Document:

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                                                                   EXHIBIT 10.21

                           [DIAMOND FOOD, INC. LOGO]
                              DIAMOND FOODS, INC.

                            WALNUT PURCHASE AGREEMENT

Grower Name:
                  ------------------------------------------------------------

Grower Address:   ------------------------------------------------------------

                  Telephone:                   Email:
                            -----------------        -------------------------

Grower Orchards:  [See description on Exhibit A]

Date of Agreement:                       , 2005
                  ----------------------

        This Walnut Purchase Agreement is made between Diamond Foods, Inc., a
Delaware corporation ("Diamond") and the Grower named above ("Grower").

1.      SALE AND PURCHASE. During the Term of this Agreement, Grower will sell
        and Diamond will buy Grower's entire production of walnuts from the
        Grower Orchards as described on Exhibit A.

2.      TERM. The Initial Term of this Agreement will commence on the date set
        forth above and will continue for the remainder of Grower's term under
        the Marketing Agreement contained in the Diamond Walnut Growers, Inc.
        Bylaws PLUS (check one):

        [ ] three additional Crop Years

        [ ] five additional Crop Years

        [ ] ten additional Crop Years

        (Thus, if a grower had one Crop Year remaining under the old Marketing
        Agreement and the grower elected a term of three additional Crop
        Years, the Initial Term would be four Crop Years). A Crop Year will
        commence on August 1 of the year in which the harvest is delivered
        (thus, the 2005 Crop Year commences on the August 1 preceding delivery
        of the harvest in the Fall of 2005), and will continue until July 31
        of the following year).

        After the Initial Term, this Agreement will be automatically renewed
        for successive three-year terms (each, an "Extension Term") unless and
        until either party terminates the Agreement using the procedure
        described in paragraph 6.a. of the General Terms and Conditions.

3.      PRICE. By March 31 following a harvest, Diamond will announce a final
        nominal purchase price for the year's walnut crop (the "Final Price").
        The Final Price will be determined by Diamond in good faith, taking
        into account market conditions, quality,

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         variety, and other relevant factors. The actual purchase price (the
         "Purchase Price") will be determined by applying to Grower's deliveries
         the Final Price, as adjusted for various bonuses and price adjustments
         relating to variety, grade, early delivery, suitability for sale as
         in-shell, shelling quality, insect classification, and other factors,
         all as announced by Diamond from time to time in the Grower Guidelines.

4.       PAYMENT TERMS. Diamond will pay the Purchase Price as follows:

<TABLE>

<S>     <C>                                         <C>
         First Payment                               A payment determined by Diamond in its
         (To be paid within 14 days                  discretion. Historically, Diamond has made
         after delivery)                             First Payments averaging approximately 35% to
                                                     45% of the final value of the crop.

         Second Payment                              A payment determined by Diamond in its
         (To be paid by February 15                  discretion. Historically, Diamond has made
         following delivery)                         Second Payments averaging approximately 10%
                                                     to 15% of the final value of the crop.

         Third Payment                               The Third Payment will be an amount equal to
         (To be paid by August 15                    65% of the Purchase Price (based upon the
         following delivery)                         Final Price announced on March 31), minus the
                                                     cumulative amount paid in the First and
                                                     Second Payments.

         Fourth and Final Payment
         (To be paid by December 15                  35% of the Purchase Price.
         of the year following the
         year of delivery)
</TABLE>

         Grower's Walnut Marketing Board and California Walnut Commission fees
         and assessments will be deducted from the First Payment paid to Grower.

5.       GENERAL TERMS AND CONDITIONS AND GROWER GUIDELINES. The General Terms
         and Conditions attached as Exhibit B and Grower Guidelines are
         incorporated by this reference into this Agreement. Diamond may amend
         the Grower Guidelines from time to time, and the amended Grower
         Guidelines will be deemed incorporated into this Agreement from and
         after the time such Guidelines are provided to Grower as set forth in
         the General Terms and Conditions.

6.       ENTIRE AGREEMENT. This Agreement, the Designation of Grower Orchards on
         the reverse side hereof, the attached General Terms and Conditions, and
         the Grower Guidelines (as amended by Diamond from time to time),
         comprise the entire agreement between Grower and Diamond, and all prior
         or contemporaneous agreements and understandings are merged herein and
         superseded hereby.

