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                                                                    Exhibit 10.1

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is entered into as of the
1st day of October, 2002 ("Effective Date"), by and between Rayovac Corporation,
a Wisconsin corporation (the "Company"), and David A. Jones (the "Executive").

     WHEREAS, the Executive and the Company were parties to an Employment
Agreement dated September 12, 1996, with respect to the employment of the
Executive by the Company (the "1996 Agreement"); and

     WHEREAS, the Executive and the Company modified the terms of Executive's
employment with the Company by entering into an Amended and Restated Employment
Agreement dated April 27, 1998 (the "1998 Agreement"), and again on October 1,
2000 (the "2000 Agreement"), and the parties wish to amend and restate the
provisions of the 2000 Agreement as set forth herein; and

     WHEREAS, the Company desires the benefit of the experience, supervision and
services of the Executive and 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, as the Chairman of
     the Board of Directors and Chief Executive Officer of the Company,
     reporting directly to the Board of Directors of the Company (the "Board").
     In connection therewith, as Chairman of the Board and Chief Executive
     Officer, the Executive shall oversee and direct the operations of the
     Company and perform such other duties consistent with the responsibilities
     of Chairman of the Board and Chief Executive Officer, all subject to the
     direction and control of the Board. During the Term (as defined below), the
     Executive shall devote substantial time to such employment which will be
     his primary business activity.

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, 2005 (the "Term").

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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 Seven
          Hundred Thousand Dollars ($700,000) per annum effective October 1,
          2002 for the duration of the Term except as set forth in Section 3(n)
          below, ("Base Salary"), which Base Salary shall be paid in equal
          monthly installments each year, to be paid monthly 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
          100% of Base Salary except as set forth in Section 3(n) below,
          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)  ADDITIONAL SALARY. In addition to the compensation described above,
          (i) so long as the promissory note (the "Note") of the Executive
          attached hereto as EXHIBIT A, and as previously extended, is not due
          and payable in full, the Executive shall receive additional
          compensation at an initial rate of Thirty-five Thousand Dollars
          ($35,000) per annum during the Term, payable (A) at the time the Bonus
          is payable hereunder, (B) if no Bonus is payable hereunder, at the
          time the Board determines that no Bonus is payable hereunder or (C) if
          payment of principal of and interest on the Note is accelerated, at
          the time of the Executive's payment in full of the Note; provided,
          however, that to the extent the Note is prepaid, the rate set forth
          above shall be decreased by the amount by which interest on the Note
          has been reduced as a result of such prepayment and (ii) the Executive
          shall also receive an additional $18,500 per annum during the Term,
          payable at the time the first monthly installment of Base Salary is
          payable hereunder and on each anniversary thereafter (all such
          payments set forth in clauses (i) and (ii) above are referred to
          herein as the "Additional Salary").

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     (d)  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.

     (e)  EXISTING STOCK OPTIONS AND RESTRICTED STOCK AWARDS. All stock options
          and restricted stock awards 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.

     (f)  NEW STOCK OPTIONS. The Company shall Grant to Executive 175,000 new
          Stock Options ("New Options") under The 1997 Rayovac Incentive Plan
          ("1997 Plan"). The grant date of such New Options shall be the
          Effective Date and such New Options shall have an exercise price equal
          to the opening price on the New York Stock Exchange as of such date.
          Fifty Percent (50%) of New Options shall be Time-Vesting Options and
          Fifty Percent (50%) shall be Performance-Vesting Options. Time-Vesting
          Options shall vest 1/3 October 1, 2003, 1/3 October 1, 2004 and 1/3
          October 1, 2005. Subject to the Company meeting performance goals
          established by the Board, the Performance-Vesting Options shall vest
          1/3 October 1, 2003, 1/3 October 1, 2004 and 1/3 October 1, 2005. The
          terms and conditions of such New Options shall be substantially
          similar to the terms and conditions of previous option grants.

     (g)  NEW RESTRICTED STOCK AWARD. The Company also grants Executive
          additional restricted shares of the Company's common stock as follows.
          On October 1, 2002, Executive shall be awarded that number of shares
          of the Company's common stock equal in value to $1,400,000 provided,
          however, that such award of stock shall include a restriction
          prohibiting the sale, transfer, pledge, assignment or other
          encumbrance prior to the earlier of October 1, 2005 or a change in
          control of the Company (as defined in the 1997 Plan) ("Change in
          Control"), and, provided further, that such restricted stock shall be
          forfeited to the Company in the event the Executive's employment with
          the Company terminates prior to the earlier of October 1, 2005 or a
          Change in Control of the Company for any reason other than (i)
          termination by the Company without cause, or (ii) termination due to
          death or disability. The terms and conditions of such new restricted
          stock awards shall be substantially similar to the terms and
          conditions of previous restricted stock award grants.

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

     (i)  HOUSING AND OTHER EXPENSES. The Executive shall be entitled to
          reimbursement of all reasonable and documented expenses actually

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          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. In addition, the Company will reimburse the
          Executive for expenses associated with reasonable travel to and from
          Atlanta, Georgia and Naples, Florida, and will pay or reimburse the
          Executive for the reasonable expenses associated with providing the
          Executive with the use of a suitable home purchased by the Company in
          the Madison, Wisconsin area, other than utilities and maintenance. 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.

     (j)  AUTOMOBILE. The Company shall provide the Executive with the use of a
          leased automobile suitable for a chief executive officer of a company
          similar to the Company.

     (k)  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.

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

     (m)  RETENTION BONUSES; HOUSE SALE.

          (i)    As set forth in the 2000 Agreement, on the earlier of September
                 30, 2003 or a Change in Control, the Company shall pay the
                 Executive an additional amount of Four Hundred Thousand Dollars
                 ($400,000). In addition, if the Company does not terminate the
                 Executive's employment hereunder pursuant to Section 4(a) and
                 the Executive does not terminate his employment hereunder
                 pursuant to Section 4(d) (other than following a Change in
                 Control), then on October 1, 2005, Company shall pay the
                 Executive Two Million Two Hundred Thousand Dollars
                 ($2,200,000).

