THE 1997 RAYOVAC INCENTIVE PLAN

SECTION 1. PURPOSE; DEFINITIONS.

         The purpose of the Plan is to support the Company's ongoing efforts to
develop and retain leaders of exceptional talent and to provide the Company with
the ability to provide incentives more directly linked to the profitability of
the Company's businesses and to increases in shareholder value.

         For purposes of the Plan, the following terms are defined as set forth
below:

         a. "Annual Incentive Award" means an Incentive Award made pursuant to
Section 5(a)(v) with a Performance Cycle of one year or less.

         b. "Awards" mean grants under this Plan of Incentive Awards, Stock
Options, Stock Appreciation Rights, Restricted Stock or Other Stock-Based
Awards.

         c. "Board" means the Board of Directors of the Company.

         d. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.

         e. "Commission" means the Securities and Exchange Commission or any
successor agency.

         f. "Committee" means the Compensation Committee of the Board or a
subcommittee thereof, any successor thereto or such other committee or
subcommittee as may be designated by the Board to administer the Plan.

         g. "Common Stock" or "Stock" means the Common Stock of the Company.

         h. "Company" means Rayovac Corporation, a corporation organized under
the laws of the State of Wisconsin, or any successor thereto.

         i. "Economic Value Added(TM)" means net after-tax operating profit less
the cost of capital.

         j. "Exercise Period" means the 60-day period from and after a Change in
Control.

         k. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.

         l. "Fair Market Value" means, as of any given date, the mean between
the highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange--Composite Transactions or, if no such sale of Common Stock is
reported on such date, the fair market value of the Stock as determined by the
Committee in good faith.

         m. "Incentive Award" means any Award that is either an Annual Incentive
Award or a Long-Term Incentive Award.





         n. "Incentive Stock Option" means any Stock Option that complies with
Section 422 of the Code.

         o. "Long-Term Incentive Award" means an Incentive Award made pursuant
to Section 5(a)(v) with a Performance Cycle of more than one year.

         p. "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

         q. "Other Stock-Based Award" means an Award made pursuant to Section
5(a)(iv).

         r. "Performance Cycle" means the period selected by the Committee
during which the performance of the Company or any subsidiary, affiliate or unit
thereof or any individual is measured for the purpose of determining the extent
to which an Award subject to Performance Goals has been earned.

         s. "Performance Goals" mean the objectives for the Company or any
subsidiary or affiliate or any unit thereof or any individual that may be
established by the Committee for a Performance Cycle with respect to any
performance-based Awards contingently awarded under the Plan. The Performance
Goals for Awards that are intended to constitute "performance-based"
compensation within the meaning of Section 162(m) of the Code shall be based on
one or more of the following criteria: earnings per share, total shareholder
return, operating income, net income, cash flow, return on equity, return on
capital, earnings before interest, taxes, depreciation and amortization
("EBITDA"), and Economic Value Added(TM).

         t. "Plan" means this 1997 Rayovac Incentive Plan, as amended from time
to time.

         u. "Restricted Period" means the period during which an Award may not
be sold, assigned, transferred, pledged or otherwise encumbered.

         v. "Restricted Stock" means an Award of shares of Common Stock pursuant
to Section 5(a)(iii).

         w. "Spread Value" means, with respect to a share of Common Stock
subject to an Award, an amount equal to the excess of the Fair Market Value, on
the date such value is determined, over the Award's exercise or grant price, if
any.

         x. "Stock Appreciation Right" or "SAR" means a right granted pursuant
to Section 5(a)(ii).

         y. "Stock Option" means an option granted pursuant to Section 5(a)(i).

In addition, the terms "Business Combination," "Change in Control," "Change in
Control Price," "Incumbent Board," "Outstanding Company Common Stock,"
"Outstanding Company Voting Securities" and "Person" have the meanings set forth
in Section 6.





SECTION 2. ADMINISTRATION.

         The Plan shall be administered by the Committee, which shall have the
power to interpret the Plan and to adopt such rules and guidelines for carrying
out the Plan as it may deem appropriate. The Committee shall have the authority
to adopt such modifications, procedures and subplans as may be necessary or
desirable to comply with the laws, regulations, compensation practices and tax
and accounting principles of the countries in which the Company, a subsidiary or
an affiliate may operate to assure the viability of the benefits of Awards made
to individuals employed in such countries and to meet the objectives of the
Plan.

         Subject to the terms of the Plan, the Committee shall have the
authority to determine those individuals eligible to receive Awards and the
amount, type and terms of each Award and to establish and administer any
Performance Goals applicable to such Awards, but, at the discretion of the
Board, such determinations may be made subject to ratification by the Board.

