Document:

[PRIMUS ASSET MANAGEMENT LETTERHEAD]

August 16, 2004

Thomas W. Jasper
39 Manursing Avenue
Rye, NY  10580

Dear Tom:

This letter agreement (the "Letter Agreement") sets forth the terms and
conditions of your continued employment with Primus Asset Management, Inc., a
Delaware corporation (the "Company").

1.       Term. This Letter Agreement will govern the terms and conditions of
         your employment from the date of the completion of the underwritten,
         registered initial public offering (the "IPO") of the common shares,
         par value $.01 per share (the "Shares") of the Company's parent, Primus
         Guaranty, Ltd. ("Primus Guaranty") until the anniversary date thereof
         with respect to which you provide the Company, or the Company provides
         you, with at least 6 months advance written notice that this Letter
         Agreement shall terminate, provided that any such notice shall not be
         effective before the third anniversary of the IPO. The period from the
         IPO until such anniversary date with respect to which notice is
         provided is referred to below as the "Term", and the portion of the
         Term during which you are actually employed by the Company is referred
         to below as the "Employment Period". Should the IPO not occur for any
         reason, then this Letter Agreement shall be null and void and of no
         force and effect.

2.       Position; Duties. You will be employed by the Company as it Chief
         Executive Officer. You will report to the Board of Directors of the
         Company (the "Board"), and will perform such duties as may be specified
         by the Board from time to time not inconsistent with your position as
         Chief Executive Officer. You agree to use your best efforts to perform
         such duties faithfully, to devote all of your working time to the
         business of the Company and its subsidiaries and affiliates
         (collectively, the "Company Group"), and while you remain employed by
         the Company, you will not engage in any other business activity that is
         in conflict with your duties and obligations to any member of the
         Company Group. You will be permitted to serve as a director of any
         not-for-profit organization, or, with the consent of the Board, any
         other organization, so long as such service does not interfere with
         your ability to perform your duties for the Company. During the
         Employment Period, the Company agrees to cause Primus Guaranty to
         appoint you as its Chief Executive Officer and to nominate you to serve
         as a member of its Board of Directors, provided that following a Change
         in Control (as defined in

         paragraph 7(i) below), the Company shall have no further obligation to
         cause Primus Guaranty to appoint you to its Board of Directors.

3.       Base Salary. During the Employment Period you will be paid a base
         salary at an annual rate of $500,000, payable in accordance with the
         normal payroll practices established by the Company ("Base Salary").
         Your Base Salary will be reviewed at least once in each calendar year
         and may be subject to upward (but not downward) adjustment.

         4. Annual Bonus. With respect to each fiscal year of the Company that
         ends during the Employment Period, you will have an opportunity to earn
         a target bonus of 150% of your Base Salary based on achievement of a
         targeted level of performance (the "Annual Bonus"). Your actual Annual
         Bonus will primarily be based on the achievement of certain performance
         objectives that are established pursuant to the Primus Guaranty Annual
         Performance Bonus Plan, or such other plan as may be in effect from
         time to time, and a portion of the Annual Bonus may be paid in the form
         of a forfeitable Stock Award (as defined in paragraph 7(b) below),
         provided that at least 50% of the Annual Bonus must be paid in the form
         of cash. The cash portion of the Annual Bonus will be earned and
         payable as soon as practicable following the release of financial
         statements for the relevant fiscal year, and except as provided in
         paragraph 7 below, no portion of the Annual Bonus will be paid to you
         unless you remain employed by the Company through the date of payment.

         5. Stock Awards. Effective as of the date of the IPO, you shall be
         granted awards relating to 1,260,000 Shares (subject to adjustment for
         the reverse stock split expected to be effected prior to the IPO, with
         the resulting shares rounded down to the nearest whole multiple of
         100), 50% of which shall be in the form of an option to purchase Shares
         (the "Option") and 50% shall be in the form of performance shares (the
         "Performance Shares"). The Option shall carry an exercise price equal
         to the IPO price, and shall vest in four equal installments on the
         first, second, third and fourth anniversaries of the date of the IPO.
         The Performance Shares shall vest as of December 31, 2006 if targeted
         level of performance is achieved for the period commencing January 1,
         2004 and ending December 31, 2006. The Option and Performance Shares
         shall be granted pursuant to the Primus Guaranty 2004 Stock Incentive
         Plan, and shall be subject to the terms thereof, as well as award
         agreements to be issued thereunder. Upon a Change in Control, if no
         provision is made for the continuance, assumption or comparable
         substitution of the Option, the Performance Shares, or any other Stock
         Award (as defined in paragraph 7(b) below), then such Option,
         Performance Shares or other Stock Award, to the extent not vested,
         shall become fully vested immediately prior to the Change in Control.

         6. Benefits. During the Employment Period, the Company will provide you
         with such vacation, fringe benefits and insurance coverages that it
         will establish for senior executives of any member of the Company
         Group, including coverages for medical, dental, prescription drugs,
         vision, death and disability. You will also be entitled to participate
         in any future executive compensation plans established by any member of
         the Company Group at a level commensurate with your position with the
         Company, other than the Primus Guaranty Senior Management Severance Pay
         Plan.

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7.       Termination.

         (a)  Generally. Notwithstanding the Term of this Letter Agreement, your
              employment with the Company will be at-will, meaning that you will
              be free to resign from the Company and the Company will be free to
              terminate your employment at any time. Upon any such termination
              or resignation during or upon expiration of the Term, you will be
              entitled to any Base Salary earned but not yet paid, any
              reimbursable business expenses incurred but not yet reimbursed,
              and any benefit to which you (or members of your family) may be
              entitled to under the Company Group's benefit plans as of the date
              of termination. In addition, except as provided below, any Stock
              Award that is a share option and that is or becomes vested upon
              your termination of employment shall remain exercisable for the 90
              day period following such termination of employment, subject to
              the provisions of the applicable plan pursuant to which such share
              option was granted governing the rights of the committee under
              such plan to take actions in connection with corporate
              transactions, reorganizations and other similar events; provided,
              however, that if such termination is initiated by the Company for
              Cause, all share options shall immediately terminate.

         (b)  Death/Disability. In addition to the entitlements set forth in
              subparagraph (a) above, in the event that, prior to expiration of
              the Term, your employment terminates on account of your death or
              is terminated by the Company on account of your Disability, you
              shall be entitled to (i) the portion of the Annual Bonus, if any,
              payable in cash for the fiscal year immediately prior to such
              termination, to the extent such Annual Bonus has not already been
              paid, payable at the time such Annual Bonus would otherwise be
              paid (the "Prior Year Cash Bonus"), and (ii) the portion of the
              Annual Bonus, if any, that would have been paid to you in cash for
              the fiscal year in which such termination occurs on the assumption
              that target level of performance for such year was achieved,
              payable at such time that such Annual Bonus would have been paid
              had your employment not so terminated, but prorated for the
              portion of the fiscal year that you were actually employed (the
              "Prorated Cash Bonus"). In addition, any share option, restricted
              stock unit or other award relating to the Shares, or any
              securities or other consideration into which such Shares are
              converted in connection with a Change in Control, whether granted
              pursuant to the Primus Guaranty 2004 Stock Incentive Plan or
              otherwise (a "Stock Award") outstanding at the time of your
              termination of employment that would have become nonforfeitable
              solely by reason of your having remained employed by the Company
              (a "Service-Based Stock Award") shall become fully vested. Any
              Stock Award that would have become nonforfeitable by reason of
              both your having remained employed by the Company through the end
              of a specified performance period, and the Company or Primus
              Guaranty achieving a pre-established level of performance during
              such performance period (a "Performance-Based Stock Award"), shall
              vest on the assumption that targeted level of performance would
              have been achieved, and such vesting shall be prorated to reflect
              the portion of the performance period that you were actually
              employed. Any Stock Award that is a share option and that is or
              becomes vested upon your termination of employment by reason of
              your death or Disability shall

                                       3

              remain exercisable for the one year period following such
              termination of employment, subject to the provisions of the
              applicable plan pursuant to which such share option was granted
              governing the rights of the committee under such plan to take
              actions in connection with corporate transactions, reorganizations
              and other similar events.

         (c)  Terminations Triggering Severance. In addition to the entitlements
              set forth in subparagraph (a) above, in the event that (x) your
              employment is terminated by the Company for any reason other than
              for Cause or your Disability prior to expiration of the Term, or
              (y) you terminate your employment for Good Reason prior to
              expiration of the Term, or (z) a Change in Control occurs prior to
              expiration of the Term and within 18 months after the Change in
              Control your employment is either terminated by the Company other
              than for Cause or Disability (including upon expiration of the
              Term pursuant to notice that is provided by the Company following
              a Change in Control pursuant to paragraph 1 above), or you
              terminate your employment for Good Reason, you will be entitled to
              receive the severance benefits described in subparagraph (d)
              below.