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          (ii)   If the Company does not terminate the Executive's employment
                 hereunder pursuant to Section 4(a) and the Executive does not
                 terminate his employment hereunder pursuant to Section 4(d)
                 (other than following a Change in Control, then at any time
                 after the earlier of April 30, 2003 or the date on which the
                 Executive's employment is terminated, at the option of and upon
                 the request of the Executive or his estate, the Company shall
                 sell to the Executive or his estate fee simple title to the
                 home purchased by the Company for the use of the Executive,
                 free and clear of all liens and encumbrances arising after the
                 date of the Company's acquisition of the home and not created
                 by the Executive, other than liens or encumbrances that do not
                 materially affect the use or value thereof; the purchase price
                 shall be One Dollar ($1.00).

     (n)  OPTION TO RELINQUISH CHIEF EXECUTIVE OFFICER POSITION. Notwithstanding
          anything else in this Agreement to the contrary, Executive may at his
          discretion relinquish his role as Chief Executive Officer effective
          October 1, 2004 and remain as an employee of the Company and, as may
          be permitted under law and the Company's bylaws, as Chairman of the
          Board of Directors of the Company until September 30, 2005. Should
          Executive exercise such option, his annual Base Salary during this
          third year of his Agreement shall be Five Hundred Thousand Dollars
          ($500,000) and his Bonus shall be based on 75% of this Base Salary,
          and all other terms and conditions of this Agreement shall continue to
          apply.

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;

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          (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 Board, provided such failure or
                 refusal continues after thirty (30) days of the receipt of
                 notice in writing from 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.

          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 (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 without prior 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). 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

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          (60) days prior written notice to the Company, or upon thirty (30)
          days prior written notice after a Change in Control. Any such
          termination shall be treated as a termination by the Company for
          "Cause" under Section 5, unless notice of such termination was given
          within thirty (30) days after a Change in Control, in which case such
          termination shall be treated in accordance with Section 5(d) hereof.

     (e)  CONSTRUCTIVE TERMINATION BY THE EXECUTIVE. The Executive shall be
          entitled to terminate his employment and appointment hereunder,
          without prior notice, upon the occurrence of a Constructive
          Termination. Any such termination shall be treated as a termination by
          the Company without Cause. For this purpose, a "Constructive
          Termination" shall mean:

          (i)    a reduction in Base Salary or Additional Salary (other than as
                 permitted hereby);

          (ii)   a reduction in annual Bonus opportunity;

          (iii)  a change in location of office of more than seventy-five (75)
                 miles from Madison, Wisconsin;

          (iv)   unless with the express written consent of the Executive, (a)
                 the assignment to the Executive of any duties inconsistent in
                 any substantial respect with the Executive's position,
                 authority or responsibilities as contemplated by Section 1 of
                 this Agreement or (b) any other substantial change in such
                 position, including titles, authority or responsibilities from
                 those contemplated by Section 1 of the Agreement; or

          (v)    any material reduction in any of the benefits described in
                 Section 3(h), (i), (j) or (k) hereof.

          For purposes of the Stock Option Agreements, Constructive Termination
          shall be treated as a termination of employment by the Company without
          "Cause."

     (f)  NOTICE OF TERMINATION. Any termination by the Company for Cause or by
          the Executive for Constructive Termination 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

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          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 any party to set forth in
          the Notice of Termination any fact or circumstance which contributes
          to a showing of Cause or Constructive Termination shall not waive any
          right of such party hereunder or preclude such party from asserting
          such fact or circumstance in enforcing its rights hereunder.

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)  DEATH OR DISABILITY. If the Executive's employment is terminated by
          the death or disability of the Executive (pursuant to Section 4(b)),
          the Executive's compensation provided in Section 3 shall be paid to
          the Executive or, in the event of the death of the Executive, the
          Executive's estate, as follows:

          (i)    the Executive's Base Salary specified in Section 3(a) shall
                 continue to be paid in monthly installments until the first to
                 occur of (i) twenty-four (24) months following such termination
                 or (ii) such time as the Executive or the Executive's estate
                 breaches the provisions of Sections 6 or 7 of this Agreement;

          (ii)   double the PRO RATA portion (based on days worked and
                 percentage of achievement of annual performance goals) of the
                 annual Bonus payable to the Executive, if any, specified in
                 Section 3(b) shall be paid, unless the Board determines to pay
                 a greater amount in its sole discretion;

          (iii)  the Executive's Additional Salary (or, for any partial year,
                 the pro rata portion thereof) specified in Section 3(c) shall
                 continue to be paid until the first to occur of (i) the
                 remaining period of the Term or (ii) such time as the Executive
                 or the Executive's estate breaches the provisions of Sections 6
                 or 7 of this Agreement;

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          (iv)   If the Executive's employment is terminated as a result of
                 disability, the Executive's additional benefits specified in
                 Section 3(d) shall continue to be available to the Executive
                 until the first to occur of (i) the remaining period of the
                 Term (or twenty-four (24) months following such termination, if
                 greater) or (ii) such time as the Executive breaches the
                 provisions of Sections 6 or 7 of this Agreement; and

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

     (c)  WITHOUT CAUSE. If the Executive's employment is terminated by the
          Company without Cause (pursuant to Section 4(c) or 4(e)), the
          Executive's compensation provided in Section 3 shall be paid as
          follows:

          (i)    the Executive's Base Salary specified in Section 3(a) shall
                 continue to be paid in monthly installments until the first to
                 occur of (i) the remaining period of the Term (or twenty-four
                 (24) months following such termination, if greater) or (ii)
                 such time as the Executive breaches the provisions of Sections
                 6 or 7 of this Agreement;

          (ii)   the Executive's annual Bonus shall continue to be paid in
                 accordance with this Section 5(c) at the times set forth in
                 Section 3(b) until the first to occur of (i) the remaining
                 period of the Term (or twenty-four (24) months following such
                 termination, if greater) or (ii) such time as the Executive
                 breaches the provisions of Sections 6 or 7 of this Agreement.
                 The annual Bonus payable pursuant to this Section 5(c) shall
                 equal the amount of the annual Bonus (if any) previously paid
                 or required to be paid pursuant to this Agreement for the full
                 fiscal year immediately prior to the Executive's termination of
                 employment;

          (iii)  the Executive's Additional Salary (or, for any partial year,
                 the pro rata portion thereof) specified in Section 3(c) shall
                 continue to be paid until the first to occur of (i) the
                 remaining period of the Term (or twenty-four (24) months
                 following such termination, if longer) or (ii) such time as the
                 Executive breaches the provisions of Sections 6 or 7 of this
                 Agreement; and

          (iv)   the Executive's additional benefits specified in Section 3(d)
                 shall continue to be available to the Executive until the first
                 to

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                 occur of (i) twenty-four (24) months following such termination
                 or (ii) such time as the Executive breaches the provisions of
                 Sections 6 or 7 of this Agreement.

