<SUBMISSION>
<ACCESSION-NUMBER>0000950152-02-002566
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>10
<PERIOD>20011229
<FILING-DATE>20020329
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BARRY R G CORP /OH/
<CIK>0000749872
<ASSIGNED-SIC>3140
<IRS-NUMBER>314362899
<STATE-OF-INCORPORATION>OH
<FISCAL-YEAR-END>0102
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>001-08769
<FILM-NUMBER>02593278
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>13405 YARMOUTH RD NW
<CITY>PICKERINGTON
<STATE>OH
<ZIP>43147
<PHONE>6148646400
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>13405 YARMOUTH RD NW
<STREET2>13405 YARMOUTH RD NW
<CITY>PICKERINGTON
<STATE>OH
<ZIP>43147
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>l93477ae10-k.txt
<DESCRIPTION>R. G. BARRY CORPORATION               FORM 10-K
<TEXT>
<PAGE>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 29, 2001
                                            OR
         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from _____________ to _____________

Commission File Number 1-8769
                             R. G. BARRY CORPORATION
             -------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

             Ohio                                     31-4362899
--------------------------------                  --------------------
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                    Identification No.)

13405 Yarmouth Road N.W., Pickerington, Ohio               43147
--------------------------------------------            -----------
 (Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code:  (614) 864-6400
                                                     --------------

Securities registered pursuant to Section 12(b) of the Act:

      Title of each class            Name of each exchange on which registered
-------------------------------      -----------------------------------------
Common Shares, Par Value $1.00               New York Stock Exchange
(9,402,379 outstanding as of
      March 15, 2002)

Series I Junior Participating                New York Stock Exchange
Class A Preferred Share Purchase Rights

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
                                      ---  ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Based upon the closing price reported on the New York Stock Exchange on March
15, 2002 ($6.25), the aggregate market value of the common shares of the
Registrant held by non-affiliates on that date was approximately $52,800,118.75.

Documents Incorporated by Reference:

     (1)   Portions of the Registrant's Annual Report to Shareholders for the
           fiscal year ended December 29, 2001, are incorporated by reference
           into Parts I and II of this Annual Report on Form 10-K.

     (2)   Portions of the Registrant's definitive Proxy Statement for its
           Annual Meeting of Shareholders to be held on May 9, 2002, are
           incorporated by reference into Part III of this Annual Report on Form
           10-K.

                      Index to Exhibits begins on Page E-1.


<PAGE>


                                     PART I


ITEM 1.  BUSINESS.

         R. G. Barry Corporation ("R. G. Barry") is organized under Ohio law. R.
G. Barry and its subsidiaries, R.G.B., Inc., Barry de Mexico, S.A. de C.V.,
Barry de Acuna, S.A. de C.V., Barry de Zacatecas, S.A. de C.V., ThermaStor
Technologies, Ltd., R. G. Barry (Texas) LP, R. G. Barry International, Inc., R.
G. Barry Holdings, Inc., R. G. Barry (France) Holdings, Inc., Escapade, S.A.,
Fargeot et Compagnie, S.A., Michel Fargeot, S.A., Procesadora de Nuevo Laredo,
S.A., and Vesture Corporation (R. G. Barry and its subsidiaries are referred to
collectively as the "Company"), manufacture and market comfort footwear as well
as products that use thermal retention technology to preserve and/or transport
temperature-sensitive or perishable commodities such as food. The Company
believes it is the world's largest manufacturer of comfort footwear for at- and
around-the-home. Comfort is the dominant influence in the Company's brand lines.
Through its Vesture subsidiary, the Company manufactures and markets thermal
retention technology products incorporating the Company's MICROCORE*
technologies.

         In October 2001, the Company announced a decision to close the sole
molding operations in San Angelo, Texas and relocate those activities to Nuevo
Laredo, Mexico. This shift is expected to be completed by the end of the first
quarter of the 2002 fiscal year.

         On January 7, 2002, R.G. Barry announced that it had been granted
accelerated elimination of United States and Mexican tariffs on slippers under
the North American Free Trade Agreement ("NAFTA"). The 15% tariff on slippers
made in Mexico and sold in the United States was eliminated effective January 1,
2002. Without such elimination, the tariff on Mexican-manufactured slippers
would have been phased out under NAFTA over six years at the rate of 2.5% per
year with tariffs eliminated in their entirety on January 1, 2008. R.G. Barry
had applied in 2001 to the Office of the United States Trade Representative for
early elimination of the tariffs under procedures established under NAFTA. The
accelerated elimination of the tariffs will allow the Company to relocate
cutting and molding operations from the United States to Mexico and
significantly reduce costs and lead times.

         After receiving accelerated elimination of the NAFTA tariffs in January
2002, the Company announced the transfer of cutting operations from Laredo,
Texas to Nuevo Laredo, Mexico and in a coordinated move, announced the
significant reduction of sewing operations in Nuevo Laredo, Mexico. The Company
expects the transfer to be completed by the end of the second quarter of the
2002 fiscal year.

         Further information concerning the restructuring changes which occurred
in the 2001 fiscal year as well as in the 2000 and 1999 fiscal years is
presented in Note (14) of the Notes to Consolidated Financial Statements on
pages 32 and 33 of R. G. Barry's Annual Report to Shareholders for the fiscal
year ended December 29, 2001, which information is incorporated herein by this
reference.

         During the fiscal year ended December 29, 2001, the Company had three
operating segments: the Barry Comfort North America group, which includes at-
and around-the-home comfort footwear products manufactured and sold in North
America; the Barry Comfort Europe group, which includes at- and around-the-home
comfort footwear products sold in Europe and footwear products sold by Fargeot;


--------
* Hereinafter denotes a trademark of the Company registered in the United States
Department of Commerce Patent and Trademark Office.


                                      -2-
<PAGE>


and the Thermal group, which includes thermal retention technology products.
Financial information on the Company's segments for the three years ended
December 29, 2001, is presented in Note (13) of the Notes to Consolidated
Financial Statements on pages 30, 31 and 32 of R. G. Barry's Annual Report to
Shareholders for the fiscal year ended December 29, 2001, which financial
information is incorporated herein by this reference.

                               PRINCIPAL PRODUCTS

         The Company designs, manufactures and markets specialized comfort
footwear for men, women and children. The Company is in the business of
responding to consumer demand for comfortable footwear combined with attractive
appearance. The Company also designs, manufactures and markets products which
use thermal retention technology to preserve and/or transport
temperature-sensitive or perishable commodities.

         Barry Comfort North America/Barry Comfort Europe

         Historically, the Company's primary products have been foam-soled,
soft, washable slippers for men, women and children. The Company developed and
introduced women's Angel Treads*, the world's first foam-soled, soft, washable
slipper, in 1947. Since that time, the Company has introduced additional
slipper-type brand lines for men, women and children designed to provide
comfort, softness and washability. These footwear products are sold, for the
most part, under various brand names including Angel Treads*, Barry*Comfort,
Dearfoams*, Dearfoams* for Kids, Dearfoams* for Men, Madye's*, Snug Treds*, Soft
Notes*, EZfeet*, Mushrooms* Slippers and Fargeot. The Company has also at times
marketed slipper-type footwear under licensed trademarks. See "TRADEMARKS AND
LICENSES."

         The Company's foam-soled footwear lines have fabric uppers made of
terry cloths, velours, fleeces, satins, nylons and other washable materials, as
well as uppers made of suede and other man-made materials. Different brand lines
are marketed for men, women and children with a variety of styles, colors and
ornamentation.

         The marketing strategy for the Company's slipper-type brand lines has
been to expand counter and floor space for these products by creating and
marketing brand lines to different portions of the consumer market. Retail
prices for the Company's footwear normally range from approximately $5 to $30
per pair, depending on the style of footwear, type of retail outlet and retailer
mark-up.

         The Company also manufactures and markets the Soft Notes* foam
cushioned casual slipper line. The Company believes that this brand line is a
bridge between slippers and casual footwear. The marketing strategy with respect
to this product emphasizes the fashion, comfort and versatility provided by the
Soft Notes* foam cushioned casual slippers.

         The Company believes that many consumers of its slippers are loyal to
the Company's brand lines, usually own more than one pair of slippers and have a
history of repeat purchases. Substantially all of the slipper brand lines are
displayed on a self-selection basis in see-through packaging at the point of
purchase and have appeal to the "impulse" buyer. The Company believes that many
of the slippers are purchased as gifts for others during the Christmas season,
with approximately 60% to 70% of sales occurring in the second half of the year
compared to approximately 30% to 40% in the first half of the year.


                                      -3-
<PAGE>


         Many styles of slipper-type footwear have become standard in the
Company's brand lines and are in demand year after year. For many of these
styles, the most significant changes made in response to fashion changes are in
ornamentation, fabric and/or color. The Company often introduces new, updated
styles of slippers with a view toward enhancing the fashion appeal and freshness
of its products. The Company anticipates that it will continue to introduce new
styles in future years in response to fashion changes.

         It is possible to fit most consumers of the Company's slipper-type
footwear within a range of four to six sizes. This allows the Company to carry
lower levels of inventories in these slipper lines compared to other footwear
manufacturers.

         Thermal

         The Company's MICROCORE* thermal retention technology consists of a
family of patented or proprietary technologies which, when energized with heat
or cold, act as reservoirs that release heat or cold at a constant temperature
for extended periods of time. The Company currently markets pizza carriers that
utilize the MICROCORE* thermal technology. The Company has also applied its
thermal retention technology in consumer products, such as heated seat cushions,
heated slippers and hand-warmers, and in personal self-care products, such as
heated booties, neck packs and shoulder packs. In recent years, the Company has
de-emphasized the development, marketing and sale of consumer products utilizing
thermal retention technologies, and currently is not actively engaged in the
development, marketing and sale of these consumer products and, in 2001,
discontinued its efforts to sell personal self-care products.

         The Company has made a strategic decision to focus on the commercial
application of MICROCORE* patented thermal retention technology, either hot or
cold, to preserve and/or transport temperature-sensitive or perishable
commodities. Presently, the Company's primary focus is on products used to
transport pizza. The Company's patented portable heat storage technology permits
portable, electrically-energized heat storage from either A.C. or D.C. power
sources and at specific temperatures through the use of a thermostat. The
Company's pizza delivery systems are designed to keep pizza hot at oven
temperatures for an extended time period so that pizza marketers may deliver
pizza to a home oven-hot, dry and crisp. The Company is currently supplying
heated delivery systems to Donatos Pizzeria Corporation, a subsidiary of
McDonald's Corporation, and Papa John's International, Inc. The Company
continues in various stages of testing future delivery systems with other pizza
chains. The Company has also worked with other prepared food providers on
potential delivery systems to meet their unique needs.

                                    MARKETING

         The Company's slipper-type brand lines are sold to traditional
department stores, promotional department stores, national chain department
stores and specialty stores; through mass merchandising channels of distribution
such as discount stores, warehouse clubs, drug and variety chain stores, and
supermarkets; and to independent retail establishments. The Company markets
these products primarily through Company salespersons and, to a lesser extent,
through independent sales representatives. The Company does not finance its
customers' purchases.

         As discussed below, the Company has entered into a strategic alliance
with British slipper maker GBR Limited related to the distribution of comfort
footwear products in the United Kingdom and Ireland. The Company is also in the
process of refining its strategies for the Barry Comfort* brand in France. As
discussed below, in the Spring of 2002, the Company will introduce a new program
called Barry Comfort Too(TM) into the French hypermarkets.


                                      -4-
<PAGE>


         Each spring and autumn and at other times during the year, new designs
and styles are presented to buyers representing the Company's retail customers
at regularly scheduled showings. Company designers also produce new styles and
experimental designs throughout the year which are evaluated by the Company's
sales and marketing personnel. Buyers for department stores and other large
retail customers attend the spring and autumn showings and make periodic visits
to the Company's showroom in New York. Company salespersons regularly visit
retail customers. The Company also regularly makes catalogs available to its
current and potential customers and periodically follows up with current and
potential customers by telephone. In addition, the Company participates in trade
shows, both regionally and nationally.

         During the 2001 Christmas selling season, the Company again provided
approximately 400 to 500 temporary merchandisers to service the retail selling
floor of department stores and chain stores nationally. The Company believes
that this point-of-sale management of the retail selling floor, combined with
computerized automatic replenishment systems the Company maintained with the
stores, put the Company in a position to optimize its comfort footwear business
during the fourth quarter.

         Sales during the last six months of each year have historically been
greater than during the first six months. The Company's inventory is largest in
early autumn in order to accommodate the retailers' fall and Christmas selling
seasons.

         The Company advertises principally in the print media. The Company's
promotional efforts are often conducted in cooperation with customers. The
Company's products are displayed at the retail-store level on a self-selection
and gift-purchase basis.

         The Company believes it has an opportunity for expansion in Europe for
its at- and around-the-home comfort footwear. The Company's international sales
are focused on the department store channels and hypermarkets primarily in the
United Kingdom, Ireland and France. In 2000, the Company entered into a
strategic alliance with British slipper maker GBR Limited. A new company, Barry
(GBR) Limited, was formed to sell comfort footwear products in the United
Kingdom and Ireland. After entering into this distributorship-like arrangement,
the Company closed its London offices and shifted responsibility for marketing,
selling, planning and financial administration for its products in the United
Kingdom and Ireland to Barry (GBR) Limited. In return, the Company receives a
fee on the transfer of all R. G. Barry-manufactured products to the new company
and royalties on the sales of all products supplied to Barry (GBR) Limited by
others. The Company's distribution center in Wales now handles products for
Barry Comfort Europe and for Barry (GBR) Limited. In the Spring of 2002, the
Company will introduce a new program called Barry Comfort Too(TM) into the
French hypermarkets. Barry Comfort Too(TM) will focus on the 50-to-75 French
franc retail price-point and complement the Company's existing 80-to-100 French
franc price-point business.

         The Company also markets its comfort footwear products in Canada,
Mexico and several other countries around the world. In the 2001 fiscal year,
the Company's European net sales comprised approximately 7% of its total net
sales, while European, Mexican and Canadian net sales combined to represent 9%
of total net sales. In the 2000 fiscal year, the Company's European net sales
comprised approximately 8% of its total net sales, while European, Mexican and
Canadian net sales combined to represent 9% of total net sales. Financial
information for the three years ended December 29, 2001 for the geographic areas
in which the Company operates is presented in Note (13) of the Notes to
Consolidated Financial Statements on pages 30, 31 and 32 of R. G. Barry's Annual
Report to Shareholders for the fiscal year ended December 29, 2001, which
financial information is incorporated herein by this reference.


                                      -5-
<PAGE>


         The Company markets its thermal retention commercial products directly
to prospective customers through Company personnel. The Company does not finance
its customers' purchases.

                            RESEARCH AND DEVELOPMENT

         Most of the Company's research efforts are undertaken in connection
with the design and consumer appeal of new styles of slipper-type footwear and
thermal retention products. During the 2001, 2000 and 1999 fiscal years, the
amounts spent by the Company in connection with the research and design of new
products and the improvement or redesign of existing products were approximately
$3.1 million, $2.7 million and $3.7 million, respectively. Substantially all of
the foregoing activities were Company-sponsored. Approximately 50 employees are
engaged full time in research and product design.

                                    MATERIALS

         The principal raw materials used by the Company in the manufacture of
its slipper and thermal retention product brand lines are textile fabrics,
threads, foams and other synthetic products. All are available domestically from
a wide range of suppliers. The Company has experienced no difficulty in
obtaining raw materials from suppliers and anticipates no future difficulty.

                             TRADEMARKS AND LICENSES

         Approximately 95% of the Company's sales are represented by brand items
sold under trademarks owned by the Company. The Company is the holder of many
trademarks which identify its products. The trademarks which are most widely
used by the Company include: (a) Angel Treads*, Barry*Comfort, Dearfoams*,
Dearfoams* for Kids, Dearfoams* for Men, Madye's*, Snug Treds*, Soft Notes*,
EZfeet*, and Fargeot, in the Company's Barry Comfort businesses; and (b)
Dearfoams*, Vesture*, Lava*, LavaPac*, LavaBuns*, LavaBooties*, MICROCORE* and
POWERTECH,* in the Company's Thermal business. The Company believes that its
products are identified by its trademarks and, thus, its trademarks are of
significant value. Each registered trademark has a duration of 20 years and is
subject to an indefinite number of renewals for a like period upon appropriate
application. The Company intends to continue the use of each of its trademarks
and to renew each of its registered trademarks.

         The Company has also sold comfort footwear under various names as
licensee under license agreements with the owners of those names. In the 2001
fiscal year, sales under the Liz Claiborne** and Claiborne** labels pursuant to
the license agreement described below represented less than 2% of the Company's
total sales. For the 2000 and 1999 fiscal years, less than 1% of the Company's
total sales were represented by footwear sold under these or other licensed
names.

         In November 2000, R. G. Barry entered into a license agreement with a
subsidiary of Liz Claiborne, Inc. which allows R. G. Barry to manufacture and
market slippers under the Liz Claiborne** and Claiborne** labels. R. G. Barry's
new Liz Claiborne** Slippers for Women and Claiborne** Slippers for Men are and
will be sold in upper-tier department stores and specialty retailers nationwide.
The first collections of Liz Claiborne** Slippers for Women became available to
the trade in March 2001, for Fall 2001 delivery. Claiborne** Slippers for Men
will be introduced in 2002. The Liz Claiborne** Slippers for Women and
Claiborne** Slippers for Men will initially be sold within the United States and
Canada, although the licensor may, in its discretion, grant R. G. Barry the
right to


--------
** Denotes a trademark of the licensor registered in the United States
Department of Commerce Patent and Trademark Office.


                                      -6-
<PAGE>


distribute these slippers in other foreign countries. The initial term of the
license agreement continues through December 31, 2005, and is renewable for an
additional five-year term if the net sales of slippers bearing the Liz
Claiborne** and Claiborne** labels for the year immediately preceding the last
year of the initial term equal or exceed a specified level. The licensor has the
right to terminate the license agreement if minimum specified net sales levels
are not achieved for two consecutive years.

         The Company has also manufactured comfort footwear for customers which
sell the footwear under their own private labels. These sales represented less
than 3% of the Company's sales during the 2001 fiscal year.

                                    CUSTOMERS

         The customers of the Company which accounted for more than 10% of the
Company's consolidated net sales in the 2001 fiscal year were Wal-Mart Stores,
Inc. and J.C. Penney Company, Inc., both Barry Comfort North America customers,
which accounted for 22% and 10%, respectively, of consolidated net sales. The
only customer of the Company which accounted for more than 10% of the Company's
consolidated net sales in the 2000 and 1999 fiscal years was Wal-Mart Stores,
Inc., which accounted for 21% in 2000 and 23% in 1999.

                                BACKLOG OF ORDERS

         The Company's backlogs of orders at the close of the 2001 and 2000
fiscal years were approximately $6.6 million and $8.7 million, respectively. The
Company anticipates that a large percentage of the orders as of the end of the
2001 fiscal year will be filled during the current fiscal year.

         The Company's backlog of unfilled sales orders is often largest after
the spring and autumn showings of the Company. For example, the Company's
approximate backlog of unfilled sales orders following the conclusion of such
showings during the last two years was: August 2001 -- $50 million; August 2000
-- $47 million; February 2001 -- $8 million; and February 2000 -- $8 million.
The Company's backlog of unfilled sales orders reflects the seasonal nature of
the Company's sales - approximately 60% to 70% of such sales occur during the
second half of the year as compared to approximately 30% to 40% during the first
half of the year.

                                    INVENTORY

         While some styles of the Company's slipper-type brand lines change
little from year to year, the Company has also introduced, and intends to
continue to introduce, new, updated styles in an effort to enhance the comfort
and fashion appeal of its products. As a result, the Company anticipates that
some of its slipper styles will continue to change from season to season,
particularly in response to fashion changes. Historically, the Company has had a
limited and manageable exposure to obsolete inventory. However, in 2000, as a
result of the Company's aggressive effort to lower inventory levels, the Company
sold a sizeable amount of obsolete and out-of-season inventory in a short period
of time for little or no profit. During the 2001 fiscal year, the level of
obsolete inventory remained at manageable levels and the Company believes it
will be able to control the level of obsolete inventory in the future.

         The accelerated elimination of the NAFTA tariffs should allow the
Company in the foreseeable future to keep its company-owned plant manufacturing
costs competitive with products produced offshore while taking advantages of the
benefits of manufacturing in the Company's own North American plants.
Nevertheless, the Company intends to continue its ongoing plans to reduce its
company-owned capacity to a level supported by demand visibility and to
outsource the balance from Chinese contract suppliers. The Company plans to
import approximately one-third of its product needs


                                      -7-
<PAGE>


from China and other Asian countries by 2003. Early in 2001, the Company opened
a representative office in Hong Kong, which is responsible for procuring
outsourced products from the Far East. This supply strategy is expected to
reduce inventory risks and markdowns by allowing the Company to better plan
inventory purchases in line with customers' demands.

                                   COMPETITION

         The Company operates in the portion of the footwear industry providing
comfort footwear for at- and around-the-home. The Company believes that it is a
small factor in the highly competitive footwear industry. The Company also
believes that it is the world's largest manufacturer of comfort footwear for at-
and around-the-home. The Company also operates in an area where it provides
portable warmth and cold through its line of thermal retention technology
products. The Company competes primarily on the basis of the value, quality and
comfort of its products, service to its customers, and its marketing expertise.
The Company knows of no reliable published statistics which indicate its current
relative position in the footwear or any other industry or in the portion of the
footwear industry providing comfort footwear for at and around the home or its
current relative position in the thermal retention product industry.

                MANUFACTURING, SALES AND DISTRIBUTION FACILITIES

         The Company has six manufacturing facilities. The Company operates
sewing plants in Nuevo Laredo, Ciudad Acuna, and Zacatecas, Mexico. During the
2001 fiscal year, the Company operated a cutting plant in Laredo, Texas and a
sole molding operation in San Angelo, Texas. As discussed above, these
operations will be relocated to Nuevo Laredo, Mexico during the 2002 fiscal
year. The Company produces thermal retention products at its manufacturing
facilities in Asheboro, North Carolina, and Nuevo Laredo, Mexico.

         The Company maintains sales offices in New York, New York and Paris,
France and a sourcing representative office in Hong Kong. The Company also
operates distribution centers in Asheboro and Goldsboro, North Carolina; San
Angelo and Laredo, Texas; Rhymney, Gwent, Wales; and Thiviers, France. The
Company will open a new distribution center in Nuevo Laredo, Mexico during the
first half of the 2002 fiscal year, replacing the distribution center in Laredo,
Texas with one closer to its manufacturing facilities.

         Please also see the discussion of the Company's supply strategy in
"INVENTORY".

         The Company's principal manufacturing, sales and distribution
facilities are described more fully in ITEM 2. PROPERTIES.

                       EFFECT OF ENVIRONMENTAL REGULATION

         Compliance with federal, state and local provisions regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had a material effect on the Company's
capital expenditures, earnings or competitive position. The Company believes
that the nature of its operations has little, if any, environmental impact. The
Company, therefore, anticipates no material capital expenditures for
environmental control facilities for its current fiscal year or for the
foreseeable future.

                                    EMPLOYEES

         At the close of the 2001 fiscal year, the Company employed
approximately 2,500 persons.


                                      -8-
<PAGE>


ITEM 2.  PROPERTIES.

         The Company owns its corporate headquarters and executive offices
located at 13405 Yarmouth Road N.W. in Pickerington, Ohio, containing
approximately 55,000 square feet as well as a warehouse facility in Goldsboro,
North Carolina, containing approximately 170,000 square feet.

         The Company leases space aggregating approximately 1 million square
feet at an approximate aggregate annual rental of $3.1 million. The following
table describes the Company's principal leased properties:


<TABLE>
<CAPTION>
                                                               Approximate       Approximate       Lease
Location                                     Use               Square Feet      Annual Rental     Expires    Renewals
--------                                     ---               -----------      -------------     -------    --------
<S>                              <C>                              <C>           <C>                <C>       <C>
Empire State Building            Sales Office                      4,300         $115,000           2003     None
New York City, N.Y.

2800 Loop 306                    Manufacturing, Office,          145,800         $166,000 (1)       2005     10 years
San Angelo, Texas                Warehouse

Distribution Center              Shipping, Warehouse             172,800         $465,000 (1)       2007     15 years
San Angelo, Texas

Cesar Lopez de Lara              Manufacturing, Office            90,200         $300,000 (1)       2004     None
  Ave.
Nuevo Laredo, Mexico

Ciudad Acuna                     Manufacturing, Office            64,700         $302,000 (1)       2004     5 years
  Industrial Park
Ciudad Acuna, Mexico

Manhattan Avenue                 Warehouse                       144,000         $675,000 (1)       2012     None
Nuevo Laredo, Mexico

Bob Bullock Loop                 Manufacturing, Warehouse,       165,000         $386,000 (1)       2006     1 term of 5
Laredo, Texas                    Office                                                                      years

Bob Bullock Loop                 Manufacturing, Warehouse,        76,000         $191,000 (1)       2006     5 years
Laredo, Texas                    Storage

Industrial Zone                  Manufacturing                    26,200         $ 48,000           2003     1 term of 5
Zacatecas, Mexico                                                                                            years

Industrial Zone                  Manufacturing                    25,800         $ 58,000           2005     3 terms-5
Zacatecas, Mexico                                                                                            years each

120 E. Pritchard St.             Manufacturing, Office,           57,500         $ 96,000 (1)       2002     None
Asheboro, North Carolina (2)     Warehouse
</TABLE>


                                      -9-
<PAGE>


<TABLE>
<CAPTION>
                                                               Approximate       Approximate       Lease
Location                                     Use               Square Feet      Annual Rental     Expires    Renewals
--------                                     ---               -----------      -------------     -------    --------
<S>                              <C>                              <C>           <C>                <C>       <C>
8000 Interstate                  Administrative Office            11,000         $211,000           2007     None
  Highway 10 West
San Antonio, Texas

Rhymney, Gwent, Wales            Warehouse                         8,000         $ 21,000        Month-to-   N/A
                                                                                                  Month

West Gate Tower                  Sourcing Representative           1,300         $ 28,700           2003     None
7 Wing Hong Street               Office
Lai Chi Kok, Kowloon
Hong Kong
</TABLE>


----------------------
(1)  Net lease.
(2)  In December 2001, the former owners of Vesture Corporation acquired this
     property and are leasing the property to the Company.

         The Company believes that all of the buildings owned or leased by it
are well maintained, in good operating condition, and suitable for their present
uses.

ITEM 3.  LEGAL PROCEEDINGS.

         On October 19, 2001, the Vesture Corporation ("Vesture") subsidiary of
R. G. Barry received a charge that its MICROCORE* pizza delivery system
infringed on two United States Patents, U.S. Patent Nos. 6,232,585 and 6,274,856
(the "Patents") owned by Thermal Solutions, Inc. ("Thermal Solutions") and
licensed to CookTek, Inc. ("CookTek"). After receiving the charge of
infringement, Vesture and its counsel evaluated the Patents and reached the
conclusion that the Patents were not infringed. To protect its rights, on
November 2, 2001, Vesture filed an action in the United States District Court
for the Middle District of North Carolina (Civil Action No. 1:01CV01006 (the
"North Carolina Action")) seeking a declaratory judgment that the Patents are
not infringed by Vesture and an order enjoining and restraining Thermal
Solutions and CookTek from further charges of infringement, or acts of
enforcement based on the Patents against Vesture and Vesture's actual and
prospective customers. Vesture also sought damages for CookTek's and Thermal
Solutions' unfounded charges of infringement and sales lost as a result of those
charges. After the North Carolina Action was filed, Thermal Solutions and
CookTek filed suit against Vesture on November 9, 2001, in the United States
District Court for the District of Kansas (Civil Action No. 01-2537-JWL (the
"Kansas Action")), alleging infringement of the Patents. Because the North
Carolina Action was filed first, it had priority. The Kansas Action was
voluntarily dismissed by Thermal Solutions and CookTek on December 6, 2001, in
favor of the North Carolina Action, where they counterclaimed for infringement
of the Patents.

         R. G. Barry believes that the patent infringement allegations against
Vesture are without merit and intends to defend vigorously against them.
However, R. G. Barry does not believe it is feasible to predict the outcome of
the North Carolina Action. The timing of the final resolution of North Carolina
Action is also uncertain.


                                      -10-
<PAGE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
------------------------------------------------------------

         Not applicable.

SUPPLEMENTAL ITEM.  EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------------

         The following table lists the names and ages of the executive officers
of R. G. Barry as of March 15, 2002, the positions with R. G. Barry presently
held by each executive officer and the business experience of each executive
officer during the past five years. Unless otherwise indicated, each individual
has had his principal occupation for more than five years. Executive officers
serve at the discretion of the Board of Directors and in the case of Messrs.
Zacks, Lenich, Galvis and Viren, pursuant to employment agreements.


<TABLE>
<CAPTION>
                                                 Position(s) Held with R. G. Barry and
Name                                   Age       Principal Occupation(s) for Past Five Years
----                                   ---       -------------------------------------------
<S>                                    <C>       <C>
Gordon Zacks                           69        Chairman of the Board and Chief Executive Officer since 1979,
                                                 President from 1992 to February 2001, and a Director since 1959,
                                                 of R. G. Barry

William Lenich                         53        President, Chief Operating Officer and a Director of R. G. Barry
                                                 since February 2001; President and Chief Operating Officer of
                                                 International from 1997 to February 2001, and Group President of
                                                 Retail from 1999 to February 2001 and from 1990 to 1997, of Nine
                                                 West Group, Inc., a women's retail shoe company

Christian Galvis                       60        Executive Vice President-Operations and a Director since 1992,
                                                 President-Operations of Barry Comfort Group since 1998, and Vice
                                                 President-Operations from 1991 to 1992, of R. G. Barry

Daniel D. Viren                        55        Senior Vice President-Finance and Chief Financial Officer since
                                                 June 2000, Secretary and Treasurer since October 2000, Senior Vice
                                                 President-Administration from 1992 to July 1999, and Assistant
                                                 Secretary from 1994 to July 1999, of R. G. Barry; Senior Vice
                                                 President and Chief Financial Officer of Metatec International,
                                                 Inc., an international information distribution company, from July
                                                 1999 to June 2000

Harry Miller                           59        Vice President-Human Resources of R. G. Barry since 1993

Donald Van Steyn                       57        Vice President-Chief Information Officer since May 2000, Vice
                                                 President-Information Systems/Services from 1996 to May 2000 and
                                                 Director of Information Services from 1988 to 1996, of R. G. Barry
</TABLE>


                                      -11-
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The information called for in this Item 5 is incorporated by reference
to page 8 of R. G. Barry's Annual Report to Shareholders for the fiscal year
ended December 29, 2001.

         On December 26, 2001, R. G. Barry granted an option (the "Lenich
Option") to purchase 150,000 common shares, $1.00 par value, to William Lenich
under the terms of his Employment Agreement, effective February 19, 2001, with
R. G. Barry as a result of the closing price of R. G. Barry's common shares
having averaged at least $5.00 for 15 consecutive trading days. The exercise
price of the Lenich Option is $5.66 per share, the closing price of the common
shares on the grant date. The Lenich Option becomes exercisable as to 50,000
common shares on each of the first through third anniversaries of the grant
date. The Lenich Option becomes fully exercisable in the event of defined
changes in control of R. G. Barry; upon the death or disability of Mr. Lenich;
or if Mr. Lenich's employment is terminated by R. G. Barry without "cause" or by
Mr. Lenich for "good reason," in each case as defined in Mr. Lenich's Employment
Agreement. The Lenich Option expires on December 25, 2006.

         R. G. Barry granted the Lenich Option in reliance upon the exemptions
from registration provided by Sections 4(2) and 4(6) under the Securities Act of
1933 based upon the fact that there was only one individual to whom an option
was granted and the status of that individual as an officer and director of R.
G. Barry.

ITEM 6. SELECTED FINANCIAL DATA.

         The information called for in this Item 6 is incorporated by reference
to pages 6 and 7 of R. G. Barry's Annual Report to Shareholders for the fiscal
year ended December 29, 2001.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.

         The information called for in this Item 7 is incorporated by reference
to pages 9 through 16 of R. G. Barry's Annual Report to Shareholders for the
fiscal year ended December 29, 2001.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         As of December 29, 2001, R. G. Barry and its subsidiaries were not
party to any market risk sensitive instruments which would require disclosure
under Item 305 of Regulation S-K.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The Consolidated Balance Sheets of R. G. Barry and its subsidiaries as
of December 29, 2001 and December 30, 2000, the related Consolidated Statements
of Operations, of Shareholders' Equity and Comprehensive Income and of Cash
Flows for each of the fiscal years in the three-year period ended December 29,
2001, the related Notes to Consolidated Financial Statements and the Independent
Auditors' Report, appearing on pages 17 through 34 of R. G. Barry's Annual
Report to Shareholders for


                                      -12-
<PAGE>


the fiscal year ended December 29, 2001, are incorporated by reference.
Quarterly Financial Data set forth on page 8 of R. G. Barry's Annual Report to
Shareholders for the fiscal year ended December 29, 2001, are also incorporated
by reference.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information called for in this Item 10 is incorporated by reference
to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 9, 2002, under the captions "ELECTION OF
DIRECTORS," "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS--Employment
Contracts, Restricted Stock Agreements and Termination of Employment and Change
in Control Arrangements" and "SHARE OWNERSHIP--Section 16(a) Beneficial
Ownership Reporting Compliance." In addition, information concerning R. G.
Barry's executive officers is included in the portion of Part I of this Annual
Report on Form 10-K entitled "Supplemental Item. Executive Officers of the
Registrant."


ITEM 11.  EXECUTIVE COMPENSATION.

         The information called for in this Item 11 is incorporated by reference
to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 9, 2002, under the caption "COMPENSATION OF
EXECUTIVE OFFICERS AND DIRECTORS."


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information called for in this Item 12 is incorporated by reference
to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 9, 2002, under the captions "SHARE OWNERSHIP" and
"COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS -- Employment Contracts,
Restricted Stock Agreements and Termination of Employment and Change in Control
Arrangements."


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information called for in this Item 13 is incorporated by reference
to R. G. Barry's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 9, 2002, under the captions "SHARE OWNERSHIP,"
"ELECTION OF DIRECTORS" and "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS."


                                      -13-
<PAGE>


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)(1)     FINANCIAL STATEMENTS.

           For a list of all financial statements incorporated by reference in
           this Annual Report on Form 10-K, see "Index to Financial Statements
           and Financial Statement Schedules" at page 17.

(a)(2)     FINANCIAL STATEMENT SCHEDULES.

           For a list of all financial statement schedules included in this
           Annual Report on Form 10-K, see "Index to Financial Statements and
           Financial Statement Schedules" at page 17.

(a)(3)     EXHIBITS.

           Exhibits filed with this Annual Report on Form 10-K are attached
           hereto. For list of these exhibits, see "Index to Exhibits" beginning
           at page E-1.

(b)        REPORTS ON FORM 8-K

           R. G. Barry filed no Current Reports on Form 8-K during the fiscal
           quarter ended December 29, 2001. On January 8, 2002, R. G. Barry
           filed a Current Report on Form 8-K, dated January 7, 2002, to report
           the accelerated elimination of United States and Mexican tariffs on
           slippers made in Mexico for sale in United States markets under the
           North American Free Trade Agreement. R. G. Barry also described the
           agreements which had been entered into with the two firms assisting
           it in securing tariff relief.

(c)        EXHIBITS

           Exhibits filed with this Annual Report on Form 10-K are attached
           hereto. For a list of such exhibits, see "Index to Exhibits"
           beginning at page E-1.

(d)        FINANCIAL STATEMENT SCHEDULES

           Financial Statement Schedules included with this Annual Report on
           Form 10-K are attached hereto. See "Index to Financial Statements and
           Financial Statement Schedules" at page 17.


                                      -14-
<PAGE>


                                   SIGNATURES
                                   ----------

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    R. G. Barry Corporation

Date:  March 28, 2002
                                    By:  /s/ Daniel D. Viren
                                        ----------------------------------------
                                            Daniel D. Viren,
                                            Senior Vice President-Finance,
                                            Secretary and Treasurer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities on the 28th day of March, 2002.

Name                         Capacity
----                         --------
               *             Chairman of the Board, Chief Executive Officer and
-------------------------    Director
Gordon Zacks

               *             President, Chief Operating Officer and Director
-------------------------
William Lenich

               *             Executive Vice President-Operations,
-------------------------    President-Operations of Barry Comfort Group and
Christian Galvis             Director


 /s/ Daniel D. Viren         Senior Vice President-Finance, Secretary and
-------------------------    Treasurer (Chief Financial and Principal Accounting
Daniel D. Viren              Officer) and Director

                             Director
-------------------------
Philip G. Barach

                             Director
-------------------------
Harvey M. Krueger

               *             Director
-------------------------
Roger E. Lautzenhiser

                             Director
-------------------------
Janice E. Page

               *             Director
-------------------------
Edward M. Stan


                                      -15-
<PAGE>



                             Director
-------------------------
Harvey A. Weinberg




-------------------------------
* By Daniel D. Viren pursuant to Powers of Attorney executed by the directors
and executive officers listed above, which Powers of Attorney have been filed
with the Securities and Exchange Commission.



 /s/ Daniel D. Viren
-------------------------------
Daniel D. Viren






                                      -16-
<PAGE>


                             R. G. BARRY CORPORATION

                           ANNUAL REPORT ON FORM 10-K
                     FOR FISCAL YEAR ENDED DECEMBER 29, 2001

                          INDEX TO FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES
                        ---------------------------------

<TABLE>
<CAPTION>
                                                                                           PAGE(S) IN ANNUAL REPORT TO
DESCRIPTION OF FINANCIAL STATEMENTS (ALL OF WHICH ARE                                          SHAREHOLDERS FOR THE
INCORPORATED BY REFERENCE IN THIS ANNUAL REPORT ON                                              FISCAL YEAR ENDED
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 29, 2001)                                          DECEMBER 29, 2001
<S>                                                                                                    <C>
Consolidated Balance Sheets at December 29, 2001 and
         December 30, 2000  .................................................................          17

Consolidated Statements of Operations for the years ended December 29, 2001,
         December 30, 2000 and January 1, 2000 ..............................................          18

Consolidated Statements of Shareholders' Equity and Comprehensive Income for the
         years ended December 29, 2001, December 30, 2000 and
         January 1, 2000.....................................................................          18

Consolidated Statements of Cash Flows for the years ended
         December 29, 2001, December 30, 2000 and January 1, 2000............................          19

Notes to Consolidated Financial Statements...................................................         20-33

Independent Auditors' Report.................................................................          34
</TABLE>


ADDITIONAL FINANCIAL DATA

     The following additional financial data should be read in conjunction with
the Consolidated Financial Statements of R. G. Barry Corporation and its
subsidiaries included in the Annual Report to Shareholders for the fiscal year
ended December 29, 2001. Schedules not included with this additional financial
data have been omitted because they are not applicable or the required
information is shown in the Consolidated Financial Statements or Notes thereto.

Additional Financial Data:

         Independent Auditor's Report on Financial Statement Schedules:
                  Included at page 18 of this Annual Report on Form 10-K

         Schedules for the fiscal years ended December 29, 2001, December 30,
                  2000 and January 1, 2000:
                  Schedule 2--Valuation and Qualifying Accounts: Included at
                  pages 19 through 21 of this Annual Report on Form 10-K


                                      -17-


<PAGE>

                               [KPMG LETTERHEAD]

                         INDEPENDENT AUDITORS' REPORT ON
                          FINANCIAL STATEMENT SCHEDULES



The Board of Directors and Shareholders
R. G. Barry Corporation:


Under date of February 21, 2002 we reported on the consolidated balance sheets
of R. G. Barry Corporation and subsidiaries as of December 29, 2001 and December
30, 2000, and the related consolidated statements of operations, shareholders'
equity and comprehensive income and cash flows for each of the fiscal years in
the three-year period ended December 29, 2001, as contained in the fiscal 2001
annual report to shareholders. These consolidated financial statements and our
report thereon are incorporated by reference in the annual report on Form 10-K
for the fiscal year 2001. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related consolidated
financial statement schedules as listed in the accompanying index. These
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.



/s/ KPMG LLP
Columbus, Ohio
February 21, 2002


                                       18

<PAGE>

<TABLE>
<CAPTION>

                                                                                                                         SCHEDULE 2
                                             R. G. BARRY CORPORATION AND SUBSIDIARIES
                                                 Valuation and Qualifying Accounts
                                                         December 29, 2001

                       COLUMN A                           COLUMN B           COLUMN C            COLUMN D            COLUMN E
-----------------------------------------------------------------------   ----------------   -----------------    ----------------
                                                                             ADDITIONS
                                                         BALANCE AT         CHARGED TO         ADJUSTMENTS          BALANCE AT
                                                         BEGINNING           COSTS AND             AND                END OF
                      DESCRIPTION                        OF PERIOD           EXPENSES           DEDUCTIONS            PERIOD
-----------------------------------------------------------------------   ----------------   -----------------    ----------------
<S>                                               <C>                     <C>               <C>                  <C>
Reserves deducted from accounts receivable:
     Allowance for doubtful accounts               $           384,000             54,000             136,000(1)          302,000
     Allowance for returns                                   5,077,000          8,743,000           5,077,000(2)        8,743,000
     Allowance for promotions                                8,680,000          8,574,000           8,680,000(3)        8,574,000
                                                      -----------------   ----------------   -----------------    ----------------
                                                   $        14,141,000         17,371,000          13,893,000          17,619,000
                                                      =================   ================   =================    ================
</TABLE>



Notes:
     1.  Write-off uncollectible accounts.
     2.  Represents 2001 sales returns reserved for in fiscal 2000.
     3.  Represents 2001 promotions expenditures committed to and reserved for
         in fiscal 2000.



                                       19
<PAGE>

<TABLE>
<CAPTION>

                                                                                                                         SCHEDULE 2
                                               R. G. BARRY CORPORATION AND SUBSIDIARIES
                                                   Valuation and Qualifying Accounts
                                                           December 30, 2000

                      COLUMN A                         COLUMN B             COLUMN C             COLUMN D             COLUMN E
------------------------------------------------   ------------------   -----------------    ------------------    ----------------
                                                                           ADDITIONS
                                                      BALANCE AT           CHARGED TO           ADJUSTMENTS          BALANCE AT
                                                       BEGINNING           COSTS AND                AND                END OF
                    DESCRIPTION                        OF PERIOD            EXPENSES            DEDUCTIONS             PERIOD
------------------------------------------------   ------------------   -----------------    ------------------    ----------------
<S>                                             <C>                   <C>                  <C>                     <C>
Reserves deducted from accounts receivable:
     Allowance for doubtful receivables         $            289,000             246,000               151,000(1)          384,000
     Allowance for returns                                11,200,000           5,077,000            11,200,000(2)        5,077,000
     Allowance for promotions                              9,293,000           8,680,000             9,293,000(3)        8,680,000
                                                   ------------------   -----------------    ------------------    ----------------
                                                $         20,782,000          14,003,000            20,644,000          14,141,000
                                                   ==================   =================    ==================    ================
</TABLE>





Notes:
     1.  Write-off uncollectible accounts.
     2.  Represents 2000 sales returns reserved for in fiscal 1999.
     3.  Represents 2000 promotions expenditures committed to and reserved for
         in fiscal 1999.


                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                                                                                        SCHEDULE 2
                                              R. G. BARRY CORPORATION AND SUBSIDIARIES
                                                  Valuation and Qualifying Accounts
                                                           January 1, 2000

                      COLUMN A                         COLUMN B             COLUMN C           COLUMN D             COLUMN E
-------------------------------------------------   ----------------    -----------------   ----------------    ------------------
                                                                           ADDITIONS
                                                      BALANCE AT           CHARGED TO         ADJUSTMENTS          BALANCE AT
                                                       BEGINNING           COSTS AND              AND                END OF
                    DESCRIPTION                        OF PERIOD            EXPENSES          DEDUCTIONS             PERIOD
-------------------------------------------------   ----------------    -----------------   ----------------    ------------------
<S>                                              <C>                   <C>                 <C>                 <C>
Reserves deducted from accounts receivable:
     Allowance for doubtful receivables          $          232,000              413,000            356,000(1)            289,000
     Allowance for returns                                9,749,000           11,200,000          9,749,000(2)         11,200,000
     Allowance for promotions                             6,040,000            9,293,000          6,040,000(3)          9,293,000
                                                    ----------------    -----------------   ----------------    ------------------
                                                 $       16,021,000           20,906,000         16,145,000            20,782,000
                                                    ================    =================   ================    ==================
</TABLE>



Notes:
     1.  Write-off uncollectible accounts.
     2.  Represents 1999 sales returns reserved for in fiscal 1998.
     3.  Represents 1999 promotions expenditures committed to and reserved for
         in fiscal 1998.