         (d)  Severance Benefits. Upon a termination of your employment
              described in subparagraph (c) above, and subject to satisfaction
              of the conditions set forth in subparagraph (f) below, you shall
              be entitled to (i) a cash payment equal to 5 times your Base
              Salary in effect at the time of such termination of employment,
              one-half of which shall be payable in accordance with the
              Company's normal payroll practices over the one year period
              following your termination of employment, and the remainder of
              which shall be payable in one lump sum at the end of such one year
              period, (ii) a cash payment equal to the Prior Year Cash Bonus as
              described in subparagraph (b) above, (iii) a cash payment equal to
              the portion of the Annual Bonus, if any, that would have been paid
              to you in cash for the fiscal year in which such termination
              occurs, payable at such time and in such amount that would have
              been paid had your employment not so terminated, but prorated for
              the portion of the fiscal year that you were actually employed,
              and (iv) continued health coverage for the two year period
              following such termination of employment on the same basis that
              such coverage is provided to senior executives of the Company
              during such period. In addition, upon a termination of your
              employment pursuant to clauses (x) and (y) of subparagraph (c)
              above, each Service-Based Stock Award will continue to vest on the
              same basis as it would have vested had you remained employed for
              the one year period following such termination, and upon a
              termination of your employment pursuant to clause (z) of
              subparagraph (c) above, each Service-Based Stock Award shall fully
              vest and each Performance-Based Stock Award shall vest on the
              assumption that targeted level of performance would have been
              achieved (or, if greater, performance that reasonably could be
              expected to be achieved based on actual performance through the
              date of the Change in Control), and such vesting shall be prorated
              to reflect the portion of the performance period that you were
              actually employed.

         (e)  Expiration of the Term. If your employment with the Company is
              terminated upon expiration of the Term, i.e. upon the third
              anniversary of the IPO or any

                                       4

              subsequent anniversary following the provision of notice as
              provided in paragraph 1 above, regardless of which party provided
              the notice or initiated the termination, you shall not be entitled
              to the severance benefits described in subparagraph (d) above,
              except where expiration of the Term occurs within 18 months
              following a Change in Control pursuant to notice that is provided
              by the Company following a Change in Control pursuant to paragraph
              1 above. However, any unvested Stock Awards (both Time-Based Stock
              Awards and Performance-Based Stock Awards) outstanding at the time
              of such termination of employment shall continue to vest on the
              same basis as such awards would have vested had you remained
              employed for the period commencing on the date of such termination
              and ending on the date that you engage in Competitive Activities
              (as defined in paragraph 12 below), provided that you provide a
              written acknowledgment to the Company prior to each vesting date
              that you have not engaged in Competitive Activities. Any Stock
              Award that is a share option shall remain exercisable for the one
              year period following the later of the date of such termination of
              employment, or the date such share option vests pursuant to the
              preceding sentence, subject to the provisions of the applicable
              plan pursuant to which such share option was granted governing the
              rights of the committee under such plan to take actions in
              connection with corporate transactions, reorganizations and other
              similar events.

         (f)  Conditions. Your entitlement to receive, or continue to receive,
              the severance benefits, vesting and extended exercisability set
              forth in subparagraphs (d) and (e) above shall be conditioned upon
              (i) your execution of a release of claims in favor of all members
              of the Company Group in substantially the form attached as Exhibit
              A, and such release becoming irrevocable, as provided in such
              release, and (ii) your compliance with paragraphs 10 through 13
              below. In the event of your breach of any of the provisions of
              such paragraphs, no further severance payments or benefits will be
              provided, and any unvested Stock Awards shall be immediately
              forfeited.

         (g)  No Mitigation. The amount and duration of the severance payments
              provided in subparagraph (d) above shall not be subject to a duty
              to mitigate and shall not be reduced by the amount of compensation
              that you receive from another employer, whether as a director,
              employee or consultant; provided, however, the Company's
              obligation set forth above to continue your health coverages will
              terminate no later than the date you become eligible for
              comparable coverage under another group health plan, and you agree
              to notify the Company of your eligibility for any such coverage.

         (h)  Offset. The Company may offset from any amount payable under
              subparagraph (d) above any amount you owe to any member of the
              Company Group.

         (i)  Definitions. For purposes of this Letter Agreement, the following
              terms shall have the meaning set forth below:

                                       5

              "Cause" shall mean a finding by of a majority of the Company's
              Board of Directors (excluding you, if you are a director) at a
              meeting in which you will have an opportunity to participate that
              you have:

              (i)       materially failed, refused or neglected to perform your
                        job functions (other than by reason of a physical or
                        mental impairment) that continued after you have been
                        provided adequate and specific notice thereof;

              (ii)      failed to comply with any material term of this Letter
                        Agreement or any material term of any written Company
                        policy that is applicable and has been communicated to
                        you, which failure continued after you have been
                        provided adequate and specific notice thereof;

              (iii)     committed an act of fraud or embezzlement against any
                        member of the Company Group; or

              (iv)      been convicted of, or entered a plea of guilty or nolo
                        contendere to, a felony or misdemeanor involving moral
                        turpitude.

              "Disability" shall mean your continuous inability by reason of a
              physical or mental illness, injury or impairment to perform the
              duties assigned to you for a period of six consecutive calendar
              months.

              "Change in Control" shall mean:

              (i)       the acquisition by any person (within the meaning of
                        Section 13(d)(3) or 14(d)(2) of the Securities Exchange
                        Act of 1934 (the "Exchange Act")), excluding Primus
                        Guaranty or any of its subsidiaries or any employee
                        benefit plan sponsored by any of the foregoing, of
                        beneficial ownership (within the meaning of Rule 13d-3
                        under the Exchange Act) of securities of Primus Guaranty
                        representing 30% or more of the voting power with
                        respect to the election of directors, except that 50%
                        shall be substituted for 30% where such person
                        beneficially owned Shares immediately prior to the time
                        of the IPO, or is controlled by or is under common
                        control with, any such beneficial owner of the Shares;

              (ii)      the cessation for any reason of the individuals who
                        constitute the Board of Directors of Primus Guaranty as
                        of the effective date of the IPO (the "Incumbent Board")
                        to constitute at least a majority of the members of the
                        Board of Directors of Primus Guaranty, provided that any
                        individual becoming a director subsequent to the
                        effective date of the IPO whose election, or nomination
                        for election by Primus Guaranty's stockholders, was
                        approved by a vote of at least a majority of the
                        directors then comprising the Incumbent Board (other
                        than any individual whose nomination for election to
                        membership on Primus Guaranty's Board of Directors was
                        not endorsed by Primus Guaranty's management prior to,
                        or at the time of, such individual's initial nomination
                        for election) shall be,

                                       6

                        for purposes of this Letter Agreement, considered as
                        though such person were a member of the Incumbent Board;
                        or

              (iii)     the consummation of a merger, consolidation,
                        recapitalization, reorganization, sale or disposition of
                        all or a substantial portion of the Primus Guaranty's
                        assets, a reverse stock split of outstanding voting
                        securities, or the issuance of shares of stock of Primus
                        Guaranty in connection with the acquisition of the stock
                        or assets of another entity, provided, however, that a
                        Change in Control shall not occur under this clause
                        (iii) if consummation of the transaction would result in
                        more than 50% of the total voting power with respect to
                        the election of directors represented by the voting
                        securities of Primus Guaranty (or, if not Primus
                        Guaranty, the entity that succeeds to all or
                        substantially all of Primus Guaranty's business)
                        outstanding immediately after such transaction being
                        beneficially owned by all or substantially all of the
                        holders of outstanding voting securities of Primus
                        Guaranty immediately prior to the transaction, with the
                        voting power of each such continuing holder relative to
                        other such continuing holders not substantially altered
                        in the transaction.

              "Good Reason" shall mean:

              (iv)      any material breach by the Company of its obligations
                        under this Letter Agreement, after you have given the
                        Company written notice and an opportunity to cure such
                        breach;

              (v)       a material and adverse change or diminution of your job
                        duties or responsibilities as an officer of any member
                        of the Company Group, after you have given the Company
                        written notice and an opportunity to cure such change or
                        diminution; or

              (vi)      a relocation of your principal place of employment by
                        more than 50 miles from New York City.

8.       Special Tax Gross-Up

         (a)  Gross-Up. You shall be entitled to a payment in an amount that, on
              an after-tax basis (including federal income and excise taxes,
              social security and Medicare taxes and state and local income
              taxes) equals the excise tax imposed on you under Section 4999 of
              the Code (the "Excise Tax") by reason of amounts payable under
              this Letter Agreement, as well as other amounts payable outside
              this Letter Agreement by any member of the Company Group that are
              described in Section 280G(b)(2)(A)(i) of the Code. For purposes of
              this subsection, you shall be deemed to pay federal, state and
              local income taxes at the highest applicable marginal rate of
              taxation.

