PLAYTEX PRODUCTS, INC.
INCENTIVE BONUS PLAN
(Effective as of December 20, 2004)

1.

 

Purpose

 

The purpose of the Plan is to establish a program of incentive compensation for designated employees, including, without limitation, officers and executives, of the Company and its subsidiaries, affiliates and divisions that is directly related to the performance results of the Company and, in the discretion of the Committee, individual Participant performance.

2.

 

Definitions

 

“Board” means the Board of Directors of the Company.

“Bonus Award” means the award, as determined by the Committee, to be granted to a Participant based on that Participant’s level of attainment of his or her goals established in accordance with Articles 9 and 10.

“162(m) Bonus Award” means a Bonus Award which is intended to qualify for the performance-based compensation exception to Section 162(m) of the Code, as further described in Article 8.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

Committee” means (i) the Board, or (ii) such other committee selected by the Board to administer the Plan, which committee may be the Compensation Committee, provided, that, with respect to the award to any “covered employee,” within the meaning of Section 162(m) of the Code, of a 162(m) Bonus Award, such committee shall be a committee of the Board composed of not less than two directors, each of whom is an “outside director” within the meaning of Section 162(m) of the Code. The Board may designate a single committee to administer the Plan with respect to all employees or different committees to administer the Plan with respect to any individual employee or specified group of employees; provided, that, the Board reserves to itself the right to administer the Plan with respect to all employees or any individual employee or specified group of employees. If at any time a committee has not been designated by the Board to administer the Plan, the Compensation Committee shall constitute the Committee, or if there shall be no Compensation Committee, the Board shall constitute the Committee. If at any time the Compensation Committee has been designated by the Board to administer the Plan with respect to all employees or with respect to any individual employee or any specified group of employees, the Compensation Committee may designate one or more members of management to administer the Plan with respect to such employee or employees, subject to the Board’s right, described above, to administer the Plan with respect to any employee or employees provided, that in no event will such delegation be applicable with respect to any Bonus Award to any “covered employee” within the meaning of Section 162(m) of the Code. The term “Committee” used herein shall refer to the Board, the Compensation Committee or any other committee appointed by the Board or the Compensation Committee to administer the Plan.

“Company” means Playtex Products, Inc., a Delaware corporation, and any successor thereto.

“Compensation Committee” means the Compensation and Stock Option Committee of the Board.

“Designated Beneficiary” means the beneficiary or beneficiaries designated by a Participant under any life insurance plan, policy or arrangement sponsored or maintained by the Company and such beneficiary or beneficiaries shall be entitled to receive the amount, if any, payable under the Plan following the Participant’s death. In the event no Designated Beneficiary is living at the time of the Participant’s death, the Participant’s estate shall be deemed his or her Designated Beneficiary.

“Leave of Absence” means a Participant’s absence from employment with the Company and its affiliates and subsidiaries on account of military service or mobilization or other authorized absence, including, but not limited to, short-term disability, pregnancy, parental leave, or long-term disability.

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“Participant” means any employee, including, without limitation any officer or executive, of the Company or its subsidiaries or affiliates who is designated by the Committee to participate in the Plan.

“Performance Criteria” means objective performance criterion or criteria established by the Committee for purposes of establishing performance goals with respect to 162(m) Bonus Awards. The Performance Criteria that will be used to establish the performance goals shall be based on the attainment of specific levels of performance of the Company or of a subsidiary, affiliate, division, department or function within the Company, subsidiary or affiliate in which the Participant is employed and shall be limited to the following:

(i)

 

earnings before or after taxes, interest, depreciation and/or amortization;

 

(ii)

 

basic or diluted earnings per share (before or after taxes);

 

(iii)

 

market share;

 

(iv)

 

net operating profit (before or after taxes);

 

(v)

 

net earnings or net income (before or after taxes);

 

(vi)

 

cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital);

 

(vii)

 

return measures (including, but not limited to, return on assets, capital, invested capital, equity or sales);

 

(viii)

 

net revenue or net revenue growth;

 

(ix)

 

gross profit or gross profit growth;

 

(x)

 

margins;

 

(xi)

 

share price (including, but not limited to, growth measures and total shareholder return);

 

(xii)

 

sales (net or gross) or product volume growth;

 

(xiii)

 

productivity improvement and productivity ratios;

 

(xiv)

 

costs, expenses or expense targets;

 

(xv)

 

market value;

 

(xvi)

 

book value;

 

(xvii)

 

gross or operating margins;

 

(xviii)

 

operating efficiency;

 

(xix)

 

objective measures of customer satisfaction;

 

(xx)

 

working capital targets;

 

(xxi)

 

measures of economic value added; and

 

(xxii)

 

inventory turns.

 

Any one or more of the Performance Criteria may be used to measure the performance of the Company, a subsidiary, affiliate, division, department or function within the Company, subsidiary or affiliate.