                                       21
<PAGE>


                             R. G. BARRY CORPORATION
                           ANNUAL REPORT ON FORM 10-K
                     FOR FISCAL YEAR ENDED DECEMBER 29, 2001


                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
    Exhibit No.         Description                                         Location
    -----------         -----------                                         --------
<S>                     <C>                                                 <C>
      2.1               Stock Purchase Agreement, dated July 22, 1999,      Incorporated herein by reference to
                        between Mr. Thierry Civetta, Mr. Michel             Registrant's Quarterly Report on Form 10-Q
                        Fargeot, FCPR County Natwest Venture France,        for the fiscal quarter ended October 2,
                        SCA Capital Prive-Investissements, Hoche            1999 (File No. 1-8769) [Exhibit 2.1]
                        Investissements, and SA Capital Prive, parties
                        of the first part, and R. G. Barry Corporation
                        ("Registrant") and Escapade, S.A., parties of
                        the second part

      3.1               Articles of Incorporation of Registrant (as         Incorporated herein by reference to
                        filed with Ohio Secretary of State on March 26,     Registrant's Annual Report on Form 10-K for
                        1984)                                               the fiscal year ended December 31, 1988
                                                                            (File No. 0-12667) ("Registrant's 1988
                                                                            Form 10-K") [Exhibit 3(a)(i)]

      3.2               Certificate of Amendment to the Articles of         Incorporated herein by reference to
                        Incorporation of Registrant Authorizing the         Registrant's 1988 Form 10-K
                        Series I Junior Participating Class B Preferred     [Exhibit 3(a)(i)]
                        Shares (as filed with the Ohio Secretary of
                        State on March 1, 1988)

      3.3               Certificate of Amendment to the Articles of         Incorporated herein by reference to
                        Registrant (as filed with the Ohio Secretary of     Registrant's 1988 Form 10-K
                        State on May 9, 1988)                               [Exhibit 3(a)(i)]

      3.4               Certificate of Amendment to the Articles of         Incorporated herein by reference to
                        Incorporation of Registrant (as filed with the      Registrant's Annual Report on Form 10-K for
                        Ohio Secretary of State on May 22, 1995)            the fiscal year ended December 30, 1995
                                                                            (File No. 1-8769) ("Registrant's 1995 Form
                                                                            10-K") [Exhibit 3(b)]

      3.5               Certificate of Amendment to Articles of             Incorporated herein by reference to
                        Incorporation of Registrant (as filed with the      Registrant's 1995 Form 10-K [Exhibit 3(c)]
                        Ohio Secretary of State on September 1, 1995)
</TABLE>


                                       E-1
<PAGE>


<TABLE>
<CAPTION>
    Exhibit No.         Description                                         Location
    -----------         -----------                                         --------
<S>                     <C>                                                 <C>
      3.6               Certificate of Amendment to Articles of             Incorporated herein by reference to
                        Incorporation of Registrant (as filed with the      Registrant's Registration Statement on Form
                        Ohio Secretary of State on May 30, 1997)            S-8, filed June 6, 1997 (Registration No.
                                                                            333-28671) [Exhibit 4(h)(6)]

      3.7               Certificate of Amendment to the Articles of         Incorporated herein by reference to
                        Incorporation of Registrant Authorizing             Registrant's Annual Report on Form 10-K for
                        Series I Junior Participating Class A Preferred     the fiscal year ended January 3, 1998 (File
                        Shares (as filed with the Ohio Secretary of         No. 1-8769) ("Registrant's 1997 Form 10-K")
                        State on March 10, 1998)                            [Exhibit 3(a)(7)]

      3.8               Articles of Incorporation of Registrant             Incorporated herein by reference to
                        (reflecting amendments through March 10, 1998)      Registrant's 1997 Form 10-K [Exhibit
                        [for purposes of SEC reporting compliance only      3(a)(8)]
                        -- not filed with the Ohio Secretary of State]

      3.9               Regulations of Registrant, as amended               Incorporated herein by reference to
                                                                            Registrant's Annual Report on Form 10-K for
                                                                            the fiscal year ended January 2, 1988 (File
                                                                            No. 0-12667) [Exhibit 3(b)]

      4.1               Revolving Credit Agreement, made to be              Incorporated herein by reference to
                        effective on March 12, 2001, between Registrant     Registrant's Annual Report on Form 10-K for
                        and The Huntington National Bank                    the fiscal year ended December 30, 2000
                                                                            (File No. 1-8769) ("Registrant's December
                                                                            2000 Form 10-K") [Exhibit 4.1]

      4.2               Note Agreement, dated July 5, 1994, between         Incorporated herein by reference to
                        Registrant and Metropolitan Life Insurance          Registrant's Registration Statement on Form
                        Company                                             S-3, filed July 21, 1994 (Registration
                                                                            No. 33-81820) [Exhibit 4(t)]

      4.3               Letter, dated July 16, 1999, from Metropolitan      Incorporated herein by reference to
                        Life Insurance Company to Registrant in respect     Registrant's Quarterly Report on Form 10-Q
                        of loan agreement dated July 5, 1994                for the fiscal quarter ended July 3, 1999
                                                                            (File No. 1-8769) [Exhibit 4.2]
</TABLE>


                                      E-2
<PAGE>


<TABLE>
<CAPTION>
    Exhibit No.         Description                                         Location
    -----------         -----------                                         --------
<S>                     <C>                                                 <C>
      4.4               Rights Agreement, dated as of February 19,          Incorporated herein by reference to
                        1998, between Registrant and The Bank of New        Registrant's Current Report on Form 8-K,
                        York, as Rights Agent                               dated March 13, 1998 and filed March 16,
                                                                            1998 (File No. 1-8769) [Exhibit 4]

      4.5               Loan Agreement, dated as of January 21, 2000,       Incorporated herein by reference to
                        among Banque Tarneaud, S.A., Banque Nationale       Registrant's Quarterly Report on Form 10-Q
                        de Paris, and Escapade, S.A.                        for the fiscal quarter ended April 1, 2000
                                                                            (File No. 1-8769) [Exhibit 4]

      9.1               Zacks-Streim Voting Trust and amendments thereto    Incorporated herein by reference to
                                                                            Registrant's Annual Report on Form 10-K for
                                                                            the fiscal year ended January 2, 1993 (File
                                                                            No. 1-8769) [Exhibit 9]

      9.2               Documentation related to extension of term of       Incorporated herein by reference to
                        the Voting Trust Agreement for the Zacks-Streim     Registrant's 1995 Form 10-K [Exhibit 10(a)]
                        Voting Trust

    *10.1               R. G. Barry Corporation Associates' Retirement      **
                        Plan (As Amended and Restated Effective January
                        1, 1997)

    *10.2               R. G. Barry Corporation Supplemental Retirement     Incorporated herein by reference to
                        Plan Effective January 1, 1997                      Registrant's Annual Report on Form 10-K for
                                                                            the fiscal year ended January 1, 2000 (File
                                                                            No. 1-8769) ("Registrant's January 2000
                                                                            Form 10-K") [Exhibit 10.2]

    *10.3               Amendment No. 1 to the R.G. Barry Corporation       Incorporated here in by reference to
                        Supplemental Retirement Plan Effective January      Registrant's January 2000 Form 10-K
                        1, 1997 (Executed effective as of May 12, 1998)     [Exhibit 10.3]

    *10.4               Amendment No. 2 to the R.G. Barry Corporation       Incorporated herein by reference to
                        Supplemental Retirement Plan Effective January      Registrant's January 2000 Form 10-K
                        1, 1997 (Executed effective as of January 1,        [Exhibit 10.4]
                        2000)

    *10.5               Employment Agreement, dated July 1, 2001,           **
                        between Registrant and Gordon Zacks
</TABLE>


                                      E-3
<PAGE>


<TABLE>
<CAPTION>
    Exhibit No.         Description                                         Location
    -----------         -----------                                         --------
<S>                     <C>                                                 <C>
    *10.6               Agreement, dated September 27, 1989, between        Incorporated herein by reference to
                        Registrant and Gordon Zacks                         Registrant's Current Report on Form 8-K
                                                                            dated October 11, 1989, filed October 12,
                                                                            1989 (File No. 0-12667) [Exhibit 28.1]

    *10.7               Amendment No. 1, dated as of October 12, 1994,      Incorporated herein by reference to
                        between Registrant and Gordon Zacks                 Amendment No. 14 to Schedule 13D, dated
                                                                            January 27, 1995, filed by Gordon Zacks on
                                                                            February 13, 1995 [Exhibit 5]

    *10.8               Amended Split-Dollar Insurance Agreement, dated     Incorporated herein by reference to
                        March 23, 1995, between Registrant and              Registrant's 1995 Form 10-K [Exhibit 10(h)]
                        Gordon B. Zacks

    *10.9               R. G. Barry Corporation 1988 Stock Option Plan      Incorporated herein by reference to
                        (Reflects amendments through May 11, 1993)          Registrant's Registration Statement on Form
                                                                            S-8, filed August 18, 1993 (Registration
                                                                            No. 33-67594) [Exhibit 4(r)]

    *10.10              Form of Stock Option Agreement used in              Incorporated herein by reference to
                        connection with the grant of incentive stock        Registrant's 1995 Form 10-K [Exhibit 10(k)]
                        options pursuant to the R. G. Barry Corporation
                        1988 Stock Option Plan

    *10.11              Form of Stock Option Agreement used in              Incorporated herein by reference to
                        connection with the grant of non-qualified          Registrant's 1995 Form 10-K [Exhibit 10(l)]
                        stock options pursuant to the R. G. Barry
                        Corporation 1988 Stock Option Plan

    *10.12              Annual Incentive Program (in effect beginning       Incorporated herein by reference to
                        with fiscal year ended December 29, 2001)           Registrant's December 2000 Form 10-K
                                                                            [Exhibit 10.13]

    *10.13              R. G. Barry Corporation Employee Stock Purchase     Incorporated herein by reference to
                        Plan (Reflects amendments and revisions for         Registrant's Registration Statement on Form
                        stock dividends and stock splits through            S-8, filed August 18, 1993 (Registration
                        May 11, 1993)                                       No. 33-67596) [Exhibit 4(r)]
</TABLE>


                                      E-4
<PAGE>


<TABLE>
<CAPTION>
    Exhibit No.         Description                                         Location
    -----------         -----------                                         --------
<S>                     <C>                                                 <C>
    *10.14              R. G. Barry Corporation 1994 Stock Option Plan      Incorporated herein by reference to
                        (Reflects stock splits through June 22, 1994)       Registrant's Registration Statement on Form
                                                                            S-8, filed August 24, 1994 (Registration
                                                                            No. 33-83252) [Exhibit 4(q)]

    *10.15              Form of Stock Option Agreement used in              Incorporated herein by reference to
                        connection with the grant of incentive stock        Registrant's December 2000 Form 10-K
                        options pursuant to the R. G. Barry Corporation     [Exhibit 10.16]
                        1994 Stock Option Plan

    *10.16              Form of Stock Option Agreement used in              Incorporated herein by reference to
                        connection with the grant of non-qualified          Registrant's December 2000 Form 10-K
                        stock options pursuant to the R. G. Barry           [Exhibit 10.17]
                        Corporation 1994 Stock Option Plan

    *10.17              Executive Employment Agreement, effective as of     Incorporated herein by reference to
                        January 4, 1998, between Registrant and             Registrant's 1997 Form 10-K [Exhibit 10(q)]
                        Christian Galvis

    *10.18              Restricted Stock Agreement, effective as of         Incorporated herein by reference to
                        January 4, 1998, between Registrant and             Registrant's 1997 Form 10-K [Exhibit 10(s)]
                        Christian Galvis

    *10.19              R. G. Barry Corporation Deferred Compensation       Incorporated herein by reference to
                        Plan As Amended and Restated (Effective as of       Registrant's 1995 Form 10-K [Exhibit 10(v)]
                        September 1, 1995)

    *10.20              Amendment No. 1 to the R.G. Barry Corporation       Incorporated herein by reference to
                        Deferred Compensation Plan (Effective as of         Registrant's January 2000 Form 10-K
                        March 1, 1997)                                      [Exhibit 10.23]

    *10.21              Amendment No. 2 to the R. G. Barry Corporation      **
                        Deferred Compensation Plan (Effective as of
                        December 1, 1999)

    *10.22              R. G. Barry Corporation Stock Option Plan for       Incorporated herein by reference to
                        Non-Employee Directors (Reflects share splits       Registrant's 1997 Form 10-K [Exhibit 10(x)]
                        and amendments through February 19, 1998)

    *10.23              R. G. Barry Corporation 1997 Incentive Stock        Incorporated herein by reference to
                        Plan (Reflects amendments through May 13, 1999)     Registrant's Registration Statement on Form
                                                                            S-8, filed June 18, 1999 (Registration No.
                                                                            333-81105) [Exhibit 10]
</TABLE>


                                      E-5
<PAGE>


<TABLE>
<CAPTION>
    Exhibit No.         Description                                         Location
    -----------         -----------                                         --------
<S>                     <C>                                                 <C>
    *10.24              Form of Stock Option Agreement used in              Incorporated herein by reference to
                        connection with the grant of incentive stock        Registrant's December 2000 Form 10-K
                        options pursuant to the R. G. Barry Corporation     [Exhibit 10.24]
                        1997 Incentive Stock Plan

    *10.25              Form of Stock Option Agreement used in              Incorporated herein by reference to
                        connection with the grant of non-qualified          Registrant's December 2000 Form 10-K
                        stock options pursuant to the R. G. Barry           [Exhibit 10.25]
                        Corporation 1997 Incentive Stock Plan

    *10.26              Restricted Stock Agreement, dated as of May 13,     Incorporated herein by reference to
                        1999, between Registrant and Gordon Zacks           Registrant's Quarterly Report on Form 10-Q
                                                                            for the fiscal quarter ended July 3, 1999
                                                                            (File No. 1-8769) [Exhibit 10.1]

    *10.27              Restricted Stock Agreement, effective as of         Incorporated herein by reference to
                        March 23, 2000, between Registrant and              Registrant's Quarterly Report on Form 10-Q
                        Christian Galvis                                    for the fiscal quarter ended April 1, 2000
                                                                            (File No. 1-8769) [Exhibit 10]

    *10.28              Employment Agreement, effective February 19,        Incorporated herein by reference to
                        2001, between Registrant and William Lenich         Registrant's December 2000 Form 10-K
                                                                            [Exhibit 10.28]

    *10.29              Executive Employment Agreement, effective as of     Incorporated herein by reference to
                        June 5, 2000, between Registrant and Daniel D.      Registrant's December 2000 Form 10-K
                        Viren                                               [Exhibit 10.29]

    *10.30              Change in Control Agreement, effective as of        Incorporated herein by reference to
                        January 4, 2001, between Registrant and Harry       Registrant's December 2000 Form 10-K
                        Miller                                              [Exhibit 10.30]

    *10.31              Change in Control Agreement, effective as of        Incorporated herein by reference to
                        January 4, 2001, between Donald Van Steyn and       Registrant's December 2000 Form 10-K
                        Registrant                                          [Exhibit 10.31]

    *10.32              Consulting Services Agreement, effective as of      Incorporated herein by reference to
                        January 1, 2000, between Registrant and             Registrant's December 2000 Form 10-K
                        Florence Zacks Melton                               [Exhibit 10.32]
</TABLE>


                                      E-6
<PAGE>


<TABLE>
<CAPTION>
    Exhibit No.         Description                                         Location
    -----------         -----------                                         --------
<S>                     <C>                                                 <C>
    *10.33              Agreement, dated February 7, 1952, as amended       Incorporated herein by reference to
                        by Agreement of Amendment dated September 18,       Registrant's December 2000 Form 10-K
                        1961, a Second Amendment dated April 15, 1968       [Exhibit 10.33]
                        and a Third Amendment dated October 31, 2000,
                        between Registrant and Florence Zacks Melton

    *10.34              Stock Option Agreements, dated February 19,         **
                        2001, between Registrant and William Lenich

    *10.35              Stock Option Agreement (Other Option Grant),        **
                        dated December 26, 2001, between Registrant and
                        William Lenich

     10.36              Warrant Agreement, dated as of March 22, 2001       Incorporated herein by reference to
                        (the "Warrant Agreement"), between Registrant       Registrant's Current Report on Form 8-K,
                        and Hills & Company                                 dated January 7, 2002 and filed January 8,
                                                                            2002 (File No. 1-8769) ("Registrant's
                                                                            January 2002 Form 8-K") [Exhibit 10(a)(i)]

     10.37              Warrant Certificate No. 1 evidencing warrants       Incorporated herein by reference to
                        issued on May 2, 2001 under the Warrant             Registrant's January 2002 Form 8-K [Exhibit
                        Agreement                                           10(a)(ii)]

     10.38              Agreement, dated July 11, 2001, between             Incorporated herein by reference to
                        Registrant and S. Golberg & Co., Inc.               Registrant's January 2002 Form 8-K [Exhibit
                                                                            10(b)]

     13.1               Registrant's Annual Report to Shareholders for      Incorporated herein by reference to the
                        the fiscal year ended December 29, 2001 (Not        financial statements portion of this Annual
                        deemed filed except for the portions thereof        Report on Form 10-K beginning at page 17
                        which are specifically incorporated by
                        reference into this Annual Report on Form 10-K)

     21.1               Subsidiaries of Registrant                          **

     23.1               Consent of Independent Certified Public             **
                        Accountants

     24.1               Powers of Attorney Executed by Directors and        **
                        Executive Officers of Registrant
</TABLE>


                                      E-7
<PAGE>


---------------------
*     Management contract or compensatory plan or arrangement.
**    Filed herewith




                                      E-8




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>l93477aex10-1.txt
<DESCRIPTION>EX-10.1
<TEXT>
<PAGE>

                                                                   Exhibit 10.1


                             R. G. BARRY CORPORATION
                           ASSOCIATES' RETIREMENT PLAN
                            (As Amended and Restated
                           Effective January 1, 1997)




<PAGE>


R. G. BARRY CORPORATION
ASSOCIATES' RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1997)

<TABLE>
<CAPTION>
CONTENTS

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

SECTION                                                                                                        PAGE

<S>                                                                                                          <C>
ARTICLE I.  THE PLAN

         1.1      Establishment and Amendment of the Plan.........................................................1
         1.2      Applicability of Plan...........................................................................1

ARTICLE II.  DEFINITIONS

         2.1      Definitions.....................................................................................2
         2.2      Construction....................................................................................9

ARTICLE III.  PARTICIPATION AND SERVICE

         3.1      Active Participation...........................................................................10
         3.2      Participation Status; Membership; Reemployment.................................................10
         3.3      Transferred Employees..........................................................................11
         3.4      Vesting Service................................................................................12
         3.5      Benefit Service................................................................................14
         3.6      Prior Service..................................................................................15
         3.7      Hours of Service...............................................................................16
         3.8      Special Provisions Relating to Acquired Businesses.............................................16
         3.9      Leased Employees...............................................................................17
         3.10     Special Provisions for Participants Who Enter the Armed Forces.................................17
         3.11     Special Provisions for Class A Commissioned Sales Representatives..............................17

ARTICLE IV.  BENEFITS

         4.1      Normal Retirement Benefits.....................................................................18
         4.2      Late Retirement Benefits.......................................................................19
         4.3      Early Retirement Benefits......................................................................20
         4.4      Disability Retirement Benefits.................................................................20
         4.5      Vested Retirement Benefits.....................................................................22
         4.6      Death Benefit..................................................................................24
         4.7      Preretirement Surviving Spouse's Benefit.......................................................24
         4.8      Automatic Joint and Surviving Spouse Annuity...................................................25
         4.9      Normal and Optional Methods of Benefit Payments................................................26
         4.10     Adjustment for In-Service Payments.............................................................28
         4.11     Maximum Annual Benefits........................................................................28
         4.12     Plan in Effect at Termination of Employment Controls...........................................31
</TABLE>


                                       i
<PAGE>


<TABLE>
<S>                                                                                                          <C>
         4.13     Optional Direct Rollovers of Eligible Rollover Distributions...................................32
         4.14     Payment of Small Amounts.......................................................................34
         4.15     Special Commencement Rule For Certain Former Participants......................................34

ARTICLE V.  COMMENCEMENT OF BENEFIT PAYMENTS AND DURATION

         5.1      Commencement and Duration......................................................................36
         5.2      Required and Minimum Distribution Rules........................................................37
         5.3      Reemployment After Benefit Commencement but Prior to Normal Retirement Age.....................39
         5.4      Reemployment After Benefit Commencement and After Attaining Normal Retirement Age..............40
         5.5      Suspension of Benefits Notice and Procedures...................................................41

ARTICLE VI.  PLAN ADMINISTRATION

         6.1      Appointment of Committee.......................................................................42
         6.2      Compensation and Expenses......................................................................42
         6.3      Manner of Action...............................................................................42
         6.4      Chairman, Secretary and Employment of Specialists..............................................43
         6.5      Delegation of Responsibilities.................................................................43
         6.6      Records........................................................................................43
         6.7      Rules..........................................................................................43
         6.8      Administration.................................................................................44
         6.9      Appeals from Denial of Claims..................................................................44
         6.10     Notice of Address and Missing Persons..........................................................45
         6.11     Application for Benefits and Data..............................................................45
         6.12     Indemnity for Liability........................................................................45

ARTICLE VII.  FINANCING

         7.1      Funding........................................................................................47
         7.2      Contributions..................................................................................47

ARTICLE VIII.  AMENDMENT AND TERMINATION

         8.1      Amendment and Termination......................................................................48
         8.2      Limitations on Amendments......................................................................49
         8.3      Distribution on Termination....................................................................49
         8.4      Effect of Contingencies Affecting the Employer.................................................50
         8.5      Restrictions on Benefits and Distributions to Certain Members..................................51

ARTICLE IX.  PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER

         9.1      Participation in the Plan......................................................................52
         9.2      Withdrawal from the Plan.......................................................................52
</TABLE>


                                       ii
<PAGE>


<TABLE>
<S>                                                                                                          <C>
ARTICLE X.  MISCELLANEOUS

         10.1     Nonalienation..................................................................................54
         10.2     Incompetency...................................................................................54
         10.3     Merger, Consolidation or Transfer..............................................................54
         10.4     Litigation.....................................................................................56
         10.5     Effect of Mistake..............................................................................56
         10.6     No Enlargement of Employee Rights..............................................................56
         10.7     No Guarantee...................................................................................56
         10.8     Internal Revenue Service Approval..............................................................56
         10.9     Exclusive Benefit; Nonreversion................................................................57
         10.10    Applicable Law.................................................................................57
         10.11    Severability...................................................................................58
         10.12    Mistakes.......................................................................................58
         10.13    Qualified Transportation Fringe Payments.......................................................58

ARTICLE XI.  TOP-HEAVY PROVISIONS

         11.1     Application of Top-Heavy Provisions............................................................59
         11.2     Definitions....................................................................................59
         11.3     Vesting Requirements...........................................................................61
         11.4     Minimum Benefit................................................................................62
         11.5     Limit on Annual Additions; Combined Plan Limit.................................................62
         11.6     Collective Bargaining Agreements...............................................................63
</TABLE>


                                      iii
<PAGE>


ARTICLE I.  THE PLAN

1.1 ESTABLISHMENT AND AMENDMENT OF THE PLAN

R. G. Barry Corporation ("Sponsor") previously maintained the R. G. Barry
Corporation Salaried Employees' Pension Plan for the benefit of its salaried
employees, which plan was previously established effective January 1, 1973, and
was last restated as a separate plan effective as of January 1, 1989. In
addition, the Sponsor previously maintained as a separate plan the Retirement
Income Plan for Non-Salaried Employees of R. G. Barry Corporation for the
benefit of its nonsalaried, noncommissioned employees, which plan was previously
established effective January 1, 1964, and was last restated as a separate plan
effective as of January 1, 1989. Effective as of January 1, 1996, the Retirement
Income Plan for Non-Salaried Employees of R. G. Barry Corporation was merged
into the R. G. Barry Corporation Salaried Employees' Pension Plan. The combined
plans were amended and restated generally effective as of January 1, 1996, and
became known as the "R. G. Barry Corporation Associates' Retirement Plan"
("Plan"). The Plan is now amended and restated, as set forth herein, effective
as of January 1, 1997 (except to the extent otherwise provided herein).

1.2 APPLICABILITY OF PLAN

The provisions of this Plan as set forth herein are applicable only to the
Eligible Employees (and their surviving Spouses or Beneficiaries) of the
Employer in current employment on or after January 1, 1997. The restated Plan
shall preserve all benefits accrued and not forfeited by Members under the terms
of the Plan prior to this restatement.


<PAGE>


ARTICLE II.  DEFINITIONS

2.1 DEFINITIONS

Whenever used in the Plan, the following terms shall have the respective
meanings set forth below unless otherwise expressly provided herein; and when
the defined meaning is intended, the term is capitalized.

(a)      "ACTUARIAL EQUIVALENT" means a benefit having the same value as the
         benefit which it replaces, computed on the basis of the 1971 Group
         Annuity Mortality Table for Males projected to 1990 by Scale D with an
         age setback of four years for the Participant and two years for any
         Spouse or Beneficiary and a 7 percent annual interest rate assumption,
         except as otherwise specified in the document. For purposes of
         determining the Actuarial Equivalent present value and single sum
         amount of a Member's monthly Retirement Benefit [and for purposes of
         Section 5.1(b)], subject to the limitations of Sections 4.9 and 8.2,
         such determination shall be made using:

         (1)      the annual interest rate set forth in Code Section 417(e) for
                  the second full month preceding the first day of the Plan
                  Year, which rate shall remain constant for the Plan Year; and

         (2)      the mortality projections taken from the 1983 Group Annuity
                  Mortality Table with a 50 percent male and 50 percent female
                  weighting of the mortality rates as described in Revenue
                  Ruling 95-6 or the successor mortality tables as prescribed by
                  the Secretary of the Treasury;

         provided, however, that prior to January 1, 1997, such determination
         shall be made on the basis of the 1971 Group Annuity Mortality Table
         for Males projected to 1990 by Scale D with an age setback of four
         years for the Participant and two years for any Spouse or Beneficiary
         and using an interest rate not greater than--

                  (A)      the "applicable interest rate" if the present value
                           of such Benefit (using such rate) is not in excess of
                           $25,000; or

                  (B)      120 percent of the "applicable interest rate" if the
                           present value of such Benefit exceeds $25,000 [as
                           determined under (A) above]. In no event shall the
                           present value determined under this Section 2.1(a)(B)
                           be less than $25,000.

         For purposes of this Section 2.1(a)(A) and (B), "applicable interest
         rate" shall mean the interest rate or rates which would be used by the
         Pension Benefit Guaranty Corporation for purposes of determining the
         present value of a Member's lump sum benefit under the Plan if the Plan
         had terminated on the date distribution commences with insufficient
         assets to provide benefits guaranteed by the Pension Benefit Guaranty
         Corporation ("PBGC") on such date, provided that the "applicable
         interest rate" shall be determined


                                        2
<PAGE>


         as of the second calendar month preceding the month in which the single
         sum is payable rather than as of the date distribution commences.

         Notwithstanding the preceding provisions of this Section 2.1(a), for
         distributions beginning on any date in 1997, the annual rate of 30-year
         Treasury securities under Section 2.1(a)(1) shall be determined as of
         the second full month preceding the first day of the Plan Year in which
         the distribution commences or as of the second calendar month preceding
         the month in which the single sum is payable, whichever results in the
         larger Actuarial Equivalent.

         The foregoing assumptions shall be used for benefit calculations but
         shall not restrict the right of the Sponsor and the Actuary to use
         different assumptions for determining the appropriate funding of the
         Plan. In the event of a termination of the Plan, this Section 2.1(a)
         shall be subject to the regulations of the PBGC.

(b)      "ACTUARY" means the actuary for the Plan who is appointed or selected
         by the Committee but is independent of the Sponsor. The Actuary
         designated shall serve for so long as shall be mutually agreeable to
         the Committee and the Actuary. The Actuary shall be a person who is an
         "enrolled actuary" under ERISA, or shall be an actuarial consulting
         firm or corporation which employs or has on its staff such an enrolled
         actuary.

(c)      "AFFILIATE" means--

         (1)      any corporation other than the Sponsor, i.e., either a
                  subsidiary corporation or an affiliated or associated
                  corporation of the Sponsor, which together with the Sponsor is
                  a member of a "controlled group" of corporations [as defined
                  in Code Section 414(b)];

         (2)      any organization which together with the Sponsor is under
                  "common control" [as defined in Code Section 414(c)];

         (3)      any organization which together with the Sponsor is an
                  "affiliated service group" [as defined in Code Section
                  414(m)];

         (4)      any organization required to be aggregated with an Employer
                  pursuant to Code Section 414(o); or

         (5)      any other corporation or entity designated as an Affiliate by
                  resolution of the Board of Directors of the Sponsor.

(d)      "ANNUITY STARTING DATE" means, in the case of benefits payable in the
         form of an annuity, the earlier of the first day of the first period
         for which a benefit is payable under the Plan; or the date on which a
         Member, surviving Spouse or Beneficiary begins to receive benefits
         under the Plan. In the case of a benefit payable in the form of a
         single sum payment, Annuity Starting Date means the date on which all
         events have occurred which entitle the Member to receive such benefit.


                                       3
<PAGE>


(e)      "AUTOMATIC JOINT AND SURVIVING SPOUSE ANNUITY" means the annuity form
         of benefit payments described in Section 4.8.

(f)      "BENEFICIARY" means the person or persons designated under Section
         4.9(c).

(g)      "BOARD OF DIRECTORS" means the Board of Directors of the Sponsor.

(h)      "CODE" means the Internal Revenue Code of 1986 and the regulations
         issued thereunder, as amended from time to time.

(i)      "COMMITTEE" means the committee which is responsible for the
         administration of the Plan, as provided in Article VI.

(j)      "COMPENSATION" means a Participant's pay, determined as follows:

         (1)      For all purposes under the Plan, except as otherwise
                  specified, Compensation means:

                  (A)      for Plan Years beginning on or after January 1, 1991,
                           the Participant's salary and excludes overtime, cash
                           bonuses, and sales incentive payments.

                  (B)      for Plan Years beginning before January 1, 1991, the
                           Participant's salary and commissions, but shall
                           exclude overtime and cash bonuses as well as
                           commissions while a Class A salesman.

         (2)      For purposes of applying the limitations described in Section
                  4.11, the definition of Highly Compensated Employee and the
                  provisions of Article XI, Compensation means the Member's
                  "compensation" as defined in Code Section 415(c)(3), including
                  amounts set forth in Code Section 415(c)(3)(D), excluding for
                  Plan Years and Limitation Years beginning prior to January 1,
                  2001, amounts set forth in Section 132(f)(4) of the Code, as
                  determined by the Committee.

         Notwithstanding the foregoing provisions of this Section 2.1(j), the
         Compensation of each Employee that may be taken into account under the
         Plan shall not exceed the first "applicable dollar amount" of an
         Employee's annual Compensation; provided, however, that such annual
         dollar limitation shall not apply to Compensation for purposes of
         Section 4.11. For purposes of this Section 2.1(j), the term "applicable
         dollar amount" means the maximum annual compensation limit set forth in
         Code Section 401(a)(17)(A), as adjusted for the cost of living in
         accordance with Code Section 401(a)(17)(B).

(k)      "EFFECTIVE DATE" of this amended and restated Plan means, except where
         separately stated, January 1, 1997.

(l)      "ELIGIBILITY SERVICE" means the service of an Employee, as determined
         under Section 3.1.


                                       4
<PAGE>


(m)      "ELIGIBLE EMPLOYEE" means any Salaried Employee or Nonsalaried Employee
         of an Employer.

(n)      "EMPLOYEE" means a person who is classified by the Sponsor or an
         Affiliate as an employee; excluding, however, any person who is
         classified by the Sponsor or an Affiliate as an independent contractor
         or leased employee (as defined in Section 3.9). If an individual who is
         not classified by the Employer or an Affiliate as a common law employee
         is determined by a court of law or governmental agency to be a common
         law employee, such Employee will remain excluded from participation in
         the Plan unless otherwise provided pursuant to Section 3.9.

(o)      "EMPLOYER" means the Sponsor or any Affiliate which has elected to
         become a participating Employer under the Plan in accordance with
         Article IX.

(p)      "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an Employee
         is credited with an Hour of Service with the Employer or an Affiliate
         or, if applicable, the first day following a Break in Service on which
         an Employee is credited with an Hour of Service with the Employer or an
         Affiliate.

(q)      "ERISA" means the Employee Retirement Income Security Act of 1974 and
         the regulations issued thereunder, as amended from time to time.

(r)      "FINAL AVERAGE COMPENSATION" means one-sixtieth of the Participant's
         total Compensation for the highest five consecutive Plan Years out of
         the last ten consecutive Plan Years of employment as a Salaried
         Employee with an Employer; provided that if he has fewer than five Plan
         Years of employment as a Salaried Employee with an Employer, then his
         Final Average Compensation shall be determined using such Participant's
         total period of employment as a Salaried Employee with the Employer and
         the actual number of months worked. With respect to a reemployed
         Participant, the period during which he is not employed as a Salaried
         Employee by an Employer shall not be considered an interruption for
         purposes of the meaning of "consecutive."

(s)      "HIGHLY COMPENSATED EMPLOYEE" means, with respect to any Plan Year, any
         Employee who--

         (1)      was a 5-percent owner [as determined under Code Section
                  416(i)(1)] at any time during the current or preceding Plan
                  Year; or

         (2)      received Compensation in the preceding Plan Year from the
                  Employers and Affiliates in excess of $80,000 (or such
                  increased amount as permitted by the Secretary of the
                  Treasury) and who, at the election of the Committee, was in
                  the "top-paid group" [as defined by Code Section 414(q)(3)]
                  during such year.

(t)      "HOUR OF SERVICE" means the hours for which an Employee shall receive
         credit for various purposes under the Plan, as described in Section
         3.7.


                                       5
<PAGE>


(u)      "LEAVE OF ABSENCE" means any absence without pay, authorized on a
         nondiscriminatory basis by an Employer or nonparticipating Affiliate
         under its standard personnel practices (which may be granted for
         reasons other than termination of employment, discharge, retirement or
         death), such as illness, accident, emergency or other unusual condition
         affecting the Employee or persons dependent upon him or for any reason
         sufficient in the discretion of the Sponsor; provided, however, that in
         granting leaves of absence, all Employees shall be treated alike.

(v)      "MEMBER" means an Active Participant, an Inactive Participant or a
         Former Participant who is entitled to receive a Retirement Benefit
         under the Plan, as provided in Section 3.2.

(w)      "NONSALARIED BENEFIT SERVICE" means the service of a Nonsalaried
         Participant as determined under Section 3.5.

(x)      "NONSALARIED EMPLOYEE" or "NONSALARIED PARTICIPANT" means an Employee
         or Participant, respectively, who is not compensated by a salary paid
         on a biweekly basis and who is not compensated by commissions.

(y)      "PARTICIPANT" means an "Active Participant" or "Inactive Participant,"
         as such terms are defined in Section 3.2. The term "Former Participant"
         shall have the meaning provided for in Section 3.2.

(z)      "PLAN" means the R. G. BARRY CORPORATION ASSOCIATES' RETIREMENT PLAN,
         as amended and restated generally effective as of January 1, 1997, and
         as may be subsequently amended from time to time.

(aa)     "PLAN YEAR" means the 12-consecutive-month period beginning January 1
         of a year and ending on December 31 of the same year.

(bb)     "PRERETIREMENT SURVIVING SPOUSE'S BENEFIT" means the monthly benefit
         payable to a Member's surviving Spouse, as described in Section 4.7.

(cc)     "PRIMARY SOCIAL SECURITY BENEFIT" means the estimated monthly primary
         insurance amount to which a Participant would be entitled at age 65 if
         not otherwise disqualified under the Federal Social Security Act as
         amended, whether or not he applies for or actually receives such
         benefit. For purposes of the Plan, such estimated amount prior to his
         Normal Retirement Date shall be determined based upon the method of
         calculations described below.

         In determining the Primary Social Security Benefit under this Plan, the
         Social Security Act as in effect on January 1 of the then current
         calendar year shall be applied. Wage history prior to employment with
         the Employer shall be estimated by applying a salary scale with the
         salary scale to be the actual change in the average national wages as
         determined by the Social Security Administration. For any year in which
         the Social Security Administration has not published the increase in
         national average wages, a six


                                       6
<PAGE>


         percent increase shall be assumed. Wages for future years shall be
         assumed to be the same as the wages received in the last full calendar
         year of employment.

         Provided, however, that any Participant shall be permitted to have his
         actual salary history used as of the date of the calculation if the
         Participant supplies documentation of that history. Such documentation
         must be provided no later than a reasonable period of time (as
         established by the Committee) following the later of the date of
         separation from service (by retirement or otherwise) and the time when
         the Participant is notified of the benefit to which he is entitled. To
         the extent required by applicable law, the Committee shall furnish each
         Member with a written notice of his right to supply actual past wages
         and the financial effect of his failure to supply such actual wage
         information.

         Post-separation increases in a Member's Social Security benefit shall
         not affect the Retirement Benefits determined under this Plan.

(dd)     "PRIOR PLANS" means the R. G. Barry Corporation Salaried Employees'
         Pension Plan and the Retirement Income Plan for Non-Salaried Employees
         of R. G. Barry Corporation.

(ee)     "RETIREMENT AGE" means a Member's Normal Retirement Age, Early
         Retirement Age or Vested Retirement Age, whichever is applicable, as
         follows:

         (1)      "NORMAL RETIREMENT AGE" means the sixty-fifth birthday of a
                  Participant.

         (2)      "EARLY RETIREMENT AGE" means a Member's age when he has
                  attained his fifty-fifth birthday (but not his sixty-fifth
                  birthday) and he is credited with at least ten years of
                  Vesting Service.

         (3)      "VESTED RETIREMENT AGE" means a Member's age when he is
                  credited with at least five years of Vesting Service but has
                  not attained his Early Retirement Age.

(ff)     "RETIREMENT BENEFIT" means the monthly benefit payment to which a
         Member is entitled under whichever of the following is applicable to
         the Member:

         (1)      "NORMAL RETIREMENT BENEFIT" means the monthly benefit
                  described in Section 4.1.

         (2)      "LATE RETIREMENT BENEFIT" means the monthly benefit described
                  in Section 4.2.

         (3)      "EARLY RETIREMENT BENEFIT" means the monthly benefit described
                  in Section 4.3.

         (4)      "DISABILITY RETIREMENT BENEFIT" means the monthly benefit
                  described in Section 4.4.

         (5)      "VESTED RETIREMENT BENEFIT" means the monthly benefit
                  described in Section 4.5.


                                       7
<PAGE>


(gg)     "RETIREMENT DATE" means a Member's Normal Retirement Date, Late
         Retirement Date or Early Retirement Date, whichever is applicable, as
         follows:

         (1)      "NORMAL RETIREMENT DATE" means the first day of the calendar
                  month coincident with or next following the date on which a
                  Member attains his Normal Retirement Age.

         (2)      "LATE RETIREMENT DATE" means the first day of the calendar
                  month coincident with or next following the date a Participant
                  terminates his employment as an Employee after his Normal
                  Retirement Date.

         (3)      "EARLY RETIREMENT DATE" means the first day of the calendar
                  month coincident with or next following the date a Participant
                  terminates his employment as an Employee on or after attaining
                  his Early Retirement Age but before his Normal Retirement Age.
                  An Early Retirement Date may also be such later date as
                  provided in Section 5.1(a)(2).

         (4)      "DISABILITY RETIREMENT DATE" means the first day of the
                  calendar month coincident with or next following the date on
                  which the Committee determines that a Nonsalaried Participant
                  has a Disability, as described in Section 4.4(a).

         (5)      "VESTED RETIREMENT DATE" means for a Participant who
                  terminates his employment as an Employee on or after he
                  attains his Vested Retirement Age, and who is not eligible for
                  a Normal Retirement Benefit, Early Retirement Benefit or
                  Disability Retirement Benefit as a result of such termination
                  of employment, the Participant's Normal Retirement Date;
                  provided, however, if such Participant was credited with at
                  least 10 years of Vesting Service prior to the termination of
                  his employment as an Employee, his Vested Retirement Date
                  shall be the first day of any calendar month coincident with
                  or next following his fifty-fifth birthday for which he makes
                  application for his Vested Retirement Benefit to begin, but in
                  no event later than his Normal Retirement Date.

(hh)     "SALARIED BENEFIT SERVICE" means the service of a Salaried Participant
         as determined under Section 3.5.

(ii)     "SALARIED EMPLOYEE" or "SALARIED PARTICIPANT" means an Employee or
         Participant, respectively, who is compensated by a salary paid on a
         biweekly basis.

(jj)     "SOCIAL SECURITY RETIREMENT AGE" means the "social security retirement
         age" of a Member, as determined under Code Section 415(b)(8).

(kk)     "SPONSOR" means R. G. BARRY CORPORATION, or any successor thereto.

(ll)     "SPOUSE" means the person to whom a Member is legally married on any
         relevant date or who is treated as if married to the Member pursuant to
         a qualified domestic relations order as defined in Code Section 414(p).


                                       8
<PAGE>


(mm)     "TRUST AGREEMENT" means any agreement in the nature of a trust, or in
         the nature of a custodial or funding agreement (including any group
         annuity contract and/or funding investment contract issued pursuant
         thereto) between the Sponsor and the Trustee and/or insurer, that is
         established to form a part of the Plan to receive, hold, invest and
         dispose of the Trust Fund.

(nn)     "TRUSTEE" means the Trustee or Trustees named in the Trust Agreement
         and/or the insurer named in any other funding agreement, and any
         additional or successor Trustee or Trustees from time to time acting as
         Trustee or Trustees of the trust assets under the Plan, or the insurer
         acting in the capacity of a custodian or funding agent of such trust
         assets.

(oo)     "TRUST FUND" or "TRUST" means the funds or assets which are held and
         administered by the Trustee pursuant to the Trust Agreement and the
         Plan.

(pp)     "VESTING SERVICE" means the service of an Employee, as determined under
         Section 3.4.

2.2 CONSTRUCTION

Unless the context clearly requires otherwise, (a) the masculine pronoun
whenever used shall include the feminine and neuter pronoun, and the singular
shall include the plural; and (b) headings of Articles and Sections herein are
included solely for convenience and if there is any conflict between such
headings and the text of the Plan, the text shall control.


                                       9
<PAGE>


ARTICLE III.  PARTICIPATION AND SERVICE

3.1  ACTIVE PARTICIPATION

Each individual who was a Participant in the Plan on December 31, 1996, in
accordance with the terms of such Plan as in effect on said date shall remain a
Participant, subject to the provisions of this Plan. Each other Employee shall
become an Active Participant under the Plan on the January 1 nearest to the
latest to occur of--

(a)      the date he is employed as an Eligible Employee;

(b)      the date on which he is credited with at least one year of Eligibility
         Service (defined below); or

(c)      the date, on or after the Effective Date, that the Plan was made
         applicable to the Employer of the individual;

provided he is employed as an Eligible Employee on such January 1. For the
purpose of determining eligibility to participate, one year of "Eligibility
Service" shall mean the first 12-consecutive-month period, beginning on the
Employee's Employment Commencement Date, during which the Employee completes
1,000 or more Hours of Service. If he does not actually have 1,000 or more Hours
of Service during the 12-month period beginning with his Employment Commencement
Date, but he actually has 1,000 or more Hours of Service during any Plan Year
(beginning with the Plan Year in which such initial 12-month period ends), then
he shall become an active Participant on the first day of the Plan Year
immediately following such Plan Year.

An Employee who satisfies the eligibility requirements of Sections 3.1(a), (b)
and (c) but who is not employed as an Eligible Employee on the applicable entry
date shall become an Active Participant under the Plan upon his reemployment as
an Eligible Employee following such entry date; provided, however, that if he is
not credited with at least one year of Vesting Service at the time of such
reemployment, he shall become an Active Participant in accordance with the
second sentence of this Section 3.1.

3.2 PARTICIPATION STATUS; MEMBERSHIP; REEMPLOYMENT

A Participant shall either be an "Active Participant" or an "Inactive
Participant" under the Plan. An Eligible Employee who has become an Active
Participant, as provided in Section 3.1, shall continue his status as an "Active
Participant" so long as he remains employed as an Eligible Employee. An Employee
who has become an Active Participant under the Plan, as provided in Section 3.1,
shall be an "Inactive Participant" during any period when he is employed as an
Employee but not as an Eligible Employee. Such an Inactive Participant shall
resume the status of an "Active Participant" at the time he resumes employment
as an Eligible Employee. An Active Participant or Inactive Participant who
ceases employment as an Employee shall become a "Former Participant." A Former
Participant shall become an "Inactive Participant" upon his reemployment as an
Employee or shall become an "Active Participant" upon his reemployment


                                       10
<PAGE>


as an Eligible Employee; provided, however, that if such Eligible Employee is
not credited with at least one year of Vesting Service at the time of his
reemployment as an Eligible Employee, he shall become an Active Participant in
accordance with the provisions of Section 3.1. As provided in Section 2.1(v), an
individual shall be classified as a "Member" under the Plan so long as he is an
Active Participant, an Inactive Participant or a Former Participant who is
entitled to receive a Retirement Benefit under the Plan. A Participant who
terminates his employment as an Employee and who is not entitled to receive a
Retirement Benefit under the Plan shall cease to be a Member covered under the
Plan.

3.3 TRANSFERRED EMPLOYEES

(a)      TRANSFER TO NONPARTICIPATING AFFILIATE. Should a Participant cease to
         be an Eligible Employee as defined in Section 2.1(m), but remain an
         Employee of the Sponsor or an Affiliate, the following provisions will
         apply:

         (1)      No Salaried or Nonsalaried Benefit Service shall be credited
                  during such period, and any benefit he may become entitled to
                  under the Plan shall be determined using the benefit formula
                  under the Plan in effect at the time of transfer and his Final
                  Average Compensation, Primary Social Security Benefit,
                  Compensation and Salaried and/or Nonsalaried Benefit Service,
                  whichever are applicable, while he was an Active Participant
                  in the Plan.

         (2)      A Participant shall continue to accrue Vesting Service during
                  such period.

         (3)      If such person again becomes an Eligible Employee, he shall
                  become an Active Participant in the Plan the first of the
                  calendar month coinciding with or next following his
                  reclassification.

         (4)      Should the status of an Affiliate change so that it is
                  disassociated with the Sponsor, the Participant will then be
                  considered to have terminated his or her employment and shall
                  be entitled to receive his Retirement Benefit as provided in
                  Article IV of the Plan.

(b)      TRANSFER TO ANOTHER PARTICIPATING EMPLOYER. It is anticipated that an
         Employee may be transferred between participating Employers; and in the
         event of any such transfer, the Employee involved shall carry with him
         his accumulated Salaried and/or Nonsalaried Benefit Service and Vesting
         Service. No such transfer shall effect a termination of employment
         hereunder, and the Employer to which the Employee is transferred shall
         thereupon become obligated hereunder with respect to such Employee in
         the same manner as was the Employer from whom the Employee was
         transferred. For the Plan Year of the transfer, both Employers shall
         pay their proportionate share of the cost, if any, of the Plan with
         respect to the transferring Employee for that Plan Year. Appropriate
         adjustments shall be made between participating Employers to reflect
         the transfers of employment.


                                       11
<PAGE>


(c)      MULTIPLE BENEFITS. The benefits under this Plan for the period during
         which an individual is a Nonsalaried Employee and a Salaried Employee
         shall be determined independently; provided, however, that no more than
         30 years of combined Salaried and Nonsalaried Benefit Service shall be
         considered in determining total benefits under the Plan. Salaried and
         Nonsalaried Benefit Service are each limited to 30 years.
         Notwithstanding any Plan provisions to the contrary, if the sum of a
         Participant's years of Salaried and Nonsalaried Benefit Service exceeds
         30, then the benefit with the more generous accrual (generally, the
         benefit earned as a Salaried Participant) shall be offset by a fraction
         of the amount of the other benefit. The numerator of said fraction
         shall equal the difference between (1) total years of Salaried and
         Nonsalaried Benefit Service and (2) 30, and the denominator shall be
         the years of Salaried or Nonsalaried Benefit Service, whichever
         provides the less generous benefit. The benefit with the less generous
         accrual (generally, the benefit earned as a Nonsalaried Participant)
         shall be provided without adjustment.

3.4 VESTING SERVICE

A Member's eligibility for benefits under the Plan shall be determined by his
period of Vesting Service. Vesting Service means a Member's period or periods of
employment by the Employers and Affiliates determined in accordance with
reasonable and uniform standards and policies adopted by the Committee from time
to time, which standards and policies shall be consistently observed. A Member
will be credited with years of Vesting Service in accordance with the following
provisions:

(a)      Vesting Service prior to January 1, 1996: For a Member as of the
         Effective Date who had been covered under the prior provisions of the
         Plan, the Member's period of employment with the Employer prior to
         January 1, 1996 shall be counted as Vesting Service in accordance with
         Section 3.6.

(b)      Vesting Service from and after January 1, 1996: Subject to the Break in
         Service provisions, a year of Vesting Service means any Plan Year
         during which the Member has at least 1,000 Hours of Service. A Member
         shall be credited with Vesting Service in whole and fractional years of
         such Member's period(s) of employment (whether or not such period(s) of
         employment were consecutive) which are not disregarded as a result of
         the application of the break rules of Section 3.4(d). Nonsuccessive
         periods of employment must be aggregated, and less than whole year
         periods of employment (whether or not consecutive) shall be aggregated
         on the basis that each fractional year of Vesting Service is rounded to
         the nearest one-hundredth. Hours of Service for this purpose shall also
         include periods of vacation, regular holidays, illness, incapacity,
         layoff, jury duty, military duty or Leave of Absence. An Employee shall
         receive credit for Vesting Service from his Employment Commencement
         Date until his Break in Service. No more than one year of Vesting
         Service shall be credited to a Member under this Plan in any Plan Year.


                                       12
<PAGE>


(c)      Vesting Service shall not be deemed to have been broken--

         (1)      by any transfer of employment of an Employee between
                  Affiliates regardless of whether the Affiliate is an Employer
                  hereunder; or

         (2)      during such period as an Employee is receiving credit for
                  Hours of Service under Section 3.7.

(d)      If an Employee who has had a Break in Service is subsequently
         reemployed as an Employee--

         (1)      if he is reemployed before a One-Year Break in Service occurs
                  after such Break in Service, the Vesting Service he had at
                  such Break in Service shall be reinstated from such Employee's
                  most recent Employment Commencement Date after the Employee
                  completes a year of Vesting Service following the Break in
                  Service.

         (2)      if he is reemployed after a One-Year Break in Service occurs
                  after such Break in Service, he shall be considered a new
                  Employee for purposes of the Plan, except--

                  (A)      if at such Break in Service he had a vested interest
                           in any portion of his accrued benefit, Vesting
                           Service he had at such Break in Service shall be
                           reinstated from such Employee's most recent
                           Employment Commencement Date after the Employee
                           completes a year of Vesting Service following the
                           One-Year Break in Service.

                  (B)      if Section 3.4(d)(2)(A) as provided above is not
                           applicable, and if the number of consecutive One-Year
                           Breaks in Service does not equal or exceed the
                           greater of five or the number of years of Vesting
                           Service he had before such Break in Service, the
                           years of Vesting Service he had at such Break in
                           Service shall be reinstated from such Employee's most
                           recent Employment Commencement Date after the
                           Employee completes a year of Vesting Service
                           following the One-Year Break in Service.

(e)      In determining an Employee's Vesting Service pursuant to this Section
         3.4, the following terms shall apply:

         (1)      "BREAK IN SERVICE" shall mean the earlier of (A) or (B) below:

                  (A)      the date the Employee quits, retires, is discharged
                           or dies; or

                  (B)      the first anniversary of the first day of an
                           Employee's absence from employment as an Employee
                           (with or without pay) for any reason other than in
                           (A) above, such as vacation, sickness, Leave of
                           Absence, layoff or military service, or special leave
                           of absence as provided in Section 3.10. An Employee
                           who fails to return to employment as an Employee at
                           the


                                       13
<PAGE>


                           expiration of such absence shall be deemed to have
                           had a Break in Service on the first to occur of the
                           expiration of his absence or the first anniversary of
                           the first day of his absence.

         (2)      A "ONE-YEAR BREAK IN SERVICE" shall mean each Plan Year
                  beginning with the Plan Year which includes the date an
                  Employee incurs a Break in Service, provided that the Employee
                  is credited with 500 or fewer Hours of Service during such
                  period. Solely for purposes of determining whether a One-Year
                  Break in Service has occurred, in the case of an Employee who
                  is absent from work beyond the first anniversary of the first
                  date of an absence and the absence is for one of the following
                  reasons, the date the Employee incurs a Break in Service shall
                  be the second anniversary of the Employee's absence from
                  employment:

                  (A)      the pregnancy of the Employee;

                  (B)      the birth of a child of the Employee;

                  (C)      the adoption of a child by the Employee; or

                  (D)      caring for such child for a period immediately
                           following birth or adoption.

                  The period between the first and second anniversaries of the
                  first date of absence shall not constitute Vesting Service.

3.5 BENEFIT SERVICE

The amount of the benefit payable to or on behalf of a Member shall be
determined on the basis of his Salaried and/or Nonsalaried Benefit Service, in
accordance with the following:

(a)      SALARIED AND/OR NONSALARIED BENEFIT SERVICE PRIOR TO JANUARY 1, 1996.
         For a Member as of January 1, 1996, who had been covered under the
         prior provisions of either of the Prior Plans, the amount of Salaried
         and/or Nonsalaried Benefit Service to be credited for employment prior
         to January 1, 1996 shall be determined in accordance with Section 3.6.

(b)      SALARIED BENEFIT SERVICE FROM AND AFTER JANUARY 1, 1996. The Member's
         Salaried Benefit Service shall be equal to his Vesting Service reduced
         by--

         (1)      any period of Vesting Service prior to the date on which the
                  Member first became a Salaried Participant under the Plan (or
                  the R. G. Barry Corporation Salaried Employees' Pension Plan
                  as in effect prior to January 1, 1996) during which the Member
                  was not a Salaried Employee of the Employer;

         (2)      any period of Vesting Service from and after the date on which
                  the Member first became a Salaried Participant under the Plan
                  (or the R. G. Barry Corporation Salaried Employees' Pension
                  Plan as in effect prior to January 1, 1996) during which the
                  Member was not a Salaried Employee of the Employer, including,
                  but


                                       14
<PAGE>


                  not limited to, any period between a Break in Service, as
                  defined in Section 3.4(e)(1), and reemployment as an Eligible
                  Employee and any period during which he was an Inactive
                  Participant; and

         (3)      any period of Vesting Service reinstated pursuant to the
                  provisions of Section 3.4(d) if the Member was entitled, upon
                  such termination, to a monthly Retirement Benefit under the
                  Plan, and the full Actuarial Equivalent value of such
                  Retirement Benefit had been paid on behalf of such Member
                  under the provisions of Section 4.9(c)(3) or 5.1(a)(6).

(c)      NONSALARIED BENEFIT SERVICE FROM AND AFTER JANUARY 1, 1996. The
         Member's Nonsalaried Benefit Service shall be equal to his Vesting
         Service reduced by--

         (1)      any period of Vesting Service prior to the date on which the
                  Member first became a Nonsalaried Participant under the Plan
                  (or the Retirement Income Plan for Non-Salaried Employees of
                  R. G. Barry Corporation as in effect prior to January 1, 1996)
                  during which the Member was not a Nonsalaried Employee of the
                  Employer;

         (2)      any period of Vesting Service from and after the date on which
                  the Member first became a Nonsalaried Participant under the
                  Plan (or the Retirement Income Plan for Non-Salaried Employees
                  of R. G. Barry Corporation as in effect prior to January 1,
                  1996) during which the Member was not a Nonsalaried Employee
                  of the Employer, including, but not limited to, any period
                  between a Break in Service, as defined in Section 3.4(e)(1),
                  and reemployment as an Eligible Employee and any period during
                  which he was an Inactive Participant; and

         (3)      any period of Vesting Service reinstated pursuant to the
                  provisions of Section 3.4(d) if the Member was entitled, upon
                  such termination, to a monthly Retirement Benefit under the
                  Plan, and the full Actuarial Equivalent value of such
                  Retirement Benefit had been paid on behalf of such Member
                  under the provisions of Section 4.9(c)(3) or 5.1(a)(6).

No more than one year of Salaried or Nonsalaried Benefit Service shall be
credited to a Member under this Plan in any Plan Year.