     (d)  FOLLOWING CHANGE IN CONTROL. If the Executive elects to terminate his
          employment within thirty (30) days following a Change in Control in
          accordance with Section 4(d), such termination by the Executive shall
          be treated as a termination by the Company without Cause, and the
          Executive shall be entitled to the compensation provided in Section
          5(c); provided, however, that Executive's Base Salary, annual Bonus,
          Additional Salary and Section 3(d) additional benefits shall continue
          to be paid only until the first to occur of (i) the remaining period
          of the Term (or twelve (12) months following the expiration of the
          Post-Term Period (as defined below)) or (ii) such time as the
          Executive breaches the provisions of Sections 6 or 7 of this
          Agreement. In no event, however, shall Executive receive less than
          twelve (12) months Base Salary and annual Bonus following the
          expiration of the Post-Term Period. Notwithstanding the foregoing, the
          Company may require that the Executive continue to remain in the
          employ of the Company for up to a maximum of thirty (30) days
          following the Change in Control (the "Post-Term Period"). The Company
          shall place the maximum cash payments payable pursuant to Section 5(c)
          in escrow with a commercial bank or trust company mutually acceptable
          to the Company and the Executive as soon as practicable following the
          Change in Control. For the Post-Term Period, the Company shall make
          the cash payments that would otherwise be required pursuant to Section
          3 (all such cash payments to be deducted from the amount placed in
          escrow). At the expiration of the Post-Term Period, the Executive
          shall receive all cash amounts due the Executive from the remaining
          amount held in escrow ratably monthly over the Non-Competition Period
          (as defined below), with the balance (if any) returned to the Company.
          If the Company does not require that the Executive remain in the
          employ of the Company, the Company shall pay the Executive all cash
          amounts payable pursuant to Section 5(c) ratably monthly over the
          Non-Competition Period (all such cash payments to be deducted from the
          amount placed in escrow) with the balance (if any) returned to the
          Company.

     The Executive shall not be required to mitigate the amount of any payment
     provided for herein by seeking other employment or otherwise, and if the
     Executive does obtain other employment, all amounts payable by the Company
     under this Agreement shall remain fully due and payable.

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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 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.

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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 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

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          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:  Board of Directors

          with a copy to:

                   Rayovac Corporation
                   601 Rayovac Drive
                   Madison, WI  53711
                   Facsimile:  (608) 278-6666
                   Attention:  James T. Lucke

     (b)  For notices and communications to the Executive:

                   David A. Jones
                   7881 Via Vecchia
                   Naples, Florida  34108

          with a copy to:

                   Sutherland, Asbill & Brennan LLP
                   999 Peachtree Street, N.E.
                   Atlanta, GA  30309
                   Facsimile:  (404) 853-8806
                   Attention:  Mark D. Kaufman, Esq.

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

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9.   GENERAL.

     (a)  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.

     (b)  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.

     (c)  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.

     (d)  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.

     (e)  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.

     (f)  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, bonus, incentive or other plan or
          program provided by the Company or any of its affiliates and for

                                       14
<Page>

          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.

     (g)  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. In the event
          that the Executive shall give a Notice of Termination for Constructive
          Termination and it shall thereafter be determined that Constructive
          Termination did not take place, the employment of the Executive shall,
          unless the Corporation and the Executive shall otherwise mutually
          agree, be deemed to have terminated, at the date of giving such
          purported Notice of Termination, and the Executive shall be entitled
          to receive only those payments and benefits which he would have been
          entitled to receive at such date had he terminated his employment
          voluntarily at such date under Section 4(d) of this Agreement.

     (h)  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.

     (i)  ENTIRE AGREEMENT. This Agreement and the exhibit 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.

                                       15
<Page>

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

                                     RAYOVAC CORPORATION

                                     By    /s/ Kent J. Hussey
                                           ---------------------
                                           Kent J. Hussey
                                           President and Chief Operating Officer

EXECUTIVE:

/s/ David A. Jones
------------------
David A. Jones

                                       16
<Page>

                                    EXHIBIT A

                               RAYOVAC CORPORATION

                          FULL RECOURSE PROMISSORY NOTE

$500,000                                                      Madison, Wisconsin
                                                              September 12, 1996

          FOR VALUE RECEIVED, the undersigned, David A. Jones (the "Borrower"),
residing at 2910 Coles Way, Atlanta, GA 30350 HEREBY PROMISES TO PAY to the
order of Rayovac Corporation, a Wisconsin corporation (the "Company"), having a
principal address at 601 Rayovac Drive, Madison, WI 53711, or to the legal
holder of this Note at the time of payment, the principal sum of $500,000, in
accordance herewith, plus simple interest thereon at a rate of 7% per annum. The
principal amount of this Note shall be due and payable on the Maturity Date (as
defined below) and the interest on this Note shall be paid in five (5) annual
installments of $35,000 on each successive Payment Date (as defined below).

          This Note is being delivered to the Company in consideration for a
loan of even date herewith to enable the Borrower to acquire 227,894 shares (the
"Shares") of common stock, $.01 par value per share, of the Company in
connection with the recapitalization of the Company pursuant to the Stock
Purchase and Redemption Agreement dated this date.

          The Borrower and the Company are parties to an Employment Agreement,
dated this date (the "Employment Agreement"), which sets forth the terms of
Borrower's employment with the Company as Chairman of the Board of Directors,
President and Chief Executive Officer of the Company.

          This Note is subject to the following further terms and conditions:

          1.   PAYMENT DATES AND MATURITY DATE. Payments of interest on this
Note as set forth above shall be paid at such time as Additional Salary (as
defined in the Employment Agreement) set forth in Section 3 (c) (i) of the
Employment Agreement is due and payable by the Company to the Borrower pursuant
to the terms of the Employment Agreement (each such date referred to herein as a
"Payment Date"). Payment of principal on this Note as set forth above shall be
paid on the fifth Payment Date (the "Maturity Date").