Each grant of a 162(m) Bonus Award shall specify the Performance Criteria to be achieved, a minimum acceptable level of achievement below which no payment or award will be made and a formula for determining the amount of any payment or award to be made if performance is at or above the minimum acceptable level but falls short of full achievement of the specified Performance Criteria. To the extent that any of the Performance Criteria for a particular Performance Period includes a metric that is earnings-based, the Committee may determine that, in measuring performance against such metric, current amounts payable

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for any Company bonus program, including any Bonus Award for which performance is being measured shall be deducted prior to determining if the metric and/or Performance Criteria has been attained.

If the Committee determines that (i) a change in the Company’s (a) business, including, without limitation, the manner in which it conducts its business, (b) operations, (c) corporate structure or (d) capital structure, including, without limitation, any recapitalization, reorganization, merger, consolidation, combination, exchange, other relevant change in capitalization, extraordinary non-recurring event, acquisition or other corporate change, or (ii) any other event or circumstance render the Performance Criteria to be unsuitable, the Committee may modify such Performance Criteria or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable; provided, however, that no such modification shall be made if the effect would be to cause a 162(m) Bonus Award to fail to qualify for the performance-based compensation exception to Section 162(m) of the Code.

“Performance Period” means the period during which performance is measured to determine the level of attainment of a Bonus Award, which period may be one or more than one fiscal year of the Company.

“Plan” means the Playtex Products, Inc. Incentive Bonus Plan.

3.

 

Eligibility

 

Participants in the Plan shall be selected by the Committee for each Performance Period from among those employees, including, without limitation, officers and executives, of the Company and its subsidiaries whose efforts contribute to the success of the Company. No employee shall be a Participant unless he or she is selected by the Committee, in its sole discretion. No employee shall at any time have the right to be selected as a Participant nor, having been selected as a Participant for one Performance Period, to be selected as a Participant in any other Performance Period.

4.

 

Administration

 

The Plan shall be administered by the Committee and may be administered by different bodies with respect to different groups of employees. The Committee, in its sole discretion, will determine eligibility for participation, establish the maximum award which may be earned by each Participant (which may be expressed in terms of dollar amount, percentage of salary or any other measurement), establish goals for each Participant (which may be objective or subjective, and based on individual, Company, subsidiary and/or division performance), calculate and determine each Participant’s level of attainment of such goals, and calculate the Bonus Award for each Participant based upon such level of attainment.

Except as otherwise herein expressly provided, full power and authority to construe, interpret and administer the Plan shall be vested in the Committee, including the power to amend or terminate the Plan as further described in Article 15. The Committee may at any time adopt such rules, regulations, policies or practices as, in its sole discretion, it shall determine to be necessary or appropriate for the administration of, or the performance of its respective responsibilities under, the Plan. The Committee may at any time amend, modify, suspend or terminate such rules, regulations, policies or practices.

5.

 

Bonus Awards

 

The Committee, based upon information to be supplied by management of the Company and, where determined as necessary by the Board, the ratification of the Board, will (a) establish (i) the Performance Period for each Bonus Award, and (ii) for each Performance Period, (A) a maximum award (and, if the Committee deems appropriate, a threshold and target award) and (B) goals relating to Company, subsidiary, divisional and departmental performance, and, in the discretion of the Committee, individual performance of the Participant and (b) communicate such award levels and goals to each Participant prior to or during the Performance Period for which such Bonus Award may be made. Bonus Awards will be earned by each Participant based upon the level of attainment of his or her goals during the applicable Performance Period; provided, that, unless otherwise provided in any individual written agreement between the Company and a Participant, the Committee may reduce the amount of any Bonus Award in its sole and absolute discretion. As soon as practicable after the end of the applicable Performance Period, the Committee shall determine the

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level of attainment of the goals for each Participant and the amount of the Bonus Award, if any, to be paid to each Participant.

6.

 

Payment of Bonus Awards

 

Bonus Awards earned during any Performance Period shall be paid as soon as practicable following the end of such Performance Period, but in no event later than two and one-half months following the close of the Company’s taxable year in which the last day of the Performance Period occurs (the “Payment Date”). Payment of Bonus Awards shall be made in the form of cash.

7.

 

162(m) Bonus Awards

 

Unless determined otherwise by the Committee, each Bonus Award awarded under the Plan to a “covered employee” within the meaning of Section 162(m) of the Code, shall be a 162(m) Bonus Award and will be subject to the following requirements, notwithstanding any other provision of the Plan to the contrary:

(a)  No 162(m) Bonus Award may be paid unless and until the shareholders of the Company have approved the Plan in a manner which complies with the shareholder approval requirements of Section 162(m) of the Code.

(b)  A 162(m) Bonus Award may be made only by a committee of the Board which is comprised solely of not less than two directors, each of whom is an “outside director” within the meaning of Section 162(m) of the Code.

(c)  The performance goals to which a 162(m) Bonus Award is subject must be based solely on Performance Criteria. Such performance goals, and the maximum, target and/or threshold (as applicable) amount of any award payable upon attainment thereof, must be established by the Committee within the time limits required in order for the 162(m) Bonus Award to qualify for the performance-based compensation exception to Section 162(m) of the Code. Accordingly, such performance goals and the maximum target and/or threshold (as applicable) amount of a 162(m) Bonus Award must be established by the Committee no later than 90 days after the commencement of the Performance Period and in no event after 25% of the Performance Period has elapsed.