GROWER:                            DIAMOND FOODS, INC., A DELAWARE CORPORATION:

By:                                By:
      --------------------------        --------------------------------------

Name:                              Name:
      --------------------------        --------------------------------------

Its:                               Its:
      --------------------------        --------------------------------------

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EXHIBIT A
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                         DESIGNATION OF GROWER ORCHARDS

<TABLE>
<CAPTION>

VARIETY         ORCHARD         COUNTY          YEAR            ACRES           TREES/ACRE              OWNED/
                LOCATION                       PLANTED                                                  LEASED

<S>            <C>             <C>            <C>              <C>             <C>                     <C>
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</TABLE>

"Grower Orchards" includes all walnut orchards as to which Grower or Grower's
Affiliates have the right to sell the production. "Grower Orchards" include (i)
orchards owned now or in the future by Grower or Grower's Affiliates, and (ii)
orchards that Grower or its Affiliates now or in the future sharecrop or lease
from the orchard owner, if Grower or its Affiliates control the sale of the
crop. Grower will notify Diamond in writing if after the date of this Agreement
Grower or any of its Affiliates acquire, sharecrop, or lease additional Grower
Orchards. Grower represents and warrants to Diamond that the above list of
Grower Orchards is complete.

An "Affiliate" of Grower is any corporation, limited liability company,
partnership, limited partnership, or other entity controlled by Grower, or which
controls Grower, or which is commonly controlled with Grower. A person or entity
"controls" another entity when the person owns more than 50% of the voting or
equity interests in such entity, or otherwise has the power to direct the
management and policies of such entity A revocable living trust of which Grower
is the grantor will also be considered an Affiliate of Grower.

If Grower sells a Grower Orchard or terminates the arrangement under which
Grower sharecropped or leased such Grower Orchard, it will cease to be
considered a Grower Orchard after Diamond receives written notice of such event
from Grower. Thereafter, the purchaser of the orchard will be free to enter into
other arrangements for the sale of production from such orchard. If Grower
leases a Grower Orchard to a third party or enters into a sharecropping
arrangement with respect thereto, the orchard will continue to be considered a
Grower Orchard, the production of which is committed to Diamond under this
Agreement. If Grower takes a Grower Orchard out of production, Grower will give
Diamond prompt written notice of such event. Thereafter, such orchard will cease
to be a Grower Orchard covered by this Agreement.

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EXHIBIT B
---------

                            WALNUT PURCHASE AGREEMENT
                          GENERAL TERMS AND CONDITIONS

1.      PRICE. Grower acknowledges that Diamond will set the Final Price for
        walnuts by March 31 of the year following delivery of each harvest.
        Diamond's good faith determination of the Final Price will be conclusive
        and binding upon the parties. Subject to Section 4 of these General
        Terms and Conditions, title to the walnuts will pass to Diamond upon
        delivery notwithstanding that the Purchase Price will be determined at a
        later date. Grower expressly waives the provisions of California Food
        and Agriculture Code Sections 62801, which provides in part

                  ". . . unless the parties agree otherwise, every contract for
                  the sale of edible nuts shall be in writing and shall state
                  the full purchase price in a definite sum which is to be paid
                  in accordance with the terms of the contract."

2.      ASSIGNMENT OF PAYMENTS. Grower may assign to a third party in whole or
        in part its right to receive payment by giving Diamond written notice of
        such assignment. Diamond will be justified in relying upon such notice
        until it receives written notice terminating or changing such
        assignment.

3.      WAIVER OF PRODUCER'S LIEN. Grower expressly waives the provisions of
        California Food and Agriculture Code Section 55631, which provides in
        part

                  "Every producer of any farm product that sells any product
                  which is grown by him to any processor . . . has a lien upon
                  such product and upon all processed or manufactured forms of
                  such farm product for his labor, care, and expense in growing
                  and harvesting such product."

The producer's lien under Section 55631 is a first priority lien on the farm
product sold. A person waiving the benefits of Section 55631 would be in the
position of a general creditor of Diamond, instead of a secured creditor.

4.      DELIVERY AND ACCEPTANCE; TITLE.

        a. Subject to Diamond's right to regulate time of delivery by reasonable
notice, Grower will harvest, hull, and deliver the walnuts in accordance with
Diamond's Grower Guidelines.

        b. Upon the delivery of Grower's walnuts to Diamond's processing
facility, Diamond will inspect, weigh, grade, and sort the walnuts.