         (b)  Cut-Back. Notwithstanding paragraph 8(a), no payment shall be made
              thereunder, and amounts payable under this Letter Agreement and,
              if necessary,

                                       7

              amounts payable outside of this Letter Agreement by any member of
              the Company Group that are described in Section 280G(b)(2)(A)(i)
              of the Code, shall be reduced to the extent necessary to avoid any
              portion of any such payment being treated as a "parachute payment"
              within the meaning of Section 280G(b)(2) of the Code if, after
              such reduction, you would retain at least 90% of the amount that
              would otherwise be payable without regard to this paragraph 8(b).
              Reductions to be made under this paragraph 8(b) shall first be
              applied to amounts payable in cash, then to non-cash benefits
              other than acceleration of vesting, and then to acceleration of
              vesting.

         (c)  Determinations. Determinations of the Excise Tax and the amount of
              the payment or reduction to be made pursuant to paragraph 8(a) or
              (b) shall be made by the Company. If it is subsequently determined
              by the Internal Revenue Service ("IRS") that the Excise Tax is
              greater than the amount so determined, the Company shall
              recalculate the payment or reduction to be made pursuant to
              paragraph 8(a) or (b), and make any appropriate payment to you.
              The Company, at its cost, may, on your behalf, challenge any
              assessment or imposition of any such excise tax by the IRS, and
              you shall reasonably assist and cooperate with the Company, at the
              Company's expense, with respect to any such challenge. Should you
              receive a refund of any excise tax previously paid, you shall
              repay to the Company the portion of any gross-up payment made in
              respect of the Excise Tax so refunded and you agree that you will
              with respect to the applicability of the Excise Tax, take a
              position consistent with that of the Company at all times.

9.       Return of Property. You agree that upon termination of your employment
         with the Company for any reason, you will immediately resign all
         officer and director positions you may have with any member of the
         Company Group. You further agree that you will as promptly as
         practicable deliver to the Company all documents, correspondence,
         memoranda, notes, records, reports, plans, designs, studies and any
         other papers or items made or received by you in connection with your
         employment with the Company (including without limitation documents
         prepared by you or which may have come into your possession in the
         course of your employment hereunder) that are reasonably necessary to
         the on-going functioning of the Company (whether or not constituting
         confidential information), and all computer equipment, disks and
         software, keys, credit cards, books and other property of the Company
         then in your possession.

10.      Proprietary Information. You understand that your work with the Company
         will involve access to and creation of confidential (including trade
         secrets) and proprietary information of any member of the Company Group
         (collectively "Proprietary Information") and recognize that it is in
         the legitimate business interest of any member of the Company Group to
         restrict your disclosure or use of Proprietary Information. You
         therefore agree that you will maintain the confidentiality of, and will
         never use or disclose, or authorize any other person or entity to use
         or disclose, any Proprietary Information, other than in connection with
         your employment as necessary to further the business objectives of the
         Company or as may be required by law or legal process or as may be
         required for you to enforce your rights under this Letter Agreement or
         as a stockholder of Primus Guaranty. The term Proprietary Information
         includes, by way of

                                       8

         example and without limitation, matters of a technical nature, such as
         software design and specifications, financial models, scientific, trade
         and engineering secrets, "know-how", formulas, secret processes,
         drawings, works of authorship, machines, inventions, computer programs
         (including documentation of such programs), services, materials, patent
         applications, new product plans, other plans, technical information,
         technical improvements, manufacturing techniques, specifications,
         manufacturing and test data, progress reports and research projects,
         and matters of a business nature, such as business plans, prospects,
         financial information, proprietary information about costs, profits,
         markets, sales, lists of customers and suppliers of any member of the
         Company Group, the management, operation and planning of any member of
         the Company Group, procurement and promotional information, credit and
         financial data concerning customers or suppliers of any member of the
         Company Group, and other information of a similar nature to the extent
         not available to the public, and plans for future development, but does
         not include any information that has been publicly disclosed or was
         known to you prior to accepting employment with the Company.

11.      Innovations. You agree to promptly and fully disclose to the Company
         all ideas, inventions, discoveries, creations, designs, materials,
         works of authorship, trademarks, and other technology and rights (and
         any related improvements or modifications thereof), whether patentable
         or not, copyrightable or not, or otherwise protectable or not under any
         form of legal protection afforded to intellectual property
         (collectively, "Innovations"), relating to any activities of any member
         of the Company Group, conceived or developed by you alone or with
         others during the Employment Period or any prior term of employment
         with any member of the Company Group, whether or not conceived during
         regular business hours. Such Innovations shall be the sole property of
         the Company. To the extent possible, such Innovations shall each be
         considered a Work Made For Hire by you for the Company within the
         meaning of the U.S. Copyright Act. To the extent such Innovations may
         not be considered such a Work Made For Hire, you hereby assign to the
         Company, without additional consideration, any right, title, or
         interest you may now have in such Innovations, and going forward, you
         agree to automatically assign to the Company at the time of creation of
         the Innovations, without additional consideration, any right, title, or
         interest you may have in such Innovations. You will (whether during or
         after your employment with the Company) execute such written
         instruments and do other such acts as may be necessary in the
         reasonable opinion of the Company to obtain a patent, register a
         copyright, or otherwise protect or enforce the Company's rights in such
         Innovations. You agree to assist the Company in obtaining or
         maintaining for itself at its own expense United States and foreign
         patents, copyrights, trade secret protection or other protection of any
         and all Innovations.

12.      Competing Businesses. You agree that, in consideration of the mutual
         covenants contained herein, and other good and valuable consideration,
         the receipt and sufficiency of which is hereby acknowledged, during the
         Employment Period and, if your employment is terminated under
         circumstances described in paragraph 7(c), for a period of 12 months
         thereafter, you will not directly or indirectly, on your own behalf or
         as a partner, officer, director, employee, agent, consultant or
         stockholder (other than as the holder of 1% or less of the voting
         capital stock of any corporation with a class of equity securities
         registered under Section 12(b) or 12(g) of the Securities Exchange Act
         of 1934,

                                       9

         as amended) engage in or render services to any person or entity
         engaged in the development or sale of financial products related to
         credit risk transfer, or that is a dealer with respect to such
         products, where your activities will relate primarily to financial
         products offered by any member of the Company Group at the time of your
         termination of employment ("Competitive Activities"). In the event of a
         termination of your employment other than pursuant to paragraph 7(c),
         the Company may elect, by providing you written notice within 10 days
         of such termination, to provide you with a payment equal to 2.5 times
         your Base Salary, payable in accordance with the Company's normal
         payroll practices over the one year period following your termination
         of employment, and continued vesting of your Service-Based Stock Awards
         during such one year period, and in exchange therefor you agree not to
         engage in Competitive Activities during such one year period. The
         Company may, at any time during such one year period, cease making such
         payments, at which time you will be relieved of your obligation not to
         engage in Competitive Activities. The period following your termination
         of employment during which this paragraph 12 applies is referred to as
         the "Restricted Period". If, in any judicial proceeding, a court shall
         refuse to enforce this covenant because the time limit is too long or
         because it is more extensive than necessary to protect the business and
         goodwill of the Company, it is understood and agreed between the
         parties that for purposes of such proceeding such time limitation and
         areas of enforcement shall be reformed to the extent necessary to
         permit enforcement of such covenant.

13.      Business Relationships. You acknowledge that the relationships of all
         members of the Company Group with their employees, customers and
         vendors are valuable business assets. You agree that, during the
         Employment Period and during the Restricted Period, you will not
         directly or indirectly (for yourself or for any third party) divert or
         attempt to divert from any member of the Company Group any business,
         employee, customer or vendor, through solicitation or otherwise.

14.      Nondisparagement. You agree that you will not issue any communication
         or statement that disparages any member of the Company Group, except if
         testifying truthfully under oath pursuant to subpoena or other legal
         process or otherwise responding to or providing disclosures required by
         law in connection with an investigation by a governmental or law
         enforcement agency. The Company will not, and will use reasonable
         efforts to cause its senior executive officers to not, issue any
         communication or statement that disparages you, except if testifying
         truthfully under oath pursuant to subpoena or other legal process or
         otherwise responding to or providing disclosure required by law in
         connection with an investigation by a governmental or law enforcement
         agency. Notwithstanding the foregoing, nothing in this paragraph 14
         shall be construed so as to preclude any member of the Company Group
         from fairly and accurately discussing, reporting or communicating,
         orally or in written form, concerning the performance of the business
         of any member of the Company Group during your employment.

15.      Enforcement. You agree that: (i) the covenants set forth in paragraphs
         10 through 13 are reasonable in all respects, including, where
         applicable, geographical and temporal scope, and (ii) the Company would
         not have entered into this Letter Agreement but for your covenants
         contained therein, and (iii) the covenants contained therein have been
         made in order to induce the Company to enter into this Letter
         Agreement. If, at the time of

                                       10

         enforcement of paragraphs 10 through 13, a court shall hold that the
         duration, scope or area restrictions stated herein are unreasonable
         under circumstances then existing, the parties agree that the maximum
         duration, scope or area reasonable under such circumstances shall be
         substituted for the stated duration, scope or area and that the court
         shall be allowed to revise the restrictions contained herein to cover
         the maximum period, scope and area permitted by law. You recognize and
         affirm that in the event of your breach of any provision of paragraphs
         10 through 13, money damages would be inadequate and the Company would
         have no adequate remedy at law. Accordingly, you agree that in the
         event of a breach or a threatened breach by you of any of the
         provisions of paragraphs 10 through 13, the Company, in addition and
         supplementary to other rights and remedies granted by law existing in
         its favor (including recovery of damages and costs (including
         reasonable attorneys' fees)), may apply to any court of law or equity
         of competent jurisdiction for specific performance and/or injunctive or
         other relief in order to enforce or prevent any violations of the
         provisions hereof (without posting a bond or other security).