3.6 PRIOR SERVICE

For periods prior to January 1, 1996, an Employee's service shall consist of his
years and fractions of a year of Vesting Service, Salaried Benefit Service under
the R. G. Barry Corporation Salaried Employees' Pension Plan and Nonsalaried
Benefit Service under the Retirement Income Plan for Non-Salaried Employees of
R. G. Barry Corporation as reflected in the Employer's records for such Prior
Plans. Such service shall be subject to the effect of any Break in Service
incurred under provisions of the Prior Plans in effect prior to January 1, 1996,
and shall be determined in accordance with the prior provisions of the Prior
Plans including rules which relate to required minimum hours or other length of
service.


                                       15
<PAGE>


3.7 HOURS OF SERVICE

Hours of Service shall be determined by including the following:

(a)      each Hour of Service for which the Employer or Affiliate, either
         directly or indirectly, pays an Employee, or for which the Employee is
         entitled to payment, for the performance of duties. The Committee
         credits Hours of Service under this paragraph (a) to the Employee for
         the computation period in which the Employee performs the duties,
         irrespective of when paid;

(b)      each Hour of Service for back pay, irrespective of mitigation of
         damages, to which the Employer or Affiliate has agreed or for which the
         Employee has received an award. The Committee credits Hours of Service
         under this paragraph (b) to the Employee for the computation period(s)
         to which the award or the agreement pertains rather than for the
         computation period in which the award, agreement or payment is made;

(c)      each Hour of Service for which the Employer or Affiliate, either
         directly or indirectly, pays an Employee, or for which the Employee is
         entitled to payment (irrespective of whether the employment
         relationship is terminated), for reasons other than for the performance
         of duties during a computation period, such as Leave of Absence,
         vacation, holiday, sick leave, illness, incapacity, layoff, jury duty
         or military duty. The Committee will credit no more than 501 Hours of
         Service under this paragraph (c) to an Employee on account of any
         single continuous period during which the Employee does not perform any
         duties (whether or not such period occurs during a single Plan Year).
         The Committee credits Hours of Service under this paragraph (c) in
         accordance with the rules of paragraphs (b) and (c) of Labor Reg.
         Section 2530.200b-2, which the Plan, by this reference, specifically
         incorporates in full within this paragraph (c). The Committee will not
         credit an Hour of Service under more than one of the above paragraphs.
         A computation period for purposes of this Section 3.7 is the calendar
         year. The Committee will resolve any ambiguity with respect to the
         crediting of an Hour of Service in favor of the Employee; and

(d)      each Employee shall be credited with Hours of Service on the basis of
         an assumed 45 Hours of Service per week for each week for which the
         Employee would have received at least one Hour of Service in accordance
         with this definition to the extent it does not result in crediting
         Hours of Service more than once with respect to any period.

3.8 SPECIAL PROVISIONS RELATING TO ACQUIRED BUSINESSES

In any case in which an individual becomes an Employee upon the acquisition of
all or a portion of the business of his former employer by an Employer or an
Affiliate, whether by merger, acquisition of assets or stock, or otherwise, his
service and compensation with such acquired employer prior to the date on which
such employer became an Affiliate (or part of an Affiliate) shall not be taken
into account under the Plan for purposes of calculating his Vesting Service,


                                       16
<PAGE>


Salaried or Nonsalaried Benefit Service, and Compensation under the Plan, except
to the extent that such service is required to be recognized under Code Section
414(a).

3.9 LEASED EMPLOYEES

A person who is not classified by the Employer or an Affiliate as an Employee
and who performs services for an Employer or an Affiliate pursuant to an
agreement between the Employer or Affiliate and a leasing organization shall be
considered a "leased employee" if such person performed the services on a
substantially full-time basis for at least one year and the services are under
the primary direction and control of the Employer or Affiliate. A person who is
considered a "leased employee" of an Employer shall not be considered an
Employee for purposes of the Plan. If such a person becomes a Participant under
the Plan as a result of being classified by the Employer as an Employee, he
shall receive credit for his service as a leased employee in calculating his
Vesting Service under the Plan but not for calculating his Salaried or
Nonsalaried Benefit Service.

3.10 SPECIAL PROVISIONS FOR PARTICIPANTS WHO ENTER THE ARMED FORCES

Notwithstanding any provision in this Plan to the contrary, effective on and
after December 12, 1994, contributions, benefits and service credit with respect
to qualified military service will be provided in accordance with Code Section
414(u). If a Participant is absent from employment for voluntary or involuntary
qualified military service with the armed forces of the United States, does not
receive a dishonorable discharge and returns to employment as an Employee within
the period required under the law pertaining to veterans' reemployment rights,
he shall receive Vesting Service and Salaried or Nonsalaried Benefit Service
(based on his employment status when the absence began) for the period of his
absence from employment.

3.11 SPECIAL PROVISIONS FOR CLASS A COMMISSIONED SALES REPRESENTATIVES

If a Class A commissioned sales representative of the Employer becomes a
Participant under the Plan as a result of subsequent employment as an Eligible
Employee with an Employer, he shall receive credit for his service as a Class A
commissioned sales representative in calculating his Vesting Service under the
Plan, but such service shall be considered Salaried Benefit Service only with
respect to Plan Years beginning on or after January 1, 1991; provided, however,
that despite the provisions of Section 2.1(j), commissions earned while a person
is a Class A commissioned sales representative of the Employer shall not be
considered to be Compensation for purposes of this Plan.




                                       17
<PAGE>


ARTICLE IV.  BENEFITS

4.1      NORMAL RETIREMENT BENEFITS

(a)      ELIGIBILITY. A Participant who attains his Normal Retirement Age while
         employed as an Employee and retires on or before his Normal Retirement
         Date shall be eligible to receive a Normal Retirement Benefit
         commencing on his Normal Retirement Date. Upon attaining his Normal
         Retirement Age, such Participant shall have a nonforfeitable right to
         his Normal Retirement Benefit.

(b)      AMOUNT FOR SALARIED PARTICIPANT. A Salaried Participant who terminates
         his employment as an Employee and who is eligible for a Normal
         Retirement Benefit under Section 4.1(a) shall be entitled to a Normal
         Retirement Benefit commencing on his Normal Retirement Date. Such
         Normal Retirement Benefit shall be calculated based on his years of
         Salaried Benefit Service, Final Average Compensation and his Primary
         Social Security Benefit as a Salaried Employee as of his Normal
         Retirement Date. The monthly amount of a Salaried Participant's Normal
         Retirement Benefit payable for the lifetime of the Participant shall be
         equal to 48 percent of the Salaried Participant's Final Average
         Compensation reduced by 50 percent of his Primary Social Security
         Benefit if the Salaried Participant has accrued at least 30 years of
         Salaried Benefit Service. If the Salaried Participant has less than 30
         years of Salaried Benefit Service at his Normal Retirement Date, then
         the resulting amount shall be multiplied by a fraction, the denominator
         of which is 30 and the numerator of which is the Salaried Participant's
         years, including partial years, of Salaried Benefit Service.

         Notwithstanding any Plan provision to the contrary, a Retirement
         Benefit shall not be reduced below the value of the benefit determined
         as of December 31, 1993 (or, if greater, December 31, 1988) due to the
         effects of any changes in the limits of recognizable Compensation under
         Code Section 401(a)(17).

(c)      AMOUNT FOR NONSALARIED PARTICIPANT. A Nonsalaried Participant who
         terminates his employment as an Employee and who is eligible for a
         Normal Retirement Benefit under Section 4.1(a) shall be entitled to a
         Normal Retirement Benefit commencing on his Normal Retirement Date.
         Such Normal Retirement Benefit shall be a monthly amount payable during
         the life of the Member, determined by multiplying (1) the Participant's
         years, including fractional years, of Nonsalaried Benefit Service (up
         to a maximum of 30 years) by (2) the benefit factor in effect on the
         date of his termination of employment as an Eligible Employee
         (regardless of when he ceased to be a Nonsalaried Employee) in
         accordance with the following table:


                                       18
<PAGE>


         TERMINATION DATE
         -----------------------------------------------------------------------

         On or After               But Before           Amount
         -----------------------------------------------------------------------

         1/1/64                    1/1/87               $ 5.00
         1/1/87                    1/1/89               $ 7.00
         1/1/89                    1/1/90               $ 8.00
         1/1/90                    6/30/91              $ 9.00
         7/1/91                    1/1/96               $10.00
         1/1/96                      --                 $11.00

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

         Notwithstanding the provisions of the previous paragraph, certain
         Members whose employment as Nonsalaried Employees with the Employer was
         terminated prior to July 1, 1991 shall nevertheless be eligible to
         receive a Normal Retirement Benefit determined by multiplying their
         respective years of Nonsalaried Benefit Service, up to a maximum of 30
         years, by $10. These individuals shall include Members (a) employed in
         the Goldsboro, North Carolina, sewing plant on the final day of such
         facility's operation; (b) employed in cutting and laminating operations
         at the San Angelo, Texas, facility on the final day of those
         operations; and (c) employed in Columbus, Ohio, whose employment with
         the Employer was terminated by layoff on December 3, 1990 and who had
         at least 15 years of Nonsalaried Benefit Service at the time of layoff.

(d)      NONDUPLICATION OF BENEFITS. There shall be no duplication of benefits.
         The Normal Retirement Benefits under Section 4.1(b) and (c) shall in no
         event be less than the largest respective Early Retirement Benefit
         which the Participant would have been entitled to receive under Section
         4.3 by retiring at any time after meeting early retirement eligibility
         requirements for an Early Retirement Benefit.

4.2      LATE RETIREMENT BENEFITS

(a)      ELIGIBILITY. A Participant who attains his Normal Retirement Age while
         employed as an Employee shall be eligible to receive a Late Retirement
         Benefit under the Plan, commencing on his Late Retirement Date.

(b)      AMOUNT. A Participant who terminates his employment as an Employee and
         who is eligible for a Late Retirement Benefit under Section 4.2(a)
         shall be entitled to a monthly Late Retirement Benefit commencing on
         his Late Retirement Date. Such Late Retirement Benefit shall be
         computed in the same manner as a Normal Retirement Benefit under
         Section 4.1(b) and/or (c), whichever applies, except that it shall be
         based on his years of Salaried or Nonsalaried Benefit Service, his
         Final Average Compensation, his Primary Social Security Benefit and the
         applicable provisions of the Plan as in effect at his Late Retirement
         Date.

         The benefits of a Participant shall not be determined based on a
         formula which became effective after his separation from service. If a
         Member continues in employment beyond


                                       19
<PAGE>


         his Normal Retirement Age at a rate such that his Normal Retirement
         Benefits are suspended pursuant to Section 5.1(a), his benefit upon
         retirement shall be calculated using the Plan formula in effect when he
         actually terminates employment. If a Member continues in employment
         beyond his Normal Retirement Age at a rate such that his Normal
         Retirement Benefits are payable during such employment pursuant to
         Section 5.1(a), his benefit shall be calculated using the Plan formula
         in effect when his benefit payments begin.

4.3      EARLY RETIREMENT BENEFITS

(a)      ELIGIBILITY. A Participant who attains his Early Retirement Age while
         employed as an Employee shall be eligible to receive an Early
         Retirement Benefit under the Plan, commencing on his Early Retirement
         Date.

(b)      AMOUNT. A Participant who terminates his employment as an Employee and
         who is eligible for an Early Retirement Benefit under Section 4.3(a)
         shall be entitled to a monthly Early Retirement Benefit under the Plan.
         Application for commencement prior to his Normal Retirement Date must
         be made in writing to the Committee not more than 90 days prior to the
         date he elects to have distributions commence. Such Early Retirement
         Benefit shall be computed in the same manner as a Normal Retirement
         Benefit under Section 4.1(b) and/or (c), except that it shall be based
         on his years of Salaried or Nonsalaried Benefit Service, his Final
         Average Compensation, his Primary Social Security Benefit and the
         applicable provisions of the Plan as in effect at his termination of
         employment as an Eligible Employee. The benefits of a Participant shall
         not be determined based on a formula which became effective after his
         separation from service as an Eligible Employee. If the Retirement
         Benefit thus determined commences prior to the Member's Normal
         Retirement Age, it shall be reduced as of the date the first Early
         Retirement Benefit payment commences by 5/9 of one percent for each of
         the first 60 months and 5/18 of one percent for each of the next 60
         months, as applicable, by which his Early Retirement Benefit payment
         precedes his Normal Retirement Age.

         The Early Retirement Benefit under this Section 4.3(b) will in no event
         be less than the largest Early Retirement Benefit that the Member would
         have been entitled to receive under this Section 4.3 by retiring at any
         time after meeting Early Retirement eligibility requirements.

4.4      DISABILITY RETIREMENT BENEFITS

(a)      ELIGIBILITY. A Participant who is actively employed as an Employee, who
         has completed at least 15 years of Vesting Service, who has attained at
         least age 50 but not his Normal Retirement Age, who incurs a
         Disability, as defined below, while so employed, and who terminates his
         employment as an Employee as a result of such Disability shall be
         eligible to receive a Disability Retirement Benefit under the Plan,
         commencing on his Normal Retirement Date with respect to benefits
         earned as a Salaried Employee and commencing on his Disability
         Retirement Date with respect to benefits earned as a Nonsalaried
         Employee. For purposes of this Section 4.4, "Disability" means that the
         Employee is so


                                       20
<PAGE>


         totally and permanently incapacitated as established by a licensed
         physician selected by the Committee that he is not able to perform his
         job or any job for the Employer for which he is reasonably suited as a
         result of his education, training and experience and that the Employee
         qualifies for Social Security disability benefits. A Member who
         commences Disability Retirement Benefit payments under the Plan shall
         not be eligible to receive any other Retirement Benefit under the Plan
         while he is receiving Disability Retirement Benefit payments.
         Disability Retirement Benefits payable to Nonsalaried Employees prior
         to Normal Retirement Age shall terminate with the last payment made
         prior to the date on which the earliest of the following events occurs:

         (1)      the Member engages in any regular gainful employment or
                  occupation for remuneration or profit;

         (2)      the Committee determines on the basis of a medical examination
                  that the Member is no longer permanently or totally disabled;

         (3)      the Member refuses to undergo a medical examination ordered by
                  the Committee not more frequently than semi-annually; or

         (4)      the date of the Member's death.

(b)      AMOUNT FOR A SALARIED PARTICIPANT. A Member who has terminated
         employment as an Employee and who is eligible for a Disability
         Retirement Benefit under Section 4.4(a) shall be entitled to a monthly
         Disability Retirement Benefit commencing on his Normal Retirement Date.
         Such Disability Retirement Benefit shall be an amount equal to the
         product of: (1) the Normal Retirement Benefit as described in Section
         4.1(b) to which the Member would have been entitled on his Normal
         Retirement Date if his employment as a Salaried Employee had continued
         without change until he attained Normal Retirement Age, and using his
         Final Average Compensation, his Primary Social Security Benefit and the
         provisions of the Plan in effect at his termination of employment as a
         Salaried Employee due to Disability in lieu of the corresponding
         amounts determined as of this Normal Retirement Date multiplied by (2)
         a fraction, the numerator of which is the Member's Salaried Benefit
         Service as of such termination date, and the denominator of which is
         the Salaried Benefit Service that would accrue as of his Normal
         Retirement Date.

(c)      AMOUNT FOR NONSALARIED PARTICIPANT. A Member who has terminated
         employment as an Employee and who is eligible for a Disability
         Retirement Benefit under Section 4.4(a) shall be entitled to a monthly
         Disability Retirement Benefit commencing on his Disability Retirement
         Date. Such Disability Retirement Benefit shall be computed in the same
         manner as a Normal Retirement Benefit under Section 4.1(c), except that
         it shall be based on his years of Nonsalaried Benefit Service and the
         provisions of the Plan as in effect at his Disability Retirement Date
         and that it shall be reduced by workers' compensation benefits (except
         awards or fixed statutory payments for loss or loss of use of any
         bodily member) payable to him with respect to his Disability. In the
         case of lump sum settlements under workers' compensation, the lump sum
         shall be divided by the weekly


                                       21
<PAGE>


         workers' compensation benefit which would otherwise have been payable
         to determine the period over which the reduction should be made and the
         amount of the reduction. Benefits shall not be payable to a Member
         under more than one provision hereof for the same period of time.

4.5      VESTED RETIREMENT BENEFITS

(a)      ELIGIBILITY. A Member who attains his Vested Retirement Age shall be
         eligible to receive a Vested Retirement Benefit under the Plan,
         commencing on his Vested Retirement Date. If the terminated Member dies
         before the date he would have been eligible to receive a Vested
         Retirement Benefit, no benefit shall be paid to or for him except under
         the terms of Sections 4.6, 4.7 and 4.8.

(b)      AMOUNT. A Member who has terminated his employment as an Employee, who
         is eligible for a Vested Retirement Benefit under Section 4.5(a) and
         who is not eligible for another Retirement Benefit under the Plan at
         the time of such termination of employment shall be entitled to a
         monthly Vested Retirement Benefit commencing on his Vested Retirement
         Date. Application for commencement prior to his Normal Retirement Date
         must be made in writing to the Committee not more than 90 days prior to
         the date he elects to have distributions commence. For a Salaried
         Participant, such Vested Retirement Benefit shall be an amount equal to
         the product of: (1) the Normal Retirement Benefit as described in
         Section 4.1(b) to which the Member would have been entitled on his
         Normal Retirement Date if his employment as a Salaried Employee had
         continued without change until he attained Normal Retirement Age, and
         using his Final Average Compensation, his Primary Social Security
         Benefit and the provisions of the Plan in effect at his termination of
         employment as an Eligible Employee in lieu of the corresponding amounts
         determined as of this Normal Retirement Date multiplied by (2) a
         fraction, the numerator of which is the Member's Salaried Benefit
         Service as of such termination date, and the denominator of which is
         the Salaried Benefit Service that he would accrue as of his Normal
         Retirement Date. For a Nonsalaried Participant, such Vested Retirement
         Benefit shall be computed in the same manner as a Normal Retirement
         Benefit under Section 4.1(c), except that it shall be based on his
         years of Nonsalaried Benefit Service and the provisions of the Plan as
         in effect on the date he ceases to be a Nonsalaried Employee. If the
         Vested Retirement Benefit thus determined commences prior to the
         Member's Normal Retirement Age, it shall be reduced as of the date the
         first Vested Retirement Benefit payment commences by 5/9 of one percent
         for each of the first 60 months and 5/18 of one percent for each of the
         next 60 months, as applicable, by which his Vested Retirement Benefit
         payment precedes his Normal Retirement Age.

(c)      IMMEDIATE DISTRIBUTION OPTION. Notwithstanding any provisions of the
         Plan to the contrary, effective as of January 1, 1997, if the Member is
         not eligible for an immediate distribution under Section 4.5(b) above
         on the date of his termination of employment as an Employee and elects
         to have his distribution commence as soon as practicable following his
         termination of employment as an Employee in accordance with Section
         5.1(a)(4), then his Vested Retirement Benefit shall be equal to an
         immediate reduced


                                       22
<PAGE>


         Vested Retirement Benefit commencing as soon as administratively
         practicable following his termination of employment as an Employee
         computed as provided in Section 4.5(b) payable at Normal Retirement Age
         and adjusted as provided below. Notwithstanding any provisions of the
         Plan to the contrary, an immediate distribution option shall not be
         available if the lump sum value of the total benefits earned as a
         Salaried Employee and as a Nonsalaried Employee as determined below
         exceeds $7,500.

         Notwithstanding any provisions of the Plan to the contrary, the
         immediate reduced Vested Retirement Benefit described in this Section
         4.5(c) shall be payable only in the following forms:

         (1)      subject to the consent requirements referenced in Section
                  4.8(a) or (b), a lump sum distribution equal to the Actuarial
                  Equivalent of the amount determined in Section 4.5(b) payable
                  at Normal Retirement Age. Any Member who receives such a
                  distribution shall have no further interest in the Plan; or

         (2)      an immediate annuity payable in the Member's normal form of
                  benefit payment as described in Section 4.8(a) or (b),
                  whichever is applicable. Such immediate annuity shall be the
                  Actuarial Equivalent of the lump sum distribution as
                  calculated above in Section 4.5(c)(1).

         The other optional forms of benefit described in Section 4.8(c) shall
         not be available for any distribution made under this Section 4.5(c).

         The Committee shall notify each Member who is eligible to elect to
         receive a distribution under this Section 4.5(c). An application for
         commencement must be made within the election period determined in
         accordance with the administrative procedures established by the
         Committee. The distribution shall commence as soon as administratively
         practicable following the receipt of the Member's completed consent
         form. If the Member does not file a timely consent to a current
         distribution in accordance with this Section 4.5(c), then distribution
         of his Retirement Benefit shall not commence prior to the date
         otherwise provided in this Plan or the Prior Plans, whichever is
         applicable.

         Should a Member who receives a benefit under this Section 4.5 be
         reemployed by an Employer, any Retirement Benefits payable after his
         reemployment shall be reduced by the Actuarial Equivalent of the
         benefit he previously received under this Section 4.5.

(d)      FORFEITURES. To the extent that the present lump sum value of a
         Member's vested accrued benefit derived from Employer contributions is
         zero at the time he ceases to be an Employee, the Member shall be
         deemed to have received a distribution of such vested accrued benefit,
         and such Member's Salaried and Nonsalaried Benefit Service shall be
         disregarded for purposes of accrual of benefits under the Plan unless
         such Member resumes covered employment with the Employer before the
         Member accrued a period of five (5) or more consecutive One-Year Breaks
         in Service [as defined in Section 3.4(e)(2)], in which event the
         Member's accrued benefit derived from Employer


                                       23
<PAGE>


         contributions shall be restored to the amount of such accrued benefit
         on the date of the deemed distribution.

4.6      DEATH BENEFIT

Except as provided under Section 4.7, 4.8 or 4.9, no benefit shall be payable to
any person after the death of a Member. Sections 4.7 and 4.8 will not apply with
respect to Participants who terminated employment prior to September 2, 1974.

4.7      PRERETIREMENT SURVIVING SPOUSE'S BENEFIT

(a)      ELIGIBILITY. In the case of a Member who (1) is eligible for a Vested
         Retirement Benefit; (2) has a surviving Spouse; and (3) dies prior to
         his Annuity Starting Date for his Retirement Benefit (whether or not
         such Member is employed as an Employee), there shall be payable to his
         surviving Spouse a Preretirement Surviving Spouse's Benefit as
         described in Section 4.7(b) and (c).

(b)      AMOUNT. The deceased Member's surviving Spouse who is eligible to
         receive a Preretirement Surviving Spouse's Benefit shall receive a
         monthly benefit payable for the life of such Spouse equal to--

         (1)      if the Member died on or before the earliest date upon which
                  he could have received Retirement Benefit payments under the
                  Plan ("Earliest Commencement Date"), 50 percent of the monthly
                  Retirement Benefit amount the Member would have received had
                  he terminated employment as an Employee on the date of his
                  death (if he had not already terminated such employment),
                  survived to his Earliest Commencement Date, elected to begin
                  receiving Retirement Benefit payments on his Earliest
                  Commencement Date with the automatic form of payment under
                  Section 4.8 in effect and died on the day after his Earliest
                  Commencement Date; or

         (2)      if the Member died after his Earliest Commencement Date, 50
                  percent of the monthly Retirement Benefit amount the Member
                  would have received had he retired on the day before his
                  death, with his Retirement Benefit payable in the automatic
                  form of payment under Section 4.8 on the date preceding the
                  day on which he died.

(c)      COMMENCEMENT. Payment of the Preretirement Surviving Spouse's Benefit
         to a Member's surviving Spouse shall, unless otherwise elected by such
         Spouse, commence on the later of the Member's Earliest Commencement
         Date or the first day of the month following the Member's death. In no
         event shall the payment of such Benefit commence later than the later
         of the date the Member would have attained his Normal Retirement Date
         or the first day of the month following the Member's death.


                                       24
<PAGE>


4.8      AUTOMATIC JOINT AND SURVIVING SPOUSE ANNUITY

(a)      ELIGIBILITY AND CONDITIONS. In lieu of the monthly Retirement Benefit
         otherwise payable under Section 4.1, 4.2, 4.3, 4.4 or 4.5, a married
         Member who has terminated employment as an Employee and who is eligible
         for a Retirement Benefit payable under said sections shall be deemed to
         have automatically elected a reduced amount of such monthly Retirement
         Benefit payable to him for his life with the provision that if his
         surviving Spouse shall be living on his Annuity Starting Date and also
         at his death after such automatic election shall have become effective,
         a surviving Spouse benefit [as described in Section 4.8(b)(2)] shall be
         payable to his surviving Spouse. Such automatic election is subject to
         the following conditions:

         (1)      The automatic election provided in this Section 4.8 shall
                  become effective as of his Annuity Starting Date for the
                  payment of the Member's reduced monthly Retirement Benefit
                  under the automatic election in the form of an immediate
                  annuity.

         (2)      A Member may prevent the automatic election provided in this
                  Section 4.8 from becoming effective only by executing a
                  specific written rejection of such election on a form approved
                  by the Committee and filing it with the Committee. This
                  written rejection of the automatic election shall not be
                  effective unless (A) the Spouse of the Member consents in
                  writing to such rejection; (B) such rejection designates a
                  form of benefit payment which may not be changed without
                  written spousal consent (or the consent of the Spouse
                  expressly permits designations by the Member without any
                  requirement of further consent by the Spouse); and (C) the
                  Spouse's consent acknowledges the financial consequences of
                  such consent and designation and is witnessed by a Plan
                  representative or a notary public. Such spousal consent shall
                  not be required if the Member establishes to the satisfaction
                  of the Committee that such consent may not be obtained because
                  there is no Spouse, because the Spouse cannot be located or
                  because of such other circumstances as the Secretary of the
                  Treasury may prescribe by regulation. Such rejection must be
                  filed during the "election period" described in Section
                  4.8(a)(3). If the Member has filed a specific written
                  rejection of such automatic election, he may revoke such
                  rejection at any time during the "election period" described
                  in Section 4.8(a)(3) by executing a specific revocation
                  thereof on a form approved by the Committee and filing it with
                  the Committee. Further, a subsequent specific written
                  rejection of the automatic election may then be made in
                  accordance with the preceding provisions of this Section
                  4.8(a)(2).

         (3)      For purposes of this Section 4.8(a), the Member's "election
                  period" shall be the 90-day period ending on his Annuity
                  Starting Date. The Committee shall provide (or cause to be
                  provided) to each Member a written explanation regarding the
                  election and rejection of the Automatic Joint and Surviving
                  Spouse Annuity. Such written explanation shall include the
                  information as required by Code Section 417 relating to
                  qualified joint and survivor annuities and, except as provided
                  in the following sentence, shall be provided no less than 30
                  days and no


                                       25
<PAGE>


                  more than 90 days prior to the Annuity Starting Date or at
                  such times as required by such regulations as currently in
                  effect. The Annuity Starting Date for a distribution in a form
                  other than an Automatic Joint and Surviving Spouse Annuity may
                  be less than 30 days (but not less than 8 days) after the
                  receipt of the written explanation described above, PROVIDED
                  THAT: (A) the Member has been provided with information that
                  clearly indicates that the Member has been given at least 30
                  days to consider whether to waive the Automatic Joint and
                  Surviving Spouse Annuity; (B) the Member is permitted to
                  revoke any affirmative distribution election not later than
                  the later of the Annuity Starting Date or the eighth day after
                  the day the explanation is provided to the Member; and (C) the
                  Annuity Starting Date is a date after the date that the
                  written explanation was provided to the Member.

         (4)      For purposes of this Section 4.8, a Member shall be considered
                  to be a "married Member" if he has a Spouse on the Member's
                  Annuity Starting Date. If the Spouse becomes divorced from the
                  Member after his benefits commence, the Automatic Joint and
                  Surviving Spouse Annuity shall still be payable to the
                  divorced former Spouse, except as otherwise provided in the
                  divorce decree.

(b)      AMOUNT OF BENEFITS.

         (1)      For a Member who is deemed to have made the automatic election
                  pursuant to this Section 4.8 [and who does not reject it as
                  provided in Section 4.8(a)(2)], the reduced amount of his
                  monthly Retirement Benefit referred to in Section 4.8(a) shall
                  be the Actuarial Equivalent of the Retirement Benefit
                  otherwise payable to such Member under Section 4.1, 4.2, 4.3,
                  4.4 or 4.5, based on the Member's age and his Spouse's age as
                  of the Member's and Spouse's nearest birthday prior to the
                  Annuity Starting Date of his Retirement Benefit, after giving
                  effect to the increased costs of the automatic election under
                  this Section 4.8.

         (2)      The surviving Spouse benefit payable to the surviving Spouse
                  of a Member who is deemed to have made an automatic election
                  pursuant to this Section 4.8 and who dies after such election
                  becomes effective shall be a monthly benefit of 50 percent of
                  the reduced amount of such Member's monthly Retirement Benefit
                  as determined in Section 4.8(b)(1).

(c)      COMMENCEMENT AND DURATION. The monthly surviving Spouse benefit shall
         be payable to the surviving Spouse for life, beginning as of the first
         day of the calendar month coincident with or next following the
         Member's death.

4.9      NORMAL AND OPTIONAL METHODS OF BENEFIT PAYMENTS

(a)      NORMAL FORM FOR UNMARRIED MEMBERS. In the case of an unmarried Member
         who is not subject to the automatic election under Section 4.8, the
         normal form of benefit payment of the monthly Retirement Benefit
         payable under Section 4.1, 4.2, 4.3, 4.4 or 4.5 shall be a single life
         annuity option, so the Member would receive a monthly payment for


                                       26
<PAGE>


         the remainder of his lifetime or until payment is suspended pursuant to
         Section 5.3. Such unmarried Member may elect to receive payment of the
         monthly Retirement Benefit payable to him in one of the optional forms
         of benefit payment described in Section 4.9(c). To make such election,
         such unmarried Member must file a specific written rejection with the
         Committee (on a form approved by the Committee) of the normal form of
         benefit payment applicable to him and elect such optional form of
         benefit payment within the 90-day period ending on his Annuity Starting
         Date ("election period"). If the unmarried Member has filed a specific
         written rejection of such normal form of benefit payment, he may revoke
         such rejection at any time during such election period by executing a
         specific revocation thereof on a form approved by the Committee.
         Further, a subsequent specific written rejection of the normal form of
         benefit payment applicable to the unmarried Member may then be made in
         accordance with the preceding provisions of this Section 4.9(a).

(b)      NORMAL FORM FOR MARRIED MEMBERS. In the case of a married Member who is
         subject to the automatic election under Section 4.8, the normal form of
         benefit payment of the monthly Retirement Benefit payable under Section
         4.1, 4.2, 4.3, 4.4 or 4.5 shall be the automatic form of benefit
         payment described in Section 4.8. A married Member who has rejected the
         automatic election of the Automatic Joint and Surviving Spouse Annuity
         as provided in Section 4.8 may elect to receive payment of the monthly
         Retirement Benefit payable to him in one of the optional forms of
         benefit payment described in Section 4.9(c). The rejection of the
         Automatic Joint and Surviving Spouse Annuity and the election of such
         optional form of benefit payment shall be made in accordance with the
         provisions of Section 4.8 and the applicable provisions of this Section
         4.9.

(c)      OPTIONAL FORMS OF BENEFIT. The election of an optional form of benefit
         payment shall be made in writing on a form approved by the Committee
         and, to the extent required, with spousal consent in the manner
         provided in Section 4.8. Such election shall be considered made as of
         the date on which the application is received by the Committee. The
         option shall not become effective until the Annuity Starting Date for
         the payment of the Member's monthly Retirement Benefit under the
         option. After the election has been made by such Member, and prior to
         the effective date of the option, it may be canceled by the Member at
         any time. A new option may be elected to replace the canceled option,
         subject to the option becoming effective on the Annuity Starting Date
         and subject to Section 4.8. After the effective date of the option, it
         may not be canceled by such Member, but it shall be automatically
         canceled if such Member (or his contingent annuitant under option 2)
         dies before the effective date of the option. If the contingent
         annuitant dies before the effective date, then the Member shall be
         permitted to select another contingent annuitant or optional form of
         benefit, subject to applicable spousal consent requirements. Any
         optional form of benefit must be the Actuarial Equivalent of the
         benefit payable to the Member as a single life annuity.


                                       27
<PAGE>


         The optional forms of benefit payment provided under this Section 4.9
are as follows:

         (1)      SINGLE LIFE ANNUITY OPTION. A Member may elect a monthly
                  Retirement Benefit payable for the life of the Member, with no
                  further payments made after his death.

         (2)      JOINT AND SURVIVOR BENEFIT OPTION. A Member may elect an
                  actuarially reduced monthly Retirement Benefit payable for his
                  lifetime with all, two-thirds or one-half of the reduced
                  amount of monthly benefit continued after his death to his
                  designated Beneficiary as a contingent annuitant. A Member
                  electing this option must designate one person individually as
                  Beneficiary to whom the survivor's benefit under this option
                  is to be paid upon the Member's death. Such designation shall
                  be made in accordance with Section 4.8, if applicable. Each
                  such designation shall be made on a form provided by the
                  Committee, shall be effective only when filed in writing with
                  the Committee prior to the death of the Member and shall
                  revoke all prior designations of a Beneficiary. Upon the death
                  of the designated Beneficiary, no alternate Beneficiary can be
                  substituted unless the Member executes a new election prior to
                  his Annuity Starting Date. All benefit payments shall cease
                  under this option upon the death of the Member and his
                  surviving Spouse or other designated Beneficiary.

         (3)      LUMP SUM OPTION. A Member may elect to receive a single sum in
                  the amount of the Actuarial Equivalent value of his total
                  accrued Retirement Benefit earned as a Salaried Employee
                  and/or as a Nonsalaried Employee if such total value is less
                  than or equal to $7,500 ($3,500 prior to January 1, 1997).
                  Such lump sum payment(s) shall be in complete satisfaction of
                  the Retirement Benefit earned as a Salaried Employee and/or as
                  a Nonsalaried Employee, whichever is applicable.

         In no event shall any optional method of benefit payment reduce the
         value of the Retirement Benefit otherwise payable to the Member by an
         amount greater than the amount permitted under Section 5.2(h). In
         addition, benefit payments with respect to a Member's Retirement
         Benefit shall be subject to the provisions of Section 5.2.

4.10     ADJUSTMENT FOR IN-SERVICE PAYMENTS

In the case of a Participant whose benefit payments commence prior to the date
of his termination of employment as an Employee pursuant to Section 5.2, amounts
payable after the date of his termination of employment as an Employee shall be
reduced to reflect the Actuarial Equivalent value of amounts paid prior to such
termination of employment.

4.11     MAXIMUM ANNUAL BENEFITS

(a)      Notwithstanding any other provisions of the Plan to the contrary, in no
         event may the annual benefit provided under the Plan (together with
         that provided by all other defined benefit plans of the Employers or
         any Affiliate) for any Member for a "Limitation Year," which shall be
         the Plan Year, exceed the lesser of--


                                       28
<PAGE>


         (1)      the dollar limit set forth in Code Section 415(b)(1)(A) [as
                  adjusted by Code Section 415(d)] or

         (2)      100 percent of the Member's average annual Compensation over
                  the three consecutive years of active participation during
                  which he had the greatest aggregate Compensation from the
                  Employers and all Affiliates.

         If the Member has completed less than ten years of participation, the
         limitation in Section 4.11(a)(1) shall be multiplied by a fraction, the
         numerator of which is the Member's number of years (or part thereof) of
         participation in the Plan, and the denominator of which is ten. If the
         Member has completed less than ten years of Vesting Service, the
         limitation in Section 4.11(a)(2), Code Section 415(b)(4) and Section
         4.11(d) shall be adjusted by multiplying such amounts by a fraction,
         the numerator of which is the Member's number of years of Vesting
         Service (or part thereof), and the denominator of which is ten. In no
         event shall the adjustments in the two preceding sentences reduce the
         limitations in Section 4.1l(a)(1) and (2), Code Section 415(b)(4) and
         Section 4.11(d) to an amount less than one-tenth of the applicable
         limitation (determined without regard to such adjustments).

(b)      The provisions of this Section 4.11(b) are effective beginning January
         1, 1997.

         The maximum benefit permitted under Section 4.11(a) shall be in the
         form of a single life annuity (with no ancillary benefits) under a plan
         to which Employees do not contribute and under which no rollover
         contributions are made. If the form of retirement benefits payable to a
         Member is other than a single life annuity or a joint and survivor
         annuity in which the contingent annuitant is the Member's Spouse, the
         retirement benefit for that form of payment shall be adjusted to an
         actuarially equivalent straight life annuity before the application of
         the maximum limitation and, so modified, shall be subject to the
         limitation. The actuarial equivalent shall be the greater of (a) the
         equivalent amount computed using the factors used in determining the
         Actuarial Equivalent for early retirement benefits under the Plan as
         described in Section 4.3 or (b) the equivalent amount computed using 5
         percent interest and the mortality assumptions described in Section
         2.1(a)(2). However, for purposes of adjusting any retirement benefit
         amount that is subject to Section 417(e)(3) of the Code, the interest
         rate described in Section 2.1(a)(1) shall be substituted for the 5
         percent interest rate in the preceding sentence.

         If the retirement benefit of a Member begins before a Member's Social
         Security Retirement Age, but on or after his sixty-second birthday, the
         dollar limitation shall be determined as follows: (a) If a Member's
         Social Security Retirement Age is 65, the dollar limitation for the
         retirement benefit commencing on or after age 62 is determined by
         reducing the dollar limitation by 5/9 of one percent for each month in
         which benefits commence before the month in which the Member attains
         age 65; (b) if a Member's Social Security Retirement Age is greater
         than 65, the dollar limitation for benefits commencing on or after age
         62 is determined by reducing the dollar limitation by 5/9 of one
         percent for each of the first 36 months and 5/12 of one percent for
         each of the


                                       29
<PAGE>


         additional months (up to 24 months) in which the retirement benefit
         commences before the month of the Member's Social Security Retirement
         Age.

         If the retirement benefit of a Member begins before a Member's
         sixty-second birthday, the dollar limitation shall be the Actuarial
         Equivalent of the retirement benefit beginning at age 62, as determined
         above, reduced for each month in which benefits commence before the
         month in which the Member attains age 62. The Actuarial Equivalent
         shall be the lesser of (a) the equivalent amount computed using the
         factors used in determining the Actuarial Equivalent for early
         retirement benefits under the Plan as described in Section 4.3 and (b)
         the equivalent amount computed using 5 percent interest and the
         mortality assumptions described in Section 2.1(a)(2). Any decrease in
         the dollar limitation determined in accordance with this provision
         shall not reflect the mortality decrement to the extent that benefits
         will not be forfeited upon the death of the Member.

         If the retirement benefit of a Member begins after the Member's Social
         Security Retirement Age, the dollar limitation shall be adjusted so
         that it is the Actuarial Equivalent of an annual benefit of such dollar
         limitation beginning at the Member's Social Security Retirement Age.
         The Actuarial Equivalent shall be the lesser of (a) the equivalent
         amount computed using the factors used in determining the Actuarial
         Equivalent as described in Section 2.1(a)(1) and (2) and (b) the
         equivalent amount computed using 5 percent interest and the mortality
         assumptions described in Section 2.1(a)(2).

(c)      The provisions of this Section 4.11(c) are effective prior to January
         1, 1997, and shall be replaced by Section 4.11(b) as of January 1,
         1997.

         The maximum benefit permitted under Section 4.11(a) shall be in the
         form of a single life annuity (with no ancillary benefits) under a plan
         to which Employees do not contribute and under which no rollover
         contributions are made. If the form of retirement benefits payable to a
         Member is other than a single life annuity or a joint and survivor
         annuity in which the contingent annuitant is the Member's Spouse, the
         Member's annual retirement benefit shall not exceed the Actuarial
         Equivalent (using an interest rate not less than 5 percent) of the
         maximum benefit permitted under Section 4.11(a) payable in the form of
         a single life annuity.

         If the retirement benefit of a Member commences before the Member's
         Social Security Retirement Age, the amount in Section 4.11(a)(1) shall
         be adjusted so that it is the Actuarial Equivalent (using an interest
         rate not less than 5 percent) of an annual benefit in such amount,
         beginning at the Social Security Retirement Age. The adjustment
         provided for in the preceding sentence shall be made in the following
         manner:

         (1)      the dollar limitation for benefits commencing on or after age
                  62 is determined by reducing the defined benefit dollar
                  limitation by 5/9 of 1 percent for each of the first 36 months
                  and 5/12 of 1 percent for any additional months (up to 24
                  months) by which the benefits commence before the month in
                  which the Member attains his Social Security Retirement Age;
                  and


                                       30
<PAGE>


         (2)      if the annual benefit of a Member commences before age 62, the
                  defined benefit dollar limitation shall be the Actuarial
                  Equivalent of an annual benefit beginning at age 62 as
                  determined above, reduced for each month by which benefits
                  commence before the month in which the Member attains age 62;
                  provided, however, that the mortality decrement shall not be
                  applied to the extent that benefits will not be forfeited upon
                  the death of the Member.

If the retirement benefit of a Member commences after the Member's Social
Security Retirement Age, the amount in Section 4.11(a)(1) shall be adjusted so
that it is the Actuarial Equivalent (using an interest rate no greater than 5
percent) of an annual benefit in such amount, beginning at the Social Security
Retirement Age.

(d)      If a Member's annual benefit does not exceed $10,000 and if he did not
         participate in any defined contribution plan maintained by the
         Employers or any Affiliate, the limitation described in Section 4.11(a)
         shall not apply.

(e)      The amount in Section 4.11(a)(1) and the amount in Section 4.11(a)(2)
         for a Member who has terminated his employment with the Employers and
         Affiliates shall be automatically adjusted annually for increases in
         the cost of living as provided in Code Section 415(d).

(f)      In applying the limitations on benefits under this Section 4.11, the
         qualified plans of any employer that is an Affiliate shall be
         aggregated with the Plan or any other plan of the Employers or an
         Affiliate if the employer would be an Affiliate if the phrase "at least
         80 percent" in Code Section 1563(a)(1), in applying such section to
         Code Sections 414(b) or 414(c), were replaced with "more than 50
         percent."

(g)      Effective for Limitation Years beginning prior to January 1, 2000, in
         the event that any Member is a participant in a defined contribution
         plan or plans of the Employers or any Affiliate, the sum of the
         "defined benefit plan fraction" and the "defined contribution plan
         fraction" [as such terms are defined in Code Section 415(e)] for any
         Limitation Year with respect to such Member shall not exceed one. If
         such sum would otherwise exceed one, then the Member's Retirement
         Benefit under the Plan shall be reduced to comply with the requirements
         of this Section 4.11(g), unless such reduction is provided for under
         the terms of such defined contribution plan or plans. It is intended to
         reduce the benefits payable under any defined benefit plan to the
         extent possible, if necessary, to prevent the sum of the defined
         benefit plan fraction and the defined contribution plan fraction from
         exceeding 1.0 before reducing contributions to any defined contribution
         plan. In applying the foregoing provisions, the transition rules of
         Section 1106(i)(3), (4) and (6) of the Tax Reform Act of 1986 shall be
         applicable.

4.12     PLAN IN EFFECT AT TERMINATION OF EMPLOYMENT CONTROLS

The terms and provisions of the Plan shall not apply in determining the benefits
payable to any Employee whose employment relationship as an Employee was severed
(for any reason) prior to


                                       31
<PAGE>


January 1, 1997. In such event, the terms and provisions of the Plan in effect
on the date when his employment relationship as an Employee was terminated shall
apply.

4.13 OPTIONAL DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS

(a)      IN GENERAL. Notwithstanding any provision of the Plan to the contrary,
         a "Distributee" may elect to have any portion of an "Eligible Rollover
         Distribution" paid directly to an "Eligible Retirement Plan" specified
         by the "Distributee" in a "Direct Rollover" to the extent permitted by
         Code Section 401(a)(31). Terms in quotation marks are defined in
         Section 4.13(b) below.

(b)      DEFINITIONS.

         (1)      "DIRECT ROLLOVER" means a payment by the Plan to the Eligible
                  Retirement Plan specified by the Distributee.

         (2)      "DISTRIBUTEE" means each of the following persons who may
                  elect a Direct Rollover of an Eligible Rollover Distribution
                  of the Member's Retirement Benefit:

                  (A)      the Member;

                  (B)      the Member's Beneficiary, if the Beneficiary was
                           married to the Member on the date of his death; and

                  (C)      an alternate payee under a qualified domestic
                           relations order, as defined in Code Section 414(p),
                           if that person is the Spouse or former Spouse of the
                           Member.

         (3)      "ELIGIBLE RETIREMENT PLAN" means an individual retirement
                  account described in Code Section 408(a), an individual
                  retirement annuity described in Code Section 408(b), an
                  annuity plan described in Code Section 403(a) or a qualified
                  trust described in Code Section 401(a) that accepts the
                  Distributee's Eligible Rollover Distribution. However, in the
                  case of an Eligible Rollover Distribution to the surviving
                  Spouse, an "Eligible Retirement Plan" is an individual
                  retirement account or an individual retirement annuity, as
                  such terms are defined in the preceding sentence.

         (4)      "ELIGIBLE ROLLOVER DISTRIBUTION" means any distribution of all
                  or any portion of the Retirement Benefit payable to the
                  Distributee, except that an "Eligible Rollover Distribution"
                  does not include:

                  (A)      any distribution that is one of a series of
                           substantially equal periodic payments (not less
                           frequently than annually) made for the life (or life
                           expectancy) of the Distributee or the joint lives (or
                           joint life expectancies)


                                       32
<PAGE>


                           of the Distributee or the Distributee's designated
                           Beneficiary, or for a specified period of 10 years or
                           more;

                  (B)      any distribution to the extent such distribution is
                           required under Code Section 401(a)(9);

                  (C)      the portion of any distribution that is not
                           includable in gross income (determined without regard
                           to the exclusion for net unrealized appreciation with
                           respect to employer securities); and

                  (D)      any other amounts which are not considered "Eligible
                           Rollover Distributions" under Code Section
                           401(a)(31).

(c)      No amount shall be directly rolled over pursuant to this Section 4.13
         unless and until it would otherwise be distributed to the Distributee
         and all consents and written elections required to make the
         distribution have been obtained. Nothing in this Section 4.13 shall be
         construed to permit a Distributee to select more than one of the
         optional forms of benefit described in Section 4.9 or elsewhere in the
         Plan.

(d)      The Committee shall provide notice to each Distributee who will receive
         an Eligible Rollover Distribution of the Distributee's right to elect a
         Direct Rollover in accordance with Code Section 401(a)(31). The
         Committee shall provide such notice at the time and in the manner
         required by regulations.

(e)      The Distributee shall notify the Committee in writing by such deadline
         as the Committee shall prescribe whether or not he wishes to have any
         part of the Eligible Rollover Distribution directly rolled over. If the
         Distributee fails to elect a Direct Rollover by the deadline
         established by the Committee, then the entire amount of the Eligible
         Rollover Distribution shall be distributed directly to the Distributee.

(f)      A Distributee may elect that either of the following amounts shall be
         directly rolled over:

         (1)      the entire amount of the Eligible Rollover Distribution; or

         (2)      such portion of the Eligible Rollover Distribution as the
                  Distributee specifies (in accordance with rules established by
                  the Committee).

(g)      The Distributee may only request a Direct Rollover to one Eligible
         Retirement Plan.

(h)      No amount will be directly rolled over pursuant to this Section 4.13
         unless the Distributee provides the Committee, by such deadline as the
         Committee shall prescribe, such information as it shall require--

         (1)      to determine that the amount directly rolled over will be
                  received by an Eligible Retirement Plan that will accept the
                  Direct Rollover; and


                                       33
<PAGE>


         (2)      to make the Direct Rollover and make such reports and keep
                  such records as are required under applicable law. The
                  Committee may rely on all such information provided by the
                  Distributee and shall not be required to verify any such
                  information.

(i)      The Committee shall select the manner in which to make the Direct
         Rollover.

(j)      Any amount directly rolled over in accordance with this Section 4.13
         shall be a distribution from this Plan and shall discharge any
         liability to the Distributee under this Plan to the same extent as a
         payment directly to the Distributee.

(k)      This Plan shall not accept Eligible Rollover Distributions from any
         plan.

4.14     PAYMENT OF SMALL AMOUNTS

Notwithstanding the foregoing provisions of this Article IV, effective as of
January 1, 1997, if the Actuarial Equivalent value of all benefits earned as a
Salaried Employee and a Nonsalaried Employee payable under the Plan (including a
benefit payable in a form as described in Sections 4.7 or 4.8) is less than or
equal to $3,500, such benefit shall be paid in a single sum payment as soon as
administratively practicable following the Member's termination of service. For
purposes of this Section 4.14, the lump sum present value shall be computed
according to the interest rate and mortality assumptions used to calculate the
Actuarial Equivalent. Effective on and after January 1, 2002, "$5,000" shall be
substituted for "$3,500" in the first sentence of this Section 4.14.

4.15     SPECIAL COMMENCEMENT RULE FOR CERTAIN FORMER PARTICIPANTS

(a)      ELIGIBILITY. Notwithstanding any Plan provisions to the contrary, any
         Former Participant who is not in current employment on or after January
         1, 1997, who is entitled to receive a Retirement Benefit under the Plan
         or Prior Plans as in effect on his date of termination of employment as
         an Employee and who is not otherwise eligible to commence distribution
         of his Retirement Benefits under such plan before January 1, 1997 shall
         be eligible to receive an immediate reduced Vested Retirement Benefit
         as described in this Section 4.15.

(b)      AMOUNT. A Former Participant who has terminated his employment as an
         Employee and satisfies the other eligibility requirements described in
         Section 4.15(a) shall be entitled to elect to receive a Vested
         Retirement Benefit commencing as provided in Section 4.15(c).

         Notwithstanding any provisions of the Plan to the contrary, such Vested
         Retirement Benefit shall be equal to an immediate reduced Vested
         Retirement Benefit commencing as provided in Section 4.15(c) computed
         as of the first day of the month coincident with or next following
         attainment of his Normal Retirement Age in the manner set forth in this
         Plan or the Prior Plans, whichever is applicable, based on the factors
         and the provisions of said plan, provided that he has a vested interest
         as determined under the terms of said plan and further adjusted as
         provided below.


                                       34
<PAGE>


         Notwithstanding any provisions of the Plan to the contrary, the
         immediate reduced Vested Retirement Benefit described in this Section
         4.15 shall be payable only in the following forms:

         (1)      subject to the consent requirements referenced in Section
                  4.8(a) or (b), a lump sum distribution equal to the Actuarial
                  Equivalent as of the Annuity Starting Date of the amount
                  determined in the preceding paragraph of this Section 4.15(b).
                  Any Former Participant who receives such a distribution shall
                  have no further interest in the Plan; or

         (2)      an immediate annuity payable in the Former Participant's
                  normal form of benefit payment as described in Section 4.8(a)
                  or (b), whichever is applicable. Such immediate annuity shall
                  be actuarially equivalent to the lump sum distribution as
                  calculated above in Section 4.15(b)(1).