          2.   METHOD OF PAYMENT. All payments of principal, interest and other
amounts owing hereunder shall be made, without setoff, deduction or
counterclaim, in funds which are available on the Payment Date (including the
Maturity Date) to the Company at the Company's principal address set forth
herein, or to such other person and at such other place specified in writing by
the Company to the Borrower, by 12:00 noon (local time) on the date when due.
The Borrower may, at his option, prepay this Note in whole or in part at any
time or from time to time without penalty or premium. Any prepayment of any
portion of

<Page>

the principal portion of this Note shall be accompanied by payment of all
interest accrued but unpaid hereunder. Upon full and final payment of the
principal amount of and interest accrued on this Note, it shall be surrendered
to the Borrower and cancelled by the Company.

          3.   LOAN PROCEEDS. The Borrower hereby irrevocably directs the
Company to disburse the proceeds of this Note directly to the Company for the
account of the Borrower in payment (whether in whole or in part) of the Shares
and agrees that any funds so disbursed (regardless of how applied by the
Company) shall be considered received by the Borrower upon the receipt of such
funds by the Company.

          4.   EVENTS OF ACCELERATION.

               (a) Upon the occurrence of any of the following events ("Events
of Acceleration"):

               (i) the failure to pay the principal of and interest under this
     Note when due if such failure is not remedied within ten (10) days after
     written notice thereof to the Borrower from the holder of this Note;

               (ii) the Borrower is terminated by the Company for Cause (as
     defined in the Employment Agreement) pursuant to Section 4 (a) of the
     Employment Agreement;

               (iii) the Borrower terminates his employment with the Company
     (other than pursuant to Section 4 (e) of the Employment Agreement) and the
     Borrower is no longer a director of the Company; or

               (iv) the Borrower sells or otherwise disposes for value any of
     the Shares, unless the Borrower uses the proceeds from such sale or other
     disposition (net of brokers' commissions) to immediately prepay in whole or
     in part the principal amount of this Note outstanding and any accrued and
     unpaid interest on the portion prepaid;

the holder of this Note may declare, by notice of acceleration given to the
Borrower, the entire principal amount of this Note to be forthwith due and
payable, whereupon the entire principal amount of this Note outstanding and any
accrued and unpaid interest hereunder shall become due and payable without
presentment, demand, protest, notice of dishonor and all other demands and
notices of any kind, all of which are hereby expressly waived. Upon the
occurrence of an Event of Acceleration, the accrued and unpaid interest
hereunder shall thereafter bear the same rate of interest as on the principal
hereunder, but in no event shall such interest be charged which would violate
any applicable usury law. If an Event of Acceleration shall occur hereunder, the
Borrower shall pay costs of collection, including reasonable attorneys' fees,
incurred by the holder in the enforcement hereof.

                                        2
<Page>

               (b) No delay or failure by the holder of this Note in the
exercise of any right or remedy shall constitute a waiver thereof, and no single
or partial exercise by the holder hereof of any right or remedy shall preclude
other or future exercises thereof or the exercise of any other right or remedy.

          5.   AMENDMENTS. This Note may be amended if in writing and signed by
the Borrower and the Company.

          6.   HEADINGS. The headings contained in this Note are for reference
purposes only and shall not affect in any way the meaning or interpretation of
the provisions hereof.

          7.   BENEFITS OF THIS AGREEMENT. This Note shall be binding upon the
Borrower and the Borrower's personal representatives, heirs and assigns and
shall not be construed so as to confer any right or benefit upon any person
other than the Borrower and his or her personal representatives, heirs and
assigns.

          8.   NOTICES. All notices and other communications hereunder shall be
in writing, and shall be deemed to have been duly given if delivered or, upon
receipt, if mailed, in either case, to the respective addresses of the Company
and the Borrower specified herein, or to such other address as a party shall
have specified by notice to the other in the same manner.

          9.   SEVERABILITY. If any provision of this Note is construed to be
invalid, illegal or unenforceable, then the remaining provisions shall not in
any way be affected thereby and shall be enforced without regard thereof.

          10.  GOVERNING LAW. The provisions of this Note shall be governed by
and construed in accordance with the laws of the State of Wisconsin, without
regard to the conflict of law rules thereof.

          11.  WAIVER OF JURY TRIAL. The Borrower and, by acceptance hereof, the
Company hereby waive trial by jury in any judicial proceeding involving,
directly or indirectly, any matter (whether sounding in tort, contract or
otherwise) in any way arising out of, related to, or connected with this Note.

     IN WITNESS WHEREOF, the undersigned Borrower has executed this Note under
seal as of the day and year first above written.

                                          /s/ David A. Jones
                                          ----------------------
                                          (Signature of Borrower)

Witness:

/s/ W. C. Smith, Jr.
--------------------

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Exhibit 10.17    
  

        THIS
EMPLOYMENT AGREEMENT is effective as of the 1st day of May, 2003 by and between Trans World Entertainment Corporation, a New York corporation (the "Company"), and
Robert J. Higgins ("Higgins"). 

Background  

        WHEREAS, Higgins has served as the President and Chief Executive Officer of the Company and as the Chairman of its Board of Directors since 1973; and 

        WHEREAS,
Higgins and the Company executed an employment agreement effective as of May 1, 1998, which will end on April 30, 2004 (the "1998 Employment Agreement"); and 

        WHEREAS,
the Company recognizes that Higgins' contribution to the growth and success of the Company has continued to be substantial throughout the term of the 1998 Employment Agreement
and that without his continued leadership and vision the Company would not have achieved and maintained its current status in the industry; and 

        WHEREAS,
the Company desires to renegotiate and extend the terms of the 1998 Employment Agreement to assure the Company of Higgins' continued services in a leadership capacity and to
compensate him therefor; and 

        WHEREAS,
Higgins is willing to commit to continue serving the Company on the terms and conditions provided in this Agreement. 

        NOW
THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and intending to be legally bound hereby, the parties agree as follows: 

SECTION
1.    CAPACITY AND DUTIES    

        1.1    Employment.    The Company hereby employs Higgins and Higgins hereby accepts employment by the Company upon the
terms and conditions hereinafter set forth for a term commencing on the date hereof and expiring on April 30, 2008 (unless Higgins' service is sooner terminated as set forth below) (the
"Contract Period"). 