16.      Indemnification. To the fullest extent permitted by law, the Company
         will indemnify you and hold you harmless from all claims arising from
         any action taken by you, or your failure to act, within the scope of
         your authority as an officer or director of any member of the Company
         Group, unless the action or omission is fraudulent or constitutes
         willful misconduct or gross negligence. You shall also be covered under
         any directors & officers liability insurance policy secured by the
         Company.

17.      Withholding. The Company shall have the right to withhold from any
         amount payable hereunder an amount necessary in order for the Company
         to satisfy any withholding tax obligation it may have under applicable
         law.

18.      Legal Fees. The Company agrees to reimburse you for your legal fees
         incurred in connection with the negotiation and review of this Letter
         Agreement, up to a maximum of $10,000, upon the presentation to the
         Company by you of appropriate substantiation of such fees.

19.      No Conflicts; Proper Authorization. You represent and warrant to the
         Company that your acceptance of continued employment and the
         performance of your duties for the Company will not conflict with or
         result in a violation or breach of, or constitute a default under any
         contract, agreement or understanding to which you are or were a party
         or of which you are aware and that there are no restrictions,
         covenants, agreements or limitations on your right or ability to enter
         into and perform the terms of this Letter Agreement. The Company
         represents and warrants to you that the terms of this Letter Agreement
         have been fully authorized and approved by the Board of Directors of
         the Company.

20.      Governing Law. The terms of this Letter Agreement and any action
         arising thereunder, shall be governed by and construed in accordance
         with the domestic laws of the State of New York, without giving effect
         to any choice of law or conflict of law provision or rule (whether of
         the State of New York or any other jurisdiction) that would cause the
         application of the laws of any jurisdiction other than the State of New
         York.

                                       11

21.      Dispute Resolution. Except for any claims or controversy relating to
         the enforcement of the restrictive covenants set forth in paragraphs 9
         through 14 which may be brought in any court of competent jurisdiction,
         any other disputes arising out of this Letter Agreement, including
         claims of violations of federal or state discrimination statutes or
         public policy, shall be resolved pursuant to binding arbitration before
         a panel of three arbitrators serving under the Commercial Arbitration
         Rules of the American Arbitration Association ("AAA"). In event of a
         dispute, a written request for arbitration shall be submitted to the
         New York, New York office of the AAA. The award of the arbitrators
         shall be final and binding and judgment upon the award may be entered
         in any court having jurisdiction thereof. Except as otherwise provided
         above, this procedure shall be the exclusive means of settling any
         disputes that may arise under this Letter Agreement. All fees and
         expenses of the arbitrators and all other expenses of the arbitration,
         except for attorneys' fees and witness expenses, shall be shared
         equally by you and the Company. Each party shall bear its own witness
         expenses and attorneys fees, provided, however, the Company will
         reimburse you for your legal fees in connection with any such dispute
         where you are found to be the prevailing party by the arbitrator and/or
         court.

22.      Entire Agreement. This Letter Agreement supersedes all previous and
         contemporaneous communications, agreements and understandings, whether
         oral or written, between you, on the one hand, and any member of the
         Company Group or any of their predecessors, on the other hand
         (including the employment letter between you and Primus Corporate
         Services Inc., dated March 12, 2002 (the "March 12, 2002 Agreement"),
         and constitutes the sole and entire agreement between you and the
         Company pertaining to the subject matter hereof. Notwithstanding the
         above, the March 12, 2002 Agreement shall remain in effect if this
         Letter Agreement becomes null and void pursuant to paragraph 1 hereof.

23.      Survival. You acknowledge that the provisions of paragraphs 9 through
         15, 16, 20 and 21 shall survive termination of this Letter Agreement
         upon expiration of the Term.

24.      Counterparts. This Letter Agreement may be executed in one or more
         counterparts, all of which shall be considered one and the same
         agreement, and shall become a binding agreement when one or more
         counterparts have been signed by each party and delivered to the other
         party.

25.      Notices. Any notice, request, or instruction to be given hereunder
         shall be in writing and shall be deemed given when personally delivered
         or three days after being sent by United States certified mail, postage
         prepaid, with return receipt requested to, the parties at their
         respective addresses set forth below:

         To the Company:

         Primus Asset Management, Inc.
         360 Madison Avenue
         23rd Floor
         New York, NY 10017

                                       12

         To the Executive:

         Mr. Thomas W. Jasper
         39 Manursing Avenue
         Rye, New York 10580

26.      Opportunity to Consult with Counsel. You acknowledge and affirm that
         you have had the opportunity to consult with an attorney prior to
         signing this Letter Agreement.

                                     * * * *

If the foregoing is acceptable to you, kindly sign and return to me one copy of
this letter, and this letter shall constitute a binding agreement between you
and the Company.

                                             Sincerely yours,

                                             Primus Asset Management, Inc.

                                             By:  /s/ Zachary Snow
                                                --------------------------------
                                                Name:  Zachary Snow
                                                Title: Secretary
AGREED TO AND ACCEPTED:

/s/ Thomas W. Jasper
-----------------------------------------------------
Thomas W. Jasper

                                       13

                                                                       EXHIBIT A

                                     RELEASE

         I, Thomas W. Jasper, the undersigned, agree to accept the compensation,
payments, benefits and other consideration provided for in paragraph 7(d) [or
(e)] of the employment letter agreement between me and Primus Asset Management,
Inc. (the "Company") dated August 16, 2004 (the "Letter Agreement") in full
resolution and satisfaction of, and hereby IRREVOCABLY AND UNCONDITIONALLY
RELEASE, REMISE AND FOREVER DISCHARGE the Company and Releasees from any and all
agreements, promises, liabilities, claims, demands, rights and entitlements of
any kind whatsoever, in law or equity, whether known or unknown, asserted or
unasserted, fixed or contingent, apparent or concealed, to the maximum extent
permitted by law ("Claims"), which I, my heirs, executors, administrators,
successors or assigns ever had, now have or hereafter can, shall or may have
for, upon, or by reason of any matter, cause or thing whatsoever existing,
arising, occurring or relating to my employment and/or termination thereof with
the Company and Releasees, or my status as a stockholder of the Company and
Releasees, at any time on or prior to the date I execute this Release,
including, without limitation, any and all Claims arising out of or relating to
compensation, benefits, any and all contract claims, tort claims, fraud claims,
claims for bonuses, commissions, sales credits, etc., defamation, disparagement,
or other personal injury claims, claims for accrued vacation pay, claims under
any federal, state or municipal wage payment, discrimination or fair employment
practices law, statute or regulation, and claims for costs, expenses and
attorneys' fees with respect thereto. This release and waiver includes, without
limitation, any and all rights and claims under Title VII of the Civil Rights
Act of 1964, the Civil Rights Acts of 1866, 1871 and 1991, the Employee
Retirement Income Security Act, the Age Discrimination in Employment Act
(including but not limited to the Older Workers Benefit Protection Act), the
Americans with Disabilities Act, the National Labor Relations Act, the Family
and Medical Leave Act, the Equal Pay Act, the Sarbanes-Oxley Act, [add
applicable state laws and/or Bermuda laws relating to employment] and all
amendments to the foregoing, and any other federal, state or local statute,
ordinance, regulation or constitutional provision regarding employment,
compensation, employee benefits, termination of employment or discrimination in
employment. Notwithstanding the above, I do not release my right to any right to
indemnification I may have as a director, officer or employee pursuant to
applicable law and/or the Company's certificate of incorporation nor do I
release any rights to any earned and vested benefits to which I am entitled
under the terms of any employee benefit plan maintained by the Company or any of
its affiliates.

         I represent and affirm (i) that I have not filed any Claim against the
Company or Releasees and (ii) that to the best of my knowledge and belief, there
are no outstanding Claims within the meaning of this paragraph.

         For the purpose of implementing a full and complete release and
discharge of Claims, I expressly acknowledge that this Release is intended to
include in its effect, without limitation, all the Claims described in the
preceding paragraphs, whether known

or unknown, apparent or concealed, and that this Release contemplates the
extinction of all such Claims, including Claims for attorney's fees. I expressly
waive any right to assert after the execution of this Release that any such
Claim has, through ignorance or oversight, been omitted from the scope of the
Release.

         For purposes of this Release, the term "the Company and Releasees"
includes the Company and its past, present and future direct and indirect
parents, subsidiaries, affiliates, divisions, predecessors, successors, and
assigns, and their past, present and future officers, directors, shareholders,
representatives, agents, attorneys and employees, in their official and
individual capacities, and all other related individuals and entities, jointly
and individually, and this Release shall inure to the benefit of and shall be
binding and enforceable by all such entities and individuals.