         The other optional forms of benefit described in Section 4.8(c) shall
         not be available for any distribution under this Section 4.15.

(c)      COMMENCEMENT. The Committee shall notify each Former Participant who is
         eligible to elect to receive a distribution under this Section 4.15 by
         sending a notice to his last known address. An application for
         commencement must be made within the election period determined in
         accordance with the administrative procedures established by the
         Committee. The distribution shall commence as soon as administratively
         practicable following the receipt of his completed consent form, but in
         no event prior to January 1, 1997.

         If the Former Participant does not file a timely consent to a current
         distribution in accordance with this Section 4.15, then distribution of
         his Retirement Benefit shall not commence prior to the date otherwise
         provided in the Prior Plan.


                                       35
<PAGE>


ARTICLE V.  COMMENCEMENT OF BENEFIT PAYMENTS AND DURATION

5.1      COMMENCEMENT AND DURATION

(a)      The monthly Retirement Benefit payments to which an eligible Member is
         entitled under Section 4.1, 4.2, 4.3, 4.4 or 4.5 shall begin as
         described below:

         (1)      NORMAL AND LATE RETIREMENT BENEFITS. A Member entitled to a
                  Retirement Benefit under Section 4.1 or 4.2 shall start
                  receiving such Benefit as of the retired Member's Normal
                  Retirement Date (in the case of a Normal Retirement Benefit),
                  the retired Member's Late Retirement Date (in the case of a
                  Late Retirement Benefit) or on the first day of the month
                  following the month that he is employed at a rate at which he
                  will work fewer than eight days during any calendar month. A
                  Member who continues in employment as an Employee after
                  attaining his Normal Retirement Age at a greater rate shall
                  have his Normal Retirement Benefit or his Late Retirement
                  Benefit (as the case may be) suspended in the manner described
                  in Section 5.4, and he shall receive the notice described in
                  Section 5.5.

         (2)      EARLY RETIREMENT BENEFITS. A Member entitled to a Retirement
                  Benefit under Section 4.3 shall start receiving such
                  Retirement Benefit as of the retired Member's Early Retirement
                  Date if he has given the Committee sufficient written notice
                  of his intention to take early retirement. If the Member does
                  not elect immediate distribution, then he may elect to defer
                  commencement until a later date which is not later than his
                  Normal Retirement Date, provided that he gives the Committee
                  not more than 90 days' notice of such later commencement date.

         (3)      DISABILITY RETIREMENT BENEFITS. A Member entitled to a
                  Retirement Benefit under Section 4.4 shall start receiving
                  such Retirement Benefit as of the terminated Member's Normal
                  Retirement Date with respect to such benefit earned as a
                  Salaried Participant and as of the terminated Member's
                  Disability Retirement Date with respect to such benefit earned
                  as a Nonsalaried Participant.

         (4)      VESTED RETIREMENT BENEFITS. A Member entitled to a Retirement
                  Benefit under Section 4.5 shall start receiving such
                  Retirement Benefit as of the terminated Member's Vested
                  Retirement Date. Application for commencement prior to his
                  Normal Retirement Date must be made at least 30 days but not
                  more than 90 days prior to the date he elects to have
                  distribution commence. Notwithstanding any provisions to the
                  contrary, if the Member is under age fifty-five on the date of
                  his termination of employment as an Employee and wants to
                  receive an immediate reduced Vested Retirement Benefit, his
                  application for commencement must be made within the election
                  period determined in accordance with the administrative
                  procedures established by the Committee and the distribution
                  shall commence as soon as administratively practicable
                  following his termination of employment as an Employee. If the
                  Member does not file a timely consent to distribution, then


                                       36
<PAGE>


                  distribution shall not commence prior to his Normal Retirement
                  Date unless he elects to receive a reduced benefit following
                  his fifty-fifth birthday.

         (5)      SALARIED AND NONSALARIED BENEFITS. If a Member is entitled to
                  benefits as a Salaried Employee and as a Nonsalaried Employee,
                  then the form of benefit payment, commencement date and the
                  duration of each such Retirement Benefit shall be determined
                  independently, except as otherwise expressly provided. No
                  Retirement Benefit can begin until the Participant ceases to
                  be an Employee.

         (6)      PAYMENT OF SMALL AMOUNTS. Notwithstanding any Plan provisions
                  to the contrary, if the Actuarial Equivalent value of a
                  Member's total benefit earned as a Salaried Employee and as a
                  Nonsalaried Employee payable under the Plan (including a
                  benefit payable in a form as described in Sections 4.8 or 4.9)
                  is less than or equal to $3,500, such benefit shall
                  automatically be distributed as provided under Section 4.14;
                  provided, however, that prior to January 1, 1997, the
                  distribution shall not be automatic but the Member may elect
                  to have such benefit paid to him in a single lump sum payment
                  as soon as administratively practicable following such
                  Member's termination of employment as an Employee. Effective
                  on and after _______________, "$5,000" shall be substituted
                  for $3,500" in the preceding sentence. For purposes of this
                  Section 5.1(a), the lump sum present value shall be computed
                  according to the interest rate and mortality assumptions used
                  to calculate the Actuarial Equivalent.

(b)      Notwithstanding the provisions of Section 5.1(a), if the value of a
         Member's total nonforfeitable Retirement Benefit earned as a Salaried
         Employee and as a Nonsalaried Employee exceeds $3,500, then payment of
         the Member's Retirement Benefit shall not commence at any time before
         the Member attains his Normal Retirement Age without his written
         consent (or where the Member has died and a Spouse's benefit is to be
         paid to his surviving Spouse, the written consent of such Spouse).
         Effective on and after ________, "$5,000" shall be substituted for
         $3,500" in the preceding sentence.

(c)      Unless the Member otherwise elects, the commencement of a Member's
         Retirement Benefit payments shall begin not later than the sixtieth day
         after the latest to close of the Plan Year in which--

         (1)      the Member attains or would have attained his Normal
                  Retirement Age;

         (2)      the tenth anniversary of the year in which the Member
                  commenced participation in the Plan occurs; or

         (3)      the Member's termination of employment as an Employee occurs.

5.2 REQUIRED AND MINIMUM DISTRIBUTION RULES

Notwithstanding any of the preceding provisions of this Article V, the following
provisions shall apply to the payment of Retirement Benefits:


                                       37
<PAGE>


(a)      In no event may the payment of a Member's Retirement Benefit commence
         later than the April 1 of the calendar year following the calendar year
         in which the Member attains age 70 1/2; provided, however, that in the
         case of a Member who attained age 70 1/2prior to January 1, 1988, and
         who is not a "5-percent owner" [as defined in Code Section 416(i)(1)(B)
         and as further described under the regulations under Code Section
         401(a)(9)], such payment shall be required to be commenced on or before
         the April 1 of the calendar year following the calendar year in which
         the Member terminates employment as an Employee or, if earlier, April 1
         of the calendar year following the calendar year in which the Member
         becomes such a "5-percent owner"; and, provided further, that in the
         case of a Member who attained age 70 1/2during the 1988 calendar year
         and who is not such a "5-percent owner," such payment shall be required
         to commence by no later than April 1, 1990. For purposes of this
         Section 5.2(a), a "5-percent owner" means any Employee who was a
         "5-percent owner" at any time during the five-Plan-Year period ending
         in the calendar year in which the Employee attains age 70 1/2or in any
         subsequent Plan Year.

         Notwithstanding the foregoing, effective for participants who attain
         age 70 1/2 on and after January 1, 2002, in no event may the payment of
         a Member's Retirement Benefit (provided the member is not a "5-percent
         owner", as defined above) commence later than the later of (i) the
         April 1 of the calendar year following the calendar year in which the
         Member attains age 70 1/2; or (ii) the April 1 of the calendar year
         following the calendar year in which the participant retires. If a
         Member retires in a calendar year after the calendar year in which the
         Member attains age 70 1/2, the Member's retirement benefit shall be
         actuarially increased in accordance with Notice 97-75, or other
         applicable guidance, to take into account the period after age 70 1/2
         in which the Member was not receiving any benefits under the Plan.

(b)      A Member's Retirement Benefit shall be distributed by a method of
         benefit payment beginning not later than the date required pursuant to
         Section 5.2(a), over the life of the Member or over the lives of such
         Member and a designated Beneficiary or surviving Spouse or within or
         over a period not extending beyond the life expectancy of such Member
         or the life expectancy of such Member and a designated Beneficiary or
         surviving Spouse.

(c)      If the payment of a Member's Retirement Benefit has begun in accordance
         with Section 5.2(a) and the Member dies before his entire interest has
         been paid to him, the remaining portion of the Member's Retirement
         Benefit shall be paid at least as rapidly as under the method of
         benefit payment being used under Section 5.2(b) as of the date of his
         death.

(d)      If a Member dies prior to the commencement of the payment of his
         Retirement Benefit, any survivor benefit paid with respect to the
         Member's Retirement Benefit shall be paid within five years after the
         death of such Member, except as permitted under Sections 5.2(e) and
         (f).

(e)      If--


                                       38
<PAGE>


         (1)      any portion of the Member's Retirement Benefit is payable to
                  his surviving Spouse;

         (2)      such portion is to be paid over the life of such surviving
                  Spouse or within or over a period not extending beyond the
                  life expectancy of the surviving Spouse; and

         (3)      such payments begin not later than one year after the date of
                  the Member's death, or such later date as the Secretary of the
                  Treasury may by regulations prescribe, the portion referred to
                  in Section 5.2(e)(1) shall be treated as distributed within
                  the time required under Section 5.2(d).

(f)      The date on which payments are required to begin under Section
         5.2(e)(3) shall not be earlier than the date on which the Member would
         have attained age 70-1/2.

(g)      In addition to the foregoing provisions of this Section 5.2, all
         distributions of or with respect to any Retirement Benefit shall be
         made in accordance with Code Section 401(a)(9) (including the
         regulations thereunder), and the provisions of the Plan relating to the
         payment of such distributions shall be interpreted and applied in
         accordance with Code Section 401(a)(9). The provisions of such Code
         Section 401(a)(9) shall control over any distribution option or other
         provision of the Plan which is inconsistent with the provisions of Code
         Section 401(a)(9).

(h)      In any case where the payment of a Member's Retirement Benefit is
         payable in a joint and survivor annuity form, the periodic survivor
         annuity payment payable to the Member's contingent annuitant shall not
         exceed the "applicable percentage" of the annuity payments payable to
         the Member. In addition, if the payment of a Member's Retirement
         Benefit is payable in either a life annuity or joint and survivor
         annuity form with an associated period certain guaranteed payment
         feature, the period certain shall not exceed the "applicable divisor"
         period determined by reference to the Member's age at the time his
         benefit payments commence. The foregoing limitations of this Section
         5.2(h) shall not apply if the contingent annuitant or designated
         Beneficiary of the Member is the Member's surviving Spouse. The
         "applicable percentage" and "applicable divisor" shall be the
         "applicable percentage" and "applicable divisor" determined pursuant to
         regulations issued by the Secretary of the Treasury under Code Section
         401(a)(9).

5.3 REEMPLOYMENT AFTER BENEFIT COMMENCEMENT BUT PRIOR TO NORMAL RETIREMENT AGE

If a Member whose Retirement Benefit has commenced is reemployed as an Eligible
Employee before attaining his Normal Retirement Age, his Retirement Benefit
payments shall be suspended and shall not be paid or accrue during the period of
such reemployment, his previous election of form of benefit payment shall be
canceled and he shall have the Vesting Service and Salaried and/or Nonsalaried
Benefit Service he had at the time of his retirement reinstated. Upon his
subsequent termination of employment as an Employee, his eligibility for a
Retirement Benefit and the amount of such Retirement Benefit shall be
determined, calculated and paid as if


                                       39
<PAGE>


he were then first retired based upon such reinstated Vesting Service and
Salaried and/or Nonsalaried Benefit Service, plus Vesting Service and Salaried
and/or Nonsalaried Benefit Service earned following the date of reemployment;
but such Retirement Benefit shall be actuarially reduced to account for any
Retirement Benefit payments he may have received prior to his reemployment. In
no event shall a Member's Retirement Benefit at his subsequent termination of
employment as an Employee be less than his Retirement Benefit at his prior
termination of employment. The foregoing notwithstanding, if a Member reemployed
as described above subsequently reaches his Normal Retirement Age and is
employed at a rate at which he will work fewer than eight days during any
calendar month, the Member may continue to receive any benefits which he is
receiving at the time of reemployment. Such payments shall continue every month
thereafter until his employment is at a rate at which he would work eight or
more days per calendar month, at which time his benefits shall be suspended
under the terms and conditions described in Section 5.4. The foregoing
notwithstanding, if an Employee is rehired on a "temporary" basis (i.e.,
expected duration of employment is three months or less), his Retirement Benefit
payments shall continue to be paid during such period of temporary employment.

5.4 REEMPLOYMENT AFTER BENEFIT COMMENCEMENT AND AFTER ATTAINING NORMAL
    RETIREMENT AGE

If a Member is reemployed as an Eligible Employee after attaining his Normal
Retirement Age at a rate at which he would work eight or more days in a calendar
month, his Retirement Benefit payments shall be suspended and shall not be paid
or accrue during the period of such reemployment, his previous election of form
of benefit payment shall be canceled and he shall have the Vesting Service and
Salaried and/or Nonsalaried Benefit Service he had at the time of his retirement
reinstated. Such suspension of benefits shall be done in accordance with
Department of Labor Regulation Section 2530.203-3 and shall include the notice
described in Section 5.5. Upon his subsequent termination of employment as an
Employee, his eligibility for a Retirement Benefit and the amount of such
Retirement Benefit shall be determined, calculated and paid as if he were then
first retired based upon such reinstated Vesting Service and Salaried and/or
Nonsalaried Benefit Service plus Vesting Service and Salaried and/or Nonsalaried
Benefit Service earned following the date of reemployment; but such Retirement
Benefit shall be actuarially reduced to account for any Retirement Benefit
payments he may have received prior to his reemployment. In no event shall a
Member's Retirement Benefit at subsequent termination of employment as an
Employee be less than his Retirement Benefit at his prior termination of
employment. If a Member is reemployed as an Employee after attaining his Normal
Retirement Age at a rate at which he would not work at least eight days during a
calendar month, he shall receive the same type and amount of Retirement Benefit
payment he was entitled to receive preceding his reemployment during such period
of reemployment. Such payments shall continue every month thereafter until his
employment is at a rate at which he would work eight days during a calendar
month, at which time his Retirement Benefit shall be suspended as described
above. The foregoing notwithstanding, if an Employee is rehired on a "temporary"
basis (i.e., expected duration of employment is three months or less), his
Retirement Benefit payments shall continue to be paid during such period of
temporary employment.


                                       40
<PAGE>


5.5      SUSPENSION OF BENEFITS NOTICE AND PROCEDURES

If an Employee's Retirement Benefit payments are to be suspended as a result of
his continued employment or reemployment, the Plan shall notify the Employee, by
personal delivery or first-class mail during the first calendar month in which
the Plan withholds payments, that his Retirement Benefit payments are suspended.
The notice shall contain--

(a)      a general description of the reasons why payments are suspended;

(b)      a general description of the Plan provisions relating to the suspension
         of benefits;

(c)      a copy of such Plan provisions;

(d)      a statement that a review of the suspension may be requested under the
         claims procedure found in the Plan;

(e)      if the Plan requires a benefit resumption notice, the procedure and
         forms; and

(f)      if the Plan requires verification by the Employee that his benefits
         should not be suspended, the procedure and forms for such verification.

The Plan shall adopt a procedure whereby an individual may request a
determination of whether specific contemplated employment will result in a
suspension of benefits.


                                       41
<PAGE>


ARTICLE VI.  PLAN ADMINISTRATION

6.1 APPOINTMENT OF COMMITTEE

The Sponsor shall be the "plan administrator" with respect to the Plan and a
"named fiduciary" with respect to the Plan and Trust Fund, as such terms are
defined under ERISA. The Board of Directors of the Sponsor shall appoint a plan
administration committee ("Committee") to administer the Plan and to handle the
day-to-day administrative responsibilities with respect to the Plan. The
Committee shall have all powers necessary to accomplish such purposes. The
Committee shall be composed of three or more members as the Board of Directors
may appoint from time to time, and such members shall hold office at the
pleasure of the Board of Directors. Each member or successor must signify
acceptance of this position in writing. Any member of the Committee may resign
at any time by delivering his written resignation to the Sponsor and to the
Chairman of the Committee to take effect on a date specified therein, or upon
delivery to the Sponsor, if no date is specified. Termination of employment of
an Employee who is a member of the Committee shall automatically constitute a
resignation. The Board of Directors may remove any member of the Committee with
or without cause by so notifying the member and the Chairman of the Committee in
writing to take effect not less than 30 days after delivery thereof, unless such
notice shall be waived. Vacancies on the Committee shall be filled by action of
the Sponsor. In the event no successor member is appointed, the remaining
member(s) or, if none remain, the Sponsor shall function as the Committee until
a new Committee has been appointed and has accepted such appointment.

6.2 COMPENSATION AND EXPENSES

(a)      A member of the Committee shall serve without compensation for services
         as such if he is receiving full-time pay as an Employee. Any other
         member of the Committee may receive compensation for services as a
         member. Any member of the Committee may receive reimbursement of
         expenses properly and actually incurred. Any such compensation or
         reimbursement shall be paid in accordance with the provisions of
         Section 6.2(b).

(b)      All expenses incident to the administration, termination or protection
         of the Plan and Trust including, but not limited to, fees of actuaries,
         accountants, premiums payable to the PBGC, counsel and other
         specialists and other costs of administering the Plan shall be paid by,
         and constitute a charge upon, the Trust Fund, except to the extent that
         such expenses, or any portion thereof, may have been paid by the
         Employer in its sole and absolute discretion.

6.3 MANNER OF ACTION

A majority of the members of the Committee at that time in office shall
constitute a quorum for the transaction of business. All resolutions adopted,
and other actions taken by the Committee at any meeting, shall be by the vote of
a majority of those present at any such meeting. Upon concurrence in writing of
a majority of the members at that time in office, action of the Committee may be
taken otherwise than at a meeting.


                                       42
<PAGE>


6.4 CHAIRMAN, SECRETARY AND EMPLOYMENT OF SPECIALISTS

The members of the Committee shall elect one of their number as Chairman and
shall elect a Secretary who is an employee of the Employer and may, but need
not, be a member of the Committee. They may authorize one or more of their
number or any agent to execute or deliver any instrument or instruments on their
behalf and may employ such counsel, auditors and other specialists; and such
clerical, medical, actuarial and other services as they may require in carrying
out the provisions of the Plan. Such expenses shall be paid in accordance with
the provisions of Section 6.2(b).

The Committee and the Employer shall be entitled to rely conclusively upon the
tables, valuations, certificates and reports furnished by an actuary or
accountant employed by the Committee or an insurer issuing life insurance
contracts under this Plan and/or upon opinions of counsel or other experts; and
such members, and each of them, shall be fully protected as to any action taken
or allowed by them in good faith and reliance upon any such tables, valuations,
certificates, reports or opinions; and all actions taken or allowed by them
shall be conclusive upon all persons having or claiming any interest under the
Plan.

6.5 DELEGATION OF RESPONSIBILITIES

The Committee may appoint one or more individuals and delegate such of its power
and duties as it deems desirable to any such individual, in which case, every
reference herein made to the Committee shall be deemed to mean or include the
individuals as to matters within their jurisdiction. Such individuals shall be
such officers or other Employees of the Employers and such other persons as the
Committee may appoint.

6.6 RECORDS

All resolutions, proceedings, acts and determinations of the Committee shall be
recorded by the Secretary thereof or under his supervision; and all such records
together with such documents and instruments as may be necessary for the
administration of the Plan shall be preserved in the custody of the Secretary or
his delegate(s).

6.7 RULES

Subject to the limitations contained in the Plan, the Committee shall be
empowered from time to time in its discretion to adopt bylaws and establish
rules for the conduct of its affairs and the exercise of the duties imposed upon
it under the Plan.


                                       43
<PAGE>


6.8 ADMINISTRATION

The Committee shall be responsible for the administration of the Plan. The
Committee shall have all such powers as may be necessary to carry out the
provisions of the Plan and may from time to time establish rules for the
administration of the Plan and the transaction of the Plan's business. In making
any such determination or rule, the Committee shall pursue uniform policies as
from time to time established by the Committee and shall not discriminate in
favor of or against any Member. The Committee shall have the exclusive right to
make any finding of fact necessary or appropriate for any purpose under the Plan
including, but not limited to, the determination of whether a Beneficiary or
Member is eligible for any benefit payable under the Plan and the amount of such
benefit. The Committee shall have sole and absolute discretion to interpret the
terms and provisions of the Plan and to determine any and all questions arising
under the Plan or in connection with the administration thereof, including,
without limitation, the right to remedy or resolve possible ambiguities,
inconsistencies or omissions by general rule or particular decision. The
Committee shall make, or cause to be made, such reports as are required by law.
To the extent permitted by law, all findings of fact, determinations,
interpretations and decisions of the Committee in respect of any matter or
question arising under the Plan shall be final, conclusive and binding upon all
persons having or claiming to have any interest or right under the Plan and
shall be given the maximum possible deference allowed by law. If challenged in
court, any decision of the Committee shall not be subject to DE NOVO review and
shall not be overturned unless proven to be arbitrary and capricious under the
evidence considered at the time of such decision.

6.9 APPEALS FROM DENIAL OF CLAIMS

If any claim for benefits under the Plan is wholly or partially denied, the
claimant shall be given notice in writing of such denial within a reasonable
period of time (not to exceed 90 days after receipt of the claim, or if special
circumstances require an extension of time, written notice of the extension
shall be furnished to the claimant and an additional 90 days will be considered
reasonable) setting forth the following information:

(a)      the specific reason or reasons for the denial;

(b)      specific reference to pertinent Plan provisions on which the denial is
         based;

(c)      a description of any additional material or information necessary for
         the claimant to perfect the claim and an explanation of why such
         material or information is necessary;

(d)      an explanation that a full and fair review by the Committee of the
         decision denying the claim may be requested by the claimant or his
         authorized representative by filing with the Committee, within 60 days
         after such notice has been received, a written request for such review;
         and

(e)      if such request is so filed, the claimant or his authorized
         representative may review pertinent documents and submit issues and
         comments in writing within the same 60-day period specified in Section
         6.9(d).


                                       44
<PAGE>


The decision of the Committee shall be made promptly, and not later than 60 days
after the Committee's receipt of the request for review, unless special
circumstances require an extension of time for processing, in which case, the
claimant shall be so notified and a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review.
The claimant shall be given a copy of the decision promptly. The decision shall
be in writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant and specific references to
the pertinent Plan provisions on which the decision is based.

6.10 NOTICE OF ADDRESS AND MISSING PERSONS

Each person entitled to benefits under the Plan must file with the Committee, in
writing, his post office address and each change of post office address. Any
communication, statement or notice addressed to such a person at his latest
reported post office address will be binding upon him for all purposes of the
Plan and neither the Committee nor the Employers or Trustee shall be obliged to
search for or ascertain his whereabouts. In the event that such person cannot be
located, after reasonable efforts to locate such person have been made, the
Committee may direct that such benefits and all further benefits with respect to
such person shall be discontinued, all liability for the payment thereof shall
terminate and such person's remaining accrued benefit under the Plan shall be
deemed a forfeiture; provided, however, that in the event of the subsequent
reappearance of such person prior to the termination of the Plan, the benefits
which were due and payable and which such person missed shall be paid in a
single sum without interest and the future benefits due such person shall be
reinstated in full.

6.11 APPLICATION FOR BENEFITS AND DATA

All persons claiming benefits under the Plan must make application and furnish
to the Committee or its designated agent, such documents, evidence, or
information as the Committee or its designated agent considers necessary or
desirable for the purpose of administering the Plan; and each such person must
furnish such information promptly and sign such documents as the Committee or
its designated agent may require before any benefits become payable under the
Plan.

6.12 INDEMNITY FOR LIABILITY

The Sponsor or any Employer may indemnify and hold harmless the members of the
Committee, members of the Board of Directors, any administrator and any other
person who is deemed to be a "fiduciary" under either statutory or common law
and who is also an Employee, officer or director of the Employer from and
against any damages, judgments, settlements, costs, charges or expenses incurred
in connection with the defense of any action, suit or proceeding to which any
such person may be a party or which may be threatened against any such person or
in connection with any appeal therefrom by virtue of any wrongful act or
omission in their respective capacities for the Plan; provided, however, that
notwithstanding anything to the contrary herein, the foregoing indemnification
shall extend and be effective only to the extent


                                       45
<PAGE>


that the same shall be valid and enforceable under all applicable laws. The
extent of such indemnification shall be expressed in a resolution by the Board
of Directors.

When making a determination or calculation, the Committee shall be entitled to
rely conclusively upon, and shall be fully protected by the Employer in any
action it may suffer in reliance upon, information furnished by the Employer.
The Employer and the Committee shall be entitled to rely upon all certificates
and reports furnished by any consultant and actuary and upon all opinions given
by legal counsel selected by the Employer and Committee.




                                       46
<PAGE>


ARTICLE VII. FINANCING

7.1 FUNDING

A Trustee shall be designated by the Sponsor, and a Trust Agreement maintained
between the Sponsor and the Trustee, under the terms of which a Trust Fund shall
be established to receive and hold contributions payable by the Employer,
interest and other income and to pay the benefits provided by the Plan. The
Sponsor may, by appropriate action and in accordance with any terms of the Trust
Agreement, employ an investment manager to invest and manage all or any
specified portion of the Trust Fund. Said investment manager shall designate in
writing that he is a fiduciary with respect to Trust assets under his control,
and the Trustee shall not be liable for nor have any responsibility in
connection with acts or omissions of the investment manager with regard to any
assets subject to his management. Any Trust Agreement entered into shall be
deemed to form a part of the Plan, and any and all rights and benefits which may
accrue to any person under the Plan shall be subject to all the terms and
provisions of such Trust Agreement. The Sponsor may modify the Trust Agreement
from time to time to accomplish the purpose of the Plan and may replace any
Trustee and appoint a successor Trustee or Trustees.

7.2 CONTRIBUTIONS

The Employer shall make such contributions to the Trust Fund as shall be
determined by the Actuary to be required under accepted actuarial principles to
at least be sufficient to maintain the Plan as a qualified employee defined
benefit pension plan meeting the plan qualification requirements of the Code and
the minimum funding standard requirements of the Code and ERISA for the Employer
contributions for any Plan Year. In no event shall an Employer make a
contribution to the Plan on behalf of any Member which is not otherwise
deductible by the Employer under Code Section 404. Forfeitures arising under the
Plan for any reason shall be used as soon as possible to reduce Employer
contributions under the Plan. Employee contributions under the Plan shall
neither be required nor permitted. All benefits under the Plan shall be payable
only from the Trust Fund and no liability for the payment of benefits under the
Plan shall be imposed upon the Employer, the Committee, officers, directors or
shareholders of the Employer.


                                       47
<PAGE>


ARTICLE VIII.  AMENDMENT AND TERMINATION

8.1 AMENDMENT AND TERMINATION

(a)      The Sponsor does hereby expressly and specifically reserve the sole and
         exclusive right at any time, and from time to time, by action of the
         Board of Directors to amend, modify or terminate the Plan to the extent
         that it may deem advisable; provided, however, the Board of Directors
         may delegate to the Committee or any other party it deems appropriate
         the authority to amend, modify or terminate the Plan in all respects or
         with regard to specified limited powers. Any amendment, modification or
         termination as aforesaid shall not require the assent, concurrence or
         any other action by any Employer or the Trustee notwithstanding that
         such action by the Sponsor may relate in whole or in part to persons in
         the employ of any Employer. The amendments or modifications made to the
         Plan by the Sponsor shall apply to the Plan as a whole, except to the
         extent any such amendment or modification is made to the Plan as it
         relates to any particular Employer and is made on the basis of
         information communicated to the Sponsor by the Employer and approved by
         the Sponsor.

(b)      While each Employer contemplates carrying out the provisions of the
         Plan indefinitely with respect to its Employees, no Employer shall be
         under any obligation or liability whatsoever to maintain the Plan for
         any minimum or other period of time.

(c)      Any action taken to amend, modify or terminate the Plan shall be
         evidenced by a written instrument duly executed and/or certified by an
         officer of the Sponsor. Any such instrument evidencing an amendment to
         the Plan shall be delivered by the Sponsor to the Committee, the
         Trustee and any Employer involved.

(d)      Upon any termination of the Plan (full or partial), the Sponsor shall
         give written notice thereof to the Committee, the Trustee and any
         Employer involved. Each of the affected Members shall have a fully
         vested and nonforfeitable interest in his accrued benefit to the extent
         funded.

(e)      Upon a complete or partial termination of the Plan [within the meaning
         of Code Section 411(d)(3)], the right of each affected Member to
         benefits accrued to the date of such termination or partial termination
         shall become nonforfeitable to the extent such benefits are funded as
         of such date; provided, however, a Member's recourse towards
         satisfaction of his nonforfeitable benefits shall be limited to the
         assets of the Trust Fund and the benefits of certain Members shall be
         further restricted as provided in Sections 4.11 and 8.5.

(f)      Upon any termination of the Plan, no Employer with respect to whom the
         Plan is terminated (including the Sponsor) shall thereafter be under
         any obligation, liability or responsibility whatsoever to make any
         contribution or payment to the Trust Fund, the Plan, any Member, any
         Beneficiary or any other person or trust or fund whatsoever, for any
         purpose whatsoever under or in connection with the Plan.


                                       48
<PAGE>


8.2      LIMITATIONS ON AMENDMENTS

The provisions of this Article VIII relating to amendments to the Plan shall be
subject to and limited by the following restrictions:

(a)      No amendment shall operate either directly or indirectly to give any
         Employer any interest whatsoever in any funds or property held by the
         Trustee under the terms of the Plan, or to permit the corpus or income
         of the Trust Fund to be used for or diverted to purposes other than the
         exclusive benefit of Members, their surviving Spouses or Beneficiaries
         or the payment of the reasonable expenses of administering the Plan.

(b)      No such amendment shall operate either directly or indirectly to
         deprive any Member, surviving Spouse or Beneficiary of his vested and
         nonforfeitable interest as of the time of such amendment. Any amendment
         which modifies the vesting provisions under the Plan shall either
         provide for a rate of vesting which is more rapid than the vesting
         schedule previously in effect, or provide that any Participant with at
         least three years of Vesting Service may elect, in writing, to remain
         under the vesting schedule in effect prior to the amendment. Such
         election must be made within 60 days after the latest of (1) the day
         the amendment is adopted; (2) the day the amendment becomes effective;
         or (3) the day the Participant has received notice of the amendment.

(c)      No amendment shall decrease the accrued benefit of any Member within
         the meaning of Code Section 411(d)(6), except as may be permitted under
         Code Section 411(d)(6).

(d)      No amendment shall change the rights, duties or responsibilities of the
         Trustee under the Plan without its written consent.

Subject to the foregoing limitations, any amendment which, in the judgment of
the Committee is necessary or advisable, may be made retroactively, provided
that such retroactive amendment does not deprive a Member, surviving Spouse or
Beneficiary, without his consent, of a right to receive benefits under the Plan
which have already vested and matured, except as such modification or amendment
shall be necessary in order to comply with any laws or regulations of the United
States or of any state to qualify this as a tax exempt Plan and Trust, or
otherwise.

8.3      DISTRIBUTION ON TERMINATION

(a)      Upon any termination (full or partial), all unallocated amounts shall
         be allocated in accordance with the provisions hereof. Upon termination
         of the Plan, the Employer with the consent of the Sponsor, by written
         notice to the Trustee, may direct either--

         (1)      continuation of the Trust and the distribution of benefits at
                  such time and in such manner as though the Plan had not been
                  terminated; or

         (2)      subject to Section 8.3(b), complete distribution of the assets
                  in the Trust Fund to the Members and their surviving Spouses
                  or Beneficiaries, in one lump-sum cash payment, or in the form
                  of a deferred annuity payable at Normal Retirement Date,


                                       49
<PAGE>


                  as soon as the Committee deems it in the best interest of the
                  Members and their surviving Spouses or Beneficiaries (no later
                  than three years after such termination).

(b)      Upon the termination of the Plan, that portion of any assets then held
         in the Trust Fund which remain after payment of all expenses of
         administration or liquidation shall be allocated for the purpose of
         paying benefits under the Plan in the order of precedence and in the
         amounts indicated for plans covered under Section 4044 of ERISA,
         according to the principles set forth in said Section 4044. The benefit
         of a missing Member shall be distributed in accordance with ERISA
         Section 4050. Following the termination of the Plan, benefit
         distributions to Members and their surviving Spouses or Beneficiaries
         shall be made through the continuation of the Plan and Trust Fund, as
         such benefits become due and payable under the Plan; provided, however,
         that if the assets of the Trust Fund are sufficient to provide the
         Members' current accrued benefits, the Committee shall direct the
         Trustee to liquidate the Trust Fund and make benefit distributions to
         Members and their surviving Spouses or Beneficiaries. In such case,
         such distributions shall be made in accordance with applicable
         amendments to the Plan relating to the termination of the Plan. To the
         extent necessary, such amendments shall require that the Plan be
         terminated in accordance with the Single-Employer Pension Plan
         Amendments Act of 1986, and applicable regulations thereunder, prior to
         the commencement of such distributions. In any case where there are
         assets in the Trust Fund remaining after the satisfaction of all
         accrued benefit liabilities to Members and their surviving Spouses or
         Beneficiaries following the termination of the Plan, such assets shall
         revert to and be distributed to the Employers.

(c)      Notwithstanding any of the above provisions of this Section 8.3,
         distributions to married Members shall be subject to the provisions of
         Section 4.8.

8.4      EFFECT OF CONTINGENCIES AFFECTING THE EMPLOYER

In the event an Employer terminates its connection with the Plan, or in the
event an Employer is dissolved or liquidated, or in the event judicial
proceedings of any kind result in the involuntary dissolution of an Employer,
the Plan shall be terminated as respects such Employer. The merger,
consolidation or reorganization of an Employer, or the sale by it of all or
substantially all of its assets, shall not terminate the Plan if there is
delivery to such Employer by the successor to such Employer or by the purchaser
of all or substantially all of its assets, a written instrument requesting that
it be substituted for the Employer and agreeing to perform all the provisions
which such Employer is required to perform, a copy of which shall be delivered
to the Trustee. Upon receipt of said instrument, with the approval of the
Sponsor, the successor or the purchaser shall be substituted for such Employer
herein, and such Employer shall be relieved and released from any obligations of
any kind, character or description herein or in any Trust Agreement imposed upon
it.


                                       50
<PAGE>


8.5      RESTRICTIONS ON BENEFITS AND DISTRIBUTIONS TO CERTAIN MEMBERS

(a)      RESTRICTION OF BENEFITS. Notwithstanding any other provisions in the
         Plan to the contrary, in the event of the termination of the Plan, the
         benefit of any Highly Compensated Employee (and any Highly Compensated
         Former Employee) is limited to a benefit that is nondiscriminatory
         under Code Section 401(a)(4). For purposes of this Section 8.5, the
         term "Highly Compensated Former Employee" shall mean any Member who has
         terminated employment as an Employee in a prior Plan Year and who was a
         Highly Compensated Employee either when he terminated employment as an
         Employee or any Plan Year ending on or after his fifty-fifth birthday.

(b)      RESTRICTIONS ON DISTRIBUTIONS. Notwithstanding any other provisions to
         the contrary, the annual benefits provided under the Plan for
         participating Highly Compensated Employees and Highly Compensated
         Former Employees who are among the 25 most highly paid Employees of the
         Employer are restricted to an amount equal to the annual payments that
         would be made on behalf of the Participant under a single life annuity
         that is the Actuarial Equivalent of the sum of such Participant's
         accrued benefit and other benefits under the Plan. In any one year, the
         total number of Members whose benefits are subject to the restriction
         under this Section 8.5(b) shall be limited to the group of the 25
         Highly Compensated Employees and Highly Compensated Former Employees
         who received the greatest compensation. The restrictions of this
         Section 8.5(b) shall not apply, however, if--

         (1)      after payment to such Member of all benefits under the Plan,
                  the value of Plan assets equals or exceeds 110 percent of the
                  value of the current liabilities [defined in Code Section
                  412(l)(7)] of the Plan; or

         (2)      the value of the benefits payable to such Member is less than
                  1 percent of the value of the current liabilities [as defined
                  in Code Section 412(l)(7)] of the Plan.


                                       51
<PAGE>


ARTICLE IX. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER

9.1 PARTICIPATION IN THE PLAN

Any Affiliate of the Sponsor which desires to become an Employer under the Plan
may elect, with the consent of the Board of Directors of the Sponsor, to become
a party to the Plan and Trust Fund by adopting the Plan for the benefit of its
Eligible Employees, effective as of the date specified in such adoption--

(a)      by filing with the Sponsor a certified copy of a resolution of its
         board of directors (or equivalent governing authority) to that effect,
         and such other instruments as the Sponsor may require; and

(b)      by the Sponsor's filing with the Committee and the Trustee a copy of
         such resolution, together with a certified copy of resolutions of the
         Board of Directors of the Sponsor approving such adoption.

The adoption resolution, supplement or instrument may contain such specific
changes and variations in Plan or Trust Agreement terms and provisions
applicable to such adopting Employer and its Eligible Employees as may be
acceptable to such Employer, the Sponsor and the Trustee. However, the sole,
exclusive right to make any amendment of whatever kind or extent to the Plan or
Trust Agreement is reserved by the Sponsor, subject to its right of delegation
under Section 8.1(a). It shall not be necessary for the adopting Employer to
sign or execute the original or then amended Plan and Trust Agreement documents.
The effective date of the Plan for any such adopting Employer shall be that
stated in the adoption resolution or instrument; and from and after such
effective date, such adopting Employer shall assume all the rights, obligations
and liabilities of an Employer under the Plan and Trust Agreement.

The administrative powers and control of the Sponsor, as provided in the Plan
and Trust Agreement, including the sole right of appointment and removal of the
members of the Committee, the Trustee and their successors shall not be
diminished by reason of the participation of any such adopting Employer in the
Plan and Trust Agreement.

9.2 WITHDRAWAL FROM THE PLAN

Any Employer other than the Sponsor, by actions of its board of directors or
other governing body, may elect to withdraw from the Plan and Trust Agreement by
giving 90 days' advance written notice of its election to the Board of Directors
of the Sponsor, unless the Board of Directors of the Sponsor waives such advance
notice or agrees to a shorter advance notice period. Such Employer's election to
withdraw from the Plan and Trust Agreement shall be subject to the consent of
the Board of Directors of the Sponsor. Distributions following such withdrawal
may be implemented through continuation of the Trust Fund or transfer to another
trust fund exempt from tax under Code Section 501 or to a group annuity contract
qualified under Code Section 403 or, subject to Section 8.3, distributions may
be made as immediate distributions in accordance with the directions of the
Committee; provided, however, that no such action shall direct any part of the
Trust Fund relating to the Members of such Employer to


                                       52
<PAGE>


any purpose other than the exclusive benefit of the Members of such Employer, or
the surviving Spouses or Beneficiaries of such Members, prior to the
satisfaction of all benefit liabilities under the Plan with respect to the
Members of such Employer.



                                       53
<PAGE>


ARTICLE X.  MISCELLANEOUS

10.1 NONALIENATION

Except as provided in Code Section 401(a)(13)(A)(B) or (C), no benefit payable
at any time under the Plan shall be subject in any manner to alienation, sale,
transfer, assignment, pledge, attachment, garnishment or encumbrance of any
kind. Any attempt to alienate, sell, transfer, assign, pledge or otherwise
encumber any such benefit, whether presently or hereafter payable, shall be
void. No benefit nor the Trust Fund shall in any manner be liable for or subject
to the debts or liabilities of any Member, surviving Spouse or Beneficiary
entitled to any benefit except as may be provided in a "qualified domestic
relations order" under Code Section 414(p). The Committee shall establish
procedures to determine whether domestic relations orders are "qualified
domestic relations orders" and to administer distributions under such qualified
domestic relations orders.

10.2 INCOMPETENCY

Every person receiving or claiming benefits under the Plan shall be conclusively
presumed to be mentally competent until the date on which the Committee receives
a written notice, in a form and manner acceptable to it, that such person is
incompetent, for whom a guardian or other person legally vested with the care of
his estate has been appointed; provided, however, that if the Committee shall
find that any person to whom a benefit is payable under the Plan is unable to
care for his affairs because of any disability or infirmity, any payment due
(unless a prior claim therefor shall have been made by a duly appointed legal
representative of his estate) may be paid to the spouse, a child, a parent, or a
brother or sister or to any person deemed by the Committee to have incurred
expense for such person otherwise entitled to payment. Any such payment so made
shall be a complete discharge of any liability therefor under the Plan. In the
event a guardian of the estate of any person receiving or claiming benefits
under the Plan shall be appointed by a court of competent jurisdiction, benefit
payments may be made to such guardian, provided that proper proof of appointment
and continuing qualification is furnished in a form and manner acceptable to the
Committee. Any such payment so made shall be a complete discharge of any
liability therefor under the Plan.

10.3 MERGER, CONSOLIDATION OR TRANSFER

In the case of any merger or consolidation of the Plan with, or in the case of
any transfer of assets or liabilities of the Plan to or from, any other plan,
each Member in the Plan shall (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer (if the Plan had then terminated).
To the extent required by Code Section 411(d)(6), the Plan will preserve the
forms of benefits that relate to a Member's benefit that is transferred to this
Plan.

The provisions of this Plan that are adopted in order that the Plan comply with
Section 401(a) of the Code within the time period set forth in Section 401(b) of
the Code are deemed to amend, to the


                                       54
<PAGE>


extent necessary, the corresponding provisions of any prior plan that was
merged, consolidated, or transferred into this Plan.


                                       55
<PAGE>


10.4 LITIGATION

In order to protect the Trust Fund against depletion as a result of litigation,
in the event that any Member or other person may bring any legal or equitable
action arising under the Plan against the Trustee or an Employer or the
Committee, or in the event that an Employer or the Trustee or the Committee may
find it necessary to bring any legal or equitable action arising under the Plan
against any Member or any person claiming any interest by or through such
Member, the Committee shall have the right to join the Trustee as a party
defendant or party plaintiff in any such action, and all expenses of defending
or bringing such action shall be paid by the Trustee from the Trust Fund, to the
extent permitted by ERISA.

10.5 EFFECT OF MISTAKE

In the event of a mistake or misstatement as to the eligibility or participation
of a Member, or the amount of benefit payments made or to be made to or with
respect to a Member, the Committee shall, if possible, cause an adjustment to be
made so as to correct such mistake and provide for the correct amount of benefit
payments with respect to such Member.

10.6 NO ENLARGEMENT OF EMPLOYEE RIGHTS

Nothing contained in the Plan shall be deemed to give any Employee the right to
be retained in the service of an Employer or Affiliate or to interfere with the
right of an Employer or Affiliate to discipline, discharge or retire any
Employee at any time.

10.7 NO GUARANTEE

Neither the Committee, the Sponsor, the Employers nor the Trustee in any way
guarantees the Trust Fund from loss or depreciation nor the payment of any money
which may be or become due to any person from the Trust Fund. Nothing herein
contained shall be deemed to give any Member, surviving Spouse or Beneficiary an
interest in any specific part of the Trust Fund or any other interest except the
right to receive benefits out of the Trust Fund in accordance with the
provisions of the Plan.

10.8 INTERNAL REVENUE SERVICE APPROVAL

It is the intention of the Sponsor to obtain a ruling or rulings by the District
Director of the Internal Revenue Service that--

(a)      the Plan, as in effect from time to time, with respect to the Employer,
         meets the requirements of Code Section 401(a); and

(b)      any and all contributions made by the Employer under the Plan are
         deductible for income tax purposes under Code Section 404(a) or any
         other applicable provisions of the Code.


                                       56
<PAGE>


10.9     EXCLUSIVE BENEFIT; NONREVERSION

The Trust Fund shall be used and applied only in accordance with the provisions
of the Plan and Trust Agreement to provide the benefits provided under the Plan;
and the Employers shall not have any right, title or interest in the assets of
the Trust Fund; and no part of the corpus or income of the Trust Fund shall be
used for or diverted to purposes other than for the exclusive benefit of
Members, surviving Spouses and Beneficiaries and for the payment of the
reasonable expenses of administering the Plan and Trust Fund, except that--

(a)      Upon termination of the Plan with respect to any Employer and the
         allocation and distribution of the Trust Fund as provided herein, any
         funds remaining in the Trust Fund with respect to the Employer because
         of an erroneous actuarial computation after the satisfaction of all
         fixed and contingent benefit liabilities under the Plan with respect to
         that Employer shall revert to such Employer.

(b)      If contributions under the Plan are made to the Trust Fund by an
         Employer by a mistake of fact, then such contributions shall be
         returned to such Employer within one year after the payment of such
         contributions; and if any part or all of the contributions are
         disallowed as a deduction under Code Section 404, then to the extent
         such contributions are disallowed as a deduction they shall be returned
         to such Employer within one year after the disallowance. All
         contributions are conditioned upon the deductibility of the
         contributions under Code Section 404 as provided in Section 7.2 of the
         Plan.

(c)      In the case of a contribution which would otherwise be an excess
         contribution [as defined in Code Section 4979(c)], a correcting
         distribution with respect to such contribution from the Plan to the
         Employer shall be made to the extent permitted in the Code to avoid
         payment of an excise tax on excess contributions under Code Section
         4979(c).

(d)      If the Internal Revenue Service determines that the Plan does not
         initially meet the requirements of Code Section 401 with respect to an
         Employer, the Plan shall be null and void from the effective date of
         the Plan applicable to such Employer; and any contributions shall be
         returned to the Employer within one year following the determination
         that the Plan does not initially meet such requirements, unless the
         Sponsor elects to make the changes to the Plan necessary to receive a
         determination from the Internal Revenue Service that the requirements
         of Code Section 401 are met. Contributions may be returned pursuant to
         this Section 10.9(d) only if the application for the determination of
         Plan qualification is made by the time prescribed by law for filing the
         Employer's return for the taxable year in which the Plan was adopted or
         such later date as the Secretary of Treasury may prescribe.

10.10    APPLICABLE LAW

The Plan and all rights hereunder shall be governed by and construed in
accordance with the laws of the State of Ohio to the extent such laws have not
been preempted by applicable federal law.


                                       57
<PAGE>


10.11    SEVERABILITY

If a provision of the Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining parts of the Plan and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included in the Plan.

10.12    MISTAKES

In the event of a mistake or a misstatement by a Member or Beneficiary as to any
item of information that is furnished pursuant to the terms of the Plan that has
an effect on the amount paid or to be paid to such Member or Beneficiary, or a
mistake by the Plan as to the amount paid or to be paid to a Member or
Beneficiary, the Committee shall take such action as in its judgment will
provide such person with the benefit to which he is properly entitled. The
actions that may be taken by the Committee may include, without limitation, the
reduction of future payments to the Member or Beneficiary, the restatement of
such person's accrued benefit on the books and records of the Committee, a
request to the Member or Beneficiary that such person repay the amounts paid in
error or any other action as the Committee deems desirable.

10.13    QUALIFIED TRANSPORTATION FRINGE PAYMENTS

To the extent that any provision of the Plan directly or indirectly references
the definition of "compensation" set forth in either Section 415(c)(3) or
Section 414(s)(2) of the Code, and such provision provides that certain deferred
compensation pursuant to Section 415(c)(3)(D) of the Code or Section 414(s)(2)
of the Code will be included in the definition of "compensation," then effective
for Plan Years or Limitation Years beginning on and after January 1, 2001, the
amount of compensation determined pursuant to such provision will include
elective amounts that are not includable in the gross income of the Participant
by reason of Section 132(f)(4) of the Code.


                                       58
<PAGE>


ARTICLE XI.  TOP-HEAVY PROVISIONS

11.1     APPLICATION OF TOP-HEAVY PROVISIONS

(a)      SINGLE PLAN DETERMINATION. Except as provided in Section 11.1(b)(2), if
         as of a Determination Date, the sum of the amount of the Code Section
         416 Benefit of Key Employees and the surviving Spouses and
         Beneficiaries of deceased Key Employees exceeds 60 percent of the
         amount of the Code Section 416 Benefits of all Members and their
         surviving Spouses or Beneficiaries (excluding former Key Employees),
         the Plan is top-heavy and the provisions of this Article XI shall
         become applicable.

(b)      AGGREGATION GROUP DETERMINATION.

         (1)      If as of a Determination Date the Plan is part of an
                  Aggregation Group which is top-heavy, the provisions of this
                  Article XI shall become applicable. Top-heaviness for the
                  purpose of this Section 11.1(b)(1) shall be determined with
                  respect to the Aggregation Group in the same manner as
                  described in Section 11.1(a).

         (2)      If the Plan is top-heavy under Section 11.1(a), but the
                  Aggregation Group is not top-heavy, the Plan shall not be
                  top-heavy and this Article XI shall not be applicable.

         (3)      In determining whether the Plan, or any other plan included in
                  a required aggregation group [within the meaning of Code
                  Section 416(g)] is top-heavy, the accrued benefit of any
                  Employee (other than a Key Employee) shall be determined under
                  (A) the accrual method which is used for accrual purposes
                  under all such plans; or (B) if there is no such method, as if
                  such benefit accrued not more rapidly than the slowest rate
                  permitted under Code Section 411(b)(1)(C).

(c)      COMMITTEE. The Committee shall have responsibility to make all
         calculations to determine whether the Plan is top-heavy.

11.2     DEFINITIONS

(a)      "AGGREGATION GROUP" means the Plan and all other plans maintained by
         the Employers and Affiliates which cover a Key Employee and any other
         plan which enables a plan covering a Key Employee to meet the
         requirements of Code Section 401(a)(4) or 410. In addition, at the
         election of the Committee, the Aggregation Group may be expanded to
         include any other qualified plan maintained by an Employer or Affiliate
         if such expanded Aggregation Group meets the requirements of Code
         Sections 401(a)(4) and 410. The Aggregation Group shall include any
         terminated plan if it was maintained within the last five years ending
         on the Determination Date for the Plan Year in question and would, but
         for the fact that it terminated, be described in the preceding sentence
         for such Plan Year.


                                       59
<PAGE>


(b)      "DETERMINATION DATE" means the last day of the Plan Year immediately
         preceding the Plan Year for which top-heaviness is to be determined or,
         in the case of the first Plan Year of a new plan, the last day of such
         Plan Year.