         The Committee may delegate its authority and power under the Plan to
one or more officers of the Company, subject to guidelines prescribed by the
Committee and approved by the Board, with respect to participants who are not
subject to Section 16 of the Exchange Act.

         Any determination made by the Committee or pursuant to delegated
authority in accordance with the provisions of the Plan with respect to any
Award shall be made in the sole discretion of the Committee or such delegate,
and all decisions made by the Committee or any appropriately designated officer
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Plan participants, but subject to
ratification by the Board if the Board so provides.

SECTION 3. ELIGIBILITY.

         All employees of the Company, its subsidiaries and affiliates, as well
as non-employee members of the Board of Directors of the Company, its
subsidiaries or affiliates are eligible to be granted Awards under the Plan.

SECTION 4. COMMON STOCK SUBJECT TO PLAN.

         The total number of shares of Common Stock reserved and available for
distribution pursuant to the Plan shall be 3,000,000 shares, all of which may be
issued pursuant to the exercise of Stock Options awarded under the Plan. If any
Award is exercised, cashed out or terminates or expires without a payment being
made to the participant in the form of Common Stock, the shares subject to such
Award, if any, shall again be available for distribution in connection with
Awards under the Plan. Any shares of Common Stock that are used by a participant
as full or partial payment of withholding or other taxes or as payment for the
exercise or conversion price of an Award shall be available for distribution in
connection with Awards under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, split-up or other change in
corporate structure affecting the Common Stock after adoption of the Plan by the
Board, the Board is authorized to make substitutions or adjustments in the
aggregate number and kind of shares reserved for issuance under the Plan, in the
number, kind and price of shares subject to outstanding Awards and in the Award
limits set 





forth in Section 5; provided, however, that any such substitutions or
adjustments shall be, to the extent deemed appropriate by the Board, consistent
with the treatment of shares of Common Stock not subject to the Plan, and that
the number of shares subject to any Award shall always be a whole number.

SECTION 5. AWARDS.

         (a) General. The types of Awards that may be granted under the Plan are
set forth below. Awards may be granted singly, in combination or in tandem with
other Awards.

                  (i) STOCK OPTIONS. A Stock Option represents the right to
purchase a share of Stock at a predetermined grant price. Stock Options granted
under this Plan may be in the form of Incentive Stock Options or Nonqualified
Stock Options, as specified in the Award agreement. The term of each Stock
Option shall be set forth in the Award agreement, but no Incentive Stock Option
shall be exercisable more than ten years after the grant date. The grant price
per share of Common Stock purchasable under an Incentive Stock Option shall not
be less than 100% of the Fair Market Value on the date of grant. Subject to the
applicable Award agreement, Stock Options may be exercised, in whole or in part,
by giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full of
the purchase price by certified or bank check or such other instrument as the
Company may accept (including a copy of instructions to a broker or bank
acceptable to the Company to deliver promptly to the Company an amount of sale
or loan proceeds sufficient to pay the purchase price). As determined by the
Committee, payment in full or in part may also be made in the form of Common
Stock already owned by the optionee valued at the Fair Market Value on the date
the Stock Option is exercised; provided, however, that such Common Stock shall
not have been acquired within the preceding six months upon the exercise of a
Stock Option or stock unit or similar Award granted under the Plan or any other
plan maintained at any time by the Company or any subsidiary.

                  (ii) STOCK APPRECIATION RIGHTS. An SAR represents the right to
receive a payment, in cash, shares of Common Stock or both (as determined by the
Committee), equal to the Spread Value on the date the SAR is exercised. The
grant price of an SAR shall be set forth in the applicable Award agreement.
Subject to the terms of the applicable Award agreement, an SAR shall be
exercisable, in whole or in part, by giving written notice of exercise to the
Company.

                  (iii) RESTRICTED STOCK. Shares of Restricted Stock are shares
of Common Stock that are awarded to a participant and that during the Restricted
Period may be forfeitable to the Company upon such conditions as may be set
forth in the applicable Award agreement. Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered during the Restricted
Period. Except as provided in this subsection (iii) and in the applicable Award
agreement, a participant shall have all the rights of a holder of Common Stock,
including the rights to receive dividends and to vote during the Restricted
Period. Dividends with respect to Restricted Stock that are payable in Common
Stock shall be paid in the form of Restricted Stock.





                  (iv) OTHER STOCK-BASED AWARDS. Other Stock-Based Awards are
Awards, other than Stock Options, SARs or Restricted Stock, that are denominated
in, valued in whole or in part by reference to, or otherwise based on or related
to, Common Stock. The purchase, exercise, exchange or conversion of Other
Stock-Based Awards granted under this subsection (iv) shall be on such terms and
conditions and by such methods as shall be specified by the Committee.