         I understand that I have a period of up to 21 days from my receipt of
this Release to review and consider this Release. I further understand that once
I have signed this Release, I may revoke it at any time during the 7 days
following its execution by delivering a written notice of revocation to the
Company, attention General Counsel. I further understand that if I fail to
execute and return this Release to the Company, attention General Counsel, prior
to the expiration of such 21 day period, or revoke my execution of the Release
during such 7 day period, I will not be entitled to the compensation, payments,
benefits and other consideration provided for in paragraph 7(d) [or (e)] of the
Letter Agreement.

I ACKNOWLEDGE THAT I HAVE READ THIS
RELEASE AND I UNDERSTAND
AND ACCEPT ITS TERMS

------------------------------              ---------------------
Thomas W. Jasper                            Date

Sworn to before me this
___ day of ________, 20__

----------------------------
Notary Public

                                        2<PAGE>

                                  EXHIBIT 10.1

                             R. G. BARRY CORPORATION
                        SUPPLEMENTAL BENEFIT PLANS TRUST
                       (Effective as of September 1, 1995)

This Trust Agreement is hereby created effective as of September 1, 1995, by and
between R. G. Barry Corporation ("Company") and Harry Miller ("Trustee").

                                   WITNESSETH:

WHEREAS, the Company has adopted and maintains the supplemental retirement
benefit plans as described in Appendix A to this Trust Agreement, which plans
are collectively referred to herein as the "Supplemental Plans";

WHEREAS, the Supplemental Plans are not tax-qualified plans under section 401 of
the Internal Revenue Code of 1986, and the applicable regulations thereunder, as
the same may be amended ("Code"), and the Supplemental Plans are designed to
provide supplemental retirement benefits ("Supplemental Benefits"), including
supplemental deferred compensation, supplemental retirement benefits, and a
restoration of benefits limited by Code limitations which are applicable to the
R. G. Barry Corporation Salaried Employees' Pension Plan;

WHEREAS, the Company desires to establish a trust ("Trust" or "Trust Fund") and
to contribute to the Trust assets that shall be held therein, subject to the
claims of the Company's creditors in the event of the Company's Insolvency (as
herein defined) until paid to the participants and their beneficiaries under the
Supplemental Plans ("Trust Beneficiaries") in such manner and at such times as
specified in the Supplemental Plans;

WHEREAS, it is the intention of the parties that this Trust shall constitute an
unfunded arrangement and shall not affect the status of the Supplemental Plans
as unfunded plans maintained for the purpose of providing deferred compensation
for a select group of management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of 1974, and the
applicable regulations thereunder, as the same may be amended ("ERISA");

WHEREAS, it is the intention of the Company to make, at its discretion,
contributions to the Trust to provide itself with a source of funds to assist it
in meeting its obligations under the Supplemental Plans; and

WHEREAS, the Trustee desires to accept the Trust established under this Trust
Agreement and to act as Trustee thereunder;

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:

<PAGE>

ARTICLE I. ESTABLISHMENT OF TRUST

1.1 INITIAL TRUST DEPOSIT

Subject to the claims of its creditors as set forth in Article III, the Company
hereby deposits with the Trustee in trust Ten Dollars ($10.00) which shall
become part of the principal of the Trust to be held, administered and disposed
of by the Trustee as provided in this Trust Agreement.

1.2 PERMANENCE

The Trust hereby established is revocable by the Company; it shall become
irrevocable upon a Change of Control, as defined herein.

1.3 GRANTOR TRUST

The Trust is intended to be a grantor trust, of which the Company is the
grantor, within the meaning of subpart E, part I, subchapter 1, subtitle A of
the Code, and shall be construed accordingly. The Company agrees to report all
items of income and deduction of the Trust on its own income tax returns, and
shall have no right to any distributions from the Trust or any claim against the
Trust for funds necessary to pay any income taxes with respect to amounts so
reported.

1.4 EXCLUSIVE BENEFIT

The principal of the Trust and any earnings thereon shall be held separate and
apart from other funds of the Company and shall be used exclusively for the uses
and purposes herein set forth. Neither the Trust Beneficiaries nor the
Supplemental Plans shall have any preferred claim on, or any beneficial
ownership interest in, any assets of the Trust prior to the time such assets are
paid to the Trust Beneficiaries as provided in Article II, and all rights
created under the Supplemental Plans and this Trust Agreement shall be mere
unsecured contractual rights of the Trust Beneficiaries against the Company. Any
assets held by the Trust will be subject to the claims of the Company's general
creditors under Federal and state law in the event of Insolvency, as defined in
Section 3.1.

1.5 ADDITIONAL TRUST DEPOSITS

The Company may at any time, or from time to time, make additional deposits of
cash or other property in trust with the Trustee to augment the principal to be
held, administered and disposed of by the Trustee as provided in this Trust
Agreement. Unless there is a Change of Control, any such additional deposits
shall be made within the sole discretion of the Company. Neither the Trustee nor
any Trust Beneficiary shall have any right to compel such additional deposits.

Upon a Change of Control, the Company shall, as soon as possible, but in no
event longer than 60 days following the Change of Control, as defined herein,
make an irrevocable contribution to the Trust in an amount that is sufficient to
pay each Trust Beneficiary the benefits to which Trust Beneficiaries would be
entitled pursuant to the terms of the Supplemental Plan(s) as of the date on
which the Change of Control occurred. The Trustee or any Trust Beneficiary shall
have the right to

<PAGE>

compel such deposits immediately following a Change of Control or in subsequent
years, as described below.

Within 180 days following the end of each Plan Year following a Change of
Control, the Company shall be required to irrevocably deposit additional cash or
other property to the Trust in an amount sufficient to pay each Trust of
Beneficiary the benefits payable pursuant to the terms of the Supplemental
Plan(s) with respect to such Plan Year.

1.6 PAYMENT OF TAXES

The Company shall from time to time pay any and all taxes which at any time are
lawfully levied or assessed upon or become payable with respect to the Trust
Fund, the income or any property forming a part thereof, or any security
transaction pertaining thereto. The Company may contest the validity of any such
taxes.

1.7 STATUS OF SUPPLEMENTAL PLANS

The Supplemental Plans are intended to be "unfunded" and maintained "primarily
for the purposes of providing supplemental benefits for a select group of
management or highly compensated employees" for purposes of ERISA. As such, it
is intended that the Supplemental Plans are not to be subject to those
provisions of Title I of ERISA for which they are eligible for exemption due to
their status. The existence of this Trust is not intended to alter said
characterization of the Supplemental Plans.

1.8 ADDITIONAL PLANS

The Company may from time to time add other supplemental plans to the list of
plans intended to be covered by the Trust. The Company may also delete plans
from such list unless there has been a Change of Control, as defined herein. Any
such addition or deletion shall be made by an amendment to Appendix A, and the
plans so listed in Appendix A from time to time shall be the "Supplemental
Plans" as covered by this Trust Agreement.

ARTICLE II. PAYMENTS TO TRUST BENEFICIARIES WHEN THE COMPANY IS NOT INSOLVENT

2.1 SUPPLEMENTAL BENEFIT PAYMENTS

At all times when the Company is not Insolvent, the Trustee shall, upon the
direction of the Company, make payments of Supplemental Benefits to Trust
Beneficiaries from the assets of the Trust, if and to the extent such assets are
available for distribution, in accordance with the Supplemental Plans. The
Company may make payment of benefits directly to Trust Beneficiaries as they
become due under the terms of the Supplemental Plan(s). In addition, if the
principal of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Supplemental Plan(s),
the Company shall make the balance of each such payment as it falls due. The
entitlement of a Trust Beneficiary to Supplemental Benefits shall be determined
by

<PAGE>

the Company or such party as it shall designate under the Supplemental Plans,
and any claim for such Supplemental Benefits shall be considered and reviewed
under the procedures set out in the Supplemental Plans.

2.2 INSUFFICIENT TRUST ASSETS

If the Trust assets are not sufficient to make payments of Supplemental Benefits
to the Trust Beneficiaries in accordance with the Supplemental Plans, the
Trustee shall so notify the Company. In such event, it is intended that the
Company will then make payments in accordance with the Supplemental Plans.

2.3 DISCHARGE OF PAYMENT OBLIGATION

Any payments made by the Trustee to the Trust Beneficiaries shall be in
discharge of the Company's obligations under the Supplemental Plans; provided,
however, that the Company shall remain liable to the Trust Beneficiaries for all
amounts due under the Supplemental Plans to the extent not paid by the Trustee.

ARTICLE III. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARIES
WHEN THE COMPANY IS INSOLVENT

3.1 INSOLVENCY

The Company shall be considered "Insolvent" for purposes of this Trust Agreement
if --

(a)   the Company is unable to pay its debts as they become due, or

(b)   the Company is the subject of a pending proceeding as a debtor under the
      United States Bankruptcy Code (or any successor Federal statute).