        1.2    Capacity and Duties.    

                1.2.1    Higgins
shall be employed by the Company generally as its President and Chief Executive Officer and shall have the executive authority, consistent with
these positions, as may from time to time be specified by the Board of Directors of the Company or any duly authorized committee thereof (the "Board"). 

                1.2.2    Higgins
shall devote his full working time, energy, skill and best efforts to the performance of his duties hereunder, in a manner that will faithfully
and diligently serve the business and interest of the Company and its affiliates (as defined below), provided that Higgins may devote such time as is reasonably required for charitable and other
personal activities in accordance with the Company's practices and policies. 

                1.2.3    For
the purposes of this Agreement, an "affiliate" of the Company means any person or entity that controls the Company, is controlled by the Company, or
which is under common control with the Company. For the purposes of this definition of "affiliate", "control" means the power to direct the management and policies of a person or entity, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" shall have correlative meanings; provided that any person or
entity who owns beneficially, either directly or though one or more intermediaries, more than 20% of the ownership interests in a specified entity shall be presumed to control such entity for the
purposes of this Agreement. 

 

SECTION
2.    COMPENSATION    

        2.1    Base Compensation.    As compensation for Higgins' services hereunder, the Company shall pay Higgins a salary
at the annual rate of $1,116,000. This salary shall be payable in installments in accordance with the Company's regular payroll practices in effect from time to time. This salary shall be subject to
increase based on normal periodic merit review by the Compensation Committee of the Board (the "Compensation Committee") in accordance with the corporate policies of the Company (such salary,
including the foregoing adjustments, if any is hereinafter referred to as "base salary"); provided, however, that the amount of such increase shall not be less than the percentage amount, if any, by
which the CPI (as defined below) for the calendar month immediately proceeding such anniversary date exceeds the CPI for the same month of the immediately preceding year. For the purposes of this
Section 2.1, the term "CPI" shall mean the Consumer Price Index for All Urban Consumers for all items for New York, New York, as published by the Bureau of Labor Statistics of the United States
Department of Labor, or of any revised or successor index hereafter published by the Bureau of Labor Statistics or other agency of the United States government succeeding to its functions. The annual
base salary of Higgins shall not be decreased at any time during the Contract Period from the amount then in effect, unless Higgins otherwise agrees in writing. Participation in deferred compensation,
discretionary bonus, retirement and other employee benefit plans and in fringe benefits shall not reduce the annual base salary payable to Higgins under this Section 2.1. 

        2.2    Benefits.    

                2.2.1    During
the Contract Period, Higgins (and his family, if applicable) shall be entitled to participate in all incentive, savings, retirement, welfare and
other employee benefit plans, practices, policies and programs that the Company may provide for the benefit of its executive employees generally (together with the fringe benefits described below,
("Employee Benefits"). Higgins shall also be entitled to participate in any other fringe benefits which may be or become applicable to the Company's executive employees, including the payment of
reasonable expenses for attending annual and periodic meetings of trade associations and any other benefits that are commensurate with the duties and responsibilities to be performed by Higgins under
this Agreement. In no event shall the Employees Benefits provided to Higgins be less favorable, in the aggregate, than the employee benefits plans, practices, policies and programs provided to Higgins
immediately preceding the effective date of this Agreement. 

                2.2.2    If
Higgins becomes a participant in any employee benefit plan, practice or policy of the Company or its affiliates, Higgins shall be given credit under
such plan for all service in the employ of the Company and any predecessors thereto or affiliates thereof prior to the date hereof, for purposes of eligibility and vesting, benefit accrual and for all
other purposes for which such service is either taken into account or recognized under the terms as such plan, practice or policy. 

                2.2.3    During
the Contract Period, Higgins shall be entitled to a private office, and such secretarial services as have been previously provided to Higgins, and
such other assistance and accommodations as
shall be suitable to the character of Higgins' position with the Company and adequate for the performance of Higgins' duties hereunder. 

                2.2.4    The
Company shall pay or reimburse Higgins for all reasonable expenses (including expenses of travel and accommodations) incurred or paid by Higgins in
connection with the performance of Higgins' duties hereunder upon receipt of itemized vouchers therefor and such other supporting information as the Company shall reasonably require. 

                2.2.5    During
the Contract Period, the Company shall continue to provide Higgins with an automobile for use by Higgins consistent with past practices and shall
continue to pay or reimburse Higgins for expenses he reasonable incurs for the maintenance and operation of such automobile upon 

2

 

receipt of itemized vouchers therefor and such other supporting information as the Company shall reasonably require. 

                2.2.6    During
the Contract Period, Higgins shall be entitled to paid vacations in a manner commensurate with Higgins' status as the President and Chief
Executive Officer of the Company, which shall not be less than the annual vacation period which Higgins is presently entitled. 

        2.3    Executive Bonus Plan.    The Company maintains the Executive Bonus Plan (the "EBP") to provide
performance-based incentive compensation to Higgins and certain other executives of the Company. During the Contract Period, Higgins shall be eligible to earn an annual performance bonus of 0 to 150%
of his annual base salary in effect for that year ("incentive compensation"), calculated in such fashion and based on the achievement of certain performance criteria as are approved by the Board or
the Compensation Committee prior to the beginning of such year under the EBP. 

        2.4    Insurance.    Under the 1996 Employment Agreement the Company assisted in providing life insurance protection
for Higgins' family at an annual cost to the Company of $150,000. During the Contract Period, the Company shall continue to assist Higgins by paying or advancing each year under an arrangement
selected by Higgins an amount which has an annual net after tax cost to the Company of $150,000. 

        2.5    Additional Compensation.    The Board, although under no obligation to do so, may determine from time to time
to pay to Higgins compensation in addition to the annual base salary and incentive compensation required to be paid above. The Board may grant Higgins options to purchase shares of common stock of the
Company ("Common Stock"), may issue him restricted Common Stock or may award him stock appreciation rights. In addition to the foregoing, Higgins is hereby granted the option to purchase one million
(1,000,000) shares of the Common Stock, five hundred thousand (500,000) shares of which shall vest 25% each year over the next four years. Five hundred thousand (500,000) shares shall vest on
May 1, 2008. If however, the Company were to employ a chief executive officer
prior to that date, the option shall vest immediately and Higgins shall remain as Chairman of the Board.