                  (v) INCENTIVE AWARDS. Incentive Awards are performance-based
Awards that are expressed in U.S. currency. Incentive Awards shall either be
Annual Incentive Awards or Long-Term Incentive Awards.

         (b) Maximum Awards. The total number of shares of Restricted Stock and
other shares of Common Stock subject to or underlying Stock Options, SARs and
Other Stock-Based Awards awarded to any participant during the term of this Plan
shall not exceed 25% of the shares of Common Stock originally reserved for
distribution pursuant to the Plan. An Annual Incentive Award paid to a
participant with respect to any Performance Cycle shall not exceed $1,000,000. A
Long-Term Incentive Award paid to a participant with respect to any Performance
Cycle shall not exceed $1,000,000 times the number of years in the Performance
Cycle. An amount not in excess of 25% of the shares of Common Stock originally
reserved for distribution pursuant to the Plan may be issued pursuant to
Restricted Stock Awards and Other Stock-Based Awards, except that Other
Stock-Based Awards with values based on Spread Values shall not be included in
this limitation.

         (c) Performance-Based Awards. Any Awards granted pursuant to the Plan
may be in the form of performance-based Awards through the application of
Performance Goals and Performance Cycles.

SECTION. 6. CHANGE IN CONTROL PROVISIONS.

         (a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control:

                  (i) All Stock Options and Stock Appreciation Rights
outstanding as of the date such Change in Control occurs shall become fully
vested and exercisable.

                  (ii) The restrictions and other conditions applicable to any
Restricted Stock or Other Stock-Based Awards, including vesting requirements,
shall lapse, and such Awards shall become free of all restrictions and fully
vested.

                  (iii) The value of all outstanding Stock Options, Stock
Appreciation Rights, Restricted Stock and Other Stock-Based Awards shall, unless
otherwise determined by the Committee at or after grant, be cashed out on the
basis of the "Change in Control Price," as defined in Section 6(c), as of the
date such Change in Control occurs or such other date as the Committee may
determine prior to the Change in Control.

                  (iv) Any Incentive Awards relating to Performance Cycles prior
to the Performance Cycle in which the Change in Control occurs that have been
earned but not paid shall become immediately payable in cash. In addition, each
participant who has been awarded an Incentive Award shall be deemed to 





have earned a pro rata Incentive Award equal to the product of (y) such
participant's maximum award opportunity for such Performance Cycle, and (z) a
fraction, the numerator of which is the number of full or partial months that
have elapsed since the beginning of such Performance Cycle to the date on which
the Change in Control occurs, and the denominator of which is the total number
of months in such Performance Cycle.

         (b) Definition of Change in Control. A "Change in Control" means the
happening subsequent to completion of the initial public offering of shares of
Stock of the Company of any of the following events:

                  (i) The acquisition, other than in a transaction approved by
the Incumbent Board, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (A) the then outstanding shares of Common Stock (the
"Outstanding Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change in
Control: (1) any acquisition directly from the Company, (2) any acquisition by
the Company, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (4) any acquisition by any corporation pursuant to a transaction
described in clauses (A), (B) and (C) of paragraph (iii) of this Section 6(b);
or

                  (ii) Individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to such effective date whose election, or
nomination for election by the stockholders of the Company, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

                  (iii) Approval by the stockholders of the Company of a
reorganization, merger, share exchange or consolidation (a "Business
Combination"), unless, in each case following such Business Combination, (A) all
or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a result of
such transaction owns the Company through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, 





as the case may be, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such Person owned 25% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to the Business Combination and (C)
at least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

                  (iv) Approval by the stockholders of the Company of (A) a
complete liquidation or dissolution of the Company or (B) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation with respect to which, following such sale or other
disposition, (1) more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) less than 25% of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation),
except to the extent that such Person owned 25% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities prior to the sale
or disposition and (3) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board, providing
for such sale or other disposition of assets of the Company or were elected,
appointed or nominated by the Board.

         (c) Change in Control Price. "Change in Control Price" means the
highest price per share paid in any transaction reported on the New York Stock
Exchange-Composite Transactions or paid or offered in any bona fide transaction
related to a potential or actual change in control of the Company at any time
during the preceding 60-day period as determined by the Committee, except that,
in the case of Incentive Stock Options, unless the Committee otherwise provides,
such price shall be based only on transactions reported for the date on which
such Incentive Stock Options are cashed out.