At all times during the continuance of this Trust, the principal and income of
the Trust shall be subject to claims of general creditors of the Company under
federal and state law as set forth below.

3.2 DETERMINATION OF INSOLVENCY

The Board of Directors and the Chief Executive Officer of the Company shall have
the duty to promptly inform the Trustee in writing of the Company's Insolvency.
If a person claiming to be a creditor of the Company alleges in writing to the
Trustee that the Company has become Insolvent, the Trustee shall independently
determine, within 60 days after receipt of such notice, whether the Company is
Insolvent. The Trustee may employ attorneys, accountants and other advisers to
make such determination and may rely conclusively on their conclusions. The
expenses of such determination shall be allowed as administrative expenses of
the Trust.

3.3 DISCONTINUANCE OF BENEFIT PAYMENTS

Upon written notification of the Company's Insolvency by the Board of Directors
and Chief Executive Officer of the Company pursuant to Section 3.2, or pending
its determination of whether the Company is Insolvent, the Trustee shall
discontinue payment of Supplemental Benefits to the

<PAGE>

Trust Beneficiaries, and shall hold the Trust Fund for the benefit of the
Company's general creditors, after payment of amounts authorized in Article IX.
The Trustee shall continue the investment of the Trust Fund in accordance with
Article V, and shall make payments out of the Trust Fund to the Company's
general creditors only in accordance with instructions from a court of competent
jurisdiction or from a person appointed by such a court.

3.4 RESUMPTION OF BENEFIT PAYMENTS

The Trustee shall resume payments of Supplemental Benefits to the Trust
Beneficiaries in accordance with Article II of this Trust Agreement only after
the Trustee has determined that the Company is not Insolvent, the Trustee has
determined that the Company is no longer Insolvent, or a court of competent
jurisdiction orders the resumption of such payments. The Trustee shall have the
discretion to determine which of the above alternatives is appropriate to the
situation.

3.5 DUTY TO INQUIRE

Unless notified of the Company's Insolvency pursuant to Section 3.3, the Trustee
shall have no duty to inquire whether the Company is Insolvent. The Trustee may
in all events rely on such evidence concerning the Company's solvency as may be
furnished to the Trustee which will give the Trustee a reasonable basis for
making a determination concerning the Company's solvency. Nothing in this Trust
Agreement shall in any way diminish any rights of Trust Beneficiaries to pursue
their rights as general creditors of the Company with respect to Supplemental
Benefits or otherwise.

3.6 SUSPENDED PAYMENTS

If the Trustee discontinues payments of Supplemental Benefits from the Trust
pursuant to Section 3.3 and subsequently resumes such payments, the first
payment following such discontinuance shall include the aggregate amount of all
payments which would have been made to the Trust Beneficiaries in accordance
with the Supplemental Plans during the period of such discontinuance, unless the
Company otherwise directs.

ARTICLE IV. PAYMENTS TO THE COMPANY

4.1 REVERSION AFTER SATISFACTION OF LIABILITIES

The Company shall have no right or power to direct the Trustee to return to the
Company or to divert to others any of the Trust assets before all payments of
Supplemental Benefits to the Trust Beneficiaries pursuant to the Supplemental
Plans. If it is determined through actuarial valuation that certain Trust assets
will clearly never be required to pay Supplemental Benefits to the Trust
Beneficiaries, the Trustee, upon written notification by the Company of such
determination, shall return such excess assets to the Company.

<PAGE>

ARTICLE V. INVESTMENT OF TRUST FUND

5.1 TYPES OF INVESTMENTS

Except for money and other property subject to the investment responsibility of
an investment manager as provided in Section 5.4, and subject to Section 5.2,
the Trustee shall, in its discretion, invest and reinvest the assets of the
Trust, without distinction between principal and income, in any property, real,
personal or mixed, wherever situated, and whether or not productive of income,
including, without limitation, domestic or foreign, common and preferred stocks,
mutual funds, common trust funds, bonds, notes, debentures, securities
convertible into common stock, leaseholds, mortgages (including, without
limitation, any collective or part interest in any bond and mortgage or note and
mortgage), interest-bearing accounts and certificates of deposit (including
those within its own banking department or within a Federally insured
institution which may be affiliated with the Trustee), oil, mineral or gas
properties, royalties, interests or rights (including equipment pertaining
thereto), equipment trust certificates, investment trust certificates, savings
bank deposits, commercial paper, and insurance contracts (including those to
which amounts may be deposited and withdrawn). The Trustee shall, at the
direction of the Company, purchase life insurance and/or annuity contracts
including group annuity contracts providing flexible funding or similar vehicles
or for the investment of assets in separate accounts, invested in any securities
and other property including real estate, regardless of whether or not the
insurance carrier shall have assumed any contractual or other liability as to
the benefits to be provided thereunder, the value thereof, or the return
therefrom. Such life insurance and/or annuity contracts shall be considered
investments of the Trust Fund and, together with all rights, privileges, options
and elections contained therein, shall vest in the Trustee but shall be
exercised, assigned or otherwise disposed of as directed by the Company. The
insurance carrier under any such contract shall have full responsibility for the
management and control of the assets held thereunder.

5.2 INVESTMENT POLICIES

The Board of Directors of the Company shall have the right at any time and in
its discretion to formulate investment policies and standards for the investment
of the Trust Fund. Such policies and standards may include, among other things,
the percentage of the Trust Fund which may be invested in fixed income
securities, the percentage of the Trust Fund which may be invested in common
stocks, and the percentage of the Trust Fund which may be invested in the
securities of any one company. Such policies may be changed from time to time by
resolution of the Board, or by any committee or administrator acting with
respect to the Supplemental Plans, as designated by the Board. Any statement of
investment policies and standards promulgated by the Board of Directors shall be
provided in writing to the Trustee, and the Trustee may rely on such statement
until such time as it receives written notice of any change in such policies and
standards from the Company.

5.3 GENERAL POWERS OF THE TRUSTEE

The Trustee, in addition to and not in modification or limitation of all of its
common law and statutory authority, shall be authorized and empowered, in its
discretion (except as provided in

<PAGE>

Section 5.4), to exercise any and all of the following rights, powers and
privileges with respect to any cash, securities or other properties held by the
Trustee in Trust hereunder:

(a)   To sell any such property at such time and upon such terms and conditions
      as the Trustee deems appropriate. Such sales may be public or private, for
      cash or credit, or partly for cash and partly for credit, and may be made
      without notice or advertisement of any kind.

(b)   To exchange, mortgage, or lease any such property and to convey, transfer
      or dispose of any such property on such terms and conditions as the
      Trustee deems appropriate.

(c)   To grant options for the sale, transfer, exchange or disposal of any such
      property.

(d)   To exercise all voting rights pertaining to any securities; and to consent
      to or request any action on the part of the issuer of any such securities;
      and to give general or special proxies or powers of attorney with or
      without power of substitution.

(e)   To consent to or participate in amalgamations, reorganizations,
      recapitalizations, consolidations, mergers, liquidations, or similar
      transactions with respect to any securities, and to accept and to hold any
      other securities issued in connection therewith.

(f)   To exercise any subscription rights or conversion privileges with respect
      to any securities held in the Trust Fund.

(g)   To collect and receive any and all money and other property of whatsoever
      kind or nature due or owing or belonging to the Trust Fund and to give
      full discharge thereof; and to extend the time of payment of any
      obligation at any time owing to the Trust Fund, as long as such extension
      is for a reasonable period, and continues at reasonable interest.

(h)   To cause any securities or other property to be registered in, or
      transferred to, the individual name of the Trustee or in the name of one
      or more of its nominees, or one or more nominees of any system for the
      centralized handling of securities, or it may retain them unregistered and
      in form permitting transferability by delivery; but the books and records
      of the Trust shall at all times show that all such investments are a part
      of the Trust Fund.

(i)   To organize under the laws of any state a corporation for the purpose of
      acquiring and holding title to any property which it is authorized to
      acquire under this Trust Agreement and to exercise with respect thereto
      any or all of the powers set forth in this Trust Agreement.

(j)   To manage, operate, repair, improve, develop, preserve, mortgage or lease
      for any period any real property or any oil, mineral or gas properties,
      royalties, interest or rights held by it directly or through any
      corporation, either alone or by joining with others, using other Trust
      assets for any of such purposes; to modify, extend, renew, waive or
      otherwise adjust any or all of the provisions of any such mortgage or
      lease; and to make provision for amortization of the investment in or
      depreciation of the value of such property.

(k)   To settle, compromise, or submit to arbitration any claims, debts or
      damages due or owing to or from the Trust; to commence or defend suits or
      legal proceedings whenever, in its judgment, any interest of the Trust
      requires it; and to represent the Trust in all suits or legal proceedings
      in any court of law or equity or before any other body or tribunal,
      insofar as such suits or proceedings relate to any property forming part
      of the Trust Fund or to the administration of the Trust Fund.

