                  foreign rights and interests in the Inventions. The Executive
                  agrees to assist the Company at the Company's expense to
                  obtain and from time to time enforce patents and copyrights on
                  the Inventions.

         (c)      Upon the request of, and, in any event, upon termination of
                  the Executive's employment with the Company, the Executive
                  shall promptly deliver to the Company all documents, data,
                  records, notes, drawings, manuals and all other tangible
                  information in whatever form which pertains to the Company,
                  and the Executive will not retain any such information or any
                  reproduction or excerpt thereof.

8.       NOTICES. All notices or other communications hereunder shall be in
         writing and shall be deemed to have been duly given (a) when delivered
         personally, (b) upon confirmation of receipt when such notice or other
         communication is sent by facsimile or telex, (c) one day after delivery
         to an overnight delivery courier, or (d) on the fifth day following the
         date of deposit in the United States mail if sent first class, postage
         prepaid, by registered or certified mail. The addresses for such
         notices shall be as follows:

         (a)      For notices and communications to the Company:
                           Rayovac Corporation
                           601 Rayovac Drive
                           Madison, WI  53711
                           Facsimile:  (608) 278-6666
                           Attention:  James T. Lucke

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         (b)      For notices and communications to the Executive:
                           Stephen P. Shanesy
                           7866 Black River Road
                           Verona, WI  53593

         Any party hereto may, by notice to the other, change its address for
receipt of notices hereunder.

9.       GENERAL.

         9.1      GOVERNING LAW. This Agreement shall be construed under and
                  governed by the laws of the State of Wisconsin, without
                  reference to its conflicts of law principles.

         9.2      AMENDMENT; WAIVER. This Agreement may be amended, modified,
                  superseded, canceled, renewed or extended, and the terms
                  hereof may be waived, only by a written instrument executed by
                  all of the parties hereto or, in the case of a waiver, by the
                  party waiving compliance. The failure of any party at any time
                  or times to require performance of any provision hereof shall
                  in no manner affect the right at a later time to enforce the
                  same. No waiver by any party of the breach of any term or
                  covenant contained in this Agreement, whether by conduct or
                  otherwise, in any one or more instances, shall be deemed to
                  be, or construed as, a further or continuing waiver of any
                  such breach, or a waiver of the breach of any other term or
                  covenant contained in this Agreement.

         9.3      SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
                  the Executive, without regard to the duration of his
                  employment by the Company or reasons for the cessation of such
                  employment, and inure to the benefit of his administrators,
                  executors, heirs and assigns, although the obligations of the
                  Executive are personal and may be performed only by him. This
                  Agreement shall also be binding upon and inure to the benefit
                  of the Company and its subsidiaries, successors and assigns,
                  including any corporation with which or into which the Company
                  or its successors may be merged or which may succeed to their
                  assets or business.

         9.4      COUNTERPARTS. This Agreement may be executed in two
                  counterparts, each of which shall be deemed an original but
                  which together shall constitute one and the same instrument.

         9.5      ATTORNEYS' FEES. In the event that any action is brought to
                  enforce any of the provisions of this Agreement, or to obtain
                  money damages for the breach thereof, and such action results
                  in the award of a judgment for money damages or in the
                  granting of any injunction in favor of one of the parties to
                  this Agreement, all expenses, including reasonable attorneys'
                  fees, shall be paid by the non-prevailing party.

         9.6      NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
                  prevent or limit the Executive's continuing or future
                  participation during his employment hereunder in any benefit,

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                  bonus, incentive or other plan or program provided by the
                  Company or any of its affiliates and for which the Executive
                  may qualify. Amounts which are vested benefits or which the
                  Executive is otherwise entitled to receive under any plan or
                  program of the Company or any affiliated company at or
                  subsequent to the date of the Executive's termination of
                  employment with the Company shall, subject to the terms hereof
                  or any other agreement entered into by the Company and the
                  Executive on or subsequent to the date hereof, be payable in
                  accordance with such plan or program.