(c)      "KEY EMPLOYEE" means a Member who for the Plan Year containing the
         Determination Date or any of the four preceding Plan Years is--

         (1)      an officer of an Employer or Affiliate who has annual
                  Compensation greater than 50 percent of the amount in effect
                  under Code Section 415(b)(1)(A) for such Plan Year; provided,
                  however, that no more than the lesser of--

                  (A)      50 Employees; or

                  (B)      the greater of (i) three Employees or (ii) 10 percent
                           of all Employees shall be treated as officers, and
                           such officers shall be those with the highest annual
                           Compensation in the five-year period;

         (2)      one of the ten Employees having annual Compensation from all
                  Employers and Affiliates for such Plan Year greater than the
                  dollar limit specified in Code Section 415(c)(1)(A) and
                  owning both more than a one-half of 1 percent interest and
                  the largest interests in an Employer or Affiliate;

         (3)      a 5-percent owner of an Employer or Affiliate; or

         (4)      a 1-percent owner of an Employer or Affiliate having annual
                  Compensation of more than $150,000.

         For purposes of this Section 11.2(c), "Compensation" shall mean
         compensation as defined in Section 2.1(j)(2), plus amounts that would
         otherwise be excluded from the Participant's compensation thereunder by
         reason of the application of Code Sections 125, 402(e)(3), 402(h)(1)(B)
         and amounts that would otherwise be excluded by reason of the
         application of Code Section 403(b) pursuant to a salary reduction
         agreement; provided, however, that Compensation for purposes of this
         Section 11.2(c) shall not exceed the maximum annual compensation limit
         as provided for in Code Section 401(a)(17), as such amount may be
         adjusted or changed from year to year in accordance with the adjustment
         provisions or changes to Code Section 401(a)(17). Ownership shall be
         determined in accordance with Code Section 416(i)(1)(B) and (C). For
         purposes of Section 11.2(c)(2), if two Employees have the same
         ownership interest in an Employer or Affiliate, the Employee having the
         greater annual Compensation from the Employers and Affiliates shall be
         treated as having a larger interest.

(d)      "SECTION 416 BENEFIT" means the sum of--

         (1)      the amount credited as of a Determination Date to a Member's,
                  surviving Spouse's or Beneficiary's account under any
                  qualified defined contribution plan


                                       60
<PAGE>


                  which is part of an Aggregation Group (including amounts to be
                  credited as of the Determination Date but which have not yet
                  been contributed);

         (2)      the present value of the accrued benefit credited as of a
                  Determination Date to a Member, surviving Spouse or
                  Beneficiary under the Plan and any other qualified defined
                  benefit plan which is part of an Aggregation Group; and

         (3)      the amount of distributions to the Member, surviving Spouse or
                  Beneficiary during the five-year period ending on the
                  Determination Date other than a distribution which is a
                  tax-free rollover contribution (or similar transfer) that is
                  not initiated by the Member or that is contributed to a plan
                  which is maintained by an Employer or Affiliate reduced by--

         (4)      the amount of rollover contributions (or similar transfers)
                  and earnings thereon credited as of a Determination Date under
                  a plan forming part of an Aggregation Group which is
                  attributable to a rollover contribution (or similar transfer)
                  accepted after December 31, 1983, initiated by the Member and
                  derived from a plan not maintained by an Employer or
                  Affiliate.

         The account or accrued benefit of a Member who was a Key Employee and
         who subsequently meets none of the conditions of Section 11.2(c) for
         the Plan Year containing the Determination Date is not a Section 416
         Benefit and shall be excluded from all computations under this Article
         XI. Furthermore, if a Member has not performed any service for an
         Employer or Affiliate during the five-year period ending on the
         Determination Date, any accrued benefit of such Member (and any account
         for such Member) shall not be taken into account in computing
         top-heaviness under this Article XI. The present value of the accrued
         benefits shall be determined as of the most recent valuation date used
         for the purposes of Code Section 412 which is within the 12-month
         period ending on the Determination Date. The accrued benefit of a
         current Member shall be determined as if the Member terminated service
         as of such valuation date. For purposes of this Article XI, the
         actuarial assumptions used for determining an Actuarial Equivalent
         benefit shall be used to compute the present value of the accrued
         benefits.

11.3 VESTING REQUIREMENTS

Notwithstanding the vesting formula in Section 4.5(a), if the Plan is determined
to be top-heavy with respect to a Plan Year under the provisions of Section
11.1, then a Member's interest in his accrued benefit shall vest by substituting
"three years of Vesting Service" for "five years of Vesting Service" in
determining a Member's Vested Retirement Age under the Plan.

The vesting provisions described in this Section 11.3 shall not apply to a
Member who does not have an Hour of Service after the Plan becomes top-heavy. If
in a subsequent Plan Year the Plan is no longer top-heavy, the vesting
provisions that were in effect prior to the time the Plan became top-heavy shall
be reinstated; provided, however, that the vesting provisions of this Section
11.3 shall continue to apply in the case of a Member who has at least three
years of Vesting Service at the time of such reinstatement.


                                       61
<PAGE>


11.4     MINIMUM BENEFIT

(a)      MINIMUM ACCRUAL FORMULA. If the Plan is determined to be top-heavy
         under the provisions of Section 11.1 with respect to a Plan Year, the
         accrued benefit, when expressed as an Annual Retirement Benefit (as
         defined below), of a Member who is not a Key Employee and who has
         completed at least 1,000 Hours of Service (or the equivalent) during
         the Plan Year regardless of his level of compensation or whether he is
         employed on a specified date shall not be less than the difference
         between (1) and (2) where--

         (1)      is the product of--

                  (A)      the number of years of Top-Heavy Service (as defined
                           below); and

                  (B)      2 percent of the Member's average Compensation during
                           the period of the five consecutive years of Top-Heavy
                           Service during which the Member had the greatest
                           aggregate Compensation, but such product shall not
                           exceed 20 percent of the average Compensation; and

         (2)      is the amount of the Annual Retirement Benefit that would be
                  provided by the Member's account balance attributable to
                  Employer contributions under a defined contribution plan which
                  is included in an Aggregation Group.

11.5     LIMIT ON ANNUAL ADDITIONS; COMBINED PLAN LIMIT

(a)      GENERAL. This Section 11.5 shall be effective for Limitation Years
         commencing prior to January 1, 2000. If the Plan is determined to be
         top-heavy under Section 11.1, Section 4.11(g) shall be applied by
         substituting "1.0" for "1.25" in applying the provisions of Code
         Section 415(e)(2) and (e)(3).

(b)      EXCEPTION.  Section 11.5(a) above shall not be applicable if--

         (1)      Section 11.4 is applied by substituting "3 percent" for "2
                  percent";

         (2)      Section 11.4 is applied by increasing (but not by more than 10
                  percentage points) "20 percent" by 1 percentage point for each
                  year for which the Plan was taken into account under this
                  Section 11.5; and

         (3)      the Plan would not be top-heavy if "90 percent" is substituted
                  for "60 percent" in Section 11.1.

(c)      TRANSITION RULE. If, but for this Section 11.5, Section 11.5(a) would
         begin to apply with respect to the Plan, the application of Section
         11.5(a) shall be suspended with respect to a Member so long as there
         are--

         (1)      no Employer contributions or forfeitures allocated to such
                  Member; and


                                       62
<PAGE>


         (2)      no accruals under a qualified defined benefit plan for such
                  Member.

11.6 COLLECTIVE BARGAINING AGREEMENTS

The requirements of Sections 11.3 and 11.4 shall not apply with respect to any
Employee included in a unit of employees covered by a collective bargaining
agreement between employee representatives and an Employer or Affiliate if
retirement benefits were the subject of good faith bargaining between such
employee representatives and such Employer or Affiliate.


                                    *********


                                       63
<PAGE>


IN WITNESS WHEREOF, R. G. Barry Corporation has caused this document to be
executed by its duly authorized officers on this 31 day of December, 2001,
effective as of the 1st day of January, 1997, unless otherwise stated herein.



                             R. G. BARRY CORPORATION



                             By: /s/ Harry Miller
                                ------------------------------------------------
                                      Vice-President of Human Resources



                             By: /s/ Daniel D. Viren
                                ------------------------------------------------
                                      Senior Vice-President of
                                      Finance and Treasurer



                             By: /s/ Michael S. Krasnoff
                                ------------------------------------------------
                                      Vice-President of Finance
                                      and Assistant Treasurer





                                       64








</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>4
<FILENAME>l93477aex10-5.txt
<DESCRIPTION>EX-10.5
<TEXT>
<PAGE>
                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT


                  This EMPLOYMENT AGREEMENT ("Agreement") is effective this 1st
day of July, 2001, by and between R. G. Barry Corporation, an Ohio corporation
(the "Company"), and Gordon Zacks ("Executive").


                              W I T N E S S E T H:


                  WHEREAS, the Company desires to continue Executive in its
employ and Executive desires to remain in the employ of the Company, holding the
offices of Chairman of the Board and Chief Executive Officer of the Company
(unless Executive agrees to hold a different office), for an extended period in
accordance with the terms and conditions of this Agreement;

                  NOW, THEREFORE, in consideration of the premises and of their
mutual covenants expressed in this Agreement, the parties hereto make the
following agreement, intending to be legally bound hereby:

                  1. Term. The Company hereby agrees to continue Executive in
its employ, and Executive hereby agrees to remain in the employ of the Company,
in accordance with the terms and conditions hereof, for the period commencing on
July 1, 2001 (the "Commencement Date"), and ending on the third anniversary of
the Commencement Date (the "Original Term"), unless sooner terminated as
hereinafter set forth; provided, however, that the term of this Agreement shall
automatically be extended for one additional, one-year term (an "Extended Term")
unless at least 90 days prior to the expiration of the Original Term the Company
or Executive shall give notice to the other that it/he does not wish to extend
the term of this Agreement. The Original Term of Executive's employment under
this Agreement, together with any Extended Term, is hereinafter sometimes
referred to as the "Employment Term." Anything contained in this Agreement to
the contrary notwithstanding, in the event that a Change of Control of the
Company (as defined in Section 9) occurs or is publicly proposed (and such
proposal is not withdrawn) prior to the end of the Employment Term, as defined
in the immediately preceding sentence of this paragraph, the Employment Term
shall be automatically extended for an additional one-year period (an "Extended
Term") commencing on the date on which the Employment Term would otherwise have
terminated pursuant to this paragraph and expiring on the first anniversary of
such date.




<PAGE>

                  2. Position and Duties. (a) During the Employment Term, (i)
Executive shall serve as the Chairman and Chief Executive Officer of the Company
(unless Executive agrees to hold a different office), reporting only to the
Company's Board of Directors (the "Board of Directors" or the "Board") and his
authority, duties and responsibilities shall be at least commensurate in all
material respects with those held, exercised and assigned on the Commencement
Date (unless Executive agrees to different duties and responsibilities) and (ii)
Executive's principal office shall be located in Central Ohio, although he shall
be allowed to travel extensively for the Company as he may determine.

                           (b) Excluding periods of vacation and sick leave to
which Executive is entitled, Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to
Executive hereunder, to use Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. Executive may (i) serve on
corporate, civic, charitable or political boards or committees, (ii) fulfill
speaking engagements and (iii) manage personal investments, so long as such
activities do not interfere in any material respect with the performance of
Executive's responsibilities hereunder. It is expressly understood and agreed
that, to the extent any such activities shall have been conducted by Executive
prior to the Commencement Date, the continued conduct of such activities or the
conduct of activities similar in nature and scope thereto subsequent to the
Commencement Date shall not, for the purposes of this Agreement, be deemed to
interfere in any material respect with the performance of Executive's
responsibilities hereunder.

                  3. Compensation and Other Benefits. The terms of Executive's
compensation during the Employment Term shall be as follows:

                           (a) BASE SALARY. During the Employment Term,
Executive shall receive a minimum annual base salary of $490,000 (the "Base
Salary"), to be paid in equal installments in accordance with the Company's
normal pay schedule for salaried employees; said Base Salary may be increased at
any time and from time to time by the Company, and the Company shall cause its
Board of Directors or an appropriate committee thereof to review annually the
performance of Executive and the results of operations and financial condition
of the Company, together with prevailing economic conditions and other relevant
factors, to determine whether or not any increase above said minimum annual
salary is appropriate; and the highest rate of salary (on an annualized basis)
paid to Executive by the Company during the



                                     - 2 -
<PAGE>

Employment Term (excluding any bonus) shall be deemed to be the Base Salary for
purposes of this Agreement.

                           (b) BENEFITS. During the Employment Term:

                           (i) The Company, at its sole expense, shall provide
and maintain a policy of insurance on Executive's life from an insurance company
that is reasonably acceptable to Executive providing for a death benefit of at
least $1,000,000, payable to one or more beneficiaries designated by Executive
(or to the beneficiaries designated by Executive's assignee, if any, of such
policy) or, if Executive (or his assignee, if any) fails to so designate a
beneficiary, to Executive's estate; provided, however, that at Executive's
option, the Company shall, in lieu of providing the aforesaid life insurance
policy, pay to Executive for each 12-month period during the Employment Term a
cash payment of $18,000. If the life insurance provided by the Company under
this Section 3(b)(i) is a whole life insurance policy or policies, Executive
shall be entitled to the cash surrender value of such policy or policies and
shall have the right to cause the Company to transfer ownership of such policy
or policies to Executive or his designee.

                           (ii) In addition to the insurance described in
Section 3(b)(i), the Company, at its expense, shall provide and maintain a
split-dollar life insurance policy on Executive's life from an insurance company
reasonably acceptable to Executive providing for a death benefit payable to
Executive's beneficiaries or estate (or to the beneficiaries designated by
Executive's assignee, if any, of his interest under this Section 3(b)(ii)), in
an amount that is not less than $1,310,000, which is the amount of coverage
provided to Executive under that certain split-dollar insurance policy on
Executive's life in effect on the Commencement Date. The Company shall be
obligated to pay the Company's portion of the premiums on such split-dollar
insurance policy and shall pay to or at the direction of Executive a cash bonus
in an amount equal to Executive's (or his assignee's) portion of such insurance
premiums (i.e., the term cost of the life insurance protection under the policy)
plus the amount of Executive's personal income tax liability resulting from the
payment of such cash bonus.

                           (iii) Executive shall be entitled to receive paid
vacation time during each consecutive twelve (12) month period during the
Employment Term in accordance with the vacation policy of the Company for its
senior executives in effect on the Commencement Date.

                           (iv) Executive shall be entitled to receive such
perquisites, fringe benefits and reimbursement of expenses


                                     - 3 -
<PAGE>

historically provided by the Company to its Chairman and Chief Executive
Officer, including, without limitation, the exclusive use of a new luxury
automobile and reimbursement of his initiation fees, dues and assessments at a
country club of his choosing.

                           (v) Executive shall be entitled to participate in the
Company's Salaried Employees' Pension Plan (the "Pension Plan") and Supplemental
Retirement Plan (the "Supplemental Plan"), as any or all of the same may be
amended from time to time, or any substitute or successor plans.

                           (vi) Executive shall be entitled to participate in
the Company's Annual Incentive Plan, as the same may be amended from time to
time, or in any substitute or successor plan, at an annual level ranging between
40% of Base Salary, if Annual Operating Plan targets are met and 100% of Base
Salary, if maximum profit targets are met or exceeded.

                           (vii) Executive shall be eligible to participate in
all benefit, bonus, incentive equity, savings or similar plans or programs
maintained or provided by the Company to its senior executives at a level
commensurate with Executive's title and position ("Bonus Plans"). However:

                           (a) Participation in the Bonus Plans will be
conditioned upon the terms and conditions included in the Bonus Plans; and

                           (b) Nothing in this Agreement will preclude the
Company from amending or terminating any of the Bonus Plans (or adopting new
plans or programs) but without Executive's prior written consent, no amendment
or termination of any Bonus Plan will reduce any benefit that Executive accrued
to the date of that amendment or termination.

                           (viii) Executive shall be entitled to receive all
other employee benefits, including, without limitation, medical, dental, group
life (to the extent the coverage is superior to that provided for in Section
3(b)(i) above) and accidental death insurance benefits as are or in the future
may be provided by the Company to its senior executives.

                           (ix) The Board of Directors of the Company will
consider annually whether additional benefits should be provided to Executive,
including, without limitation, the grant of additional shares of restricted
stock of the Company, stock options or the implementation of other stock-based
incentive plans.


                                     - 4 -
<PAGE>

                  4. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company and for which
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as Executive may have under any stock option or other agreements with the
Company. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan or program of the Company at or subsequent to
the Date of Termination (as defined in Section 5 hereof) shall be payable in
accordance with such plan or program.

                  5. Termination. (a) DEATH OR DISABILITY. Executive's
employment shall terminate automatically upon Executive's death. The Company may
terminate Executive's employment under this Agreement after having established
Executive's Disability (pursuant to the definition of "Disability" set forth
below), by giving to Executive written notice of its intention to terminate
Executive's employment hereunder. In such a case, Executive's employment
hereunder shall terminate effective on the 30th day after receipt of such notice
(the "Disability Effective Date"), provided that within such 30-day period,
Executive shall not have returned to full-time performance of his duties. For
purposes of this Agreement, "Disability" means a disability, which, after the
expiration of more than 6 months after its commencement, is determined to be
total and permanent by a physician selected by the Company or its insurers and
reasonably acceptable to Executive or Executive's legal representative.

                           (b) CAUSE. The Company may terminate Executive's
employment for "Cause." For purposes of this Agreement, termination of
employment for the following reasons (and no other reason) shall constitute
"Cause": (i) gross negligence materially detrimental to the Company, (ii)
conviction of a felony, (iii) willful, and continued failure of Executive, after
receipt of written notice from the Company setting forth the specifics of such
failure, to perform the duties of his offices with the Company unless such
failure is the result of ill health or physical or mental disability or (iv)
intentional misconduct of Executive materially and demonstrably injurious to the
Company.

                           (c) GOOD REASON. Executive's employment may be
terminated by Executive for Good Reason. For purposes of this Agreement, "Good
Reason" means:

                                    (i) (A) The assignment to Executive of any
duties inconsistent in any respect with Executive's position (including, without
limitation, his status, office and title), authority, duties or responsibilities
as contemplated by Section


                                     - 5 -
<PAGE>


2 of this Agreement or (B) any other action by the Company which results in a
material diminution in such position, authority, duties or responsibilities,
other than an insubstantial and inadvertent action which is remedied by the
Company promptly after receipt of notice thereof given by Executive;

                                    (ii) Any reduction in Executive's Base
Salary or any material reduction in the extent of Executive's participation in
the plans referred to in Section 3 hereof or the extent of Executive's
entitlement to the employee benefits, expenses, fringe benefits or prerequisites
referred to in Section 3;

                                    (iii) The assignment of Executive without
his consent to a Company office located beyond a radius of 50 miles from the
Company's principal office on the Commencement Date;

                                    (iv) Failure to nominate or renominate
Executive to the Board of Directors of the Company; or

                                    (v) Any other failure by the Company to
comply with any provision of this Agreement, other than an insubstantial and
inadvertent failure which is remedied by the Company promptly after receipt of
notice thereof given by Executive.

                  For purposes of this Section 5(c) any good faith determination
of "Good Reason" made by Executive shall be conclusive. In addition, for
purposes of this Agreement, a reduction of the kind described in clause (ii) of
this Section 5(c) shall be deemed to be an "Impermissible Reduction."

                           (d) NOTICE OF TERMINATION. Any termination of
Executive's employment hereunder by the Company or by Executive shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 16 of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date.

                           (e) DATE OF TERMINATION. The term "Date of
Termination," as used in this Agreement, means the date of receipt of the Notice
of Termination or any later date specified therein (which date shall be not more
than 15 days after the


                                     - 6 -
<PAGE>

giving of such notice), as the case may be. If Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies Executive of such
termination.

                  6. Compensation Upon Termination of Employment or During
Disability. (a) DEATH. If Executive's employment shall be terminated by reason
of his death, the Company shall promptly make all payments which Executive's
spouse, beneficiaries or estate may be entitled to receive pursuant to any
pension or employee benefit plan, or life insurance policy maintained by the
Company. If the policy of life insurance described in Section 3(b)(ii) is not in
force at the time of Executive's death for any reason, the Company shall
continue to pay Executive's full Base Salary at the rate in effect on the date
of his death on a monthly basis for a period of 60 months following Executive's
date of death to such person or persons as he shall have designated to the
Company or, if no such person or persons shall have been designated, to his
estate. In addition, if Executive's employment shall be terminated by reason of
his death, the Company shall promptly or provide to the person or persons
described in the first sentence of this Section 6 the following:

                           (i) Any unpaid installments of his Base Salary,
calculated to the end of the payroll period during which he terminates
employment because of death;

                           (ii) The value of any accrued but unused vacation,
calculated to the end of the payroll period during which he terminates
employment because of death (this value will be calculated by dividing the Base
Salary by 365 and then multiplying this dollar amount by the number of accrued
but unused vacation days);

                           (iii) The unpaid portion of any bonus that has been
earned and declared under the Company's Annual Incentive Program (or any
successor program) for the most recently completed fiscal year;

                           (iv) A prorated portion of the bonus that would have
been paid to Executive under the Company's Annual Incentive Program (or any
successor program) for the fiscal year during which he dies. This amount will be
calculated and paid after the end of the fiscal year in which Executive dies and
will be determined by multiplying the amount of the bonus Executive would have
received under the Annual Incentive Program if he had continued active
employment until the end of the fiscal year during which he dies by the number
of full calendar months he was actively employed during that fiscal year and
then dividing this dollar amount by 12 months;


                                     - 7 -
<PAGE>

                           (v) Continuation, for a period of six calendar months
beginning on or immediately after the date he dies, of the medical, dental,
prescription drug and hospitalization coverage and benefits for which Executive
and/or his dependents were eligible before his death (the cost of these
continued benefits will be allocated between Executive and the Company in the
same manner it was allocated before Executive's death).

                           (b) DISABILITY. During any period during the
Employment Term that Executive fails to perform his duties hereunder as a result
of incapacity due to ill health or physical or mental disability ("Disability
Period"), Executive shall continue to receive the Base Salary for such period
until his employment is terminated for Disability pursuant to Section 5(a),
provided that payments of Base Salary shall be reduced by the sum of the
amounts, if any, payable to Executive at or prior to the time of any such Base
Salary payment under disability benefit plans of the Company and which were not
previously applied to reduce any payment of Base Salary. If Executive's
employment is terminated by reason of Executive's Disability, Executive shall
continue to receive after the Disability Effective Date his full Base Salary at
the rate then in effect under this Agreement (less any sums payable to Executive
under any disability benefit plan maintained by the Company) until the longer of
the end of the Original Term or six months. Such payments shall not be offset by
Social Security payments, if any. In addition, after any such termination of
employment for Disability, Executive (or, if applicable, his spouse,
beneficiaries or estate) shall receive all amounts to which any of them may be
entitled under any pension, deferred compensation plan or employee benefit plan
maintained by the Company or under any other agreement (said amounts to be paid
in accordance with the terms of any such plan or agreement). In addition, if
Executive's employment shall be terminated by reason of Executive's Disability,
the Company shall, promptly after the Disability Effective Date, pay or provide
to Executive and, if appropriate, his dependents, the following:

                           (i) Any unpaid installments of his Base Salary,
calculated to the end of the payroll period in which employment terminates
because of Disability;

                           (ii) The value of any accrued but unused vacation,
calculated to the end of the payroll period in which employment terminates
because of Disability (this value will be calculated by dividing the Base Salary
by 365 and then multiplying this dollar amount by the number of accrued but
unused vacation days);


                                     - 8 -
<PAGE>

                           (iii) The unpaid portion of any bonus that has been
earned and declared under the Company's Annual Incentive Program (or any
successor plan) for the most recently completed fiscal year; and

                           (iv) A prorated portion of the bonus that would have
been paid to Executive under the Company's Annual Incentive Program (or any
successor plan) for the fiscal year during which the Disability Effective Date
occurs. This amount will be calculated and paid after the end of the fiscal year
in which the Disability Effective Date occurs and will be determined by
multiplying the amount of the bonus Executive would have received under the
Annual Incentive Program (or any successor plan) if he had continued active
employment until the end of the fiscal year during which the Disability
Effective Date occurs by the number of full calendar months he was actively
employed during that fiscal year and then dividing this dollar amount by 12
months.

                           (c) WITH CAUSE OR WITHOUT A GOOD REASON. If, during
the Employment Term, Executive's employment shall be terminated by the Company
for Cause or by Executive without Good Reason, the Company shall pay to
Executive the amounts described in clauses (i) through (iv) below, and the
Company shall have no further obligation to Executive under this Agreement:

                           (i) Any unpaid installments of his Base Salary,
calculated to the end of the payroll period during which the Date of Termination
occurs;

                           (ii) The value of any accrued but unused vacation,
calculated to the end of the payroll period during which the Date of Termination
occurs (this value will be calculated by dividing the Base Salary by 365 and
then multiplying this dollar amount by the number of accrued but unused vacation
days);

                           (iii) Any amounts Executive is entitled to receive
under the terms of any employee benefit plan, including any pension or deferred
compensation plan or program; and

                           (iv) The unpaid portion of any bonus that has been
earned and declared under the Company's Annual Incentive Program (or any
successor plan) for the most recently completed fiscal year.

                           (d) WITHOUT CAUSE OR FOR GOOD REASON AFTER A CHANGE
OF CONTROL. If, during the Employment Term and following a Change of Control (as
defined in Section 9 of this Agreement), the Company shall terminate Executive's
employment other than for


                                     - 9 -
<PAGE>

Cause or Disability, or the employment of Executive shall be terminated by
Executive for Good Reason:

                                    (i) The Company shall pay to Executive in a
lump sum in cash within 10 days after the Date of Termination the aggregate of
the following amounts:

                                             (A) If not theretofore paid,
Executive's Base Salary through the Date of Termination at the rate in effect on
the Date of Termination;

                                             (B) The value of any accrued but
unused vacation, calculated to the end of the payroll period during which the
Date of Termination occurs (this value will be calculated by dividing the Base
Salary by 365 and then multiplying this dollar amount by the number of accrued
but unused vacation days);

                                             (C) The unpaid portion of any bonus
that has been earned and declared under the Company's Annual Incentive Program
(or any successor program) for the most recently completed fiscal year before
Executive's termination of employment occurs under this section;

                                             (D) An amount equal to three times
the then current Base Salary;

                                             (E) An amount equal to three times
the average of the annual bonuses, if any, Executive received during the five
fiscal years ending before Executive's termination of employment occurs under
this section (or, if less than five, the number of years in which Executive
received a bonus during such past five fiscal years); and

                                             (F) In the case of compensation
previously deferred by Executive, all amounts of such compensation previously
deferred and not yet paid by the Company, together with all interest accrued
thereon.

                                    (ii) The Company shall, promptly upon
submission by Executive of supporting documentation, pay or reimburse to
Executive all costs and expenses paid or incurred by Executive which would have
been payable under Section 3(b) hereof if Executive's employment had not been
terminated.

                                    (iii) For a period ending on Executive's
85th birthday, or until his earlier death, the Company, at its cost, shall
maintain in full force and effect, for the continued benefit of Executive and
Executive's spouse, all life, medical and dental insurance to which Executive
and/or his spouse was



                                     - 10 -
<PAGE>

entitled immediately prior to the Date of Termination less any such benefits
provided to them by Medicare or similar government-funded health insurance;
provided that, in the event the participation by Executive or his spouse in any
Company employee benefit program that provides such life, medical and dental
benefits is not possible under the terms of such program, the Company, at its
cost, shall arrange to provide Executive and his spouse with benefits
substantially similar to those which they were entitled to receive under any
such program immediately prior to the Date of Termination (less any such
benefits provided to them by Medicare or similar government-funded health
insurance). In addition, the Company shall maintain the life insurance benefits
described in Sections 3(b)(i) and 3(b)(ii) beyond Executive's 85th birthday for
so long as the Company can do so without additional premium costs.

                                    (iv) Executive shall be entitled to all
other benefits to which he is entitled under the terms of any employee benefit
plan or program;

                                    (v) All stock option held by Executive which
were not fully exercisable on the Date of Termination shall immediately become
fully exercisable by Executive.

                                    (vi) All restricted stock of the Company
held by Executive shall become fully vested.

                                    (vii) All of Executive's executive
perquisites immediately prior to the Date of Termination shall continue for
three years after the Date of Termination (except for perquisites that are
specifically addressed by other sections of this Agreement, which other sections
shall control.)

                                    After the Date of Termination, Executive
shall have no obligation to seek other employment, but shall have the right to
be otherwise employed, and any compensation of any type whatsoever received by
Executive in connection with such employment shall not be offset by the Company
against any of the obligations of the Company under this Section 6(d).

                           (e) WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO A
CHANGE OF CONTROL. If, during the Employment Term and prior to a Change of
Control, the employment of Executive shall be terminated by the Company for any
reason other than for Cause or Disability, or the employment of Executive shall
be terminated by Executive for Good Reason, and Section 6(d) of this Agreement
shall not be applicable:


                                     - 11 -
<PAGE>

                                    (i) The Company shall pay to Executive in a
lump sum in cash within 10 days after the Date of Termination the aggregate of
the following amounts:

                                             (A) If not theretofore paid,
Executive's Base Salary through the Date of Termination at the rate in effect on
the Date of Termination;

                                             (B) The value of any accrued but
unused vacation, calculated to the end of the payroll period during which the
Date of Termination occurs (this value will be calculated by dividing the Base
Salary by 365 and then multiplying this dollar amount by the number of accrued
but unused vacation days);

                                             (C) The unpaid portion of any bonus
that has been earned and declared under the Company's Annual Incentive Program
(or any successor plan) for the most recently completed fiscal year before
Executive's termination occurs under this section; and

                                             (D) In the case of compensation
previously deferred by Executive, all amounts of such compensation previously
deferred and not yet paid by the Company together with all interest accrued
thereon.

                                    (ii) Until the longer of the remainder of
the Employment Term (as in effect immediately prior to the termination of
employment) or 18 months, the Company shall continue to pay Executive his Base
Salary on a monthly basis at the rate in effect immediately prior to the Date of
Termination, plus an additional monthly payment equal to one-twelfth of the
Average Bonus (as defined in Section 6(f)).

                                    (iii) The Company shall, promptly upon
submission by Executive of supporting documentation, pay or reimburse to
Executive all costs and expenses paid or incurred by Executive which would have
been payable under Section 3(b) hereof if Executive's employment had not
terminated.

                                    (iv) All stock options held by Executive
which were not fully exercisable on the Date of Termination shall immediately
become fully exercisable by Executive.

                                    (v) All restricted stock of the Company held
by Executive shall become fully vested.

                                    (vi) For a period ending on Executive's 75h
birthday, or until his earlier death, the Company, at its cost, shall maintain
in full force and effect, for the continued



                                     - 12 -
<PAGE>

benefit of Executive and Executive's spouse, all life, medical and dental
insurance benefits to which Executive and his spouse were entitled immediately
prior to the Date of Termination (less any such benefits provided to them by
Medicare or similar government funded health insurance); provided that, in the
event the participation by Executive or his spouse in any Company employee
benefit program that provides such life, medical and dental benefits is not
possible under the terms of such program, the Company, at its cost, shall
arrange to provide Executive and his spouse with benefits substantially similar
to those which they were entitled to receive under any such program immediately
prior to the Date of Termination (less any such benefits provided to them by
Medicare or similar government funded health insurance). In addition, the
Company shall maintain the life insurance benefits described in Sections 3(b)(i)
and 3(b)(ii) beyond Executive's 75th birthday for so long as the Company can do
so without additional premium costs.

                                     (vii) Executive shall be entitled to all
other benefits to which he is entitled under the terms of any employee benefit
plan or program.

                                     After the Date of Termination, Executive
shall have no obligation to seek other employment, but shall have the right to
be otherwise employed, and any compensation of any type whatsoever received by
Executive in connection with such employment shall not be offset by the Company
against any of the obligations of the Company under this Section 6(e).

                           (f) For purposes of this Section 6, the "Average
Bonus" is the average annual bonus paid to Executive for the last three full
fiscal years ending prior to the Date of Termination.

                           (g) Anything in this Section 6 to the contrary
notwithstanding, for purposes of calculating any amount payable to or for the
benefit of the Executive and/or his family pursuant to Section 6, the effect of
any Impermissible Reduction in amounts payable pursuant to Section 5 shall be
disregarded.

                           (h) Regardless of any other provision of this
Agreement, all amounts paid under this Section 6 will be reduced by any amounts
payable to Executive from any other broad based severance plan or program (other
than any plan or arrangement adopted in connection with a Change in Control) or
disability program in which Executive participates (other than a disability
plan, program or policy purchased directly by Executive from his personal
funds).

                  7. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to


                                     - 13 -
<PAGE>


perform its obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against Executive or others. In no event
shall Executive be obligated to seek other employment by way of mitigation of
the amounts payable to Executive under any of the provisions of this Agreement.
Company agrees to pay, to the full extent permitted by law, all legal fees and
expenses which Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof, plus interest, compounded quarterly, on the
total unpaid amount determined to be payable under this Agreement, such interest
to be calculated at a rate equal to 2% in excess of the prime commercial lending
rate announced by The Huntington National Bank, Columbus, Ohio, or its
successor, in effect from time to time during the period of such nonpayment.

                  8. Certain Reduction of Payments by the Company.
Notwithstanding any other provisions in this Agreement or any other agreement,
plan or arrangement, if the sum of the payments and benefits received or to be
received by Executive, whether under the terms of this Agreement or any other
agreement, plan or arrangement with the Company or an affiliate of the Company
(all such payments and benefits being hereinafter referred to as "Total
Payments") constitute "excess parachute payments" as defined in Section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), the
Company will either:

                           (a) Reimburse Executive for the amount of any excise
tax due under Code ss.4999 on the Total Payments (but not on any amount payable
solely under this subsection 8(a)), if this procedure provides Executive with an
after-tax amount that is larger than the after-tax amount produced under Section
8(b); or

                           (b) Reduce the Total Payments (in the manner provided
for in Section 8(c)) so that his total "parachute payment" as defined in Code
ss.280G(b)(2)(A) under this and all other agreements, plans and arrangements
will be $1.00 less than the amount that would be an "excess parachute payment,"
if this procedure provides Executive with an after-tax amount that is larger
than the after-tax amount produced under Section 8(a).

                           (c) Any reduction in the Total Payments in accordance
with this Section 8 shall be made in the following order (unless otherwise
directed by Executive):

                                    (i) The cash payments provided for in
Section 6(d)(i) shall first be reduced (if necessary, to zero);



                                     - 14 -
<PAGE>

                                    (ii) The benefits (or calculated value
thereof) under Subsection 6(d)(iii) shall next be reduced (if necessary, to
zero);

                                    (iii) The benefits described in Subsections
6(d)(v), (vi) and (vii) shall next be reduced; and

                                    (iv) Any additional termination payments or
benefits provided outside this Agreement shall then be reduced as necessary.

                  No inference shall be drawn, however, that any of the payments
described in clauses (i) through (iv) above constitute "parachute payments"
under Section 280G of the Code.

                  9. Change of Control. For purposes of this Agreement, a
"Change of Control" shall be deemed to have occurred if:

                           (a) Any individual (other than Executive), firm,
corporation, partnership, joint venture or other entity or any group (as the
term "group" is defined in Section 13(d)(3) of the Securities Exchange Act of
1934 (the "Exchange Act") and the rules thereunder on the Commencement Date),
other than any such entity or group in respect of which Executive is a
participant, shall hereafter acquire (or disclose the previous acquisition of)
beneficial ownership (as that term is defined in Section 13(d) of the Exchange
Act and the rules thereunder on the Commencement Date) of shares of the
outstanding stock of any class or classes of the Company which results in such
person, firm, corporation, partnership, joint venture, other entity or group
possessing more than a majority of the total voting power of the Company's
outstanding voting securities ordinarily having the right to vote for the
election of directors of the Company; or

                           (b) As the result of, or in connection with, any
tender or exchange offer, merger or other business combination, sale of assets
or contested election of directors, or any combination of the foregoing
transactions ("Transaction"), the persons who were directors of the Company
immediately before the Transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the Company; or

                           (c) If the Board at any time declares that one or
more events have occurred or are likely to occur which, in their sole
determination, create or pose the threat of a Change of Control and which, for
that reason, make it desirable and in the best interests of the Company to
invoke those provisions of this Agreement which become effective on or after the
occurrence of a


                                     - 15 -
<PAGE>

Change of Control; provided, however, that no director of the Company who is
party to this Agreement or an agreement with the Company similar to this
Agreement may participate in considering or voting upon any such resolution; or

                           (d) Any acquisition, merger, consolidation or other
business combination occurs in which the Company's shareholders (determined
immediately before the merger, consolidation or other business combination) do
not own at least 51 percent of the equity interest of the surviving entity
(measured immediately after the transaction); or

                           (e) There occurs a complete liquidation of the
Company or approval by the Company's shareholders of a plan of liquidation or
dissolution.

                  10. Nomination to Board. During the Employment Term, the
Company shall cause Executive to be nominated to membership on the Board of
Directors of the Company in all applicable proxy solicitations made to
shareholders.

                  11. Confidential Information. Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
Executive during Executive's employment by the Company or any of its affiliated
companies and which shall not be public knowledge (other than by acts by
Executive or his representatives in violation of this Agreement). After
termination of Executive's employment with the Company, Executive shall not,
without the prior written consent of the Company, or unless required to do so by
order of a court, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. In no event shall
an asserted violation of the provisions of this Section 11 constitute a basis
for deferring or withholding any amounts otherwise payable to Executive under
this Agreement.

                  12. Agreement Not to Compete. Executive agrees that during the
Employment Term and for a period of two (2) years thereafter (five (5) years
thereafter if Executive's employment terminates under the circumstances
described in Section 6(d)), he will not, without the consent of the Company's
Board of Directors, serve on the board of directors of any corporation or other
entity that is in competition with the Company or any affiliate of the Company,
nor allow the use of his name with respect to any such corporation or entity,
nor serve as an officer, employee, consultant, representative or otherwise or
have a substantial investment in any such corporation or entity. In no event
shall any asserted violation of the provisions of


                                     - 16 -
<PAGE>

this Section 12 constitute a basis for deferring or withholding any amounts
otherwise payable to Executive under this Agreement.

                  13. Retirement Benefits. In addition to any retirement
benefits to which Executive is entitled under any pension plan or other plan or
program provided by the Company and for which Executive may qualify and in
addition to any termination benefits or payments provided for in this Agreement,
upon any termination of Executive's employment with the Company (other than
termination for Cause), whether such termination occurs during or after the
Employment Term, the Company shall provide Executive the following retirement
benefits:

                           (a) The Company shall continue the life insurance
benefits described in Sections 3(b)(i) and 3(b)(ii) until Executive has attained
the age of 75 or for such longer period as the Company can maintain such
insurance without additional premium costs;

                           (b) For a period ending on Executive's 75th birthday
(85th birthday if Executive's termination of employment occurs following a
Change of Control), or until his earlier death, the Company, as its cost, shall
maintain in full force and effect, for the continued benefit of Executive and
Executive's spouse, all medical and dental insurance benefits to which Executive
and his spouse were entitled immediately prior to the date of termination of
Executives employment with the Company (less any such benefits provided to them
by Medicare or similar government funded health insurance); provided that, in
the event the participation by Executive or his spouse in any Company employee
benefit program that provides such medical and dental benefits is not possible
under the terms of such program, the Company, at its cost, shall arrange to
provide Executive and his spouse with benefits substantially similar to those
which they were entitled to receive under any such program immediately prior to
the Date of Termination (less any such benefits provided to them by Medicare or
similar government funded health insurance).

                           (c) For a period of five years following the date of
termination of Executive's employment with the Company (other than termination
for Disability), the Company shall make available to Executive, at the Company's
expense, Class A office space suitable for Executive at the Company's
headquarters in Pickerington, Ohio, or at a different location selected by the
Company and Executive within 10 miles of Executive's principal residence in
Ohio; and

                           (d) For a period of one year following the date of
termination of Executive's employment with the Company (other than termination
for Disability), the Company, at its cost, will


                                     - 17 -
<PAGE>

make available to Executive a full-time secretary, at the location described
in Section 13(b) above.

                  14. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be submitted to
arbitration by the American Arbitration Association in Columbus, Ohio, and the
determination of such arbitration shall be final and absolute. The arbitration
and the panel of three arbitrators shall be governed by the duly promulgated
Commercial Arbitration Rules of the American Arbitration Association and the
pertinent provisions of the laws of the State of Ohio relating to arbitration.
Any judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. Compensation and benefits provided hereunder
shall continue while any proceeding entered into pursuant to this section is in
progress. Unless prohibited by law, arbitration and legal fees regarding
disputes or controversies arising under this Agreement shall be borne by the
Company.

                  15. Successors; Binding Agreement. (a) The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance reasonably
satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no succession had taken place. Failure of the Company
to obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Executive to compensation and
benefits and other rights in the same amount and on the same terms as he would
be entitled hereunder if he had terminated his employment for Good Reason
immediately after a Change of Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as defined above and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
15 or which otherwise becomes bound by the terms and provisions of this
Agreement by operation of law.

                           (b) This Agreement shall inure to the benefit of and
be enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of


                                     - 18 -
<PAGE>

this Agreement to his devisee, legatee or other designee or, if there be no
such designee, to his estate.

                  16. Notices. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be deemed to
have been given if delivered by hand to the address of the recipient or mailed
by first-class certified mail return receipt requested, to the party at the
following addresses:

         If to Executive:    Gordon Zacks
                             XXXXXXXXXXXXXXXXXX
                             XXXXXXXXXXXXXXXXXX

         If to the Company:  R. G. Barry Corporation
                             13405 Yarmouth Rd., N. W.
                             Pickerington, Ohio 43147
                             Attention: Chair of
                                        Compensation Committee

Either party to this Agreement may, by notice given in accordance with this
paragraph, designate a new address for notices, requests, demands and other
communications to such party.

                  17. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

                           (b) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

                           (c) The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.

                           (d) This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

                           (e) This Agreement supersedes any prior agreements or
understandings, oral or written, between Executive and the Company, with respect
to the subject matter described in



                                     - 19 -
<PAGE>

this Agreement and constitutes the entire agreement of the parties with
respect to any matter covered in this Agreement.

                           (f) If any provision or portion of this Agreement is
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement will remain in full force and effect.

                           (g) The Company will withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as required
by any applicable law or governmental regulation or ruling.

                           (h) Failure to insist upon strict compliance with any
of the terms, covenants or conditions described in this Agreement will not
constitute a waiver of that or any other term, covenant or condition nor will
any such failure constitute a waiver or relinquishment of the party's right to
insist subsequently on strict compliance of the affected (and all other) terms,
covenants or conditions of this Agreement.

                  IN WITNESS WHEREOF, this Agreement has been duly executed on
behalf of the Company by an officer duly authorized in the premises and by
Executive on the date first above written.

EXECUTIVE:                                  COMPANY:

                                            R. G. BARRY CORPORATION



/s/ Gordon Zacks  6/20/2001                 By: /s/ Daniel D. Viren  6/20/2001
----------------------------                   --------------------------------
Gordon Zacks                                    Daniel D. Viren, Senior Vice
                                                President-Finance, Chief
                                                Financial Officer, Secretary
                                                and Treasurer


                                     - 20 -





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>5
<FILENAME>l93477aex10-21.txt
<DESCRIPTION>EX-10.21
<TEXT>
<PAGE>
                                                                Exhibit 10.21


                                 AMENDMENT NO. 2

                                     to the

                R.G. BARRY CORPORATION DEFERRED COMPENSATION PLAN
                       (Effective as of December 1, 1999)

WHEREAS, R.G. Barry Corporation (the "Company") maintains the "R.G. Barry
Corporation Deferred Compensation Plan", effective as of September 1, 1995, and
as may be subsequently amended (hereinafter referred to as the "Plan"), for the
benefit of its Eligible Employees and the Eligible Employees of any
participating Affiliate;

WHEREAS, the Company desires to amend the provisions of the Plan to revise the
Plan's eligibility provisions; and

WHEREAS, Section 9.1 of the Plan provides that the Board of Directors of the
Company may amend the Plan from time to time with respect to all participating
Employers under the Plan;

NOW, THEREFORE, in accordance with the provisions of Section 9.1 of the Plan,
the following actions are hereby taken and the Plan is hereby amended in the
following respect:

         1.       Section 3.1, ELIGIBILITY, of the Plan shall be deleted in its
                  entirety, and the following new Section 3.1 shall be
                  substituted therefor:

         3.1      ELIGIBILITY

         Each Employee shall become an "Active Participant" under the Plan on
         the Entry Date on which his election to make Deferral Amounts under the
         Plan becomes effective, as provided in Article IV, coincident with or
         next following the date on which the Committee designates that he is
         eligible to become a Participant.

         The Committee shall provide each Eligible Employee who is eligible to
         become a Participant with notice of his status, so as to permit such
         Eligible Employee the opportunity to make the deferral elections
         provided for under Article IV. Such notice may be given at such time
         and in such manner as the Committee may determine from time to time.

                                 * * * * * *

                                       1
<PAGE>



IN WITNESS WHEREOF, R.G. Barry Corporation has caused this instrument to be
executed on this     day of December, 1999, by its duly authorized officers
effective as provided above.

                                    Company:
                                    R.G. Barry Corporation


                                    By:  /s/Harry Miller
                                       -----------------------------------------
                                          Vice President of Human Resources


                                    By:  /s/Richard L. Burrell
                                       -----------------------------------------
                                          Senior Vice President of Finance
                                          and Treasurer


                                    By:  /s/Michael S. Krasnoff
                                       -----------------------------------------
                                          Vice President of Finance
                                           and Assistant Treasurer






                                       2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.34
<SEQUENCE>6
<FILENAME>l93477aex10-34.txt
<DESCRIPTION>EX-10.34
<TEXT>
<PAGE>
                                                                   Exhibit 10.34

                             STOCK OPTION AGREEMENT
                          (Non-Qualified Stock Options)
                          ----------------------------


         THIS AGREEMENT is made to be effective as of February 19, 2001, by and
between R. G. Barry Corporation, an Ohio corporation (the "COMPANY"), and
WILLIAM LENICH (the "OPTIONEE").

                                   WITNESSETH:
                                   ----------

         WHEREAS, the Board of Directors of the COMPANY has adopted and the
shareholders of the COMPANY have approved the R. G. Barry Corporation 1994 Stock
Option Plan (the "PLAN"); and

         WHEREAS, pursuant to the provisions of the PLAN, the Board of Directors
of the COMPANY has appointed a Compensation Committee (the "COMMITTEE") to
administer the PLAN and the COMMITTEE has determined that an option to acquire
common shares, $1.00 par value (the "COMMON SHARES"), of the COMPANY should be
granted to the OPTIONEE upon the terms and conditions set forth in this
Agreement;

         NOW, THEREFORE, in consideration of the premises, the parties hereto
make the following agreement, intending to be legally bound thereby:

         (1) Grant of OPTION. The COMPANY hereby grants to the OPTIONEE an
option (the "OPTION") to purchase 1,325 COMMON SHARES of the COMPANY. The OPTION
is not intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE").

         (2) Terms and Conditions of the OPTION.

                  (A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the OPTION shall be
$2.65 per share, subject to adjustment as provided in Section 3.

                  (B) Exercise of the OPTION. Except as provided in Section 4,
the OPTION may not be exercised until the OPTIONEE shall have completed twelve
months of continuous employment with the COMPANY and/or its subsidiaries
immediately following the date hereof. Thereafter, the OPTION may be exercised
as follows:

                           (i) at any time after such twelve-month period as to
265 of the COMMON SHARES subject to the OPTION;

                           (ii) at any time after twenty-four months from the
date of this Agreement as to an additional 265 of the COMMON SHARES subject to
the OPTION;

<PAGE>

                           (iii) at any time after thirty-six months from the
date of this Agreement as to an additional 265 of the COMMON SHARES subject to
the OPTION;

                           (iv) at any time after forty-eight months from the
date of this Agreement as to an additional 265 of the COMMON SHARES subject to
the OPTION; and

                           (iv) at any time after sixty months from the date of
this Agreement as to the remaining 265 of the COMMON SHARES subject to the
OPTION.

                  Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall remain
exercisable as to those COMMON SHARES until the date of expiration of the OPTION
term. The COMMITTEE may, but shall not be required to (unless otherwise provided
in this Agreement), accelerate the schedule of the time or times when the OPTION
may be exercised.

                  The grant of the OPTION shall not confer upon the OPTIONEE any
right to continue in the employment of the COMPANY nor limit in any way the
right of the COMPANY to terminate the employment of the OPTIONEE at any time in
accordance with law or the COMPANY'S governing corporate documents.

                  (C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this Agreement.

                  (D) Method of Exercise. The OPTION may be exercised by giving
written notice of exercise to the COMMITTEE in care of the Treasurer of the
COMPANY stating the number of full COMMON SHARES subject to the OPTION in
respect of which it is being exercised. Payment for all such COMMON SHARES shall
be made to the COMPANY at the time the OPTION is exercised in United States
dollars in cash (including check, bank draft or money order). If permitted by
the COMMITTEE, payment for such COMMON SHARES may be made (i) by delivery of
COMMON SHARES of the COMPANY already owned by the OPTIONEE and having a Fair
Market Value (as that term is defined in the PLAN) on the date of delivery equal
to the OPTION PRICE, or (ii) by delivery of a combination of cash and already
owned COMMON SHARES. After payment in full for the COMMON SHARES purchased under
the OPTION has been made, the COMPANY shall take all such action as is necessary
to deliver appropriate share certificates evidencing the COMMON SHARES purchased
upon the exercise of the OPTION as promptly thereafter as is reasonably
practicable.

                  (E) Satisfaction of Taxes and Tax Withholding Requirements.
The COMMITTEE shall determine the appropriate arrangements for the satisfaction
by the COMPANY and the OPTIONEE of all federal, state, local or other income,
excise or employment taxes or tax withholding requirements applicable to the
exercise of the OPTION or the later disposition of the COMMON SHARES or other
property thereby acquired.

         (3) Adjustments and Changes in the COMMON SHARES.

                  (A) In the event that the outstanding COMMON SHARES of the
COMPANY shall be changed into or exchanged for a different kind of shares or
other securities of the COMPANY or of another corporation or for any other
property (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise) or if the number
of such COMMON SHARES shall be increased through the payment of a stock
dividend, then unless such change results in the termination of a1l outstanding
options granted



                                       2
<PAGE>

pursuant to the PLAN, then except as provided in Section (4), there shall be
substituted for or added to each COMMON SHARE of the COMPANY subject to the
OPTION, the number and kind of shares or other securities or other property into
which each outstanding COMMON SHARE of the COMPANY shall be changed, or for
which each such COMMON SHARE shall be exchanged, or to which the holder of each
such COMMON SHARE shall be entitled, as the case may be. The OPTION shall also
be appropriately amended as to the OPTION PRICE and other terms as may be
necessary to reflect the foregoing events. The number of COMMON SHARES that will
vest on the dates set forth in Section 2(B) shall be appropriately adjusted to
reflect any such change in the outstanding COMMON SHARES. In the event there
shall be any other change in the number or kind of the outstanding shares of the
COMPANY, or of any shares or other securities or other property into which such
shares shall have been changed, or for which they shall have been exchanged,
then if the COMMITTEE shall, in its sole discretion, determine that such change
equitably requires an adjustment in the OPTION, such adjustment shall be made by
the COMMITTEE in accordance with such determination. Fractional shares resulting
from any adjustment in the OPTION pursuant to this Section 3(A) shall be rounded
down to the nearest whole number of shares.