SECTION
3.    TERMINATION OF EMPLOYMENT    

        3.1    Death or Disability of Higgins.    

                3.1.1    Higgins'
employment hereunder shall immediately terminate upon his death, upon which the Company shall pay the amounts due under Section 2
(including base salary, Employee Benefits, expense reimbursements and compensation for unused vacation time) accrued as of the date of Higgins' death in accordance with generally accepted accounting
principles ("GAAP"). 

                3.1.2    If
Higgins, in the reasonable opinion of the Company, is Disabled (as defined below), the Company shall have the right to terminate Higgins' employment
upon 30 days prior written notice to Higgins at any time after the expiration of the 180 day period referred to below, in which event the Company shall pay the amounts due under
Section 2 (including base salary, Employee Benefits, expense reimbursements and compensation for unused vacation time) accrued in accordance with GAAP as of the date of Higgins' termination
because of Disability. As used in this Agreement, the term "Disabled" or "Disability" shall mean the inability of Higgins to perform substantially Higgins' duties and responsibilities to the Company
by reason of a physical or mental disability or infirmity for a continuous period of at least 180 days. The date of Disability shall be on the last day of such 180 day period. The
determination of whether the Disability has occurred shall be made by a licensed physician chosen by the Board. The benefits payable under Sections 3.1, 3.2 or otherwise under this Agreement shall be
reduced by the amount of any benefits to which Higgins may be entitled under the benefit plans and programs of the Company, including any disability plan, supplementary retirement plan or agreement or
insurance policies maintained by the Company for the benefit of Higgins. 

3

 

        3.2    Continuing Benefits Following Death or Disability.    In addition to any payments or benefits contemplated by
Section 3.1, if Higgins' employment is terminated for death or disability, Higgins (and, as applicable, his family and estate) shall continue to receive all base salary, incentive compensation
and all Employee Benefits Higgins (and, as applicable, his family) would have received for the balance of the Contract Period had his employment not been so terminated; provided, however, that if
Higgins' employment is terminated for death the total amount payable under this Section 3 shall in no event be less than 2.99 times the average of the aggregate base salary and incentive
compensation paid to Higgins over the preceding five years. 

        3.3    Date of Termination.    

                3.3.1    Except
as otherwise provided in this Agreement, the employment of Higgins hereunder shall terminate upon the earliest to occur of the dates specified
below: 

                3.3.1.1    the
end of the Contract Period; 

                3.3.1.2    the
close of business on the date of Higgins' death; 

                3.3.1.3    the
close of business on the date which is 30 days after the date on which the Company delivers to Higgins a written notice of the Company's
election to terminate Higgins' employment for "Cause" (as defined below); 

                3.3.1.4    the
close of business on the date which is 30 days after the date on which the Company delivers to Higgins a written notice of the Company's
election to terminate Higgins' employment because of Disability; 

                3.3.1.5    the
close of business on the date which is 30 days after the date on which Higgins delivers to the Company a notice of Higgins " election to
terminate Higgins' employment" for "Good Reason" (as defined below); 

                3.3.1.6    the
close of business on the date which is 30 days after the date on which Higgins delivers to the Company a notice as Higgins' election to
terminate Higgins' employment in accordance with Section 3.5.2 following a change in the present control of the Company (as defined below); provided, however, Higgins shall not have the right
to terminate this agreement pursuant to this Section 3.3.1.6 to the extent a change in the present control of the Company resulted solely from the sale or other transfer of ownership interests
by Higgins to a person or entity; or 

                3.3.1.7    the
close of business on the date which is 60 days after the date on which the Company delivers to Higgins a written notice that the Board has
adopted a resolution terminating the Higgins' employment and such termination is not for death, Cause or Disability. 

                3.3.2    Any
purported termination by the Company or by Higgins shall be communicated by written Notice of Termination to the other. For the purposes of this
Agreement, a "Notice of Termination" shall mean a notice which indicates the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of Higgins' employment under the provision so indicated. No such purported termination shall be effective without delivery of such Notice of Termination. Termination of employment will not
cause a termination of this Agreement, the terms of which shall survive any termination of employment in accordance with the express terms hereof. 

        3.4    Termination for Cause.    

                3.4.1    In
the event Higgins' employment is terminated (i) by the Company for Cause, or (ii) by Higgins for any reason other than Good Reason or in
accordance with Section 3.5.2 following a change in the present control of the Company (as defined below), the Company's remaining obligations under this Agreement shall terminate as of the
date provided in Section 3.3. 

4

 

                3.4.2    For
the purposes of this Agreement, the term "Cause" shall mean: 

                3.4.2.1    fraud,
theft, misappropriation or embezzlement of the Company's funds; 

                3.4.2.2    conviction
of any felony, crime involving fraud or misrepresentation, or of any other crime (whether or not connected with his employment) the effect
of which is likely to adversely affect the Company, except if Higgins' actions which result in such a conviction were taken in good faith and in a manner Higgins reasonably believed not to be adverse
to the interests of the Company; 

                3.4.2.3    after
a written demand for substantial performance to Higgins from the Board (mailing of such written demand having been authorized by a least 60% of
the directors then in office) which specifically identifies the manner in which the Board believes that Higgins has intentionally materially breached Higgins' duties and provides Higgins with a
30 day period in which to cure such breach, the willful and continuing intentional material breach by Higgins substantially to perform Higgins' duties with the Company (other than any such
failure resulting from Disability); or 

                3.4.2.4    abuse
of alcohol or other drugs which interferes with the performance by Higgins of his duties, provided that Higgins has been given 30 days
notice by the Company of its intent to terminate Higgins pursuant to this provision during which time Higgins has not demonstrated the cessation of such abuse to the reasonable satisfaction of the
Board. 

Notwithstanding
the foregoing or any other provision hereof, Higgins shall not be deemed to have been terminated for Cause unless there shall have been delivered to Higgins a copy of a resolution duly
adopted by the affirmative vote of not less than 60% of the entire membership of the Board at a meeting of the Board called and held for that purpose (after at least 15 days prior written
notice to Higgins and an opportunity for Higgins, together with Higgins' counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, Higgins was guilty of conduct set
forth above and specifying the particulars thereof in reasonable detail. 