         9.7      MITIGATION. In no event shall the Executive be obligated to
                  seek other employment by way of mitigation of the amounts
                  payable to the Executive under any of the provisions of this
                  Agreement.

         9.8      EQUITABLE RELIEF. The Executive expressly agrees that breach
                  of any provision of Sections 6 or 7 of this Agreement would
                  result in irreparable injuries to the Company, that the remedy
                  at law for any such breach will be inadequate and that upon
                  breach of such provisions, the Company, in addition to all
                  other available remedies, shall be entitled as a matter of
                  right to injunctive relief in any court of competent
                  jurisdiction without the necessity of proving the actual
                  damage to the Company.

         9.9      SEVERANCE AGREEMENT.  The Severance Agreement between the
                  parties dated October 1, 1998 is hereby terminated and all
                  rights and obligations thereunder are of no further force or
                  effect.

         9.10     ENTIRE AGREEMENT. This Agreement and the schedule hereto
                  constitute the entire understanding of the parties hereto with
                  respect to the subject matter hereof and supersede all prior
                  negotiations, discussions, writings and agreements between
                  them with respect to the subject matter hereof.

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                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.


                                     RAYOVAC CORPORATION



                                      By:
                                         -------------------------------
                                         David A. Jones
                                         Chief Executive Officer



EXECUTIVE:



-------------------------
Name:  Stephen P. Shanesy

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                                   SCHEDULE A

                               RAYOVAC CORPORATION
                        RESTRICTED STOCK AWARD AGREEMENT

         This is a Restricted Stock Award Agreement ("Agreement") dated as of
October 1, 2000 by and between Rayovac Corporation, a Wisconsin corporation (the
"Company"), and Stephen P. Shanesy (the "Executive") pursuant to The 1997
Rayovac Incentive Plan (the "Plan"), and, in consideration of the mutual
promises set forth below and other good and valuable consideration, the
mutuality and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:

    1. BACKGROUND. The Company has adopted the Plan to provide additional
incentive compensation to its officers and other employees and to encourage
such individuals, including the Executive, to remain in the employ of the
Company. The Company desires to grant an award (the "Award") to the Executive
of shares of the Company's common stock, par value $.01 per share ("Common
Stock"), as additional incentive for the Executive's services and as an
inducement to the continued services by the Executive to the Company and its
subsidiaries, subject to all of the terms, conditions and restrictions
contained herein. The Executive acknowledges that he has received a copy of
the Plan and any prospectus related thereto from the Company.

    2. GRANT OF AWARD. Pursuant to the Plan and subject to the terms and
conditions of this Agreement and the Plan, the Company hereby grants to the
Executive an Award of Twenty-Five Thousand Four Hundred One (25,401) shares
of Common Stock, subject to certain restrictions (individually, a "Share" and
collectively, the "Shares").

    3. RESTRICTIONS. Until expiration of the restrictions provided in this
Agreement or in the Plan, the Shares shall be subject to the following
restrictions:

   (a) CONTINUED EMPLOYMENT. The Executive shall remain in the employment of the
Company or one of its subsidiaries and if, prior to the lapse of restrictions on
the Shares, the Executive's employment by the Company terminates for any reason
other than termination by the Company without Cause or by reason of death or
disability of Executive prior to the date the restrictions lapse, the Shares
shall immediately be forfeited to the Company and the Executive shall have no
further rights with respect the Shares. The terms "Cause" and "disability" shall
be defined as set forth in Sections 4(a) and (b) of Executive's Employment
Agreement of October 1, 2000.

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   (b) TRANSFER. The Shares may not be sold, assigned, transferred, exchanged,
pledged, hypothecated, or otherwise encumbered in any manner by the Executive.

    4. LAPSE OF RESTRICTIONS.

   (a) GENERAL. Subject to the terms of this Agreement, restrictions on the
Shares shall expire on September 30, 2003, and the Executive shall receive the
Shares with respect to which such restrictions expire within thirty (30) days
after such vesting date.

