SC TO-I

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

Tender Offer Statement under Section 14(d)(1) or 13(e)(1)

of the Securities Exchange Act of 1934

Blair Corporation

(Name of Subject Company (issuer))

Blair Corporation (Issuer)

(Name of Filing Person (Identifying Status as Offeror, Issuer or Other Person))

Common Stock, without nominal or par value

(Title of Class of Securities)

092828102

(CUSIP Number of Class of Securities)

Daniel R. Blair

Secretary

220 Hickory Street

Warren, Pennsylvania 16366

(814) 723-3600

(Name, address and telephone number of person authorized to receive notices and communications on behalf of filing person)

Copies to:

John H. Vogel, Esq.

Philip G. Feigen, Esq.

Patton Boggs LLP

2550 M Street, N.W.

Washington, D.C. 20037

(202) 457-6000

Calculation Of Filing Fee

Transaction Valuation*	Amount of Filing Fee*
184,800,000.00	21,750.96

* Estimated for purposes of calculating the amount of the filing fee only. The amount assumes the purchase of a total of 4,400,000 shares of the outstanding common stock, without nominal or par value, at a price per share of $42.00.

¨ Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid: N/A

Form or Registration No.: N/A

Filing Party: N/A

Date Filed: N/A

¨ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

¨ third-party tender offer subject to Rule 14d-1.

x issuer tender offer subject to Rule 13e-4.

¨ going-private transaction subject to Rule 13e-3.

¨ amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:  ¨

SCHEDULE TO

This Tender Offer Statement on Schedule TO relates to the offer by Blair Corporation, a Delaware corporation (“Blair”), to purchase up to 4,400,000 shares of common stock, without nominal or par value, or such lesser number of shares as is properly tendered and not properly withdrawn, at a price of $42.00 per share, net to the seller in cash, without interest. Blair’s offer is being made upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 20, 2005 and in the related Letter of Transmittal which, as amended or supplemented from time to time, together constitute the offer. This Schedule TO is intended to satisfy the reporting requirements of Rule 13e-4(c)(2) of the Securities Exchange Act of 1934, as amended.

Item 1. Summary Term Sheet.

The information set forth in the Summary Term Sheet in the Offer to Purchase by Blair dated July 20, 2005 (the “Offer to Purchase”) attached hereto as Exhibit (a)(1)(i), is incorporated herein by reference.

Item 2. Subject Company Information.

(a) The information set forth in Section 10 (“Certain Information Concerning Blair”) of the Offer to Purchase is incorporated herein by reference.

(b) The information set forth in the last paragraph of the “Introduction” of the Offer to Purchase is incorporated herein by reference.

(c) The information set forth in Section 8 (“Price Range of Shares; Dividends”) of the Offer to Purchase is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

(a) This Tender Offer Statement is filed by the subject company. The information set forth in Section 10 (“Certain Information Concerning Blair”) and Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Securities of Blair”) of the Offer to Purchase is incorporated herein by reference.

Item 4. Terms of the Transaction.

(a) The following information set forth in the Offer to Purchase is incorporated herein by reference: (i) Section 1 (“Number of Shares; Proration”); (ii) Section 1 (“Number of Shares; Proration”); (iii) Section 1 (“Number of Shares; Proration”); (v) Section 14 (“Extension of the Tender Offer; Termination; Amendment”); (vi) Section 4 (“Withdrawal Rights”); (vii) Section 3 (“Procedures for Tendering Shares”) and Section 4 (“Withdrawal Rights”); (viii) Section 5 (“Purchase of Shares and Payment of Purchase Price”); (ix) Section 1 (“Number of Shares; Proration”); and (xii) Section 13 (“Certain United States Federal Income Tax Consequences”).

(b) The information set forth in Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Securities of Blair”) of the Offer to Purchase is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

(e) The information set forth in Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Securities of Blair”) of the Offer to Purchase is incorporated herein by reference.

Item 6. Purposes of the Transaction and Plans or Proposals.

(a), (b) and (c) The information set forth in Section 2 (“Purpose of the Tender Offer; Certain Effects of the Tender Offer”) of the Offer to Purchase is incorporated herein by reference.

Item 7. Source and Amount of Funds or Other Consideration.

(a) The information set forth in Section 9 (“Source and Amount of Funds”) of the Offer to Purchase is incorporated herein by reference.

(b) Not applicable.

(d) The information set forth in Section 9 (“Source and Amount of Funds”) of the Offer to Purchase is incorporated herein by reference.

Item 8. Interest in Securities of the Subject Company.

(a) And (b) The information set forth in Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Securities of Blair”) of the Offer to Purchase is incorporated herein by reference.

Item 9. Persons/Assets, Retained, Employed, Compensated or Used.

(a) The information set forth in Section 15 (“Fees and Expenses”) of the Offer to Purchase is incorporated herein by reference.

Item 10. Financial Statements.

(a)(1) The financial statements for the fiscal years ending December 31, 2003 & 2004 contained in Blair Corporation’s Form 10-K for the fiscal year ended December 31, 2004 are incorporated herein by reference; (2) The financial statements for the quarter ended March 31, 2005 contained in Blair Corporations Form 10-Q for the quarter ended March 31, 2005 are incorporated herein by reference; (3) The ratio of earnings to fixed charges for the fiscal years ending December 31, 2003 & 2004 contained in Blair Corporation’s Form 10-K for the fiscal year ended December 31, 2004 are incorporated herein by reference and the ratio of earnings to fixed charges for the quarter ended March 31, 2005 contained in Blair Corporation’s Form 10-Q for the quarter ended March 31, 2005 is incorporated herein by reference; and (4) the book value per share for the quarter ended March 31, 2005 contained in Blair Corporation’s Form 10-Q for the quarter ended March 31, 2005 is incorporated herein by reference.

(b)(1), (2) And (3) The information set forth in Section 10 (“Certain Information Concerning Blair”) of the Offer to Purchase is incorporated herein by reference.

Item 11. Additional Information.

(a) The information set forth in Section 6 (“Conditional Tender of Shares”), Section 7 (“Conditions of the Tender Offer”), Section 11 (“Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Securities of Blair”) and Section 12 (“Legal Matters; Regulatory Approvals”) of the Offer to Purchase is incorporated herein by reference.

(b) The information set forth in the Offer to Purchase and in the related Letter of Transmittal, as each may be amended from time to time, is incorporated herein by reference.

Item 12. Exhibits.

The index to exhibits appears on the page immediately following the signature page of this Schedule TO.

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

BLAIR CORPORATION
By:	/s/ JOHN E. ZAWACKI
Name:	John E. Zawacki
Title:	President, Chief Executive Officer and Director

Date: July 20, 2005

EXHIBIT INDEX

Exhibit No.
(a)(1)(i)	Offer to Purchase dated July 20, 2005
(a)(1)(ii)	Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9)
(a)(1)(iii)	Notice of Guaranteed Delivery
(a)(1)(iv)	Notice of Instructions (Options)
(a)(5)(i)	Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees dated July 20, 2005
(a)(5)(ii)	Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees dated July 20, 2005
(a)(5)(iii)	Letter to Stockholders dated July 20, 2005
(a)(5)(iv)	Summary of Advertisement
(a)(5)(v)	Employee FAQ
(a)(5)(vi)	Press Release, dated July 20, 2005
(b)(i)	Amendment Agreement, dated as of July 15, 2005, which amends the Receivables Purchase Agreement
(b)(ii)	Amended and Restated Credit Agreement, dated as of July 15, 2005
(c)	None
(d)(i)	“Standstill” Agreement between Blair Corporation and Loeb Arbitrage Fund and its affiliates dated May 24, 2005*
(d)(ii)	“Standstill” Agreement between Blair Corporation and Mr. Phillip Goldstein and Mr. Andrew Dakos dated May 24, 2005**
(d)(iii)	“Standstill” Agreement between Blair Corporation and Mr. Lawrence Goldstein, Santa Monica Partners Opportunity Fund L.P. and its affiliates dated May 25, 2005***
(d)(iv)	Change in Control Severance Agreement between Blair Corporation and Mr. Randall A. Scalise****
(d)(v)	Change in Control Severance Agreement between Blair Corporation and Mr. Robert D. Crowley*****
(d)(vi)	Change in Control Severance Agreement between Blair Corporation and Mr. Bryan J. Flanagan*****
(d)(vii)	Change in Control Severance Agreement between Blair Corporation and Mr. John E. Zawacki*****
(e)	None
(f)	None
(g)	None
(h)	None

* Incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K (SEC File No. (001-00878)), as filed with the Securities and Exchange Commission on May 27, 2005.

** Incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K (SEC File No. (001-00878)), as filed with the Securities and Exchange Commission on May 27, 2005.

*** Incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K (SEC File No. (001-00878)), as filed with the Securities and Exchange Commission on May 27, 2005.

**** Incorporated by reference to Exhibit 10.6 of the Company’s Form 10-Q (SEC File No. (001-00878)), as filed with the Securities and Exchange Commission on November 9, 2004.

***** Incorporated by reference to Exhibit 10.7 of the Company’s Form 10-Q (SEC File No. (001-00878)), as filed with the Securities and Exchange Commission on November 9, 2004.

EX-99.(A)(1)(I)

Offer to Purchase for Cash

Up to 4,400,000 Shares of its Common Stock

At a Purchase Price of $42.00 Per Share

by

Blair Corporation

The tender offer, proration period and withdrawal rights will expire at 12:00 midnight,

Eastern Time, on August 16, 2005,

unless the tender offer is extended.

Blair Corporation, a Delaware corporation, is offering to purchase up to 4,400,000 shares of its common stock, without nominal or par value per share, at a price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal.

All shares properly tendered and not properly withdrawn will be purchased at the purchase price, upon the terms and subject to the conditions of the tender offer, including proration provisions. However, because of the proration and conditional tender provisions described in this Offer to Purchase, all of the shares tendered may not be purchased if more than the number of shares we seek are properly tendered. Shares not purchased in the tender offer will be returned to the tendering stockholders at our expense promptly after the expiration date of the tender offer. We reserve the right, in our sole discretion, to purchase more than 4,400,000 shares in the tender offer, subject to applicable legal requirements. See Section 1.

The tender offer is not conditioned on any minimum number of shares being tendered. The tender offer is, however, subject to other conditions. See Section 7.

Our Board of Directors has approved the tender offer. However, neither we nor our Board of Directors nor the dealer manager makes any recommendation to you as to whether you should tender or refrain from tendering your shares. You must make your own decision as to whether to tender your shares and, if so, how many shares to tender. You should discuss whether to tender all or any portion of your shares with your broker or other financial and tax advisors. Blair’s directors have agreed not to tender any of their shares of Blair’s common stock in the tender offer and senior management has agreed to restrict the amount they tender in the tender offer to no more than 25% of their holdings of Blair’s common stock.

Our shares are listed and traded on The American Stock Exchange under the trading symbol “BL.” On May 25, 2005, the last full trading day before the public announcement of the tender offer, the last reported sale price of our shares on AMEX was $35.98 per share. You are urged to obtain current market quotations for our shares before deciding whether to tender your shares. See Section 8.

If you have any questions, need assistance or require additional copies of this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery, you should contact Georgeson Shareholder Communications Inc., the information agent for the tender offer, or Stephens Inc., the dealer manager for the tender offer, at their respective addresses and telephone numbers set forth on the back cover page of this Offer to Purchase.

The dealer manager for the tender offer is:

July 20, 2005

We have not authorized any person to make any recommendation on our behalf as to whether you should tender or refrain from tendering your shares in the tender offer. You should rely only on the information contained in this Offer to Purchase and the related Letter of Transmittal and any document to which we have referred you. We have not authorized any person to give any information or to make any representation in connection with the tender offer other than those contained in this Offer to Purchase or in the related Letter of Transmittal. If anyone makes any recommendation or representation to you or gives you any information, you must not rely on that recommendation, representation or information as having been authorized by the dealer manager or us.

We are not making this tender offer to, and will not accept any tendered shares from, stockholders in any jurisdiction where it would be illegal to do so. However, we may, at our discretion, take any actions necessary for us to make this offer to stockholders in any such jurisdiction.

TABLE OF CONTENTS

		Page
SUMMARY TERM SHEET		3
FORWARD-LOOKING STATEMENTS		7
INTRODUCTION		11
THE TENDER OFFER		12
1.	Number of Shares; Proration	12
2.	Purpose of the Tender Offer; Certain Effects of the Tender Offer	13
3.	Procedures for Tendering Shares	17
4.	Withdrawal Rights	21
5.	Purchase of Shares and Payment of Purchase Price	22
6.	Conditional Tender of Shares	23
7.	Conditions of the Tender Offer	23
8.	Price Range of Shares; Dividends	25
9.	Source and Amount of Funds	26
10.	Certain Information Concerning Blair	27
11.	Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Securities of Blair	35
12.	Legal Matters; Regulatory Approvals	39
13.	Certain United States Federal Income Tax Consequences	39
14.	Extension of the Tender Offer; Termination; Amendment	43
15.	Fees and Expenses	44
16.	Miscellaneous	44

SUMMARY TERM SHEET

We are providing this summary term sheet for your convenience. It highlights material information in this document, but you should realize that it does not describe all of the details of the tender offer to the same extent described elsewhere in this Offer to Purchase. We urge you to read the entire Offer to Purchase and the related Letter of Transmittal because they contain the full details of the tender offer. We have included references to the sections of this Offer to Purchase where you will find a more complete discussion.

Who is offering to purchase my shares?

Blair Corporation is offering to purchase your shares of Blair common stock, without nominal or par value per share.

What will the purchase price for the shares be?

We are offering to purchase your shares of Blair common stock at a price of $42.00 per share. We will pay this purchase price in cash, without interest, for all the shares we purchase under the tender offer. See Section 1.

How many shares will Blair purchase?

We are offering to purchase up to 4,400,000 shares in the tender offer, or such lesser number of shares as are properly tendered. 4,400,000 shares represents approximately 53% of our outstanding common stock. We also expressly reserve the right to purchase more than 4,400,000 shares in the tender offer. In accordance with applicable legal requirements, we may purchase in the tender offer an additional number of shares not to exceed 2% of our currently outstanding shares of common stock (approximately 165,146 shares) without extending the period of time during which the tender offer is open. See Section 1 and Section 14. The tender offer is not conditioned on any minimum number of shares being tendered. See Section 7.

How will Blair pay for the shares?

We intend to utilize a combination of available cash as well as funds drawn down from our credit facility to purchase the shares and pay expenses. We will need a maximum of approximately $185 million to purchase 4,400,000 shares. The tender offer is not subject to the receipt of financing by us. See Section 7 and Section 9.

When does the tender offer expire; can the tender offer be extended?

You may tender your shares until the tender offer expires. The tender offer will expire on August 16, 2005 at 12:00 midnight, Eastern Time, unless we extend it. See Section 1. We may choose to extend the tender offer for any reason, subject to applicable law. See Section 14.

Can the tender offer be extended, amended or terminated and under what circumstances?

We can extend, amend or terminate the tender offer in our sole discretion, subject to applicable law. If we extend the tender offer, we will delay the acceptance of any shares that have been tendered. See Section 14 for a more detailed discussion of our ability to extend, amend or terminate the tender offer.

How will I be notified if Blair extends the tender offer?

We will issue a press release by 9:00 a.m., Eastern Time, on the first business day after the previously scheduled expiration date of the tender offer period if we decide to extend the tender offer. See Section 14. We cannot assure you that the tender offer will be extended or, if extended, for how long.

When will Blair announce the results of the tender offer?

We will issue a press release by 9:00 a.m., Eastern Time, on the first business day after the expiration date announcing the expiration of the tender offer and the preliminary results of the tender offer, including the approximate number of shares tendered. We anticipate issuing a press release announcing the final results of the

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tender offer, including the number of shares tendered and the proration factor, if any, within five to seven business days after the expiration date.

What is the purpose of the tender offer?

We believe that the tender offer is consistent with our goals of maximizing stockholder value and increasing our earnings per share. We believe that the repurchase of shares pursuant to the tender offer is currently a prudent use of our funds. We expect that the repurchase of shares in the tender offer will be accretive to earnings per share. We further believe that the tender offer allows us to return cash to stockholders who elect to tender their shares and provide stockholders (particularly those with large stockholdings) with an opportunity to obtain liquidity with respect to their shares, while at the same time increasing non-tendering stockholders’ proportionate interest in Blair and thus in Blair’s future earnings and assets at no additional cost. See Section 2.

Are there any conditions to the tender offer?

Yes. The tender offer is subject to conditions such as no court and governmental action prohibiting the tender offer, no commencement or escalation of a war or armed hostilities, no circumstances that would cause our common stock to be delisted from AMEX or cause us to no longer be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, no decrease of 15% or greater after July 19, 2005 in the market price of our common stock or the market prices of equity securities generally in the United States and no changes in general market conditions or our business that, in our reasonable judgment, are or may be materially adverse to us. See Section 7.

How do I tender my shares?

Unless the tender offer is extended, shares must be tendered prior to 12:00 midnight, Eastern Time, on August 16, 2005. Depending on whose name the shares are registered in and who holds the certificates, you must either:

• deliver your share certificate(s) and a properly completed and duly executed Letter of Transmittal to the depositary at the address appearing on the back cover page of this Offer to Purchase;

• request a broker, dealer, commercial bank, trust company or other nominee to effect the transaction for you; or

• assure that the depositary receives a confirmation of receipt of your shares by book-entry transfer and a properly completed and duly executed Letter of Transmittal or an Agents’ Message, in the case of a book-entry transfer.

In certain circumstances, you must comply with the guaranteed delivery procedure. Contact the information agent or the dealer manager for assistance. See Section 3 and the instructions to the Letter of Transmittal.

Once I have tendered shares in the tender offer, can I withdraw my tender?

Yes. You may withdraw any shares you have tendered at any time before 12:00 midnight, Eastern Time, on August 16, 2005, unless we extend the tender offer, in which case you can withdraw your shares until the expiration of the tender offer as extended. If we have not accepted for payment the shares you have tendered to us, you may also withdraw your shares at any time after 12:00 midnight, Eastern Time, on Wednesday September 14, 2005. See Section 4.

How do I withdraw shares I previously tendered?

You must deliver on a timely basis a written or facsimile notice of your withdrawal to the depositary at the address appearing on the back cover page of this Offer to Purchase. Your notice of withdrawal must specify your name, the number of shares to be withdrawn and the name of the registered holder of the shares. Some additional requirements apply if the certificates for shares to be withdrawn have been delivered to the depositary or if your shares have been tendered under the procedure for book-entry transfer set forth in Section 3. See Section 4.

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Has Blair or its Board of Directors adopted a position on the tender offer?

Our Board of Directors has approved the tender offer. However, neither we nor our Board of Directors nor the dealer manager makes any recommendation to you as to whether you should tender or refrain from tendering your shares. You must make your own decision as to whether to tender your shares and, if so, how many shares to tender. You should discuss whether to tender all or any portion of your shares with your broker or other financial and tax advisors. See Section 13.

Will any directors or executive officers of Blair tender shares in the tender offer?

Blair’s directors have agreed not to tender any of their shares of Blair’s common stock in the tender offer and senior management has agreed to restrict the amount they tender in the tender offer to no more than 25% of their holdings of Blair’s common stock. See Section 2 and Section 11.

When and how will Blair pay me for the shares I tender?

We will pay the purchase price, net in cash, without interest, for the shares we purchase promptly after the expiration of the tender offer and the acceptance of the shares for payment. We will pay for the shares accepted for purchase by depositing the aggregate purchase price with the depositary promptly after the expiration date of the tender offer. The depositary will transmit to you the payment for all your shares accepted for payment. See Section 5.

Will I have to pay brokerage commissions if I tender my shares?

If you are a registered stockholder and you tender your shares directly to the depositary, you will not incur any brokerage commissions. If you hold shares through a broker or bank, we urge you to consult your broker or bank to determine whether transaction costs are applicable. See Section 3.

What are the United States federal income tax consequences if I tender my shares?

Generally, you will be subject to United States federal income taxation when you receive cash from us in exchange for the shares you tender. The receipt of cash for your tendered shares will generally be treated for United States federal income tax purposes either as (1) a sale or exchange eligible for capital gains treatment or (2) a dividend subject to ordinary income tax rates. See Section 13.

Will I have to pay stock transfer tax if I tender my shares?

If you instruct the depositary in the Letter of Transmittal to make the payment for the shares to the registered holder, you will not incur any stock transfer tax. See Section 5.

Whom do I contact if I have questions about the tender offer?

The information agent and the dealer manager can help answer your questions. The information agent is Georgeson Shareholder Communications Inc. and the dealer manager is Stephens Inc. Their contact information is set forth on the back cover page of this Offer to Purchase.

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IMPORTANT

If you wish to tender all or any part of your shares, you must do one of the following before our tender offer expires:

• if you hold certificates in your own name, complete and sign a Letter of Transmittal according to its instructions, and deliver it, together with any required signature guarantees, the certificates for your shares and any other documents required by the Letter of Transmittal, to Computershare Trust Company of New York, the depositary for our tender offer;

• if your shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact the nominee and have the nominee tender your shares for you; or

• if you are an institution participating in The Depository Trust Company, which we call the “book-entry transfer facility” in this Offer to Purchase, tender your shares according to the procedure for book-entry transfer described in Section 3.

If you want to tender your shares but:

• your certificates for the shares are not immediately available or cannot be delivered to the depositary by the expiration of our tender offer;

• you cannot comply with the procedure for book-entry transfer by the expiration date of our tender offer; or

• your other required documents cannot be delivered to the depositary by the expiration date of our tender offer;

you can still tender your shares if you comply with the guaranteed delivery procedure described in Section 3.

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FORWARD-LOOKING STATEMENTS

This Offer to Purchase, including the Summary Term Sheet, and the documents incorporated by reference in this Offer to Purchase contain statements that are not historical facts and constitute projections, forecasts or forward-looking statements. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “expect,” “intend,” “may,” “planned,” “potential,” “possible,” “should,” “will” and “would.” Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. Our actual actions or results may differ materially from those expected or anticipated in the forward-looking statements. Some of the factors that might cause such a difference include, but are not limited to:

Blair’s revenue and profit results are sensitive to general economic conditions, consumer confidence and spending patterns.

Blair’s growth, sales and profitability may be adversely affected by negative local, regional, national or international political or economic trends or developments that shake consumer confidence, including the effects of national and international security concerns such as war, terrorism or the threat thereof. Purchases of women’s and men’s apparel, and home furnishings often decline during periods when economic or market conditions are unsettled or weak. In such circumstances, Blair may increase the number of promotional sales, which would further adversely affect its profitability.

Blair’s net sales, operating income and inventory levels fluctuate on a seasonal basis.

Blair experiences seasonal fluctuations in its net sales and operating income. Seasonal fluctuations also affect Blair’s inventory levels, since it usually orders merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases. Blair must carry a significant amount of inventory.

If Blair is not successful in selling inventory it may have to sell the inventory at significantly reduced prices or it may not be able to sell the inventory at all.

Blair may be unable to compete favorably in its highly competitive segment of the retail industry.

The sale of womenswear, menswear and home furnishings is highly competitive. Increased competition could result in price reductions, increased marketing expenditures and loss of market share, any of which could have a material adverse effect on Blair’s financial condition and results of operations.

Blair competes for sales with a broad range of other retailers, including individual and chain fashion specialty stores and department stores. In addition to the traditional store-based retailers, Blair also competes with other direct marketers that sell similar lines of merchandise, who target customers through catalogues and e-commerce. Blair’s direct response business competes with numerous national and regional catalogue and e-commerce merchandisers. Brand image, marketing, fashion design, price, service, quality, image presentation and fulfillment are all competitive factors in catalogue and e-commerce sales. Some of Blair’s competitors may have greater financial, marketing and other resources available to them.

Blair may not be able to keep up with fashion trends and may not be able to launch new product lines successfully.

Blair’s success depends in part on management’s ability to effectively anticipate and respond to changing fashion tastes and consumer demands and to translate market trends into appropriate, saleable product offerings far in advance. Customer tastes and fashion trends change rapidly. If Blair is unable to successfully anticipate, identify or react to changing styles or trends and misjudges the market for its products or any new product lines, Blair’s

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sales will be lower and it may be faced with a significant amount of unsold finished goods inventory. In response, Blair may be forced to increase its marketing promotions or price markdowns, which could have a material adverse effect on its business. Blair’s brand image may also suffer if customers believe merchandise misjudgments indicate that Blair is no longer able to offer the latest fashions.

Blair’s manufacturers may be unable to manufacture and deliver products in a timely manner or meet quality standards.

Blair purchases apparel and home furnishings through contract manufacturers and importers and directly from third-party manufacturers. Similar to most other retailers, Blair has narrow sales windows for much of its inventory. Factors outside Blair’s control, such as manufacturing or shipping delays or quality problems, could disrupt merchandise deliveries and result in lost sales, cancellation charges or excessive markdowns.

Blair relies on foreign sources of production.

Blair purchases apparel merchandise directly in foreign markets and in the domestic market, some of which is manufactured overseas. Blair does not have any long-term merchandise supply contracts and many of its imports are subject to a variety of customs regulations and international trade arrangements, including existing or potential duties, tariffs or quotas. Blair competes with other companies for production facilities and import quota capacity.

Blair also faces a variety of other risks generally associated with doing business in foreign markets and importing merchandise from abroad, such as:

• political instability;

• imposition of new legislation or rules relating to imports that may limit the quantity of goods which may be imported into the United States from countries in a particular region;

• imposition of duties, taxes, and other charges on imports;

• currency and exchange risks;

• local business practice and political issues, including issues relating to compliance with domestic or international labor standards which may result in adverse publicity;

• potential delays or disruptions in shipping and related pricing impacts; and

• disruption of imports by labor disputes.

New initiatives may be proposed that may have an impact on the trading status of certain countries and may include retaliatory duties or other trade sanctions that, if enacted, would increase the cost of products purchased from suppliers in such countries.

In addition, significant health hazards or environmental or natural disasters may occur in Asia and elsewhere, which could have a negative effect on the economies, financial markets and business activity in Asia, and elsewhere. Blair’s purchases of merchandise from Asian manufacturing operations may be affected by this risk.

The future performance of Blair will depend upon these and the other factors listed above which are beyond its control. These factors may have a material adverse effect on the business of Blair.

Increases in costs of mailing, paper and printing may affect Blair’s business.

Postal rate increases and paper and printing costs will affect the cost of Blair’s order fulfillment and catalogue and promotional mailings. Blair relies on discounts from the basic postal rate structure, such as discounts for bulk

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mailings and sorting by zip code and carrier routes. Future paper and postal rate increases could adversely impact Blair’s earnings if it was unable to pass such increases directly onto its customers or offset such increases by raising prices or by implementing more efficient printing, mailing, delivery and order fulfillment systems.

Blair’s stock price may be volatile.

Blair’s stock price may fluctuate substantially as a result of quarter-to-quarter variations in the actual or anticipated financial results of Blair or other companies in the retail industry or markets served by Blair. In addition, the stock market has experienced price and volume fluctuations that have affected the market price of many retail and other stocks and that have often been unrelated or disproportionate to the operating performance of these companies.

Blair may be unable to service its debt.

Blair may be unable to service its debt drawn under its credit facilities and/or any other debt it incurs. Additionally, the agreements related to such debt require Blair to maintain certain financial ratios which limit the total amount Blair may borrow, and restrict certain types of transactions pertaining to property or assets.

Blair may be unable to close the sale of its receivables portfolio to a wholly owned subsidiary of Alliance Data Systems.

Blair may be unable to consummate the sale of its receivables portfolio to World Financial Capital Bank, a wholly owned subsidiary of Alliance Data Systems. The Purchase, Sale and Servicing Transfer Agreement that Blair and World Financial Capital Bank executed on April 26, 2005 contains various covenants and conditions that Blair must comply with and/or satisfy prior to the close of the sale of the receivables portfolio. If Blair is unable to comply with the covenants and/or satisfy the conditions set forth in the Agreement the transaction will not close, Blair will retain its receivables portfolio and will have to transition management of the portfolio back to Blair at a considerable cost to Blair.

Blair’s sales, revenue and operating income may be adversely impacted if World Financial Capital Bank raises the credit rating standards required to purchase merchandise from Blair on credit.

Historically, Blair has managed its own credit portfolio and set the minimum credit scores a consumer must have to be entitled to purchase Blair merchandise on credit. Blair has agreed to sell its receivables portfolio to World Financial Capital Bank and after the close of the sale, World Financial Capital Bank will have a discretion over the minimum credit score necessary to be eligible to purchase Blair merchandise on credit. If World Financial Capital Bank decides to raise the applicable credit rating standards certain consumers will no longer qualify to purchase Blair merchandise on credit, which could lower sales thereby lowering revenue and operating income.

Some additional risk factors include:

• Our failure to meet our clients’ expectations could result in losses or negative publicity and could subject us to liability for the services we provide;

• An economic recession or downturn in the United States or abroad may result in a reduction in our revenues and operating results;

• Fluctuations in our quarterly revenues and operating results may lead to reduced prices for our common stock;

• Failure to manage our growth may impact our operating results;

• We must maintain our reputation and expand our name recognition to remain competitive;

• We depend on our key personnel, and the loss of their services may adversely affect our business;

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• Our business will be negatively affected if we do not keep up with rapid technological changes, evolving industry standards and changing client requirements;

• Our industry is highly competitive; if we cannot effectively compete, our revenue may decline;

• Acts of war or terrorism, or related effects such as disruptions in air transportation, enhanced security measures and political instability in certain foreign countries, may contribute to the current economic downturn and adversely affect our business, operating results and financial condition;

• Increased government regulation of various direct marketing channels could adversely affect our business;

• Changes in consumer spending patterns;

• Consumer preferences and overall economic conditions;

• The potential impact of national and international security concerns on the retail environment, including any possible military action, terrorist attacks or other hostilities;

• Our ability to service the debt we expect to incur in connection with this tender offer, any debt we draw down under our credit facilities and any other debt we incur, and the restrictions the agreements related to such debt impose upon us;

• Our ability to implement our strategic and operational initiatives;

• The impact of competition and pricing;

• Political instability;

• Risks related to consumer acceptance of our products and our ability to develop new merchandise;

• The ability to retain, hire and train key personnel;

• Risks associated with the possible inability of our manufacturers to deliver products in a timely manner;

• Risks associated with relying on foreign sources of production;

• We may become subject to claims regarding foreign laws and regulations that could subject us to increased expenses; and

• Provisions of Delaware law and of our charter and by-laws may make a takeover of Blair more difficult.

Except as required by law, we undertake no obligation to make any revisions to the forward-looking statements contained in this Offer to Purchase or to update them to reflect events or circumstances occurring after the date of this Offer to Purchase. Notwithstanding any statement in this Offer to Purchase or in any document incorporated by reference in this Offer to Purchase, the safe harbor protections of the Private Securities Litigation Reform Act of 1995 are not available to statements made in connection with a tender offer.

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INTRODUCTION

To the Holders of our Common Stock:

We invite our stockholders to tender shares of our common stock, without nominal or par value per share, for purchase by Blair Corporation. We are offering to purchase up to 4,400,000 shares at a price of $42.00 per share, net to the seller in cash, without interest.

Our offer is being made upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal. We refer to this Offer to Purchase and the related Letter of Transmittal, as they may be amended or supplemented from time to time, as the “tender offer.”

Only shares properly tendered and not properly withdrawn will be purchased. However, because of the proration and conditional tender provisions described in this Offer to Purchase, all of the shares tendered will not be purchased if more than the number of shares we seek are properly tendered and not properly withdrawn. We will return shares tendered and that we do not purchase because of proration or conditional tenders promptly following the expiration date of the tender offer. See Section 3.

We reserve the right, in our sole discretion, to purchase more than 4,400,000 shares in the tender offer, subject to certain limitations and legal requirements. See Sections 1 and 14.

The tender offer is not conditioned on any minimum number of shares being tendered. The tender offer is, however, subject to other conditions. See Section 7.

Our Board of Directors has approved the tender offer. However, neither we nor our Board of Directors nor the dealer manager makes any recommendation to you as to whether you should tender or refrain from tendering your shares. You must make your own decision as to whether to tender your shares and, if so, how many shares to tender. Our directors have agreed not to tender any of their shares of Blair’s common stock in the tender offer and senior management has agreed to restrict the amount they tender to no more than 25% of their holdings of Blair’s common stock.

If at the expiration of the tender offer more than 4,400,000 shares (or such greater number of shares as we may elect to purchase) are properly tendered and not properly withdrawn, we will buy shares on a pro rata basis from all stockholders who properly tender their shares, other than stockholders who tender conditionally and whose specific conditions are not satisfied. Those stockholders who conditionally tender all shares held by them and whose specific conditions were not initially satisfied may be eligible to have their shares purchased by random lot. See Sections 1 and 6 for additional information concerning proration procedures and conditional tenders.

The purchase price will be paid net to the tendering stockholder in cash, without interest, for all the shares we purchase. Tendering stockholders who hold shares registered in their own name and who tender their shares directly to the depositary will not be obligated to pay brokerage commissions, solicitation fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer taxes on our purchase of shares in the tender offer. Stockholders holding shares through brokers or banks are urged to consult the brokers or banks to determine whether transaction costs may apply if stockholders tender shares through the brokers or banks and not directly to the depositary. Also, any tendering stockholder or other payee who fails to complete, sign and return to the depositary the Substitute Form W-9 that is included as part of the Letter of Transmittal or Form W-8BEN obtained from the depositary may be subject to required United States federal income tax backup withholding equal to 28% of the gross proceeds payable to the tendering stockholder or other payee pursuant to the offer. See Section 3.

As of June 30, 2005, we had 8,257,313 issued and outstanding shares of Blair Corporation common stock, without nominal or par value, and 209,907 shares reserved for issuance upon exercise of outstanding stock options under our stock option plans. The 4,400,000 shares that we are offering to purchase pursuant to the tender offer represent approximately 53% of our shares outstanding on June 30, 2005. Our shares are listed and traded on AMEX under the symbol “BL.” On May 25, 2005, the last full trading day before the announcement of the tender offer, the last reported sale price of our shares on AMEX was $35.98 per share. Stockholders are urged to obtain current market quotations for our shares before deciding whether to tender shares. See Section 8.

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THE TENDER OFFER

1.    Number of Shares; Proration.

General. Upon the terms and subject to the conditions of the tender offer, we will purchase 4,400,000 shares of Blair Corporation common stock, without nominal or par value, or such lesser number of shares as are properly tendered and not properly withdrawn in accordance with Section 4 before the scheduled expiration date of the tender offer, at a price of $42.00 per share, net to the seller in cash, without interest.

The term “expiration date” means 12:00 midnight, Eastern Time, on August 16, 2005. We may, in our sole discretion, extend the period of time during which the tender offer will remain open, in which event the term “expiration date” shall refer to the latest time and date at which the tender offer, as so extended by us, shall expire. See Section 14 for a description of our right to extend, delay, terminate or amend the tender offer.

Promptly following the expiration date, we will purchase, at the purchase price of $42.00 per share, shares properly tendered and not properly withdrawn, upon the terms and subject to the conditions of the tender offer, including the proration and conditional tender provisions. All shares tendered and not purchased under the tender offer, including shares not purchased because of proration and conditional tender provisions, will be returned to the tendering stockholders at our expense promptly following the expiration date.

If the number of shares properly tendered and not properly withdrawn prior to the expiration date is less than or equal to 4,400,000 shares, or such greater number of shares as we may elect to purchase, subject to applicable legal requirements, we will, upon the terms and subject to the conditions of the tender offer, purchase all shares so tendered.

We reserve the right, in our sole discretion, to purchase more than 4,400,000 shares in the tender offer. In accordance with applicable regulations of the Securities and Exchange Commission, we may purchase in the tender offer an additional number of shares not to exceed 2% of our currently outstanding shares of common stock (approximately 165,146 shares) without extending the period of time during which the tender offer is open. See Section 14.