(d)  No 162(m) Bonus Award may be paid until the Committee has certified in writing the level of attainment of the applicable Performance Criteria.

(e)  The maximum amount of a 162(m) Bonus Award is $5 million to a single Participant.

8.

 

Termination of Employment

 

(a)  General. Unless otherwise provided by applicable law or in an individual written agreement between the Participant and the Company or a subsidiary or affiliate of the Company for whom such Participant performs services, a Participant shall be eligible to receive payment with respect to a Bonus Award earned with respect to a Performance Period only if he or she is employed by the Company or an affiliate or subsidiary of the Company both on the last day of the Performance Period and on the Payment Date; provided, however, that if a Participant dies after the last day of the Performance Period but prior to the Payment Date, his or her Designated Beneficiary shall be entitled to receive payment with respect to such Bonus Award on the Payment Date.

(b)  Leave of Absence During the Performance Period. Notwithstanding Section 8(a). hereof, if a Participant is on a Leave of Absence on the last day of the Performance Period, and such Leave of Absence commenced after fifty percent (50%) of the Performance Period had elapsed, unless otherwise provided by (x) applicable law or (y) an individual written agreement between the Participant and the Company or an affiliate or subsidiary of the Company for whom such Participant performs services, the Participant shall be entitled to receive a portion of his or her Bonus Award with respect to the Performance Period in which such Leave of Absence commenced determined by multiplying the Bonus Award which such Participant would have received had he or she been employed on the last day of the Performance Period by a fraction the numerator of which shall be the number of days in the Performance Period remaining as of the date such Leave of Absence

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commenced and the denominator of which shall be the total number of days in the applicable Performance Period; and such prorated amount shall be paid on the Payment Date.

(c)  Death During the Performance Period. Notwithstanding Section 8(a). hereof, if a Participant dies after fifty percent (50%) of the Performance Period has elapsed but prior to the last day of the Performance Period, unless otherwise provided by (x) applicable law or (y) an individual written agreement between the Participant and the Company or an affiliate or subsidiary of the Company for whom such Participant performed services, the Participant’s Designated Beneficiary shall be entitled to receive a portion of such Participant’s Bonus Award with respect to the Performance Period in which such Participant died determined by multiplying the Bonus Award which such Participant would have received had he or she been employed on the last day of the Performance Period by a fraction the numerator of which shall be the number of days in the Performance Period remaining as of the date of his or her death and the denominator of which shall be the total number of days in the applicable Performance Period; and such prorated amount shall be paid on the Payment Date.

9.

 

Reorganization or Discontinuance

 

The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.

10.

 

Non-Alienation of Benefits

 

A Participant may not assign, sell, encumber, transfer or otherwise dispose of any rights or interests under the Plan except by will or the laws of descent and distribution. Any attempted disposition in contravention of the preceding sentence shall be null and void.

11.

 

No Claim of Right to Plan Participation

 

No employee or other person shall have any claim or right to be selected as a Participant under the Plan. Neither the Plan nor any action taken pursuant to the Plan shall be construed as giving any employee any right to be retained in the employ of the Company or any of its subsidiaries.

12.

 

Taxes

 

The Company or any subsidiary of the Company shall have the right, and is hereby authorized, to withhold from any amounts paid under the Plan the amount of any federal, state, local and other taxes required by law to be withheld with respect to such payments.

13.

 

Payments to Persons Other Than the Participant

 

If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his or her affairs because of incapacity, illness or accident, or is a minor, or has died, then any payment due to such person or his or her estate (unless a prior claim therefore has been made by a duly appointed legal representative) may, if the Committee so directs, be paid to his or her spouse, a child, a relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee, in its sole discretion, to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Company therefore.

14.

 

No Liability of Committee Members

 

No member of the Committee shall be personally liable by reason of any contract or other instrument related to the Plan executed by such member or on his or her behalf in his or her capacity as a member of the Committee, nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including legal fees, disbursements and other related charges) or liability (including any sum paid in

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settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or bad faith.

15.

 

Termination or Amendment of the Plan

 

The Board or the Committee may amend, suspend or terminate the Plan at any time; provided, that no amendment may be made without the approval of the Company’s shareholders if the effect of such amendment would be to cause outstanding or pending 162(m) Bonus Awards to cease to qualify for the performance-based compensation exception to Section 162(m) of the Code.

16.

 

Unfunded Plan

 

Participants shall have no right, title or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, Designated Beneficiary, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company, and no special or separate fund shall be established, and no segregation of assets shall be made, to assure payment of such amounts except as expressly set forth in the Plan.

The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

17.

 

Governing Law

 

The terms of the Plan and all rights thereunder shall be governed by and construed in accordance with the laws of the State of Connecticut, without reference to principles of conflict of laws.

18.

 

Effective Date

 

The effective date of the Plan is December 20, 2004.

As Adopted by the Board of Directors
of Playtex Products, Inc.
at a Meeting Held on December 20, 2004

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