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        c. If Grower participates in Diamond's Ranch Pick-Up Program, Grower
will deliver the walnuts to Diamond's common carrier for transportation to
Diamond's processing facility. In such event, title to the walnuts will pass to
Diamond when the walnuts are loaded on the common carrier's truck (subject,
however, to Diamond's right to inspect, reject, and return to Grower loads of
walnuts that are not merchantable).

        d. If Grower does not participate in Diamond's Ranch Pick-Up Program,
but rather transports walnuts using Grower's own carrier, title to the walnuts
will pass to Diamond upon delivery of the walnuts to Diamond's facility and
acceptance by Diamond.

        e. Prior to transfer of title, Grower will bear all risk of loss,
damage, or depreciation of the walnuts.

        f. Diamond will have no obligation to purchase Willson Wonder, Bijou,
Klondyke, Gant, and other walnut varieties that Diamond determines to be not
merchantable.

5.      GROWER WARRANTIES.

        a. Grower warrants that upon delivery Diamond will acquire good and
merchantable title to the walnuts. Grower will promptly notify Diamond of the
existence of any security interest granted in the walnuts. Grower will provide
to Diamond upon request proof of release of any liens on delivered walnuts
arising out of crop financing. Grower further warrants that the holders of any
liens, claims, or encumbrances affecting the walnuts have granted to Grower
permission to sell the walnuts to Diamond. Grower will indemnify, defend, and
hold Diamond harmless from any loss or liability relating to the claim of any
person claiming a lien in the walnuts.

        b. Grower warrants that the walnuts will be dry and clean, and of good
merchantable quality, with levels of mold, insects, and other damage that do not
render the walnuts not merchantable. The walnuts will be free of pesticide
residues or other substances in a quantity prohibited by local state, or federal
law. If the walnuts fail to meet these standards, Diamond may, at its option and
in its sole discretion, either (i) do whatever is commercially reasonable to
make the walnuts meet these standards, charging all related costs to Grower;
(ii) decline acceptance of such walnuts before or upon delivery or within a
reasonable time after delivery and return the walnuts to Grower at Grower's
expense; or (iii) notify Grower and hold the walnuts subject to Grower's orders
and expense.

        c. Grower warrants that (i) Grower's delivery obligations under this
Agreement will not conflict with any duty Grower may have under agreements with
third parties; and (ii) none of the walnuts delivered by Grower to Diamond
hereunder will originate in orchards other than Grower Orchards.

        d. Grower agrees to conform to (i) the provisions of the pure food and
drug laws and other present or future laws of the State of California, and (ii)
the provisions of the Federal Pure Food and Drugs Act of the United States of
June 30, 1906, and all amendments thereto. Grower warrants that walnuts
delivered under this contract will not on the date of delivery be adulterated or
misbranded within the meaning of any applicable law of the State of California,
or the Federal Food, Drug, and Cosmetic Act. Grower further warrants that the
walnuts have not been subjected

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to any pesticides or chemicals that may detrimentally affect the natural state
of such walnuts or the saleability thereof. All products delivered hereunder
will be produced in compliance with the requirements of section 12 of the Fair
Labor Standards Act of 1938, as amended, and all other requirements of the Act
so far as they may be applicable.

6.      TERM AND TERMINATION.

        a. The Initial Term will expire at the end of the last Crop Year of such
period. Thereafter, the term of the Agreement will automatically be renewed for
successive additional three-year terms (each, an "Extension Term"), unless a
party terminates the Agreement through the following procedure. (The Initial
Term and all Extension Terms will be referred to as the "Term.") Either Grower
or Diamond may terminate this Agreement by giving written notice (a "Termination
Notice") to the other party before February 28 of the final Crop Year of the
then-current Term. If a Termination Notice has been delivered, this Agreement
will terminate at the end of the then-current Term, and will not be
automatically renewed.

        b. Grower may terminate this Agreement effective 30 days after giving
written notice to Diamond if Grower sells all of its Grower Orchards or takes
all of the Grower Orchards out of commercial production.