In the event of an oversubscription of the tender offer, shares will be subject to proration as described below under “—Proration.” The proration period also expires on the expiration date.

If we:

• increase or decrease the price that may be paid for shares,

• increase the number of shares that we may purchase in the tender offer by more than 2% of our currently outstanding shares, or

• decrease the number of shares that we may purchase in the tender offer,

then the tender offer must remain open for at least ten business days following the date that notice of the increase or decrease is first published, sent or given in the manner specified in Section 14. If we make any other changes that require such a minimum offer period, we will comply with the requirements of applicable law. For purposes of the tender offer, a “business day” means any day other than a Saturday, Sunday or United States federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, Eastern Time.

The tender offer is not conditioned on any minimum number of shares being tendered. The tender offer is, however, subject to other conditions. See Section 7.

Proration. Upon the terms and subject to the conditions of the tender offer, if more than 4,400,000 shares, or such greater number of shares as we may elect to purchase, subject to applicable law, have been properly tendered and not properly withdrawn before the expiration date, we will purchase such properly tendered and not

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properly withdrawn shares on a pro rata basis, subject to the conditional tender provisions described in Section 6. If proration of tendered shares is required, we will determine the proration factor promptly following the expiration date. Proration for each stockholder tendering shares shall be based on the ratio of the number of shares properly tendered and not properly withdrawn by such stockholder to the total number of shares properly tendered and not properly withdrawn by all stockholders. Because of the difficulty in determining the number of shares properly tendered, including shares tendered by guaranteed delivery procedures, as described in Section 3, and not properly withdrawn, and because of the conditional tender procedure described in Section 6, we do not expect that we will be able to announce the final proration factor or commence payment for any shares purchased under the tender offer until five to seven business days after the expiration date. The preliminary results of any proration will be announced by press release promptly after the expiration date. Stockholders may obtain preliminary proration information from the information agent or the dealer manager and may be able to obtain such information from their brokers.

As described in Section 13, the number of shares that we will purchase from a stockholder under the tender offer may affect the United States federal income tax consequences to that stockholder and, therefore, may be relevant to a stockholder’s decision whether or not to tender all or any portion of its shares.

This Offer to Purchase and the related Letter of Transmittal will be mailed to holders of our common stock and will be furnished to brokers, dealers, commercial banks and trust companies whose names, or the names of whose nominees, appear on our stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of shares.

2.    Purpose of the Tender Offer; Certain Effects of the Tender Offer.

Purpose of the Tender Offer. On April 26, 2005 Blair announced the sale of its consumer receivable portfolio to a wholly owned subsidiary of Alliance Data Systems. Prior to the announcement of this tender offer, our Board of Directors considered alternatives for the use of the proceeds of the sale of our consumer receivable portfolio to the Alliance Data Systems subsidiary and our cash on hand. After such deliberations, our Board of Directors determined that the repurchase of our own shares at this time is a prudent use of some of our excess cash and is consistent with our goals of maximizing stockholder value and increasing our earnings per share. In particular, we believe that the tender offer represents an efficient means of achieving our goals and may provide several benefits to Blair and our stockholders, including:

• The offer provides an opportunity to return a portion of our cash to stockholders who elect to tender their shares. In addition, where shares are tendered by the registered owner of the stock directly to the depositary, the sale of these shares in the tender offer will permit the stockholders to avoid the usual costs associated with open market sales.

• The tender offer provides stockholders (particularly those with large stockholdings) with an opportunity to obtain liquidity with respect to their shares, pursuant to the tender offer for cash, without potential disruption to the share price and the usual transaction costs associated with open market sales.

• Stockholders who decide not to participate in the tender offer will realize a proportionate increase in their relative ownership interest in Blair and thus increase their interest in our future earnings and assets, if any, subject to our right to issue additional shares in the future.

• Given the number of shares that are anticipated to be repurchased in the tender offer, the Board of Directors has indicated their intention to increase the per share amount of its quarterly regular dividend to $0.30 per share subsequent to the successful completion of the tender offer and the close of the sale of Blair’s receivables portfolio to a wholly owned subsidiary of Alliance Data Systems, which is currently scheduled for the fourth quarter of 2005. Stockholders who decide not to participate in the tender offer will likely realize a larger per share dividend return in future fiscal quarters.

• The repurchase of shares in the tender offer may be accretive to earnings per share for stockholders who do not sell their shares in the tender offer.

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After the tender offer is completed, we believe that our anticipated cash flow from operations combined with our current cash and cash equivalents and funds available under our credit facility, will be adequate for our anticipated needs. However, our actual experience may differ significantly from our expectations and there can be no assurance that our action in utilizing a significant portion of our available cash in this manner will not adversely affect our ability to operate profitably or absorb possible losses in future periods. Future events may adversely or materially affect our business, expenses or prospects and could affect our available cash and our access to, and the cost of, external financial resources.

Potential Risks and Disadvantages of the Tender Offer. The tender offer also presents some potential risks and disadvantages to Blair and our continuing stockholders, including:

• Our continuing stockholders will bear a higher proportionate share of risk.

• In the event that we complete the tender offer, our cash balances and in turn, the interest income we receive on our cash balances, will be significantly reduced. We anticipate using at least $40 million of our current cash balance to pay a portion of the aggregate purchase price for the tendered shares, assuming we purchase 4,400,000 shares of our common stock in the offer at a price of $42.00 per share, and after paying estimated fees and expenses related to the tender offer. The reduction in our cash balances could adversely affect our ability to operate profitably or absorb possible losses in future periods.

• In order to finance a portion of the tender offer the Company is taking on debt. On a going forward basis servicing the debt will increase interest expense. This increase in interest expense will be even greater if the sale of the consumer credit portfolio does not close. Increased interest expense will have a negative effect on the Company’s cash flow.

• The tender offer could potentially reduce our “public float” (the number of shares owned by non-affiliate stockholders and available for trading in the securities markets). This reduction in our public float may result in lower stock prices and/or reduced liquidity in the trading market for our common stock following completion of the tender offer.

On May 24 and 25, 2005, we entered into separate “standstill” agreements with Loeb Partners Corporation and each of its affiliates, and Santa Monica Opportunity Fund L.P. and each of its affiliates and principals, pursuant to which, among other things, said stockholders agreed to tender all of their Blair common stock in the tender offer. In particular, as of May 3, 2005 Santa Monica held 808,500 issued and outstanding shares, which as of June 30, 2005 represented approximately 9.79% of our issued and outstanding shares and fully vested and exercisable stock options. As of May 10, 2005 Loeb held 551,327 issued and outstanding shares, which as of June 30, 2005 represented approximately 6.68% of our issued and outstanding shares and fully vested and exercisable stock options.

The tender offer may increase the proportional holdings of certain other significant stockholders depending on the extent they elect to participate in the tender offer. The tender offer will increase the proportional holdings of our directors as a result of their agreement not to participate in the tender offer and it will increase the proportional holdings of our senior management as they have agreed to restrict the amount they tender in the tender offer to no more than 25% of their holdings of Blair’s common stock. Except as otherwise disclosed in this Offer to Purchase, we have not been informed by any other stockholders of their intent with respect to tendering the shares held by them in the tender offer. See Section 11 for a more detailed discussion of beneficial ownership of our common stock by our major stockholders, directors and executive officers on a pre and post tender offer basis.

Our Board of Directors has approved the tender offer. However, neither we nor our Board of Directors nor the dealer manager makes any recommendation to stockholders as to whether they should tender or refrain from tendering their shares. We have not authorized any person to make any such recommendation. Stockholders must make their own decision as to whether to tender their shares and, if so, how many shares to tender. Stockholders should carefully evaluate all information in this Offer to

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Purchase and the related Letter of Transmittal and any document to which we have referred them. Stockholders should also consult their broker or other financial and tax advisors before making a decision as to whether they should tender or refrain from tendering all or any portion of their shares. Our directors have agreed not to tender any of their shares in the tender offer and our senior management has agreed to restrict the amount they tender in the tender offer to no more than 25% of their holdings.

Certain Effects of the Tender Offer. After completion of the tender offer, stockholders may be able to sell non-tendered shares on AMEX or otherwise at a net price higher or lower than the purchase price in the tender offer. We can give you no assurance, however, as to the price at which a stockholder may be able to sell his or her shares in the future.

Shares that we acquire pursuant to the tender offer will return to the status of authorized but unissued stock (denoted as treasury stock in our financial statements), and will be available for us to issue in the future without further stockholder action (except as required by applicable law or the rules of AMEX or any other securities exchange on which the shares are listed) for all purposes, including, without limitation, the acquisition of other businesses, the raising of additional capital and the satisfaction of obligations under existing or future employee benefit compensation programs or stock plans.

Our shares are registered under the Securities Exchange Act of 1934, which requires, among other things, that we furnish information to our stockholders and to the Securities and Exchange Commission and comply with the SEC’s proxy rules in connection with meetings of our stockholders. Our completion of the tender offer will not result in the shares ceasing to be registered under the Securities Exchange Act of 1934.

Our purchase of shares in the offer will reduce the number of shares that might otherwise trade publicly. This may reduce the volume of trading in our shares and make it more difficult to buy or sell significant amounts of our shares without materially affecting the market price. Nonetheless, we anticipate that there will be a sufficient number of shares outstanding and publicly traded following consummation of the offer to ensure a continued trading market for the shares. Based upon published guidelines of AMEX, we do not believe that our completion of the tender offer will cause our remaining shares to be delisted from AMEX.

Our shares are currently “margin securities” under the rules of the Federal Reserve Board. This has the effect, among other things, of allowing brokers to extend credit to their customers using the shares as collateral. We believe that, following the purchase of shares pursuant to the offer, the shares will continue to be “margin securities” for purposes of the Federal Reserve Board’s margin regulations.

Sale of a material amount of assets of Blair. On April 26, 2005, Blair, Blair Factoring Company, Blair Credit Services Corporation, and JLB Service Bank, each a wholly-owned subsidiary of Blair, entered into a Purchase, Sale and Servicing Transfer Agreement with World Financial Capital Bank, a wholly-owned subsidiary of Alliance Data Systems. Pursuant to the Purchase Agreement, Blair’s credit portfolio will be sold to World Financial Capital Bank at par plus a premium. Additionally, on April 26, 2005, Blair and World Financial Capital Bank entered into an agreement to form a long-term marketing and servicing alliance under a Private Label Credit Program Agreement having an initial term of ten (10) years. The transaction has been approved by both companies and is expected to close by the end of the fourth quarter of fiscal 2005, subject to regulatory review and approval and customary closing conditions.

Material change in the present dividend rate of Blair. On July 19, 2005, the Board of Directors of Blair declared its regular quarterly dividend of $0.15 per share, payable on September 15, 2005 to stockholders of record on August 19, 2005. Therefore, assuming the tender offer expires as contemplated on August 16, 2005, tendering stockholders will not be eligible for payment of the dividend on shares tendered and accepted for purchase by Blair. In addition, the Board of Directors announced its intention to increase the per share amount of quarterly regular dividends to $0.30 per share subsequent to the successful completion of the tender offer and the close of the sale of Blair’s receivables portfolio to a wholly owned subsidiary of Alliance Data Systems, which is

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currently scheduled for the fourth quarter of 2005. Therefore, stockholders who decide not to participate in the tender offer will likely receive a larger per share dividend in the future. However, future determinations as to the payment of dividends will depend upon our capital requirements, limitations imposed by our credit agreements, if any, the availability of funds to make such payments and such other factors as our Board of Directors may consider.

The acquisition and disposition of securities of Blair by certain significant stockholders. On May 24 and 25, 2005, Blair entered into separate “standstill” agreements with Loeb and Santa Monica pursuant to which said stockholders agreed to tender all of their Blair common stock in the tender offer. In addition, Loeb and Santa Monica have agreed not to acquire any additional shares of Blair common stock or seek to acquire Blair, each for a period of five years.

Except as disclosed in this Offer to Purchase, we currently have no plans, proposals or negotiations underway that relate to or would result in:

• any extraordinary transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries (other than as contemplated by the sale of our receivables portfolio to a wholly owned subsidiary of Alliance Data Systems);

• any material change in our indebtedness or capitalization;

• any material change in our present Board of Directors or management, including, but not limited to, any plans or proposals to change the number or the term of directors (although we may fill vacancies arising on the Board of Directors) or to change any material term of the employment contract of any executive officer;

• any other material change in our corporate structure or business;

• any class of our equity securities ceasing to be authorized to be quoted on AMEX;

• any class of our equity securities becoming eligible for termination of registration under Section 12(g)(4) of the Securities Exchange Act of 1934;

• the suspension of our obligation to file reports under Section 13 of the Securities Exchange Act of 1934;

• the acquisition by any person of our securities; or

• any changes in our charter, bylaws or other governing instruments or other actions that could impede the acquisition of control of us.

We do not currently have any plans, other than as described in this document, which relate to or would result in any of the events described above. Notwithstanding the foregoing, we consider from time to time and may in the future evaluate opportunities for increasing stockholder value, and we may undertake or plan actions that relate to or could result in one or more of these events.

Additional Purchases of our Common Stock. In the future, we may purchase additional shares of our common stock in the open market, in private transactions, through tender offers or otherwise, subject to the approval of our Board of Directors. Future purchases may be on the same terms as this tender offer or on terms that are more or less favorable to stockholders than the terms of this tender offer. We currently intend to continue as a publicly traded company, and, therefore, we do not plan to effect any stock repurchases that would cause our common stock to be ineligible to be listed on AMEX.

Notwithstanding the foregoing, Rule 13e-4 under the Securities Exchange Act of 1934 prohibits us and our affiliates from purchasing any shares, other than pursuant to the tender offer, until at least ten business days after the expiration date, except pursuant to certain limited exceptions provided in Rule 14e-5 under the Securities Exchange Act of 1934.

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3.    Procedures for Tendering Shares.

Proper Tender of Shares. For shares to be tendered properly pursuant to the tender offer:

(1) the certificates for the shares (or confirmation of receipt of the shares under the procedure for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), including any required signature guarantees, or an “agent’s message” (as defined below), and any other documents required by the Letter of Transmittal, must be received before 12:00 midnight, Eastern Time, on the expiration date by the depositary at its address set forth on the back cover page of this Offer to Purchase; or

(2) the tendering stockholder must comply with the guaranteed delivery procedure set forth below.

Participants in the Blair Dividend Reinvestment and Stock Purchase Plan who wish to tender such shares shall follow the appropriate instructions titled “Tender of Dividend Reinvestment and Stock Purchase Plan Shares” in the Letter of Transmittal.

Holders of vested options to purchase shares with an exercise price of less than $42.00 per share who wish to conditionally exercise their options and tender any of their Option Shares, must follow the separate instructions described below under “Special Procedures for Holders of Option Shares.” Optionees holding vested options to purchase shares (without regard to exercise price) may also exercise their options and tender the shares received upon exercise in accordance with the instructions and procedures described in Section 3 with respect to shares generally. Except for the conditional exercise of an option in accordance with the Notice of Instructions (Options), the exercise of an option cannot be revoked even if the shares received upon the exercise and tendered in the offer are not purchased for any reason.

Stockholders who hold shares through brokers or banks are urged to consult the brokers or banks to determine whether transaction costs are applicable if stockholders tender shares through the brokers or banks and not directly to the depositary.

Signature Guarantees and Method of Delivery. No signature guarantee is required if:

(1) the Letter of Transmittal is signed by the registered holder of the shares (which term, for purposes of this Section 3, includes any participant in The Depository Trust Company, referred to as the “book-entry transfer facility,” whose name appears on a security position listing as the owner of the shares) tendered and the holder has not completed either the box captioned “Special Delivery Instructions” or the box captioned “Special Payment Instructions” on the Letter of Transmittal; or

(2) shares are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity that is a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity that is an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. See Instruction 1 of the Letter of Transmittal.

If a certificate for shares is registered in the name of a person other than the person executing a Letter of Transmittal, or if payment is to be made, or shares not purchased or tendered are to be issued, to a person other than the registered holder, then the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered holder appears on the certificate, with the signature guaranteed by an eligible guarantor institution.

In all cases, payment for shares tendered and accepted for payment pursuant to the tender offer will be made only after timely receipt by the depositary of certificates for the shares or a timely confirmation of the book-entry transfer of such shares into the depositary’s account at the book-entry transfer facility as described above, a properly completed and duly executed Letter of Transmittal or a manually signed facsimile thereof, or an agent’s message in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal. The method of delivery of all documents, including certificates for shares, the Letter of Transmittal and any other required documents, is at the election and risk of the tendering stockholder. If delivery is by mail, we recommend that stockholders use registered mail with return receipt requested properly insured. In all cases, sufficient time should be allowed to ensure timely delivery.

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All deliveries made in connection with the tender offer, including a Letter of Transmittal and certificates for shares, must be made to the depositary and not to us, the dealer manager, the information agent or the book-entry transfer facility. Any documents delivered to us, the dealer manager, the information agent or the book-entry transfer facility will not be forwarded to the depositary and, therefore, will not be deemed to be properly tendered.

Book-Entry Delivery. The depositary will establish an account with respect to the shares for purposes of the tender offer at the book-entry transfer facility within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the shares by causing the book-entry transfer facility to transfer shares into the depositary’s account in accordance with the book-entry transfer facility’s procedures for transfer. Although delivery of shares may be effected through a book-entry transfer into the depositary’s account at the book-entry transfer facility, either (1) a properly completed and duly executed Letter of Transmittal or a manually signed facsimile thereof, with any required signature guarantees, or an agent’s message in the case of a book-entry transfer, and any other required documents must, in any case, be transmitted to and received by the depositary at its address set forth on the back cover page of this Offer to Purchase before the expiration date or (2) the guaranteed delivery procedure described below must be followed. Delivery of the Letter of Transmittal and any other required documents to the book-entry transfer facility does not constitute delivery to the depositary.

The term “agent’s message” means a message transmitted by the book-entry transfer facility to, and received by, the depositary, which states that the book-entry transfer facility has received an express acknowledgment from the participant in the book-entry transfer facility tendering the shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Blair may enforce such agreement against the participant.

Federal Backup Withholding Tax. Under the United States federal backup withholding tax rules, a portion of the gross proceeds (currently 28%) payable to a stockholder or other payee under the tender offer must be withheld and remitted to the United States Treasury, unless the stockholder or other payee provides such person’s taxpayer identification number (employer identification number or social security number) to the depositary and certifies under penalties of perjury that such number is correct or otherwise establishes an exemption. In addition, if the depositary is not provided with the correct taxpayer identification number or another adequate basis for exemption, the holder may be subject to certain penalties imposed by the Internal Revenue Service. Therefore, each tendering stockholder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal in order to provide the information and certification necessary to avoid backup withholding, unless such stockholder otherwise establishes to the satisfaction of the depositary that the stockholder is not subject to backup withholding. Specified stockholders (including, among others, all corporations and certain foreign stockholders (in addition to foreign corporations)) are not subject to these backup withholding and reporting requirements rules. In order for a foreign stockholder to qualify as an exempt recipient, that stockholder must generally submit an IRS Form W-8BEN or other applicable form, signed under penalties of perjury, attesting to that stockholder’s exempt status. The applicable form can be obtained from the information agent. See Instructions 12 and 13 of the related Letter of Transmittal.

To prevent federal backup withholding tax on the gross payments made to stockholders for shares purchased under the tender offer, each stockholder who does not otherwise establish an exemption from such withholding must provide the depositary with the stockholder’s correct taxpayer identification number and provide other information by completing the Substitute Form W-9 included with the Letter of Transmittal.

For a discussion of United States federal income tax consequences to tendering stockholders that are U.S. holders (as defined in Section 13), see Section 13.

Federal Income Tax Withholding on Payments to Foreign Stockholders. Even if a foreign stockholder has provided the required certification as described above to avoid backup withholding, the depositary will withhold United States federal income taxes at a rate of 30% of the gross payment payable to a foreign stockholder or his,

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her or its agent unless the depositary determines that an exemption from, or a reduced rate of, withholding tax is available under a tax treaty or that an exemption from withholding is applicable because the gross proceeds are effectively connected with the conduct of a trade or business of the foreign stockholder within the United States. For this purpose, a foreign stockholder is any stockholder that is not a U.S. holder (as defined in Section 13). In order to obtain a reduced rate of withholding under a tax treaty, a foreign stockholder must deliver to the depositary before the payment a properly completed and executed IRS Form W-8BEN. In order to obtain an exemption from withholding on the grounds that the gross proceeds paid under the tender offer are effectively connected with the conduct of a trade or business within the United States, a foreign stockholder must deliver to the depositary a properly completed and executed IRS Form W-8ECI. A foreign stockholder may be eligible to obtain a refund of all or a portion of any tax withheld if they or it satisfies one of the “Section 302 tests” for capital gain treatment described in Section 13 or is otherwise able to establish that no withholding or a reduced amount of withholding is due. Federal backup withholding tax generally will not apply to amounts subject to the 30% or a treaty-reduced rate of federal income tax withholding.

Foreign stockholders are urged to consult their tax advisors regarding the application of United States federal income tax withholding, including eligibility for a reduction of, or an exemption from, withholding tax, and the refund procedure. See Instruction 13 of the related Letter of Transmittal.

Guaranteed Delivery. If a stockholder desires to tender shares pursuant to the tender offer and the stockholder’s share certificates are not immediately available or cannot be delivered to the depositary before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, or if time will not permit all required documents to reach the depositary before the expiration date, the shares may nevertheless be tendered, provided that all of the following conditions are satisfied:

(1) the tender is made by or through an eligible guarantor institution;

(2) the depositary receives by hand, mail, overnight courier or facsimile transmission, before the expiration date, a properly completed and duly executed notice of guaranteed delivery in the form we have provided with this Offer to Purchase, including (where required) a guarantee by an eligible guarantor institution in the form set forth in the notice of guaranteed delivery; and

(3) the certificates for all tendered shares, in proper form for transfer, or confirmation of book-entry transfer of such shares into the depositary’s account at the book-entry transfer facility, together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, including any required signature guarantees, or an agent’s message in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal, are received by the depositary within three AMEX trading days after the date of receipt by the depositary of the notice of guaranteed delivery.

Return of Unpurchased Shares. If any tendered shares are not purchased under the tender offer or are properly withdrawn before the expiration date, or if less than all shares evidenced by a stockholder’s certificates are tendered, certificates for unpurchased shares will be returned promptly after the expiration or termination of the tender offer or the proper withdrawal of the shares, as applicable, or, in the case of shares tendered by book-entry transfer at the book-entry transfer facility, the shares will be credited to the appropriate account maintained by the tendering stockholder at the book-entry transfer facility, in each case without expense to the stockholder.

Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the number of shares to be accepted, the purchase price to be paid for shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of shares will be determined by Blair, in our sole discretion, and our determination will be final and binding on all parties. We reserve the absolute right to reject any or all tenders of any shares that we determine are not in proper form or the acceptance for payment of, or payment for which, Blair determines may be unlawful. We also reserve the absolute right to waive any of the conditions of the tender offer or any defect or irregularity in any tender with

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respect to any particular shares or any particular stockholder, and our interpretation of the terms of the tender offer will be final and binding on all parties. No tender of shares will be deemed to have been properly made until all defects or irregularities have been cured by the tendering stockholder or waived by us. We will not, and none of the depositary, the information agent, the dealer manager or any other person will be under any duty to give notice of any defects or irregularities in any tender or incur any liability for failure to give any such notice.

Tendering Stockholder’s Representation and Warranty; Acceptance by Blair Constitutes an Agreement. A tender of shares under any of the procedures described above will constitute the tendering stockholder’s acceptance of the terms and conditions of the tender offer, as well as the tendering stockholder’s representation and warranty to us that:

• the stockholder has a “net long position,” within the meaning of Rule 14e-4 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, in the shares or equivalent securities at least equal to the shares being tendered; and

• the tender of shares complies with Rule 14e-4.

It is a violation of Rule 14e-4 for a person, directly or indirectly, to tender shares for that person’s own account unless, at the time of tender and at the end of the proration period or period during which shares are accepted by random lot (including any extensions thereof), the person so tendering (1) has a net long position equal to or greater than the amount of (a) shares tendered or (b) other securities convertible into, or exchangeable or exercisable for, the shares tendered will acquire the shares for tender by conversion, exchange or exercise and (2) will deliver or cause to be delivered the shares in accordance with the terms of the tender offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. Our acceptance for payment of shares tendered pursuant to the tender offer will constitute a binding agreement between the tendering stockholder and us upon the terms and conditions of the tender offer.

Lost or Destroyed Certificates. Stockholders whose certificates for part or all of their shares have been lost, stolen, misplaced or destroyed may contact National City Bank, the transfer agent for our common stock, at 1-800-622-6757, for instructions as to obtaining a replacement certificate. That replacement certificate will then be required to be submitted together with the Letter of Transmittal in order to receive payment for shares that are tendered and accepted for payment. A bond may be required to be posted by the stockholder to secure against the risk that the lost, stolen, misplaced or destroyed certificates may be subsequently recirculated. Stockholders are urged to contact the transfer agent immediately in order to permit timely processing of this documentation and to determine if the posting of a bond is required.

Certificates for shares, together with a properly completed and duly executed Letter of Transmittal or facsimile thereof, or an agent’s message in the case of shares tendered by book-entry transfer, and any other documents required by the Letter of Transmittal, must be delivered to the depositary and not to us, the dealer manager or the information agent. Any documents delivered to us, the dealer manager or the information agent will not be forwarded to the depositary and therefore will not be deemed to be properly tendered.

Special Procedures for Holders of Option Shares. Option Shares may not be tendered by a Letter of Transmittal. Proper tender may only be made by following the separate instructions and procedures applicable for Option Shares. Please note that the deadlines for submitting instructions regarding the tender of Option Shares is earlier than the Expiration Date. The deadline for submitting instructions regarding the conditional exercise of options and the tender of such underlying Option Shares is five business days prior to the Expiration Date.

Optionees with vested (but unexercised) options to purchase shares with an exercise price of less than $42.00 per share may conditionally exercise some or all of such options as part of the offer by instructing Blair to tender all of the Option Shares resulting from the exercise. This exercise of options is “conditional” because the optionee is deemed to exercise the option (and pay the exercise price) only if and to the extent that Blair actually purchases the Option Shares in the offer. If the Company does not purchase an Option Share, the option for the Option

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Share will not be deemed exercised and will remain outstanding. The Company will, as an accommodation to the optionees planning to tender Option Shares in the offer, permit a “cashless” exercise of such options. In this event the Company will determine the number of shares needed by the optionee to pay the exercise price of the option and any applicable tax withholding due upon exercise of the option based on the closing price of the Company’s common stock on AMEX on the Expiration Date. The Company will deduct that number of shares from the total number of shares subject to the option being exercised and will tender the remaining net Option Shares for the optionee. Accordingly, the optionee will receive $42.00 only for each net Option Share actually purchased and not for each share subject to the option exercised. Optionees who wish to conditionally exercise their options and tender the resulting shares may not use the Letter of Transmittal. Rather, such optionees must follow the procedures set forth in the Employee FAQ and the Notice of Instructions (Options). Optionees are urged to read the Employee FAQ and the Notice of Instructions (Options) carefully.

Optionees eligible to conditionally exercise their options may direct on the Notice of Instructions (Options) the order in which an optionee wishes to have his or her options exercised. If an optionee does not direct the order in which he or she wishes to have the options exercised, then options will be exercised in order of exercise price, beginning with options having the lowest exercise price.

Optionees may also exercise vested but unexercised options (regardless of exercise price) in accordance with the terms of the applicable stock option plans and tender the shares received upon exercise in accordance with the instructions and procedures described in this Section 3 with respect to shares generally.

4.    Withdrawal Rights.

Except as otherwise provided in this Section 4, tenders of shares pursuant to the tender offer are irrevocable. Shares tendered pursuant to the tender offer may be withdrawn at any time before the expiration date and, unless already accepted for payment by us pursuant to the tender offer, may also be withdrawn at any time after 12:00 midnight, Eastern Time, on Wednesday, September 14, 2005.

For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the depositary at its address set forth on the back cover page of this Offer to Purchase. Any notice of withdrawal must specify the name of the tendering stockholder, the number of shares to be withdrawn and the name of the registered holder of the shares. If the certificates for shares to be withdrawn have been delivered or otherwise identified to the depositary, then, before the release of the certificates, the tendering stockholder must also submit the serial numbers shown on the particular certificates to the depositary and the signature(s) on the notice of withdrawal must be guaranteed by an eligible guarantor institution, unless such shares have been tendered for the account of an eligible guarantor institution.

If shares have been tendered pursuant to the procedure for book-entry transfer set forth in Section 3, any notice of withdrawal also must specify the name and the number of the account at the book-entry transfer facility to be credited with the withdrawn shares and must otherwise comply with such book-entry transfer facility’s procedures. All questions as to the form and validity (including the time of receipt) of any notice of withdrawal will be determined by us, in our sole discretion, which determination will be final and binding on all parties. Neither we nor any of the depositary, the information agent, the dealer manager or any other person will be under any duty to give notice of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notice.

Withdrawals may not be rescinded and any shares properly withdrawn will be deemed not properly tendered for purposes of the tender offer unless the withdrawn shares are properly re-tendered before the expiration date by again following one of the procedures described in Section 3.

If we extend the tender offer, are delayed in our purchase of shares, or are unable to purchase shares in the tender offer for any reason, then, without prejudice to our rights under the tender offer, the depositary may, subject to applicable law, retain tendered shares on our behalf, and the shares may not be withdrawn except to the extent

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tendering stockholders are entitled to withdrawal rights as described in this Section 4. Our reservation of the right to delay payment for shares that we have accepted for payment is limited by Rule 13e-4(f)(5) under the Securities and Exchange Act of 1934, which requires that we must pay the consideration offered or return the shares tendered promptly after termination or withdrawal of a tender offer.

5.    Purchase of Shares and Payment of Purchase Price.

Upon the terms and subject to the conditions of the tender offer, promptly following the expiration date, we will accept for payment and pay for, and thereby purchase, shares properly tendered and not properly withdrawn before the expiration date. For purposes of the tender offer, we will be deemed to have accepted for payment, and therefore purchased, shares that are properly tendered and not properly withdrawn, subject to the proration and conditional tender provisions of the tender offer, only when, and if we give oral or written notice to the depositary of our acceptance of the shares for payment pursuant to the tender offer.

Upon the terms and subject to the conditions of the tender offer, promptly after the expiration date, we will accept for payment and pay the per share purchase price of $42.00 for up to 4,400,000 shares, subject to increase or decrease as provided in Section 14, if properly tendered and not properly withdrawn, or such lesser number of shares as are properly tendered and not properly withdrawn. In all cases, payment for shares tendered and accepted for payment in the tender offer will be made promptly, subject to possible delay in the event of proration or conditional tender, but only after timely receipt by the depositary of certificates for shares, or of a timely book-entry confirmation of shares into the depositary’s account at the book-entry transfer facility, and a properly completed and duly executed Letter of Transmittal, or manually signed facsimile of the Letter of Transmittal, or an agent’s message in the case of a book-entry transfer, and any other required documents.

We will pay for shares purchased in the tender offer by depositing the aggregate purchase price for the shares with the depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from us and transmitting payment to the tendering stockholders.

In the event of proration, we will determine the proration factor and pay for those tendered shares accepted for payment promptly after the expiration date. However, we do not expect to be able to announce the final results of any proration and commence payment for shares purchased until approximately five to seven business days after the expiration date. Certificates for all shares tendered and not purchased, including shares not purchased due to proration or conditional tenders, will be returned to the tendering stockholder, or, in the case of shares tendered by book-entry transfer, will be credited to the account maintained with the book-entry transfer facility by the participant who delivered the shares, at our expense promptly after the expiration date or termination of the tender offer without expense to the tendering stockholders. Under no circumstances will we pay interest on the purchase price, including, but not limited to, by reason of any delay in making payment. In addition, if certain events occur, we may not be obligated to purchase shares in the tender offer. See Section 7.

We will pay all stock transfer taxes, if any, payable on the transfer to us of shares purchased in the tender offer. If, however, payment of the purchase price is to be made to any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person will be deducted from the purchase price unless satisfactory evidence of the payment of the stock transfer taxes, or exemption therefrom, is submitted. See Instruction 7 of the Letter of Transmittal.

Any tendering stockholder or other payee who fails to complete fully, sign and return to the depositary the Substitute Form W-9 included with the Letter of Transmittal may be subject to United States federal backup withholding tax on the gross proceeds paid to the stockholder or other payee in the tender offer. See Section 3. Also see Section 13 regarding United States federal income tax consequences for foreign stockholders.

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6.    Conditional Tender of Shares.

Under certain circumstances, we may prorate the number of shares purchased in the tender offer. As discussed in Section 13, the number of shares to be purchased from a particular stockholder may affect the tax treatment of the purchase to the stockholder and the stockholder’s decision whether to tender. The conditional tender alternative is made available so that a stockholder may (1) know with certainty the number of the stockholder’s shares, if any, which will be purchased pursuant to the tender offer (provided such shares are properly tendered and the conditions of such stockholder’s tender are satisfied) or (2) seek to structure the purchase of shares from the stockholder in the offer in such a manner that it will be treated as a sale of such shares by the stockholder, rather than the payment, in whole or in part, of a dividend to the stockholder, for United States federal income tax purposes. Accordingly, a stockholder may tender shares subject to the condition that a specified minimum number of the stockholder’s shares tendered must be purchased if any shares tendered by such stockholder are purchased. Any stockholder desiring to make a conditional tender must so indicate in the box captioned “Conditional Tender” in the Letter of Transmittal or, if applicable, the Notice of Guaranteed Delivery. Each stockholder is urged to consult with his or her own tax advisor.

In order to make a conditional tender, the box captioned “Conditional Tender” in the Letter of Transmittal or, if applicable, the Notice of Guaranteed Delivery must be checked. In this box in the Letter of Transmittal or the Notice of Guaranteed Delivery, the minimum number of shares being tendered that must be purchased if any are to be purchased must be calculated and appropriately indicated. After the tender offer expires, if more than 4,400,000 shares are properly tendered and not properly withdrawn and we must prorate our acceptance of and payment for tendered shares, we will calculate a preliminary proration percentage based upon all shares properly tendered, conditionally or unconditionally. If the effect of this preliminary proration would be to reduce the number of shares to be purchased from any stockholder below the minimum number specified by that stockholder, the conditional tender will automatically be regarded as withdrawn, unless chosen by random lot for reinstatement as discussed in the next paragraph.

After giving effect to these withdrawals, we will accept the remaining shares properly tendered, conditionally or unconditionally, on a pro rata basis, if necessary. If we are able to purchase all of the remaining tendered shares and the total number that we would purchase would be below 4,400,000 then, to the extent feasible, we will select enough of the conditional tenders that would otherwise have been deemed withdrawn to permit us to purchase 4,400,000 shares. In selecting these conditional tenders, we will select by random lot and will select only from stockholders who tendered all of their shares. Upon selection by random lot, if any, we will limit our purchase in each case to the designated minimum number of shares to be purchased.