   (b) FORFEITURE OF SHARES. The Executive shall forfeit all of the Shares
subject to restrictions upon the Executive's termination of employment with the
Company or any of its subsidiaries for any reason other than termination by the
Company without Cause or by reason of death or disability.

   (c) TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing, the
Compensation Committee of the Board of Directors of the Company shall have the
power, in its sole discretion, to accelerate the expiration of the applicable
restriction period, to waive any restriction with respect to any part or all of
the Shares, or to waive the forfeiture of Shares and to retain restrictions on
Shares that would have been forfeited pursuant to the terms of this Agreement.

    5. CERTIFICATES. Each certificate issued in respect of the Shares shall
be registered in the name of Executive and deposited with the Company or its
designee and shall bear the following legend:

                  "This certificate and the shares of common stock represented
                  hereby are subject to the terms and conditions (including
                  forfeiture and restrictions against transfer) contained in The
                  1997 Rayovac Incentive Plan and an Agreement entered into
                  between Rayovac Corporation and the registered owner. Release
                  from such terms and conditions shall be obtained only in
                  accordance with the provisions of such Plan and Agreement,
                  copies of which are on file in the office of the Secretary of
                  Rayovac Corporation, Madison, Wisconsin."

         The Executive shall execute and deliver to the Company a stock power or
powers in blank with respect to the Shares.

    6. SECTION 83 ELECTION.  The Executive  agrees not to file an election
under section 83(b) of the Internal  Revenue Code of 1986, as amended, with
respect to the Shares.

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    7. CHANGE IN CONTROL. As more particularly provided in the Plan, all
restrictions with respect to any of the Shares that have not been previously
forfeited as provided in this Agreement shall expire and lapse upon the
occurrence of a Change in Control (as defined in the Plan). If a Change in
Control has occurred, all restrictions on the Shares shall expire immediately
prior to the effective date of the Change in Control.

    8. INCORPORATION OF PLAN; DEFINED TERMS. The Plan is incorporated herein
by reference and made a part of this Agreement as if each provision of the
Plan were specifically set forth herein. In the event of a conflict between
the Plan and this Agreement, the terms and conditions of the Plan shall
govern. Unless otherwise expressly defined in this Agreement, all capitalized
terms in this Agreement shall have the meanings given such terms in the Plan.

    9. MISCELLANEOUS.

    (A) SUCCESSORS; GOVERNING LAW. This Agreement shall bind and inure to the
benefit of the parties, their heirs, personal representative, successors in
interest and assigns. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.

    (B) DIVIDENDS. The Company shall have the discretion to pay to the
Executive any special or regular cash dividends declared by the Board of
Directors, or to defer the payment of cash dividends until the expiration of
the restrictions with respect to the Shares, or reinvest such amounts in
additional shares of Restricted Stock. Any cash payments of dividends that
become payable while any of the Shares remain subject to restrictions
hereunder to Executive with respect to the restricted shares may, in the
Company's discretion, be net of an amount sufficient to satisfy any federal,
state and local withholding tax requirements with respect to such dividends.

    (C) CONTINUED EMPLOYMENT. The Agreement does not constitute a contract of
employment. Participation in the Plan does not give the Executive the right
to remain in the employ of the Company or a subsidiary and does not limit in
any way the right of the Company or a subsidiary to change the duties or
responsibilities of the Executive.

    (D) AMENDMENT. The Company may amend this Agreement or modify the
provisions for the termination of the restrictions on the Shares without the
approval of the Executive to comply with any rules or regulations under
applicable tax, securities or other laws or the rules and regulations
thereunder, or to correct any omission in this Agreement.

                                       13

<PAGE>


                  IN WITNESS WHEREOF, the parties have executed this Agreement,
effective as of the date set forth below.


                                                     Rayovac Corporation


October 1, 2000                                      By:
                                                         ----------------------
                                                         David A. Jones
                                                         Chief Executive Officer


EXECUTIVE


-----------------------------
Name:      Stephen P. Shanesy

Address:   7866 Black River Road
           Verona, WI  53593

                                        14


</TEXT>
</DOCUMENT>