                3.4.3    For
the purposes of this Agreement, the term "Good Reason" shall mean the occurrence of any of the events or conditions described in the following
subparagraphs without Higgins' express written consent: 

                3.4.3.1    a
material diminution of Higgins' status, title, position, scope of authority or responsibilities (including reporting responsibilities), the
assignment to Higgins of any duties or responsibilities which, in Higgins' reasonable judgment, are inconsistent with such status, title, position, authorities or responsibilities, Higgins ceasing to
be Chairman of the Board of Directors, or any removal of Higgins from or failure to reappoint or reelect Higgins to any of such positions, except in connection with the termination of Higgins'
employment for Disability, Cause, as a result of Higgins' death or by Higgins other than for Good Reason; 

                3.4.3.2    a
reduction by the Company in Higgins' compensation or benefits as in effect on the date hereof or as the same may be increased from time to time; 

                3.4.3.3    the
relocation of the Company's principal executive offices to a location outside a 25-mile radius of Albany, New York or the Company's
requiring Higgins to be based at any place other than Albany, New York, except for reasonable required travel on the Company's business; 

                3.4.3.4    the
materially adverse and substantial alteration in the nature and quality of the office space within which Higgins performs Higgins duties, including
the size and location thereof, as well as the secretarial and administrative support provided to Higgins; 

                3.4.3.5    any
material breach by the Company of any material provision of this Agreement; and 

5

 

                3.4.3.6    the
failure of the Company to obtain a satisfactory agreement from any purchaser of the Company or successor or permitted assignee of the Company to
assume and agree to perform this Agreement. 

Provided,
however, that a termination by Higgins in accordance with Section 3.5.2 following a change in the present control of the Company (as defined below) shall not constitute a termination
by Higgins for Good Reason under this Agreement. 

        3.5    Termination Without Cause    

                3.5.1    In
the event Higgins' employment is terminated (i) by the Company for any reason other than Cause, or the death or Disability of Higgins, or
(ii) by Higgins for Good Reason, the Company shall immediately pay Higgins the amounts due under Section 2 (including base salary, Employee Benefits, expense reimbursements and
compensation for unused vacation time) accrued as of the date of such termination in accordance with GAAP. In such event, Higgins (and, as applicable, his family) shall also continue to receive from
the Company until two years after the end of the Contract Period then in effect, all base salary, incentive compensation and Employee Benefits that Higgins (and, as applicable, his family) would have
received had he continued employment and such event had not occurred. 

                3.5.2    In
the event Higgins elects to terminate his employment by written notice to the Company within the 90 day period immediately following a change
in the present control of the Company, the Company shall immediately pay Higgins the amounts due under Section 2 (including base salary, Employee Benefits, expense reimbursements and
compensation for unused vacation time) accrued as of the date of such termination in accordance with GAAP. In such event, the Company shall also pay Higgins within 60 days thereafter a singe
sum amount equal to 2.99 his "base amount" (within the meaning of Section 2806 (b) (3) of the Internal Revenue Code of 1986, as amended). 

                3.5.3    There
shall be no requirement on the part of Higgins to seek other employment or otherwise mitigate damages in order to be entitled to the full amount of
any payments or benefits to be made pursuant to this Agreement or any other agreement between Higgins and the Company or any of its affiliates; provided, however, if Higgins' employment is terminated
by the Company other than for Cause or the death or Disability of Higgins, or by Higgins for Good Reason, Higgins shall for so long as he is being paid amounts in respect of base salary hereunder, use
reasonable efforts following 12 months after his employment has been so terminated, to find alternative employment; provided, however, such reasonable efforts shall not require Higgins to move,
commute more than 20 miles to his office or accept employment of a stature materially less than the position Higgins had with the Company. No payment or benefit under any portion of this Agreement
shall be subject to offset. 

SECTION
4.    RESTRICTIVE COVENANTS    

        4.1    Confidentiality.    Higgins acknowledges a duty of confidentiality owed to the Company and shall not, directly
or indirectly, at any time during or after his employment by the Company divulge, furnish, or make accessible to anyone, without the express authorization of the Board, any trade secret, private or
confidential or proprietary information or know-how of the Company or any of its affiliates obtained or
acquired by him while so employed. All computer software and books paid for by the Company, and all records and files generated or acquired while an employee of the Company are acknowledged to be the
property of and shall not be removed from the Company's possession or made use of other than in pursuit of the Company's business and, upon termination of employment for any reason, Higgins shall
deliver to the Company, without further demand, all copies thereof which are then in his possession or under his control. The provisions of this Section 4.1 shall not apply to information which
(i) is or becomes generally available to the public other than as a result of a disclosure by Higgins, (ii) was available to Higgins on a non-confidential basis prior to its
disclosure to Higgins, (iii) becomes available to Higgins on a non-confidential basis from a source other than the 

6

 

Company, (iv) must be disclosed by law or by order of a court or governmental authority, or (v) is used to enforce Higgins's rights with the Company. This Section 4.1 shall
terminate on the date that a sale or other transfer of the Company is completed. 

        4.2    Noncompetition.    

                4.2.1    At
any time while employed hereunder and, except as provided in the last sentence of this Section 4.2.1, for a period of one year following
termination of Higgins' employment for any reason, Higgins shall not, directly or indirectly: (i) engage, anywhere in the Territory (as defined in Section 4.2.2 below), in the retail
sale of music, video or related products; (ii) be or become a stockholder, partner, owner, officer, director or employee or agent of, or a consultant to or give financial or other assistance
to, any person or entity engaging in any such activities; (iii) seek in competition with the business of the Company to procure orders from or do business with any customer of the Company; or
(iv) solicit or contact with a view to the engagement or employment by any person or entity of any person who is an employee of the Company as of the date of this Agreement, provided this will
not preclude hiring any person who contacts Higgins for employment and who has not been employed by the Company at any time during the preceding 6 months. Nothing herein shall prohibit Higgins
without the written consent of the Board from owning, as a passive investor, in the aggregate not more than 5% of the outstanding publicly traded stock of any corporation so engaged. The duration of
Higgins' covenants set forth in this Section shall be extended by a period of time equal to the number of days, if any, during which Higgins is in violation of the provisions hereof. Higgins shall not
be bound by this Section 4.2.1 following the termination of his employment (a) by the Company without Cause, or (b) by Higgins for Good Reason. 