7.    Conditions of the Tender Offer.

Notwithstanding any other provision of the tender offer, we will not be required to accept for payment, purchase or pay for any shares tendered, and may terminate or amend the tender offer or may postpone the acceptance for payment of, or the purchase of and the payment for shares tendered, subject to Rule 13e-4(f) under the Securities Exchange Act of 1934, if at any time on or after July 20, 2005 and before the expiration date any of the following events shall have occurred (or shall have been determined by us to have occurred) that, in our sole reasonable judgment and regardless of the circumstances giving rise to the event or events (including any action or omission to act by us), makes it inadvisable to proceed with the tender offer or with acceptance for payment:

• there has been threatened, instituted or pending before any court, authority, agency or other tribunal any action, suit or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or by any other person, domestic, foreign or supranational, or any judgment, order or injunction entered, enforced or deemed applicable by any court, authority, agency or tribunal, which, directly or indirectly:

(1) challenges or seeks to make illegal, or to delay or otherwise directly or indirectly to restrain, prohibit or otherwise affect the making of the tender offer, the acquisition of some or all of the shares pursuant to the tender offer or otherwise relates in any manner to the tender offer; or

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(2) in our reasonable judgment, could materially and adversely affect our, or our subsidiaries’, business, condition (financial or otherwise), income, operations or prospects, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of us and our subsidiaries, taken as a whole, or materially impair the contemplated benefits of the tender offer to us;

• there has been any action threatened, instituted, pending or taken, including any settlement, or any approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, invoked, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the tender offer or us or any of our subsidiaries, including any settlement, by any court, government or governmental, regulatory or administrative authority, agency or tribunal, domestic, foreign or supranational, that, in our reasonable judgment, could directly or indirectly:

(1) make the acceptance for payment of, or payment for, some or all of the shares illegal or otherwise restrict or prohibit consummation of the tender offer;

(2) delay or restrict our ability, or render us unable, to accept for payment or pay for some or all of the shares;

(3) materially impair the contemplated benefits of the tender offer to us; or

(4) materially and adversely affect our and our subsidiaries’ business, condition (financial or otherwise), income, operations or prospects, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of us and our subsidiaries, taken as a whole;

• there has occurred any of the following:

(1) any general suspension of trading in, or limitation on prices for, securities on any United States national securities exchange or in the over-the-counter market;

(2) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred;

(3) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, whether or not mandatory;

(4) the declaration of a national emergency; the commencement or escalation of a war or armed hostilities; or other international or national act of terrorism or calamity directly or indirectly affecting the United States;

(5) any limitation, whether or not mandatory, by any governmental, regulatory or administrative agency or authority on, or any event that, in our reasonable judgment, could materially affect, the extension of credit by banks or other lending institutions in the United States;

(6) as measured from the close of business on Tuesday, July 19, 2005, a 15% or greater decrease in the market price of our common stock, or a 15% or greater decrease in the American Stock Exchange, the New York Stock Exchange, the Nasdaq Composite Index, the Dow Jones Industrial Average, the S&P 500 Composite Index or the market prices of equity securities generally in the United States;

(7) any changes in the general political, market, economic or financial conditions in the United States or abroad that could have, in our reasonable judgment, a material adverse effect on our and our subsidiaries’ business, condition (financial or otherwise), income, operations or prospects, taken as a whole, or on the trading in the shares of our common stock or on the benefits of the offer to us;

(8) any change in the general political, market, economic or financial conditions in the United States or abroad that could have, in our reasonable judgment, a material adverse effect on our business, operations or prospects or the trading in the shares; or

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(9) in the case of any of the foregoing existing at the time of the commencement of the offer, a material acceleration or worsening thereof.

• a tender or exchange offer for any or all of our outstanding shares (other than this self-tender offer), or any merger, acquisition proposal, business combination or other similar transaction with or involving us or any subsidiary, has been proposed, announced or made by any person or has been publicly disclosed;

• we learn that:

(1) any entity, “group” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) or person has acquired or proposes to acquire beneficial ownership of more than 5% of our outstanding shares, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise (other than as and to the extent disclosed in a Schedule 13D filed with the Securities and Exchange Commission on or before July 19, 2005); or

(2) any entity, group or person who has filed a Schedule 13D with the Securities and Exchange Commission on or before July 19, 2005 has acquired or proposes to acquire, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise, beneficial ownership of an additional 2% or more of our outstanding shares;

• any person, entity or group has filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an intent to acquire us or any of our shares of common stock, or has made a public announcement reflecting an intent to acquire us or any of our subsidiaries or any of our respective assets or securities (other than any filings or announcements made in connection with the previously announced Alliance Data Systems transaction);

• we determine that there is a reasonable likelihood that the completion of the Offer and the purchase of the shares may otherwise cause the shares to be delisted from AMEX or would result in there being less than 300 stockholders of record of the shares of our common stock;

• any change or event is discovered or is threatened in our, or our subsidiaries’, business, condition (financial or otherwise), assets, income, operations or prospects, taken as a whole, or in the ownership of our shares that, in our reasonable judgment, is or may be material to us and our subsidiaries.

The conditions referred to above are for our sole benefit and may be asserted by us regardless of the circumstances (including any action or omission to act by us) giving rise to any condition, and may be waived by us with respect to all stockholders, in whole or in part, at any time and from time to time in our sole discretion prior to the expiration date. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of any right, and each such right will be deemed an ongoing right that may be asserted at any time and from time to time prior to the expiration of the offer. In certain circumstances, if we waive any of the conditions described above, we may be required to extend the expiration date. Any determination by us concerning the events described above will be final and binding on all parties.

8.    Price Range of Shares; Dividends.

Our common stock is traded on AMEX under the trading symbol “BL.” The following table sets forth, for the fiscal quarters indicated, the high and low closing sale prices of our common stock on AMEX.

	High		Low
Fiscal 2003:
First Quarter	$	24.80	$	21.72
Second Quarter		24.73		20.60
Third Quarter		23.00		20.22
Fourth Quarter		25.70		21.15

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	High		Low
Fiscal 2004:
First Quarter	$	26.94	$	23.75
Second Quarter		29.35		25.25
Third Quarter		29.50		25.31
Fourth Quarter		36.70		28.00
Fiscal 2005:
First Quarter	$	38.89	$	32.80
Second Quarter (through May 25, 2005)		36.35		29.86

On May 25, 2005, the last trading day before the date of announcement of the tender offer, the last reported sale price of the shares on AMEX was $35.98 per share. We urge stockholders to obtain current market quotations for the shares.

On July 19, 2005, the Board of Directors of Blair declared its regular quarterly dividend of $0.15 per share, payable on September 15, 2005 to stockholders of record on August 19, 2005. Therefore, assuming the tender offer expires as contemplated on August 16, 2005, tendering stockholders will not be eligible for payment of the dividend on shares tendered and accepted for purchase by Blair. In addition, the Board of Directors announced its intention to increase the per share amount of quarterly regular dividends to $0.30 per share subsequent to the successful completion of the tender offer and the close of the sale of Blair’s receivables portfolio to a wholly owned subsidiary of Alliance Data Systems, which is currently scheduled for the fourth quarter of 2005. Therefore, stockholders who decide not to participate in the tender offer will likely receive a larger per share dividend in the future. However, future determinations as to the payment of dividends will depend upon our capital requirements, limitations imposed by our credit agreements, if any, the availability of funds to make such payments and such other factors as our Board of Directors may consider.

9.    Source and Amount of Funds.

Assuming we purchase 4,400,000 shares in the tender offer at $42.00 per share, the aggregate purchase price will be approximately $185 million. We expect that the fees and expenses we incur related to the tender offer will be approximately $4 million. We expect to fund our purchase of shares tendered in the tender offer and related fees and expenses with at least $40 million of our cash on hand with the remainder, approximately $149 million, by way of borrowings on our credit facilities.

Financing for the tender offer is being provided pursuant to an Amended and Restated Credit Agreement, an amendment to the Receivables Purchase Agreement and certain other ancillary agreements called for in the Credit Agreement.

The Amendment Agreement, dated as of July 15, 2005, which amends the Receivables Purchase Agreement is by, between and amongst Blair Factoring Company and Blair Credit Services Corporation, each a wholly owned subsidiary of Blair, and PNC Bank, N.A. as administrator for certain Conduit Purchasers. The receivables purchase facility has a purchase limit of $100 million, a commitment fee rate of 0.50% and a program fee rate of 1.0%, which shall convert to a 2.0% fee on the earlier of March 31, 2006 or the date upon which the Purchase Agreement with World Financial Capital Bank is terminated. Blair’s receivables have been pledged as collateral for the receivables purchase facility.

The Amended and Restated Credit Agreement dated as of July 15, 2005 is by, between and amongst Blair, and PNC Capital Markets, Inc. as lead arranger and PNC Bank, N.A. and three other lending institutions. The Credit Agreement is guaranteed by Blair Holdings, Inc., Blair Payroll LLC, Blair Credit Services Corporation and Blair International Holdings, Inc., each a wholly owned subsidiary of Blair. The Credit Agreement provides for $100 million in first and second lien credit facilities consisting of a senior secured first lien revolving credit facility not to exceed $75 million, which matures in five years, and a $25 million senior secured second lien term loan that

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matures on the earlier of (x) the date of the close of the sale of Blair’s receivables and credit receivables pursuant to the Purchase Agreement with World Financial Capital Bank; or (y) in quarterly payments commencing on July 1, 2006 and terminating on July 1, 2010.

The collateral for the revolving credit facility consists of all of Blair’s and its subsidiaries assets (except the credit receivables securing the Receivables Purchase Agreement), including, but not limited to, inventory, equipment, furniture, general intangibles, intellectual property, fixtures, real property and improvements, the common stock of Blair’s domestic subsidiaries (excluding JLB Service Bank), as well as a negative and double negative pledge on the assets of our direct and indirect foreign subsidiaries. The collateral for the term loan consists of a lien subordinate to the revolving credit facility on all the aforementioned assets. At Blair’s option, any loan under the revolving credit facility or term loan shall bear interest at the Euro-Rate (calculated with reference to a LIBOR-based formula in accordance with the Credit Agreement) or a Base Rate (as that term is defined in the Credit Agreement) plus a margin in accordance with a performance based pricing grid in the case of the revolving credit facility and a locked fixed spread in the case of the term loan. Blair is also required to pay a commitment fee, a letter of credit fee and reasonable out-of-pocket expenses pursuant to the Credit Agreement.

As of April 26, 2005 Blair entered into a Purchase Agreement to sell its credit portfolio to World Financial Capital Bank, a wholly owned subsidiary of Alliance Data Systems. The sale of the credit portfolio is expected to close prior to the end of the fourth quarter of fiscal 2005, subject to regulatory review and approval and customary closing conditions. Blair anticipates receiving proceeds from the sale of its credit portfolio of approximately $180 million. Proceeds from the sale are to be used first to repay and terminate Blair’s outstanding receivables purchase facility, second to pay any amounts outstanding and extinguish the commitment under the term loan and any remaining proceeds will be used to reduce the amount, if any, outstanding under the revolving credit facility.

10.    Certain Information Concerning Blair.

General. Blair Corporation was founded in 1910 by John L. Blair, Sr., and was incorporated in 1924 under the laws of the State of Delaware. Blair’s business consists of the sale of fashion apparel for men and women, plus a wide range of home products. Although our revenues are generated primarily through direct mail merchandising, we have transitioned into a multi-channel direct marketer, as an increasing amount of total sales revenue, approximately 16% in 2004, is being generated through its e-commerce Web sites, which were launched in 2000. Blair operates three retail stores, two in Pennsylvania and one in Delaware. We employ approximately 2,000 people. None of our employees are subject to collective bargaining agreements.

Our principal executive offices are located at 220 Hickory Street, Warren, Pennsylvania 16366. Our telephone number at that address is (814) 723-3600.

Recent Developments. On July 20, 2005, we announced our preliminary and unaudited financial results for the three and six month periods ended June 30, 2005.

Net sales for the second quarter ended June 30, 2005 were $120.8 million compared to $127.0 million reported for the second quarter ended June 30, 2004. Net income for the second quarter ended June 30, 2005 was $6.1 million, or $0.74 per basic and $0.73 per diluted share, compared to $5.0 million, or $0.62 per basic and $0.61 per diluted share, reported for the second quarter last year.

Net sales for the six months ended June 30, 2005 were $228.4 million, compared to $255.6 million reported for the first six months ended June 30, 2004. Net income for the six months ended June 30, 2005 was $6.7 million, or $0.82 per basic and $0.81 per diluted share, compared to $5.6 million, or $0.69 per basic and diluted share, reported for the six months last year.

A copy of the press release announcing our preliminary and unaudited financial results was filed as an exhibit to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 20, 2005. Stockholders are urged to read the press release in its entirety.

27

The forward-looking information included in this Offer to Purchase is not to be regarded as fact and should not be relied upon as an accurate representation of future results. In addition, because the estimates and assumptions underlying the forward-looking information included in this Offer to Purchase are based upon events and circumstances that have not taken place and are inherently subject to significant financial, market, economic and competitive uncertainties and contingencies which are difficult or impossible to predict accurately and are beyond Blair’s control, that information is inherently imprecise and there can be no assurance that these expected results can be realized. Therefore, it is expected that there will be differences between the actual and projected results and that the actual results may be materially higher or lower than those now expected. Neither Blair nor any other party assumes any responsibility for the accuracy of such information. The inclusion of the forward-looking information set forth above should not be regarded as a representation by us or any of our affiliates or representatives that the projected results will be achieved. This forward-looking information was not prepared with a view towards public disclosure or complying with published guidelines of the Securities and Exchange Commission or guidelines established by the American Institute of Certified Public Accountants. None of Blair, its affiliates or representatives nor their financial advisors, their independent auditors or any of their respective directors or officers assume any responsibility for the accuracy of this forward-looking information included in this Offer to Purchase. This forward-looking information has not been examined, reviewed or compiled by our independent auditors, and accordingly they have not expressed an opinion or any other assurance on that information. Blair disclaims any current intention or obligation to update any forward-looking information related to its future performance, results of operations, anticipated fee revenue, pro forma cash earnings, or earnings per share calculated in accordance with generally accepted accounting principles.

Summary Unaudited Pro Forma Financial Data. The following summary unaudited pro forma balance sheet as of March 31, 2005 and unaudited pro forma income statement for the three months ended March 31, 2005 and year ended December 31, 2004 have been presented to give effect to the purchase for cash of 4,400,000 shares at a purchase price of $42.00 per share and the payment of estimated fees and expenses pursuant to the tender offer, based on the assumptions described in the footnotes below. We have also added additional pro forma information, which further gives effect to the closing of the sale of our consumer receivables portfolio to a wholly owned subsidiary of Alliance Data Systems. The unaudited pro forma balance sheet has been prepared as if the tender offer had been completed on March 31, 2005. The unaudited pro forma income statement has been prepared as if the tender offer had been completed as of January 1, 2005 for the three months ended March 31, 2005 and as of January 1, 2004 for the year ended December 31, 2004. This summary unaudited pro forma information does not purport to be indicative of the results that would have been obtained or results that may be obtained in the future, or the financial condition that would have resulted if the purchase of the shares pursuant to the tender offer had been completed at the dates indicated.

The unaudited pro forma balance sheet and income statements should be read in conjunction with our historical financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, our Quarterly Report on Form 10-Q for the three months ended March 31, 2005 and our Current Report on Form 8-K filed on July 20, 2005, all of which have been filed with the Securities and Exchange Commission and are incorporated by reference in this Offer to Purchase.

28

Pro Forma Consolidated Balance Sheets

Blair Corporation and Subsidiaries

March 31, 2005

	3/31/05 As Originally Disclosed			Tender Offer Adjustments				As Adjusted for the Tender Offer			Sale of Portfolio Adjustments				As Adjusted for the Tender Offer and Portfolio Sale
Assets
Current Assets:
Cash and cash equivalents	$	65,720,862		$	(51,578,844	)	(1)	$	14,142,018		$	13,722,803		(7)	$	27,864,821
Customer accounts receivable, less allowances for doubtful accounts and returns of $33,521,058		169,432,190 (33,521,058	)		—   —				169,432,190 (33,521,058	)		(166,400,697 35,343,558	)	(8) (8)		3,031,493 1,822,500
Inventories:
Merchandise		67,108,020			—				67,108,020			—				67,108,020
Advertising and shipping supplies		13,747,645			—				13,747,645			—				13,747,645
		80,855,665			—				80,855,665			—				80,855,665
Deferred income taxes		10,029,000			—				10,029,000			(10,565,667	)	(8)		(536,667	)
Prepaid and refundable federal and state taxes		619,875			—				619,875			—				619,875
Prepaid expenses		2,740,359			—				2,740,359			—				2,740,359
Total current assets		295,876,893			(51,578,844	)			244,298,049			(127,900,003	)			116,398,046
Property, plant and equipment:
Land		1,142,144			—				1,142,144			—				1,142,144
Buildings and leasehold improvements		66,814,184			—				66,814,184			—				66,814,184
Equipment		73,154,033			—				73,154,033			—				73,154,033
Construction on progress		2,406,696			—				2,406,696			—				2,406,696
		143,517,057			—				143,517,057			—				143,517,057
Less allowances for depreciation		94,908,316			—				94,908,316			—				94,908,316
		48,608,741			—				48,608,741			—				48,608,741
Trademark		397,860			—				397,860			—				397,860
Other long-term assets		408,570			1,165,936		(2)		1,574,506			1,462,500		(9)		3,037,006
Total Assets	$	345,292,064		$	(50,412,908	)		$	294,879,156		$	(126,437,503	)		$	168,441,653

29

Pro Forma Consolidated Balance Sheets—(Continued)

Blair Corporation and Subsidiaries

March 31, 2005

	3/31/05 As Originally Disclosed			Tender Offer Adjustments				As Adjusted for the Tender Offer			Sale of Portfolio Adjustments				As Adjusted for the Tender Offer and Portfolio Sale
Liabilities and Stockholders' Equity
Current Liabilities:
Notes Payable	$	15,000,000		$	140,500,000		(3)	$	155,500,000		$	(155,500,000	)	(10)	$	—
Trade accounts payable		28,077,347			—				28,077,347			—				28,077,347
Advance payments from customers		3,157,599			—				3,157,599			—				3,157,599
Allowance for returns		—			—				—			5,329,667		(11)		5,329,667
Accrued expenses		13,721,032			—				13,721,032			—				13,721,032
Accrued federal and state taxes		—			(421,444	)	(4)		(421,444	)		3,779,685		(12)		3,358,241
Current portion of capital lease obligations		43,874			—				43,874			—				43,874
Total current liabilities		59,999,852			140,078,556				200,078,408			(146,390,648	)			53,687,760
Capital lease obligations, less current portion		9,752			—				9,752			—				9,752
Deferred income taxes		2,330,000			—				2,330,000			—				2,330,000
Other long term liability		389,522			—				389,522			—				389,522
Stockholders' equity:
Common stock without par value:
Authorized 12,000,000 shares issued 10,075,440 shares (including shares held in treasury)—stated value		419,810			—				419,810			—				419,810
Additional paid-in capital		13,178,632			—				13,178,632			—				13,178,632
Retained earnings		305,999,614			(1,741,464	)	(5)		304,258,150			19,953,145		(5)		324,211,295
Accumulated other comprehensive loss		(121,864	)		—				(121,864	)		—				(121,864	)
		319,476,192			(1,741,464	)			317,734,728			19,953,145				337,687,873
Less 1,833,264 shares of common stock in treasury—at cost		35,577,088			188,750,000		(6)		224,327,088			—				224,327,088
Less receivable and deferred compensation from stock plans		1,336,166			—				1,336,166			—				1,336,166
Total stockholders' equity		282,562,938			(190,491,464	)			92,071,474			19,953,145				112,024,619
Total liabilities and stockholders' equity	$	345,292,064		$	(50,412,908	)		$	294,879,156		$	(126,437,503	)		$	168,441,653

⁽¹⁾ Net adjustment to record increase of tender offer debt of $140,500,000, payment of interest expense associated with the tender offer debt of $1,053,844, loan origination fees incurred to execute the tender offer of $2,275,000, the payment of cash for the repurchase of shares of $184,800,000 and professional fees incurred to execute the tender offer of $3,950,000.

⁽²⁾ Adjustment to reflect the capitalization of professional fees, net of accumulated amortization, to execute the tender offer financing.

⁽³⁾ Adjustment to record increase of debt incurred to execute the tender offer.

⁽⁴⁾ Adjustment to reflect the tax effect of professional fees amortized to execute the tender offer financing.

⁽⁵⁾ Net adjustment to net income reflected on the Pro Forma Consolidated Income Statement for the quarter ended March 31, 2005.

⁽⁶⁾ Adjustment to record change in stockholders’ equity associated with the tender offer.

⁽⁷⁾ Net adjustment to reflect repayment of debt incurred to execute the tender offer and satisfy the securitization of $155,500,000, and the following adjustments related to the portfolio sale: record gross proceeds of $176,384,739; record payment of severance costs of $542,500, payment of capitalized conversion costs of $1,500,000, eliminate variable general and administrative expenses of $1,734,994, record merchant premium revenue of $252,298, eliminate finance charge revenues of $6,011,962 and record professional fees incurred to execute the conversion of receivable portfolio of $1,094,766.

⁽⁸⁾ Adjustment to eliminate the customer accounts receivable of $166,400,697; net adjustment to eliminate the allowance for doubtful accounts of $30,013,891, reclassify the allowance for returns to current liabilities of $5,329,667; and adjustment to deferred income taxes related to the sale of the receivable portfolio of $10,565,667.

⁽⁹⁾ Adjustment to reflect the capitalization of portfolio conversion costs, net of accumulated amortization.

⁽¹⁰⁾ Adjustment to reflect the repayment of debt incurred to execute the tender offer and satisfy the securization.

⁽¹¹⁾ Adjustment to reclassify the allowance for returns to current liabilities

⁽¹²⁾ Net adjustment to record the currently payable taxes on the following: the gain attributable to the receivable portfolio sale of $3,793,935 and the amortization of portfolio conversion capitalized costs of $14,250.

30

Pro Forma Consolidated Statement of Income

Blair Corporation and Subsidiaries

For the year ended December 31, 2004

	Year Ended 12/31/2004 As Originally Disclosed			Tender Offer Adjustments				As Adjusted for the Tender Offer		Sale of Portfolio Adjustments				As Adjusted for the Tender Offer and Portfolio Sale
Net sales	$	496,120,207		$	—			$	496,120,207	$	—			$	496,120,207
Other revenue		44,714,912			—				44,714,912		(35,959,277	)	(4)		8,755,635
		540,835,119			—				540,835,119		(35,959,277	)			504,875,842
Cost and expenses:
Cost of goods sold		234,972,079			—				234,972,079		—				234,972,079
Advertising		128,324,650			—				128,324,650		—				128,324,650
General and administrative		131,408,753			1,592,500		(1)(2)		133,001,253		(9,995,259	)	(5)		123,005,994
Provision for doubtful accounts		22,664,048			—				22,664,048		(20,518,003	)	(6)		2,146,045
Interest (income) expense, net		(122,757	)		6,799,000		(3)		6,676,243		(6,799,000	)	(7)		(122,757	)
Gain on sale of receivables portfolio		—			—				—		(40,389,358	)	(8)		(40,389,358	)
Other expense, net		221,699			—				221,699		—				221,699
		517,468,472			8,391,500				525,859,972		(77,701,620	)			448,158,352
Income before income taxes		23,366,647			(8,391,500	)			14,975,147		41,742,343				56,717,490
Income taxes (38% effective rate)		8,498,000			(3,188,770	)			5,309,230		15,862,090				21,171,320
Net income	$	14,868,647		$	(5,202,730	)		$	9,665,917	$	25,880,252			$	35,546,170
Basic earnings per share based on weighted average shares outstanding	$	1.83						$	2.61					$	9.59
Basic weighted average shares outstanding		8,107,575							3,707,575						3,707,575
Diluted earnings per share based on weighted average shares outstanding and assumed conversions	$	1.80						$	2.52					$	9.25
Diluted weighted average shares outstanding		8,241,515							3,841,515						3,841,515

⁽¹⁾ Adjustment to reflect amortization of professional fees incurred to execute the tender offer financing.

⁽²⁾ As a result of the Company’s decision to repurchase stock acquired by an employee under its stock option award program, it will incur compensation expense. The amount of expense is not presently determinable. It will be based on the number of shares tendered multiplied by the difference between the option exercise price and the $42 tender offer price. The option exercise price of shares eligible to be tendered ranges from $17.10 to $23.60. At December 31, 2004, the weighted average exercise price was $20.58. For additional information regarding stock options outstanding and related option prices, refer to Footnote 5, Stockholders’ Equity in the 2004 Blair Corporation Form 10-K.

⁽³⁾ Adjustment to record interest expense associated with the debt incurred to execute the tender offer.

⁽⁴⁾ Net adjustment to record merchant premium revenue of $2,039,706 and to eliminate finance charge revenue of $37,998,983 as a result of the accounts receivable portfolio sale.

⁽⁵⁾ Net adjustment to reflect severance costs associated with the sale of the receivables portfolio of $875,000, record amortization of portfolio conversion capitalized costs of $150,000, eliminate variable general and administrative expense related to the receivable portfolio sale of $11,193,510, record professional fees incurred to execute the portfolio conversion of $1,765,751 and eliminate professional fees amortized to execute the tender offer financing of $1,592,500.

⁽⁶⁾ Adjustment to eliminate the provision for doubtful accounts related to the receivable portfolio sale.

⁽⁷⁾ Adjustment to reverse interest expense associated with the tender offer debt.

⁽⁸⁾ Adjustment to record the gain on sale of accounts receivable portfolio.

31

Pro Forma Consolidated Statement of Income

Blair Corporation and Subsidiaries

For the quarter ended March 31, 2005

	Quarter Ended 3/31/2005 As Originally Disclosed			Tender Offer Adjustments				As Adjusted for the Tender Offer			Sale of Portfolio Adjustments				As Adjusted for the Tender Offer and Portfolio Sale
Net sales	$	107,557,919		$	—			$	107,557,919		$	—			$	107,557,919
Other revenue		10,715,572			—				10,715,572			(9,289,780	)	(4)		1,425,792
		118,273,491			—				118,273,491			(9,289,780	)			108,983,711
Cost and expenses:
Cost of goods sold		52,774,761			—				52,774,761			—				52,774,761
Advertising		29,458,705			—				29,458,705			—				29,458,705
General and administrative		31,859,818			1,109,064		(1)(2)		32,968,882			(1,229,191	)	(5)		31,739,691
Provision for doubtful accounts		3,492,632			—				3,492,632			(3,563,716	)	(6)		(71,084	)
Interest (income) expense, net		(125,229	)		1,699,749		(3)		1,574,520			(1,699,749	)	(7)		(125,229	)
Gain on sale of receivables portfolio		—			—				—			(37,788,429	)	(8)		(37,788,429	)
Other expense, net		(209,519	)		—				(209,519	)		—				(209,519	)
		117,251,168			2,808,813				120,059,981			(44,281,085	)			75,778,896
Income before income taxes		1,022,323			(2,808,813	)			(1,786,490	)		34,991,305				33,204,815
Income taxes (38% effective rate)		372,000			(1,067,349	)			(695,349	)		13,296,696				12,601,347
Net income	$	650,323		$	(1,741,464	)		$	(1,091,141	)	$	21,694,609			$	20,603,468
Basic earnings per share based on weighted average shares outstanding	$	0.08						$	(0.29	)					$	5.46
Basic weighted average shares outstanding		8,176,914							3,776,914							3,776,914
Diluted earnings per share based on weighted average shares outstanding and assumed conversions	$	0.08						$	(0.28	)					$	5.24
Diluted weighted average shares outstanding		8,310,410							3,933,656							3,933,656

⁽¹⁾ Adjustment to reflect amortization of professional fees incurred to execute the tender offer financing.

⁽²⁾ As a result of the Company’s decision to repurchase stock acquired by an employee under its stock option award program, it will incur compensation expense. The amount of expense is not presently determinable. It will be based on the number of shares tendered multiplied by the difference between the option exercise price and the $42 tender offer price. The option exercise price of shares eligible to be tendered ranges from $17.10 to $23.60. At December 31, 2004, the weighted average exercise price was $20.58. For additional information regarding stock options outstanding and related option prices, refer to Footnote 5, Stockholders’ Equity in the 2004 Blair Corporation Form 10-K.

⁽³⁾ Adjustment to record interest expense associated with the debt incurred to execute the tender offer.

⁽⁴⁾ Net adjustment to record merchant premium revenue of $406,933 and to eliminate finance charge revenue of $9,696,713 as a result of the accounts receivable portfolio sale.

⁽⁵⁾ Net adjustment to reflect severance costs associated with the sale of the receivables portfolio of $875,000, record amortization of portfolio conversion capitalized costs of $37,500, eliminate variable general and administrative expense related to the receivable portfolio sale of $2,798,378, record professional fees incurred to execute the portfolio conversion of $1,765,751 and eliminate professional fees amortized to execute the tender offer financing of $1,109,064.

⁽⁶⁾ Adjustment to eliminate the provision for doubtful accounts related to the receivable portfolio sale.

⁽⁷⁾ Adjustment to reverse interest expense associated with the tender offer debt.

⁽⁸⁾ Adjustment to record the gain on sale of accounts receivable portfolio.

32

Ratio of Earnings to Fixed Charges—Actual and Pro Forma

Blair Corporation and Subsidiaries

	Actual						Pro Forma
	12 Months 12/31/2003		12 Months 12/31/2004		3 Months 3/31/2005		12 Months 12/31/2004		3 Months 3/31/2005
Interest expense	$	351,120	$	370,474	$	131,322	$	6,830,668	$	1,701,798
Interest capitalized		—		—		—		—		—
Amortized premiums, discounts and capitalized expenses related to indebtedness		270,660		265,667		64,468		1,858,167		1,173,532
Estimate of the interest within rental expense		215,236		182,400		46,370		182,400		46,370
Preference security dividend requirements of consolidated subsidiaries		—		—		—		—		—
Fixed Charges	$	837,016	$	818,541	$	242,160	$	8,871,235	$	2,921,700
Pretax income from continuing operations	$	23,163,182	$	23,366,647	$	1,022,323	$	56,717,490	$	33,204,815
Fixed charges		837,016		818,541		242,160		8,871,235		2,921,700
Amortization of capitalized interest		—		—		—		—		—
Distributed income of equity investees		—		—		—		—		—
Share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges		—		—		—		—		—
	$	24,000,198	$	24,185,188	$	1,264,483	$	65,588,725	$	36,126,515
Capitalized interest		—		—		—		—		—
Preference security dividend requirements of consolidated subsidiaries		—		—		—		—		—
Minority interest in pre-tax income of subsidiaries that have not incurred fixed charges		—		—		—		—		—
		—		—		—		—		—
Earnings	$	24,000,198	$	24,185,188	$	1,264,483	$	65,588,725	$	36,126,515
Ratio of Earnings to Fixed Charges		28.67		29.55		5.22		7.39		12.36

33

Book Value Per Share—Actual and Pro Forma

Blair Corporation and Subsidiaries

	Actual as of 3/31/2005		Tender Offer Equity Impact		Tender Offer Loan ADS Conversion Earnings Impact		Pro Forma as of 3/31/2005
Total Stockholders' Equity	$	282,562,938	$	188,750,000	$	18,211,681	$	112,024,619
Shares Outstanding		8,242,176		4,400,000		—		3,842,176
Book Value Per Share	$	34.28					$	29.16

34

Additional Information. We are subject to the informational filing requirements of the Exchange Act, and, accordingly, are obligated to file reports, statements and other information with the SEC relating to our business, financial condition and other matters. Information, as of particular dates, concerning our directors and executive officers, their remuneration, options granted to them, the principal holders of our securities and any material interest of these persons in transactions with us is required to be disclosed in proxy statements distributed to our stockholders and filed with the SEC. We have also filed an Issuer Tender Offer Statement on Schedule TO with the SEC that includes additional information relating to the tender offer.

These reports, statements and other information can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of this material may also be obtained by mail, upon payment of the SEC’s customary charges, from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. The SEC also maintains a web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The reference to the URL of the SEC’s web site is intended to be an inactive textual reference only. Information about the Public Reference Room may be obtained by calling the SEC for more information at 1-800-SEC-0330.

Incorporation by Reference. The rules of the SEC allow us to “incorporate by reference” information into this document, which means that we can disclose important information by referring people to another document filed separately with the SEC. These documents contain important information about us.

SEC Filings	Period or Date Filed
Annual Report on Form 10-K	Year ended December 31, 2004
Quarterly Reports on Form 10-Q	Quarter ended March 31, 2005
Current Reports on Form 8-K	Dated July 20, 2005
	Dated March 25, 2005
Proxy Statement	March 21, 2005

Any of the documents incorporated by reference in this document can be obtained from us or from the SEC’s web site at the address described above. Documents incorporated by reference are available from us without charge, excluding any exhibits to those documents. Documents incorporated by reference in this Offer to Purchase can be obtained by requesting them in writing or by telephone from us at 220 Hickory Street, Warren, Pennsylvania 16366, Attention: Treasurer, telephone: (814) 723-3600. Those requesting documents should be sure to include their complete name and address in their request. If any incorporated documents are requested, we will mail them by first class mail, or another equally prompt means, within one business day after we receive the request.

11.    Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Securities of Blair.

Interest of Directors and Executive Officers. As of June 30, 2005, we had 8,257,313 issued and outstanding shares of common stock and 209,907 shares reserved for issuance upon exercise of outstanding stock options under our stock option plans. The 4,400,000 shares Blair is offering to purchase under the tender offer represent approximately 53% of the shares outstanding as of June 30, 2005.

As of June 30, 2005 our directors and executive officers as a group (23 persons) beneficially owned an aggregate of 441,840 shares of our common stock (including 135,391 shares issuable upon exercise of stock options that are or will become exercisable within sixty days of June 30, 2005), representing approximately 5.21% of issued and outstanding shares and fully vested and exercisable stock options. Our directors and executive officers are entitled to participate in the tender offer on the same

35

basis as all other stockholders, however our directors have agreed not to tender any of their shares in the tender offer and senior management has agreed to restrict the amount they tender to no more than 25% of their holdings.

The following table sets forth, as to each of our directors and executive officers and holders of 5% or more of our common stock (1) the number of shares and percentage of common stock beneficially owned as of June 30, 2005, (2) the number of shares issuable upon exercise of options that are or will become exercisable within sixty days of June 30, 2005, (3) the number of shares expected to be tendered by such person in the tender offer and (4) assuming our purchase of 4,400,000 shares in the tender offer, the number of shares being retained by such person and the percentage which such shares would represent of the resulting outstanding shares. No subsidiary of Blair owns any securities of Blair. Unless otherwise noted, the business address of the listed beneficial owner is c/o Blair Corporation, 220 Hickory Street, Warren, Pennsylvania 16366 and the telephone number is (814) 723-3600.

Beneficial Owner (1)	Number of Shares of Common Stock Beneficially Owned		Percent of Class		Number of Shares Expected to be Tendered in the Tender Offer	Percent of Ownership After Tender Offer (2)
5% and Greater Stockholders:
Opportunity-Santa Monica Group 1865 Palmer Avenue Larchmont, NY 10538	808,500	(3)	9.79	%	808,500	0
Dimensional Fund Advisors, Inc. 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401	669,700	(4)(5)	8.11	%	N/A	N/A
The PNC Financial Services Group, Inc. 249 5th Avenue Pittsburgh, PA 15222	500,509	(5)(6)	6.06	%	N/A	N/A
Loeb 61 Broadway New York, NY 10006	551,327	(7)	6.68	%	551,327	0
Directors and Senior Management (8):
Steven M. Blair	34,725	(9)(10)(11)	*		0	*
Robert D. Crowley	33,541	(9)(10)	*		0	*
Harriet Edelman	3,575	(12)	*		0	*
Cynthia A. Fields	2,075		*		0	*
Bryan J. Flanagan	17,349	(10)(13)	*		0	*
John O. Hanna	13,350	(9)	*		0	*
Craig N. Johnson	6,900		*		0	*
Murray K. McComas	51,475	(9)(12)	*		0	1.33	%
Ronald L. Ramseyer	3,325		*		0	*
Randall A. Scalise	19,060	(9)(10)	*		3,000	*
Michael A. Schuler	2,250		*		0	*
John E. Zawacki	100,626	(9)(10)	1.22	%	0	2.60	%
All directors and executive officers as a group (includes 23 persons)	441,840	(9)(10)(12)(13)(14)(15)	5.21	%	76,460	8.98	%

* Does not exceed 1%.