        c. In the event that either party is in material breach of its
obligAtions hereunder, the other party may give notice to the party in breach,
specifying in detail the nature of the breach. This Agreement will terminate 30
days after the date of such notice, unless the breaching party substantially
cures its breach within the 30-day period (or, if the breach is not capable of
being cured within such period, if the party in breach commences such cure
during such period and thereafter diligently prosecutes such cure to
completion). It shall be considered a material breach of this Agreement if
Grower breaches its obligation to sell to Diamond during the Term of this
Agreement all of its production from Grower Orchards.

        d. Diamond may terminate this Agreement effective upon 30 days prior
written notice to Grower if over 3 consecutive years Grower's deliveries are not
of commercial quality. "Commercial quality" means that at least 80% of Grower's
deliveries are Class I Insect Level and that no more than 12% of the delivered
pounds are classified as "offgrade."

7.      GROWER GUIDELINES. Grower and Diamond will be subject to the terms and
        conditions set forth in Diamond's Grower Guidelines. Each Crop Year,
        Diamond will amend and republish the Grower Guidelines. Diamond will
        send to Grower or post on its website in a manner accessible to Grower
        the Grower Guidelines that will be applicable to the upcoming harvest.

8.      DISPUTE RESOLUTION.

        a. Any controversy or claim arising out of or relating to this Agreement
will be settled by arbitration conducted in Stockton, California in accordance
with the rules of the American Arbitration Association. The arbitrator selected
to hear the matter must have a minimum of five years of experience as a judge or
arbitrator, or both. At least thirty days before the arbitration hearing, the
parties will allow each other reasonable written discovery including the
inspection and copying of documents and other tangible items relevant to the
issues that are

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to be presented at the arbitration hearing. The arbitrator will decide any
disputes regarding the scope of discovery. Fees for the arbitrator or
arbitrators will be divided equally between the parties, and the parties will be
individually responsible for the payment of the fees. The prevailing party in
any arbitration, proceeding or legal action arising out of or relating to this
Agreement will be entitled to recover its reasonable attorneys' fees and costs
incurred in connection with such arbitration, proceeding or legal action. The
arbitrator will determine who is the prevailing party for this purpose.

        b. The award rendered by the arbitrator will be final and binding upon
both parties. The California State Superior Court located in Stockton,
California will have exclusive jurisdiction over disputes between the parties in
connection with such arbitration and the enforcement thereof. The parties
consent to the jurisdiction and venue of the California State Superior Court
located in Stockton, California. Notwithstanding that the parties have agreed to
binding arbitration of disputes, neither party will be prevented from seeking
ancillary or equitable relief from the California State Superior Court,
including lis pendens, injunctive relief and specific performance.

        c. The parties will keep confidential the outcome of any mediation,
arbitration, proceeding or legal action. Each dispute will be resolved based
upon its own facts and merits, and no procedure in the nature of class actions
will be permitted. Further, no collateral estoppel effect will be accorded to
any judgment, decision, or award from any prior arbitration, proceeding or legal
action against the other party unless both parties were parties to such prior
proceeding.

9.      FORCE MAJEURE:  QUARANTINES AND EMBARGOES; RESERVATION OF CROP.

        a. Either party's obligation to perform under this Agreement will be
excused to the extent it is prevented by fire, storm, flood, earthquake,
explosion, action of the elements, total or partial failure of transportation or
delivery facilities, shortage of labor, materials or supplies, interruption of
power, Act of God, the elements, war, civil disturbance, governmental or
regulatory actions, labor disturbances, or any other event beyond the party's
reasonable control.

        b. If, before delivery hereunder is completed, any quarantine, embargo,
or other laws or regulations or restrictions of federal state, or other public
or governmental authority or officers would prevent or substantially interfere
with shipment of any walnuts deliverable hereunder to the nearest walnut packing
or receiving station of Grower or from such plant, or would render any such
walnuts subject to detention, seizure, or condemnation, Diamond at its option,
by written notice to Grower, may either terminate this Agreement as to all
walnuts not theretofore delivered by Grower, or may postpone the time for
delivery hereunder while such laws, regulations, or restrictions so operate.

        c. Grower acknowledges that pursuant to Federal Marketing Order (984)
covering walnuts grown in California, Diamond may be required to withhold from
the saleable market that portion of Grower's crop which is declared reserved or
surplus by the Walnut Marketing Board and ordered withheld from the salable
market by the United States Secretary of Agriculture. Price and payment for
Grower's reserve walnuts may be on a basis different than for the salable

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portion of Grower's crop. Diamond will have no obligation to pay for Grower's
reserve walnuts, until such reserve walnuts are released for sale by the Walnut
Marketing Board.