(l)   To borrow money from others for the purposes of the Trust, but the Trustee
      shall not be authorized to borrow any money from its banking department or
      from the Company or any subsidiary or associated company.

<PAGE>

(m)   To employ such agents and counsel, including attorneys, accountants,
      actuaries, and investment managers, as may be reasonably necessary in
      managing and protecting the Trust Fund and to pay them reasonable
      compensation.

(n)   To purchase, hold and sell interests or units of participation in any
      collective or common trust fund established by the Trustee, including any
      such funds which may be established in the future.

(o)   Generally to do all acts, whether or not expressly authorized, which the
      Trustee deems necessary or desirable, but acting at all times according to
      the principles expressed in Articles V and VIII.

5.4 INVESTMENT RESPONSIBILITIES

The Company may (but need not) appoint an Investment Manager or Managers to
manage (including the power to acquire and dispose of) all or any of the assets
of the Trust Fund. In the event of any such appointment, the Company shall
establish the portion of the assets of the Trust Fund which shall be subject to
the management of the Investment Manager and shall so notify the Trustee in
writing. Likewise, the Company may establish that all or a portion of the assets
of the Trust Fund shall be subject to the investment jurisdiction of the Company
itself and shall advise the Trustee of such determination. With respect to such
assets over which either an Investment Manager or the Company has investment
responsibility, the Investment Manager or the Company shall possess all of the
investment and administrative power and responsibilities granted to the Trustee
hereunder, including the power to hold the indicia of ownership of any
investment in a collective trust fund, and the Trustee shall invest and reinvest
such assets pursuant to the written directions of the Investment Manager or the
Company. If the Company so directs, an Investment Manager shall have the power
to acquire and dispose of assets in the name of the Trust. The investment
jurisdiction of the Company may be exercised in any manner consonant with its
duties as a fiduciary, including --

(a)   directing the Investment Manager or the Trustee that certain investments
      or types of investments be made or liquidated;

(b)   directing the Investment Manager or the Trustee that certain investments
      or types of investments not be made; and

(c)   requiring that the Trustee or the Investment Manager obtain approval prior
      to acquiring or disposing of any asset.

The Trustee shall have no investment responsibility with respect to the assets
subject to the investment responsibility of an Investment Manager or the
Company, and shall have no duty to inquire into the direction of such Investment
Manager or the Company, to solicit such directions nor to review and follow the
investments made pursuant to any such direction, other than to the extent
provided by law.

5.5 COMPANY STOCK

The Company may from time to time contribute its common stock or other
securities to be held in the Trust. The Trustee may invest in securities or
obligations issued by the Company. All rights associated with any such Company
stock or securities shall be exercised by the Trustee at the direction of the
Company.

<PAGE>

ARTICLE VI. DISPOSITION OF INCOME

6.1 TRUST INCOME

During the term of this Trust, all income received by the Trust, net of any
expenses and taxes properly paid from the Trust Fund, shall be accumulated and
reinvested.

ARTICLE VII. ACCOUNTING BY THE TRUSTEE

7.1 MAINTENANCE OF TRUST RECORDS

The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be done,
including all such specific records as shall be agreed upon in writing between
the Company and the Trustee. All such accounts, books and records shall be open
to inspection and audit at all reasonable times by any person designated by the
Company. Within 60 days following the close of each calendar year and within 60
days after the removal or resignation of the Trustee, the Trustee shall deliver
to the Company a written account of its administration of the Trust during such
year or during the period from the close of the last preceding year to the date
of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being show
separately), and showing all cash, securities and other property held in the
Trust at the end of such year or as of the date of such removal or resignation,
as the case may be.

ARTICLE VIII. RESPONSIBILITY OF THE TRUSTEE

8.1 STANDARD OF CARE

The Trustee shall act with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims; provided, however, that the Trustee shall incur no
liability to anyone for any action taken pursuant to a direction, request, or
approval given by the Company which is contemplated by, and in conformity with,
the terms of the Supplemental Plans or this Trust Agreement, and to that extent
shall be relieved of the prudent man rule for investments.

8.2 DUTY AS TO LITIGATION

The Trustee shall not be required to undertake or to defend any litigation
arising in connection with this Trust Agreement, unless it be first indemnified
by the Company against its prospective costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses) relating thereto,
and the Company hereby agrees to indemnify the Trust Fund for such costs,
expenses and liability.

<PAGE>

8.3 RETENTION OF COUNSEL

The Trustee may consult with legal counsel (who may also be counsel for the
Trustee generally, or for the Company) with respect to any of its duties or
obligations hereunder, and shall be fully protected in acting or refraining from
acting in accordance with the advice of such counsel.

8.4 EXTENT OF TRUSTEE'S POWERS

The Trustee shall have, without exclusion, all powers conferred on trustees by
applicable law unless expressly provided otherwise herein, provided, however,
that if an insurance policy is held as an asset of the Trust, the Trustee shall
have no power, except as otherwise provided herein, to name a beneficiary of the
policy other than the Trust, to assign the policy (as distinct from conversion
of the policy to a different form) other than to a successor the Trustee, or to
loan to any person the proceeds of any borrowing against such policy. General
powers of the Trustee are described in Section 5.3.

8.5 INDEMNIFICATION

The Trustee shall be indemnified and held harmless by the Company against and
from any and all loss, cost, liability, or expense (including any attorneys'
fees and court costs) that may be imposed upon or reasonably incurred by the
Trustee in connection with or resulting from any claim, action, suit, or
proceeding to which the Trustee may be a party or in which the Trustee may be
involved by reason of any action taken or failure to act under this Trust and
against and from any and all amounts paid by the Trustee in settlement (with the
Company's written approval) or paid by the Trustee in satisfaction of a judgment
in any such action, suit, or proceeding. The foregoing provision shall not be
applicable to any Trustee if the loss, cost, liability, or expense is due to
such Trustee's willful misconduct. Such indemnity shall include all claims and
liabilities arising from any breach of fiduciary responsibility by a fiduciary
other that the Trustee, unless the Trustee --

(a)   knowingly participates in, or knowingly undertakes to conceal, an act or
      omission of such other fiduciary, knowing such act or omission is a
      breach;

(b)   by its failure to act in accordance with 8.1 in the administration of its
      specific responsibilities which give rise to its status as a fiduciary,
      has enabled such other fiduciary to commit a breach; or

(c)   has knowledge of a breach by such other fiduciary, unless it makes
      reasonable efforts under the circumstances to remedy the breach.

The performance by the Trustee of trades, custody, reporting, recording and
bookkeeping with respect to assets managed by another fiduciary shall not be
deemed to give rise to any participation or knowledge on the part of the
Trustee. Such indemnification shall survive the amendment or termination of the
Trust Agreement or the resignation or removal of the Trustee and shall be
construed as a contract between the Company and the Trustee under the laws of
the State of Ohio.

8.6 LIMITATION OF POWERS

Notwithstanding any powers granted to the Trustee pursuant to this Trust
Agreement or under applicable law, the Trustee shall not have any power that
could give this Trust the objective of

<PAGE>

carrying on a business and dividing the gains therefrom, within the meaning of
Section 301.7701-2 of the Procedure and Administrative Regulations promulgated
pursuant to the Code.

8.7 ACTION BY THE TRUSTEE

When more than one individual and/or entity serves as Trustee, action by the
trustees shall be determined by the majority of the trustees. Such action shall
be binding upon all parties at interest. The individuals and/or entities who
collectively act as Trustee may act by vote at a meeting or by writing without a
meeting. Any act of more than one individual or entity serving as Trustee shall
be sufficiently evidenced if certified to by one of the individuals or entities
serving as Trustee, and, if there is more than one individual and/or entity
serving as Trustee, one of the trustees may be given authority to perform all
administrative and ministerial duties. Any individual who serves as Trustee
hereunder may be an employee of the Company.

ARTICLE IX. COMPENSATION AND EXPENSES OF THE TRUSTEE

9.1 COMPENSATION AND EXPENSES

The Trustee, unless such Trustee is also an employee of the Company, shall be
entitled to receive such reasonable compensation for its services as shall be
agreed upon by the Company and the Trustee. The Trustee shall also be entitled
to receive its reasonable expenses incurred with respect to the administration
of the Trust, including fees incurred by the Trustee pursuant to Article VIII of
this Trust Agreement. Such compensation and expenses shall be payable by the
Company, but if not paid by the Company, shall constitute a charge against the
Trust and shall be withdrawn by the Trustee from the Trust.

ARTICLE X. RESIGNATION AND REMOVAL OF TRUSTEE

10.1 RESIGNATION OR REMOVAL

The Trustee may be removed at any time upon 30 days' written notice by the
Company. The Trustee may resign at any time, upon 30 days' written notice to the
Company. Such advance notification may be accepted within a shorter time period
as agreed to by the parties.

10.2 CHANGE OF CONTROL

Notwithstanding any Trust provisions to the contrary, upon a Change of Control,
as defined herein, Trustee may not be removed by Company for five years. If
Trustee resigns or is removed within five years of a Change of Control, as
defined herein, Trustee shall select a successor Trustee in accordance with the
provisions of Section 10.4(b) hereof prior to the effective date of Trustee's
resignation or removal.