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(1) In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, shares of common stock that could be acquired by such person within sixty days of June 30, 2005 were deemed to be outstanding. We did not deem such shares to be outstanding, however, for the purpose of computing the percentage ownership of any other person.

(2) In computing the percentage ownership of a person after the tender offer, we assumed our major stockholders, directors and senior management tendered that number of shares that they have informed us they intend to tender in the tender offer as set forth in the column entitled “Number of Shares Expected to Be Tendered in the Tender Offer.” We also assumed that all other issued and outstanding shares of common stock of Blair were tendered in the tender offer, that no shares were conditionally tendered and that 4,400,000 shares were purchased by us in the tender offer. To the extent fewer than all other issued and outstanding shares of common stock of Blair are tendered in the tender offer, the percentage ownership of persons listed in the table and who tender in the tender offer could decrease.

(3) Opportunity-Santa Monica Group is comprised of Santa Monica Partners Opportunity Fund L.P. (“SMPOP”) and Santa Monica Partners, L.P. (“SMP”) are both New York limited partnerships, and Santa Monica Partners Asset Management LLC and SMP Asset Management LLC, both Delaware limited liability companies, act as general partner for SMPOP and SMP, respectively. Their principal business address is 1865 Palmer Avenue, Larchmont, NY 10538. Mr. Phillip Goldstein is deemed to be the beneficial owner of 418,450 shares of Company Common Stock, Mr. Dakos is deemed to be the beneficial owner of 49,500 shares of Company Common Stock and Mr. Lawrence Goldstein is deemed to be the owner of 340,550 shares of Company Common Stock. The aggregate amount of shares of Company Common Stock owned is 808,500.

The above information was provided to the U.S. Securities and Exchange Commission in a Schedule 13D filed on May 3, 2005 by Opportunity – Santa Monica Group.

(4) Dimensional Fund Advisors, Inc. (“Dimensional”), a registered investment advisor, is deemed to have beneficial ownership of 669,700 shares of the Company’s Common Stock as of December 31, 2004, all of which shares are held in portfolios of four registered investment companies for which Dimensional serves as investment advisor and certain other investment vehicles, including co-mingled group trusts and separate accounts for which Dimensional serves as investment manager. The portfolios own all of the shares and Dimensional disclaims beneficial ownership of all such shares.

Dimensional Fund Advisors, Inc provided the above information to the U.S. Securities and Exchange Commission in a Schedule 13G filed on February 9, 2005.

(5) These entities have not indicated to Blair whether or not they intend to participate in the tender offer.

(6) PNC Bank, N.A., a wholly-owned subsidiary of PNC Bancorp, Inc., which is itself a wholly-owned subsidiary of PNC Financial Services Group, Inc., is deemed to have beneficial ownership of 500,509 shares of the Company’s Common Stock as of December 31, 2004.

The above information was provided to the U.S. Securities and Exchange Commission in a Schedule 13G filed on February 10, 2005 by PNC Financial Services Group.

(7) Loeb consists of seven entities, (1) Loeb Arbitrage Fund (“LAF”), a New York limited partnership and a registered broker-dealer, (2) Loeb Arbitrage Management (“LAM”), a Delaware corporation and the general partner of LAF, (3) Loeb Partners Corporation (“LPC”), a Delaware corporation and registered broker-dealer, (4) Loeb Holding Corporation (“LHC”), a Maryland corporation and the sole stockholder of LAM and LPC, (5) Loeb Offshore Fund, Ltd. (“LOF”), a Cayman Islands exempted company, (6) Loeb Offshore Management, LLC (“LOM”), a Delaware limited liability company and a registered investment advisor, is wholly owned by LHC and is LOF’s and LMOF’s investment advisor, (7) Loeb Marathon Fund (“LMF”), a Delaware limited partnership whose general partner is LAM, and (8) Loeb Marathon Offshore Fund, Ltd. (“LMOF”), a Cayman Islands exempted company. Together Loeb owns 551,327 shares of Blair’s common stock as of May 6, 2005, including shares purchased and sold for the account of one customer of LPC as to which it has investment discretion.

The above information was provided to the U.S. Securities and Exchange Commission in a Schedule 13D filed on May 10, 2005 by Loeb Partners Corporation.

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(8) Unless otherwise indicated, each person has sole voting and investment power with respect to the shares beneficially owned.

(9) The share totals include the following shares of Common Stock held by and for the benefit of members of the immediate families of certain nominees and executive officers, as to which the indicated nominees and executive officers have no voting or investment power, beneficial interest in which is disclaimed by such nominees and executive officers: Steven M. Blair (7,500 shares), Robert D. Crowley (13,034 shares), Randall A. Scalise (450 shares), John O. Hanna (2,600 shares), Murray K. McComas (2,480 shares), and John E. Zawacki (31,320 shares).

(10) The share totals include the following shares of Common Stock underlying stock options granted by the Company, which are exercisable now or within 60 days of June 30, 2005: Steven M. Blair (5,200 shares), Robert D. Crowley (10,067 shares), Randall A. Scalise (4,134 shares), Bryan J. Flanagan (10,000 shares), and John E. Zawacki (54,396 shares) and all directors and executive officers listed as a group (135,291).

(11) Steven M. Blair is not related to Daniel R. Blair, the Company Secretary.

(12) The share totals include the following shares, which were deferred pursuant to the Company’s Stock Accumulation and Deferred Compensation Plan for non-management directors: Harriet Edelman (2,075 shares) and Murray K. McComas (1,500 shares).

(13) Includes 1,250 shares of Company Common Stock held by Mr. Flanagan as co-trustee of the Bryan J. Flanagan Revocable Trust.

(14) The share totals include 2,700 shares of Common Stock, which are held by or for the benefit of members of the immediate families of executive officers of the Company not identified individually in this chart, as to which such executive officers have no voting or investment power, beneficial interest in which is disclaimed by such executive officers.

(15) Such share totals include an aggregate of 575 shares of Common Stock jointly owned by certain of the directors and executive officers with their spouses.

The number of shares actually tendered by our major stockholders, directors and senior management prior to the expiration date may be different from the number set forth in this Offer to Purchase.

Transactions and Arrangements Regarding Securities of Blair. Based on our records and on information provided to us by our directors, executive officers, affiliates, and subsidiaries, neither we nor any of our affiliates or subsidiaries, nor, to the best of our knowledge, any of our or our subsidiaries’ directors or executive officers, nor any associated persons or subsidiaries of any of the foregoing, has effected any transactions involving the shares during the 60 days prior to July 20, 2005.

Change in Control Severance Agreements. John E. Zawacki, President and Chief Executive Officer, Bryan J. Flanagan, Senior Vice President and Chief Financial Officer, Robert D. Crowley, Senior Vice President and Randall A. Scalise, Vice President, each have a Change in Control Severance Agreement with Blair. The agreements are for a term of three years and will be extended by our Board of Directors for an additional year upon each annual anniversary date of the date of the agreement such that the remaining term is three years. The agreements provide that at any time within three years following a change in control of Blair, if Blair terminates the executive’s employment for any reason other than death, disability, retirement, or “cause” (as defined in the agreements), or the executive voluntarily terminates his employment following demotion, loss of title, office, significant authority or responsibility, any material reduction in compensation or benefits, or relocation of his principal place of employment, the executive will be entitled to receive a payment in an amount equal to three times (two times for Mr. Scalise) his respective base annual salary in effect immediately prior to the change in control (as that term is defined in the agreements) or his termination (whichever is greater) plus the greater of (a) the executive’s average annual incentive bonus over the previous three years or (b) the higher of the target incentive bonus in the year of the change in control or the year of termination. In addition, the agreements grant Messrs. Zawacki, Flanagan and Crowley the right to walk-away from Blair in the thirteenth month following a change in control rather than accept a demotion, loss of title, office, significant authority or responsibility, any

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material reduction in compensation or benefits. The agreements also provide for the acceleration of vesting of any stock options or stock awards, the payment of three times (two times for Mr. Scalise) the amount of any target award under the Blair Long Term Incentive Program and the continuation of certain life and medical insurance coverage, retirement and out placement benefits. In addition, Blair will make “gross-up” payments to the executive if any payments or benefits to be made under the agreement are subject to excise tax.

Standstill Agreements. On May 25, 2005, we entered into separate “standstill” agreements with Loeb Partners Corporation and each of its affiliates, and Santa Monica Opportunity Fund L.P. and each of its affiliates and principals, pursuant to which, among other things, said shareholders have agreed to tender all of their Blair common stock in the Company’s tender offer. Loeb and Santa Monica agreed (i) not to attempt to exercise any control over our management or our company; (ii) to vote their shares in favor of the position advocated by our Board of Directors; and (iii) not to acquire any additional shares of our Company or seek to acquire our Company, each for a period of five years. In addition, our directors have agreed not to tender any of their shares of the Company’s common stock in the tender offer and our executive officers have agreed to restrict the amount they tender in the tender offer to no more than 25% of their holdings of Blair’s common stock.

Except for outstanding options to purchase our common stock and except as otherwise described in this Offer to Purchase, neither we, nor, to the best of our knowledge, any of our affiliates, directors, executive officers or holders of 5% or greater of our common stock is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly to the tender offer or with respect to any of our securities, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.

12.    Legal Matters; Regulatory Approvals.

We are not aware of any license or regulatory permit material to our business that might be adversely affected by our acquisition of shares as contemplated by the tender offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic, foreign or supranational, that would be required for the acquisition or ownership of shares by us as contemplated by the tender offer. Should any such approval or other action be required, we presently contemplate that we will seek that approval or other action. We are unable to predict whether we will be required to delay the acceptance for payment of or payment for shares tendered under the tender offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial cost or conditions or that the failure to obtain the approval or other action might not result in adverse consequences to our business and financial condition. Our obligation under the tender offer to accept for payment and pay for shares is subject to conditions. See Section 7.

13.    Certain United States Federal Income Tax Consequences.

The following summary describes certain United States federal income tax consequences relating to the tender offer. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, administrative pronouncements and judicial decisions, all as in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect. This summary addresses only shares that are held as capital assets within the meaning of Section 1221 of the Code and does not address all of the tax consequences that may be relevant to stockholders in light of their particular circumstances or to certain types of stockholders subject to special treatment under the Code, including, without limitation, foreign stockholders, certain financial institutions, dealers in securities or commodities, traders in securities who elect to apply a mark-to-market method of accounting, insurance companies, tax-exempt organizations, certain expatriates, persons who hold shares as a position in a “straddle” or as a part of a “hedging,” “conversion” or “constructive sale” transaction for United States federal income tax purposes, persons whose functional currency is not the United States dollar, persons who own, directly or by attribution, 10% or more of our common stock or persons who received their shares through the exercise of employee stock options or otherwise as compensation. In particular, except as otherwise specifically noted, this discussion applies only to “U.S. holders” (as defined

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below). This summary also does not address the state, local or foreign tax consequences of participating in the tender offer. For purposes of this discussion, a “U.S. holder” means:

• a citizen or resident of the United States;

• a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or of any political subdivision thereof;

• an estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or

• a trust whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all of its substantial decisions.

If a partnership holds shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. Partners of partnerships holding shares should consult their tax advisors.

Holders of shares who are not U.S. holders should consult their tax advisors regarding the United States federal income tax consequences and any applicable foreign tax consequences of the tender offer and should also see Section 3 for a discussion of the applicable United States withholding rules and the potential for obtaining a refund of all or a portion of any tax withheld.

Stockholders are urged to consult their tax advisor to determine the particular tax consequences to them of participating or not participating in the tender offer.

Characterization of the Purchase. The purchase of shares by us under the tender offer will be a taxable transaction for U.S. federal income tax purposes. As a consequence of the purchase, a U.S. holder will, depending on the U.S. holder’s particular circumstances, be treated either as having sold the U.S. holder’s shares or as having received a distribution in respect of stock from us.

Under Section 302 of the Code, a U.S. holder whose shares are purchased by us under the tender offer will be treated as having sold its shares, and thus will recognize capital gain or loss, if the purchase:

• results in a “complete termination” of the U.S. holder’s equity interest in Blair;

• results in a “substantially disproportionate” redemption with respect to the U.S. holder; or

• is “not essentially equivalent to a dividend” with respect to the U.S. holder.

Each of these tests, referred to as the “Section 302 tests,” is explained in more detail below.

If a U.S. holder satisfies any of the Section 302 tests explained below, the U.S. holder will be treated as if it sold its shares to us and will recognize capital gain or loss equal to the difference between the amount of cash received under the tender offer and the U.S. holder’s adjusted tax basis in the shares surrendered in exchange therefor. This gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period for the shares that were sold exceeds one year as of the date of purchase by us under the tender offer. Specified limitations apply to the deductibility of capital losses by U.S. holders. Gain or loss must be determined separately for each block of shares (shares acquired at the same cost in a single transaction) that is purchased by us from a U.S. holder under the tender offer. A U.S. holder may be able to designate, generally through its broker, which blocks of shares it wishes to tender under the tender offer if less than all of its shares are tendered under the tender offer, and the order in which different blocks will be purchased by us in the event of proration under the tender offer. U.S. holders should consult their tax advisors concerning the mechanics and desirability of that designation. Under the “wash sale” rules under Section 1091 of the Code, loss recognized on our shares sold pursuant to the tender offer will be disallowed to the extent the U.S. holder acquires our shares within thirty days before or after the date the shares are purchased pursuant to the tender offer and in that event, the basis and holding period will be adjusted to reflect the disallowed loss.

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If a U.S. holder does not satisfy any of the Section 302 tests explained below, the purchase of a U.S. holder’s shares by us under the tender offer will not be treated as a sale or exchange under Section 302 of the Code with respect to the U.S. holder. Instead, the amount received by the U.S. holder with respect to the purchase of its shares by us under the tender offer will be treated as a dividend distribution to the U.S. holder with respect to its shares under Section 301 of the Code, taxable at ordinary income tax rates, to the extent it is paid from the current or accumulated earnings and profits (within the meaning of the Code) of Blair. To the extent the amount exceeds the U.S. holder’s share of the current and accumulated earnings and profits of Blair, the excess first will be treated as a tax-free return of capital to the extent, generally, of the U.S. holder’s adjusted tax basis in its shares and any remainder will be treated as capital gain (which may be long-term capital gain as described above). To the extent that a purchase of a U.S. holder’s shares by us under the tender offer is treated as the receipt by the U.S. holder of a dividend, the U.S. holder’s adjusted tax basis in the purchased shares will be added to any shares retained by the U.S. holder.

The determination of whether a corporation has current or accumulated earnings and profits is complex and the legal standards to be applied are subject to uncertainties and ambiguities. Additionally, whether a corporation has current earnings and profits can be determined only at the end of the taxable year. Accordingly, it is unclear whether all or any portion of the amount received by a U.S. holder with respect to the purchase of its shares by us under the tender offer that is not treated as a sale or exchange under Section 302 of the Code will constitute a dividend.

Constructive Ownership of Stock and Other Issues. In applying each of the Section 302 tests explained below, U.S. holders must take into account not only shares that they actually own but also shares they are treated as owning under the constructive ownership rules of Section 318 of the Code. Under the constructive ownership rules, a U.S. holder is treated as owning any shares that are owned (actually and in some cases constructively) by certain related individuals and entities as well as shares that the U.S. holder has the right to acquire by exercise of an option or by conversion or exchange of a security. Due to the factual nature of the Section 302 tests explained below, U.S. holders should consult their tax advisors to determine whether the purchase of their shares under the tender offer qualifies for sale treatment in their particular circumstances.

If a U.S. holder sells shares to persons other than us at or about the time the U.S. holder also sells shares to us pursuant to the tender offer, and the sales effected by the U.S. holder are part of an overall plan to reduce or terminate the U.S. holder’s proportionate interest in us, then the sales to persons other than us may be integrated with the U.S. holder’s sale of shares pursuant to the tender offer and, if integrated, should be taken into account in determining whether the U.S. holder satisfies any of the Section 302 tests explained below. U.S. holders should consult their tax advisors regarding the treatment of other sales of shares that may be integrated with the purchase of their shares by us pursuant to the tender offer.

We cannot predict whether or the extent to which the tender offer will be oversubscribed. If the tender offer is oversubscribed, proration of tenders under the tender offer will cause us to accept fewer shares than are tendered. Therefore, no assurance can be given that a U.S. holder will be able to determine in advance whether its disposition of shares pursuant to the tender offer will be treated as a sale or exchange or as a distribution in respect of stock from us.

Section 302 Tests. One of the following tests must be satisfied in order for the purchase of shares by us under the tender offer to be treated as a sale or exchange for U.S. federal income tax purposes:

• Complete Termination Test. The purchase of a U.S. holder’s shares by us under the tender offer will result in a “complete termination” of the U.S. holder’s equity interest in us if all of the shares that are actually owned by the U.S. holder are sold under the tender offer and all of the shares that are constructively owned by the U.S. holder, if any, are sold under the tender offer or, with respect to shares owned by certain related individuals, the U.S. holder effectively waives, in accordance with Section 302(c) of the Code, attribution of shares which otherwise would be considered as constructively owned by the U.S. holder. U.S. holders wishing to satisfy the “complete termination” test through waiver of the constructive ownership rules should consult their tax advisors.

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• Substantially Disproportionate Test. The purchase of a U.S. holder’s shares by us under the tender offer will result in a “substantially disproportionate” redemption with respect to the U.S. holder if, among other things, the percentage of the then outstanding shares actually and constructively owned by the U.S. holder immediately after the purchase is less than 80% of the percentage of the shares actually and constructively owned by the U.S. holder immediately before the purchase (treating as outstanding all shares purchased under the tender offer).

• Not Essentially Equivalent to a Dividend Test. The purchase of a U.S. holder’s shares by us under the tender offer will be treated as “not essentially equivalent to a dividend” if the reduction in the U.S. holder’s proportionate interest in us as a result of the purchase constitutes a “meaningful reduction” given the U.S. holder’s particular circumstances. Whether the receipt of cash by a stockholder who sells shares under the tender offer will be “not essentially equivalent to a dividend” is independent of whether or not we have current or accumulated earnings and profits and will depend upon the stockholder’s particular facts and circumstances. The IRS has indicated in a published revenue ruling that even a small reduction in the percentage interest of a stockholder whose relative stock interest in a publicly held corporation is minimal (for example, an interest of less than 1%) and who exercises no control over corporate affairs should constitute a “meaningful reduction.” U.S. holders should consult their tax advisors as to the application of this test in their particular circumstances.

Corporate Stockholder Dividend Treatment. If a corporate U.S. holder does not satisfy any of the Section 302 tests described above and we have current or accumulated earnings and profits, a corporate U.S. holder may, to the extent that any amounts received by it under the tender offer are treated as a dividend, be eligible for the dividends-received deduction under Section 243 of the Code. The dividends-received deduction is subject to certain limitations and may not be available if a corporate U.S. holder does not satisfy certain holding period requirements with respect to its shares or if its shares are treated as “debt-financed portfolio stock” within the meaning of Section 246A of the Code. In addition, any amount received by a corporate U.S. holder pursuant to the tender offer that is treated as a dividend may constitute an “extraordinary dividend” under Section 1059 of the Code. If any such amount were treated as an “extraordinary dividend,” a corporate U.S. holder would be required under Section 1059(a) of the Code to reduce its adjusted tax basis, but not below zero, in its shares by the non-taxed portion of the extraordinary dividend (i.e., the portion of the dividend for which a deduction is allowed) and, if such portion exceeds the corporate U.S. holder’s adjusted tax basis in its shares, to treat the excess as gain from the sale of such shares in the year in which the dividend is received. These basis reduction and gain recognition rules would be applied by taking account only of the corporate U.S. holder’s adjusted tax basis in the shares that were sold, without regard to other shares that the corporate U.S. holder may continue to own. Corporate U.S. holders should consult their own tax advisors as to the application of Sections 243, 246, 246A and 1059 of the Code to the tender offer, and to the tax consequences of dividend treatment in their particular circumstances.

Foreign Stockholders. Generally, the depositary will withhold United States federal income tax at a rate of 30% from the gross proceeds paid under the tender offer to a foreign stockholder (as defined in Section 3) or his agent, unless the depositary determines that an exemption from, or a reduced rate of, withholding tax is available under a tax treaty or that an exemption from withholding otherwise applies. See Section 3 for a discussion of the applicable United States withholding rules and the potential for a foreign stockholder being subject to reduced withholding and for obtaining a refund of all or a portion of any tax withheld.

Stockholders Who Do Not Receive Cash Under the Tender Offer. Stockholders whose shares are not purchased by us pursuant to the tender offer will not incur any tax liability as a result of the completion of the tender offer.

Backup Withholding. See Section 3 with respect to the application of United States federal backup withholding tax.

The discussion set forth above is included for general information only. Stockholders are urged to consult their tax advisor to determine the particular tax consequences to them of the tender offer, including the applicability and effect of state, local and foreign tax laws.

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14.    Extension of the Tender Offer; Termination; Amendment.

We expressly reserve the right, in our sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 7 shall have occurred or shall be deemed by us to have occurred, to extend the period of time during which the tender offer is open and thereby delay acceptance for payment of, and payment for, any shares by giving oral or written notice of such extension to the depositary and making a public announcement of such extension. We also expressly reserve the right, in our sole discretion, to terminate the tender offer and not accept for payment or pay for any shares not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for shares upon the occurrence of any of the conditions specified in Section 7 by giving oral or written notice of the termination or postponement to the depositary and making a public announcement of such termination or postponement. Our reservation of the right to delay payment for shares which we have accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange Act, which requires that we must pay the consideration offered or return the shares tendered promptly after termination or withdrawal of a tender offer. Subject to compliance with applicable law, we further reserve the right, in our sole discretion, and regardless of whether any of the events set forth in Section 7 shall have occurred or shall be deemed by us to have occurred, to amend the tender offer in any respect, including, without limitation, by decreasing or increasing the price to be paid for tendered shares or by decreasing or increasing the number of shares being sought in the tender offer. Amendments to the tender offer may be made at any time and from time to time effected by public announcement, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., Eastern Time, on the first business day after the last previously scheduled or announced expiration date. Any public announcement made pursuant to the tender offer will be disseminated promptly to stockholders in a manner reasonably designed to inform stockholders of the change. Without limiting the manner in which we may choose to make a public announcement, except as required by applicable law (including Rule 13d-4(e)(3) under the Exchange Act), we will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a press release through Business Wire or comparable service.

If we materially change the terms of the tender offer or the information concerning the tender offer, we will extend the tender offer to the extent required by Rules 13e-4(d)(2) and 13e-4(f)(1) under the Exchange Act. These rules and certain related releases and interpretations of the SEC provide that the minimum period during which a tender offer must remain open following material changes in the terms of the tender offer or information concerning the tender offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of the terms or information. If (1) we increase or decrease the price to be paid for tendered shares or increase or decrease the number of shares being sought in the tender offer and, in the case of an increase in the number of shares being sought, the increase exceeds 2% of the outstanding shares of our common stock and (2) the tender offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that notice of an increase or decrease is first published, sent or given to security holders in the manner specified in this Section 14, then, in each case, the tender offer will be extended until the expiration of a period of ten business days.

We will issue a press release by 9:00 a.m., Eastern Time, on the first business day after the expiration date announcing the expiration of the tender offer and the preliminary results of the tender offer, including the approximate number of shares tendered. Because of the difficulty in determining the number of shares properly tendered, including shares tendered by guaranteed delivery procedures, as described in Section 3, and not properly withdrawn, and because of the conditional tender procedure described in Section 6, we do not expect that we will be able to announce the final results of the tender offer, including the number of shares tendered and the proration factor, if any, or commence payment for any shares purchased under the tender offer until five to seven business days after the expiration date.

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15.    Fees and Expenses.

We have retained Stephens Inc. to act as the dealer manager in connection with the tender offer. Stephens Inc. will receive reasonable and customary compensation for its services. We also have agreed to reimburse Stephens Inc. for reasonable out-of-pocket expenses incurred in connection with the tender offer, including reasonable fees and expenses of counsel, and to indemnify Stephens Inc. against certain liabilities in connection with the tender offer, including liabilities under the federal securities laws. Stephens Inc. has rendered various investment banking and other services to us in the past and may continue to render such services in the future, for which they have received, and may continue to receive, customary compensation from us. In the ordinary course of its trading and brokerage activities, Stephens Inc. and its affiliates may hold long or short positions, for their own accounts or for those of their customers, in securities of Blair.

We have retained Georgeson Shareholder Communications Inc. to act as information agent and Computershare Trust Company of New York to act as depositary in connection with the tender offer. The information agent may contact holders of shares by mail, telephone, or in person and may request brokers, dealers, commercial banks, trust companies and other nominee stockholders to forward materials relating to the tender offer to beneficial owners. The information agent and the depositary will each receive reasonable and customary compensation for their respective services, will be reimbursed by us for specified reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection with the tender offer, including certain liabilities under the federal securities laws.

No fees or commissions will be payable by us to brokers, dealers, commercial banks or trust companies (other than fees to the dealer manager and the information agent as described above) for soliciting tenders of shares under the tender offer. Stockholders holding shares through brokers or banks are urged to consult the brokers or banks to determine whether transaction costs are applicable if stockholders tender shares through such brokers or banks and not directly to the depositary. We, however, upon request will reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling expenses incurred by them in forwarding the tender offer and related materials to the beneficial owners of shares held by them as a nominee or in a fiduciary capacity. No broker, dealer, commercial bank or trust company has been authorized to act as the agent of Blair, the dealer manager, the information agent or the depositary for purposes of the tender offer. We will pay or cause to be paid all stock transfer taxes, if any, on its purchase of shares except as otherwise provided in this document and Instruction 7 in the Letter of Transmittal.

16.    Miscellaneous.

We are not aware of any jurisdiction where the making of the tender offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the tender offer or the acceptance of shares pursuant thereto is not in compliance with applicable law, we will make a good faith effort to comply with the applicable law. If, after such good faith effort, we cannot comply with the applicable law, the tender offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of shares in such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the tender offer to be made by a licensed broker or dealer, the tender offer shall be deemed to be made on behalf of us by the dealer manager or one or more registered brokers or dealers licensed under the laws of that jurisdiction.

Pursuant to Rule 13e-4(c)(2) under the Exchange Act, we have filed with the SEC an Issuer Tender Offer Statement on Schedule TO, which contains additional information with respect to the tender offer. The Schedule TO, including the exhibits and any amendments and supplements thereto, may be examined, and copies may be obtained, at the same places and in the same manner as is set forth in Section 10 with respect to information concerning us.

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We have not authorized any person to make any recommendation on our behalf as to whether you should tender or refrain from tendering your shares in the tender offer. You should rely only on the information contained in this Offer to Purchase and the related Letter of Transmittal and any document to which we have referred you. We have not authorized any person to give any information or to make any representation in connection with the tender offer other than those contained in this Offer to Purchase or in the related Letter of Transmittal. If anyone makes any recommendation or representation to you or gives you any information, you must not rely on that recommendation, representation or information as having been authorized by us or the dealer manager.

BLAIR CORPORATION

July 20, 2005

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The Letter of Transmittal and certificates for shares and any other required documents should be sent or delivered by each stockholder or such stockholder’s broker, dealer, commercial bank, trust company or nominee to the depositary at one of its addresses set forth below.

The depositary for the tender offer is:

Computershare Trust Company of New York

By mail: Computershare Trust Company of New York Wall Street Station P.O. Box 1010 New York, NY 10268-1010 By hand delivery or overnight delivery: Computershare Trust Company of New York Wall Street Plaza 88 Pine Street, 19^th Floor New York, NY 10005 By facsimile transmission (for eligible institutions only): (212) 701-7636 For confirmation call: (212) 701-7600

Any questions or requests for assistance may be directed to the information agent or the dealer manager at their respective telephone numbers and addresses set forth below. Requests for additional copies of this Offer to Purchase, the related Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the information agent at the telephone number and address set forth below. Stockholders may also contact their broker, dealer, commercial bank, trust company or nominee for assistance concerning the tender offer. To confirm receipt of shares, stockholders are directed to contact the depositary.

The information agent for the tender offer is:

Georgeson Shareholder Communications Inc.

17 State Street

10^th Floor

New York, NY 10004

Bank and brokers call: (212) 440-9800

All Others Call Toll Free: (866) 729-6811

The dealer manager for the tender offer is:

Stephens Inc.

111 Center Street

Suite 2400

Little Rock, AR 72201

Call: (501) 377-2467

Call Toll Free: (800) 643-9691

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EX-99.(A)(1)(II)

LETTER OF TRANSMITTAL

To Tender Shares of Common Stock,

Without Nominal or Par Value

of

Blair Corporation

Pursuant to the Offer to Purchase Dated July 20, 2005

THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, AUGUST 16, 2005, UNLESS THE TENDER OFFER IS EXTENDED.

The depositary for the tender offer is:

Computershare Trust Company of New York

By mail:	By hand delivery or overnight delivery:	By facsimile transmission (for eligible institutions only):
Computershare Trust Company of New York Wall Street Station P.O. Box 1010 New York, NY 10268-1010	Computershare Trust Company of New York Wall Street Plaza 88 Pine Street, 19th Floor New York, NY 10005	(212) 701-7636 For confirmation call: (212) 701-7600

The information agent for the tender offer is:

Georgeson Shareholder Communications Inc.

Call Toll Free: (866) 729-6811

List below each certificate number, the number of shares represented by each certificate and the number of such shares tendered. If the space provided below is inadequate, list such information on a separately executed and signed schedule and affix the schedule to this Letter of Transmittal. The names and addresses of the holders should be printed, if not already printed below, exactly as they appear on the certificates representing the shares tendered hereby. The shares that the undersigned wishes to tender should be indicated in the appropriate boxes.

DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
Name(s) and Address(es) of Registered Holder(s) (Please Fill in Exactly as Name(s) Appear on Certificate(s))	Certificate(s) Tendered (Attach Additional Signed List, if Necessary)
	Certificate Number(s)*	Number of Shares         Represented By         Certificate(s)*	Number of Shares         Tendered**
	Total Shares Tendered*

*** Indicate the order (by certificate number) in which shares are to be purchased in the event of proration (attach additional signed list if necessary) (See Instruction 8):

1^st 2^nd 3^rd 4^th 5^th 6^th

¨ CHECK HERE IF ANY CERTIFICATES REPRESENTING SHARES TENDERED HEREBY HAVE BEEN LOST, STOLEN, DESTROYED OR MUTILATED. SEE INSTRUCTION 14.

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* Need not be completed if shares are delivered by book-entry transfer.

** If you desire to tender fewer than all shares evidenced by any certificates listed above, please indicate in this column the number of shares you wish to tender. Otherwise, all shares evidenced by such certificates will be deemed to have been tendered. See Instruction 4.

*** If you do not designate an order, in the event less than all shares tendered are purchased due to proration, shares will be selected for purchase by the depositary. See Instruction 8.

All questions regarding the tender offer should be directed to Georgeson Shareholder Communications Inc., the information agent, or Stephens Inc., the dealer manager, at their respective addresses and telephone numbers set forth on the back cover page of the Offer to Purchase.

This Letter of Transmittal, including the accompanying instructions, and the Offer to Purchase should be read carefully before you complete this Letter of Transmittal.

Delivery of this Letter of Transmittal to an address other than one of those shown above for the depositary does not constitute a valid delivery. Deliveries to Blair, the dealer manager of the tender offer or the information agent of the tender offer will not be forwarded to the depositary and therefore will not constitute valid delivery to the depositary. Deliveries to the book-entry transfer facility will not constitute valid delivery to the depositary.

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This Letter of Transmittal is to be used only if (1) certificates for shares are to be forwarded with it, or such certificates will be delivered under a Notice of Guaranteed Delivery previously sent to the depositary or (2) a tender of shares is to be made by book-entry transfer to the account maintained by the depositary at The Depository Trust Company, or any other “qualified” registered securities depository, referred to as the “book-entry transfer facility,” under Section 3 of the Offer to Purchase.

Stockholders who desire to tender shares under the tender offer and who cannot deliver the certificates for their shares or who are unable to comply with the procedures for book-entry transfer before the “expiration date” (as defined in Section 1 of the Offer to Purchase), and who cannot deliver all other documents required by this Letter of Transmittal to the depositary before the expiration date, may tender their shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to the book-entry transfer facility does not constitute delivery to the depositary.

¨ CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

Name of Tendering Institution:                                                                                                                                                                

Account Number:                                                                                                                                                                                          

Transaction Code Number:                                                                                                                                                                         

¨ CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED UNDER A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:

Name(s) of Registered Holder(s):                                                                                                                                                            

Date of Execution of Notice of Guaranteed Delivery:                                                                                                                     

Name of Institution which Guaranteed Delivery:                                                                                                                               

Account Number:                                                                                                                                                                                          

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Ladies and Gentlemen:

The undersigned hereby tenders to Blair Corporation, a Delaware corporation (“Blair”), the above-described shares of Blair common stock, without nominal or par value, at the purchase price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated July 20, 2005, of Blair, receipt of which is hereby acknowledged, and in this Letter of Transmittal which, as amended and supplemented from time to time, together constitute the tender offer.

Subject to and effective upon acceptance for payment of the shares tendered hereby in accordance with the terms of the tender offer, including, if the tender offer is extended or amended, the terms or conditions of any such extension or amendment, the undersigned hereby sells, assigns and transfers to or upon the order of Blair all right, title and interest in and to all shares tendered hereby and orders the registration of such shares tendered by book-entry transfer that are purchased under the tender offer to or upon the order of Blair and hereby irrevocably constitutes and appoints the depositary as attorney-in-fact of the undersigned with respect to such shares, with the full knowledge that the depositary also acts as the agent of Blair, with full power of substitution, such power of attorney being an irrevocable power coupled with an interest, to:

(a) deliver certificates for shares, or transfer ownership of such shares on the account books maintained by the book-entry transfer facility, together in either such case with all accompanying evidences of transfer and authenticity, to or upon the order of Blair, upon receipt by the depositary, as the undersigned’s agent, of the purchase price with respect to such shares;

(b) present certificates for such shares for cancellation and transfer on the books of Blair; and

(c) receive all benefits and otherwise exercise all rights of beneficial ownership of such shares, subject to the next paragraph, all in accordance with the terms of the tender offer.

The undersigned hereby covenants, represents and warrants to Blair that:

(a) the undersigned understands that tendering of shares under any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned’s acceptance of the terms and conditions of the tender offer, including the undersigned’s representation and warranty that (i) the undersigned has a net long position in shares or equivalent securities at least equal to the shares tendered within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) such tender of shares complies with Rule 14e-4 under the Exchange Act;

(b) when and to the extent Blair accepts the shares for purchase, Blair will acquire good, marketable and unencumbered title to them, free and clear of all security interests, liens, charges, encumbrances, conditional sales agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim; and

(c) on request, the undersigned will execute and deliver any additional documents the depositary or Blair deems necessary or desirable to complete the assignment, transfer and purchase of the shares tendered hereby.

The names and addresses of the registered holders should be printed, if they are not already printed above, exactly as they appear on the certificates representing the shares tendered hereby. The certificate numbers, the number of shares represented by such certificates, and the number of shares that the undersigned wishes to tender, should be set forth in the appropriate boxes above.

The undersigned understands that all shares properly tendered and not properly withdrawn will be purchased at the purchase price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions of the tender offer, including its proration and conditional tender provisions, and that Blair will return at its expense all other shares, including shares not purchased because of proration or conditional tender, promptly following the expiration date.