10.     REMEDIES FOR GROWER'S BREACH OF OBLIGATION TO SELL ENTIRE PRODUCTION.
        The parties acknowledge and agree that (i) this contract is a
        requirements contract obligating Grower to sell to Diamond its entire
        production of walnuts from Grower Orchards; and (ii) Grower is not
        entitled to sell walnuts to Diamond that are from orchards other than
        Grower Orchards. The parties further acknowledge and agree that these
        obligations are fundamental to the commercial understanding between the
        parties, and that if Grower breaches either of these obligations,
        Diamond will suffer damages that would be impracticable or extremely
        difficult to determine. Accordingly, the parties agree that in the event
        that Grower breaches either of the above obligations, Grower shall
        become obligated to pay to Diamond liquidated damages equal to 50% of
        the market value of production that Grower sells to buyers other than
        Diamond, or 50% of the market value of production sold to Diamond that
        originated from orchards other than Grower Orchards. The foregoing right
        to recover liquidated damages will be in addition to, and not in
        substitution of, all other available remedies for breach of this
        Agreement, including equitable relief.

11.     GENERAL.

        a. EFFECT OF REORGANIZATION OF OLD DIAMOND. Grower is currently a member
of Diamond Walnut Growers, Inc., a grower-owned California cooperative ("Old
Diamond"). As a member, Grower is subject to the "Marketing Agreement" contained
in Diamond's Bylaws, which deals with the same subject matter as this Agreement.
Old Diamond is contemplating a corporate reorganization in which Old Diamond
will be merged into Diamond, a newly-formed Delaware corporation. Old Diamond
has elected to terminate all Marketing Agreements under the Bylaws, effective
upon Diamond's merger into New Diamond. The effectiveness and operation of this
Agreement will be suspended until termination of the Marketing Agreements under
the Bylaws. If the Marketing Agreements under the Bylaws are not terminated
prior to December 31, 2005, Diamond will have the option to terminate this
Agreement effective upon the giving of written notice to Grower.

         b.  ASSIGNMENT.

            (i) Upon giving written notice, Grower may assign its rights and
obligations to a person who acquires by purchase a controlling interest in all
or substantially all of Grower's Grower Orchards, provided that the assignee
agrees in writing to be bound by the terms of this Agreement. In such a case, no
other walnut orchards owned by the assignee will be considered Grower Orchards
unless Diamond agrees in writing to such designation.

           (ii) Upon giving written notice, Diamond may assign its rights and
obligations under this Agreement to an acquiror of all or substantially all
Diamond's assets and business operations.

        c. NOTICES. All notices under this Agreement must be in writing and will
be effective (i) immediately upon delivery in person or by messenger to the
address stated above, or

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(ii) the next business day after deposit with a commercial courier or delivery
service for next business day delivery, or (iii) upon receipt by facsimile as
established by evidence of successful transmission, provided a copy of the
notice is mailed by first class the same day, or (iv) three business days after
deposit with the United States Postal Service, certified mail, return receipt
requested, postage prepaid. All notices must be properly addressed to Grower at
the address set forth above, or to Diamond at 1050 S. Diamond Street, Stockton,
CA 95205-7087, or at such other addresses as either party may subsequently
designate by written notice given in the manner provided in this Section.

        d. SEVERABILITY. If any provision of this Agreement or its application
to any person or circumstances is held to be invalid or unenforceable, the
remainder of this Agreement and the application of such term or provision to
other persons or circumstances will not be affected, and each term of this
Agreement will be valid and enforceable to the fullest extent permitted by law.

        e. AMENDMENT. This Agreement may only be amended in a writing signed by
both parties; provided, however, that Diamond may amend the Grower Guidelines
from time to time by giving written notice to Grower.

        f. BINDING AGREEMENT. The Agreement will be binding upon, and will inure
to the benefit of, the heirs, executors, administrators, successors, assigns,
and grantees of the parties hereto.

        g. GOVERNING LAW. This Agreement will be governed by the laws of the
State of California, as applied to contracts entered into and performed
completely within California.