                4.2.2    For
the purposes of this Agreement, "Territory" means the United States. 

                4.2.3    If
either party hereto learns of any breach or potential breach of this Agreement such party shall immediately notify the other party hereto of such
event, specifying the basis therefore in reasonable detail. The Company may, in its sole discretion, afford Higgins an opportunity to remedy or otherwise cure such breach or potential breach before
seeking legal redress, provided that Higgins is actively seeking to cure or remedy such breach or potential breach; but such opportunity to remedy shall be without prejudice to the right of the
Company to seek and obtain injunctive or other relief. 

        4.3    Injunctive and Other Relief.    Higgins acknowledges and agrees that the covenants contained in
Section 4.1 and 4.2 above are fair and reasonable in light of the consideration paid hereunder, and that damages alone shall not be an adequate remedy for any breach by Higgins of his covenants
contained herein and accordingly expressly agrees that, in addition to any other remedies which the Company may have, the Company shall be entitled to injunctive relief in any court of competent
jurisdiction for any breach or threatened breach of any such covenants by Higgins. Nothing contained herein shall prevent or delay the Company from seeking, in any court of competent jurisdiction,
specific performance or other equitable remedies in the event of any breach or intended breach by Higgins of any of his obligations hereunder. In the event the Company prevails in an action to enforce
its rights under Section 4.1 and 4.2 it shall be entitled to be reimbursed for its costs and reasonable attorneys' fees associated with so enforcing its rights. 

SECTION
5.    MISCELLANEOUS    

        5.1    Reimbursement of Counsel Fees: Arbitration.    The Company shall pay all reasonable legal fees, accounting fees
and related expenses incurred by Higgins in connection with the preparation, negotiation and execution of this Agreement. Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in New York, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction. The prevailing party, shall be entitled to recover from the other party all of its legal fees, accounting fees and related 

7

 

expenses incurred in any such arbitration including without limitation, all expenses of arbitration, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenditures of the types customarily incurred in connection with prosecuting, defending or
investigating any arbitration, action or suit. 

        5.2    Severability.    The invalidity or unenforceability of any particular provision or part of any provision of
this Agreement shall not affect the other provisions or parts hereof. If any provision hereof is determined to be invalid or unenforceable by a court of competent jurisdiction, Higgins shall negotiate
in good faith to provide the Company with protection as nearly equivalent to that found to be invalid or unenforceable and if any such provision shall be so determined to be invalid or unenforceable
by reason of the duration or geographical scope of the covenants contained therein, such duration or geographical scope to the extent necessary to cure such invalidity. 

        5.3    Assignment.    Neither this Agreement nor any right or interest hereunder shall be assignable by Higgins,
Higgins' beneficiaries, or legal representatives without the Company's prior written consent; provided, however, that nothing herein shall preclude (i) Higgins from designating a beneficiary to
receive any benefit payable hereunder upon Higgins' death, or (ii) the executors, administrators, or other legal representatives of Higgins or Higgins' estate form assigning any rights
hereunder to devisees, legatees, beneficiaries, testamentary trustee or other legal heirs of Higgins (each a "Distributee"). If Higgins should die while any amounts would still be payable to Higgins
if Higgins
had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Higgins' Distributee or, if there is no such Distributee, to
Higgins' estate. 

        5.4    Notices.    All notices hereunder shall be in writing and shall be sufficiently given if
hand-delivered, sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested or by telegram, fax or telecopy (confirmed by U.S.
mail), receipt acknowledged, addressed as set forth below or to such other person and/or a such other address as may be furnished in writing by either party hereto to the other. Any such notice shall
be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation therefore, in all other cases. Any and all service of
process and any other notice in any such action, suit or proceeding shall be effective against a party if given as provided in this Agreement; provided that nothing herein shall be deemed to affect
the right of a party to serve process in any other manner permitted by law. 

If
to the Company: 

Chief
Financial Officer

Trans World Entertainment Corporation

38 Corporate Circle

Albany, N.Y. 12203 

If
to Higgins: 

Mr. Robert
J. Higgins

6 Sage Estates

Menands, N.Y. 12204 

        5.5    Entire Agreement and Modification.    This Agreement (and any Employee Benefit plan or agreement contemplated
hereby) constitutes the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. Any
amendment, modification, or waiver of this Agreement shall not be effective unless in writing. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial 

8

 

exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege with respect to any occurrence be construed as a
waiver of any right, remedy, power, or privilege with respect to any other occurrence. 

        5.6    Governing Law.    This Agreement is made pursuant to, and shall be construed and enforced in accordance with,
the internal laws of the State of New York (and United States federal law, to the extent applicable), without giving effect to otherwise applicable principles of conflicts of law. 

        5.7    Headings; Counterparts.    The headings of sections in this Agreement are for convenience only and shall not
affect its interpretation. This Agreement may be executed in tow or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to
constitute but one and the same Agreement. 

        5.8    Further Assurances.    Each of the parties hereto shall execute such further instruments and take such other
actions as any other party shall reasonably request in order to effectuate the purposes of this Agreement. 

        5.9    Indemnification.    The Company shall pay, as additional compensation under this Agreement, an amount equal to
Higgins' liability (including all taxes on such amount), if any, under Internal Revenue Code Section 4999 (or any successor provision) by reason of payments under any provision of this
Agreement or otherwise. Throughout the Contract Period and for a period of five years thereafter, the Company shall indemnify and defend Higgins against all claims arising out of Higgins' activities
as an officer, director or employee of the Company to the fullest extent permitted under the law of the applicable state of incorporation. In addition to the foregoing, Higgins shall, upon reasonable
notice, furnish such information and proper assistance to the Company in connection with any litigation in which it is, or may become, a party. 

        IN
WITNESS WHEREOF,    the parties have executed this Agreement on the dates set forth below. 

	 	 	TRANS WORLD ENTERTAINMENT CORPORATION
	
May 2, 2003	
 	

By:	

/s/  JOHN J. SULLIVAN      
 Executive Vice President/Chief Financial Officer
	

May 2, 2003	
 	

By:	

/s/  ROBERT J. HIGGINS      
 Chairman/Chief Executive Officer

9

QuickLinks

Exhibit 10.17

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