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The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, Blair may terminate or amend the tender offer or may postpone the acceptance for payment of, or the payment for, shares tendered or may accept for payment fewer than all of the shares tendered hereby. The undersigned understands that certificate(s) for any shares not tendered or not purchased will be returned to the undersigned at the address indicated above. The undersigned recognizes that Blair has no obligation, under the Special Payment Instructions, to transfer any certificate for shares from the name of its registered holder, or to order the registration or transfer of shares tendered by book-entry transfer, if Blair purchases none of the shares represented by such certificate or tendered by such book-entry transfer.

The undersigned understands that acceptance of shares by Blair for payment will constitute a binding agreement between the undersigned and Blair upon the terms and subject to the conditions of the tender offer.

The check for the aggregate net purchase price for such of the tendered shares as are purchased by Blair will be issued to the order of the undersigned and mailed to the address indicated above unless otherwise indicated under either of the “Special Payment Instructions” or the “Special Delivery Instructions” boxes below.

All authority conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligations or duties of the undersigned under this Letter of Transmittal shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.

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CONDITIONAL TENDER

(See Instruction 5)

A tendering stockholder may condition his or her tender of shares upon Blair purchasing a specified minimum number of such shares tendered, all as described in Section 6 of the Offer to Purchase. Unless at least that minimum number of shares indicated below is purchased by Blair pursuant to the terms of the tender offer, none of the shares tendered by such tendering stockholder will be purchased. It is the tendering stockholder’s responsibility to calculate that minimum number of shares that must be purchased if any are purchased, and each stockholder is urged to consult his or her broker or other financial and tax advisors. Unless the box below has been checked and a minimum number of shares have been specified, the tender will be deemed unconditional.

¨ The minimum number of shares tendered hereby that must be purchased, if any are purchased, is:              shares.

If, because of proration, such minimum number of shares tendered hereby will not be purchased, Blair may accept conditional tenders by random lot, if necessary. However, to be eligible for purchase by random lot, the tendering stockholder must have tendered all of his or her shares and checked this box:

¨ The tendered shares represent all shares held by the undersigned, and the undersigned wishes such shares to be eligible for purchase by random lot.

TENDER OF DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN SHARES

(See Instruction 15)

This section is to be completed only if shares held in Blair’s Dividend Reinvestment and Stock Purchase Plan are to be tendered.

¨ By checking this box, the undersigned represents that the undersigned is a participant in Blair’s Dividend Reinvestment and Stock Purchase Plan and hereby instructs National City Bank to tender on behalf of the undersigned the following number of shares credited to the Dividend Reinvestment and Stock Purchase Plan account of the undersigned:

                                         shares

¨ By checking this box, the undersigned represents that the undersigned is a participant in Blair’s Dividend Reinvestment and Stock Purchase Plan and hereby instructs National City Bank to tender on behalf of the undersigned all of the shares credited to the Dividend Reinvestment and Stock Purchase Plan account of the undersigned.

SPECIAL PAYMENT INSTRUCTIONS (See Instructions 1, 4, 6, 7 and 9)	SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 4, 6 and 9)
To be completed only if certificate(s) for shares not tendered or not purchased and/or any check for the purchase price of shares purchased are to be issued in the name of someone other than the undersigned, or if shares tendered hereby and delivered by book-entry transfer which are not purchased are to be returned by credit to an account at the book-entry transfer facility other than that designated above.	To be completed only if certificate(s) for shares not tendered or not purchased and/or any check for the purchase price of shares purchased are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above.
Issue check/certificate to:	Deliver check/certificate to:
Name:	Name:
(Please Print)	(Please Print)
Address:	Address:
(Including Zip Code)	(Including Zip Code)
(Tax Identification or Social Security Number) (See Substitute Form W-9 Included Herewith)

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PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL

CAREFULLY BEFORE COMPLETING

STOCKHOLDER(S) SIGN HERE

(See Instructions 1 and 6)

(Please Complete Substitute Form W-9 Included Herewith)

Must be signed by registered holder(s) exactly as name(s) appear(s) on share certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by share certificates and documents transmitted herewith. If a signature is by an officer on behalf of a corporation or by an executor, administrator, trustee, guardian, attorney-in-fact, agent or other person acting in a fiduciary or representative capacity, please provide full title and see Instruction 6.

(Signature(s))

Dated:                         , 2005

Name(s):                                                                                                                                                                                                            

(Please Print)

Capacity (full title):                                                                                                                                                                                       

Address:                                                                                                                                                                                                             

(Include Zip Code)

(Area Code) Telephone Number:                                                                                                                                                             

Tax Identification or Social Security Number:                                                                                                                                    

GUARANTEE OF SIGNATURE(S)

(If required, see Instructions 1 and 6)

Authorized Signature

Name(s)

Title

Name of Firm

Address

(Area Code) Telephone Number

Dated:                             , 2005

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INSTRUCTIONS TO LETTER OF TRANSMITTAL

FORMING PART OF THE TERMS OF THE TENDER OFFER

OF

BLAIR CORPORATION

1. Guarantee of Signatures. No signature guarantee is required if either:

(a) this Letter of Transmittal is signed by the registered holder of the shares exactly as the name of the registered holder appears on the certificate, which term, for purposes of this document, shall include any participant in a book-entry transfer facility whose name appears on a security position listing as the owner of shares, tendered with this Letter of Transmittal, and payment and delivery are to be made directly to such registered holder unless such registered holder has completed either the box entitled “Special Payment Instructions” or “Special Delivery Instructions” above; or

(b) such shares are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity which is an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, each such entity, referred to as an “eligible guarantor institution.”

In all other cases, signatures must be guaranteed by an eligible guarantor institution. See Instruction 6.

2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be used only if certificates are delivered with it to the depositary, or such certificates will be delivered under a Notice of Guaranteed Delivery previously sent to the depositary, or if tenders are to be made under the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Certificates for all physically tendered shares, or confirmation of a book-entry transfer into the depositary’s account at the book-entry transfer facility of shares tendered electronically, together in each case with a properly completed and duly executed Letter of Transmittal or manually signed facsimile of it, or an agent’s message (as defined below), and any other documents required by this Letter of Transmittal, should be mailed or delivered to the depositary at the appropriate address set forth herein and must be received by the depositary before the expiration date.

The term “agent’s message” means a message transmitted by the book-entry transfer facility to, and received by, the depositary, which states that the book-entry transfer facility has received an express acknowledgment from the participant in such book-entry transfer facility tendering the shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that Blair may enforce such agreement against such participant.

Stockholders whose certificates are not immediately available or who cannot deliver certificates for their shares and all other required documents to the depositary before the expiration date, or whose shares cannot be delivered before the expiration date under the procedures for book-entry transfer, may tender their shares by or through any eligible guarantor institution by properly completing and duly executing and delivering a Notice of Guaranteed Delivery, or facsimile of it, and by otherwise complying with the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Under such procedure, the certificates for all physically tendered shares or book-entry confirmation, as the case may be, as well as a properly completed and duly executed Letter of Transmittal, or manually signed facsimile of it, or an agent’s message, and all other documents required by this Letter of Transmittal, must be received by the depositary within three American Stock Exchange trading days after receipt by the depositary of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.

The Notice of Guaranteed Delivery may be delivered by hand, facsimile transmission or mail to the depositary and must include, if necessary, a guarantee by an eligible guarantor institution in the form set forth in

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such notice. For shares to be tendered validly under the guaranteed delivery procedure, the depositary must receive the Notice of Guaranteed Delivery before the expiration date.

The method of delivery of all documents, including certificates for shares, is at the option and risk of the tendering stockholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to assure delivery.

Blair will not accept any alternative or contingent or (except as specified in Instruction 5 below) conditional tenders. All tendering stockholders, by execution of this Letter of Transmittal, or a facsimile of it, waive any right to receive any notice of the acceptance of their tender.

3. Inadequate Space. If the space provided in the box captioned “Description of Shares Tendered” is inadequate, the certificate numbers, the number of shares represented by each certificate and the number of shares tendered should be listed on a separate signed schedule and attached to this Letter of Transmittal.

4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders who tender by book-entry transfer.) If fewer than all of the shares evidenced by any certificate are to be tendered, fill in the number of shares that are to be tendered in the column entitled “Number of Shares Tendered.” In such case, if any tendered shares are purchased, a new certificate for the remainder of the shares evidenced by the old certificates will be issued and sent to the registered holder(s) promptly after the expiration date. Unless otherwise indicated, all shares represented by the certificates listed and delivered to the depositary will be deemed to have been tendered.

5. Conditional Tender. As described in Section 6 of the Offer to Purchase, stockholders may condition their tenders on all or a minimum number of their tendered shares being purchased.

To make a conditional tender a stockholder must indicate this in the box captioned “Conditional Tender” in this Letter of Transmittal or, if applicable, the Notice of Guaranteed Delivery. In the box in this Letter of Transmittal or the Notice of Guaranteed Delivery, a stockholder must calculate and appropriately indicate the minimum number of shares that must be purchased if any are to be purchased.

As discussed in Sections 1 and 6 of the Offer to Purchase, proration may affect whether Blair accepts conditional tenders and may result in shares tendered pursuant to a conditional tender being deemed withdrawn if the minimum number of shares would not be purchased. If, because of proration, such minimum number of shares tendered hereby will not be purchased, Blair may accept conditional tenders by random lot, if necessary. However, to be eligible for purchase by random lot, a stockholder must have tendered all of his or her shares and checked the box so indicating. Upon selection by random lot, if any, Blair will limit its purchase in each case to the designated minimum number of shares.

All tendered shares will be deemed unconditionally tendered unless the “Conditional Tender” box is completed.

6. Signatures on Letter of Transmittal, Stock Powers and Endorsements.

(a) If this Letter of Transmittal is signed by the registered holder(s) of the shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without any change whatsoever.

(b) If the shares are registered in the names of two or more joint holders, each such holder must sign this Letter of Transmittal.

(c) If any tendered shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal, or photocopies of it, as there are different registrations of certificates.

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(d) When this Letter of Transmittal is signed by the registered holder(s) of the shares listed and transmitted hereby, no endorsements of certificate(s) representing such shares or separate stock powers are required unless payment is to be made or the certificates for shares not tendered or not purchased are to be issued to a person other than the registered holder(s). Signature(s) on such certificate(s) must be guaranteed by an eligible guarantor institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, or if payment is to be made to a person other than the registered holder(s), the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the certificate(s), and the signature(s) on such certificates or stock power(s) must be guaranteed by an eligible guarantor institution. See Instruction 1.

(e) If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence to the depositary that is satisfactory to Blair of their authority to so act.

7. Stock Transfer Taxes. Except as provided in this Instruction 7, no stock transfer tax stamps or funds to cover such stamps need to accompany this Letter of Transmittal. Blair will pay or cause to be paid any stock transfer taxes payable on the transfer to it of shares purchased under the tender offer. If, however:

(a) payment of the purchase price is to be made to any person other than the registered holder(s);

(b) tendered certificates are registered in the name of any person(s) other than the person(s) signing this Letter of Transmittal;

then the depositary will deduct from the purchase price the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person(s) or otherwise) payable on account thereof, unless satisfactory evidence of the payment of such taxes or an exemption from them is submitted.

8. Order of Purchase in Event of Proration. Stockholders may designate the order in which their shares are to be purchased in the event of proration. The order of purchase may have an effect on the United States federal income tax classification and the amount of any gain or loss on the shares purchased. See Section 13 of the Offer to Purchase.

9. Special Payment and Delivery Instructions. If certificate(s) for shares not tendered or not purchased and/or check(s) are to be issued in the name of a person other than the signer of the Letter of Transmittal or if the certificate(s) and/or such check(s) are to be sent to someone other than the person signing the Letter of Transmittal or to the signer at a different address, the boxes captioned “Special Payment Instructions” and/or “Special Delivery Instructions” on this Letter of Transmittal should be completed as applicable and signatures must be guaranteed as described in Instructions 1 and 6.

10. Irregularities. All questions as to the number of shares to be accepted and the validity, form, eligibility, including time of receipt, and acceptance for payment of any tender of shares will be determined by Blair in its sole discretion, which determinations shall be final and binding on all parties. Blair reserves the absolute right to reject any or all tenders of shares it determines not to be in proper form or the acceptance of which or payment for which may, in the opinion of Blair, be unlawful. Blair also reserves the absolute right to waive with respect to all stockholders any of the conditions of the tender offer and to waive any defect or irregularity in the tender of any particular shares, and Blair’s interpretation of the terms of the tender offer, including these instructions, will be final and binding on all parties. No tender of shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time, as Blair shall determine. None of Blair, the dealer manager (as defined in the Offer to Purchase), the depositary, the information agent (as defined in the Offer to Purchase) or any other person is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give any such notice.

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11. Questions and Requests for Assistance and Additional Copies. Any questions or requests for assistance or for additional copies of the Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the information agent at the telephone number and address set forth below. You may also contact the dealer manager or your broker, dealer, commercial bank or trust company for assistance concerning the tender offer.

The information agent for the tender offer is:

Georgeson Shareholder Communications Inc.

17 State Street, 10th Floor

New York, NY 10004

Bankers and Brokers Call: (212) 440-9800

All Others Call Toll Free: (866) 729-6811

12. Tax Identification Number and Backup Withholding. U.S. federal income tax law generally requires that a stockholder whose tendered shares are accepted for purchase, or such stockholder’s assignee, in either case, referred to as the “payee,” provide the depositary with such payee’s correct taxpayer identification number, which, in the case of a payee who is an individual, is such payee’s social security number. If the depositary is not provided with the correct taxpayer identification number or an adequate basis for an exemption, such payee may be subject to penalties imposed by the Internal Revenue Service and backup withholding in an amount equal to 28% of the gross proceeds received pursuant to the tender offer. If withholding results in an overpayment of taxes, a refund may be obtained. To prevent backup withholding, each payee must provide the depositary with a correct taxpayer identification number by completing the Substitute Form W-9 included herewith, and certify, under penalties of perjury, that such taxpayer identification number is correct (or that such payee is awaiting a taxpayer identification number), that such stockholder is not subject to backup withholding of federal income tax, and that such stockholder is a U.S. person. If the payee does not have a taxpayer identification number, such payee should (i) consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for instructions on applying for a taxpayer identification number, (ii) write “Applied For” in the space provided in Part 1 of the Substitute Form W-9 and (iii) sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number. If the payee does not provide such payee’s taxpayer identification number to the depositary, backup withholding will apply and will reduce the net amount paid to the selling stockholder. Note that writing “Applied For” on the Substitute Form W-9 means that the payee has already applied for a taxpayer identification number or that such payee intends to apply for one in the near future. If shares are held in more than one name or are not in the name of the actual owner, consult the Substitute Form W-9 Guidelines for information on which taxpayer identification number to report. Exempt payees, including, among others, all corporations and certain foreign individuals, are not subject to backup withholding and reporting requirements. To prevent possible erroneous backup withholding, an exempt payee should check the exempt payee box in Part 2 of Substitute Form W-9, and should sign and date the form. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. In order for a nonresident alien or foreign entity to qualify as an exempt payee, such person must submit a completed IRS Form W-8BEN or a Substitute Form W-8 (or similar form), signed under penalties of perjury attesting to such exempt status. Such form may be obtained from the depositary.

13. Withholding on Foreign Holder. The following discussion applies to any “foreign stockholder,” that is, a stockholder that, for U.S. federal income tax purposes, is a non-resident alien individual, a foreign corporation, a foreign partnership, a foreign estate or a foreign trust. A foreign stockholder who has provided a completed IRS Form W-8BEN or a Substitute Form W-8 (or similar form) to the depositary will not be subject to backup withholding. However, foreign stockholders generally are subject to withholding under Internal Revenue Code sections 1441 or 1442 at a rate of 30% of the gross payments received by such foreign stockholders, which are subject to dividend treatment. If a stockholder’s address is outside the United States, and if the depositary has not received a Substitute Form W-9, the depositary will assume that the stockholder is a foreign stockholder. The general 30% withholding rate may be reduced under a tax treaty, if appropriate certification

11

(Form W-8BEN) is furnished to the depositary. A foreign stockholder may be eligible to obtain a refund of all or a portion of any tax withheld if such stockholder meets those tests described in Section 13 of the Offer to Purchase that would characterize the exchange as a sale (as opposed to a dividend) or is otherwise able to establish that no tax or a reduced amount of tax is due. Foreign stockholders are urged to consult their tax advisors regarding the application of U.S. federal income tax withholding and the refund procedure.

14. Lost, Stolen, Destroyed or Mutilated Certificates. If any certificate representing shares has been lost, stolen, destroyed or mutilated, the stockholder should notify National City Bank, the transfer agent for the shares, of that fact by calling National City Bank at 1-800-622-6757 and asking for instructions on obtaining a replacement certificate(s). National City Bank will require you to complete an affidavit of loss and return it to National City Bank. Such stockholder will then be instructed by National City Bank as to the steps that must be taken in order to replace the certificate. A bond may be required to be posted by the stockholder to secure against the risk that the certificate may be subsequently recirculated. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, stolen, destroyed or mutilated certificates have been followed.

15. Dividend Reinvestment and Stock Purchase Plan. If a tendering stockholder desires to tender shares held under Blair’s Dividend Reinvestment and Stock Purchase Plan (the “DRIP”), the section captioned “Tender of Dividend Reinvestment and Stock Purchase Plan Shares” on page 6 should be completed. A participant in the DRIP may complete such section on only one Letter of Transmittal submitted by such participant. If a participant submits more than one Letter of Transmittal and completes such section on more than one letter of transmittal, the participant will be deemed to have elected to tender all shares held under the DRIP.

If a participant authorizes a tender of shares held in the DRIP, all such shares credited to such participant’s account(s), including fractional shares, will be tendered, unless otherwise specified in the appropriate space in the box captioned “Tender of Dividend Reinvestment and Stock Purchase Plan Shares.” In the event that the box captioned “Tender of Dividend Reinvestment and Stock Purchase Plan Shares” is not completed, no shares held under the DRIP will be tendered. If a participant tenders all of such participant’s DRIP Shares and all such shares are purchased by Blair pursuant to the Offer, such tender will be deemed to be authorization and written notice to National City Bank of termination of such participant’s participation in the DRIP.

Important: this Letter of Transmittal or a manually signed photocopy of it (together with certificate(s) for shares or confirmation of book-entry transfer and all other required documents) or, if applicable, the Notice of Guaranteed Delivery must be received by the depositary before the expiration date.

12

PAYER’S NAME: Computershare Trust Company of New York
SUBSTITUTE Form W-9 Department of the Treasury Internal Revenue Service	Part 1—Taxpayer Identification Number—Please provide your TIN in the box at right and certify by signing and dating below. If awaiting TIN, write “Applied For.”	Social Security Number OR Employer Identification Number
Payer’s Request for Taxpayer Identification Number (TIN) and Certification	Part 2—For Payees Exempt from Backup Withholding—Check the box if you are NOT subject to backup withholding. ¨
	Part 3—Certification—Under penalties of perjury, I certify that: (1)    The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2)    I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (“IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. (3)    I am a U.S. person (including a U.S. resident alien).
	Certification Instructions.—You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. However, if, after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item 2.
SIGNATURE		DATE

NOTE:    FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. IN ADDITION, FAILURE TO PROVIDE SUCH INFORMATION MAY RESULT IN A PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE “APPLIED FOR” INSTEAD OF A TIN IN THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 28% of all reportable payments made to me will be withheld until I provide a taxpayer identification number.
Signature	Date

Any questions and requests for assistance or additional copies of the Offer to Purchase, the Letter of Transmittal and related materials may be directed to the information agent or dealer manager at their respective addresses and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the tender offer.

The information agent for the tender offer is:

17 State Street, 10th Floor

New York, NY 10004

Banks and Brokers Call: (212) 440-9800

All Others Call Toll-Free: (866) 729-6811

The dealer manager for the tender offer is:

111 Center Street, Suite 2400

Little Rock, AR 72201

Call Toll-Free: (800) 643-9691

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payer.—Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.

For this Type of Account:	Give the name and SOCIAL SECURITY Number of —
1.   Individual	The individual
2.   Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account.(1)
3.   Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)
4.   a. The usual revocable savings     trust account (grantor is also     trustee)	The grantor-trustee(1)
b. So-called trust account that is     not a legal or valid trust under     state law	The actual owner(1)
5.   Sole proprietorship or single-owner LLC	The owner(3)

For this Type of Account:	Give the name and EMPLOYER IDENTIFICATION Number of —
6.   Sole proprietorship or single-owner LLC	The owner(3)
7.   A valid trust, estate, or pension trust	The legal entity (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(4)
8.   Corporate or LLC electing corporate status on Form 8837	The corporation
9.   Association, club, religious, charitable, educational, or other tax-exempt organization	The organization
10.   Partnership or multi-member LLC	The partnership
11.   A broker or registered nominee	The broker or nominee
12.   Account with the Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments	The public entity

(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person’s number must be furnished.

(2) Circle the minor’s name and furnish the minor’s social security number.

(3) Show the individual name of the owner. Either the social security number or employer identification number may be furnished.

(4) List first and circle the name of the legal trust, estate, or pension trust.

Note:    If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Page 2

Obtaining a Number

If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Card (for resident individuals), Form SS-4, Application for Employer Identification Number (for businesses and all other entities), or Form W-7, Application for IRS Individual Taxpayer Identification Number (for alien individuals required to file U.S. tax returns), at an office of the Social Security Administration or the Internal Revenue Service.

To complete the Substitute Form W-9, if you do not have a taxpayer identification number, write “applied for” in the space provided for the taxpayer identification number, sign and date the Form, and give it to the requester. Generally, you will then have 60 days to obtain a taxpayer identification number and furnish it to the requester. If the requester does not receive your taxpayer identification number within 60 days, backup withholding, if applicable, will begin and will continue until you furnish your taxpayer identification number to the requester.

Payees and Payments Exempt from Backup Withholding

Set forth below is a list of payees that are exempt from backup withholding with respect to all or certain types of payments. For interest and dividends, all listed payees are exempt except the payee in item (9). For broker transactions, all payees listed in items (1) through (13) and any person registered under the Investment Advisors Act of 1940 who regularly acts as a broker is exempt. For payments subject to reporting under Sections 6041 and 6041A, the payees listed in items (1) through (7) are generally exempt. For barter exchange transactions and patronage dividends, the payees listed in items (1) through (5) are exempt.

(1) An organization exempt from tax under Section 501(a), an IRA, or a custodial account under Section 403(b)(7) if the account satisfies the requirements of Section 401(f)(2).

(2) The United States or any of its agencies or instrumentalities.

(3) A state, the District of Columbia, a possession of the United States, or any or their subdivisions or instrumentalities.

(4) A foreign government or any if its political subdivisions, agencies or instrumentalities.

(5) An international organization or any of its agencies or instrumentalities.

(6) A corporation.

(7) A foreign central bank of issue.

(8) A dealer in securities or commodities registered in the U.S., the District of Columbia, or a possession of the U.S.

(9) A futures commission merchant registered with the Commodity Futures Trading Commission.

(10) A real estate investment trust.

(11) An entity registered at all times under the Investment Company Act of 1940.

(12) A common trust fund operated by a bank under Section 584(a).

(13) A financial institution.

(14) A middleman known in the investment community as a nominee or custodian.

(15) A trust exempt from tax under Section 664 or described in Section 4947.

Payments of dividends and patronage dividends not generally subject to backup withholding include the following:

• Payments to nonresident aliens subject to withholding under Section 1441.

• Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner.

• Payments of patronage dividends not paid in money.

• Payments made by certain foreign organizations.

• Section 404(k) distributions made by an ESOP.

Payments of interest not generally subject to backup withholding include the following:

• Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer’s trade or business and you have not provided your correct taxpayer identification number to the payer.

• Payments of tax-exempt interest (including exempt-interest dividends under Section 852).

• Payments described in Section 6049(b)(5) to non-resident aliens.

• Payments on tax-free covenant bonds under Section 1451.

• Payments made by certain foreign organizations.

• Mortgage or student loan interest paid to you.

Exempt payees described above should file a Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, CHECK THE EXEMPT PAYEE BOX AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL REVENUE SERVICE FORM W-8BEN OR FORM W-8ECI, AS APPLICABLE.

Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N and the regulations promulgated thereunder.

Privacy Act Notice. — Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 28% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.

Penalties

(1) Penalty for Failure to Furnish Taxpayer Identification Number. — If you fail to furnish your taxpayer identification number to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information with Respect to Withholding. — If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for Falsifying Information. — Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONSULT YOUR TAX ADVISER OR THE INTERNAL REVENUE SERVICE

EX-99.(A)(1)(III)

Notice of Guaranteed Delivery for

Offer to Purchase for Cash up to 4.4 million Shares of its

common stock, Without Nominal or Par Value,

at a Purchase Price of $42.00 Per Share

by

Blair Corporation

THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE

AT 12:00 MIDNIGHT, EASTERN TIME,

ON TUESDAY, AUGUST 16, 2005, UNLESS THE TENDER OFFER IS EXTENDED.

As set forth in Section 3 of the Offer to Purchase, dated July 20, 2005, this Notice of Guaranteed Delivery, or a facsimile hereof, must be used to accept the tender offer if:

(a) certificates representing shares of common stock, without nominal or par value, of Blair Corporation, a Delaware corporation, cannot be delivered prior to the “expiration date” (as defined in Section 1 of the Offer to Purchase); or

(b) the procedure for book-entry transfer cannot be completed before the expiration date; or

(c) time will not permit a properly completed and duly executed Letter of Transmittal, or manually signed facsimile thereof, and all other required documents to reach the depositary referred to below before the expiration date.

This form or a facsimile of it, signed and properly completed, may be delivered by hand or transmitted by facsimile transmission or mailed to the depositary so that it is received by the depositary before the expiration date. See Section 3 of the Offer to Purchase.

The depositary for the tender offer is:

Computershare Trust Company of New York

By mail:	By hand delivery or overnight delivery:	By facsimile transmission (for eligible institutions only):
Computershare Trust Company of New York Wall Street Station P.O. Box 1010 New York, NY 10268-1010	Computershare Trust Company of New York Wall Street Plaza 88 Pine Street, 19th Floor New York, NY 10005	(212) 701-7636 For confirmation call: (212) 701-7600

The information agent for the tender offer is:

Georgeson Shareholder Communications Inc.

Call Toll Free: (866) 729-6811

Delivery of this Notice of Guaranteed Delivery to an address other than those shown above or transmission of instructions via the facsimile number other than the one listed above does not constitute a valid delivery. Deliveries to Blair, the dealer manager of the tender offer or the information agent of the tender offer will not be forwarded to the depositary and therefore will not constitute valid delivery. Deliveries to the book-entry transfer facility (as defined in the Offer to Purchase) will not constitute valid delivery to the depositary.

This Notice of Guaranteed Delivery form is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an “eligible guarantor institution” (as defined in Section 3 of the Offer to Purchase) under the instructions thereto, such signature must appear in the applicable space provided in the signature box on the Letter of Transmittal.

Ladies and Gentlemen:

The undersigned hereby tenders to Blair the number of shares of common stock, without nominal or par value, of Blair specified below at a price per share of $42.00, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, and the related Letter of Transmittal, which, as may be amended and supplemented from time to time, together constitute the tender offer, receipt of which are hereby acknowledged.

CONDITIONAL TENDER

A tendering stockholder may condition his or her tender of shares upon Blair purchasing a specified minimum number of such shares tendered, all as described in Section 6 of the Offer to Purchase. Unless at least that minimum number of shares indicated below is purchased by Blair pursuant to the terms of the tender offer, none of the shares tendered by such tendering stockholder will be purchased. It is the tendering stockholder’s responsibility to calculate that minimum number of shares that must be purchased if any are purchased, and each stockholder is urged to consult his or her broker or other financial and tax advisors. Unless the box below has been checked and a minimum number of shares have been specified, the tender will be deemed unconditional.

¨ The minimum number of shares tendered hereby that must be purchased, if any are purchased, is:                  shares.

If, because of proration, such minimum number of shares tendered hereby will not be purchased, Blair may accept conditional tenders by random lot, if necessary. However, to be eligible for purchase by random lot, the tendering stockholder must have tendered all of his or her shares and checked this box:

¨ The tendered shares represent all shares held by the undersigned, and the undersigned wishes such shares to be eligible for purchase by random lot.

(Please Type or Print)

Number of Shares Tendered:                                                                                                                                                               

Certificate Numbers (if available and applicable):                                                                                                                       

Name(s) of Record Holder(s):                                                                                                                                                             

Address(es):                                                                                                                                                                                               

(Including Zip Code)

Area Code(s) and Telephone Number(s):                                                                                                                                        

Sign here:

Signature(s):                                                                                                                                                                                               

Date:                                 , 2005

If shares will be tendered by book-entry transfer, check the box:  ¨

Name of Tendering Institution:                                                                                                                                                           

Account Number:                                                                                                                                                                                     

Transaction Code Number:                                                                                                                                                                   

GUARANTEE

(Not to Be Used for Signature Guarantee)

The undersigned, a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity which is an “eligible guarantor institution,” as such term is defined in rule 17Ad-15 under the securities exchange act of 1934, as amended, each of the foregoing constituting an “Eligible Guarantor Institution,” guarantees the delivery to the depositary of the shares tendered hereby, in proper form for transfer, or a confirmation that the shares tendered hereby have been delivered under the procedure for book-entry transfer set forth in the Offer to Purchase into the depositary’s account at the book-entry transfer facility, together with a properly completed and duly executed letter of transmittal, or a manually signed facsimile thereof, or an Agents’ Message, in the case of a book-entry transfer, and any other required documents, all within three American Stock Exchange trading days of the date hereof.

Name of Firm:	Name of Firm:
Authorized Signature:	Authorized Signature:
Name:	Name:
Title:	Title:
Address:	Address:
Zip Code:	Zip Code:
Area Code and Telephone Number:	Area Code and Telephone Number:
Dated:                                                                             , 2005	Dated:                                                                             , 2005

Do not send share certificates with this Notice of Guaranteed Delivery.

Share certificates should be sent with your Letter of Transmittal.

EX-99.(A)(1)(IV)

NOTICE OF INSTRUCTIONS

(OPTIONS)

(NOTE: To understand the offer fully and for a more complete description of the terms and conditions of the offer, you should carefully read the entire Offer to Purchase, the related Letter of Transmittal and the attached Employee FAQ. THIS FORM SHOULD BE USED ONLY BY HOLDERS OF VESTED STOCK OPTIONS WITH AN EXERCISE PRICE OF LESS THAN $42.00 PER SHARE WHO DESIRE TO CONDITIONALLY EXERCISE SUCH OPTIONS AND TENDER THIS RESULTING OPTIONS SHARES TO THE COMPANY IN THE OFFER.)

THIS NOTICE OF INSTRUCTIONS (OPTIONS) FORM MUST BE RECEIVED BY ED SIERZEGA, AT THE ADDRESS BELOW BEFORE 5:00 PM, EASTERN TIME, ON AUGUST 9, 2005, UNLESS THE OFFER IS EXTENDED, IN WHICH CASE THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION FORM WILL BE 5:00 PM, EASTERN TIME, ON THE FIFTH BUSINESS DAY PRIOR TO THE EXPIRATION OF THE OFFER, AS EXTENDED. YOU MUST SIGN AND COMPLETE THIS FORM FOR YOUR DIRECTION TO BE VALID.

TO: ED SIERZEGA

BLAIR CORPORATION

220 HICKORY STREET

WARREN, PENNSYLVANIA 16366

NOTE: DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR INDIVIDUAL AT THE COMPANY OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

NAME, ADDRESS AND (SOCIAL SECURITY NUMBER) OF

OPTION HOLDER

Name:
Address:
	Social Security Number
	(PLEASE FILL IN)

I acknowledge receipt of the Offer to Purchase dated July 20, 2005 (the “Offer to Purchase”) and the related Letter of Transmittal and Employee FAQ with respect to an offer by Blair Corporation, a Delaware corporation, to purchase up to 4,400,000 shares of common stock, without nominal or par value per share, at a price of $42.00 per share (the “Offer Price”), net to the seller in cash, without interest. The number of shares that the Company is offering to purchase includes Option Shares (as defined herein) and excludes those shares used to pay the exercise price in “cashless” exercises as described in Section 3 of the Offer to Purchase. Unless otherwise noted, the term “shares” includes Options Shares and does not include those shares used to pay the exercise price in “cashless” exercises.

1.     I hereby exercise vested options, with an exercise price of less than $42.00 per share, for the amount of shares set forth herein (“Option Shares”). My exercise of options hereunder is subject to the condition that any options for Option Shares tendered but not purchased by the Company because of proration or otherwise, shall be deemed not to have been exercised.

2.     I hereby elect as follows with respect to my options:

(CHOOSE ONLY ONE)

¨     I wish to exercise and tender Option Shares having an exercise price of less than $42.00 per share from ALL of my vested options.

¨     I wish to exercise and tender                          Option Shares having an exercise price of less than $42.00 per share from my vested options.

NOTE: If none of the boxes is checked and the form is otherwise properly completed, signed and returned to Ed Sierzega, Option Shares from all of your vested options will be tendered.

¨     I wish to exercise and tender my vested options and Option Shares having an exercise price of less than $42.00 per share in the following order:

Date of Grant	Number of Shares	Exercise Price
a.
b.
c.
d.
e.
f.

Attach additional signed list if necessary

Note: If you do not designate the order in which you wish to have your options exercised, your vested

options will be exercised in the order of exercise price starting with the lowest exercise price.

3. This notice instructs you to exercise the options and to tender, at the $42.00 per share purchase price set forth in the Offer to Purchase and related Letter of Transmittal, the Option Shares that I am entitled to receive upon exercise, as instructed above, pursuant to the terms and conditions set forth in the Offer to Purchase you have furnished to me. By signing this Notice of Instructions (Options) I hereby agree that if any Option Shares are validly tendered and accepted, the options pursuant to which such Option Shares are acquired will be deemed exercised and I will (a) surrender shares with a fair market value (based on the closing price of the Company’s common stock on the expiration of the Offer) equal to the exercise price of the Options so exercised and the applicable tax withholding and (b) receive a cash payment equal to (i) the number of Option Shares that are accepted for purchase, times (ii) the $42.00 per share purchase price, and further agree to be bound by the terms and conditions set forth herein and in the Offer to Purchase.

4. I understand and acknowledge that any portion of the options with respect to Option Shares that are purchased and in the Offer will be deemed exercised and the exercised portion of the option will be cancelled. I understand and acknowledge that any portion of the options with respect to Option Shares not purchased in the Offer will be deemed not to have been exercised, and will continue to be governed by such option’s existing terms and conditions.

5. Your conditional exercise of the options and the tender of the resulting Option Shares pursuant to the Offer to Purchase may be withdrawn at any time prior to 5:00 PM, Eastern time, on August 9, 2005, unless the Offer is extended, in which case the deadline for receipt of notice of withdrawal will be 5:00 PM, Eastern time, on the fifth business day prior to the expiration of the Offer, as extended. After that, only if Option Shares are not accepted for payment by the Company as provided in the Offer to Purchase will the option remain outstanding. You must submit a written, transmission notice of withdrawal so that it is received by Ed Sierzega, at the address indicated above before 5:00 PM, Eastern time, on August 9, 2005, unless the Offer is extended, in which case the deadline for receipt of your notice of withdrawal will be 5:00 PM, Eastern time on the fifth business day prior to the expiration of the Offer, as extended. Any such notice of withdrawal must specify your name, social security number, the number of Option Shares that you wish to withdraw from the offer and to which Option Shares the withdrawal relates. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Company, in its sole discretion, which determination will be final and binding on all parties. None of the company, the Dealer Manager, the Information Agent, the Depositary, or any other person will be obligated to give notice of any defects or irregularities in any notice of withdrawal and none of them shall incur any liability for failure to give any such notice. Any options properly withdrawn will thereafter be deemed not to have been conditionally exercised, or the resulting Option Shares tendered for purposes of the Offer to Purchase. However, conditional option exercises which have been withdrawn may be rescinded and Option Shares retendered by again properly following the procedures for conditional option exercises and the tendering of resulting Option Shares.