                                       6<PAGE>
                                                                Exhibit 10.1

                                    AGREEMENT

         This agreement (the "AGREEMENT") dated as of May 24, 2005, is entered
into by, between and among, Blair Corporation, a Delaware corporation (the
"COMPANY") and Loeb Arbitrage Fund, a New York limited partnership, Loeb
Arbitrage Management, a Delaware corporation, Loeb Partners Corporation, a
Delaware corporation, Loeb Holding Corporation, a Maryland corporation, Loeb
Offshore Fund, Ltd., a Cayman Islands exempted company, Loeb Offshore
Management, LLC, a Delaware limited liability company, Loeb Marathon Fund, a
Delaware limited partnership, Loeb Marathon Offshore Fund, Ltd., a Cayman
Islands exempted company (each a member of, and who shall collectively be
referred to as, "LOEB" and together with the Company, the "PARTIES").

                                    RECITALS

         WHEREAS, it is the Company's present intention to conduct a tender
offer for the purchase of its common stock to commence within approximately 60
days provided it can reach certain agreements with Loeb regarding Loeb's sale of
Company's common stock;

         WHEREAS, the Parties have negotiated to enter in this Agreement to
provide for the orderly disposition of Loeb's holdings of the Company's common
stock and the orderly governance of the Company going forward;

         NOW, THEREFORE, intending to be legally bound, and for, and in
consideration of, the terms, conditions and mutual obligations set forth herein,
including the performance by each of the Parties of their respective mutual and
independent covenants, representations and obligations as set forth herein, and
understanding the meaning and legal effect of entering into this Agreement, the
Parties hereto stipulate, agree, warrant and represent as follows:

SECTION 1.  COMPANY TENDER OFFER AND STOCK DISPOSITION.

    (a)  The Company agrees that it shall conduct a tender offer for the
         purchase of its common stock having an aggregate value of $185 million
         at a per share price of $42.00 to be commenced on or before August 1,
         2005 (the "TENDER OFFER").

    (b)  The Company confirms that it has received a commitment from the Board
         of Directors and senior management of the Company that they will not
         tender more than 25% of their holdings of the Company's common stock in
         the Tender Offer.

    (c)  Loeb agrees that it will, and will ensure that its affiliates or
         associates shall, tender any and all shares of the Company's common
         stock , par value $.01, that it owns, directly or indirectly,
         beneficially or otherwise (the "LOEB'S COMMON STOCK"), in the Tender
         Offer.

<PAGE>

    (d)  Loeb agrees that it shall not dispose of Loeb's Common Stock in a block
         sale(s) (for the purpose of this Agreement "block sale" shall mean, a
         public or private sale, in a single or series of coordinated
         transaction(s), of a block of 100,000 or more shares of Company common
         stock) between the date first written above and the date upon which
         Loeb tenders Loeb's Common Stock in the Tender Offer. Loeb further
         agrees that following the close of the Tender Offer, to the extent it
         has identified, or been presented with, a third party that is willing
         and able to acquire, in a block sale(s), any proportion of, or all of,
         Loeb's Common Stock, the Company shall have a right of first refusal
         with respect thereto.

    (e)  Loeb agrees that it shall not acquire any additional shares of the
         Company's common stock, directly or indirectly, beneficially or
         otherwise, for a period of 5 years commencing as of the date first
         written above (the "RESTRICTION PERIOD").

SECTION 2. STANDSTILL PROVISIONS. Loeb agrees that during the Restriction Period
neither it nor any affiliate nor associate shall:

    (a)  make any statement, proposal or offer, whether written or oral, to the
         Company's Board of Directors or to any director, officer or agent of
         the Company, or make any public announcement, proposal or offer with
         respect to an acquisition, merger (or other business combination),
         sale, transfer of the Company's assets, recapitalization, dividend,
         share repurchase, liquidation or other extraordinary corporate
         transaction with the Company or any other transaction that could result
         in a change of control of the Company; and Loeb commits not to solicit
         or encourage any other person to make such an announcement, statement,
         proposal or offer, or to take any action that might require the Company
         to make a public announcement regarding the possibility of any such
         transaction or similar transaction, and commits not to advise, assist
         or encourage any other person in connection with any of the foregoing.