                  (B) Notice of any adjustment pursuant to this Section 3 shall
be given by the COMPANY to the OPTIONEE.

         (4) Acceleration of OPTIONS. The OPTION will be fully exercisable upon
the occurrence of any of the following events:

                  (A) Termination of the OPTIONEE'S employment by COMPANY
without "cause," as defined in the employment agreement between COMPANY and
OPTIONEE dated February 19, 2001 (a copy of which is attached to this agreement
- "Employment Agreement"), whether or not the Employment Agreement has expired
by its terms or been superceded when the acceleration event occurs.

                  (B) Termination of employment by OPTIONEE for "good reason,"
as defined in the Employment Agreement, but only if all of the procedures
described in that employment agreement are followed.

                  (C) Upon a "change in control" or a "special change in
control," as defined in the Employment Agreement.

                  (D) In the event that the COMPANY or its shareholders enter
into one or more agreements to dispose of all or substantially all of the assets
or fifty percent (50%) or more of the outstanding capital stock of the COMPANY
by means of sale (whether as a result of a tender offer or otherwise), merger,
reorganization or liquidation in one or a series of related transactions (each,
an "ACCELERATION EVENT"), then the OPTION shall become exercisable during the
fifteen (15) days immediately prior to the scheduled consummation of the
ACCELERATION EVENT with respect to the full number of COMMON SHARES subject to
the OPTION; provided, however, that no such ACCELERATION EVENT will occur in the
event that (i) the primary purpose of the transaction is to change the COMPANY'S
domicile solely within the United States, (ii) the terms of the agreement(s)
require as a prerequisite for the consummation of the transaction that each
option granted by the COMPANY pursuant to the



                                       3
<PAGE>

PLAN either be assumed by the successor corporation or parent thereof or be
replaced with a comparable option to purchase shares of capital stock of the
successor corporation or parent thereof, or (iii) the transaction is approved by
a majority of the members of the Board of Directors of the COMPANY who had
either been in office for more than twelve (12) months prior to such transaction
or had been elected, or nominated for election by the COMPANY's shareholders, by
the vote of three-fourths of the directors then still in office who were
directors at the beginning of such twelve-month period; and provided further
that any exercise of the OPTION during such fifteen (15) day period shall be
conditioned upon the consummation of such transaction and shall be effective
only immediately before such consummation, except to the extent that the
OPTIONEE may indicate, in writing, that such exercise is unconditional with
regard to all or part of the unaccelerated portion of the OPTION. Upon
consummation of the ACCELERATION EVENT, the OPTION, whether or not accelerated,
shall terminate and cease to be exercisable, unless assumed by the successor
corporation or parent thereof.

                  (E) In the event of the occurrence of an ACCELERATION EVENT,
if the OPTIONEE is subject to the filing requirements imposed under Section
16(a) of the Securities Exchange Act of 1934 with respect to the COMPANY, the
OPTIONEE shall receive a payment of cash equal to the difference between the
aggregate "Fair Value" of the COMMON SHARES subject to such accelerated OPTION
and the aggregate OPTION PRICE of such COMMON SHARES. Notwithstanding the
provisions of the foregoing sentence, no payment of cash shall be made in
respect of the accelerated OPTION unless a period of at least six (6) months has
elapsed from the date of grant of the OPTION. For purposes of this Section 4(B),
"Fair Value" shall mean the highest aggregate fair market value of the subject
COMMON SHARES during the 60-day period immediately preceding the date of the
consummation of the ACCELERATION EVENT. Payment of said cash shall be made
within ten (10) days after said consummation of the ACCELERATION EVENT. The
foregoing payments under this section 4(B) shall be made in lieu of and in full
discharge of any and all obligations of the COMPANY in respect of the OPTION.

                  (E) Termination of employment by the OPTIONEE because of death
or Disability, as defined in the Employment Agreement.

                  (F) The grant of this OPTION shall not affect in any way the
right of the COMPANY to adjust, reclassify, reorganize, or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

         (5) Non-Assignabilitv of OPTION. The OPTION shall not be assignable or
otherwise transferab1e by the OPTIONEE except by will or by the laws of descent
and distribution. The OPTION may not be exercised during the lifetime of the
OPTIONEE except by him, his guardian or legal representative.

         (6) Substitution for OPTION. The COMMITTEE shall have the authority to
effect, at any time and from time to time, with the consent of the OPTIONEE, the
cancellation of the OPTION and the grant in substitution therefor of one or more
new options under the PLAN covering the same or a different number of COMMON
SHARES.


                                       4
<PAGE>

         (7) Exercise After Termination of Employment.

                  (A) Except as otherwise provided in this Agreement, the OPTION
shall be exercisable only by the OPTIONEE, shall be exercisable only while the
OPTIONEE is in the employment of the COMPANY and then only if the OPTION has
become exercisable by its terms, and if not exercisable by its terms at the time
the OPTIONEE ceases to be in the employment of the COMPANY, shall immediately
expire on the date of termination of employment.

                  (B) If the OPTION is exercisable by its terms at the time the
OPTIONEE ceases to be in the employment of the COMPANY other than by reason of
the death, permanent disability or normal retirement of the OPTIONEE, the OPTION
must be exercised on or before the earlier of three (3) months after the date of
termination of employment or the fixed expiration date of the OPTION after which
period the OPTION shall expire. Notwithstanding the foregoing, if the OPTIONEE's
employment is terminated for "cause" as defined in the Employment Agreement, the
OPTION shall, to the extent not previously exercised, expire immediately upon
such termination.

                  (C) In the event of the death of the OPTIONEE (i) while in the
employment of the COMPANY or (ii) within three (3) months after his termination
of employment other than for other than "cause" as defined in the Employment
Agreement, the unexercised portion of the OPTION (whether or not then
exercisable by its terms) shall become immediately exercisable by his estate for
a period ending on the earlier of the fixed expiration date of the OPTION or
twelve months after the date of death, after which period the OPTION shall
expire. For purposes hereof, the estate of an OPTIONEE shall be defined to
include the legal representatives thereof or any person who has acquired the
right to exercise the OPTION by reason of the death of the OPTIONEE.

                  (D) In the event of the termination of employment of the
OPTIONEE by reason of the "permanent disability" of the OPTIONEE, the
unexercised portion of the OPTION (whether or not then exercisable by its terms)
shall become exercisable for a period ending on the earlier of the fixed
expiration date of the OPTION or twelve (12) months from the date of
termination, after which period the OPTION shall expire. For purposes hereof,
"permanent disability" shall be deemed to be the inability of the OPTIONEE to
perform the duties of his job with the COMPANY because of a physical or mental
disability as evidenced by the opinion of a COMPANY-approved doctor of medicine
licensed to practice medicine in the United States of America.

                  (E) In the event of the termination of employment of the
OPTIONEE by reason of the "normal retirement" of the OPTIONEE, the unexercised
portion of the OPTION (whether or not then exercisable by its terms) granted to
the OPTIONEE on or before his 65th birthday shall become immediately exercisable
for a period ending on the earlier of the fixed expiration date of the OPTION or
twelve (12) months after the date of death, after which period the OPTION shall
expire. Also, in the event of the "normal retirement" of the OPTIONEE, the
unexercised portion of the OPTION (whether or not then exercisable by its terms)
granted to the OPTIONEE after his 65th birthday and held for a period of at
least twelve (12) consecutive months of active employment with the COMPANY after
the date of grant shall become



                                       5
<PAGE>

immediately exercisable for a period ending on the earlier of the fixed
expiration date of the OPTION or twelve (12) months after the date of death,
after which period the OPTION shall expire. For purposes hereof, "retirement"
shall be deemed to be "normal retirement" if the OPTIONEE is at least 65 years
of age and has completed at least five (5) consecutive years of employment with
the COMPANY at the date of retirement.

         (8) Restrictions on Transfers of COMMON SHARES. Anything contained in
this Agreement or elsewhere to the contrary notwithstanding, the COMPANY may
postpone the issuance and delivery of COMMON SHARES upon any exercise of the
OPTION until completion of any stock exchange listing or registration or other
qualification of such COMMON SHARES under any state or federal law, rule or
regulation as the COMPANY may consider appropriate; and may require the OPTIONEE
when exercising the OPTION to make such representations and furnish such
information as the COMPANY may consider appropriate in connection with the
issuance of the COMMON SHARES in compliance with applicable law.

                  COMMON SHARES issued and delivered upon exercise of the OPTION
shall be subject to such restrictions on trading, including appropriate
legending of certificates to that effect, as the COMPANY, in its discretion,
shall determine are necessary to satisfy applicable legal requirements and
obligations.

         (9) Rights of OPTIONEE as Shareholder. The OPTIONEE shall have no
rights as a shareholder of the COMPANY with respect to any COMMON SHARES of the
COMPANY covered by the OPTION until the date of issuance of a certificate to him
evidencing such COMMON SHARES.

         (10) PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this Agreement shall be
deemed incorporated herein by reference. In the event that any term or condition
of this Agreement is inconsistent with the terms and conditions of the PLAN, the
PLAN shall be deemed controlling.

         (11) Government Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.

         (12) Rights and Remedies Cumulative. All rights and remedies of the
COMPANY and of the OPTIONEE enumerated in this Agreement shall be cumulative
and, except as expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in equity, and each of
said rights or remedies may be exercised and enforced concurrently.

         (13) Captions. The captions contained in this Agreement are included
only for convenience of reference and do not define, limit, explain or modify
this Agreement or its interpretation, construction or meaning and are in no way
to be construed as a part of this Agreement.

         (14) Severability. If any provision of this Agreement or the
application of any provision hereof to any person or any circumstance shall be
determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other


                                       6
<PAGE>

provisions shall remain in full force and effect, and it is the intention of
each party to this Agreement that if any provision of this Agreement is
susceptible of two or more constructions, one of which would render the
provision enforceable and the other or others of which would render the
provision unenforceable, then the provision shall have the meaning which renders
it enforceable.

         (15) Number and Gender. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may required.

         (16) Entire Agreement. This Agreement (and attachments to it)
constitutes the entire agreement between the COMPANY and the OPTIONEE in respect
of the subject matter of this Agreement, and this Agreement supersedes all prior
and contemporaneous agreements between the parties hereto in connection with the
subject matter of this Agreement. No officer, employee or other servant or agent
of the COMPANY, and no servant or agent of the OPTIONEE, is authorized to make
any representation, warranty or other promise not contained in this Agreement.
No change, termination or attempted waiver of any of the provisions of this
Agreement shall be binding upon any party hereto unless contained in a writing
signed by the party to be charged.

         (17) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns (including successive, as well
as immediate, successors and assigns) of the COMPANY.





                  [Remainder of page intentionally left blank;
                          signatures on following page]


                                       7
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written.

                                       COMPANY:

                                       R. G. BARRY CORPORATION


                                       By:  /s/ Gordon Zacks
                                          -------------------------------------

                                       Its: Chairman and Chief Executive Officer
                                           -------------------------------------

                                       WILLIAM LENICH:


                                         /s/ William Lenich
                                       -----------------------------------------
                                       Signature of Optionee


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Street Address


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       City                State       Zip Code


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Telephone Number


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Social Security Number


                                       8
<PAGE>


                             STOCK OPTION AGREEMENT
                            (Incentive Stock Option)


         THIS AGREEMENT is made to be effective as of February 19, 2001, by and
between R. G. Barry Corporation, an Ohio corporation (the "COMPANY"), and
William Lenich (the "OPTIONEE").

                                   WITNESSETH:

         WHEREAS, pursuant to the provisions of the R. G. Barry Corporation 1997
Incentive Stock Plan (as amended, the "PLAN"), the Board of Directors of the
COMPANY has appointed a Compensation Committee (the "COMMITTEE") to administer
the PLAN and the COMMITTEE has determined that an option to acquire common
shares, $1.00 par value (the "COMMON SHARES"), of the COMPANY should be granted
to the OPTIONEE upon the terms and conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the premises, the parties hereto
make the following agreement, intending to be legally bound thereby:

         (1) Grant of OPTION. The COMPANY hereby grants to the OPTIONEE an
option (the "OPTION") to purchase 100,000 COMMON SHARES of the COMPANY (subject
to adjustment as provided in Section (3)). The OPTION is intended to qualify as
an incentive stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "CODE").

         (2) Terms and Conditions of the OPTION.

                  (A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the OPTION shall be
$2.65 per share, subject to adjustment as provided in Section (3).

                  (B) Exercise of the OPTION. Except as provided under Section
4, the OPTION may not be exercised until the OPTIONEE shall have completed
twelve months of continuous employment with the COMPANY and/or its subsidiaries
immediately following the date hereof. Thereafter, except as otherwise provided
in this Agreement, the OPTION may be exercised as follows:

                           (i) at any time after such twelve-month period as to
20% of the COMMON SHARES subject to the OPTION (subject to adjustment as
provided in Section (3));

                           (ii) at any time after twenty-four months from the
date of this Agreement as to an additional 20% of the COMMON SHARES subject to
the OPTION (subject to adjustment as provided in Section (3));


<PAGE>


                           (iii) at any time after thirty-six-months as to an
additional 20% of the COMMON SHARES subject to the OPTION (subject to adjustment
as provided in Section (3));

                           (iv) at any time after forty-eight months from the
date of this Agreement as to an additional 20% of the COMMON SHARES subject to
the OPTION (subject to adjustment as provided in Section (3)) and

                           (v) at any time after sixty months from the date of
this Agreement as to the remaining 20% of the COMMON SHARES subject to the
OPTION (subject to adjustment as provided in Section (3)).

         Subject to the other provisions of this Agreement, if the OPTION
becomes exercisable as to certain COMMON SHARES, it shall remain exercisable as
to those COMMON SHARES until the date of expiration of the OPTION term. The
COMMITTEE may, but shall not be required to (unless otherwise provided in this
Agreement), accelerate the schedule of the time or times when the OPTION may be
exercised.

         The grant of the OPTION shall not confer upon the OPTIONEE any right to
continue in the employment of the COMPANY nor limit in any way the right of the
COMPANY to terminate the employment of the OPTIONEE at any time in accordance
with law or the COMPANY's governing corporate documents.

                  (C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this Agreement.

                  (D) Method of Exercise. The OPTION may be exercised by giving
written notice of exercise to the COMPANY in care of the Treasurer of the
COMPANY stating the number of COMMON SHARES subject to the OPTION in respect of
which it is being exercised. Payment for all such COMMON SHARES shall be made to
the COMPANY at the time the OPTION is exercised in United States dollars in cash
(including check, bank draft or money order). Payment for such COMMON SHARES
also may be made (i) by delivery of COMMON SHARES of the COMPANY already owned
by the OPTIONEE and having a Fair Market Value (as that term is defined in the
PLAN) on the date of delivery equal to the OPTION PRICE, or (ii) by delivery of
a combination of cash and already owned COMMON SHARES. After payment in full for
the COMMON SHARES purchased under the OPTION has been made, the COMPANY shall
take all such action as is necessary to deliver appropriate share certificates
evidencing the COMMON SHARES purchased upon the exercise of the OPTION as
promptly thereafter as is reasonably practicable.

         (3) Adjustments and Changes in the COMMON SHARES.

                  (A) In the event that the outstanding COMMON SHARES of the
COMPANY shall be changed into or exchanged for a different kind of shares or
other securities of the COMPANY or of another corporation or for any other type
of property (whether by reason of



                                     - 2 -
<PAGE>

merger, consolidation, recapitalization, reclassification, split-up, combination
of shares or otherwise) or if the number of such COMMON SHARES shall be
increased through the payment of a stock dividend, then unless such change
results in the termination of all outstanding options granted pursuant to the
PLAN, then except as provided in Section (4) hereof, there shall be substituted
for or added to each COMMON SHARE of the COMPANY subject to the OPTION, the
number and kind of shares or other securities or other property into which each
outstanding COMMON SHARE of the COMPANY shall be changed, or for which each such
COMMON SHARE shall be exchanged, or to which the holder of each such COMMON
SHARE shall be entitled, as the case may be. The OPTION shall also be
appropriately amended as to the OPTION PRICE and other terms as may be necessary
to reflect the foregoing events. The number of COMMON SHARES that will vest on
the dates set forth in Section (2)(B) shall be appropriately adjusted to reflect
any such change in the outstanding COMMON SHARES. In the event there shall be
any other change in the number or kind of the outstanding shares of the COMPANY,
or of any shares or other securities or other property into which such shares
shall have been changed, or for which they shall have been exchanged, then if
the COMMITTEE shall, in its sole discretion, determine that such change
equitably requires an adjustment in the OPTION, such adjustment shall be made by
the COMMITTEE in accordance with such determination. Fractional shares resulting
from any adjustment in the OPTION pursuant to this Section 3(A) shall be rounded
down to the nearest whole number of shares.

                  (B) Notwithstanding the foregoing, any and all adjustments in
connection with the OPTION shall comply in all respects with Section 422 of the
CODE, and the regulations promulgated thereunder.

                  (C) Notice of any adjustment pursuant to this Section (3)
shall be given by the COMPANY to the OPTIONEE.

                  (D) The grant of this OPTION shall not affect in any way the
right of the COMPANY to adjust, reclassify, reorganize, or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

         (4) Acceleration of OPTION. The OPTION will be fully exercisable upon
the occurrence of any of the following events:

                  (A) Termination of the OPTIONEE'S employment by COMPANY
without "cause," as defined in the employment agreement between COMPANY and
OPTIONEE dated February 19, 2001 (a copy of which is attached to this agreement
- "Employment Agreement"), whether or not the Employment Agreement has expired
by its terms or been superceded when the acceleration event occurs.

                  (B) Termination of employment by OPTIONEE for "good reason,"
as defined in the Employment Agreement, but only if all of the procedures
described in that employment agreement are followed.



                                     - 3 -
<PAGE>

                  (C) Upon a "change in control" or a "special change in
control," as defined in the Employment Agreement.

                  (D) In the event that the COMPANY or its shareholders enter
into one or more agreements to dispose of all or substantially all of the assets
or fifty percent (50%) or more of the outstanding capital stock of the COMPANY
by means of sale (whether as a result of a tender offer or otherwise), merger,
reorganization or liquidation in one or a series of related transactions (each,
an "ACCELERATION EVENT"), then the OPTION shall become exercisable during the
fifteen (15) days immediately prior to the scheduled consummation of the
ACCELERATION EVENT with respect to the full number of COMMON SHARES subject to
the OPTION. Upon consummation of the ACCELERATION EVENT, the OPTION, whether or
not accelerated, will terminate and cease to be exercisable, unless assumed by
the successor corporation or parent thereof.

                  (E) Termination of employment by OPTIONEE because of death or
Disability, as defined in the Employment Agreement.

         (5) Non-Assignability of OPTION. The OPTION shall not be assignable or
otherwise transferable by the OPTIONEE except by will or by the laws of descent
and distribution. The OPTION may not be exercised during the lifetime of the
OPTIONEE except by him, his guardian or legal representative.

         (6) Substitution for OPTION. The COMMITTEE shall have the authority to
effect, at any time and from time to time, with the consent of the OPTIONEE, the
cancellation of the OPTION and the grant in substitution therefor of one or more
new options under the PLAN covering the same or a different number of COMMON
SHARES at an option price per share in all events not less than 100% of the
closing sale price for the COMMON SHARES of the COMPANY as shown on the New York
Stock Exchange - Composite Transactions on the new grant date.

         (7) Exercise After Termination of Employment.

                  (A) Except as otherwise provided in this Agreement, the OPTION
shall be exercisable only while the OPTIONEE is in the employment of the COMPANY
and then only if the OPTION has become exercisable by its terms, and if not
exercisable by its terms at the time the OPTIONEE ceases to be in the employment
of the COMPANY, shall immediately expire on the date of termination of
employment.

                  (B) If the OPTION is exercisable by its terms at the time the
OPTIONEE ceases to be in the employment of the COMPANY other than by reason of
OPTIONEE's death, permanent disability or normal retirement (as defined in
Section (7)(D) below), it must be exercised on or before the earlier of three
(3) months after the date of the termination of employment of the OPTIONEE or
the fixed expiration date of the OPTION, after which period the OPTION shall
expire. Notwithstanding the foregoing, if the OPTIONEE's employment is
terminated for "cause" as defined in the Employment Agreement,, the OPTION
shall, to the extent not previously exercised, expire immediately upon such
termination.


                                     - 4 -
<PAGE>

                  (C) In the event of the death of the OPTIONEE (i) while in the
employment of the COMPANY or (ii) within three (3) months after his termination
of employment other than for "cause" as defined in the Employment Agreement, the
unexercised portion of the OPTION (whether or not then exercisable by its terms)
shall become immediately exercisable by his estate for a period ending on the
earlier of the fixed expiration date of the OPTION or twelve months after the
date of death, after which period the OPTION shall expire. For purposes hereof,
the estate of an OPTIONEE shall be defined to include the legal representatives
thereof or any person who has acquired the right to exercise the OPTION by
reason of the death of the OPTIONEE.

                  (D) In the event of the termination of employment of the
OPTIONEE by reason of the "permanent disability" or "normal retirement" of the
OPTIONEE, the unexercised portion of the OPTION (whether or not then exercisable
by its terms) shall become immediately exercisable in full for a period ending
on the earlier of three (3) months after the termination of employment or the
fixed expiration date of the OPTION, after which period the OPTION shall expire;
provided, however, that if such termination of employment occurs by reason of
"disability" within the meaning of Section 22(e)(3) of the CODE, said
three-month period shall be extended to twelve months. For purposes hereof,
"permanent disability" shall be deemed to be the inability of the OPTIONEE to
perform the duties of his job with the COMPANY because of a physical or mental
disability as evidenced by the opinion of a COMPANY-approved doctor of medicine
licensed to practice medicine in the United States of America and "retirement"
shall be deemed to be "normal retirement" if the OPTIONEE is at least 65 years
of age and has completed at least five (5) consecutive years of employment with
the COMPANY at the date of retirement.

         (8) Restrictions on Transfers of COMMON SHARES. Anything contained in
this Agreement or elsewhere to the contrary notwithstanding, the COMPANY may
postpone the issuance and delivery of COMMON SHARES upon any exercise of the
OPTION until completion of any stock exchange listing or registration or other
qualification of such COMMON SHARES under any state or federal law, rule or
regulation as the COMPANY may consider appropriate; and may require the OPTIONEE
when exercising the OPTION to make such representations and furnish such
information as the COMPANY may consider appropriate in connection with the
issuance of the COMMON SHARES in compliance with applicable law.

         COMMON SHARES issued and delivered upon exercise of the OPTION shall be
subject to such restrictions on trading, including appropriate legending of
certificates to that effect, as the COMPANY, in its discretion, shall determine
are necessary to satisfy applicable legal requirements and obligations.

         (9) Rights of OPTIONEE. The OPTIONEE shall have no rights as a
shareholder of the COMPANY with respect to any COMMON SHARES of the COMPANY
covered by the OPTION until the date of issuance of a certificate to him
evidencing such COMMON SHARES.


                                     - 5 -
<PAGE>

         (10) PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this Agreement shall be
deemed incorporated herein by reference. In the event that any term or condition
of this Agreement is inconsistent with the terms and conditions of the PLAN, the
PLAN shall be deemed controlling.

         (11) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.

         (12) Rights and Remedies Cumulative. All rights and remedies of the
COMPANY and of the OPTIONEE enumerated in this Agreement shall be cumulative
and, except as expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in equity, and each of
said rights or remedies may be exercised and enforced concurrently.

         (13) Captions. The captions contained in this Agreement are included
only for convenience of reference and do not define, limit, explain or modify
this Agreement or its interpretation, construction or meaning and are in no way
to be construed as a part of this Agreement.

         (14) Severability. If any provision of this Agreement or the
application of any provision hereof to any person or any circumstance shall be
determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect, and it is the intention of each party to
this Agreement that if any provision of this Agreement is susceptible of two or
more constructions, one of which would render the provision enforceable and the
other or others of which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.

         (15) Number and Gender. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may required.

         (16) Entire Agreement. This Agreement (and attachments to it)
constitutes the entire agreement between the COMPANY and the OPTIONEE in respect
of the subject matter of this Agreement, and this Agreement supersedes all prior
and contemporaneous agreements between the parties hereto in connection with the
subject matter of this Agreement. No officer, employee or other servant or agent
of the COMPANY, and no servant or agent of the OPTIONEE is authorized to make
any representation, warranty or other promise not contained in this Agreement.
No change, termination or attempted waiver of any of the provisions of this
Agreement shall be binding upon any party hereto unless contained in a writing
signed by the party to be charged.



                                     - 6 -
<PAGE>



         (17) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns (including successive, as well
as immediate, successors and assigns) of the COMPANY.


                  [Remainder of page intentionally left blank;
                         signatures on following page.]


                                     - 7 -
<PAGE>


                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written.


                                       COMPANY:

                                       R. G. BARRY CORPORATION


                                       By:  /s/ Gordon Zacks
                                          -------------------------------------

                                       Its: Chairman and Chief Executive Officer
                                           -------------------------------------

                                       WILLIAM LENICH:


                                       /s/ William Lenich
                                       -----------------------------------------
                                       Name


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Street Address


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       City, State, Zip Code


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Social Security Number



                                     - 8 -

<PAGE>



                             STOCK OPTION AGREEMENT
                            (Incentive Stock Options)

         THIS AGREEMENT is made to be effective as of February 19, 2001, by and
between R. G. Barry Corporation, an Ohio corporation (the "COMPANY"), and
WILLIAM LENICH (the "OPTIONEE").

                                   WITNESSETH:

         WHEREAS, the Board of Directors of the COMPANY has adopted and the
shareholders of the COMPANY have approved the R. G. Barry Corporation 1994 Stock
Option Plan (the "PLAN"); and

         WHEREAS, pursuant to the provisions of the PLAN, the Board of Directors
of the COMPANY has appointed a Compensation Committee (the COMMITTEE") to
administer the PLAN and the COMMITTEE has determined that an option to acquire
common shares, $1.00 par value (the "COMMON SHARES"), of the COMPANY should be
granted to the OPTIONEE upon the terms and conditions set forth in this
Agreement;

         NOW, THEREFORE, in consideration of the premises, the parties hereto
make the following agreement, intending to be legally bound thereby:

         (1) Grant of OPTION. The COMPANY hereby grants to the OPTIONEE an
option (the "OPTION") to purchase 88,675 COMMON SHARES of the COMPANY. The
OPTION is intended to qualify as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "CODE").

         (2) Terms and Conditions of the OPTION.

                  (A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the OPTION shall be
$2.65 per share, being 100% of the closing sale price for the COMMON SHARES of
the COMPANY as shown on the New York Stock Exchange on February 16, 2001,
subject to adjustment as provided in Section 3.

                  (B) Exercise of the OPTION. Except as provided in Section 4,
the OPTION may not be exercised until the OPTIONEE shall have completed twelve
months of continuous employment with the COMPANY and/or its subsidiaries
immediately following the date hereof. Thereafter, the OPTION may be exercised
as follows:

                           (i) at any time after such twelve-month period as to
17,735 of the COMMON SHARES subject to the OPTION;

                           (ii) at any time after twenty-four months from the
date of this Agreement as to an additional 17,735 of the COMMON SHARES subject
to the OPTION;


<PAGE>


                           (iii) at any time after thirty-six months from the
date of this Agreement as to an additional 17, 735 of the COMMON SHARES subject
to the OPTION; and

                           (iv) at any time after forty-eight months from the
date of this Agreement as to an additional 17,735 of the COMMON SHARES subject
to the OPTION; and

                           (v) at any time after sixty months from the date of
this Agreement as to the remaining 17,735 of the COMMON SHARES subject to the
OPTION.

                  Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall remain
exercisable as to those COMMON SHARES until the date of expiration of the OPTION
term. The COMMITTEE may, but shall not be required to (unless otherwise provided
in this Agreement), accelerate the schedule of the time or times when the OPTION
may be exercised.

                  The grant of the OPTION shall not confer upon the OPTIONEE any
right to continue in the employment of the COMPANY nor limit in any way the
right of the COMPANY to terminate the employment of the OPTIONEE at any time in
accordance with law or the COMPANY'S governing corporate documents.

                  (C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this Agreement.

                  (D) Method of Exercise. The OPTION may be exercised by giving
written notice of exercise to the COMMITTEE in care of the Treasurer of the
COMPANY stating the number of full COMMON SHARES subject to the OPTION in
respect of which it is being exercised. Payment for all such COMMON SHARES shall
be made to the COMPANY at the time the OPTION is exercised in United States
dollars in cash (including check, bank draft or money order). If permitted by
the COMMITTEE, payment for such COMMON SHARES may be made (i) by delivery of
COMMON SHARES of the COMPANY already owned by the OPTIONEE and having a Fair
Market Value (as that term is defined in the PLAN) on the date of delivery equal
to the OPTION PRICE, or (ii) by delivery of a combination of cash and already
owned COMMON SHARES. After payment in full for the COMMON SHARES purchased under
the OPTION has been made, the COMPANY shall take all such action as is necessary
to deliver appropriate share certificates evidencing the COMMON SHARES purchased
upon the exercise of the OPTION as promptly thereafter as is reasonably
practicable.

                  (E) Satisfaction of Taxes and Tax Withholding Requirements.
The COMMITTEE shall determine the appropriate arrangements for the satisfaction
by the COMPANY and the OPTIONEE of all federal, state, local or other income,
excise or employment taxes or tax withholding requirements applicable to the
exercise of the OPTION or the later disposition of the COMMON SHARES or other
property thereby acquired.


                                      - 2 -
<PAGE>

         (3) Adjustments and Changes in the COMMON SHARES.

                  (A) In the event that the outstanding COMMON SHARES of the
COMPANY shall be changed into or exchanged for a different kind of shares or
other securities of the COMPANY or of another corporation, or for any other
property, (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise) or if the number
of such COMMON SHARES shall be increased through the payment of a stock
dividend, then unless such change results in the termination of all outstanding
options granted pursuant to the PLAN, then except as provided in Section (4)
hereof, there shall be substituted for or added to each COMMON SHARE of the
COMPANY subject to the OPTION, the number and kind of shares or other securities
or other property into which each outstanding COMMON SHARE of the COMPANY shall
be changed, or for which each such COMMON SHARE shall be exchanged, or to which
the holder of each such COMMON SHARE shall be entitled, as the case may be. The
OPTION shall also be appropriately amended as to the OPTION PRICE and other
terms as may be necessary to reflect the foregoing events. The number of COMMON
SHARES that will vest on the dates set forth in Section 2(B) shall be
appropriately adjusted to reflect any such change in the outstanding COMMON
SHARES. In the event there shall be any other change in the number or kind of
the outstanding shares of the COMPANY, or of any shares or other securities or
other property into which such shares shall have been changed, or for which they
shall have been exchanged, then if the COMMITTEE shall, in its sole discretion,
determine that such change equitably requires an adjustment in the OPTION, such
adjustment shall be made by the COMMITTEE in accordance with such determination.
Fractional shares resulting from any adjustment in the OPTION pursuant to this
section 3(A) shall be rounded down to the nearest whole number of shares.

                  (B) Notwithstanding the foregoing, any and all adjustments in
connection with the OPTION shall comply in all respects with Section 422 of the
CODE, and the regulations promulgated thereunder.

                  (C) Notice of any adjustment pursuant to this Section 3 shall
be given by the COMPANY to the OPTIONEE.

         (4) Acceleration of OPTIONS. The OPTION will be fully exercisable upon
the occurrence of any of the following events:

                  (A) Termination of the OPTIONEE'S employment by COMPANY
without "cause," as defined in the employment agreement between COMPANY and
OPTIONEE dated February 19, 2001 (a copy of which is attached to this agreement
- "Employment Agreement"), whether or not the Employment Agreement has expired
by its terms or been superceded when the acceleration event occurs.

                  (B) Termination of employment by OPTIONEE for "good reason,"
as defined in the Employment Agreement, but only if all of the procedures
described in that employment agreement are followed.


                                     - 3 -
<PAGE>

                  (C) Upon a "change in control" or a "special change in
control," as defined in the Employment Agreement.

                  (D) In the event that the COMPANY or its shareholders enter
into one or more agreements to dispose of all or substantially all of the assets
or fifty percent (50%) or more of the outstanding capital stock of the COMPANY
by means of sale (whether as a result of a tender offer or otherwise), merger,
reorganization or liquidation in one or a series of related transactions (each,
an "ACCELERATION EVENT"), then the OPTION shall become exercisable during the
fifteen (15) days immediately prior to the scheduled consummation of the
ACCELERATION EVENT with respect to the full number of COMMON SHARES subject to
the OPTION provided, however, that no such ACCELERATION EVENT will occur in the
event that (i) the primary purpose of the transaction is to change the COMPANY'S
domicile solely within the United States, (ii) the terms of the agreement(s)
require as a prerequisite for the consummation of the transaction that each
option granted by the COMPANY pursuant to the PLAN either be assumed by the
successor corporation or parent thereof or be replaced with a comparable option
to purchase shares of capital stock of the successor corporation or parent
thereof, or (iii) the transaction is approved by a majority of the members of
the Board of Directors of the COMPANY who had either been in office for more
than twelve (12) months prior to such transaction or had been elected, or
nominated for election by the COMPANY'S shareholders, by the vote of
three-fourths of the directors then still in office who were directors at the
beginning of such twelve-month period; and provided further that any exorcise of
the OPTION during such fifteen (15) day period shall be conditioned upon the
consummation of such transaction and shall be effective only immediately before
such consummation, except to the extent that the OPTIONEE may indicate, in
writing, that such exercise is unconditional with regard to all or part of the
unaccelerated portion of the OPTION. Upon consummation of the ACCELERATION
EVENT, the OPTION, whether or not accelerated, shall terminate and cease to be
exercisable, unless assumed by the successor corporation or parent thereof.

                  (E) Termination of employment by OPTIONEE because of death or
Disability, as defined in the Employment Agreement.

                  (F) The grant of this OPTION shall not affect in any way the
right of the COMPANY to adjust, reclassify, reorganize, or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

         (5) Non-Assignability of OPTION. The OPTION shall not be assignable or
otherwise transferable by the OPTIONEE except by will or by the laws of descent
and distribution. The OPTION may not be exercised during the lifetime of the
OPTIONEE except by him, his guardian or legal representative.

         (6) Substitution for OPTION. The COMMITTEE shall have the authority to
effect, at any time and from time to time, with the consent of the OPTIONEE, the
cancellation of the OPTION and the grant in substitution therefor of one or more
new options under the PLAN covering the same or a different number of COMMON
SHARES at an option price per share in all events not less than 100% of the
closing sale price for the COMMON SNARES of the


                                     - 4 -
<PAGE>


COMPANY as shown on the New York Stock Exchange - Composite Transactions on
the new grant date.

         (7) Exercise After Termination of Employment.

                  (A) Except as otherwise provided in this Agreement, the OPTION
shall be exercisable only by the OPTIONEE, shall be exercisable only while the
OPTIONEE is in the employment of the COMPANY and then only if the OPTION has
become exercisable by its terms, and if not exercisable by its terms at the time
the OPTIONEE ceases to be in the employment of the COMPANY, shall immediately
expire on the date of termination of employment.

                  (B) If the OPTION is exercisable by its terms at the time the
OPTIONEE ceases to be in the employment of the COMPANY other than by reason of
the death, permanent disability or normal retirement of the OPTIONEE, it must be
exercised on or before the earlier of three (3) months after the date of the
termination of employment of the OPTIONEE or the fixed expiration date of the
OPTION after which period the OPTION shall expire. Notwithstanding the
foregoing, if the OPTIONEE'S employment is terminated for "cause" as defined in
the Employment Agreement, the OPTION shall, to the extent not previously
exercised, expire immediately upon such termination.

                  (C) In the event of the death of the OPTIONEE (i) while in the
employment of the COMPANY or (ii) within three (3) months after his termination
of employment other than for "cause" as defined in the Employment Agreement, the
unexercised portion of the OPTION (whether or not then exercisable by its terms)
shall become immediately exercisable by his estate for a period ending on the
earlier of the fixed expiration date of the OPTION or twelve (12) months after
the date of death, after which period the OPTION shall expire. For purposes
hereof, the estate of an OPTIONEE shall be defined to include the legal
representatives thereof or any person who has acquired the right to exercise the
OPTION by reason of the death of the OPTIONEE.

                  (D) In the event of the termination of employment of the
OPTIONEE by reason of the "permanent disability" or "normal retirement" of the
OPTIONEE, the OPTION shall become fully exercisable for a period ending on the
earlier of three (3) months after the termination of employment or the fixed
expiration date of the OPTION; provided, however, that if such termination of
employment occurs by reason of "disability" within the meaning of Section
22(e)(3) of the CODE, said three-month period shall be extended to twelve
months. For purposes hereof, "permanent disability" shall be deemed to be the
inability of the OPTIONEE to perform the duties of his job with the COMPANY
because of a physical or mental disability as evidenced by the opinion of a
COMPANY-approved doctor of medicine licensed to practice medicine in the United
States of America and "retirement" shall be deemed to be "normal retirement" if
the OPTIONEE is at least 65 years of age and has completed at least five (5)
consecutive years of employment with the COMPANY at the date of retirement.



                                     - 5 -
<PAGE>

         (8) Restrictions on Transfers of COMMON SHARES. Anything contained in
this Agreement or elsewhere to the contrary notwithstanding, the COMPANY may
postpone the issuance and delivery of COMMON SHARES upon any exercise of the
OPTION until completion of any stock exchange listing or registration or other
qualification of such COMMON SHARES under any state or federal law, rule or
regulation as the COMPANY may consider appropriate; and may require the OPTIONEE
when exercising the OPTION to make such representations and furnish such
information as the COMPANY may consider appropriate in connection with the
issuance of the COMMON SHARES in compliance with applicable law.

         COMMON SHARES issued and delivered upon exercise of the OPTION shall be
subject to such restrictions on trading, including appropriate legending of
certificates to that effect, as the COMPANY, in its discretion, shall determine
are necessary to satisfy applicable legal requirements and obligations.

         (9) Rights of OPTIONEE as Shareholder. The OPTIONEE shall have no
rights as a shareholder of the COMPANY with respect to any COMMON SHARES of the
COMPANY covered by the OPTION until the date of issuance of a certificate to him
evidencing such COMMON SHARES.

         (10) PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this Agreement shall be
deemed incorporated herein by reference. In the event that any term or condition
of this Agreement is inconsistent with the terms and conditions of the PLAN, the
PLAN shall be deemed controlling.

         (11) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.

         (12) Rights and Remedies Cumulative. All rights and remedies of the
COMPANY and of the OPTIONEE enumerated in this Agreement shall be cumulative
and, except as expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in equity, and each of
said rights or remedies may be exercised and enforced concurrently.

         (13) Captions. The captions contained in this Agreement are included
only for convenience of reference and do not define, limit, explain or modify
this Agreement or its interpretation, construction or meaning and are in no way
to be construed as a part of this Agreement.

         (14) Severability. If any provision of this Agreement or the
application of any provision hereof to any person or any circumstance shall be
determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect, and it is the intention of each party to
this Agreement that if any provision of this Agreement is susceptible of two or
more constructions, one of which would render the provision enforceable and the
other or others of which would



                                     - 6 -
<PAGE>

render the provision unenforceable, then the provision shall have the
meaning which renders it enforceable.

         (15) Number and Gender. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may required.

         (16) Entire Agreement. This Agreement (and attachments to it)
constitutes the entire agreement between the COMPANY and the OPTIONEE in respect
of the subject matter of this Agreement, and this Agreement supersedes all prior
and contemporaneous agreements between the parties hereto in connection with the
subject matter of this Agreement. No officer, employee or other servant or agent
of the COMPANY, and no servant or agent of the OPTIONEE, is authorized to make
any representation, warranty or other promise not contained in this Agreement.
No change, termination or attempted waiver of any of the provisions of this
Agreement shall be binding upon any party hereto unless contained in a writing
signed by the party to be charged.

         (17) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successor; and assigns (including successive, as well
as immediate, successors and assigns) of the COMPANY.


                  [Remainder of page intentionally left blank;
                          signatures on following page]


                                     - 7 -
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written.


                                       COMPANY:

                                       R. G. BARRY CORPORATION


                                       By:  /s/ Gordon Zacks
                                          -------------------------------------

                                       Its: Chairman and Chief Executive Officer
                                           -------------------------------------

                                       WILLIAM LENICH:


                                       /s/ William Lenich
                                       -----------------------------------------
                                       Signature of Optionee


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Street Address


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       City                State       Zip Code


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Telephone Number


                                       X X X X X X X X X X X X X X X X X X X X
                                       -----------------------------------------
                                       Social Security Number



                                     - 8 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.35
<SEQUENCE>7
<FILENAME>l93477aex10-35.txt
<DESCRIPTION>EX-10.35
<TEXT>
<PAGE>
                                                                   Exhibit 10.35

                             STOCK OPTION AGREEMENT

                              (OTHER OPTION GRANT)

                          (Non-Qualified Stock Option)


                  THIS AGREEMENT is made to be effective as of December 26,
2001, by and between R.G. Barry Corporation, an Ohio corporation (the
"Company"), and William Lenich ("Employee") and constitutes the grant of the
"$5.00 options" referenced in the employment agreement between Employee and the
Company dated February 19, 2001.


                                   WITNESSETH:

                  WHEREAS, the Board of Directors of the Company ("Board") has
determined that an option to acquire common shares of the Company should be
granted to Employee upon the terms and conditions set forth in this Agreement;

                  NOW, THEREFORE, in consideration of the covenants and premises
contained herein, the parties named above make the following agreement,
intending to be legally bound thereby:


         1. Grant of Option. Subject to adjustment pursuant to Section 3(a) of
this Agreement, the Company hereby grants to Employee an option (the "Option")
to purchase One Hundred Fifty Thousand (150,000) common shares, par value $1.00
per share, of the Company (the "Shares"). The Option is not intended to qualify
as an incentive stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). Anything contained in this Agreement to the
contrary notwithstanding, the Option may not be exercised for a period of six
(6) months from the date of this Agreement.

         2. Terms and Conditions of the Option.


                  (a) Option Price. The purchase price (the "Option Price") to
be paid by Employee to the Company upon the exercise of the Option shall be Five
Dollars and 66/100 ($5.66) per Share, subject to adjustment as provided in
Section 3(a) of this Agreement.

                  (b) Exercise of the Option. Except as otherwise provided in
this Agreement, the Option may be exercised by Employee as follows:

                           (i) Subject to Employee's continued employment with
the Company or with any entity related to Company through common ownership
("Subsidiary"), the Option shall vest and become exercisable with respect to (a)
one-third (33-1/3%) of the Shares on the first anniversary of the effective date
of this Agreement, (b) two-thirds (66-2/3%) of the Shares on the



<PAGE>

second anniversary of the effective date of this Agreement and (c) all (100%) of
the Shares on the third anniversary of the effective date of this Agreement.

                           (ii) Subject to the six-month holding period
requirement of Section 1 of this Agreement, if Employee's employment with the
Company and all Subsidiaries is terminated by Employee as a result of death or
Disability (as defined below), by the Company without Cause (as defined below),
or by Employee for Good Reason (as defined below), the Unvested Portion (as
defined below) shall vest and become exercisable upon the date of such
termination of employment.

                           (iii) The portion of the Option which has become
vested and exercisable pursuant to this section is referred to as the "Vested
Portion" and the portion of the Option which has not become vested and
exercisable pursuant to this section is referred to as the "Unvested Portion."

                           (iv) For purposes of this Agreement, (a) "Disability"
shall have the same meaning given to such term in the Employee's employment
agreement dated February 19, 2001, (whether or not that agreement is in effect
at the time employment terminates), (b) "Cause" shall have the same meaning
given to such term in the Employee's employment agreement dated February 19,
2001 (whether or not that agreement is in effect at the time employment
terminates), and (c) "Good Reason" shall have the same meaning given to such
term in the Employee's employment agreement dated February 19, 2001 (whether or
not that agreement is in effect at the time employment terminates).

                           (v) Change in Control. In the event there is a Change
in Control or a Special Change in Control, subject to the six-month holding
period requirement of Section 1, the Option shall become immediately exercisable
as of the date of the Change in Control or the Special Change in Control,
whether or not exercisable under this Agreement. If the Option has been held for
less than six months as of the date of the Change in Control or the Special
Change in Control, the Option shall be cancelled by the Company without
consideration and shall terminate as of the date of the Change of Control or the
Special Change in Control. For purposes of this Agreement, "Change in Control"
and "Special Change in Control" shall have the same meanings given to such terms
in the Employee's employment agreement dated February 19, 2001 (whether or not
that agreement is in effect at the time employment terminates).

                           (vi) If Employee's employment with the Company or any
Subsidiary is terminated prior to a Change in Control or Special Change in
Control (a) by Employee for any reason other than Disability or death or by
Employee without Good Reason or (b) by the Company for Cause, the Unvested
Portion of the Option shall be cancelled by the Company without consideration
and shall thereupon terminate.


                                     - 2 -
<PAGE>


                  (c) Option Term. Subject to the provisions of this Agreement,
Employee may exercise all or any part of the Vested Portion of the Option at any
time prior to the occurrence of the earliest event listed below:

                           (i) the fifth anniversary of the date of this
Agreement;

                           (ii) three months following the date of Employee's
termination of employment with the Company or a Subsidiary other than by reason
of death or Disability, or, if earlier, on the fifth anniversary of the date of
this Agreement;

                           (iii) twelve months following the date of Employee's
termination of employment with the Company due to death or Disability, or, if
earlier, on the fifth anniversary of the date of this Agreement;

                           (iv) twelve months after the death of Employee, if
Employee dies within three (3) months after his termination of employment other
than for willful, deliberate or gross misconduct, or, if earlier, on the fifth
anniversary of the date of this Agreement; or

                           (v) the date of termination of Employee's employment
with the Company or a Subsidiary if the termination is by the Company for Cause.

                  (d) Exercise of Option. The Vested Portion of the Option may
be exercised by giving written notice of exercise to the Company, in care of the
Treasurer of the Company, stating the number of full Shares subject to the
Option in respect of which it is being exercised. Payment for all such Shares
shall be made to the Company at the time the Option is exercised in United
States dollars in cash (including check, bank draft or money order). Payment for
such Shares also may be made (i) by delivery of common shares of the Company
already owned by Employee and having a Fair Market Value (as defined in Section
2(f) of this Agreement) on the date of delivery equal to the Option Price for
the Shares purchased, or (ii) by delivery of the combination of cash and already
owned common shares of the Company. The Board may, in its discretion, permit
payment of the Option Price of the Shares subject to the Option by delivery of a
properly executed exercise notice together with a copy of irrevocable
instructions to deliver promptly to the Company the amount of sale proceeds to
pay the Option Price. After payment in full for the Shares purchased under the
Option has been made, the Company shall take all such action necessary to
deliver appropriate share certificates evidencing the Shares purchased upon
exercise of the Option as promptly thereafter as is reasonably practicable.

                  (e) Tax Withholding. Employee will pay to the Company the
amount of any taxes the Company is required by law to withhold with respect to
the exercise of the Option. Employee also may instruct the Company to withhold
from the Shares issuable upon exercise of the Option that number of Shares
having a Fair Market Value (as defined in Section 2(f) of this Agreement) on the
date of exercise equal to the amount of any taxes the Company is required by law
to withhold with respect to the exercise of the Option.



                                     - 3 -
<PAGE>

                  (f) For purposes of this Agreement, "Fair Market Value" means,
on any given date, the closing price of the Company's common shares, as reported
on The New York Stock Exchange, or on any securities exchange on which the
common shares are listed for such date, or if the Company's common shares were
not traded on such date, on the next preceding date on which the Company's
common shares were traded.

         3. Adjustments and Changes in the Shares.

                  The following provisions shall apply to the Option:

                  (a) Generally. In the event that the outstanding common shares
of the Company shall be changed into or exchanged for a different kind of
shares, other securities or other property of the Company or of another
corporation or for cash, (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise) or if the number of common shares of the Company shall be increased
through the payment of a share dividend, there shall be substituted for or added
to each Share subject to the Option, the number and kind of shares, other
securities or other property and the amount of cash into which each outstanding
common share of the Company shall be changed, or for which each such common
share shall be exchanged, or to which the holder of each common share shall be
entitled, as the case may be. The Option shall also be appropriately amended as
to the Option Price and other terms as may be necessary to reflect the foregoing
events. The number of shares that will become vested in accordance with Section
2(b) of this Agreement shall be appropriately adjusted to reflect any such
change in the outstanding common shares of the Company. In the event there shall
be any other change in the number or kind of the outstanding shares of the
Company, or of any shares, other securities or other property (including cash)
into which such shares shall have been changed, or for which they shall have
been exchanged, then if the Board, in its sole discretion, shall determine that
such change equitably requires an adjustment in the Option, such adjustment
shall be made by the Board in accordance with such determination. Fractional
shares resulting from any adjustment in the Option pursuant to this Section 3(a)
shall be rounded down due to the nearest whole number of shares. The Board has
sole discretion to make all determinations under this section. All decisions by
the Board under this section will be final and binding on the Company, Employee
and the assigns, if any, of each.

                  (b) No Restrictions on Company. The grant of this Option shall
not affect in any way the right of the Company to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

         4. Assignability of Option. Upon receipt of permission from the
Company, Employee may transfer all or any portion of the Option to a revocable
inter-vivos trust as to which Employee is the settlor, or to a "Permissible
Transferee", as such term is defined in the Company's 1997 Incentive Stock Plan.
The Option may not be retransferred by a Permissible Transferee except by will
or by the laws of descent and distribution, and then only to another Permissible
Transferee. The Option may not be exercised during the lifetime of Employee
except by Employee or Employee's legal representative.



                                     - 4 -
<PAGE>

         5. Substitution for Option. The Company shall have the authority to
effect, at anytime and from time to time, with the consent of the Employee, the
cancellation of the Option and the grant in substitution therefore of one or
more new options covering the same or a different number of common shares of the
Company.