THIS NOTICE OF INSTRUCTIONS (OPTIONS) FORM MUST BE RECEIVED BY ED SIERZEGA BEFORE 5:00 PM, EASTERN TIME, ON AUGUST 9, 2005. UNLESS THE OFFER IS EXTENDED, IN WHICH CASE THE DEADLINE FOR RECEIPT OF YOUR INSTRUCTION FORM WILL BE 5:00 PM, EASTERN TIME, ON THE FIFTH BUSINESS DAY PRIOR TO THE EXPIRATION OF THE OFFER, AS EXTENDED. YOU MUST SIGN AND COMPLETE THIS FORM FOR YOUR DIRECTION TO BE VALID.

GENERAL TERMS AND CONDITIONS OF THE OFFER APPLICABLE TO OPTION SHARE TENDERS:

NOTE: THE FOLLOWING TERMS AND CONDITIONS ARE IN ADDITION TO, AND SHALL NOT BE CONSTRUED TO LIMIT IN ANY WAY, THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE AND RELATED LETTER OF TRANSMITTAL.

1.    The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Company to be necessary or desirable to exercise the options and complete the sale, assignment and transfer of the Option Shares tendered hereby and understands and agrees with all of the terms of the Offer to Purchase.

2.    The undersigned understands that tenders of Option Shares pursuant to the procedures described in Section 3 of the Offer to Purchase and in the related Letter of Transmittal and this Notice of Instructions (Optional) will constitute an agreement between the undersigned and the company upon the terms and subject to the conditions of the offer.

3.    All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.

4.    The Company will pay any stock transfer taxes with respect to the sale and transfer of any Option Shares to it or its order pursuant to the Offer to Purchase. The undersigned understands that (a) the purchase price will be paid to the undersigned (the holder CANNOT elect to have the purchase price paid to another person);

and (b) the undersigned will be responsible for paying federal and state income taxes arising from the sale of the Option Shares in the Offer (a portion of which will be withheld as described in Instruction 5 below).

5.    Under the U.S. federal income tax laws, the Company will be required to withhold income and employment taxes from the amount of any compensation income paid to option holders who are current or former employees of the Company pursuant to the Offer to Purchase.

6.    All questions as to the number of Option Shares accepted, the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Option Shares will be determined by the Company in its sole discretion, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any or all conditional exercises of options and tenders of Option shares it determines not to be in proper form or the acceptance of which or payment for which may, in the opinion of the Company’s counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular Option Shares, and the Company’s interpretation of the terms of the Offer to Purchase (including this Notice of Instructions (Options)) will be final and binding on all parties. No tender of Option Shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Company shall determine. None of the Company, the Depositary, the Dealer Manager, the Information Agent or any other person is or will be obligated to give notice of any defects or irregularities in tenders and none of them will incur any liability for failure to give any such notice. Neither will the company be liable for any failure to waive any defect or irregularity in any tender of Option Shares.

7.    If this Notice of Instructions (Options) is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary capacity, such person should so indicate when signing, and proper evidence satisfactory to the Company of the authority of such person so to act must be submitted to Ed Sierzega.

8.    If you have questions regarding excercising your stock options in order to tender shares in the tender offer, you will need to contact Ed Sierzega at extension 6116. Questions and requests for assistance or additional copies of the Offer to Purchase and related Letter of transmittal, the Employee FAQ and this Notice of Instructions (Options) should be directed to Georgeson Shareholder Communications Inc. at (800) 255-4791.

SIGN HERE

SIGNATURE OF OPTION HOLDER                                                                                                                                                   

Name                                                                                                                                                                                                                   

(PLEASE PRINT)

If signed by other than option holder, capacity (full title)

Address (if different from that shown on the cover page)

Daytime Telephone Number

Dated

(Must be signed by option holder exactly as name appears on option(s). If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 7.)

EX-99.(A)(5)(I)

Offer to Purchase for Cash up to 4.4 million Shares of its

Common Stock, Without Nominal or Par Value,

at a Purchase Price of $42.00 Per Share

by

Blair Corporation

THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE

AT 12:00 MIDNIGHT, EASTERN TIME,

ON TUESDAY, AUGUST 16, 2005, UNLESS THE TENDER OFFER IS EXTENDED.

July 20, 2005

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

Blair Corporation, a Delaware corporation (“Blair”), has appointed us to act as the dealer manager in connection with its offer to purchase for cash up to 4.4 million shares of its common stock, without nominal or par value (“Blair Common Stock”), at a purchase price of $42.00 per share, upon the terms and subject to the conditions set forth in its Offer to Purchase, dated July 20, 2005 (the “Offer to Purchase”), and in the related Letter of Transmittal (the “Letter of Transmittal”), which, as may be amended and supplemented from time to time, together constitute the tender offer.

Blair will purchase 4.4 million shares of Blair Common Stock properly tendered and not properly withdrawn before the “expiration date” (as defined in Section 1 of the Offer to Purchase), or such lesser number of shares as are properly tendered and not properly withdrawn, at a price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions of the tender offer, including the proration and conditional tender provisions thereof. Blair reserves the right, in its sole discretion, to purchase more than 4.4 million shares of Blair Common Stock under the tender offer, subject to applicable legal requirements. Shares of Blair common stock tendered and not purchased because of proration or conditional tender will be returned promptly after the expiration date at the expense of Blair to the stockholders who tendered such shares. See Section 1 of the Offer to Purchase.

If, at the expiration date, more than 4.4 million shares of Blair Common Stock, or such greater number of shares as Blair may elect to purchase in accordance with applicable legal requirements, are properly tendered and not properly withdrawn, Blair will, upon the terms and subject to the conditions of the tender offer, accept such shares for purchase on a pro rata basis from all such tendering stockholders, subject to the conditional tender provisions described in Section 6 of the Offer to Purchase.

The tender offer is not conditioned on any minimum number of shares of Blair Common Stock being tendered. The tender offer is, however, subject to other conditions. See Section 7 of the Offer to Purchase.

For your information and for forwarding to your clients for whom you hold shares of Blair Common Stock registered in your name or in the name of your nominee, we are enclosing the following documents:

1. Offer to Purchase, dated July 20, 2005;

2. Letter of Transmittal for your use and for the information of your clients (together with accompanying instructions and Substitute Form W-9);

3. Notice of Guaranteed Delivery to be used to accept the tender offer if the share certificates and all other required documents cannot be delivered to the depositary before the expiration date or if the procedure for book-entry transfer cannot be completed before the expiration date;

4. Letter to clients that you may send to your clients for whose accounts you hold shares of Blair Common Stock registered in your name or in the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the tender offer;

5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9;

6. Letter dated July 20, 2005, from the Chairman of the Board of Directors of Blair and Chief Executive Officer to stockholders of Blair; and

7. Return envelope addressed to the depositary.

We urge you to contact your clients as promptly as possible. The tender offer, proration period and withdrawal rights will expire at 12:00 midnight, Eastern Time, on Tuesday, August 16, 2005, unless the tender offer is extended.

No fees or commissions will be payable to brokers, dealers, commercial banks, trust companies or any person for soliciting tenders of shares of Blair Common Stock under the tender offer other than fees paid to the dealer manager and the information agent, as described in the Offer to Purchase. Blair will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to the beneficial owners of shares of Blair Common Stock held by you as a nominee or in a fiduciary capacity. Blair will pay or cause to be paid any stock transfer taxes applicable to its purchase of shares, except as otherwise provided in the Offer to Purchase and Letter of Transmittal.

In order to take advantage of the tender offer, a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, including any required signature guarantees or an Agents’ Message, in the case of a book-entry transfer and any other required documents, must be sent to the depositary with either a certificate or certificates representing the tendered shares of Blair Common Stock or confirmation of their book-entry transfer, all in accordance with the instructions set forth in the Offer to Purchase and Letter of Transmittal.

Holders of shares of Blair Common Stock whose certificate(s) for such shares are not immediately available, holders who cannot deliver such certificate(s) and all other required documents to the depositary or holders who cannot complete the procedures for book-entry transfer before the expiration date must tender their shares according to the procedure for guaranteed delivery set forth in Section 3 of the Offer to Purchase.

The Board of Directors of Blair has approved the tender offer. However, neither Blair nor its Board of Directors nor the dealer manager makes any recommendation to stockholders as to whether to tender or refrain from tendering their shares of Blair Common Stock. Stockholders must make their own decision as to whether to tender their shares of Blair Common Stock and, if so, how many shares to tender. Stockholders should discuss whether to tender all or any portion of their shares with their brokers or other financial and tax advisors.

Any inquiries you may have with respect to the tender offer should be addressed to Stephens Inc., the dealer manager of the tender offer, or to Georgeson Shareholder Communications Inc., the information agent of the tender offer, at their respective addresses and telephone numbers set forth on the back cover page of the Offer to Purchase.

Additional copies of the enclosed material may be obtained from Georgeson Shareholder Communications Inc., by calling them collect at: (212) 440-9800.

Very truly yours,

Stephens Inc.

Enclosures

Nothing contained herein or in the enclosed documents shall make you or any other person an agent of Blair, the dealer manager, the information agent or the depositary or any affiliate of the foregoing, or authorize you or any other person to use any document or make any statement on behalf of any of them in connection with the tender offer other than the documents enclosed herewith and the statements contained therein.

EX-99.(A)(5)(II)

Offer to Purchase for Cash up to 4.4 million Shares of its

Common Stock, Without Nominal or Par Value,

at a Purchase Price of $42.00 Per Share

by

Blair Corporation

July 20, 2005

To Our Clients:

Enclosed for your consideration are the Offer to Purchase, dated July 20, 2005, and the related Letter of Transmittal, which, as amended and supplemented from time to time, together constitute the tender offer, in connection with the tender offer by Blair Corporation, a Delaware corporation (“Blair”), to purchase up to 4.4 million shares of its common stock, without nominal or par value (“Blair Common Stock”), at a purchase price of $42.00 per share, net to the sellers in cash, without interest, upon the terms and subject to the conditions set forth in the tender offer.

Blair will purchase 4.4 million shares of Blair Common Stock properly tendered and not properly withdrawn before the “expiration date” (as defined in Section 1 of the Offer to Purchase), or such lesser number of shares as are properly tendered and not properly withdrawn, at a price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions of the tender offer, including the proration and conditional tender provisions thereof. Blair reserves the right, in its sole discretion, to purchase more than 4.4 million shares of Blair Common Stock under the tender offer, subject to applicable legal requirements. Shares of Blair Common Stock tendered and not purchased because of proration or conditional tender will be returned promptly after the expiration date at the expense of Blair to the stockholders who tendered such shares. See Section 1 of the Offer to Purchase.

If, at the expiration date, more than 4.4 million shares of Blair Common Stock, or such greater number of shares as Blair may elect to purchase in accordance with applicable legal requirements, are properly tendered and not properly withdrawn, Blair will, upon the terms and subject to the conditions of the tender offer, accept such shares for purchase on a pro rata basis from all such tendering stockholders, subject to the conditional tender provisions described in Section 6 of the Offer to Purchase.

We are the owner of record of shares of Blair Common Stock held for your account. As such, we are the only ones who can tender your shares, and then only pursuant to your instructions. We are sending you the Letter of Transmittal for your information only; you cannot use it to tender shares of Blair Common Stock we hold for your account.

Please instruct us as to whether you wish us to tender any or all of the shares of Blair Common Stock we hold for your account on the terms and subject to the conditions of the tender offer.

We call your attention to the following:

1. You may tender shares of Blair Common Stock at a price of $42.00 per share as indicated in the attached instruction form, net to you in cash, without interest.

2. You should consult with your broker on the possibility of designating the priority in which your shares will be purchased in the event of proration.

3. The tender offer is not conditioned upon any minimum number of shares being tendered. The tender offer is, however, subject to certain other conditions set forth in Section 7 of the Offer to Purchase.

4. The tender offer, proration period and withdrawal rights will expire at 12:00 midnight, Eastern Time, on Tuesday, August 16, 2005, unless Blair extends the tender offer.

5. The tender offer is for up to 4.4 million shares, constituting approximately 53% of the issued and outstanding shares of Blair Common Stock as of June 30, 2005.

6. Tendering stockholders who are registered stockholders or who tender their shares directly to the depositary will not be obligated to pay any brokerage commissions or fees, solicitation fees, or, except as set forth in the Offer to Purchase and the Letter of Transmittal, stock transfer taxes on the purchase by Blair of shares of Blair Common Stock under the tender offer.

7. If you wish to condition your tender upon the purchase of a specified minimum number of the shares of Blair Common Stock which you tender, you may elect to do so and thereby avoid possible proration of your tender. You are urged to consult your own tax advisor with regard to this election. The purchase of shares by Blair of Blair Common Stock from all tenders, which are so conditioned, may be determined by random lot. To elect such a condition complete the section below captioned “Conditional Tender.”

8. The Board of Directors of Blair has approved the tender offer. However, neither Blair nor its Board of Directors nor the dealer manager makes any recommendation to stockholders as to whether to tender or refrain from tendering their shares of Blair Common Stock. Stockholders must make their own decision as to whether to tender their shares of Blair Common Stock and, if so, how many shares to tender. Stockholders should discuss whether to tender all or any portion of their shares with their brokers or other financial and tax advisors.

If you wish to have us tender any or all of your shares of Blair Common Stock, please so instruct us by completing, executing, detaching and returning to us the attached instruction form. If you authorize us to tender your shares of Blair Common Stock, we will tender all such shares unless you specify otherwise on the attached instruction form.

Your instruction form should be forwarded to us in ample time to permit us to submit a tender on your behalf before the expiration date of the tender offer. The tender offer, proration period and withdrawal rights will expire at 12:00 midnight, Eastern Time, on Tuesday, August 16, 2005, unless Blair extends the tender offer.

As described in the Offer to Purchase, if more than 4.4 million shares, or such greater number of shares as Blair may elect to purchase in accordance with applicable legal requirements, are properly tendered and not properly withdrawn before the expiration date, Blair will accept shares for purchase on a pro rata basis, as provided in the Offer to Purchase, subject to the conditional tender provisions described in the Offer to Purchase.

The tender offer is being made solely under the Offer to Purchase and the related Letter of Transmittal and is being made to all record holders of shares of Blair common stock. The tender offer is not being made to, nor will tenders be accepted from or on behalf of, holders of shares residing in any jurisdiction in which the making of the tender offer or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

Instruction Form With Respect To

Offer to Purchase for Cash up to 4.4 Million Shares of its

Common Stock, Without Nominal or Par Value

at a Purchase Price of $42.00 Per Share

by

Blair Corporation

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated July 20, 2005, and the related Letter of Transmittal, which, as may be amended and supplemented from time to time, together constitute the tender offer in connection with the tender offer by Blair Corporation, a Delaware corporation (“Blair”), to purchase up to 4.4 million shares of its common stock, without nominal or par value (“Blair Common Stock”), at a purchase price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions of the tender offer.

The undersigned understands that Blair will purchase 4.4 million shares of Blair Common Stock properly tendered and not properly withdrawn before the “expiration date” (as defined in Section 1 of the Offer to Purchase), or such lesser number of shares as are properly tendered and not properly withdrawn, at a price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions of the tender offer, including the proration and conditional tender provisions thereof. Blair reserves the right, in its sole discretion, to purchase more than 4.4 million shares of Blair Common Stock under the tender offer, subject to applicable legal requirements. Shares of Blair Common Stock tendered and not purchased because of proration or conditional tender will be returned promptly after the expiration date at the expense of Blair to the stockholders who tendered such shares.

The undersigned hereby instruct(s) you to tender to Blair the number of shares of Blair Common Stock indicated below or, if no number is indicated, all shares you hold for the account of the undersigned, under the terms and subject to the conditions of the tender offer.

Aggregate number of shares of Blair Common Stock to be tendered by you for the account of the undersigned:

                     shares of Blair Common Stock

CONDITIONAL TENDER

A tendering stockholder may condition his or her tender of shares upon Blair purchasing a specified minimum number of such shares tendered, all as described in Section 6 of the Offer to Purchase. Unless at least that minimum number of shares indicated below is purchased by Blair pursuant to the terms of the tender offer, none of the shares tendered by such tendering stockholder will be purchased. It is the tendering stockholder’s responsibility to calculate that minimum number of shares that must be purchased if any are purchased, and each stockholder is urged to consult his or her broker or other financial and tax advisors. Unless the box below has been checked and a minimum number of shares have been specified, the tender will be deemed unconditional.

¨ The minimum number of shares tendered hereby that must be purchased, if any are purchased, is:                          shares.

If, because of proration, such minimum number of shares tendered hereby will not be purchased, Blair may accept conditional tenders by random lot, if necessary. However, to be eligible for purchase by random lot, the tendering stockholder must have tendered all of his or her shares and checked this box:

¨ The tendered shares represent all shares held by the undersigned, and the undersigned wishes such shares to be eligible for purchase by random lot.

The method of delivery of this document is at the option and risk of the tendering stockholder. If delivery is by mail, registered mail with return receipt requested, properly insured is requested. In all cases, sufficient time should be allowed to assure delivery.

SIGNATURE BOX

(Please Print)

Signature(s):

Dated:                                         , 2005

Name(s) and address(es):

(Including Zip Code)

Area code and telephone number:

Taxpayer Identification or Social Security Number:

EX-99.(A)(5)(III)

BLAIR CORPORATION

July 20, 2005

To Our Stockholders:

Blair Corporation, a Delaware corporation (“Blair”), is offering to purchase up to 4.4 million shares of our common stock from existing stockholders, subject to the terms set forth in the enclosed Offer to Purchase and the related Letter of Transmittal. The purchase price paid by Blair Corporation will be $42.00 per share, net to the seller in cash, without interest. On July 18, 2005, two trading days prior to the commencement of the tender offer, the closing price of Blair common stock on the American Stock Exchange was $39.29 per share.

Any stockholder whose shares are properly tendered directly to Computershare Trust Company of New York, the depositary of the tender offer, and purchased under the tender offer will receive the net purchase price in cash, without interest, promptly after the expiration of the tender offer. You may tender all or only a portion of your shares upon the terms and subject to the conditions of the tender offer.

The terms and conditions of the tender offer are explained in detail in the enclosed Offer to Purchase and the related Letter of Transmittal. I encourage you to read these materials carefully before making any decision with respect to the tender offer. The instructions on how to tender shares are also explained in detail in the accompanying materials.

The Board of Directors of Blair has approved the tender offer. However, neither Blair nor its Board of Directors nor the dealer manager of the tender offer makes any recommendation to you as to whether you should tender or refrain from tendering your shares. You must make your own decision as to whether to tender your shares and, if so, how many shares to tender. You should discuss whether to tender all or any portion of your shares with your broker or other financial and tax advisors. The members of our Board of Directors have agreed not to tender any of their shares of Blair’s common stock in the tender offer and our senior management has agreed to restrict the amount they tender to no more than 25% of their holdings of Blair’s common stock. Furthermore, certain institutional stockholders have agreed to tender all of their shares in the tender offer.

The tender offer will expire at 12:00 midnight, Eastern Time, on Tuesday, August 16, 2005, unless extended by Blair. If you have any questions regarding the tender offer or need assistance in tendering your shares, please contact Georgeson Shareholder Communications Inc., the information agent of the tender offer, at (866) 729-6811, or Stephens Inc., the dealer manager of the tender offer, at (800) 643-9691.

Sincerely,

John E. Zawacki

President, Chief Executive Officer and

Director of Blair Corporation

EX-99.(A)(5)(IV)

This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares. The Offer is made solely by the Offer to Purchase dated July 20, 2005 and the related Letter of Transmittal, and any amendments

or supplements to the Offer to Purchase or Letter of Transmittal. The Offer is not being made to, nor will

tenders be accepted from or on behalf of, holders of shares in any jurisdiction in which the making or

acceptance of offers to sell shares would not be in compliance with the laws of that jurisdiction.

In any jurisdiction where the securities, blue sky or other laws require the Offer to be made

by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of

Blair Corporation by Stephens Inc., the dealer manager for the Offer,

or by one or more registered brokers or dealers licensed under

the laws of that jurisdiction.

Notice of Offer to Purchase for Cash

by

Blair Corporation

Up to 4.4 million shares of its common stock

At a purchase price of $42.00 Per Share

Blair Corporation, a Delaware corporation (“Blair”), is offering to purchase for cash up to 4.4 million shares of its common stock, without nominal or par value (the “Blair Common Stock”), upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 20, 2005 (the “Offer to Purchase”) and in the related Letter of Transmittal (which together, as they may be amended and supplemented from time to time, constitute the “Offer”). Blair is inviting its stockholders to tender their Blair Common Stock at a price of $42.00 per share (the “Purchase Price”), net to the seller in cash, without interest, upon the terms and subject to the conditions of the Offer. The Offer is not conditioned on any minimum number of shares of Blair Common Stock being tendered. The Offer is, however, subject to other conditions set forth in the Offer to Purchase and the related Letter of Transmittal, including the proration and conditional tender provisions.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON TUESDAY, AUGUST 16, 2005, UNLESS THE OFFER IS EXTENDED.

The Board of Directors of Blair has approved the Offer. However, neither Blair nor its Board of Directors nor the dealer manager is making any recommendation to stockholders as to whether stockholders should tender or refrain from tendering their Blair Common Stock. Stockholders of Blair must make their own decision whether to tender their Blair Common Stock and, if so, how many shares of Blair Common Stock to tender. Stockholders should discuss whether to tender their shares of Blair Common Stock with their broker or other financial and tax advisors. The members of our Board of Directors have agreed not to tender any of their shares of Blair Common Stock in the tender offer and our senior management has agreed to restrict the amount they tender to no more than 25% of their holdings of Blair Common Stock. Furthermore, certain institutional stockholders have agreed to tender all of their shares of Blair Common Stock in the tender offer.

Blair will purchase 4.4 million shares of Blair Common Stock properly tendered and not properly withdrawn before the “expiration date” (as defined below), or such lesser number of shares as are properly tendered and not properly withdrawn, at a price of $42.00 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions of the tender offer, including the proration and conditional tender provisions.

Under no circumstances will interest be paid on the Purchase Price for the Blair Common Stock, regardless of any delay in making such payment. All Blair Common Stock acquired in the Offer will be acquired at the Purchase Price. The term “expiration date” means 12:00 midnight, Eastern Time, on Tuesday, August 16, 2005, unless Blair, in its sole discretion, shall have extended the period of time during which the Offer will remain open, in which event the term “expiration date” shall refer to the latest time and date at which the Offer, as so

extended by Blair, shall expire. Blair reserves the right, in its sole discretion, to purchase more than 4.4 million shares of Blair Common Stock under the Offer, subject to applicable legal requirements. For purposes of the Offer, Blair will be deemed to have accepted for payment (and therefore purchased) Blair Common Stock properly tendered and not properly withdrawn, subject to the proration and conditional tender provisions of the Offer, only when, as and if Blair gives oral or written notice to Computershare Trust Company of New York, the depositary for the Offer, of its acceptance for payment of such Blair Common Stock under the Offer. Payment for Blair Common Stock tendered and accepted for payment under the Offer will be made only after timely receipt by the depositary of certificates for such Blair Common Stock or a timely confirmation of a book-entry transfer of such shares of Blair Common Stock into the depositary’s account at the “book-entry transfer facility” (as defined in the Offer to Purchase), a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile of the Letter of Transmittal), or an “agent’s message” (as defined in the Offer to Purchase) in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal.

Upon the terms and subject to the conditions of the Offer, if more than 4.4 million shares of Blair Common Stock, or such greater number of shares of Blair Common Stock as Blair may elect to purchase, subject to applicable legal requirements, have been properly tendered and not properly withdrawn prior to the expiration date, Blair will purchase such properly tendered and not properly withdrawn Blair Common Stock on a pro rata basis. If necessary to permit Blair to purchase 4.4 million shares of Blair Common Stock, or such greater number of shares of Blair Common Stock as Blair may elect to purchase, subject to applicable legal requirements, Blair Common Stock conditionally tendered and not properly withdrawn prior to the expiration date (for which the minimum tender condition specified by the stockholder was not initially satisfied) will, to the extent feasible, be selected for purchase by random lot; provided, however, to be eligible for purchase by random lot, stockholders whose shares of Blair Common Stock are conditionally tendered must have tendered all of their Blair Common Stock. All other shares of Blair Common Stock that have been tendered and not purchased will be returned to the stockholders promptly after the expiration date.

Blair expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, any Blair Common Stock by giving oral or written notice of such extension to the depositary and making a public announcement thereof no later than 9:00 a.m., Eastern Time, on the next business day after the previously scheduled expiration date. During any such extension, all Blair Common Stock previously tendered and not properly withdrawn will remain subject to the Offer and to the right of a tendering stockholder to withdraw such stockholder’s Blair Common Stock.

On April 26, 2005 Blair announced the sale of its consumer receivable portfolio to a wholly owned subsidiary of Alliance Data Systems. Prior to the announcement of this tender offer, our Board of Directors considered alternatives for the use of the proceeds of the sale of our consumer receivable portfolio to the Alliance Data Systems subsidiary and our cash on hand. After such deliberations, our Board of Directors determined that the repurchase of our own shares at this time is a prudent use of some of our excess cash and is consistent with our goals of maximizing stockholder value and increasing our earnings per share. In particular, Blair believes that the Offer allows it to return cash to stockholders who elect to tender their Blair Common Stock and provides stockholders (particularly those with large stockholdings) with an opportunity to obtain liquidity with respect to their shares of Blair Common Stock.

Tenders of Blair Common Stock under the Offer are irrevocable, except that tendered Blair Common Stock may be withdrawn at any time prior to the expiration date and, unless previously accepted for payment by Blair under the Offer, may also be withdrawn at anytime after 12:00 midnight, Eastern Time, on Wednesday, September 14, 2005. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the depositary at its address set forth on the back cover page of the Offer to Purchase. Any such notice of withdrawal must specify the name of the tendering stockholder, the number of shares of Blair Common Stock to be withdrawn and the name of the registered holder of such Blair Common Stock. If the certificates for the shares of Blair Common Stock to be withdrawn have been delivered or otherwise identified to the depositary, then, before the release of such certificates, the tendering stockholder must also submit the serial numbers shown on such certificates to the depositary, and the signature(s) on the notice of withdrawal must be

guaranteed by an “eligible guarantor institution” (as defined in the Offer to Purchase), unless such shares of Blair Common Stock have been tendered for the account of an eligible guarantor institution. If shares of Blair Common Stock have been tendered pursuant to the procedure for book-entry transfer set forth in the Offer to Purchase, any notice of withdrawal also must specify the name and the number of the account at the book-entry transfer facility to be credited with the withdrawn shares of Blair Common Stock and must otherwise comply with such book-entry transfer facility’s procedures. All questions as to the form and validity of any notice of withdrawal, including the time of receipt, will be determined by Blair, in its sole discretion, whose determination will be final and binding on all parties. None of Blair, Computershare Trust Company of New York as the depositary, Georgeson Shareholder Communications Inc. as the information agent, Stephens Inc. as the dealer manager or any other person will be under any duty to give notification of any defects or irregularities in any tender or notice of withdrawal or incur any liability for failure to give any such notification.

In certain circumstances, a tendering stockholder whose shares of Blair Common Stock are purchased in the Offer may be treated for U.S. federal income tax purposes as having received an amount taxable as a distribution or dividend rather than as a capital gain or loss. Stockholders are strongly encouraged to read the Offer to Purchase for additional information regarding the U.S. federal income tax consequences of participating in the Offer.

The information required to be disclosed by Rule 13e-4(d)(1) under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference.

The Offer to Purchase and the related Letter of Transmittal are being mailed promptly to record holders of Blair Common Stock whose names appear on the stockholder list of Blair and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of Blair Common Stock.

THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION. STOCKHOLDERS SHOULD READ THEM CAREFULLY BEFORE MAKING ANY DECISION REGARDING THE OFFER.

Any questions or requests for assistance may be directed to the information agent or the dealer manager at their respective telephone numbers and addresses set forth below. Additional copies of the Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the information agent at the address and telephone number set forth below and will be promptly furnished by Blair at its expense. Stockholders may also contact their broker, dealer, commercial bank, trust company or nominee for assistance concerning the Offer. To confirm delivery of Blair Common Stock, stockholders are directed to contact the depositary.

The Information Agent for the Offer is:

17 State Street, 10th Floor

New York, New York 10004

Banks and Brokers Call: (212) 440-9800

All Others Call Toll Free: (866) 729-6811

The Dealer Manager for the Offer is:

111 Center Street

Suite 2400

Little Rock, AR 72201

Call Toll Free: (800) 643-9691

July 20, 2005

EX-99.(A)(5)(V)

BLAIR CORPORATION TENDER OFFER

EMPLOYEE FREQUENTLY ASKED QUESTIONS

JULY 20, 2005

The following frequently asked questions document has been made available to Blair employees.

We have prepared this summary statement for your convenience. It describes certain terms of our tender offer, which is the manner in which the company chose to distribute $185 million in cash to its stockholders. It highlights important information regarding the tender offer. This summary does not describe all the details of the company’s tender offer. You are encouraged to read the offer to purchase and related letter of transmittal that have been filed with the Securities and Exchange Commission and which are available on the company’s website, http://www.blair.com. You may also receive copies by contacting the company’s Treasurer, Roger H. Allen, at extension 6298.

If you hold Blair stock or stock options for the company’s common stock, we urge you to review this summary and the offer to purchase and related letter of transmittal containing details of the steps that you must take to tender shares and participate in the company’s tender offer.

WHAT IS A TENDER OFFER?

A tender offer is a company’s purchase of its own securities. This is also referred to as a stock buyback or stock repurchase, because the company, and not a third party, is purchasing its own securities.

A tender offer means that a company has invited security holders to sell their stock in the company. A company uses its own cash to purchase these shares. This reduces the company’s cash balance and the number of outstanding shares that are in the market. The offer is only open for a limited period of time.

WHY IS THE COMPANY CONDUCTING A TENDER OFFER?

After evaluation of our current business, our financial condition, our capital spending and working capital needs, and our growth plans, our Board of Directors determined that a $185 million return of capital to stockholders would be desirable and in the best interest of our stockholders. The Board further determined that this return would be affected by a repurchase of up to $185 million of our shares through a tender offer.

The tender offer is intended to achieve multiple objectives, including demonstrating the Company’s confidence in its operations, providing a return to longstanding stockholders, providing an opportunity for the Company’s stockholders who wish to receive cash for their shares, and establishing a capital structure that is appropriate for our current business.

WHAT IS THE PURCHASE PRICE?

The purchase price will be $42.00 per share. The Company will pay this purchase price in cash, without interest for all the securities it purchases under the tender offer.

HOW MANY SHARES WILL THE COMPANY PURCHASE?

The Company intends to purchase approximately $185 million of shares of common stock (4.4 million shares), on the terms and subject to the conditions of the Offer to Purchase, including the proration provisions.

WILL THE COMPANY PURCHASE ALL THE SHARES I TENDER?

If at the end of the tender period less than 4.4 million shares have been tendered, then the Company will purchase all shares properly tendered (and no proration will apply). If at the end of the tender period more than 4.4 million shares have been tendered, then the number of shares purchased by the Company will be prorated. For example, if stockholders tender 8.8 million shares in the aggregate, then 50% of what each stockholder tendered will actually be bought. So, in this instance, if you tendered 1,000 shares, the Company would purchase 500 of those.

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WHEN DOES THE TENDER OFFER EXPIRE; CAN THE TENDER OFFER BE EXTENDED?

The tender offer will expire on Tuesday, August 16, 2005, at 12:00 midnight, Eastern Time, unless the Company extends it. The Company may choose to extend the tender offer for any reason but it does not have to do so.

IS THERE AN ADVANTAGE TO TENDERING EARLY IN THE TENDER OFFER?

No, all shares received during the tender offer period will be treated the same.

CAN THE TENDER OFFER BE EXTENDED, AMENDED OR TERMINATED AND UNDER WHAT CIRCUMSTANCES?

The Company can extend or amend the tender offer at its sole discretion. If the Company extends the tender offer, it will delay the acceptance of any shares that have been tendered. The Company can terminate the tender offer under certain circumstances.

HOW WILL I BE NOTIFIED IF THE COMPANY EXTENDS THE OFFER OR AMENDS THE TERMS OF THE OFFER?

The Company will issue a press release by 9:00 a.m., Eastern Time, no later than the business day after the previously scheduled expiration date if it decides to extend the tender offer. The Company will announce any amendment to the tender offer by making a public announcement of the amendment.

HOW LONG DO STOCKHOLDERS HAVE TO DECIDE WHETHER OR NOT TO TENDER?

Stockholders may tender their shares until the tender offer expires. The tender offer will expire on Tuesday, August 16, 2005, at 12:00 midnight, Eastern Time, unless we extend the tender offer.

If you intend to exercise stock options in order to tender shares in the tender offer, you will need to contact Ed Sierzega at extension 6116.

HOW DO I KNOW HOW MANY SHARES I ACTUALLY OWN AND CAN TENDER?

If you own shares through more than one brokerage account you will receive multiple packages; therefore, it is important that you read each package in detail. If you have been granted stock options and any of those options have vested, the package that you will be receiving will provide information regarding the number of vested options available for exercise and subsequent tender.

HOW DO I TENDER MY SHARES?

You will receive a tender offer package that will provide you with the complete details of the tender offer and instructions on how to tender your shares if you wish to do so. Remember that if you own shares through multiple brokers, you will be receiving packages from each. Should you choose to tender shares from multiple brokers, you will need to follow the tender instructions for each, which will require completing separate tender forms.

WILL I HAVE TO PAY BROKERAGE FEES AND COMMISSIONS IF I TENDER MY SHARES?

If you are a holder of record of your shares and you tender your shares directly to the depositary, you will not incur any brokerage fees or commissions. If you hold your shares through a broker, bank or other nominee and your broker tenders shares on your behalf, your broker may charge you a fee for doing so. We urge you to consult your broker or nominee to determine whether any charges will apply.

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WHAT IF I DO NOT WANT TO TENDER ANY SHARES?

If you do not want to sell your shares, do nothing.

DOES THE COMPANY HAVE ANY RECOMMENDATION ABOUT WHAT I SHOULD DO?

Neither the Company nor the Board of Directors makes any recommendation to you as to whether you should tender your shares. You must make your own decision as to whether to tender your shares and, if so, how many shares to tender.

WHAT ARE SOME OF THE POSSIBLE EFFECTS OF A TENDER OFFER?

The tender offer will provide the Company’s shareholders an opportunity to sell their shares at a pre-determined price. Further, it will provide an opportunity for the holders to sell their securities at lower transaction costs than are normally associated with market sales and also will allow the holders to sell a portion of their shares while retaining a continuing equity interest in the Company.

Stockholders who elect not to participate in the tender offer may significantly increase their proportional holdings in the Company. Conversely, holders who elect to participate in the tender offer may significantly decrease their proportional holdings.

A tender offer reduces the number of outstanding shares that are in the market, giving each remaining stockholder a larger percentage ownership in the Company.

Because the tender offer will reduce the Company’s shares outstanding, the result may be a lower stock price and/or reduced liquidity in the trading market for its common stock following completion of the tender offer.

Since the Company is using its own cash to purchase these shares, it will reduce the interest income that the Company currently earns on its cash balance. Additionally, the Company will have less cash available to engage in significant transactions without additional financing or to cover existing or future liabilities.

IS THE COMPANY AWARE OF ANY STOCKHOLDERS’ INTENTIONS WITH REGARD TO THE TENDER OFFER?