    (b)  initiate, encourage, participate in or engage in any proxy solicitation
         or contest or otherwise publicly oppose the Board of Directors of the
         Company.

    (c)  initiate, encourage or propose any shareholder proposal regarding the
         Company.

    (d)  disclose to any third party, or make any filing under the Securities
         Exchange Act of 1934, as amended, (the "EXCHANGE ACT") including,
         without limitation, under Section 13(d) thereof, disclosing, any
         intention, plan or arrangement inconsistent with any term or provision
         of this Agreement.

    (e)  join, or in any way participate, in a "group" as that term is defined
         in the Exchange Act in connection with any action, plan, arrangement or
         objective prohibited by or inconsistent with any term or provision of
         this Agreement.

    (f)  seek to control the management, policies, affairs, actions, or business
         of the Company, including, without limitation, by taking any action to
         seek to obtain representation on the Company's Board of Directors.

    (g)  have any communications with any of the Company's other shareholders,
         directors, officers, associates, employees, customers or suppliers
         regarding matters relating to

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         the Company that could reasonably be expected to, or with an intention
         to, interfere with or otherwise adversely affect the operation of the
         Company and/or the Company's relationship with any of the
         aforementioned constituents of the Company.

SECTION 3. VOTING. Loeb agrees that it shall vote any and all shares of Loeb's
Common Stock in favor of the position advocated by a majority of the Company's
Board of Directors until such time as Loeb has completed the disposition of
Loeb's Common Stock in accordance with the terms and provisions of this
Agreement.

SECTION 4.  REPRESENTATIONS, WARRANTIES AND COVENANTS.

    (a)  Representations of the Company. The Company represents, warrants and
         covenants to Loeb that: (i) the Company has full legal right, power and
         authority to enter into and perform this Agreement; (ii) the execution
         and delivery of this Agreement by the Company and the consummation by
         it of the transactions, terms and conditions contemplated by this
         Agreement have been duly authorized by the Company; (iii) this
         Agreement constitutes a valid, binding and enforceable agreement of the
         Company; and (iv) the Company will use its best efforts to commence the
         Tender Offer within 60 days of the date first written above.

    (b)  Representations of Loeb. Each member of Loeb, jointly and severally,
         represents, warrants and covenants to the Company that: (i) it has the
         full legal right, power and authority to enter into and perform this
         Agreement; (ii) the execution and delivery of this Agreement and the
         consummation of the transactions, terms, conditions, restrictions and
         limitations contemplated by this Agreement have been duly authorized by
         each member of Loeb; (iii) this Agreement constitutes a valid, binding
         and enforceable Agreement of each member of Loeb; (iv) Loeb owns,
         directly or indirectly, beneficially or otherwise, all of the Loeb's
         Common Stock, and except as otherwise indicated to the Company, none of
         Loeb, any member of Loeb or any affiliate or associate thereof owns any
         other Company common stock, directly or indirectly, beneficially or
         otherwise, or any rights or interests in any Company common stock; (v)
         no member of Loeb has any agreement, arrangement or understanding with
         any person including, without limitation, any possible shareholder
         proposal with respect to the Company, with respect to any possible
         solicitation of proxies for any matter with respect to the Company or
         with respect to any matter prohibited by Sections 1, 2 or 3 of this
         Agreement; (vi) it shall, and shall ensure that any and all affiliates,
         associates, directors, officers, partners (general or limited), members
         and principles of each member of Loeb, comply with and fulfill all of
         the obligations and restrictions that apply to Loeb pursuant to this
         Agreement; (vii) it will not request, directly or indirectly, a waiver
         or modification of any provision of this Agreement; and (viii) each
         member of Loeb hereby waives and releases any and all claims against
         the Company, its directors, officers and agents arising under this
         Agreement or otherwise, including, without limitation, any claim to
         terminate or suspend performance of this Agreement other than in
         accordance with Section 5.

                                       3
<PAGE>

SECTION 5. NULLIFICATION. Either of the Parties to this Agreement may terminate
this Agreement rendering it null, void and of no force or effect, if the Company
fails for any reason to commence the Tender Offer. Notwithstanding the previous
sentence, the Company may not terminate this Agreement, unless it has made a
good faith effort to obtain the necessary financing and make the appropriate
regulatory filings to commence the Tender Offer pursuant to the terms of this
Agreement.