         6. Restrictions on Transfers of Common Shares. Anything contained in
this Agreement or elsewhere to the contrary notwithstanding, the Company may
postpone the issuance and delivery of Shares upon any exercise of the Option
until completion of any stock exchange listing or registration or other
qualification of such Shares under any state or federal law, rule or regulation
as the Company may consider appropriate. The Company may require Employee, when
exercising the Option, to make such representations and furnish such information
as the Company may consider appropriate in connection with the issuance of the
Shares in compliance with applicable law.

                  Shares issued and delivered upon exercise of the Option shall
be subject to such restrictions on trading, including appropriate legending of
certificates to that effect, as the Company, in its discretion, shall determine
are necessary to satisfy applicable legal requirements and obligations.

         7. Rights of Employee. Employee shall have no rights as a shareholder
of the Company with respect to any Shares of the Company covered by the Option
until the date of issuance of a certificate to him evidencing ownership of the
Shares.

         8. No Agreement to Employ. The grant of the Option shall not confer
upon Employee any right to continue in the employment of the Company or any
Subsidiary nor limit in any way the right of the Company or any Subsidiary to
terminate the employment of Employee at any time.

         9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.

         10. Rights and Remedies Cumulative. All rights and remedies of the
Company and of Employee enumerated in this Agreement shall be cumulative and,
except as expressly provided otherwise in this Agreement, none shall exclude any
other rights or remedies allowed by law or in equity, and each may be exercised
and enforced concurrently.

         11. Captions. The captions contained in this Agreement are included
only for convenience of reference and do not define, limit, explain or modify
this Agreement or its interpretation, construction or meaning and are in no way
to be construed as a part of this Agreement.

         12. Severability. If any provision of this Agreement or the application
of any provision hereof to any person or any circumstance shall be determined to
be invalid or unenforceable, then such determination shall not affect any other
provision of this Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall remain in full


                                     - 5 -
<PAGE>

force and effect. It is the intention of each party to this Agreement that if
any provision of this Agreement is susceptible of two or more interpretations,
one of which would render the provision enforceable and the other or others of
which would render the provision unenforceable, then the provision shall have
the meaning which renders it enforceable.

         13. Number and Gender. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may required.

         14. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and Employee with respect to this stock option grant, and
this Agreement supersedes all prior agreements between the parties related to
this option grant. No officer, employee or other servant or agent of the
Company, and no servant or agent of Employee, is authorized to make any
representation, warranty or other promise not contained in this Agreement. No
change, termination or attempted waiver of any of the provisions of this
Agreement shall be binding upon any party hereto unless contained in a writing
signed by the party to be charged.

         15. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns (including subsequent, as well
as immediate, successors and assigns) of the Company.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written.

                                    COMPANY:

                                    R.G. BARRY CORPORATION

                                    By:  /s/ Gordon Zacks
                                        ----------------------------------------

                                    Name:    Gordon Zacks
                                          --------------------------------------

                                    Title:  Chairman and Chief Executive Officer
                                           -------------------------------------

                                    EMPLOYEE:

                                     /s/ William Lenich
                                    --------------------------------------------
                                    William Lenich

                                    Social Security Number:  X X X X X X X X
                                                            -----------------

                                    Employee Number:  X X X X X X X X X X
                                                     ---------------------

                                     - 6 -


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>8
<FILENAME>l93477aex13.txt
<DESCRIPTION>EX-13
<TEXT>
<PAGE>

SIX YEAR REVIEW OF SELECTED FINANCIAL DATA
R.G. Barry Corporation and Subsidiaries



<Table>
<Caption>
                                                       2001         2000         1999         1998        1997**        1996
<S>                                                 <C>          <C>          <C>         <C>           <C>          <C>
SUMMARY OF OPERATIONS (THOUSANDS)
Net sales                                           $ 144,121    $ 149,435    $ 140,092    $ 149,404    $ 148,034    $ 147,284
Cost of sales                                          83,972       93,816       85,996       76,707       77,401       81,797
  Gross profit                                         60,149       55,619       54,096       72,697       70,633       65,487
    Gross profit as percent of net sales                 41.7%        37.2%        38.6%        48.7%        47.7%        44.5%
Selling, general and administrative expenses           58,298       58,321       66,416       56,719       53,137       49,008
Restructuring and asset impairment charges
  (adjustments)                                          (118)       1,921        5,914           --           --           --
Other income (expense)                                    800        1,717          502          380          415         (211)
Proceeds from litigation, net of expenses
  incurred                                                 --        4,476           --           --           --           --
Interest expense, net                                  (1,079)      (1,802)      (1,651)      (1,607)      (1,817)      (2,483)
Earnings (loss) before income taxes                     1,690         (232)     (19,383)      14,751       16,094       13,785
Income tax expense (benefit)                              716          522       (4,778)       5,443        6,420        5,511
Minority interest                                         (42)         (52)         (20)          --           --           --
Net earnings (loss)                                 $     932    $    (806)   $ (14,625)   $   9,308    $   9,674    $   8,274

ADDITIONAL DATA
Basic earnings (loss) per share*                    $    0.10    $   (0.09)   $   (1.55)   $    0.96    $    1.02    $    0.89
Diluted earnings (loss) per share*                  $    0.10    $   (0.09)   $   (1.55)   $    0.93    $    0.99    $    0.84
Book value per share*                               $    6.44    $    6.34    $    6.46    $    8.12    $    7.23    $    6.26
Annual % change in net sales                             (3.6)%        6.7%        (6.2)%        0.9%         0.5%         9.9%
Annual % change in net earnings                         215.6%        94.5%      (257.1)%       (3.8)%       16.9%        26.5%
Pretax return on net sales                                1.2%        (0.2)%      (13.8)%        9.9%        10.9%         9.4%
Net earnings (loss) as a percentage of beginning
  shareholders' equity                                    1.6%        (1.3)%      (18.5)%       13.5%        16.5%        16.7%
Basic average number of shares outstanding
  (in thousands)*                                       9,379        9,399        9,455        9,698        9,504        9,308
Diluted average number of shares outstanding
  (in thousands)*                                       9,577        9,399        9,455        9,992        9,820        9,827

FINANCIAL SUMMARY (THOUSANDS)
Current assets                                      $  69,676    $  70,268    $  71,678    $  91,914    $  84,693    $  70,792
Current liabilities                                    14,471       14,715       17,705       17,885       20,908       15,108
Working capital                                        55,205       55,553       53,973       74,029       63,785       55,684
Long-term debt                                          5,162        7,637        8,571       10,714       12,992       15,265
Net shareholders' equity                               60,385       59,452       60,384       79,139       69,126       58,704
Net property, plant and equipment                      10,917       11,741       14,408       12,875       14,231       13,929
Total assets                                           88,612       89,549       93,164      113,026      107,083       92,180
Capital expenditures                                    1,194          653        3,381        1,136        2,944        2,404
Depreciation and amortization of property,
  plant and equipment                                   1,847        2,109        2,243        2,413        2,531        2,571
</Table>


See also Management's Discussion & Analysis of Financial Condition & Results of
Operations.

 *Retroactively restated to reflect 5-for-4 share split distributed June 17,
  1996.

**Fiscal year includes fifty-three weeks.

Effective in 2000, the Company changed its inventory costing method from LIFO to
FIFO. All amounts have been retroactively restated to give effect to the change
in costing method. Certain amounts from prior years have been reclassified to
conform with current year's presentation.




                                    6 and 7
<PAGE>

MARKET AND DIVIDEND INFORMATION
R.G. Barry Corporation and Subsidiaries

MARKET VALUE

            QUARTER               HIGH                 LOW               CLOSE
------------------------------------------------------------------------------
2001        FIRST                $3.250              $2.130             $2.500
            SECOND                4.750               2.200              4.600
            THIRD                 5.180               3.830              4.040
            FOURTH                6.080               3.680              5.950

2000        First                $4.250              $2.750             $3.375
            Second                4.750               3.000              3.875
            Third                 3.938               2.750              3.000
            Fourth                3.125               2.125              2.375


Stock Exchange: New York Stock Exchange
Stock Ticker Symbol: RGB
Wall Street Journal Lising: BarryRG
Approximate Number of Registered Shareholders: 1,000

No cash dividends were paid during the periods noted. The Company has no current
intention to pay cash dividends, and its liability to do so is subject to the
restrictions contained in various loan agreements. See also Note 4 to
Consolidated Financial Statements, and Management's Discussion & Analysis of
Financial Condition & Results of Operations.



QUARTERLY FINANCIAL DATA
R.G. Barry Corporation and Subsidiaries

<TABLE>
<CAPTION>
2001 FISCAL QUARTERS                               in thousands, except basic and diluted earnings (loss) per share

                                            FIRST                SECOND                 THIRD                FOURTH
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>                   <C>                   <C>
NET SALES                                 $25,547               $16,958               $45,413               $56,203
GROSS PROFIT                                9,289                 5,701                19,652                25,507
NET EARNINGS (LOSS)                        (1,313)               (3,579)                2,603                 3,221
BASIC EARNINGS (LOSS) PER SHARE           $(0.14)                $(0.38)                $0.28               $  0.34
DILUTED EARNINGS (LOSS) PER SHARE         $(0.14)                $(0.38)                $0.28               $  0.34


<CAPTION>
2000 Fiscal Quarters
                                            First                Second                 Third                Fourth
-------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>                   <C>                   <C>
Net sales                                 $24,238               $22,241               $42,396               $60,560
Gross profit                                8,647                 5,861                16,405                24,706
Net earnings (loss)                           653                (3,588)                  137                 1,992
Basic earnings (loss) per share           $  0.07                $(0.38)                $0.01               $  0.21
Diluted earnings (loss) per share         $  0.07                $(0.38)                $0.01               $  0.21
</TABLE>


Certain amounts from prior periods have been reclassified to conform with
current presentation.

See also Management's Discussion & Analysis of Financial Condition & Results of
Operations.



                                       8
<PAGE>

                                           MANAGEMENT'S DISCUSSION & ANALYSIS OF
                                     FINANCIAL CONDITION & RESULTS OF OPERATIONS
                                         R.G. Barry Corporation and Subsidiaries


LIQUIDITY AND CAPITAL RESOURCES
Our company uses many differing types of assets in the development, production,
marketing, warehousing and distribution, and sale of our products. Mainly, we
utilize current assets, such as cash, receivables, inventory, and prepaid
expenses, and to a lesser degree, we utilize property, plant and equipment, and
other non-current assets, such as deferred taxes and goodwill.

At the end of 2001, current assets amounted to approximately 79 percent of total
assets, compared with 78 percent at the end of 2000. We had $55.2 million in net
working capital, made up of $69.7 million in current assets, less $14.5 million
in current liabilities as of the end of 2001.

As of the end of 2000, we had nearly the same level of net working capital at
$55.6 million, made up of $70.3 million in current assets, less $14.7 million in
current liabilities.

We ended 2001 with $12.3 million in cash and cash equivalents, $15.0 million in
trade receivables, net of allowances, and $35.6 million in inventory. By
comparison, at the end of 2000, we had $6.9 million in cash and cash
equivalents, $19.7 million in net trade receivables, and $32.8 million in
inventory. The increase in cash from 2000 to 2001, is due in part to the $4.6
million decline in net trade receivables from year to year, and a federal income
tax refund received in 2001 of $3.6 million, as a result of carrying back tax
losses to prior fiscal periods. See also the accompanying Consolidated
Statements of Cash Flows.

Following year-end 1999, we set an objective of lowering our investment in
inventory. During 2000, we reduced total inventories by $8.2 million, with the
largest reduction being a $5.7 million reduction in finished goods. Raw
materials and work in progress, together, were reduced by approximately $2.5
million. During 2001, inventories increased by $2.8 million, with the largest
portion a $2.3 million increase in slipper finished goods, substantially all in
Barry Comfort North America, where inventories at year end 2001 are well
positioned and where we normally experience the least exposure to risk of
markdowns or obsolescence. Net trade receivables declined from 2000 to 2001, by
$4.6 million. This is due, in part, to a $3.5 million increase in 2001 in
offsetting provisions for customer allowances and sales support programs. Also
impacting the decline in trade receivables is the nearly $4.4 million decrease
in merchandise sold during the fourth quarter of 2001, compared with the fourth
quarter of 2000. To some degree, the increase in inventory from 2000 to 2001,
and the decrease in trade receivables, reflect the decline in net sales during
the fourth quarter. Additionally, at the end of 2000, we had one large customer
who was late in paying approximately $3 million on its account before year-end.
The customer's account was paid early in 2001. There was no similar sizable
customer payment delays noted at the end of fiscal 2001. We have experienced no
significant loss from exposure to uncollectable accounts. The recent highly
publicized bankruptcies of Kmart Corporation, and Jacobson Stores Inc., did not
have any impact upon us in 2001, as neither store has been a customer of ours in
recent years.

Traditionally, we have leased most of our operating facilities. We periodically
review facilities to determine whether our current facilities will satisfy
projected operating needs for the foreseeable future. During the second half of
1999, we opened a new manufacturing facility in the Dominican Republic. Products
manufactured in the leased Dominican facility were expected to be shipped into
the European market duty-free. Subsequent to opening the Dominican facility,
Mexico and the European market completed a new duty arrangement, which we
believe will, by 2003, result in the same duty situation as had existed with the
Dominican Republic. Taking this modified duty arrangement between Mexico and
Europe into consideration, we closed the Dominican operation before the end of
2000. In 1999, we opened a warehouse in San Antonio, Texas to serve what we
believed was a need to house increased finished goods inventory for the
Soluna(TM) line of Spa-at-home thermal/magnetic products. By 2000, the
Soluna(TM) products had not achieved expected results and we concluded that this
warehouse was too large and too expensive for its use, as originally planned,
especially in light of the significant reduction in inventory levels from 1999
to year-end 2000. In 2000, we moved that operation into a lower cost facility
that we had available in Laredo, Texas. Late in 2001, we committed to move into
a new leased warehouse facility in Nuevo Laredo, Mexico, which will permit us to
begin warehousing operations in Mexico in 2002, and reduce our warehousing
operations in the United States; this transition will permit us to substitute
lower cost Mexican



                                       9
<PAGE>

MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
R.G. Barry Corporation and Subsidiaries


warehouse labor for comparably higher U.S. labor costs. See also Note 5 of Notes
to the Consolidated Financial Statements for information about operating lease
commitments.

For many years, we have relied on unsecured revolving credit agreements to
satisfy our seasonal working capital liquidity needs. Throughout recent years,
our banks have agreed to amend the various agreements to accommodate our needs
and provide us with needed operating liquidity, occasionally modifying
provisions of the agreements as necessary. In March 2001, we entered into the
current Revolving Credit Agreement ("Revolver") with our main bank. This
Revolver, which extended through February 2002, was also unsecured, and further
modified certain of the covenants included in the previous agreements. The
Revolver contained covenants that we believe were not uncommon for agreements of
similar type and duration. The Revolver provided us a seasonally adjusted
available line of credit with a peak of $30 million from April through November.
During 2001, we reached a peak of $26 million in borrowings outstanding for a
two week period late in September through early October. This compares with $30
million in peak outstanding borrowings for a nearly four week period during the
same months of 2000. Throughout 2001, our overall usage of the Revolver was
lower than in 2000. The daily weighted average borrowings outstanding in 2001
amounted to $7.9 million in 2001 compared with $11.5 million in 2000. Clearly,
during the time period from mid-spring though December, we are dependent upon
the bank and the Revolver for funding our seasonal liquidity needs. On March 8,
2002, we received a letter from our bank with their commitment to renew and
extend the Revolver through 2002, providing us with a seasonally adjusted line
of credit of up to $30 million, which we expect will meet our liquidity needs
for the upcoming year.

At times, we have incurred additional long-term debt to provide long-term
capital financing. The last time we incurred additional long-term debt was in
1994, when we issued a $15 million, 9.7 percent note, due in 2004 ("Note"). The
balance due under the Note as of the end of 2001 was $6.4 million. The Note
contains covenants that we believe are not uncommon among agreements of its type
and duration. The Note and the Revolver place restrictions on the amount of
additional borrowings we may incur, and contain certain other financial
covenants. See also Note 4 of Notes to the Consolidated Financial Statements for
additional information. The Note requires semi-annual interest payments and
annual principal repayments of $2.1 million, the first of which was made in July
1998, and which continue through July 2004. We are in compliance with all
covenants of the Note and the Revolver.

We last paid cash dividends in 1981. As of year-end 2001, the Revolver
prohibited the payment of cash dividends and further limited the acquisition of
common shares for treasury. We have no current plans to pay cash dividends or to
acquire common shares for treasury. We anticipate continuing to use our cash
resources to finance operations and to fund the future needs of the business.
While the covenants under the Note permit us to incur additional long-term debt
should that become desirable, the Revolver requires the consent of the bank in
order for us to do so.

We believe that we have a strong balance sheet, with strong financial ratios. At
the end of 2001, total shareholders' equity amounted to $60.4 million. With the
addition of long-term debt totaling $5.2 million, we have a total capital base
of $65.6 million. This compares with $59.5 million in shareholders' equity last
year and $7.6 million in long-term debt. Our long-term debt to net worth ratio
was 8.5 percent at the end of 2001, slightly improved from the 12.8 percent at
the end of 2000. Our current ratio, a measure of the relationship of current
assets to current liabilities, was 4.81 to 1 at year-end 2001, compared with
4.78 to 1 at year-end 2000.


ACCELERATION OF NAFTA TARIFF REDUCTIONS - SUBSEQUENT EVENTS
Effective January 1, 2002, the 15 percent duty on United States slippers made in
Mexico has been eliminated in total. The tariff removal, which was a part of
round three of the NAFTA tariff acceleration, eliminated duties on a range of
products, including slippers. This duty elimination is expected to have a
positive impact on many aspects of our business. Prior to the elimination of the
duty, the slipper tariff was scheduled to be reduced annually at the rate of 2.5
percent per year until its scheduled elimination on January 1, 2008.



                                       10
<PAGE>

                                           MANAGEMENT'S DISCUSSION & ANALYSIS OF
                                     FINANCIAL CONDITION & RESULTS OF OPERATIONS
                                         R.G. Barry Corporation and Subsidiaries


The acceleration allows us to take full advantage of the benefits of
manufacturing in our own North American plants and is a key element in our
strategies for the future. It permits us to relocate cutting and molding
activities from the U. S. to Mexico and thus keep our costs in line with
competitive products produced offshore. In 2002, we expect to transfer jobs from
the U.S. to Mexico and realize the benefits of reduced labor and benefit costs.
Without the tariff eliminations, most of the labor savings would have been
offset by the increase in the cost of duties, and we would have been forced to
consider further reductions in North American jobs. We expect the shift of jobs
to be completed in 2002, and impact about 350 positions in the company. The
severance costs associated with this reduction in workforce are to be recognized
in the first quarter of 2002, and are expected to amount to about $750 thousand.

We contracted with two firms to assist us in pursuit of this tariff relief. With
the successful conclusion of this pursuit, we agreed to pay an aggregate of
approximately $6.25 million, most of which is to be paid in nearly equal
quarterly installments, over the next four years. The benefit we will receive
from the tariff relief in excess of $18 million over the next six years, with an
estimated $1.5 million in pre-tax net benefit in 2002 alone. The remainder of
the benefit will be realized equally over the following five years.

LEGAL PROCEEDINGS
In March 2000, a lawsuit we filed in 1998 against Domino's Pizza, Inc. and Phase
Change Laboratories, Inc., alleging patent infringement and deceptive
advertising, was settled. As a part of the settlement, we received a cash
payment of $5 million, and entered into a $1 million licensing arrangement with
Domino's for the future use of our patented thermal retention technology.

FOREIGN CURRENCY RISK
Our operations are currently conducted primarily in U. S. Dollars and to a much
lesser degree, in British Pounds Sterling, French Francs and Euros, and Canadian
Dollars--all currencies that historically have not been subject to significant
market volatility. In accordance with our established policy guidelines, we have
at times hedged some of these currencies on a short-term basis, using foreign
exchange contracts as a means to protect ourselves from fluctuations. The amount
we normally maintained under foreign exchange contracts has not been material to
overall operations. At the end of fiscal 2001, there were no foreign exchange
contracts outstanding.

In addition, a sizable portion of our manufacturing labor and other costs are
incurred in Mexican Pesos. It has not been our practice to hedge the Peso as it
has generally declined in value over longer time horizons, when compared to the
U. S. Dollar. In addition, forward contracts denominated in Pesos generally have
not been readily or economically available. Should the Peso suffer a devaluation
compared to the U. S. Dollar, we believe that the impact would likely be of
benefit to us by reducing, at least initially, the effective costs of
manufacturing, although any such reduction would not be expected to have a
significant impact upon our results of operations.

IMPLEMENTATION OF THE "EURO" AS A COMMON LEGAL CURRENCY IN EUROPE
We believe that we are prepared for the implementation of the "Euro" as the
common legal currency in certain European Community countries. The United
Kingdom will not immediately join the transition to the Euro, although France
has already joined. Our systems were designed several years ago with sufficient
flexibility to handle the introduction of the Euro as an added transactional
currency.

CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires that we make certain
estimates. These estimates can affect our reported revenues, expenses and
results of operations, as well as the reported values of certain of our assets
and liabilities. This is not new; making estimates about the impact of future
events has been a generally accepted practice for nearly all companies in nearly
all industries for many many years. We make these estimates after gathering as
much information from as many resources as are available at the time, and after
reasonably assessing the conditions that exist at the time we prepare the
financial reports. We make these estimates in a consistent manner from period to
period, based upon historical trends and conditions, after review and analysis
of current events and conditions. Management believes that these



                                       11
<PAGE>

MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
R.G. Barry Corporation and Subsidiaries


estimates reasonably reflect the impact of events that may not become known with
certainty until some time in the future.

The more critical of these accounting policies requiring significant management
estimates include: a) an assessment of the estimated costs of returns and
allowances that will be required to satisfy the commitments made to retailers
for the just concluded holiday season, b) an evaluation of any impairment in the
realizable value of our inventories in light of the just concluded holiday
selling season, the economic environment, and the plans for the upcoming selling
season, c) an assessment of the amount of income taxes that will become
currently payable for the just concluded period and what deferred tax costs or
benefits will become realizable for income tax purposes in the future as a
result of differences between results of operations as reported in conformity
with accounting principles generally accepted in the United States of America
and the requirements of the complex income tax laws existing in various
jurisdictions, d) an assessment of the ongoing future value of goodwill, and e)
estimations of the future costs associated with restructuring charges related to
a number of operational changes and reconfigurations we have announced. In
addition, there are other accounting policies, which require less judgmental
input by management, that we follow consistently from year to year, and those
policies are summarized in Note 1 of Notes to the Consolidated Financial
Statements beginning on page 20 of this Annual Report to Shareholders.


IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2001, the FASB issued SFAS No. 141, "Business Combinations, which
requires the purchase method of accounting for business combinations initiated
after June 2001, and eliminates pooling-of-interests method. We believe the
adoption of SFAS No. 141 will not have a significant impact on our financial
statements.

In July 2001, the FASB issues SFAS No. 142, "Goodwill and Other Intangible
Assets", which is effective for fiscal years beginning after December 2001. SFAS
No. 142 requires, among other things, the discontinuance of goodwill
amortization, substituting an assessment of the impairment of existing
intangibles. With the adoption of SFAS in 2002, we will no longer amortize
approximately $2 million of goodwill--the amortization incurred in 2001 and 2000
was $136 thousand per year. We will be required to perform an impairment review
of goodwill upon adoption of SFAS 142. We expect to complete this review in 2002
and do not anticipate the need to record an impairment charge, however, there
can be no assurance that at the time of the review or later, an impairment
charge may not be required.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 develops one accounting method by
which long-lived assets held for disposal are measured at the lower of book
value or fair market value less costs of disposal. In addition, SFAS 144
enlarges the scope of discontinued operations to include all operations of an
entity with operations that can be separated from the rest of the business and
that will be eliminated in a disposal transaction. We do not anticipate the
adoption of SFAS No. 144 to have a material impact on our financial statements.

In June 2001, the Emerging Issues Task Force, ("EITF") issued EITF Issue No.
00-25, "Vendor Income Statement Characterization of Consideration Paid to a
Reseller of Vendor's Products," effective for periods beginning after December
2001. EITF 00-25 addresses whether consideration from a vendor to a reseller is
an adjustment of the selling prices of the vendor's products and thus, should be
deducted from revenue when classified in the vendor's statement of operations,
or is a cost incurred by the vendor for services received from the reseller and
thus should be classified as an expense in the vendor's statement of operations.
Upon application of this EITF, financial statements of prior periods presented
for comparative purposes should be reclassified to comply with the current
statement classification required under this Issue. The application of this
Issue will require a reclassification of certain expenses netting them against
sales in our Statement of Operations. This will result in a revocation of net
sales and a corresponding decrease in selling, general and administrative
expenses of approximately $9.5 million, $9.0 million and $9.7 million for fiscal
years 2001, 2000 and 1999, respectively. There will be no change in the final
determination of earnings before income taxes or in the determination of net
earnings after income taxes.



                                       12
<PAGE>

                                           MANAGEMENT'S DISCUSSION & ANALYSIS OF
                                     FINANCIAL CONDITION & RESULTS OF OPERATIONS
                                         R.G. Barry Corporation and Subsidiaries


RESULTS OF OPERATIONS
2001 SALES AND OPERATIONS COMPARED WITH 2000
The results of 2001 represent an important turnaround. Operating results in 2001
showed continued improvement.

During 2001, net sales totaled $144.1 million, about 3.6 percent less than they
were in 2000. We operate in three different business segments: (I) "Barry
Comfort North America", which manufactures and markets at- and around-the-home
comfort footwear in North America; (II) "Barry Comfort Europe", which markets
footwear principally in western Europe; and (III) "Thermal", which markets,
principally in North America, thermal retention technology products that act as
hot or cold temperature reservoirs releasing that energy over time. See also
Note 13 of Notes to the Consolidated Financial Statements for a breakdown of net
sales by geographic region of the world and by segment of our operations.

Net sales for Barry Comfort North America increased slightly in 2001, to $126.4
million from $125.0 million in 2000. The increase in North America, although
only 1.1 percent, came in an economic environment of recession, consumer
concerns heightened by September's terrorist attacks in the United States, and a
retail atmosphere that was highly promotional, resulting in generally lackluster
retail sales increases. We have continued our efforts to provide new styling to
the consumers of our soft washable footwear, with continued focus on fresh
product, delivered complete and on-time to our customers. Sales of our products
at retail did well, while retailers generally struggled through a difficult and
very promotional holiday season. The mix within net sales was enriched slightly
in 2001, to a mix that was slightly higher in our more profitable image brands,
sold to traditional department stores and chains, and relatively fewer net sales
to the lower priced mass merchandisers.

Net sales for Barry Comfort Europe decreased to $10.4 million in 2001, from
$11.7 million in 2000. Substantially the entire decline in net sales came from
the United Kingdom where sales decreased from 2000 to 2001 by $1.2 million. In
2000, we changed the nature of our operations in the United Kingdom. Previously,
we had operated with our own full service sales organization, but in 2000, we
shifted to a joint arrangement with GBR Limited, a British footwear marketer.
Thus far, our results from this arrangement have been less than we expected. Net
sales in France, at $10.3 million in 2001, were essentially flat with net sales
of $10.4 million in 2000. We continue to refine our strategies in Europe,
believing that this region still provides a growth opportunity for us. In 2002,
we will be introducing a new program with a lower retail selling price point in
France to compliment our existing business in the French Hypermarkets.

Net sales of Thermal products declined in 2001 to $7.3 million from $12.7
million in 2000. Much of the decrease relates to sales of the quick heat units -
units that allow the delivery of a pizza that is hotter and fresher than pizzas
transported for delivery to consumers by conventional means. In 2000, net sales
benefited by the sizable increase in quick heat units sold to Papa John's
International, Inc. The sales volume in 2001 was less than that in 2000,
representing the major portion of the decline. We believe that there are others
with the experience and food industry contacts that may be better able to
provide direction and support for growth in the Thermal products. We continue to
actively seek an established business partner to join with us in a venture to
fully unlock the opportunities in the Thermal segment of our business.

Gross profit in 2001 increased to $60.1 million from $55.6 million in 2000.
Gross profit as a percent of net sales also increased significantly in 2001 to
41.7 percent, from 37.2 percent, in 2000. Benefiting the increase in gross
profit, both in dollars and as a percentage of net sales, were several factors:

  - In 2000, as a result of an aggressive effort to lower our inventory levels,
    we sold a sizable amount of obsolete and out-of-season inventory in a short
    period of time for little or no profit. This aggressive inventory
    liquidation successfully reduced inventories by about $8 million from 1999
    to 2000, but at a significant cost in gross profit in 2000. In 2001, the
    levels and thus net sales of obsolete and out-of-season inventory were much
    lower than in 2000, and thus there was no similar penalty to gross profit in
    2001.
  - As noted above, in the discussion of net sales changes, there was a slightly
    richer mix of products in 2001, which contributed to the overall increase in
    gross profit for the year.



                                       13
<PAGE>

MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
R.G. Barry Corporation and Subsidiaries


  - Manufacturing efficiencies in 2001 were much improved over 2000. The
    improvement in manufacturing efficiencies was in part due to activities from
    2000, which did not recur in 2001. Early in 2000, the startup of a new
    factory in the Dominican Republic required a longer than anticipated time to
    bring operations up to normal efficiency standards. As a consequence, we
    incurred manufacturing variances from inefficient operations. Moreover, with
    the reduction of inventory by $8 million during 2000, we required that less
    product be manufactured throughout 2000. Lower production requirements
    generally added to the manufacturing variances. There were no similar
    adverse impacts on our production activities in 2001 to penalize gross
    profit, and manufacturing efficiencies in 2001 were greatly improved.

Selling, general and administrative expenses remained flat in 2001 compared with
2000, following a nearly $8.1 million reduction from 1999. We have been very
diligent in keeping our expense structure in line with our strategic objectives.
Within the selling, general and administrative expense category, there were
modest increases in selling expenses to assist retailers' efforts in a difficult
holiday selling season, with corresponding reductions in other administrative
expenses.

Net interest expense declined in 2001 to $1.1 million from $1.8 million in 2000.
During 2001, the daily average seasonal borrowings outstanding under the
Revolver decreased to $7.9 million from $11.5 million in 2000, a decrease of 31
percent in average bank borrowings. In addition, the weighted average interest
rate on short-term bank borrowings in 2001 decreased to 5.8 percent from 8.2
percent in 2000. The improved operating results in 2001, coupled with the
strategic initiatives we began implementing in 1999 and 2000, greatly
contributed to the decrease in average borrowings in 2001. Short-term market
interest rates generally declined significantly in 2001, by nearly 4.75 percent
throughout the year. Part of this decrease was offset by the 75 basis points
increase in spreads over market charged by our bank. The net result was a
reduction in the average rate of interest, by about 2.4 percent, that we
incurred in 2001 for borrowings to provide short-term operating capital.

In 2001, we continued on the strategic plan that we outlined in 1999 and 2000.
Beginning in 2000, we took several actions to align the forecasting of our
manufacturing requirements with our customers' demand visibility. As a result,
we have begun to migrate, over a three-year period, to a company that produces
about two-thirds of our products in-house and outsources the remainder to
independent third party suppliers. In previous years, we had produced in excess
of 95 percent internally and outsourced the balance. Early in 2001, we opened a
representative office in Hong Kong, which is responsible for procuring
outsourced products from the Far East. During 2001, about 20 percent of our
requirements were sourced from the Far East.

For fiscal 2001, we earned $1.7 million before income taxes and $932 thousand
after income taxes, or $0.10 per diluted share. In 2000, we incurred a loss of
$232 thousand before income taxes, this after including restructuring charges
and after including $5 million proceeds from settlement of the Domino's
litigation and the related $1 million licensing arrangement. As our operations
outside the United States were profitable in 2000, we incurred foreign taxes of
$407 thousand, plus we incurred taxes in a number of states where we operate.
Consequently, in 2000, the net loss after income taxes amounted to $806
thousand, or $0.09 per share.

2000 SALES AND OPERATIONS COMPARED WITH 1999
Effective in 2000, we changed the method of accounting for domestic inventories
of company-manufactured soft washable slippers from the LIFO method to the FIFO
method, so that in 2000, all inventories were accounted for using the FIFO
method. For all previous years' financial statements presented, this change was
applied retroactively by restating the financial information.

Results for 2000 were disappointing. Following the loss incurred in 1999, and
the restructuring actions taken at the end of 1999, we anticipated that 2000
would be a profitable year. In 1999, we recognized that we needed to reduce our
levels of production and to lessen our manufacturing capacity. We closed a plant
in Shenzhen, China although we opened a plant in the Dominican



                                       14
<PAGE>

                                           MANAGEMENT'S DISCUSSION & ANALYSIS OF
                                     FINANCIAL CONDITION & RESULTS OF OPERATIONS
                                         R.G. Barry Corporation and Subsidiaries


Republic. We believed that the customs duty advantages enjoyed between the
Dominican Republic and Europe would outweigh our need to reduce capacity. After
opening the plant in the Dominican Republic, Mexico completed a new treaty with
Europe that we believe will, by 2003, provide the same duty situation as had
existed with the Dominican Republic. In December 2000, we closed the plant in
the Dominican Republic. In 1999, we opened a warehouse in San Antonio, Texas to
serve what we believed was a need to house increased finished goods inventory
for the Soluna(TM) line of products first introduced in 1999. By 2000, the
Soluna(TM) products had not achieved expected results and we concluded that this
warehouse was too large and too expensive for its prospective use. This was
especially so, in light of the significant reduction in inventory levels from
1999 to year-end 2000. Moreover, our strategy for the future includes acquiring
greater portions of our inventories from third party suppliers, thus reducing
the need to take large portions of finished goods into our warehouses for
extended periods of time. In mid-2000, we closed the San Antonio warehouse and
moved into a smaller warehouse that we already controlled in Laredo, Texas. The
opening and subsequent closing of a factory and a warehouse, all within a
two-year period, was very costly. During 2000, we provided for a restructuring
charge of $1.9 million to handle the costs of closing the Dominican Republic
plant and closing the warehouse in San Antonio, as well as various staff
reductions which all together involved the elimination of 225 positions.

During 2000, net sales totaled $149.4 million, about 6.7 percent greater than in
1999. Net sales for Barry Comfort North America increased 5.1 percent to $125.0
million in 2000, from $118.9 million in 1999. The increase in North America net
sales was largely the result of providing fresh new comfortable soft washable
footwear to our customers with complete and on-time delivery, plus the impact of
our aggressive program of inventory liquidation. We believe that sales of these
products at retail were generally excellent; whereas, retailers generally
experienced a mediocre holiday season. Net sales for Barry Comfort Europe were
essentially flat at $11.7 million in 2000 and 1999. In Europe, in 2000, we had
the benefit of our Fargeot operation for the entire 2000 year compared with only
half of the year in 1999. In addition, we changed the nature of our operations
in the United Kingdom. In 1999 and prior, we operated with our own full service
sales organization. In mid-year 2000, we shifted to a joint arrangement with GBR
Limited, a British footwear marketer. Net sales of Thermal products in 2000
increased by 33.3 percent to $12.7 million from $9.5 million in 1999. This
increase largely reflected Vesture's first major contract to provide thermal
retention quick heat units to a national pizza chain.

Gross profit in 2000 amounted to $55.6 million, as compared with gross profit in
1999 of $54.1 million. Gross profit as a percent of net sales declined in 2000
to 37.2 percent, compared with 38.6 percent during 1999. Gross profit was
adversely impacted by several items:
  - We sold a sizable amount of obsolete and out-of-season inventory in a short
    period of time for little or no profit, in an effort to lower our inventory
    levels. By year-end 2000, substantially all of this inventory had been
    liquidated.
  - We experienced a shift in the mix of net sales toward mass merchandisers.
  - In 2000, we included the operations of our Fargeot subsidiary, which
    operates with a lower gross margin and a lower expense structure than our
    other operations.
  - The new factory in the Dominican Republic required a longer than anticipated
    time to bring its operations up to normal efficiency standards, resulting in
    manufacturing variances from inefficient operations.

Selling, general and administrative expenses decreased by 12.2 percent in 2000
to $58.3 million from $66.4 million in 1999, a significant reduction of nearly
$8.1 million. Much of the reduction reflected our plan to lower the costs of
operation throughout the organization--selling, marketing, warehousing and
administration. Lower costs were incurred in all of these areas in 2000.

Early in 2000, our lawsuit against Domino's Pizza and Phase Change Laboratories
for patent infringement was settled. As a result, we received a payment of $5
million and entered into a $1 million licensing arrangement with Domino's for
the future use of our patented thermal retention technology.



                                       15
<PAGE>

MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
R.G. Barry Corporation and Subsidiaries


Net interest expense increased in 2000 to $1.8 million from $1.7 million in
1999. During 2000, the daily average seasonal borrowings under the Revolver
amounted to $11.5 million compared with $9.9 million during 1999, a 16.2 percent
increase. In addition, the weighted average interest rate in 2000 increased to
8.2 percent from 6.4 percent in 1999. The loss we incurred in 1999, plus the
scheduled $2.1 million annual principal repayment under the Note, contributed to
the increase in average borrowings in 2000. General market interest rates
increased in 2000 by about one and one-half percent, and the spread over market
rates charged by our banks also increased in 2000 by one-half of one percent.
While interest expense increased as a result of increased borrowings under the
Revolver, there was an nearly offsetting decrease in interest expense resulting
from the $2.1 million scheduled annual repayments of long-term debt.

With the reduction in inventory levels and the strategic change to outsourcing
increased levels of product, the need for the warehouse in San Antonio
diminished and we transferred that warehousing function to a smaller facility in
Laredo, Texas. These actions, coupled with administrative staff reductions,
eliminated 225 associates throughout the organization. The costs associated with
closing the Dominican facility, closing the San Antonio warehouse and staff
reductions total about $1.9 million, which was provided for in the results of
operations for 2000.

For the 2000 fiscal year, after the restructuring charges and after including
the $5 million proceeds from settlement of the Domino's litigation and the
related $1 million licensing arrangement, we incurred a loss amounting to $232
thousand before income taxes, compared with a loss before income taxes in 1999
of $19.4 million. For 2000, the net loss after income taxes was $806 thousand.
The net loss in 1999, after the benefit of current and deferred income taxes,
amounted to $14.6 million. For 2000, basic and diluted loss per share amounted
to $0.09 per share, compared with basic and diluted loss per share in 1999 of
$1.55 per share.

  "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
  1995:
  The statements in this Annual Report to Shareholders, which are not
  historical fact are forward-looking statements based upon our current plans
  and strategies, and reflect our current assessment of the risks and
  uncertainties related to our business, including such things as product demand
  and market acceptance; the economic and business environment and the impact of
  governmental regulations, both in the United States and abroad; the effects of
  direct sourcing by customers of competitive products from alternative
  suppliers; the effect of pricing pressures from retailers; the loss of
  significant customers in connection with mergers, acquisitions, bankruptcies
  or other circumstances; inherent risks of international development, including
  foreign currency risks, the implementation of the Euro, economic, regulatory
  and cultural difficulties or delays in our business development outside the
  United States; our ability to improve processes and business practices to keep
  pace with the economic, competitive and technological environment; the
  availability and costs of financing; capacity, efficiency, and supply
  constraints; weather; the effect of terrorist acts and governments' responses
  to terrorist acts, on business activities and customer orders; acts of war;
  and other risks detailed in our press releases, shareholder communications,
  and Securities and Exchange Commission filings. Actual events affecting us and
  the impact of such events on our operations may vary from those currently
  anticipated.



                                       16
<PAGE>

                                                     CONSOLIDATED BALANCE SHEETS
                                         R.G. Barry Corporation and Subsidiaries


<TABLE>
<CAPTION>
                                                                                       DECEMBER 29, 2001          December 30, 2000
                                                                                           (in thousands, except per share data)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                        <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                                     $ 12,258                   $  6,930
  Accounts receivable:
    Trade (less allowance for doubtful receivables, returns and
      promotions of $17,619 and $14,141, respectively)                                            15,004                     19,650
    Other                                                                                          1,428                      1,945
  Inventory                                                                                       35,642                     32,796
  Recoverable income taxes                                                                            --                      2,820
  Deferred income taxes                                                                            2,896                      4,401
  Prepaid expenses                                                                                 2,448                      1,726
                                                                                                --------                   --------
      Total current assets                                                                        69,676                     70,268
                                                                                                --------                   --------
Property, plant and equipment, at cost                                                            40,066                     40,187
  Less accumulated depreciation and amortization                                                  29,149                     28,446
                                                                                                --------                   --------
      Net property, plant and equipment                                                           10,917                     11,741
                                                                                                --------                   --------
Deferred income taxes                                                                              2,971                      2,339
Goodwill (less accumulated amortization of
  $304 and $193, respectively)                                                                     2,002                      2,266
Other assets                                                                                       3,046                      2,935
                                                                                                --------                   --------
                                                                                                $ 88,612                   $ 89,549
                                                                                                ========                   ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current installments of long-term debt                                                        $  2,432                   $  2,432
  Accounts payable                                                                                 7,628                      6,206
  Accrued expenses                                                                                 4,411                      6,077
                                                                                                --------                   --------
    Total current liabilities                                                                     14,471                     14,715
                                                                                                --------                   --------
Accrued retirement cost, excluding current liability                                               6,665                      5,975
Long-term debt, excluding current installments                                                     5,162                      7,637
Other                                                                                              1,593                      1,476
                                                                                                --------                   --------
    Total liabilities                                                                             27,891                     29,803
                                                                                                --------                   --------
Minority interest                                                                                    336                        294
Shareholders' equity:
  Preferred shares, $1 par value per share. Authorized 3,775 Class A shares,
    225 Series I Junior Participating Class A shares, and
    1,000 Class B shares; none issued                                                                 --                         --
  Common shares, $1 par value per share. Authorized 22,500 shares;
    issued and outstanding 9,376 and 9,371 shares
    (excluding treasury shares of 979 and 980)                                                     9,376                      9,371
  Additional capital in excess of par value                                                       12,093                     12,069
  Deferred compensation                                                                             (331)                      (461)
  Accumulated other comprehensive income (loss)                                                     (495)                      (337)
  Retained earnings                                                                               39,742                     38,810
                                                                                                --------                   --------
    Net shareholders' equity                                                                      60,385                     59,452
Commitments and contingencies                                                                         --                         --
                                                                                                --------                   --------
                                                                                                $ 88,612                   $ 89,549
                                                                                                ========                   ========
</TABLE>


See accompanying notes to consolidated financial statements.



                                       17
<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
R.G. Barry Corporation and Subsidiaries                                          2001                   2000                   1999
                                                                                     (in thousands, except per share data)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                    <C>                    <C>
Net sales                                                                   $ 144,121              $ 149,435              $ 140,092
Cost of sales                                                                  83,972                 93,816                 85,996
                                                                            ---------              ---------              ---------
    Gross profit                                                               60,149                 55,619                 54,096
Selling, general and administrative expenses                                   58,298                 58,321                 66,416
Restructuring and asset impairment charges (adjustments)                         (118)                 1,921                  5,914
                                                                            ---------              ---------              ---------
    Operating income (loss)                                                     1,969                 (4,623)               (18,234)
Proceeds from litigation, net of expenses incurred                                 --                  4,476                     --
Other income                                                                      800                  1,717                    502
Interest expense, net of interest income of $242,
  $240 and $367, respectively                                                  (1,079)                (1,802)                (1,651)
                                                                            ---------              ---------              ---------
    Earnings (loss) before income taxes                                         1,690                   (232)               (19,383)
Income tax expense (benefit)                                                      716                    522                 (4,778)
Minority interest, net of tax                                                     (42)                   (52)                   (20)
                                                                            ---------              ---------              ---------
    Net earnings (loss)                                                     $     932              $    (806)             $ (14,625)
                                                                            =========              =========              =========
Earnings (loss) per common share:
  Basic                                                                     $    0.10              $   (0.09)             $   (1.55)
                                                                            =========              =========              =========
  Diluted                                                                   $    0.10              $   (0.09)             $   (1.55)
                                                                            =========              =========              =========
</TABLE>


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
R.G. Barry Corporation and Subsidiaries

<TABLE>
<CAPTION>
                                                        Additional                                 Accumulated
                                                        capital in     Deferred                          other
                                            Common       excess of      compen-      Retained     comprehensive       Shareholders'
                                            shares       par value       sation      earnings     income (loss)              equity
-----------------------------------------------------------------------------------------------------------------------------------
                                                                               (in thousands)

<S>                                        <C>            <C>             <C>        <C>                 <C>              <C>
Balance at January 2, 1999                 $ 9,745        $ 15,357        $(204)     $ 54,241            $  --           $  79,139
  Comprehensive income (loss):
    Net loss                                    --              --           --       (14,625)              --             (14,625)
    Other comprehensive income (loss):
      Foreign currency translation
        adjustment                              --              --           --            --              (92)                (92)
        Total comprehensive loss                --              --           --            --               --             (14,717)
  Deferred compensation                         71             335         (406)           --               --                  --
  Amortization of deferred compensation         --              --           71            --               --                  71
  Stock options exercised                       11              29           --            --               --                  40
  Purchase of shares                          (478)         (3,671)          --            --               --              (4,149)
                                           -------        --------        -----      --------            -----            --------
Balance at January 1, 2000                   9,349          12,050         (539)       39,616              (92)             60,384
  Comprehensive income (loss):
    Net loss                                    --              --           --          (806)              --                (806)
    Other comprehensive income (loss):
      Foreign currency translation
        adjustment                              --              --           --            --             (180)               (180)
      Pension liability adjustment              --              --           --            --              (65)                (65)
        Total comprehensive loss                --              --           --            --               --              (1,051)
  Deferred compensation                         22              19          (41)           --               --                  --
  Amortization of deferred compensation         --              --          119            --               --                 119
                                           -------        --------        -----      --------            -----            --------
Balance at December 30, 2000                 9,371          12,069         (461)       38,810             (337)             59,452
   Comprehensive income:
     Net earnings                               --              --           --           932               --                 932
     Other comprehensive income (loss):
       Foreign currency translation
         adjustment                             --              --           --            --             (161)               (161)
       Pension liability adjustment             --              --           --            --                3                   3
         Total comprehensive income             --              --           --            --               --                 774
   Amortization of deferred compensation        --              --          130            --               --                 130
   Stock options exercised and
     warrants issued                             5              24           --            --               --                  29
                                           -------        --------        -----      --------            -----            --------
Balance at December 29, 2001               $ 9,376        $ 12,093        $(331)     $ 39,742            $(495)           $ 60,385
                                           =======        ========        =====      ========            =====            ========
</TABLE>


See accompanying notes to consolidated financial statements.



                                       18
<PAGE>

                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         R.G. Barry Corporation and Subsidiaries


<TABLE>
<CAPTION>
                                                                                      2001                 2000                1999
                                                                                                     (in thousands)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                 <C>                 <C>
Cash flows from operating activities:
  Net earnings (loss)                                                              $    932            $   (806)           $(14,625)
  Adjustments to reconcile net earnings (loss) to net cash
    provided (used) by operating activities:
      Depreciation and amortization of property,
         plant, and equipment                                                         1,847               2,109               2,243
      Amortization of goodwill                                                          136                 136                 183
      Goodwill impairment                                                                --                  --               4,000
      Deferred income tax expense (benefit)                                              42               2,711              (4,535)
      Loss on disposal of property, plant and equipment                                 135                 998                 186
      Amortization of deferred compensation                                             130                 119                  71
      Minority interest, net of tax                                                      42                  52                  20
      Changes in:
        Accounts receivable                                                           5,107             (11,985)              2,907
        Inventory                                                                    (2,930)              8,095               5,443
        Prepaid expenses, recoverable income taxes
          and other assets                                                            2,860              (1,283)             (1,039)
        Accounts payable                                                              1,500              (2,131)               (777)
        Accrued expenses                                                             (1,668)               (458)             (2,742)
        Accrued retirement cost, net                                                    690                 921                 549
        Other liabilities                                                               402                 (58)                292
                                                                                   --------            --------            --------
          Net cash provided (used) by operating activities                            9,225              (1,580)             (7,824)
                                                                                   --------            --------            --------
Cash flows from investing activities:
  Acquisition, net of cash acquired                                                      --                  --              (2,448)
  Additions to property, plant, and equipment                                        (1,194)               (653)             (3,381)
  Proceeds from disposal of property, plant, and equipment                               13                   8                  10
                                                                                   --------            --------            --------
          Net cash used in investing activities                                      (1,181)               (645)             (5,819)
                                                                                   --------            --------            --------
Cash flows from financing activities:
  Repayment of long-term debt                                                        (2,671)               (934)             (2,278)
  Short-term borrowings                                                                  --                  --                 489
  Proceeds from shares issued                                                            29                  --                  40
  Purchase of common shares for treasury                                                 --                  --              (4,149)
                                                                                   --------            --------            --------
          Net cash used in financing activities                                      (2,642)               (934)             (5,898)
                                                                                   --------            --------            --------
  Effect of exchange rates on cash                                                      (74)                 83                 (49)
                                                                                   --------            --------            --------
          Net increase (decrease) in cash                                             5,328              (3,076)            (19,590)
Cash and cash equivalents at beginning of year                                        6,930              10,006              29,596
                                                                                   --------            --------            --------
Cash and cash equivalents at end of year                                           $ 12,258            $  6,930            $ 10,006
                                                                                   ========            ========            ========
Supplemental cash flow disclosures:
  Interest paid                                                                    $  1,425            $  2,124            $  2,113
                                                                                   ========            ========            ========
  Income taxes paid (recovered)                                                    $ (3,113)           $    413            $  4,127
                                                                                   ========            ========            ========
</TABLE>


See accompanying notes to consolidated financial statements.



                                       19
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
    (Dollar amounts in thousands, except for per share data)


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    (a) OPERATIONS
        R. G. Barry Corporation (the Company) is a United States based
        multinational corporation. The Company's principal line of business is
        the production and distribution of comfort products for at- and
        around-the-home. The predominant market for the Company's products is
        North America. Products are sold primarily to department and discount
        stores.

        The Company maintains Europe branch sales and distribution center
        activities in Europe as well as an 80% ownership interest in a French
        company, Escapade SARL, in France. The Escapade subsidiary was purchased
        in 1999 and the underlying purchase agreement includes put and call
        options for the purchase of the remaining 20% of the Escapade shares.
        The minority interest owner may put his shares to the Company for a
        period of five years after July 22, 2004 at a price as determined by the
        purchase agreement. Similarly, the Company may exercise call options on
        the minority interest shares through July 22, 2009 at the same basis.

    (b) PRINCIPLES OF CONSOLIDATION
        The consolidated financial statements include the accounts of the
        Company and its subsidiaries. All significant intercompany balances and
        transactions have been eliminated in consolidation. Minority interest of
        20% in the French subsidiary, Escapade SARL, is presented on an
        after-tax basis in the Company's financial statements.