The members of the Company’s Board of Directors have agreed not to tender any of their shares in the tender offer, senior management has agreed to restrict the amount they tender to no more than 25% of their holdings and certain institutional stockholders have agreed to tender all of their shares in the tender offer.

WHAT IF I WANT TO CONDITIONALLY TENDER MY SHARES?

Special procedures will apply to tendering stockholders who conditionally tender their shares. The tender offer package will explain these procedures.

CAN I TENDER MY SHARES OF RESRICTED STOCK?

Restricted stock for which there is no outstanding loan balance and for which you hold your shares in certificated form may be tendered in the tender offer. However, if you have held your restricted stock for more than seven years and there still is an outstanding loan balance, you may pay off the outstanding loan balance and then tender your shares. In order to determine if and how much your outstanding loan balance may be, as well as procedures for making payment on such loan balance, please contact Ed Sierzega at extension 6116.

WHAT DOES THIS MEAN FOR MY OPTIONS?

You may, but are not required to, exercise your vested options.

You may direct the Company to conditionally exercise your vested options and tender the resulting shares in the tender offer. A “conditional” exercise means that if some or all of the shares are not purchased in the offer because of the proration process described above and in the Offer to Purchase (or for any other reason), the options will be returned to you as unexercised options.

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If you would prefer to actually exercise your vested options and tender the shares you receive in the tender offer, you can do so. You may not exercise any unvested options. If you do exercise vested options, you need to follow the same procedures applicable to all other Company stockholders described in Section 3 of the Offer to Purchase. If you decide to exercise your options in order to receive shares to tender in the offer, you will need to exercise such options with sufficient time to obtain shares to tender before the expiration date for the Company’s tender offer as described in the Offer to Purchase.

In light of the tax consequences that may apply to your exercise of options, it is important to understand that participation in the tender offer may be prorated, depending on how many stockholders choose to participate and the number of securities involved. If the number of shares is prorated, the Company will proportionately reduce the number of shares it will purchase from each stockholder. In other words, the Company may not buy all the shares you tender.

In this situation, you will then own the remaining shares or options that were not repurchased and will need to choose whether you want to hold them or to sell them on the open market. The price in the open market may be higher or lower than your exercise price and may be higher or lower than the tender offer price. Such sales could only be made during the open window period. The trading window is open as of July 25, 2005 and is scheduled to remain open until August 31, 2005. Please note that if you choose to tender your shares, it is likely that the Company will not be able to return any shares not purchased by the Company as a result of proration until after the trading window has closed. Therefore you will not have an opportunity to sell such shares in the open market during the July 25^th-August 31^st trading window.

The exercise of your employee stock options and sale of the shares underlying such options may have different tax consequences to you depending on the type of option you hold, and certain other factors. For example, exercise of a non-qualified stock option (or non-statutory stock option) will result in ordinary income to you at the time of exercise in an amount equal to the excess of (i) the fair market value of the purchased shares on the exercise date over (ii) the exercise price paid for those shares. In addition, and the Company will have to collect all the applicable withholding taxes with respect to such income. Conversely, you will not recognize taxable income at the time an incentive stock option (“ISO”) is exercised. However, the spread at exercise will be includible in alternative minimum taxable income and may be subject to alternative minimum tax. In addition, upon the disposition of shares of stock acquired pursuant to an exercise of an ISO after the later of (i) 2 years after the grant of the ISO or (ii) 1 year after the transfer of shares to you (the “ISO Holding Period”) you may, depending upon your circumstances, recognize long-term capital gain or loss, measured by the difference between the stock’s selling price and exercise price. Different rules may apply if you dispose of your shares of stock (including in the tender offer) acquired pursuant to the exercise of an ISO before the expiration of the ISO Holding Period. YOU SHOULD CONSULT YOUR TAX ADVISOR TO DETERMINE THE IMPLICATIONS OF EXERCISING YOUR OPTIONS.

WHAT HAPPENS IF I EXERCISE MY OPTIONS AND THE SHARES I TENDER ARE NOT ACCEPTED?

If you actually exercise your options (not a conditional exercise) and tender the resulting shares, but they are not accepted in the tender due to proration, then the Company will return the shares to you and you can either continue to hold the shares or you may sell them in the market. However, it is likely that the Company will not be able to return your shares to you until after the July 25^th- August 31^st trading window closes and therefore you will not have the opportunity to sell such shares during that trading window.

MUST I ACTUALLY EXERCISE MY OPTIONS IN ORDER TO PARTICIPATE IN THE OFFER?

No. As a holder of unexercised vested options, the Company is allowing you to “conditionally” exercise all or part of your options and tender the resulting shares you would be entitled to receive upon such exercise. This “conditional” exercise means that you will exercise your options on the condition that the resulting shares are actually purchased by the Company in the tender offer. Because the Company may not purchase all of the

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resulting shares you tender, the “conditionally” exercised options relating to any such shares that are not actually purchased by the Company will be deemed unexercised and will continue to have the same terms and conditions that they currently have.

DO I HAVE TO PAY THE EXERCISE PRICE WITH CASH?

No. In order to facilitate your participation in the tender offer, the Company is allowing you to exercise your options without paying the exercise price in cash. This is called a “cashless” exercise. This means that your options will be conditionally exercised at the fair market value (i.e. trading price) on the closing date of the tender offer, which is expected to be August 16, 2005. The Company will withhold the number of shares equal to the exercise price and tax withholding due as a result of the exercise and then the Company will tender the resulting amount, or “net” resulting shares. Therefore, the actual amount of cash you receive will be the number of net resulting shares that are accepted in the offer times $42.00. The options relating to resulting shares that are not accepted in the offer will be deemed unexercised and will continue to have the same terms and conditions that they currently have.

IF MY OPTIONS ARE NOT VESTED MAY I STILL TENDER SHARES UNDERLYING THEM?

No. Unvested options are not yet eligible to be exercised and turned into shares. Your unvested options will continue to vest according to the vesting schedule. You may exercise them when they become vested and sell the shares on the open market at that time if you so choose.

WHAT DO I NEED TO DO TO CONDITIONALLY TENDER MY OPTION SHARES?

You should contact Ed Sierzega at extension 6116 to get further details.

AFTER I CONDITIONALLY EXERCISE MY OPTION AND BEFORE ANY ARE PURCHASED, CAN I EXERCISE MY OPTIONS?

No. Once you conditionally exercise your options and tender the resulting shares, even though all resulting shares may not be accepted in the tender, your options account will be frozen until you either withdraw your tender instruction or the offer is completed.

CAN I CHANGE MY MIND AND WITHDRAW MY CONDITIONAL EXERCISE AND TENDER OF OPTIONS?

Yes, but only if you perform the following steps:

• The notice of withdrawal must be in writing.

• You must send the signed notice of withdrawal to Ed Sierzega at the address indicated below.

• The notice of withdrawal must state your name and the number of options that you wish to withdraw from the offer.

• The notice of withdrawal must be received by Ed Sierzega before 5:00 PM, Eastern Time, on August 9, 2005, unless the tender offer is extended, in which case the deadline for receipt of your withdrawal will be 5:00 PM, Eastern Time, on the 5^th business day prior to the expiration of the tender offer, as extended.

You are entitled to retender options after withdrawal, provided that all resubmitted materials are completed properly and delivered on time in accordance with the instructions applicable to the original submission.

The withdrawal procedures are described in greater detail in the memorandum you may receive from Ed Sierzega. You must follow these instructions carefully.

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WHEN WILL I KNOW HOW MANY OF MY SHARES HAVE BEEN ACCEPTED?

The Company will distribute a press release announcing the preliminary results of the tender offer, including the preliminary proration information, if applicable, promptly after the end of the tender period. Then, within five to seven business days, the Company will distribute a press release announcing the final results of the tender offer, including the prorated percentage of shares purchased, if applicable. Copies of these press releases will be made available to associates and posted on www.blair.com.

IF I DECIDE TO SELL WHEN WILL I RECEIVE MY MONEY?

If you decide to sell, the purchase price for the shares you tendered, which are accepted by the Company, will be paid to you, promptly after it has been determined what percentage of the total number of shares tendered will be purchased by the Company.

HOW CAN I LEARN MORE ABOUT THE TENDER OFFER?

The Company has filed a Schedule TO, including an Offer to Purchase, a Letter of Transmittal and certain ancillary documents, with the SEC. These documents contain more details about the offer and what stockholders need to do if they want to participate. Copies of these documents are available from Roger H. Allen at extension 6298.

WHO CAN I TALK TO FOR MORE INFORMATION ABOUT WHAT THIS ALL MEANS TO ME?

If you own shares, we recommend that you wait until you receive your tender offer package(s) in the mail and have had an opportunity to review the details of the tender offer. Then, if you have questions regarding your personal situation and how the tender offer impacts the various plans through which you may hold Company stock, beginning Wednesday, July 20^th, you may call:

• Regarding stock options: call Ed Sierzega at extension 6116; or contact your own broker if applicable.

• Regarding shares: Georgeson Shareholder Communications Inc. at (866) 729-6811.

Representatives will be available at these numbers to answer associate questions during normal business hours. We also strongly urge each stockholder to contact their investment and tax advisors with any questions.

NOTWITHSTANDING ANYTHING STATED TO THE CONTRARY, THE COMPANY WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT, PURCHASE OR PAY FOR ANY SHARES TENDERED, AND THE COMPANY MAY TERMINATE OR AMEND THE TERMS OF THE TENDER OFFER OR POSTPONE THE ACCEPTANCE FOR PAYMENT OF, OR THE PURCHASE OF AND PAYMENT FOR, TENDERED SHARES, SUBJECT TO RULE 13E-4(F) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. PLEASE READ THE ENTIRE SCHEDULE TO AND THE ATTACHED OFFER TO PURCHASE, FOR FULL DETAILS OF THESE EVENTS AND THE CONDITIONS OF THE OFFER.

ADDITIONAL INFORMATION:

This document is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell shares of Blair Corporation’s common stock. The tender offer is being made only pursuant to the Offer to Purchase and the ancillary materials that Blair will distribute to its stockholders. Stockholders should read the Offer to Purchase and the ancillary materials, including the Letter of Transmittal, carefully because they contain important information. Stockholders will be able to obtain a free copy of the tender offer materials that Blair is filing with the SEC at the SEC’s website: www.sec.gov. Stockholders may also obtain a copy of these documents, without charge, from Georgeson Shareholder Communications Inc., the information agent for the tender offer, toll free at (866) 729-6811.

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EX-99.(A)(5)(VI)

FOR IMMEDIATE RELEASE:

CONTACTS:
Blair Corporation	Carl Hymans
Bryan Flanagan, SVP/Chief Financial Officer	G.S. Schwartz & Co
814-723-3600	212-725-4500
	carlh@schwartz.com

BLAIR CORPORATION REPORTS IMPROVED SECOND QUARTER RESULTS AND

ANNOUNCES THE COMMENCEMENT OF ITS TENDER OFFER

WARREN, Pa., (July 20, 2005) — Blair Corporation (Amex: BL), (www.blair.com), a national multi-channel direct marketer of women’s and men’s apparel and home products, today announced results for the second quarter and six months ended June 30, 2005. In addition, Blair today commenced its tender offer to repurchase 4.4 million shares of approximately 8.3 million shares outstanding.

Net sales for the second quarter ended June 30, 2005 were $120.8 million compared to $127.0 million reported for the second quarter ended June 30, 2004.

Net income for the second quarter ended June 30, 2005 was $6.1 million, or $0.74 per basic and $0.73 per diluted share, compared to $5.0 million, or $0.62 per basic and $0.61 per diluted share, reported for the second quarter last year.

Net sales for the six months ended June 30, 2005 were $228.4 million, compared to $255.6 million reported for the first six months ended June 30, 2004.

Net income for the six months ended June 30, 2005 was $6.7 million, or $0.82 per basic and $0.81 per diluted share, compared to $5.6 million, or $0.69 per basic and diluted share, reported for the six months last year.

The $6.2 million reduction in net sales for the second quarter of 2005 was driven primarily by a decrease of approximately $5.7 million resulting from the previously announced closing of its Crossing Pointe catalog that was completed in March 2005.

Net income results for the quarter reflect Blair’s continued focus on its core business opportunities and profitability. These initiatives are key elements of Blair’s strategic plan to eliminate unprofitable sales and enhance shareholder value.

Cost of goods sold as a percentage of net sales for the second quarter of 2005 was 45.5% compared to 45.9% for the second quarter of 2004, reflecting continued success in its efforts to lower overall liquidation costs.

Blair also benefited by negotiating lower merchandise cost from its existing vendors. Blair plans to expand its own International Trade Department’s product development and sourcing as part of its strategic initiatives to further reduce cost of goods and increase profitability.

During the second quarter, Blair announced plans to initiate a stock tender buyback of approximately 4.4 million shares of its outstanding common stock at $42 per share, at an aggregate price of approximately $185 million. The tender will commence today. Blair also recently closed on a $200 million financing from PNC Financial Services Group, Inc., which will be used to finance, in part, the stock tender buyback in conjunction with $40 million of Blair’s cash reserves.

“Blair intends to pay down this credit facility from PNC with the proceeds received from the previously announced sale of its credit portfolio to Alliance Data Systems Corp. With our tender commencing today, we are confident that the repurchase of more than half of our shares, in conjunction with remaining an independent public company, will maximize future shareholder value,” said Bryan Flanagan, senior vice president and Chief Financial Officer.

Blair’s e-commerce channel generated $48.6 million in gross sales demand in the first six months of 2005, compared to $45.6 million in the first six months of 2004. The year-over-year increase was achieved despite significantly lower Crossing Pointe e-commerce gross sales demand.

“The increase in profitability for the second quarter reflects Blair’s strategic efforts to focus on its core customer base, lowering overall operating costs and reducing unprofitable sales,” said John Zawacki, president and Chief Executive Officer.

“Blair is confident that today’s tender offer will be a major factor in enhancing shareholder value. We remain committed to increasing profitability and further developing and implementing strategic plans which will enhance our position as the premier direct marketer to value-conscious consumers,” Mr. Zawacki concluded.

ABOUT BLAIR

Headquartered in Warren, Pennsylvania, Blair Corporation sells a broad range of women’s and men’s apparel and home products through direct mail marketing and its Web sites www.blair.com and www.irvinepark.com. Blair Corporation employs over 2,000 people and operates facilities and retail outlets in Northwestern Pennsylvania as well as a catalog outlet in Wilmington, Delaware. The Company, which has annual sales of approximately $500 million, is publicly traded on the American Stock Exchange (Amex: BL).

BLAIR CORPORATION SECURITY HOLDERS ARE ADVISED TO READ BLAIR CORPORATION’S TENDER OFFER STATEMENT WHEN IT BECOMES AVAILABLE AS IT WILL CONTAIN IMPORTANT INFORMATION REGARDING THE TENDER OFFER. BLAIR CORPORATION WILL NOTIFY ALL OF ITS SECURITY HOLDERS WHEN THE TENDER OFFER STATEMENT BECOMES AVAILABLE. WHEN AVAILABLE, BLAIR CORPORATION SECURITY HOLDERS MAY GET THE TENDER OFFER STATEMENT AND OTHER FILED DOCUMENTS RELATED TO THE TENDER OFFER FOR FREE AT THE U.S. SECURITIES AND EXCHANGE COMMISSION’S WEB SITE (www.sec.gov). IN ADDITION, BLAIR CORPORATION SECURITY HOLDERS MAY REQUEST A FREE COPY OF THE TENDER OFFER STATEMENT AND OTHER DOCUMENTS RELATED TO THE TENDER OFFER FROM BLAIR CORPORATION WHEN AVAILABLE.

This release contains certain statements, including without limitation, statements containing the words “believe,” “plan,” “expect,” “anticipate,” “strive,” and words of similar import relating to future results of the Company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to, changes in political and economic conditions, demand for and market acceptance of new and existing products, as well as other risks and uncertainties detailed in the most recent periodic filings of the Company with the Securities and Exchange Commission.

—Financial table follows—

BLAIR CORPORATION

COMPARATIVE OPERATING HIGHLIGHTS

(UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

	For the Three Months Ended June 30
	2005		2004
Net sales	$	120,835	$	126,993
Income before income taxes		9,639		8,087
Income taxes		3,575		3,076
Net income		6,064		5,011
Basic / diluted earnings per share		$0.74 / $0.73		$0.62 / $0.61
Weighted average basic shares outstanding		8,191,942		8,092,034
Weighted average diluted shares outstanding		8,324,925		8,166,940

	For the Six Months Ended June 30
	2005		2004
Net sales	$	228,392	$	255,635
Income before income taxes		10,661		9,007
Income taxes		3,947		3,425
Net income		6,714		5,582
Basic / diluted earnings per share		$0.82 / $0.81		$0.69 / $0.69
Weighted average basic shares outstanding		8,184,428		8,071,579
Weighted average diluted shares outstanding		8,317,667		8,139,561

SELECTED BALANCE SHEET ITEMS AS OF JUNE 30
	2005		2004
Customer accounts receivable	$	134,631	$	146,289
Inventories	$	67,771	$	76,136
Total assets	$	348,268	$	339,298
Total liabilities	$	60,044	$	64,872
Stockholders’ equity	$	288,223	$	274,426
Total liabilities and stockholders’ equity	$	348,268	$	339,298

EX-99.(B)(I)

Execution Copy

AMENDMENT AGREEMENT

This AMENDMENT AGREEMENT, dated as of July 15, 2005 (this “Amendment Agreement”), is made among BLAIR FACTORING COMPANY, BLAIR CREDIT SERVICES CORPORATION, each of the Conduit Purchasers (each a “Conduit Purchaser”, and collectively, the “Conduit Purchasers”) party to the Receivables Purchase Agreement (as defined below) and PNC BANK, NATIONAL ASSOCIATION (in its individual capacity, “PNC”), as administrator (in such capacity, the “Administrator”) for the Conduit Purchasers.

RECITALS

A. The parties hereto are also parties to that certain Receivables Purchase Agreement, dated as of December 20, 2001 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Receivables Purchase Agreement”).

B. The parties to the Receivables Purchase Agreement hereby agree to amend the Receivables Purchase Agreement as set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Certain Defined Terms. Capitalized terms used herein and not defined shall have the meanings set forth for such terms in Exhibit I of the Receivables Purchase Agreement.

2. Amendments to the Receivables Purchase Agreement.

2.1 Section 1.1(a) of the Receivables Purchase Agreement is hereby amended and restated in its entirety as follows:

“On the terms and conditions hereinafter set forth in this Agreement, each Conduit Purchaser hereby agrees to purchase, and make reinvestments of, on a non-recourse basis, ratably, based on their respective commitments set forth in Schedule IV hereto, undivided percentage ownership interests with regard to the Purchased Interest from the Seller from time to time from the date hereof to the Facility Termination Date to the extent that, for each Conduit Purchaser, such purchase or reinvestment would not exceed its respective commitment set forth in Schedule IV hereto, and after giving effect to all such purchases or reinvestments for all Conduit Purchasers on such date, the aggregate outstanding Capital of the Purchased Interest would not exceed the Purchase Limit.”

2.2 Section 1.4(f)(iii) of the Receivables Purchase Agreement is hereby amended and restated in its entirety as follows:

“the Servicer shall hold such payments received from the Seller or Principal Collections (to the extent representing a return of Capital), as the case may be, in trust for the Conduit Purchasers, ratably based on their respective commitments

Amendment Agreement

set forth in Schedule IV hereto, for payment to the Conduit Agents on the next Monthly Settlement Date immediately following the current Settlement Period or such other date approved by the Conduit Agents, and Capital shall be deemed reduced in the amount to be paid to the Conduit Agents only when in fact finally so paid;”

2.3 Notwithstanding anything to the contrary in the Receivables Purchase Agreement or any other Transaction Document, for all purposes of notices and consents required under the Receivables Purchase Agreement or any other Transaction Document to be delivered to Blair Factoring Company (the “Seller”), such notices and consents shall be sent to the Seller’s new address at: 300 Creek View Road, Suite 205, Newark, Delaware 19711-8548.

2.4 The definition of “Facility Termination Date” set forth in Exhibit I to the Receivables Purchase Agreement is hereby amended by replacing the reference to the date “April 7, 2006” with the date “July 15, 2008” therein.

2.5 The definition of “Purchase Limit” set forth in Exhibit I to the Receivables Purchase Agreement is hereby amended by replacing the amount “$70,000,000” with the amount “$100,000,000” therein.

2.6 The Fifth Third Conduit Purchaser Scheduled Termination Date as set forth on Fountain Square Commercial Funding’s signature page to this Amendment Agreement is hereby extended through and until the close of business on July 15, 2008.

2.7 Exhibit I to the Receivables Purchase Agreement is hereby amended by adding the following definition in appropriate alphabetical order:

“Conversion Date” means the earlier to occur of the following: (a) the date upon which that certain Purchase, Sale and Servicing Transfer Agreement, dated as of April 26, 2005, among World Financial Capital Bank, Blair Corp., JLB Service Bank of Delaware, Blair Credit Services Corp. and Blair Factoring Company is terminated, and (b) March 31, 2006.

2.8 Exhibit V to the Receivables Purchase Agreement is hereby amended by adding the following subsections in order:

“(m) prior to the Conversion Date, any of the “Loan Parties” (as defined in the Credit Agreement (as such term is defined) below) shall have breached the financial covenant set forth in Section 8.2.14 of that certain Amended and Restated Credit Agreement dated as of July 15, 2005, by and among Blair Corporation, the lenders and other parties thereto and PNC Bank, National Association, as agent (without giving effect to any amendment, restatement, supplement, modification, waiver or substitution or replacement thereof, the “Credit Agreement”; it being understood that if such Credit Agreement is terminated and is not replaced or superceded by a similar agreement containing substantially the same financial covenants, “Credit Agreement” shall mean and be

2 RPA Amendment Agreement (Blair)

deemed to mean the Credit Agreement as in effect immediately prior to such termination).”

“(n) on or after the Conversion Date, any of the “Loan Parties” (as defined in the Credit Agreement) shall have breached any of the financial covenants set forth in Sections 8.2.15, 8.2.16 or 8.2.17 of the Credit Agreement (without giving effect to any amendment, restatement, supplement, modification, waiver or substitution or replacement thereof; it being understood that if such Credit Agreement is terminated and is not replaced or superceded by a similar agreement containing substantially the same financial covenants, “Credit Agreement” shall mean and be deemed to mean the Credit Agreement as in effect immediately prior to such termination).”

“(o) the Servicer shall have failed to establish a lockbox arrangement with a national bank, in form and substance satisfactory to the Administrator, on or before March 31, 2006.”

“(p) the Servicer shall have failed to enter into a backup servicing agreement in form and substance satisfactory (including, without limitation, the Person acting as backup servicer thereunder) to the Administrator, on or before March 31, 2006.”

2.9 Schedule IV to the Receivables Purchase Agreement is hereby replaced in its entirety as follows:

Name	Commitment		Undivided Percentage Ownership Interest		Conduit Agent
Market Street	$	65,000,000	65	%	PNC
Fifth Third Bank Conduit Purchaser	$	35,000,000	35	%	Fifth Third Bank

2.10 Notwithstanding anything in the Receivables Purchase Agreement or any of the Transaction Documents to the contrary, so long as any one Conduit Purchaser’s commitment is greater than 50% of the aggregate commitments and there are only two Conduit Purchasers, solely for purposes of voting rights and granting or withholding consents or waivers, the term “Purchaser” shall, and shall be deemed to, require the affirmative vote, consent or waiver of, as applicable, each such Conduit Purchaser.

3. Conditions Precedent to the Effectiveness of this Amendment Agreement. Notwithstanding anything herein to the contrary, the effectiveness of this Amendment Agreement is expressly conditioned upon the satisfaction of the following conditions precedent:

(a) evidence satisfactory to the Conduit Agents of the payment of all fees and expenses required to be paid prior to the date of this Amendment Agreement;

3 RPA Amendment Agreement (Blair)

(b) receipt by the Conduit Agents of counterparts of this Amendment Agreement and each amended and restated fee letter related hereto, in each case, duly executed by the parties thereto; and

(c) receipt by the Administrator of the results of a review (satisfactory in form, scope and substance to each of the Conduit Agents and the Administrator) and an audit (performed by representatives of the Conduit Agents) of the Servicer’s collection, operating and reporting systems, the Credit and Collection Policy of the Originator, historical receivables data and accounts, including satisfactory results of a review of the Servicer’s operating location(s), as well as such other matters as either Conduit Agent may such request.

4. Governing Law. This Amendment Agreement shall be governed by and construed in accordance with the laws of the state of New York (without reference to any otherwise applicable conflicts of law principles).

5. Effect of Amendment Agreement. This Amendment Agreement constitutes an amendment to the Receivables Purchase Agreement. After the execution and delivery of this Amendment Agreement, all references to the Receivables Purchase Agreement in any document shall be deemed to refer to the Receivables Purchase Agreement as amended by this Amendment Agreement, unless the context otherwise requires. Except as amended above, the Receivables Purchase Agreement is hereby ratified in all respects.

6. Counterparts. This Amendment Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument.

[signature pages follow]

4 RPA Amendment Agreement (Blair)

IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

BLAIR FACTORING COMPANY
By:	/s/ Edward R. Sierzega
	Name:	Edward R. Sierzega
	Title:	Vice-President
BLAIR CREDIT SERVICES CORP.
By:	/s/ Roger N. Allen
	Name:	Roger N. Allen
	Title:	Treasurer

S-1 RPA Amendment Agreement (Blair)

MARKET STREET FUNDING CORPORATION, as a Conduit Purchaser
By:	/s/ Doris J. Hearn
	Name:	Doris J. Hearn
	Title:	Vice President
PNC BANK, NATIONAL ASSOCIATION, as Administrator
By:	/s/ John T. Smathers
	Name:	John T. Smathers
	Title:	Vice President
PNC BANK, NATIONAL ASSOCIATION, as Conduit Agent
By:	/s/ John T. Smathers
	Name:	John T. Smathers
	Title:	Vice President

S-2 RPA Amendment Agreement (Blair)

FOUNTAIN SQUARE COMMERCIAL FUNDING
by Fifth Third Bank, as Conduit Agent
By:	/s/ Robert O. Finley
	Name:	Robert O. Finley
	Title:	Vice President
Fifth Third Conduit Purchaser Scheduled Termination
Date:	July 15, 2008

S-3 RPA Amendment Agreement (Blair)

EX-99.(B)(II)

Exhibit (b)(ii)

AMENDED AND RESTATED CREDIT AGREEMENT

by and among

BLAIR CORPORATION

and

THE LENDERS PARTY HERETO

and

PNC BANK, NATIONAL ASSOCIATION, As Agent

and

PNC CAPITAL MARKETS, INC., As

Lead Arranger and Book Runner

Dated as of December 20, 2001,

as amended and restated through July 15, 2005

LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

SCHEDULE 1.1(A)	-	PRICING GRID
SCHEDULE 1.1(B)	-	COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P)	-	PERMITTED LIENS
SCHEDULE 1.1(R)	-	REAL PROPERTY COLLATERAL
SCHEDULE 6.1.1	-	QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.2	-	CAPITALIZATION OF BORROWER
SCHEDULE 6.1.3	-	SUBSIDIARIES OF BORROWER
SCHEDULE 6.1.7	-	LITIGATION
SCHEDULE 6.1.8	-	OWNED AND LEASED REAL PROPERTY
SCHEDULE 6.1.13	-	CONSENTS AND APPROVALS
SCHEDULE 6.1.15	-	PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 6.1.17	-	PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 6.1.19	-	INSURANCE POLICIES
SCHEDULE 6.1.21	-	MATERIAL CONTRACTS
SCHEDULE 6.1.23	-	EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.25	-	ENVIRONMENTAL DISCLOSURES
SCHEDULE 8A	-	COVENANTS RELATED TO JLB SERVICE BANK
SCHEDULE 8.2.1	-	EXISTING INDEBTEDNESS, LETTERS OF CREDIT AND CAPITALIZED LEASES

EXHIBITS

EXHIBIT 1.1(A)(1)	-	ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(A)(2)	-	ASSIGNMENT OF LEASES AND RENTS
EXHIBIT 1.1(G)(1)	-	GUARANTOR JOINDER
EXHIBIT 1.1(G)(2)	-	GUARANTY AGREEMENT
EXHIBIT 1.1(I)(1)	-	INDEMNITY AGREEMENT
EXHIBIT 1.1(I)(2)	-	INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(M)	-	MORTGAGE
EXHIBIT 1.1(P)(1)	-	THE PATENT, TRADEMARK AND COPYRIGHT ASSIGNMENT
EXHIBIT 1.1(P)(2)	-	PLEDGE AGREEMENT
EXHIBIT 1.1(R)	-	REVOLVING CREDIT NOTE
EXHIBIT 1.1(S)(1)	-	SECURITY AGREEMENT
EXHIBIT 1.1(S)(2)	-	SWING LOAN NOTE
EXHIBIT 1.1(T)	-	TERM NOTE
EXHIBIT 2.4.1	-	REVOLVING CREDIT/TERM LOAN REQUEST
EXHIBIT 2.4.2	-	SWING LOAN REQUEST
EXHIBIT 7.1.9	-	OPINION OF COUNSEL
EXHIBIT 8.1.17	-	LANDLORD’S WAIVER
EXHIBIT 8.3.4	-	COMPLIANCE CERTIFICATE

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AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of December 20, 2001, as amended and restated through July 15, 2005 and is made by and among BLAIR CORPORATION, a Delaware corporation (the “Borrower”), each of the Guarantors (as hereinafter defined), the LENDERS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as agent for the Lenders under this Agreement (hereinafter referred to in such capacity as the “Agent”).

WITNESSETH:

WHEREAS, the Borrower, certain of the Lenders and the Agent are parties to the Credit Agreement, dated as of December 20, 2001 (as amended prior to the date hereof, the “Prior Credit Agreement”);

WHEREAS, pursuant to the Prior Credit Agreement, the Lenders have over time made loans and have issued letters of credit for the account of, the Borrower which are secured pursuant to the security documents referred to therein;

WHEREAS, this Amended and Restated Credit Agreement is intended to confirm and evidence (i) the amendment and restatement and continuation (but not payment) of the existing obligations of the Loan Parties under the Loan Documents and (ii) the continuation as security for the indebtedness and obligations under this Amended and Restated Agreement and the other Loan Documents of certain of the liens and security interests granted under and in connection with the Prior Credit Agreement and the other Loan Documents;

WHEREAS, as part of this amendment and restatement the Borrower has requested that the parties modify the Prior Credit Agreement to provide for (i) a revolving credit facility to the Borrower in an aggregate principal amount of $75,000,000, and (ii) a $25,000,000 term loan facility; and

WHEREAS, the proceeds of the amended and restated credit facilities shall be used to (i) consummate the Tender Offer (as defined below), (ii) pay fees and expenses and (iii) provide ongoing working capital and for other general corporate purposes of the Borrower and its Subsidiaries; and

WHEREAS, the Lenders are willing to provide such credit upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:

1. CERTAIN DEFINITIONS

1.1 Certain Definitions.

In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:

Affiliate as to any Person shall mean any other Person (i) which directly or indirectly controls, is controlled by, or is under common control with such Person, (ii) which beneficially owns or holds 5% or more of any class of the voting or other equity interests of such Person, or (iii) 5% or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by such Person. Control, as used in this definition, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.

Agent shall mean PNC Bank, National Association, and its successors and assigns.

Agent’s Fee shall have the meaning assigned to that term in Section 10.15.

Agent’s Letter shall have the meaning assigned to that term in Section 10.15.

Aggregate Ratable Share shall mean the proportion that a Lender’s Commitment bears to the Commitments of all of the Lenders.

Agreement shall mean this Credit Agreement, as the same may be supplemented or amended from time to time, including all schedules and exhibits.

Ancillary Mortgage Documents shall mean all documents, instruments, environmental reports, environmental indemnity agreements, agreements, endorsements, policies and certificates requested by the Agent and customarily delivered by any property owner in connection with a mortgage financing. Without limiting the generality of the foregoing, examples of Ancillary Mortgage Documents would include insurance policies or certificates regarding any collateral, title insurance policies, appraisals, lien searches, estoppel letters, flood insurance certifications, environmental audits which meet the Agent’s minimum requirements for phase I environmental assessments or phase II environmental assessments, as applicable, opinions or counsel and the like.

Annual Statements shall have the meaning assigned to that term in Section 6.1.9(i).

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Anti-Terrorism Laws shall mean any Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced).

Applicable Margin shall mean the percentage spread to be added to the Euro-Rate under the Euro-Rate Option (the “Euro-Rate Margin”) and to be added to the Base Rate under the Base Rate Option (the “Base Rate Margin”) as follows:

(i) prior to the earlier of the Conversion Date or the Loan Reduction Date:

(A) the Euro-Rate Margin shall be 250 basis points for all Loans and

(B) the Base Rate Margin shall be 100 basis points for all Loans;

(ii) after the Loan Reduction Date:

(A) the Euro-Rate Margin shall be the amounts listed based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Euro-Rate Spread”. The Applicable Margin shall be computed in accordance with the parameters set forth on Schedule 1.1(A).

(B) the Base Rate Margin shall be 0 for all Loans;

(iii) after the Conversion Date (in the event that the Loan Reduction Date does not occur before the Conversion Date):

(A) the Euro-Rate Margin shall be:

(y) 300 basis points for Revolving Credit Loans and

(Z) 900 basis points for the Term Loans; and

(B) the Base Rate Margin shall be:

(y) 150 basis points for Revolving Credit Loans and

(Z) 750 basis points for the Term Loans.

Applicable Revolving Credit Commitment Fee Rate shall mean the percentage rate per annum to be used for computation of the Revolving Credit Commitment Fee as follows:

(i) prior to the earlier of the Conversion Date or the Loan Reduction Date, the Revolving Credit Commitment Fee shall be 50 basis points;

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(ii) after the Loan Reduction Date, the Revolving Credit Commitment Fee shall be based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit Commitment Fee.” The Applicable Revolving Credit Commitment Fee Rate shall be computed in accordance with the parameters set forth on Schedule 1.1(A).

(iii) after the Conversion Date (in the event that the Loan Reduction Date does not occur before the Conversion Date) the Revolving Credit Commitment Fee shall be 50 basis points.

Assignment and Assumption Agreement shall mean an Assignment and Assumption Agreement by and among an assignee Lender, an assignor Lender and the Agent, as Agent and on behalf of the remaining Lenders, substantially in the form of Exhibit 1.1(A).

Authorized Officer shall mean those individuals, designated by written notice to the Agent from the Borrower, authorized to execute notices, reports and other documents on behalf of the Loan Parties required hereunder. The Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the Agent.

Base Rate shall mean the greater of (i) the interest rate per annum announced from time to time by the Agent at its Principal Office as its then prime rate, which rate may not be the lowest rate then being charged commercial borrowers by the Agent, or (ii) the Federal Funds Open Rate plus 1/2% per annum.

Base Rate Option shall mean either the either the Revolving Credit Base Rate Option or the Term Loan Base Rate Option.

Base Net Worth shall mean, as of any date of determination, the sum of $240,000,000 (representing approximately 85% of the Consolidated Net Worth of the Borrower and its Subsidiaries as of March 31, 2005), (i) plus 50% of consolidated net income (excluding from such net income the net gain after taxes on the World Financial Sale) of the Borrower and its Subsidiaries for each fiscal quarter in which net income was earned (as opposed to a net loss) ending after March 31, 2005, less (ii) the amount paid by the Borrower for repurchase of its shares under the Tender Offer, not to exceed $190,000,000, plus (iii) the amount of the net gain after taxes on the World Financial Sale.

Benefit Arrangement shall mean at any time an “employee benefit plan,” within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a Multiemployer Plan and which is maintained, sponsored or otherwise contributed to by any member of the ERISA Group.