SECTION 6.  MISCELLANEOUS.

    (a)  Specific Performance. The Company and each member of Loeb acknowledge
         and agree that irreparable damage would occur in the event that any
         provision, term, condition, representation, warranty, covenant or
         restriction were not performed or complied with in accordance with
         their specific terms or were otherwise breached. It is accordingly
         agreed that the parties shall be entitled to an injunction or
         injunctions to prevent or cure breaches of the provisions of this
         Agreement and to enforce specifically the terms and provisions hereof,
         this being in addition to any other remedy to which they may be
         entitled by law or equity.

    (b)  Joint and Several Liability. Each member of Loeb shall be jointly and
         severally liable for any breach of this Agreement by any other member
         of Loeb.

    (c)  Non-Disclosure. The Company agrees promptly to issue a press release
         announcing, among other things, the execution of this Agreement and the
         material non-public information contained herein. Except for the
         issuance of such press release, the Company and Loeb agree not to make
         (and Loeb agrees to ensure that its affiliates, associates, directors,
         officers, partners (general or limited), members and principals do not
         make) any disclosure with respect to this Agreement, the performance
         hereof or any matter covered hereby; provided that, neither the Company
         nor Loeb shall be restricted from making such disclosure if and to the
         extent it shall be advised by independent legal counsel that such
         disclosure is required by law or administrative regulation or by the
         regulations of the American Stock Exchange; provided however, that
         prior to such a disclosure, the disclosing party shall provide notice
         to the other party of such intention to disclose and the notice shall
         provide a reasoned legal analysis as to why such disclosure is required
         by law, administrative regulation or regulation of the American Stock
         Exchange.

    (d)  Severability. If any term, provision, covenant or restriction of this
         Agreement is held by a court of competent jurisdiction to be invalid,
         void or unenforceable, the remainder of the terms, provisions,
         covenants and restrictions of this Agreement shall remain in full force
         and effect.

    (e)  Counterparts. This Agreement may be executed in two or more
         counterparts, each of which shall be deemed an original but all of
         which together shall constitute one and the same instrument. This
         Agreement may be executed by facsimile signatures.

    (f)  Governing Law. This Agreement shall be governed by and construed in
         accordance with the internal laws of the State of Delaware without
         regard to conflicts of laws

                                       4
<PAGE>

         principally that would require the application of any other law. Any
         action or proceeding seeking to enforce any provision of, or based on
         any claims for equitable relief arising out of this Agreement may be
         brought against any of the Parties only in the federal or state courts
         of Delaware and each of the Parties consents to the jurisdiction of
         such courts (and of the appropriate appellate courts) in any such
         action or proceeding and waives any objection to venue laid therein.
         Process in any action or proceeding referred to in the preceding
         sentence may be served on any party anywhere in the world.

    (g)  Entire Agreement. This Agreement contains the entire understanding of
         the Parties with respect to the matters covered hereby and this
         Agreement may be amended only by an agreement in writing executed by
         the Parties hereto.

    (h)  Notices. Any notice or other communication required or permitted to be
         given hereunder shall be in writing and be effective (a) when
         personally delivered on a business day during normal business hours at
         the address designated below; or (b)on the business day following the
         date of mailing by overnight courier, fully prepaid, addressed to such
         address.

            i.   Notice to the Company:

                           220 Hickory Street
                           Warren, Pennsylvania 16366-0001
                           Attention:

            ii.  Notice to Loeb:

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

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

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       5
<PAGE>

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

BLAIR CORPORATION

By:  /s/ CRAIG N. JOHNSON
     ---------------------------------------------------------
Name:  Craig N. Johnson
Title: Board Chairman

LOEB ARBITRAGE FUND

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: President, General Partner

LOEB ARBITRAGE MANAGEMENT

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: President

LOEB PARTNERS CORPORATION

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: Executive Vice President

LOEB HOLDING CORPORATION

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: Officer

LOEB OFFSHORE FUND, LIMITED

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: Director

LOEB OFFSHORE MANAGEMENT, LLC

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: President

<PAGE>

LOEB MARATHON FUND

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: President, General Partner

LOEB MARATHON OFFSHORE FUND, LIMITED

By:  /s/ GIDEON J. KING
     ---------------------------------------------------------
Name: Gideon J. King
Title: Director

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