         (d) Notwithstanding any other provision of this Plan, upon a Change in
Control, unless the Committee shall determine otherwise at grant, or after grant
but before the Change in Control, an Award recipient shall have the right, by
giving notice to the Company within the 





Exercise Period, to elect to surrender all or part of the Stock Option, SAR or
Other Stock-Based Award to the Company and to receive in cash, within 30 days of
such notice, an amount equal to the amount by which the "Change in Control
Price" on the date of such notice shall exceed the exercise or grant price under
such Award, multiplied by the number of shares of Stock as to which the right
granted under this Section 6 shall have been exercised.

         (e) Notwithstanding the foregoing, if any right granted pursuant to
this Section 6 would make a Change in Control transaction ineligible for pooling
of interests accounting under generally accepted accounting principles that but
for this Section 6 would otherwise be eligible for such accounting treatment,
the Committee shall have the ability to substitute the cash payable pursuant to
this Section 6 with Common Stock with a Fair Market Value equal to the cash that
would otherwise be payable hereunder.

SECTION 7. PLAN AMENDMENT AND TERMINATION.

         The Board may amend or terminate the Plan at any time, provided that no
such amendment shall be made without stockholder approval if such approval is
required under applicable law, or if such amendment would increase the total
number of shares of Common Stock that may be distributed under the Plan.

         Except as set forth in any Award agreement, no amendment or termination
of the Plan may materially and adversely affect any outstanding Award under the
Plan without the Award recipient's consent.

SECTION 8. PAYMENTS AND PAYMENT DEFERRALS.

         Payment of Awards may be in the form of cash, Stock, other Awards or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee, either at the time of grant or by
subsequent amendment, may require or permit deferral of the payment of Awards
under such rules and procedures as it may establish. It also may provide that
deferred settlements include the payment or crediting of interest or other
earnings on the deferred amounts, or the payment or crediting of dividend
equivalents where the deferred amounts are denominated in Common Stock
equivalents.

SECTION 9. DIVIDENDS AND DIVIDEND EQUIVALENTS.

         The Committee may provide that any Awards under the Plan earn dividends
or dividend equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to a participant's Plan account. Any crediting of
dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in additional
shares of Common Stock or Common Stock equivalents.

SECTION 10. TRANSFERABILITY.

         Except to the extent permitted by the Award agreement, either initially
or by subsequent amendment, Awards shall not be transferable or assignable other
than by will or the laws of descent and distribution, and shall be exercisable
during the lifetime of the recipient only by him.





SECTION 11. AWARD AGREEMENTS.

         Each Award under the Plan shall be evidenced by a written agreement
(which need not be signed by the recipient unless otherwise specified by the
Committee) that sets forth the terms, conditions and limitations for each Award.
Such terms may include, but are not limited to, the term of the Award, vesting
and forfeiture provisions, and the provisions applicable in the event the
recipient's employment terminates. The Committee may amend an Award agreement,
provided that no such amendment may materially and adversely affect an Award
without the Award recipient's consent.

SECTION 12. UNFUNDED STATUS OF PLAN.

         It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that,
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

SECTION 13. GENERAL PROVISIONS.

         (a) The Committee may require each person acquiring shares of Common
Stock pursuant to an Award to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any legend that the
Committee deems appropriate to reflect any restrictions on transfer.

         All certificates for shares of Common Stock or other securities
delivered under the Plan shall be subject to such stock transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Commission, any stock exchange upon
which the Common Stock is then listed and any applicable Federal, state or
foreign securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.

         (b) Nothing contained in this Plan shall prevent the Company, a
subsidiary or an affiliate from adopting other or additional compensation
arrangements for its employees or directors.

         (c) The adoption of the Plan shall not confer upon any employee any
right to continued employment nor shall it interfere in any way with the right
of the Company, a subsidiary or an affiliate to terminate the employment of any
employee at any time.

         (d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Committee, withholding obligations arising from an Award may be settled with
Common Stock, including Common Stock that is part of, or is received upon
exercise or conversion of, the Award that gives rise to the withholding





requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company, its subsidiaries and its
affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including the making of
irrevocable elections, for the settling of withholding obligations with Common
Stock.

         (e) On receipt of written notice of exercise, the Committee may elect
to cash out all or a portion of the shares of Common Stock for which a Stock
Option is being exercised by paying the optionee an amount, in cash or Common
Stock, equal to the Spread Value of such shares on the date such notice of
exercise is received.

         (f) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Wisconsin.

         (g) If any provision of the Plan is held invalid or unenforceable, the
invalidity or unenforceability shall not affect the remaining parts of the Plan,
and the Plan shall be enforced and construed as if such provision had not been
included.

         (h) The Plan shall be effective on September 5, 1997. Except as
otherwise provided by the Board, no Awards shall be granted after August 31,
2007, but any Awards granted theretofore may extend beyond that date.