10.3 SETTLEMENT OF TRUST ACCOUNTS

Upon its resignation or removal, the Trustee, with the written consent of the
Company, may reserve such amounts as it deems necessary for the payment of any
outstanding taxes or other liabilities of

<PAGE>

the Trust Fund and its reasonable fees and expenses in connection with the
settlement of its accounts. Any balance of such reserve remaining after the
payment of such taxes, liabilities, fees, and expenses shall be paid over to the
successor Trustee within 60 days after receipt of notice of resignation,
removal, or transfer, unless the Company extends the time limit.

10.4 APPOINTMENT OF SUCCESSOR

(a)   If the Trustee resigns or is removed in accordance with Section 10.1
      hereof, the Company may appoint any one or more individuals or third
      parties as a successor to replace the Trustee upon resignation or removal.
      If no such appointment has been made, the Trustee may apply to a court of
      competent jurisdiction for appointment of a successor or for instructions.
      All expenses of the Trustee in connection with the proceeding shall be
      allowed as administrative expenses of the Trust. The appointment shall be
      effective when accepted in writing by the new Trustee, who shall have all
      of the rights and powers of the former Trustee, including ownership rights
      in the Trust assets. The former Trustee shall execute any instrument
      necessary or reasonably requested by the Company or the successor Trustee
      to evidence the transfer.

(b)   If the Trustee resigns or is removed pursuant to the provisions of Section
      10.2 hereof and selects a successor Trustee, the Trustee may appoint any
      third party such as a bank trust department or other party that may be
      granted corporate trustee powers under state law, as long as such
      successor is independent and not subject to the control of the Company.
      The appointment of a successor Trustee shall be effective when accepted in
      writing by the new Trustee. The new Trustee shall have all the rights and
      powers of the former Trustee, including ownership rights in Trust assets.
      The former Trustee shall execute any instrument necessary or reasonably
      requested by the successor Trustee to evidence the transfer.

10.5 ACTS OF PRIOR TRUSTEE

The successor Trustee need not examine the records and acts of any prior Trustee
and may retain or dispose of existing Trust assets, subject to the provisions
herein. The successor Trustee shall not be responsible for any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.

ARTICLE XI. AMENDMENT OR TERMINATION OF TRUST AGREEMENT

11.1 AMENDMENT OR TERMINATION

This Trust Agreement may be amended any time and in any manner by a written
instrument executed by the Trustee and the Company. Notwithstanding the
foregoing, no such amendment shall alter Section 11.2, conflict with the terms
of the Supplemental Plans, or make the Trust revocable after it has become
irrevocable in accordance with Section 1.2 hereof. In addition, Sections 1.5,
1.8, 10.2, and 10.4 of this Trust Agreement may not be amended by the Company
for five years following a Change of Control, as defined herein.

<PAGE>

11.2 LIMITATION ON TERMINATION

The Trust shall not terminate prior to the time that all Supplemental Benefits
have been paid under the Supplemental Plans.

11.3 REMAINING TRUST ASSETS

Upon termination of the Trust as provided in Section 11.2, any assets remaining
in the Trust shall be returned to the Company.

ARTICLE XII. SEVERABILITY AND ALIENATION

12.1 SEVERABILITY

If any provision of this Trust Agreement is, becomes, or is deemed invalid or
unenforceable in any jurisdiction, such provision shall be deemed amended to
conform to applicable law as to be valid, legal and enforceable in any
jurisdiction so deeming. The validity, legality and enforceability of such
provision shall not in any way be affected or impaired in any other
jurisdiction; if such provision cannot be so amended without materially altering
the intention of the parties, it shall be stricken and the remainder of this
Trust Agreement shall remain in full force and effect.

12.2 ALIENATION

To the extent permitted by law, Supplemental Benefits payable to Trust
Beneficiaries under the Supplemental Plans and this Trust Agreement may not be
assigned (either at law or in equity), alienated, or subject to attachment,
garnishment, levy, execution or other legal or equitable process. A Trust
Beneficiary may not assign or transfer any interest in the Supplemental Benefits
due hereunder and shall have no direct interest in or to any Trust asset unless
and until paid to such Trust Beneficiary.

ARTICLE XIII. MISCELLANEOUS

13.1 GOVERNING LAW

This Trust Agreement shall be governed by and construed in accordance with the
laws of Ohio.

13.2 EMPLOYMENT CONTRACT

This Trust Agreement does not constitute a contract of employment, and it does
not give any Trust Beneficiary the right to be retained in the employ of the
Company or any affiliate.

13.3 TAX WITHHOLDING

The Trustee shall withhold all amounts required by law to be withheld from any
payments made pursuant to this Trust Agreement, including any or all amounts
required to be withheld by the Code, the Federal Insurance Contribution Act, any
state income or other tax act, any applicable city, county or municipality's
earnings or income tax act. The Trustee shall pay amounts withheld to the

<PAGE>

appropriate taxing authorities or determine that such amounts have been
reported, withheld, and paid by the Company.

13.4 REFERENCE TO COMPANY

Where appropriate, all references to Company shall refer to any subsidiary or
affiliate of the Company designated as a participating employer under any
Supplemental Plan; provided, however, that only the Company shall be permitted
to amend or terminate the Trust Agreement and to provide any directions to the
Trustee as provided herein.

13.5 DESIGNATION OF AUTHORIZED PARTIES

The Board of Directors of the Company, or such committee as may properly act on
its behalf, may from time to time designate a person, persons or committee to
act on its behalf under this Trust Agreement, particularly as regards investment
directions and directions regarding the payment of Supplemental Benefits. The
Board shall instruct the Trustee in writing as regards any such designation,
including the designee's scope of authority to act on its behalf. The Trustee
shall be able to rely on the acts of such designated party, provided such
reliance is in good faith.

13.6 SUCCESSORS

This Trust Agreement shall be binding upon the Company and any successor, direct
or indirect, of the Company whether such succession results from a merger,
consolidation, liquidation, purchase of securities, acquisition of assets or
otherwise.

13.7 TRUSTEE

For purposes of this Trust Agreement, the Trustee shall not be deemed an agent,
receiver or an assignee of the Company.

13.8 CHANGE OF CONTROL

For purposes of this Trust, Change of Control shall mean any of the following
events:

(a)   Any person, entity, or group of persons, within the meaning of Section
      13(d) or 14(d) of the Securities Exchange Act of 1934 ("Act"), or any
      comparable successor provisions, purchases or otherwise acquires
      beneficial ownership (within the meaning of Rule 13d-3 promulgated under
      the Act) of 20 percent or more of either the outstanding shares of common
      stock or the combined voting power of the Company's then outstanding
      voting securities entitled to vote generally;

(b)   The stockholders of the Company approve a reorganization, merger, or
      consolidation, in each case, with respect to which persons who were
      stockholders of the Company immediately prior to such reorganization,
      merger, or consolidation do not, immediately thereafter, own more than 50
      percent of the combined voting power entitled to vote generally in the
      election of directors of the reorganized, merged, or consolidated
      Company's then outstanding securities, or the Company is liquidated or
      dissolved or all or substantially all of the Company's assets are sold; or

<PAGE>

(c)   Individuals who constitute the board of directors of the Company on the
      date hereof (the "Incumbent Board") cease for any reason to constitute at
      least a majority thereof, provided that any person becoming a director
      subsequent to the date hereof whose election, or nomination for election
      by the Company's shareholders, was approved by a vote of at least three
      quarters of the directors comprising the Incumbent Board (either by a
      specific vote or by approval of the proxy statement of the Company in
      which such person is named as a nominee for director, without objection to
      such nomination) shall be, for purposes of this clause (c), considered as
      though such person were a member of the Incumbent Board.

Notwithstanding anything in the foregoing to the contrary, no Change of Control
shall be deemed to have occurred for purposes of this Trust Agreement by virtue
of any transaction which results in a Participant or group of Participants
acquiring, directly or indirectly, 20 percent or more of the combined voting
power of the Company's voting Securities.

                               * * * * * * * * * *

IN WITNESS WHEREOF, the Company has caused this Trust Agreement to be executed
by its duly authorized officers and the Trustee, to evidence its acceptance of
the Trust, has caused this Trust Agreement to be executed effective as of
September 1, 1995.

                             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

                             TRUSTEE:
                             HARRY MILLER

                              /s/ Harry Miller

<PAGE>

APPENDIX A TO THE
R. G. BARRY CORPORATION SUPPLEMENTAL BENEFIT PLANS TRUST

The following supplemental retirement benefit plans of R. G. Barry Corporation
are intended to be covered under the Trust Agreement for the above-referenced
Trust:

              R. G. Barry Corporation Supplemental Retirement Plan
              (As established effective as of January 1, 1978)

              R. G. Barry Corporation Restoration Plan
              (As established effective as of January 1, 1994)

              R. G. Barry Corporation Deferred Compensation Plan
              (As established effective as of September 1, 1995)

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