        The Company maintains its accounts on a 52-53 week fiscal year ending on
        the Saturday nearest December 31.

    (c) CASH EQUIVALENTS
        Investments with maturities of three months or less at the date of
        issuance are considered cash equivalents. These investments consisted of
        short-term money market funds with balances of $8,423 and $5,156 for
        2001 and 2000, respectively.

    (d) INVENTORY
        Inventory is valued at the lower of cost or market as determined on the
        first-in, first-out (FIFO) basis, see note 2.

    (e) DEPRECIATION AND AMORTIZATION
        Depreciation and amortization have been provided substantially using the
        straight-line method over the estimated useful lives of the assets.

    (f) GOODWILL
        Goodwill, which represents the excess of purchase price over fair value
        of net assets acquired, is amortized on the straight-line method over 20
        years. The Company assesses the recoverability of this intangible asset
        by determining whether the amortization of the goodwill balance over its
        remaining life can be recovered through undiscounted future operating
        cash flows of the acquired operation. The amount of goodwill impairment,
        if any, is measured based on projected discounted future operating cash
        flows using a discount rate reflecting the Company's average cost of
        funds. The assessment of the recoverability of goodwill will be impacted
        if estimated future operating cash flows are not achieved.

    (g) REVENUE RECOGNITION
        The Company recognizes revenue when the goods are shipped to customers
        with adequate allowance made for anticipated sales returns. The Company
        bases its allowance for sales returns on current and historical
        experience.

    (h) ADVERTISING AND PROMOTION
        The Company has certain programs in place to advertise and promote the
        sale of its products. The Company expenses the costs of advertising and
        promotion as incurred. For the years ended December 29, 2001, December
        30, 2000 and January 1, 2000, advertising and promotion expenses were
        $13,894, $11,805 and $13,965, respectively, and are included in selling,
        general and administrative expenses in the consolidated statements of
        operations.

    (i) INCOME TAXES
        Income taxes are accounted for under the asset and liability method.
        Deferred tax assets and liabilities are recognized for the future tax
        consequences attributable to differences between the financial statement
        carrying amounts of existing assets and liabilities and their respective
        tax bases and operating loss and tax credit carry-



                                       20
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                         R.G. Barry Corporation and Subsidiaries
                                                                       continued


        forwards. Deferred tax assets and liabilities are measured using enacted
        tax rates expected to apply to taxable income in the years in which
        those temporary differences are expected to be recovered or settled. The
        effect on deferred tax assets and liabilities of a change in tax rates
        is recognized in income in the period that includes the enactment date.

    (j) PER-SHARE INFORMATION
        The computation of basic earnings (loss) per common share for 2001, 2000
        and 1999 is based on the weighted average number of outstanding common
        shares during the period. Diluted earnings per common share for 2001
        includes those weighted average common shares as well as, when their
        effect is dilutive, potential common shares consisting of certain shares
        subject to stock options and the stock purchase plan. Diluted loss per
        common share for 2000 and 1999 does not include the impact of potential
        common shares due to their antidilutive effect.

    (k) COMPREHENSIVE INCOME
        Comprehensive income (loss) consists of net income, foreign currency
        translation adjustments and pension liability adjustments and is
        presented in the consolidated statements of shareholders' equity.

    (l) TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS
        Assets and liabilities of foreign operations have been translated into
        United States dollars at the applicable rates of exchange in effect at
        the end of the period. Revenues, expenses and cash flows have been
        translated at the applicable weighted average rates of exchange in
        effect during the period.

    (m) STOCK-BASED COMPENSATION
        The Company follows the intrinsic value method set forth in APB Opinion
        No. 25, Accounting for Stock Issued to Employees, and provides pro forma
        net earnings (loss) and pro forma earnings (loss) per share disclosures
        for employee stock option grants as if the fair-value-based method
        defined in SFAS No. 123 had been applied, see note 9. Warrants issued to
        non-employees for services rendered are accounted for at fair value at
        the time of grant.

    (n) USE OF ESTIMATES
        The preparation of financial statements in conformity with accounting
        principles generally accepted in the United States of America requires
        management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and disclosure of contingent assets
        and liabilities at the date of the financial statements and the reported
        amounts of revenues and expenses during the reporting period. Actual
        results could differ from those estimates.

    (o) FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and cash equivalents, accounts
        receivable, accounts payable, and accrued expenses as reported in the
        financial statements approximate their fair value because of the
        short-term maturity of those instruments. The fair value of the
        Company's long-term debt is disclosed in note 4.

    (p) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
        The Company accounts for long-lived assets in accordance with the
        provisions of Statement of Financial Accounting Standards No. 121,
        Accounting for the Impairment of Long-Lived Assets and for Long-Lived
        Assets to Be Disposed Of. This Statement requires that long-lived assets
        and certain identifiable intangibles be reviewed for impairment whenever
        events or changes in circumstances indicate that the carrying amount of
        an asset may not be recoverable. Recoverability of assets to be held and
        used is measured by a comparison of the carrying amount of an asset to
        future net cash flows expected to be generated by the asset. If such
        assets are considered to be impaired, the impairment to be recognized is
        measured by the amount by which the carrying amount of the assets
        exceeds the fair value of the assets. Assets to be disposed of are
        reported at the lower of the carrying amount or fair value less any
        disposition costs.

    (q) IMPACT OF NEW ACCOUNTING STANDARDS
        In April 2001, the Emerging Issues Task Force (EITF) reached a consensus
        on issues 2 and 3 within EITF 00-25, Vendor Income Statement
        Characterization of Consideration Paid to a Reseller of the Vendor's
        Products. EITF 00-25 addresses whether consideration from a vendor to a
        reseller of the vendor's products is an adjustment of the selling prices
        of the vendor's products and, therefore, a reduction of sales or a cost
        incurred by the vendor for assets or services received from the reseller
        and, therefore, a cost or an expense.



                                       21
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued


        EITF 00-25 is effective in 2002 and upon adoption prior periods
        presented for comparative purposes are reclassified. The Company expects
        the adoption will result in a reduction of Company's net sales and
        corresponding decrease in selling, general and administrative expenses
        of approximately $9,550, $8,979 and $9,561 for the fiscal years 2001,
        2000 and 1999 respectively.

(2) INVENTORY
    Inventory by category for the Company consists of the following:

                                     DECEMBER 29,     December 30,
                                             2001             2000
                                     -----------------------------

    Raw materials                         $ 8,203          $ 7,739
        Work in process                     1,820            1,708
        Finished goods                     25,619           23,349
                                          -------          -------
            Total inventory               $35,642          $32,796
                                          =======          =======

    Effective in 2000, the Company changed its inventory costing method for its
    domestic inventories of manufactured soft washable slippers from the LIFO
    method to the FIFO method.

    The effect of the change in accounting decreased the reported net loss for
    2000, by $418 after tax, or $0.04 per diluted share. The change has been
    applied to prior years by retroactively restating the financial statements.
    The effect of this restatement was to increase retained earnings as of
    January 3, 1998 by $1,518. The restatement decreased the net loss reported
    for 1999, by $844 or $0.09 per diluted share.

(3) PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment consists of the following:

                                 DECEMBER 29,    December 30,         Estimated
                                         2001            2000     life in years
                                 ----------------------------------------------
    Land and improvements             $   506         $   506              8-15
    Buildings and improvements          5,912           5,915             40-50
    Machinery and equipment            25,673          26,190              3-10
    Leasehold improvements              7,701           7,522              5-20
    Construction in progress              274              54
                                      -------         -------
                                      $40,066         $40,187
                                      =======         =======

(4) LONG-TERM DEBT AND RESTRICTIONS
    Long-term debt consists of the following:

                                                     DECEMBER 29,  December 30,
                                                             2001          2000
                                                     --------------------------
    9.7% note, due July 2004                              $ 6,428       $ 8,571
    Other notes                                             1,166         1,498
                                                          -------       -------
                                                            7,594        10,069
    Less current installments                               2,432         2,432
                                                          -------       -------
      Long-term debt, excluding current installments      $ 5,162       $ 7,637
                                                          =======       =======


    The 9.7% note, issued in July 1994, requires semiannual interest payments
    and annual principal repayments of $2,143, which commenced in 1998 and end
    in 2004.

    The other notes, issued in January 2000, require quarterly interest and
    principal payments which commenced in 2000 and end in 2007. The interest
    rate on these notes is set to Euribor plus 1% on a quarterly basis; at
    year-end the interest rate on these notes was 5.5%. The carrying value of
    other notes approximates fair value based on current rates with comparable
    maturities.



                                       22
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                         R.G. Barry Corporation and Subsidiaries
                                                                       continued


    The Company has estimated the fair value of its long-term debt based upon
    the present value of expected cash flows, considering expected maturities
    and using current interest rates available to the Company for borrowings
    with similar terms. The fair value of the 9.7% note was $6,750 and $9,050 at
    December 29, 2001 and December 30, 2000, respectively.

    In March 2001, the Company terminated its previous unsecured revolving
    credit agreement with three of its banks, and entered a new unsecured
    revolving credit agreement with its principal bank (the "Revolver"). The
    Revolver increased the borrowing spreads over market rates and increased the
    periodic reporting requirements of certain financial information. The
    Revolver provides the Company with a seasonally adjusted availability of
    credit that peaks at $30 million. The Revolver extends through February
    2002, and the Company is in discussions with its bank to renew and extend
    the agreement beyond its current expiration date.

    Under the most restrictive of the covenants of the various loan agreements,
    the Company is: (1) limited from additional borrowings, payment of dividends
    and the purchase of treasury shares, (2) required to maintain minimum
    seasonally adjusted tangible net worth, (3) limited in annual acquisitions
    of fixed assets, (4) and required to meet seasonally adjusted minimum
    earnings before interest, depreciation and amortization. As of December 29,
    2001, the Company is prohibited from paying cash dividends or purchasing
    treasury shares under the Revolver covenants. There were no covenant
    violations during 2001 or 2000, and the Company is in compliance with all
    the covenants of the Revolver and all other debt agreements.

    The Company maintains compensating balances, which are not restricted, to
    defray the costs of other banking services provided.

(5) LEASE COMMITMENTS

    The Company occupies certain manufacturing, warehousing, operating, and
    sales facilities and uses certain equipment under cancelable and
    noncancelable operating lease arrangements. A summary of the noncancelable
    operating lease commitments at December 29, 2001 are as follows.

    2002                                $ 4,371
    2003                                  4,015
    2004                                  3,309
    2005                                  2,587
    2006                                  2,000
    2007-2011                             5,152
                                        -------
                                        $21,434
                                        =======

    Substantially all of these operating lease agreements are renewable for
    periods of 3 to 15 years and require the Company to pay insurance, taxes and
    maintenance expenses. Rent expense under cancelable and noncancelable
    operating lease arrangements in 2001, 2000 and 1999, amounted to $5,616,
    $6,056 and $6,275, respectively.

(6) INCOME TAXES
    Income tax expense (benefit) consists of:


    Current expense (benefit):               2001         2000         1999
                                          ---------------------------------
      Federal                             $   105      $(2,847)     $  (776)
      Foreign                                 397          433          254
      State                                   172          225          774
                                          -------      -------      -------
                                              674       (2,189)         252
    Deferred expense (benefit)                 42        2,711       (5,030)
                                          -------      -------      -------
                                          $   716      $   522      $(4,778)
                                          =======      =======      =======



                                       23
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued


    The differences between income taxes computed by applying the statutory
    federal income tax rate (34% in 2001 and 2000 and 35% in 1999) and income
    tax expense (benefit) in the consolidated financial statements are:

<TABLE>
<CAPTION>
                                                                                         2001           2000             1999
                                                                                        -------------------------------------
<S>                                                                                     <C>            <C>            <C>
    Computed "expected" tax expense (benefit)                                           $ 575          $ (79)         $(6,784)
    State income taxes, net of federal income tax benefit                                  93            149              502
    Foreign income taxes                                                                  138            407               69
    Impairment write down of goodwill                                                      --             --            1,400
    Other, net                                                                            (90)            45               35
                                                                                        -----          -----          -------
                                                                                        $ 716          $ 522          $(4,778)
                                                                                        =====          =====          =======
</TABLE>

    The tax effects of temporary differences that give rise to significant
    portions of the deferred tax assets and deferred tax liabilities are
    presented below:

<TABLE>
<CAPTION>
                                                                                   DECEMBER 29, 2001        December 30, 2000
                                                                                   ------------------------------------------
<S>                                                                                           <C>                      <C>
    Deferred tax assets:
      Accounts receivable                                                                     $  944                   $1,898
      Inventories                                                                              1,069                    1,326
      Package design costs                                                                       262                      287
      Certain accounting accruals, including such items as
        self-insurance costs, vacation costs, and others                                         684                      971
      Pension costs                                                                            3,042                    2,684
      State net operating loss carryforward                                                      234                      213
                                                                                              ------                   ------
          Total deferred tax assets                                                            6,235                    7,379
    Deferred tax liabilities:
      Royalties                                                                                  238                      294
      Property, plant, and equipment                                                             130                      345
                                                                                              ------                   ------
          Total deferred tax liabilities                                                         368                      639
                                                                                              ------                   ------
          Net deferred tax assets                                                             $5,867                   $6,740
                                                                                              ======                   ======
</TABLE>


    The Company believes the existing net deductible temporary differences will
    reverse during future periods in which the Company generates net taxable
    earnings. The Company considers 1999 and 2000 to be unusual years since
    throughout the Company's history it has regularly been profitable. The
    Company is in the process of a three-year plan to change from a company that
    solely manufactures its product internally to include a substantial portion
    of outsourced product and expects to continue profitable operations in
    upcoming years. Further, the Company believes it has available certain tax
    planning strategies that could be implemented, if necessary, to supplement
    future taxable earnings from operations. The Company has considered the
    above factors in concluding that it is more likely than not that the Company
    will realize the future benefits of existing deferred tax assets. There can
    be no assurance, however, that the Company will generate any specific level
    of continuing earnings.

    Deferred taxes are not provided on unremitted earnings of subsidiaries
    outside the United States because it is expected that the earnings are
    permanently reinvested. Such earnings may become taxable upon the sale or
    liquidation of these subsidiaries or upon the remittance of dividends.

(7) ACCRUED EXPENSES
    Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                                  DECEMBER 29, 2001                December 30, 2000
                                                                  --------------------------------------------------
<S>                                                                          <C>                              <C>
    Salaries and wages                                                       $1,299                           $1,383
    Income taxes                                                                710                              524
    Non-income taxes                                                            989                            1,568
    Restructuring costs                                                         346                            1,026
    All other areas                                                           1,067                            1,576
                                                                             ------                           ------
                                                                             $4,411                           $6,077
                                                                             ======                           ======
</TABLE>



                                       24
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                         R.G. Barry Corporation and Subsidiaries
                                                                       continued


(8) EMPLOYEE RETIREMENT PLANS
    The Company and its domestic subsidiaries have a noncontributory retirement
    plan for the benefit of salaried and nonsalaried employees, the Associates'
    Retirement Plan (ARP). The employees covered under the ARP are eligible to
    participate upon the completion of one year of service. Salaried participant
    benefits are based upon a formula applied to a participant's final average
    salary and years of service, which is reduced by a certain percentage of the
    participant's social security benefits. Nonsalaried participant benefits are
    based on a fixed amount for each year of service. The ARP provides reduced
    benefits for early retirement. The Company intends to fund the minimum
    amounts required under the Employee Retirement Income Security Act of 1974
    (ERISA).

    The funded status of the ARP and the accrued retirement costs recognized at
    December 29, 2001 and December 30, 2000 were:

<TABLE>
<CAPTION>
                                                                                      2001                  2000
                                                                                  ------------------------------
<S>                                                                               <C>                   <C>
    Change in benefit obligation:
      Benefit obligation at the beginning of the year                             $ 25,706              $ 23,679
      Service cost                                                                     762                   798
      Interest cost                                                                  1,895                 1,739
      Actuarial (gain) loss                                                         (1,004)                  370
      Benefits paid                                                                 (1,322)                 (880)
                                                                                  --------              --------
        Benefit obligation at the end of the year                                   26,037                25,706
                                                                                  ========              ========
    Change in plan assets:
      Fair value of plan assets at the beginning of the year                        23,540                23,618
      Actual return on plan assets                                                   1,733                 1,010
      Expenses                                                                        (326)                 (207)
      Benefits paid                                                                 (1,322)                 (880)
                                                                                  --------              --------
        Fair value of plan assets at the end of the year                            23,625                23,541
                                                                                  ========              ========
    Funded status                                                                   (2,412)               (2,165)
    Unrecognized actuarial (gain) loss                                                  63                   300
    Unrecognized prior service cost                                                    250                   186
                                                                                  --------              --------
        Net amount recognized in the consolidated balance sheets                  $ (2,099)             $ (1,679)
                                                                                  ========              ========
</TABLE>


    The Company also has a Supplemental Retirement Plan (SRP) for certain
    officers and other key employees of the Company as designated by the Board
    of Directors. The SRP is unfunded, noncontributory, and provides for the
    payment of monthly retirement benefits. Benefits are based on a formula
    applied to the recipients' final average monthly compensation, reduced by a
    certain percentage of their social security benefits.



                                       25
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued


    The funded status of the SRP and the accrued retirement cost recognized at
    December 29, 2001 and December 30, 2000 are:

<TABLE>
<CAPTION>
                                                                                                       2001                2000
                                                                                                    ---------------------------
<S>                                                                                                 <C>                 <C>
   Change in benefit obligation:
      Benefit obligation at the beginning of the year                                               $ 4,522             $ 4,214
      Service cost                                                                                       54                  86
      Interest cost                                                                                     335                 312
      Amendments                                                                                         --                 175
      Actuarial gain                                                                                   (187)               (166)
      Benefits paid                                                                                    (142)                (99)
                                                                                                    -------             -------
        Benefit obligation at the end of the year                                                     4,582               4,522
                                                                                                    =======             =======
    Change in plan assets:
      Fair value of plan assets at the beginning of the year                                             --                  --
      Employer contributions                                                                            142                  99
      Benefits paid                                                                                    (142)                (99)
                                                                                                    -------             -------
        Fair value of plan assets at the end of the year                                                 --                  --
                                                                                                    =======             =======
    Funded status                                                                                    (4,582)             (4,522)
    Contribution during the fourth quarter                                                               39                  25
    Unrecognized actuarial (gain) loss                                                                 (449)               (254)
    Unrecognized prior service cost                                                                     526                 635
    Unrecognized net transition obligation                                                               --                  20
                                                                                                    -------             -------
        Net amount recognized in the consolidated balance sheets                                     (4,466)             (4,096)
                                                                                                    =======             =======
    Amounts recognized in the consolidated balance sheets consist of:
      Accrued retirement cost, including current liability of $156
        and $99, respectively                                                                        (4,722)             (4,395)
      Intangible asset                                                                                  194                 234
      Accumulated other comprehensive income                                                             62                  65
                                                                                                    -------             -------
        Net amount recognized                                                                       $(4,466)            $(4,096)
                                                                                                    =======             =======
</TABLE>


    The components of net periodic benefit cost for the retirement plans were:

<TABLE>
<CAPTION>
                                                                             2001                      2000                1999
                                                                          -----------------------------------------------------
<S>                                                                       <C>                       <C>                 <C>
    Service cost                                                          $   816                  $    884             $   923
    Interest cost                                                           2,230                     2,051               1,771
    Expected return on plan assets                                         (2,173)                   (2,029)             (1,853)
    Net amortization                                                           73                       113                 165
                                                                          -------                   -------             -------
                                                                          $   946                   $ 1,019             $ 1,006
                                                                          =======                   =======             =======
</TABLE>

    Weighted average assumptions as of December 29, 2001 and December 30, 2000
    were:

<TABLE>
<CAPTION>
                                                                                          DECEMBER 29, 2001   December 30, 2000
                                                                                          -------------------------------------
<S>                                                                                                   <C>                 <C>
    Discount rate                                                                                     7.25%               7.50%
    Rate of compensation increase                                                                     5.00%               5.00%
    Expected return on plan assets                                                                    9.25%               9.25%
</TABLE>

    The Company has a 401(k) plan to which salaried and nonsalaried employees
    may contribute a percentage, as defined, of their compensation per pay
    period and the Company contributes 50% of the first 3% of each participant's
    compensation contributed to this plan. The Company's contribution in cash to
    the 401(k) plan for the years ended December 29, 2001, December 30, 2000 and
    January 1, 2000 was $241, $254 and $261, respectively.



                                       26
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                         R.G. Barry Corporation and Subsidiaries
                                                                       continued


(9) SHAREHOLDERS' EQUITY
    The Company has various stock option plans, which have granted incentive
    stock options (ISO's) and nonqualified stock options exercisable for periods
    of up to 10 years from date of grant at prices not less than fair market
    value at date of grant. Information with respect to options under these
    plans follows:

<TABLE>
<CAPTION>
                                                        ISO                    NON-QUALIFIED
                                                       NUMBER                     NUMBER                  WEIGHTED-AVERAGE
                                                      OF SHARES                  OF SHARES                 EXERCISE PRICE
--------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                        <C>                          <C>
    Outstanding at January 2, 1999                     845,000                    336,100                      $10.85
    Granted                                            331,600                     87,000                        7.31
    Exercised                                           (9,800)                        --                        3.54
    Expired/Cancelled                                 (210,400)                   (62,700)                      10.82
                                                      --------                    -------                        ----
    Outstanding at January 1, 2000                     956,400                    360,400                        9.85
    Granted                                            196,900                     63,100                        3.23
    Exercised                                               --                         --                         --
    Expired/Cancelled                                 (633,700)                   (89,800)                       9.68
                                                      --------                    -------                        ----
    Outstanding at December 30, 2000                   519,600                    333,700                        7.90
    Granted                                            428,600                    258,800                        4.26
    Exercised                                           (3,200)                        --                        2.21
    Expired/Cancelled                                 (125,300)                    (6,300)                       8.88
                                                      --------                    -------                        ----
    Outstanding at December 29, 2001                   819,700                    586,200                       $6.04
                                                       =======                    =======                       =====
    Options exercisable at December 29, 2001           209,200                    299,900
                                                       =======                    =======
</TABLE>


<TABLE>
<CAPTION>
                                             OPTIONS OUTSTANDING                                 OPTIONS EXERCISABLE
                           ------------------------------------------------------------    --------------------------------
                              NUMBER           WEIGHTED-AVERAGE                                NUMBER
           RANGE OF         OUTSTANDING           REMAINING            WEIGHTED-AVERAGE      EXERCISABLE    WEIGHTED-AVERAGE
        EXERCISE PRICES     AT 12/29/01    CONTRACTUAL LIFE (YEARS)     EXERCISE PRICE       AT 12/29/01     EXERCISE PRICE
----------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                     <C>                  <C>                 <C>             <C>
    $ 5.00 and under          818,300                 8.8                  $  3.67             122,400         $    3.26

      5.01 - 10.00            389,300                 6.3                  $  7.28             211,300         $    8.26

      10.01 - 15.00           191,600                 5.5                  $ 13.27             175,400         $   13.15

     15.01 and over             6,700                 6.4                  $ 16.43                  --                --
                            ---------                                                        ---------
                            1,405,900                                                          509,100
                            =========                                                        =========
</TABLE>


    At December 29, 2001, the remaining number of ISO and nonqualified shares
    available for grant was 259,000.

    At December 29, 2001, December 30, 2000 and January 1, 2000, the options
    outstanding under these plans were held by 89, 73 and 81, employees,
    respectively, and had expiration dates ranging from 2002 to 2011.

    Stock appreciation rights may be issued subject to certain limitations.
    There were no rights outstanding at December 29, 2001, December 30, 2000 and
    January 1, 2000.

    Had the Company elected to determine compensation cost based on the fair
    value at the grant date, as alternatively permitted under SFAS No. 123, the
    Company's net earnings would have been reduced to the pro forma amounts
    indicated below:

<TABLE>
<CAPTION>
                                                                             2001                  2000                    1999
                                                                          -----------------------------------------------------
<S>                                                                       <C>                 <C>                    <C>
    Net earnings (loss):
      As reported                                                         $   932             $    (806)             $  (14,625)
      Pro forma                                                               279                (1,400)                (15,807)

    Earnings (loss) per share (diluted):
      As reported                                                             .10                  (.09)                  (1.55)
      Pro forma                                                               .03                  (.15)                  (1.67)
                                                                           ======             =========               =========
</TABLE>



                                       27
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued


    Using the Black Scholes option-pricing model, the per-share,
    weighted-average fair value of stock options granted during 2001, 2000 and
    1999, was $2.14, $1.10 and $3.33, respectively, on the date of grant. The
    assumptions used in estimating the fair value of the options as of December
    29, 2001 and December 30, 2000 were:


                                        DECEMBER 29, 2001   December 30, 2000
                                        ----------------------------------------

    Expected dividend yield                            0%                  0%
    Expected volatility                               50%                 45%
    Risk-free interest rate                         5.00%               6.25%
    Expected life -- ISO grants                   6 years             6 years
    Expected life -- nonqualified grants          8 years             8 years

    The Company has an employee stock purchase plan in which approximately 800
    employees are eligible to participate. Under the terms of the plan,
    employees receive options to acquire common shares at the lower of 85% of
    the fair market value on their enrollment date or at the end of each
    two-year plan term.

                                                                      SHARES
                                                                  SUBSCRIBED
                                                                  ----------
    Balance at January 1, 2000                                            --
    Subscriptions                                                    249,300
    Purchases                                                             --
    Expired                                                          (10,600)
                                                                     -------
    Balance at December 30, 2000                                     238,700
    Subscriptions                                                      5,800
    Purchases                                                             --
    Expired                                                          (48,400)
                                                                     -------
    Balance at December 29, 2001                                     196,100
                                                                     =======

    During December 2000, the Company offered all stock option holders,
    excluding its Chief Executive Officer, with an option price greater than $5
    per share, the opportunity to participate in an option exchange program. The
    program permitted the option holder to tender current options for
    cancellation prior to the end of the year. The Company agreed to reissue to
    the option holder one-half of the number of option shares tendered,
    contingent upon continued employment, after the passage of six months and
    one day. The options, granted in June 2001, were granted at $4.60 per share,
    the then current fair market value. Approximately 557,000 shares were
    tendered under the program, by 68 associates.



                                       28
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                         R.G. Barry Corporation and Subsidiaries
                                                                       continued


(10) EARNINGS PER SHARE

     Earnings per share for the years ended December 29, 2001, December 30, 2000
     and January 1, 2000 were as follows:

<TABLE>
<CAPTION>
                                                                                DECEMBER 29, 2001
                                                           -------------------------------------------------------
                                                              EARNINGS                SHARES             PER-SHARE
                                                           (NUMERATOR)         (DENOMINATOR)                AMOUNT
                                                           -------------------------------------------------------
<S>                                                               <C>                 <C>                     <C>
     BASIC EPS --
        Net earnings allocable to common
           shareholders                                           $932                 9,379                  $.10
     EFFECT OF DILUTIVE SECURITIES --
        Stock options                                               --                   198                    --
     BASIC AND DILUTED EPS --
        Net earnings allocable to common
           shareholders including assumed conversions              932                 9,577                   .10
</TABLE>


     Options to purchase 1,215,000 common shares at prices up to $16.43 were
     outstanding in 2001 but were not included in the computation of diluted
     earnings per share because based on the Company's share price at December
     29, 2001, the effect would be anti-dilutive.

<TABLE>
<CAPTION>
                                                                            December 30, 2000
                                                            -------------------------------------------------------
                                                                   Loss                Shares             Per-share
                                                            (numerator)         (denominator)                amount
                                                            -------------------------------------------------------
<S>                                                              <C>                    <C>                  <C>
     BASIC AND DILUTED EPS --
        Net loss allocable to common
            shareholders                                         $(806)                 9,399                $(.09)
</TABLE>


     Options to purchase 1,092,000 common shares at prices up to $16.43 were
     outstanding in 2000 but were not included in the computation of diluted
     earnings per share because based on the Company share price at December 30,
     2000, the effect would be anti-dilutive.

<TABLE>
<CAPTION>
                                                                              January 1, 2000
                                                            -------------------------------------------------------
                                                                   Loss                Shares             Per-share
                                                            (numerator)         (denominator)                amount
                                                            -------------------------------------------------------
<S>                                                            <C>                      <C>                  <C>
      BASIC AND DILUTED EPS --
         Net loss allocable to common
             shareholders                                      $(14,625)                9,455                $(1.55)
</TABLE>


     Options to purchase 1,316,800 common shares at prices up to $16.43 were
     outstanding in 1999 but were not included in the computation of diluted
     earnings per share because based on the Company share price at January 1,
     2000, the effect would be anti-dilutive.

(11) PREFERRED SHARE PURCHASE RIGHTS

     In February 1998, the Company's Board of Directors declared a distribution
     of one Preferred Share Purchase Right (Right) for each outstanding common
     share of the Company to shareholders of record on March 16, 1998. The new
     Rights replaced similar Rights issued in 1988 which expired on March 16,
     1998. Under certain conditions, each new Right may be exercised to purchase
     one one-hundredth of a share of Series Junior I Participating Class A
     Preferred Shares, par value $1 per share, at an initial exercise price of
     $40. The Rights initially will be attached to the Common Shares. The Rights
     will separate from the Common Shares and a Distribution Date will occur
     upon the earlier of 10 business days after a public announcement that a
     person or group has acquired, or obtained the right to acquire 20% or more
     of the Company's outstanding common shares (Share Acquisition Date) or 10
     business days (or such later date as the Board shall determine) after the
     commencement of a tender or exchange offer that would result in a person or
     group beneficially owning 20% or more of the Company's outstanding common
     shares. The Rights are not exercisable until the Distribution Date.



                                       29
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued


     In the event that any Person becomes the beneficial owner of more than 20%
     of the then outstanding common shares, each holder of a Right will be
     entitled to purchase, upon exercise of the Right, common shares having a
     market value two times the exercise price of the Right. In the event that,
     at any time following the Share Acquisition Date, the Company is acquired
     in a merger or other business combination transaction in which the Company
     is not the surviving corporation or 50% or more of the Company's assets or
     earning power is sold or transferred, the holder of a Right will be
     entitled to buy the number of shares of common stock of the acquiring
     company which at the time of such transaction will have a market value of
     two times the exercise price of the Right.

     The Rights, which do not have any voting rights, expire on March 16, 2008,
     and may be redeemed by the Company at a price of $0.01 per Right at any
     time until 10 business days following the Share Acquisition Date.

     Each Class A Preferred Share is entitled to one-tenth of one vote, while
     Class B Preferred Shares are entitled to ten votes. The preferred shares
     are entitled to a preference in liquidation. None of these shares have been
     issued.

(12) RELATED-PARTY OBLIGATION
     The Company and a key executive have entered into an agreement pursuant to
     which the Company is obligated for up to two years after the death of the
     key executive to purchase, if the estate elects to sell, up to $4 million
     of the Company's common shares, at their fair market value. To fund its
     potential obligation to purchase such shares, the Company has purchased a
     $5 million life insurance policy on the key executive with a cash surrender
     value of $1.7 million and $ 1.6 million at December 29, 2001 and December
     30, 2000, respectively, which is included in other assets in the
     accompanying consolidated balance sheets. In addition, for a period of 24
     months following the key executive's death, the Company will have a right
     of first refusal to purchase any common shares of the Company owned by the
     key executive at the time of his death if his estate elects to sell such
     shares. The Company would have the right to purchase such shares on the
     same terms and conditions as the estate proposes to sell such shares.

(13) SEGMENT REPORTING
     SFAS No. 131, Disclosures about Segments of an Enterprise and Related
     Information, establishes standards for the manner in which public
     enterprises report information about operating segments, their products and
     the geographic areas where they operate.

     The Company manufactures and markets comfort footwear for
     at-and-around-the-home and supplies thermal retention technology products.
     The Company considers its "Barry Comfort" at-and-around-the-home comfort
     footwear group in North America and Europe, and the thermal retention
     technology products group, "Thermal", as its three operating segments.

     The accounting policies of the operating segments are substantially similar
     to those described in note 1, except that the disaggregated financial
     information has been prepared using certain management reports, which by
     their very nature require estimates. In addition, certain items from these
     management reports have not been allocated among operating segments. Some
     of the more significant items include: a) costs of certain administrative
     functions, b) current and deferred income tax expense (benefit) and
     deferred tax assets (liabilities), and c) in some years, certain operating
     provisions.

     Revenues, and net property, plant and equipment, have been allocated to
     geographic areas based upon the location of the Company's operating unit.



                                       30
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                         R.G. Barry Corporation and Subsidiaries
                                                                       continued


     REVENUES

<TABLE>
<CAPTION>
                                                                    2001                 2000                1999
                                                                -------------------------------------------------
<S>                                                             <C>                  <C>                 <C>
     United States/North America                                $133,706             $137,743            $128,462
     France                                                       10,345               10,406               7,677
     United Kingdom                                                   70                1,286               3,953
                                                                --------             --------            --------
                                                                $144,121             $149,435            $140,092
                                                                ========             ========            ========
</TABLE>


     NET PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                    2001                2000
                                                                 ---------------------------
<S>                                                              <C>                 <C>
      United States                                               $6,797              $7,469
      Mexico                                                       3,383               3,509
      Other                                                          737                 763
                                                                 -------             -------
                                                                 $10,917             $11,741
                                                                 =======             =======
</TABLE>


      REVENUES BY PRODUCT LINE

<TABLE>
<CAPTION>
                                                                    2001                 2000                1999
                                                                -------------------------------------------------
<S>                                                             <C>                  <C>                 <C>
      At- and around-the-home comfort footwear                  $136,804             $136,728            $130,557
      Thermal retention technology products                        7,317               12,707               9,535
                                                                --------             --------            --------
                                                                $144,121             $149,435            $140,092
                                                                ========             ========            ========
</TABLE>


     In 2000, and 1999, one Barry Comfort customer accounted for approximately
     21% and 23% of the Company's net sales, respectively. In 2001, one Barry
     Comfort Customer accounted for 22% and a second Barry Comfort Customer
     accounted for 10% respectively of the Company's net sales.


     OTHER SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                                           BARRY COMFORT                              INTER-
                                                         NORTH                                       SEGMENT
     DECEMBER 29, 2001                                 AMERICA         EUROPE        THERMAL    ELIMINATIONS         TOTAL
     ---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>             <C>           <C>           <C>
     Net sales                                        $126,389        $10,415         $7,317        $     --      $144,121
     Depreciation and amortization                       1,453            221            173              --         1,847
     Interest income                                       265             --             --             (23)          242
     Interest expense                                    1,253             68            (23)             23         1,321
     Pre tax earnings (loss)                             4,616         (1,239)        (1,687)             --         1,690
     Additions to property, plant, and equipment           990            196              8              --         1,194
     Total assets devoted                              $81,811         $7,142         $5,027         $(5,368)      $88,612
                                                       =======         ======         ======         =======       =======

<CAPTION>
                                                           BARRY COMFORT                              INTER-
                                                         NORTH                                       SEGMENT
     DECMEBER 30, 2000                                 AMERICA         EUROPE        THERMAL    ELIMINATIONS         TOTAL
     ---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>            <C>            <C>           <C>
     Net sales                                        $125,036        $11,692        $12,707        $     --      $149,435
     Depreciation and amortization                       1,650            249            210              --         2,109
     Interest income                                       331             --             44            (135)          240
     Interest expense                                    1,972             70            135            (135)        2,042
     Litigation proceeds, net of expense incurred           --             --          4,476              --         4,476
     Pre tax earnings (loss)                            (4,440)        (1,498)         5,706              --          (232)
     Additions to property, plant, and equipment           400            201             52              --           653
     Total assets devoted                              $76,041         $8,930         $4,711           $(133)      $89,549
                                                       =======         ======         ======           =====       =======
</TABLE>



                                       31
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
R.G. Barry Corporation and Subsidiaries
continued

<TABLE>
<CAPTION>
                                                           Barry Comfort                              Inter-
                                                         North                                       Segment
     January 1, 2000                                   America         Europe        Thermal    Eliminations         Total
     ---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>            <C>            <C>           <C>
     Net sales                                        $118,927        $11,630         $9,535        $     --      $140,092
     Depreciation and amortization                       1,681            176            386              --         2,243
     Interest income                                       684             27             --            (344)          367
     Interest expense                                    2,010             48            304            (344)        2,018
     Pre tax earnings (loss)                            (5,278)        (2,268)       (11,837)             --       (19,383)
     Additions to property, plant, and equipment         3,063            220             98              --         3,381
     Total assets devoted                              $85,072        $12,341         $3,497         $(7,746)      $93,164
                                                       =======        =======         ======         =======       =======
</Table>


(14) RESTRUCTURING AND ASSET IMPAIRMENT CHARGES

     In December 1999, in connection with management's plan to reduce costs and
     improve operating efficiencies, the Company recorded a restructuring charge
     of $1,794 as a component of operating income. The restructuring charge
     primarily related to the elimination of 240 positions. The positions
     eliminated were primarily manufacturing and administrative positions. As a
     result, severance and employee benefit costs of $1,487 were accrued at
     January 1, 2000. In December 1999, the Company determined that based on the
     recoverability of the goodwill balance related to its acquisition of
     Vesture Corporation in 1994 that the remaining unamortized value could not
     be recovered through future operating cash flows. The Company's analysis
     resulted in a charge of $4.0 million to write down the carrying value of
     the Vesture acquisition goodwill to zero. After an income tax benefit of
     $670, these fiscal year 1999 actions reduced earnings by $5,244 or $.55 per
     share.

     During 2000, the Company announced additional actions to reduce costs and
     improve operating efficiencies. As a result of these actions, the Company
     recognized $1,921 in restructuring and asset impairment charges in fiscal
     year 2000. Actions in 2000 included: (i) closure in July 2000 of a
     distribution warehouse in San Antonio and transfer of its functions to a
     smaller facility in Laredo, Texas, (ii) closure in December 2000 of a
     manufacturing facility in the Dominican Republic; and (iii) various staff
     reduction actions taken in December 2000 in the administrative functions
     within the Company. The actions taken in fiscal year 2000 involved
     elimination of 225 positions. After an income tax benefit of $711, the
     fiscal year 2000 actions reduced earnings by $1,210 or $0.13 per share.

<TABLE>
<CAPTION>
                                            Accruals      Charges                    Non-cash    Paid in           Accruals
                                     January 1, 2000      in 2000    Adjustments   write-offs       2000  December 30, 2000
     -----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>            <C>             <C>     <C>                <C>
      Employee separations                    $1,487       $  551         $(279)         $ --     $1,232             $  527
      Other exit costs                            94           --           (62)           --         32                 --
      Noncancelable leases                       213        1,013            (5)           --        722                499
                                              ------       ------         -----          ----     ------             ------
        Total restructuring                    1,794        1,564          (346)           --      1,986              1,026
                                              ------       ------         -----          ----     ------             ------
      Asset impairments                           --          703            --           703         --                 --
                                              ------       ------         -----          ----     ------             ------
          Total                               $1,794       $2,267         $(346)         $703     $1,986             $1,026
                                              ======       ======         =====          ====     ======             ======
</TABLE>


     In 2001, the Company experienced favorable adjustments of approximately
     $420 related to settlement of lease cancellations of facilities and cutting
     equipment accrued during fiscal year 2000. In October 2001, the Company
     announced a decision to close the molding operations in Texas and relocate
     those activities to Nuevo Laredo, Mexico. The plan primarily includes a
     reduction of 70 employees and related severance costs of $172.



                                       32
<PAGE>

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                         R.G. Barry Corporation and Subsidiaries
                                                                       continued


<TABLE>
<CAPTION>
                                           Accruals      Charges                    Non-cash    Paid in           Accruals
                                  December 30, 2000      in 2001    Adjustments   write-offs       2001  December 29, 2001
     ---------------------------------------------------------------------------------------------------------------------
<S>                                          <C>            <C>          <C>             <C>       <C>                <C>
     Employee separations                    $  527         $172         $    2          $--       $355               $346
     Other exit costs                            --           --             --           --         --                 --
     Noncancelable leases                       499           40          (422)           --        117                 --
                                             ------         ----         -----           ---       ----               ----
       Total restructuring                    1,026          212          (420)           --        472                346
                                             ------         ----         -----           ---       ----               ----
     Asset impairments                           --           90            --            90         --                 --
                                             ------         ----         -----           ---       ----               ----
         Total                               $1,026         $302         $(420)          $90       $472               $346
                                             ======         ====         =====           ===       ====               ====
</TABLE>

     After an income tax expense of $42, these fiscal year 2001 actions
     increased earnings by $76 or $.01 per share.

(15) LITIGATION SETTLEMENT
     During the first quarter of 2000, the Company settled its pending patent
     infringement litigation. As a part of the settlement the Company received a
     $5 million cash payment. The pretax gain, net of expenses incurred,
     recognized by the Company was approximately $4.5 million. In addition, the
     Company entered into a licensing arrangement for approximately $1 million
     for the future use of the Company's thermal technology.

(16) CONTINGENT LIABILITIES
     The Company has been named as defendant in various lawsuits arising from
     the ordinary course of business. In the opinion of management, the
     resolution of such matters is not expected to have a material adverse
     effect on the Company's financial position or results of operations.

(17) SUBSEQUENT EVENTS
     R.G. Barry Corporation announced January 8, 2002 that it had been granted
     accelerated elimination of United States and Mexican tariffs on slippers
     under the North American Free Trade Agreement ("NAFTA"). The current 15%
     tariff on slippers made in Mexico and sold in the United States was
     eliminated effective January 1, 2002. Without such elimination, the tariff
     on Mexican-manufactured slippers would have been phased out under NAFTA
     over six years at the rate of 2.5% per year with tariffs eliminated in
     their entirety on January 1, 2008.

     Due to the importance of obtaining early elimination of these tariffs, the
     Company contracted with two firms for a total fee of $6.2 million and
     granted warrants to purchase 25 thousand of the Company's common shares to
     assist in securing tariff relief.

     After receiving accelerated elimination of tariffs in January 2002, the
     Company announced the transfer of cutting operations from Laredo, Texas to
     Nuevo Laredo, Mexico and in a coordinated move, to significantly reduce
     sewing operations in Nuevo Laredo, Mexico. The Company expects the transfer
     to be completed in 2002 resulting in a reduction of 354 employees and
     approximately $750 in related severance costs.



                                       33
<PAGE>

INDEPENDENT AUDITORS' REPORT
R.G. Barry Corporation and Subsidiaries

The Board of Directors and Shareholders
R. G. Barry Corporation:


We have audited the accompanying consolidated balance sheets of R. G. Barry
Corporation and subsidiaries as of December 29, 2001 and December 30, 2000, and
the related consolidated statements of operations, shareholders' equity and
comprehensive income and cash flows for each of the fiscal years in the
three-year period ended December 29, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of R. G. Barry
Corporation and subsidiaries as of December 29, 2001 and December 30, 2000, and
the results of their operations and their cash flows for each of the fiscal
years in the three-year period ended December 29, 2001, in conformity with
accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

KPMG LLP

Columbus, Ohio
February 21, 2002



                                       34

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>9
<FILENAME>l93477aex21-1.txt
<DESCRIPTION>EX-21.1
<TEXT>
<PAGE>
                                                                  Exhibit 21.1


                     SUBSIDIARIES OF R. G. BARRY CORPORATION


                                                 State or Other Jurisdiction of
Name                                             Incorporation or Organization
----                                             -------------------------------
R. G. Barry International, Inc.                           Ohio
Barry de Mexico, S.A. de C.V.                             Mexico
R.G.B., Inc.                                              Ohio
Barry de Acuna, S.A. de C.V.                              Mexico
Barry de Zacatecas, S.A. de C.V.                          Mexico
Vesture Corporation                                       North Carolina
ThermaStor Technologies, Ltd. (1)                         Ohio
R. G. Barry (Texas), LP  (2)                              Texas
Barry de la Republica Dominicana,                         Dominican Republic
S.A. de C.V.
R. G. Barry Holdings, Inc.                                Ohio
R. G. Barry (France) Holdings, Inc.                       Ohio
Escapade, S.A.  (3)                                       France
     Fargeot et Compagnie, S.A.  (4)                      France
         Michel Fargeot, S.A.  (5)                        France
Procesadora de Nuevo Laredo, S.A. de C.V.                 Mexico

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

(1)      Each of R. G. Barry Corporation and Vesture Corporation owns a 50%
         interest as a member.

(2)      R.G.B., Inc. holds 99% interest as limited partner and R. G. Barry
         Corporation holds 1% interest as general partner.

(3)      R. G. Barry Corporation holds 80% of outstanding stock.

(4)      Wholly-owned subsidiary of Escapade, S.A.

(5)      Wholly-owned subsidiary of Fargeot et Compagnie, S.A.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>10
<FILENAME>l93477aex23-1.txt
<DESCRIPTION>EX-23.1
<TEXT>
<PAGE>
                                                                    Exhibit 23.1

                               [KPMG LETTERHEAD]


               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors
R. G. Barry Corporation:


We consent to incorporation by reference in Registration Statement Nos.
33-23567, 33-23568, 33-67594, 33-67596, 33-81820, 33-83252, 333-06875, 333-28671
and 333-81105 on Forms S-8 and S-3 of R. G. Barry Corporation of our reports
dated February 21, 2002, relating to the consolidated balance sheets of R. G.
Barry Corporation and subsidiaries as of December 29, 2001 and December 30,
2000, and the related consolidated statements of operations, shareholders'
equity and comprehensive income and cash flows and related financial statement
schedule for each of the fiscal years in the three-year period ended December
29, 2001, which reports appear in the 2001 annual report on Form 10-K of R. G.
Barry Corporation.



/s/ KPMG LLP
Columbus, Ohio
March 26, 2002




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24.1
<SEQUENCE>11
<FILENAME>l93477aex24-1.txt
<DESCRIPTION>EX-24.1
<TEXT>
<PAGE>

                                                                   Exhibit 24.1

                                POWER OF ATTORNEY
                                -----------------


                  KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and director of R. G. Barry Corporation, an Ohio corporation, which is about to
file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Exchange Act of 1934, as amended, the Annual Report
on Form 10-K for the fiscal year ended December 29, 2001, hereby constitutes and
appoints Daniel D. Viren and Michael S. Krasnoff as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K and any and all amendments
and documents related thereto, and to file the same, and any and all exhibits,
financial statements and schedules relating thereto, and other documents in
connection therewith, with the Securities and Exchange Commission and the New
York Stock Exchange, and grants unto each of said attorneys-in-fact and agents,
and substitute or substitutes, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

                  IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 21st day of March, 2002.



                                  /s/ Gordon Zacks
                                  --------------------------------------------
                                  Gordon Zacks



<PAGE>


                                POWER OF ATTORNEY
                                -----------------


                  KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and director of R. G. Barry Corporation, an Ohio corporation, which is about to
file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Exchange Act of 1934, as amended, the Annual Report
on Form 10-K for the fiscal year ended December 29, 2001, hereby constitutes and
appoints Daniel D. Viren and Michael S. Krasnoff as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K and any and all amendments
and documents related thereto, and to file the same, and any and all exhibits,
financial statements and schedules relating thereto, and other documents in
connection therewith, with the Securities and Exchange Commission and the New
York Stock Exchange, and grants unto each of said attorneys-in-fact and agents,
and substitute or substitutes, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

                  IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 21st day of March, 2002.



                                   /s/ William Lenich
                                  ---------------------------------------------
                                  William Lenich


<PAGE>


                                POWER OF ATTORNEY
                                -----------------


                  KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and director of R. G. Barry Corporation, an Ohio corporation, which is about to
file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Exchange Act of 1934, as amended, the Annual Report
on Form 10-K for the fiscal year ended December 29, 2001, hereby constitutes and
appoints Daniel D. Viren and Michael S. Krasnoff as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Annual Report on Form 10-K and any and all amendments
and documents related thereto, and to file the same, and any and all exhibits,
financial statements and schedules relating thereto, and other documents in
connection therewith, with the Securities and Exchange Commission and the New
York Stock Exchange, and grants unto each of said attorneys-in-fact and agents,
and substitute or substitutes, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all things that each of said
attorneys-in-fact and agents, or any of them or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

                  IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 21st day of March, 2002.



                                   /s/ Christian Galvis
                                  ---------------------------------------------
                                  Christian Galvis



<PAGE>


                                POWER OF ATTORNEY
                                -----------------


                  KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer
and director of R. G. Barry Corporation, an Ohio corporation, which is about to
file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Exchange Act of 1934, as amended, the Annual Report
on Form 10-K for the fiscal year ended December 29, 2001, hereby constitutes and
appoints Michael S. Krasnoff as his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign the Annual Report on Form
10-K and any and all amendments and documents related thereto, and to file the
same, and any and all exhibits, financial statements and schedules relating
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission and the New York Stock Exchange, and grants unto said
attorney-in-fact and agent, and substitute or substitutes, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all things that
said attorney-in-fact and agent, or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

                  IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 21st day of March, 2002.



                                   /s/ Daniel D. Viren
                                  ---------------------------------------------
                                  Daniel D. Viren




<PAGE>


                                POWER OF ATTORNEY


                  KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
of R. G. Barry Corporation, an Ohio corporation, which is about to file with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Exchange Act of 1934, as amended, the Annual Report on Form 10-K
for the fiscal year ended December 29, 2001, hereby constitutes and appoints
Daniel D. Viren and Michael S. Krasnoff as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign the Annual Report
on Form 10-K and any and all amendments and documents related thereto, and to
file the same, and any and all exhibits, financial statements and schedules
relating thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and the New York Stock Exchange, and grants
unto each of said attorneys-in-fact and agents, and substitute or substitutes,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all things that each of said attorneys-in-fact and agents, or any of
them or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

                  IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 21st day of March, 2002.



                                   /s/ Roger E. Lautzenhiser
                                  ---------------------------------------------
                                  Roger E. Lautzenhiser



<PAGE>


                                POWER OF ATTORNEY
                                -----------------


                  KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
of R. G. Barry Corporation, an Ohio corporation, which is about to file with the
Securities and Exchange Commission, Washington, D.C., under the provisions of
the Securities Exchange Act of 1934, as amended, the Annual Report on Form 10-K
for the fiscal year ended December 29, 2001, hereby constitutes and appoints
Daniel D. Viren and Michael S. Krasnoff as his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign the Annual Report
on Form 10-K and any and all amendments and documents related thereto, and to
file the same, and any and all exhibits, financial statements and schedules
relating thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and the New York Stock Exchange, and grants
unto each of said attorneys-in-fact and agents, and substitute or substitutes,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all things that each of said attorneys-in-fact and agents, or any of
them or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

                  IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 21st day of March, 2002.



                                    /s/ Edward M. Stan
                                   --------------------------------------------
                                   Edward M. Stan




</TEXT>
</DOCUMENT>
</SUBMISSION>