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Blair Factoring Company shall mean Blair Factoring Company, a Delaware corporation, which purchases the accounts of the Borrower and sells such accounts to Market Street Funding Corporation under the Trade Receivables Securitization.

Blocked Person shall have the meaning assigned to such term in Section 6.1.28.2.

Borrower shall mean Blair Corporation, a corporation organized and existing under the laws of the State of Delaware.

Borrowing Date shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.

Borrowing Tranche shall mean specified portions of Loans outstanding as follows: (i) any Loans to which a Euro-Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrower and which have the same Interest Period shall constitute one Borrowing Tranche, (ii) any Swing Loans which have the same Swing Loan Interest Period shall constitute one Borrowing Tranche, and (iii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.

Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania and if the applicable Business Day relates to any Revolving Credit Loan to which the Euro-Rate Option applies, such day must also be a day on which dealings are carried on in the London interbank market.

Capital and Liquidity Agreement shall mean the Capital and Liquidity Agreement to be made among Blair, JLB Service Bank and the FDIC.

Capital and Liquidity Agreement Payment shall mean any amounts paid by the Borrower to JLB Service Bank pursuant to the Capital and Liquidity Agreement, including any capital contributions made by the Borrower pursuant to section 2 thereof, and cash, financial support or other payments, but excluding any of the following payments:

(1) any JLB Deposits made by the Borrower in JLB Service Bank referenced in clause (vii) of Section 8.2.1;

(2) the initial capital contribution by the Borrower in JLB Service Bank (which is in the amount of $2,000,000) referenced in clause (vi) of Section 8.2.4;

(3) the deposit in the amount of $500,000 referenced in clause (3)(b) of Schedule 8A relating to Section 8.2.4(vi); and

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(4) the JLB Letter of Credit referenced in clause (vi) of Section 8.2.4, or any draws under such JLB Letter of Credit.

Closing Date shall mean the Business Day on which the first Loan shall be made or Letter of Credit shall be outstanding, which shall be July 15, 2005.

Collateral shall mean the UCC Collateral, the Pledged Collateral, the Intellectual Property Collateral and the Real Property Collateral.

Commitment shall mean as to any Lender the aggregate of its Revolving Credit Commitment, Term Loan Commitment and, in the case of the Agent, its Swing Loan Commitment, and Commitments shall mean the aggregate of the Revolving Credit Commitments, Term Loan Commitments and the Swing Loan Commitment of all of the Lenders and the Agent.

Compliance Certificate shall have the meaning assigned to such term in Section 8.3.4.

Consolidated Net Worth shall mean as of any date of determination total stockholders’ equity of the Borrower and its Subsidiaries as of such date determined and consolidated in accordance with GAAP.

Contamination shall mean the presence or release or threat of release of Regulated Substances in, on, under or emanating to or from the Property, which pursuant to Environmental Laws requires notification or reporting to an Official Body, or which pursuant to Environmental Laws requires the investigation, cleanup, removal, remediation, containment, abatement of or other response action or which otherwise constitutes a violation of Environmental Laws.

Conversion Date shall mean the earlier of the following dates: (1) the date on which the World Financial Sales Agreement is terminated (in the event that such World Financial Sales Agreement is terminated prior to the closing of the World Financial Sale provided for therein), and (2) March 31, 2006. The Conversion Date shall not occur if the Loan Reduction Date occurs prior to March 31, 2006.

Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the United States of America.

Drawing Date shall have the meaning assigned to that term in Section 2.9.3.2.

EBITDA for any period of determination shall mean (i) the sum of net income, depreciation, amortization, interest expense and income tax expense, plus (ii) non-recurring non-cash charges to net income, minus (iii) non-recurring, non-cash credits to net income, in each case of the Borrower and its Subsidiaries for such period determined and consolidated in accordance with GAAP; provided that for any determination of EBITDA on or

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after the World Financial Sale, (1) EBITDA shall be adjusted to exclude from its calculation one time fees, expenses and charges to net income resulting from the World Financial Sale and the Tender Offer, and (2) EBITDA shall be adjusted to exclude from its calculation any one time gain or loss from the World Financial Sale and the Tender Offer.

Environmental Complaint shall mean any written complaint by any Person or Official Body setting forth a cause of action for personal injury or property damage, natural resource damage, contribution or indemnity for response costs, civil or administrative penalties, criminal fines or penalties, or declaratory or equitable relief arising under any Environmental Laws or any order, notice of violation, citation, subpoena, request for information or other written notice or demand of any type issued by an Official Body pursuant to any Environmental Laws.

Environmental Laws shall mean all federal, state, local and foreign Laws and any consent decrees, settlement agreements, judgments, orders, directives, policies or programs issued by or entered into with an Official Body pertaining or relating to: (i) pollution or pollution control; (ii) protection of human health or the environment; (iii) employee safety in the workplace; (iv) the presence, use, management, generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, transport, storage, collection, distribution, disposal or release or threat of release of Regulated Substances; (v) the presence of Contamination; (vi) the protection of endangered or threatened species; and (vii) the protection of Environmentally Sensitive Areas.

Environmentally Sensitive Area shall mean (i) any wetland as defined by applicable Environmental Laws; (ii) any area designated as a coastal zone pursuant to applicable Laws, including Environmental Laws; (iii) any area of historic or archeological significance or scenic area as defined or designated by applicable Laws, including Environmental Laws; (iv) habitats of endangered species or threatened species as designated by applicable Laws, including Environmental Laws; or (v) a floodplain or other flood hazard area as defined pursuant to any applicable Laws.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

ERISA Group shall mean, at any time, the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Borrower, are treated as a single employer under Section 414 of the Internal Revenue Code.

Euro-Rate shall mean, with respect to the Loans comprising any Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period, the interest rate per annum determined by the Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Agent in accordance with its usual procedures (which determination shall be conclusive absent

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manifest error) to be the average of the London interbank offered rates for U.S. Dollars quoted by the British Bankers’ Association as set forth on the Moneyline Telerate (or appropriate successor or, if the British Bankers’ Association or its successor ceases to provide such quotes, a comparable replacement determined by the Agent) display page 3750 (or such other display page on the Moneyline Telerate service as may replace display page 3750) two (2) Business Days prior to the first day of such Interest Period for an amount comparable to such Borrowing Tranche and having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the following formula:

Euro-Rate	=	Average of London interbank offered rates quoted by BBA or appropriate successor as shown on Moneyline Telerate Service display page 3750
		1.00 - Euro-Rate Reserve Percentage

The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate Option applies that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrower of the Euro-Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

Euro-Rate Option shall mean either the Revolving Credit Euro-Rate Option or the Term Loan Euro-Rate Option.

Euro-Rate Reserve Percentage shall mean as of any day the maximum percentage in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).

Event of Default shall mean any of the events described in Section 9.1 and referred to therein as an “Event of Default.”

Excess Cash Flow shall be computed as of the close of each fiscal year by taking the difference between (i) EBITDA less capital expenditures for such fiscal year and (ii) Fixed Charges for such fiscal year. All determinations of Excess Cash Flow shall be based on the immediately preceding fiscal year and shall be made following the delivery by the Borrower to the Agent of the Borrower’s audited financial statements for such preceding year.

Excluded Assets shall have the meaning assigned to such term in the definition of Security Agreement.

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Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

Excluded Subsidiaries shall mean the Foreign Subsidiaries, Blair Factoring Company, and JLB Service Bank.

Expiration Date shall mean, with respect to the Revolving Credit Commitments, July 15, 2010.

Federal Funds Effective Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.

Federal Funds Open Rate The rate per annum determined by the Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the “open” rate for federal funds transactions as of the opening of business for federal funds transactions among members of the Federal Reserve System arranged by federal funds brokers on such day, as quoted by Garvin Guybutler, any successor entity thereto, or any other broker selected by the Agent, as set forth on the applicable Telerate display page; provided, however; that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day, or if no such rate shall be quoted by a Federal funds broker at such time, such other rate as determined by the Agent in accordance with its usual procedures.

Financial Projections shall have the meaning assigned to that term in Section 6.1.9(ii).

Fixed Charge Coverage Ratio shall mean as of the end of any quarter, for the four quarters then ended, the ratio of (i) Borrower’s EBITDA less capital expenditures to (ii) Fixed Charges.

Fixed Charges shall mean the sum of net cash interest expense (including borrowing, interest, capital or equivalent costs under the Trade Receivables Securitization) scheduled principal payments on Indebtedness, scheduled payments under capital leases, cash taxes, dividends and distributions to shareholders of the Borrower (excluding any payments to shareholders of the Borrower pursuant to the Tender Offer which shall not exceed $190,000,000);

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provided that for any determination of Fixed Charges on or after the World Financial Sale, Fixed Charges shall be adjusted to exclude from its calculation one time fees, expenses and charges associated with the World Financial Sale and the Tender Offer.

Foreign Subsidiary shall mean a Subsidiary of the Borrower or another Loan Party which is organized under the Laws of a country or jurisdiction other than the United States of America or any state or commonwealth thereof.

Funding Termination Period shall have the meaning assigned to such term in Section 8.1.15 of Schedule 8A.

GAAP shall mean generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3, and applied on a consistent basis both as to classification of items and amounts.

Governmental Acts shall have the meaning assigned to that term in Section 2.9.8.

Guarantor shall mean each of the parties to this Agreement which is designated as a “Guarantor” on the signature page hereof and each other Person which joins this Agreement as a Guarantor after the date hereof pursuant to Section 11.18. The Excluded Subsidiaries shall not be Guarantors hereunder.

Guarantor Joinder shall mean a joinder by a Person as a Guarantor under this Agreement, the Guaranty Agreement and the other Loan Documents in the form of Exhibit 1.1(G)(1).

Guaranty of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business.

Guaranty Agreement shall mean the Continuing Agreement of Guaranty and Suretyship in substantially the form of Exhibit 1.1(G)(2) executed and delivered by each of the Guarantors to the Agent for the benefit of the Lenders.

Historical Statements shall have the meaning assigned to that term in Section 6.1.9(i).

Indebtedness shall mean, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money including any outstanding capital or other liabilities under the Trade

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Receivables Securitization, (ii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any letter of credit, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management device, (iv) any other transaction (including forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade and customer payables and accrued expenses incurred in the ordinary course of business not represented by a promissory note or other evidence of indebtedness and which are not more than thirty (30) days past due), or (v) any Guaranty of Indebtedness for borrowed money.

Ineligible Security shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

Indemnity shall mean the Indemnity Agreement in the form of Exhibit 1.1(I)(1) among the Lenders, the Agent and the Loan Parties relating to possible environmental liabilities associated with any of the Property.

Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors; undertaken under any Law.

Intellectual Property Collateral shall mean all of the property described in the Patent, Trademark and Copyright Assignment.

Intercompany Subordination Agreement shall mean the Subordination Agreement among the Loan Parties in the form attached hereto as Exhibit 1.1(I)(2).

Interest Period shall mean either (A) in the case of Swing Loans, the Swing Loan Interest Period, or (B) in the case of Term Loans or Revolving Credit Loans, the period of time selected by the Borrower in connection with (and to apply to) the election permitted hereunder by the Borrower to have such Loans bear interest under the Euro-Rate Option as provided below. Subject to the last sentence of this definition, such period (referred to in clause (B) above) shall be (i) one Month if Borrower selects the Euro-Rate Option during the Syndications Period and (ii) upon the termination of the Syndications Period, one, two, three or six Months; such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (i) the Borrowing Date if the Borrower is requesting new Loans, or (ii) the

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date of renewal of or conversion to the Euro-Rate Option if the Borrower is renewing or converting to the Euro-Rate Option applicable to outstanding Loans. With respect to any election under clause (B) above, (A) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (B) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date.

Interest Rate Hedge shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Loan Parties or their Subsidiaries in order to provide protection to, or minimize the impact upon, the Borrower, the Guarantor and/or their Subsidiaries of increasing floating rates of interest applicable to Indebtedness.

Interest Rate Option shall mean any Euro-Rate Option or Base Rate Option.

Interim Statements shall have the meaning assigned to that term in Section 6.1.9(i).

Internal Revenue Code shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

Investment shall mean with respect to any Person, (i) loans made, directly or indirectly, by any of the Loan Parties to such Person, (ii) capital or other equity contributions or investments made, directly or indirectly, by any of the Loan Parties to such Person, (iii) Guaranties made by any of the Loan Parties, directly or indirectly, to or for the benefit of such Person, (iv) letters of credit made by any of the Loan Parties, directly or indirectly, to or for the benefit of such Person or (v) any other consideration, benefit or investment made or give to or for the benefit of such Person by any of the Loan Parties.

JLB Deposits shall mean deposits in JLB Service Bank which shall be used by JLB Service Bank to acquire accounts receivables or to collateralize the origination of accounts receivable.

JLB Letter of Credit shall have the meaning assigned to such term in Section 8.2.4(vi)(3)(c) of Schedule 8A.

JLB Service Bank shall mean JLB Service Bank, a Delaware banking association which shall engage in issuing credit to customers of the Borrower permitted by a CEBA credit card bank under Federal law.

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Labor Contracts shall mean all employment agreements, employment contracts, collective bargaining agreements and other agreements among any Loan Party or Subsidiary of a Loan Party and its employees.

Law shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or settlement agreement with any Official Body.

Lender-Provided Interest Rate Hedge shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which the Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. The liabilities of the Loan Parties to the provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder, guaranteed obligations under the Guaranty Agreement and secured obligations under the Mortgage, Pledge Agreement and Security Agreement and otherwise treated as Obligations for purposes of each of the other Loan Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the other Loan Documents.

Lenders shall mean the financial institutions named on Schedule 1.1(B) and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender.

Letter of Credit shall have the meaning assigned to that term in Section 2.9.1.

Letter of Credit Borrowing shall have the meaning assigned to such term in Section 2.9.3.4.

Letter of Credit Fee shall have the meaning assigned to that term in Section 2.9.2.

Letters of Credit Outstanding shall mean at any time the sum of (i) the aggregate undrawn face amount of outstanding Letters of Credit and (ii) the aggregate amount of all unpaid and outstanding Reimbursement Obligations and Letter of Credit Borrowings.

Leverage Ratio shall mean as of any date of determination the ratio of Net Total Indebtedness of Borrower and its Subsidiaries on such date to the EBITDA for the four prior fiscal quarters ending on such date or immediately before such date if such date is not a quarter end.

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Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).

Liquidity shall mean, with respect to the Loan Parties, the sum of Revolver Availability, cash and Permitted Investments.

LLC Interests shall have the meaning given to such term in Section 6.1.3.

Loan Documents shall mean this Agreement, the Agent’s Letter, the Guaranty Agreement, the Intercompany Subordination Agreement, the Notes, the Patent, Trademark and Copyright Assignment, the Pledge Agreement, the Security Agreement, and as and when executed and delivered, the Indemnity and the Mortgages, and any other instruments, certificates or documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or amended from time to time in accordance herewith or therewith, and Loan Document shall mean any of the Loan Documents (but excluding documentation relating to the Trade Receivables Securitization).

Loan Parties shall mean the Borrower and the Guarantors.

Loan Reduction Date shall mean the date on which all of the following have occurred:

(1) closing of the World Financial Sale;

(2) repayment in full of the Term Loan, and

(3) repayment in full and termination of the Trade Receivables Securitization.

Loan Request shall mean either a Revolving Credit/Term Loan Request or Swing Loan Request, as applicable.

Loans shall mean collectively and Loan shall mean separately all Revolving Credit Loans, Term Loans or Swing Loans, or any Revolving Credit Loan, Term Loan or Swing Loan.

Mandatory Prepayment Date shall have the meaning assigned to that term in Section 5.6.2.

Mandatory Prepayment of Excess Cash Flow shall have the meaning assigned to that term in Section 5.6.2.

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Material Adverse Change shall mean any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected to be material and adverse to the business, properties, assets, financial condition, results of operations or prospects of the Loan Parties taken as a whole, (c) impairs materially or could reasonably be expected to impair materially the ability of the Loan Parties taken as a whole to duly and punctually pay or perform its material Indebtedness, or (d) impairs materially or could reasonably be expected to impair materially the ability of the Agent or any of the Lenders, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any other Loan Document, but does not include the World Financial Sale or the Tender Offer.

Minimum Agent Commitment On Term Loan Repayment Date shall have the meaning ascribed to such term in Schedule 1.1(B).

Month, with respect to an Interest Period under the Euro-Rate Option, shall mean the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Euro-Rate Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.

Mortgages shall mean the Mortgages in substantially the form of Exhibit 1.1(M) with respect to the Real Property Collateral executed and delivered by the relevant Loan Party to the Agent for the benefit of the Lenders.

Mortgage Documents shall mean the Mortgages, deeds of trust, assignments of leases and rents, and all other documents, instruments, and agreements sufficient to provide the Agent for the benefit of the Lenders a first priority perfected Lien, subject only to Permitted Liens, on all Real Property Collateral of the Loan Parties.

Multiemployer Plan shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, within the preceding five Plan years, has made or had an obligation to make such contributions.

Multiple Employer Plan shall mean a Plan which has two or more contributing sponsors (including the Borrower or any member of the ERISA Group) at least two of whom are not under common control, as such a plan is described in Sections 4063 and 4064 of ERISA.

Net Total Indebtedness shall mean the sum of Indebtedness less (i) cash and Permitted Investments in excess of $5,000,000, and (ii) outstanding capital or other liabilities

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under the Trade Receivables Securitization to the extent that such capital or liabilities are included in such Indebtedness, in each case of the Borrower and its Subsidiaries on a consolidated basis.

Notes shall mean the Revolving Credit Notes, Term Notes and Swing Note.

Notices shall have the meaning assigned to that term in Section 11.6.

Obligation shall mean any obligation or liability of any of the Loan Parties to the Agent or any of the Lenders, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with this Agreement, the Agent’s Letter, the Notes, the Letters of Credit, or any other Loan Document. Obligations shall include the liabilities to any Lender under any Lender-Provided Interest Rate Hedge but shall not include the liabilities to other Persons under any other Interest Rate Hedge.

Offered Rate Option shall mean the rate of interest quoted from time to time by PNC Bank to the Borrower and accepted by the Borrower with respect to a Swing Loan.

Official Body shall mean any national, federal, state, local or other government or political subdivision or any agency, authority, board, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

Participation Advance shall mean, with respect to any Lender, such Lender’s payment in respect of its participation in a Letter of Credit Borrowing according to its Revolving Credit Ratable Share pursuant to Section 2.9.3.4.

Partnership Interests shall have the meaning given to such term in Section 6.1.3.

Patent, Trademark and Copyright Assignment shall mean the Patent, Trademark and Copyright Collateral Assignment in substantially the form of Exhibit 1.1(P)(1) executed and delivered by each of the Loan Parties to the Agent for the benefit of the Lenders.

PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

Permitted Investments shall mean:

(i) direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;

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(ii) commercial paper maturing in 180 days or less rated not lower than A-1, by Standard & Poor’s or P-1 by Moody’s Investors Service, Inc. on the date of acquisition;

(iii) demand deposits, time deposits or certificates of deposit maturing within one year in commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor’s on the date of acquisition; and.

(iv) funds invested exclusively in the investments described in clauses (i) through (iii) above.

Permitted Liens shall mean:

(i) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable;

(ii) Pledges or deposits made in the ordinary course of business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions or other social security programs;

(iii) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default;

(iv) Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;

(v) Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;

(vi) Liens, security interests and mortgages in favor of the Agent for the benefit of the Lenders securing the Obligations including liabilities under any Lender-Provided Interest Rate Hedge;

(vii) Liens on property leased by any Loan Party or Subsidiary of a Loan Party under capital and operating leases securing obligations of such Loan Party or Subsidiary to the lessor under such leases;

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(viii) Any Lien existing on the date of this Agreement and described on Schedule 1.1(P), provided that the principal amount secured thereby is not hereafter increased, and no additional assets become subject to such Lien;

(ix) Liens on assets excluded from the Collateral under the Security Agreement granted or to be granted by Borrower to Blair Factoring Company, or by Blair Factoring Company to the administrator for the conduit purchasers, pursuant to or in connection with the Trade Receivables Securitization; and

(x) The following, (A) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, and in either case they do not affect the Collateral or, in the aggregate, materially impair the ability of any Loan Party to perform its Obligations hereunder or under the other Loan Documents:

(1) Claims or Liens for taxes, assessments or charges due and payable and subject to interest or penalty, provided that the applicable Loan Party maintains such reserves or other appropriate provisions as shall be required by GAAP and pays all such taxes, assessments or charges forthwith upon the commencement of proceedings to foreclose any such Lien;

(2) Claims, Liens or encumbrances upon, and defects of title to, real or personal property other than the Collateral, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits;

(3) Claims or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory nonconsensual Liens; or

(4) Liens resulting from final judgments or orders described in Section 9.1.6; and

(xi) A pledge of cash to secure letters of credit permitted under Section 8.2.1(viii) in an amount not to exceed the amount of such letters of credit.

Person shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.

Plan shall mean at any time an employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained by any entity

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which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.

Pledge Agreement shall mean the Pledge Agreement in substantially the form of Exhibit 1.1(P)(2) executed and delivered by the Loan Parties to the Agent for the benefit of the Lenders.

Pledged Collateral shall mean the property of the Loan Parties in which security interests are to be granted under the Pledge Agreement, which shall include the ownership interests in each of the Subsidiaries of the Borrower including the Borrower’s interest in Blair Factoring but excluding JLB Service Bank and the Foreign Subsidiaries.

PNC Bank shall mean PNC Bank, National Association, its successors and assigns.

Potential Default shall mean any event or condition which with notice, passage of time or a determination by the Agent or the Required Lenders, or any combination of the foregoing, would constitute an Event of Default.

Principal Office shall mean the main banking office of the Agent in Pittsburgh, Pennsylvania.

Prior Credit Agreement shall mean have the meaning assigned to such term in the recitals.

Prior Security Interest shall mean a valid and enforceable perfected first-priority security interest under the Uniform Commercial Code in the UCC Collateral and the Pledged Collateral which is subject only to Liens for taxes not yet due and payable to the extent such prospective tax payments are given priority by statute.

Prohibited Transaction shall mean any prohibited transaction as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which neither an individual nor a class exemption has been issued by the United States Department of Labor.

Property shall mean all real property, both owned and leased, of any Loan Party or Subsidiary of a Loan Party.

Real Property shall mean the real estate owned by any Loan Party and identified on Schedule 6.1.8.

Real Property Collateral shall mean the Real Property identified on Schedule 1.1(R) upon which Mortgages will be delivered to the Agent for the benefit of the Lenders.

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Receivables Sale Date shall mean the date on which the Borrower and its Subsidiaries sell their receivables and related accounts and assets pursuant to the World Financial Sales Agreement and the related World Financial Sales Documents.

Regulated Substances shall mean, without limitation, any substance, material or waste, regardless of its form or nature, defined under Environmental Laws as a “hazardous substance,” “pollutant,” “pollution,” “contaminant,” “hazardous or toxic substance,” “extremely hazardous substance,” “toxic chemical,” “toxic substance,” “toxic waste,” “hazardous waste,” “special handling waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal waste,” “mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” or “regulated substance” or any other material, substance or waste, regardless of its form or nature, which otherwise is regulated by Environmental Laws, excepting immaterial quantities of commonly used cleaning and related products in offices or retail facilities.

Regulation U shall mean Regulation U, T, G or X as promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time.

Reimbursement Obligation shall have the meaning assigned to such term in Section 2.9.3.2.

Reportable Event shall mean a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Plan or Multiemployer Plan.

Required Lenders shall mean:

(i) if the Revolving Credit Commitments have not expired or otherwise have been terminated, Lenders who hold at least 66-2/3% of the sum of (i) the Revolving Credit Commitments (excluding the Swing Loan Commitment) and (ii) the outstanding principal amount of the Term Loans, or

(ii) if the Revolving Credit Commitments have expired or otherwise have been terminated, Lenders who hold at least 66-2/3% of the sum of (i) the Revolving Facility Usage, plus (ii) the outstanding principal amount of the Term Loans. Reimbursement Obligations and Letter of Credit Borrowings shall be deemed, for purposes of this definition, to be in favor of the Agent and not a participating Lender if such Lender has not made its Participation Advance in respect thereof and shall be deemed to be in favor of such Lender to the extent of its Participation Advance if it has made its Participation Advance in respect thereof.

Required Revolving Lenders shall mean

(i) if the Revolving Credit Commitments have not expired or otherwise have been terminated, Revolving Lenders who hold at least 66-2/3% of the Revolving Credit Commitments (excluding the Swing Loan Commitment), or

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(ii) if the Revolving Credit Commitments have expired or otherwise have been terminated, Revolving Lenders who hold at least 66-2/3% of the Revolving Facility Usage.

Reimbursement Obligations and Letter of Credit Borrowings shall be deemed, for purposes of this definition, to be in favor of the Agent and not a participating Revolving Lender if such Revolving Lender has not made its Participation Advance in respect thereof and shall be deemed to be in favor of such Revolving Lender to the extent of its Participation Advance if it has made its Participation Advance in respect thereof.

Required Term Lenders shall mean:

(i) if the Term Loans have not been funded, Term Lenders who hold at least 66-2/3% of the Term Loan Commitments, or

(ii) if the Term Loans have been funded, Term Lenders who hold at least 66-2/3% of the Term Loans.

Required Environmental Notices shall mean all notices, reports, plans, forms or other filings which pursuant to Environmental Laws, Required Environmental Permits or at the request or direction of an Official Body either must be submitted to an Official Body or which otherwise must be maintained.

Required Environmental Permits shall mean all permits, licenses, bonds, consents, programs, approvals or authorizations required under Environmental Laws to own, occupy or maintain the Property or which otherwise are required for the operations and business activities of the Borrower or Guarantors.

Required Interest Rate Hedge shall have the meaning assigned to such term in Section 8.1.14

Revolver Availability means as of any date, the difference between the Revolving Credit Commitments and the Revolving Facility Usage.

Revolving Credit Base Rate Option shall mean the option of the Borrower to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in Section 4.1.1(i)

Revolving Credit Commitment shall mean, as to any Lender at any time, the amount initially set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment for Revolving Credit Loans,” and Revolving Credit Commitments shall mean the aggregate Revolving Credit Commitments of all of the Lenders.

Revolving Credit Commitment Fee shall mean the fee referred to in Section 2.3.

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Revolving Credit Loans shall mean collectively and Revolving Credit Loan shall mean separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant to Section 2.1 or 2.9.3.

Revolving Credit/Term Loan Request shall have the meaning given to such term in Section 2.4.1.

Revolving Credit Euro-Rate Option shall mean the option of the Borrower to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in Section 4.1.1(ii).

Revolving Credit Notes shall mean collectively and Revolving Credit Note shall mean separately all the Revolving Credit Notes of the Borrower in the form of Exhibit 1.1(R) evidencing the Revolving Credit Loans together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.

Revolving Credit Ratable Share shall mean the proportion that a Lender’s Revolving Credit Commitment bears to the Revolving Credit Commitments of all of the Lenders.

Revolving Facility Usage shall mean at any time the sum of the Revolving Credit Loans and Swing Loans outstanding and the Letters of Credit Outstanding.

Revolving Lenders shall mean the Lenders providing the Revolving Credit Commitments hereunder including the Revolving Credit Loans, Swing Loans and Letters of Credit and participations in such Swing Loans and Letters of Credit.

Section 20 Subsidiary shall mean the Subsidiary of the bank holding company controlling any Lender, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

Security Agreement shall mean the Security Agreement in substantially the form of Exhibit 1.1(S)(1) executed and delivered by each of the Loan Parties to the Agent for the benefit of the Lenders. The collateral under the Security Agreement shall include inventory, equipment, and all other tangible personal property of the Loan Parties, including stock of each of the Loan Parties (except for the Borrower), and all other personal property, excluding accounts and certain related assets of the Borrower sold to Blair Factoring Company under or in connection with the Trade Receivables Securitization as more fully described in such Security Agreement (the “Excluded Assets”).

Settlement Date shall mean any Business Day on which the Agent elects to effect settlement of Swing Loans pursuant to Section 5.8.

Shares shall have the meaning assigned to that term in Section 6.1.2.

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Solvent shall mean, with respect to any Person on a particular date, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (v) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

Standby Letter of Credit shall mean a Letter of Credit issued to support obligations of one or more of the Loan Parties, contingent or otherwise, which finance the working capital and business needs of the Loan Parties incurred in the ordinary course of business, but excluding any Letter of Credit under which the stated amount of such Letter of Credit increases automatically over time.

Subsidiary of any Person at any time shall mean (i) any corporation or trust of which 50% or more (by number of shares or number of votes) of the outstanding capital stock or shares of beneficial interest normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries, (ii) any partnership of which such Person is a general partner or of which 50% or more of the partnership interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries, (iii) any limited liability company of which 50% or more of the limited liability company interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries or (iv) any corporation, trust, partnership, limited liability company or other entity which is controlled or capable of being controlled by such Person or one or more of such Person’s Subsidiaries.

Subsidiary Shares shall have the meaning assigned to that term in Section 6.1.3.

Swing Loan Commitment shall mean PNC Bank’s commitment to make Swing Loans to the Borrower pursuant to Section 2.1.2 hereof in an aggregate principal amount up to $5,000,000. Swing Loans may be requested and made only after the Loan Reduction Date.

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Swing Loan Due Date shall have the meaning assigned to that term in Section 2.5.2.

Swing Loan Interest Period shall mean the period of time selected by the Borrower in connection with any Swing Loan Request. Such period shall (i) be no less than one (1) and no more than seven (7) days, (ii) shall end on a Business Day, and (iii) shall end on or before the Revolving Credit Expiration Date. Notwithstanding the second sentence hereof, the Borrower shall not select, convert to or renew an Interest Period for any portion of the Swing Loans that would end after the Expiration Date.

Swing Loan Note shall mean the Swing Loan Note of the Borrower in the form of Exhibit 1.1(S)(2) evidencing the Swing Loans, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.

Swing Loan Request shall mean a request for Swing Loans made in accordance with Section 2.4.2 hereof.

Swing Loans shall mean collectively and Swing Loan shall mean separately all Swing Loans or any Swing Loan made by PNC Bank to the Borrower pursuant to Section 2.1.2 hereof.

Syndications Period shall mean the period between the Closing Date and the earlier of the following dates:

(a) the date on which the Revolving Credit Commitment of PNC Bank has been reduced to $0, and

(b) the earlier of the following dates:

(i) the Loan Reduction Date, and

(ii) June 30, 2006.

Tender Offer shall mean the offer by Borrower to purchase up to approximately 4,488,000 of its common shares at price per share of $42 for total consideration not to exceed $190,000,000.

Term Lenders shall mean the Lenders providing the Term Loans.

Term Loans shall mean collectively and Term Loan shall mean separately all Term Loans or any Term Loan made by the Lenders or any one of the Lenders to the Borrower pursuant to Section 3.1.

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Term Loan Base Rate Option shall mean the option of the Borrower to have Term Loans bear interest at the rate and under the terms and conditions set forth in Section 4.1.2(i)).

Term Loan Commitment shall mean, as to any Lender at any time, the amount initially set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment for Term Loans,” and thereafter on Schedule I to the most recent Assignment and Assumption Agreement, and Term Loan Commitments shall mean the aggregate Term Loan Commitments of all of the Lenders.

Term Loan Euro-Rate Option shall mean the option of the Borrower to have Term Loans bear interest at the rate and under the terms and conditions set forth in Section 4.1.2(ii)).

Term Loan Prepayment Premium shall mean a fee payable to each Term Lender if the Borrower repays the Term Loan of such Term Lender after the Conversion Date (in the event that the Conversion Date shall occur) and prior to the second anniversary of the Closing Date; [provided that no Term Loan Prepayment Premium shall be payable as a result of any mandatory prepayment]. Such fee shall be payable on the date of such prepayment and be in an amount equal to:

(a) 2% times the amount of such Term Loan subject to such prepayment if such prepayment occurs prior to the first anniversary of the Closing Date, and

(b) 1% times the amount of such Term Loan subject to such prepayment if such prepayment occurs after the first anniversary, but prior to the second anniversary, of the Closing Date;

provided, that with respect to any amount payable as a Term Loan Prepayment Premium, such amounts shall be pro rated with respect to partial prepayments made pursuant to Section 5.4.1; provided, further, that, subject to Section 5.7 [Additional Compensation in Certain Circumstances], no other prepayment penalty or prepayment shall be payable with respect to the Term Loans outstanding.

Term Loan Ratable Share shall mean the proportion that a Lender’s Term Loan Commitment bears to the Term Loan Commitments of all of the Lenders.

Term Notes shall mean collectively and Term Note shall mean separately all of the Term Notes of the Borrower in the form of Exhibit 1.1(T) evidencing the Term Loans together with all amendments, extensions, renewals, replacements, refinancings or refunds thereof in whole or in part.

Trade Letter of Credit shall mean a letter of credit issued in respect of the purchase of goods or services by one or more of the Loan Parties in the ordinary course of their business.

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Term Loan Repayment Date shall have the meaning assigned to such term in Section 5.6.

Trade Receivables Securitization shall mean the sale of the receivables of the Loan Parties and their Subsidiaries to Blair Factoring Company and subsequent sale to Market Street Funding Corporation and other conduit purchasers with a capital balance not to exceed $100,000,000 and any extensions, amendments or replacements on terms no less favorable than the terms of such securitization on the Closing Date and approved by the Agent as previously amended and as amended as of the date hereof as permitted hereby.

Transaction Consideration shall have the meaning assigned to such term in Section 8.2.6.

UCC Collateral shall mean the property of the Loan Parties in which security interests are to be granted under the Patent, Trademark and Copyright Assignment, the Pledge Agreement and the Security Agreement.

Uniform Commercial Code shall have the meaning assigned to that term in Section 6.1.16.

USA Patriot Act shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

World Financial shall mean World Financial Capital Bank, which is the purchaser under the World Financial Sales Agreement.

World Financial Program shall mean the “Program” described under the World Financial Program Agreement.

World Financial Program Agreement shall mean the Private Label Credit Program Agreement, dated as of April 26, 2005 (the “Program Agreement”), between the Borrower and the other parties thereto and World Financial.

World Financial Sale shall mean the sale by the Borrower and its Subsidiaries of their receivables and related assets pursuant to the World Financial Sales Agreement as more fully provided therein.

World Financial Sales Agreement shall mean that certain Purchase, Sale and Servicing Transfer Agreement, dated as of April 26, 2005 (the “Sales Agreement”), by and among the Borrower, JLB Service Bank, Blair Credit Services Corporation and Blair Factoring as the sellers and World Financial.

World Financial Sales Documents shall mean the World Financial Sales Agreement, the Program Agreement and the other documents governing the sale of receivables

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and related accounts by the Borrower to World Financial and the operations of the World Financial Program.

1.2 Construction.

Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents:

1.2.1. Number; Inclusion.

references to the plural include the singular, the plural, the part and the whole; “or” has the inclusive meaning represented by the phrase “and/or,” and “including” has the meaning represented by the phrase “including without limitation”;

1.2.2. Determination.

references to “determination” of or by the Agent or the Lenders shall be deemed to include good-faith estimates by the Agent or the Lenders (in the case of quantitative determinations) and good-faith beliefs by the Agent or the Lenders (in the case of qualitative determinations) and such determination shall be conclusive absent manifest error;

1.2.3. Agent’s Discretion and Consent.

whenever the Agent or the Lenders are granted the right herein to act in its or their sole discretion or to grant or withhold consent such right shall be exercised in good faith;

1.2.4. Documents Taken as a Whole.

the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this Agreement or such other Loan Document;

1.2.5. Headings.

the section and other headings contained in this Agreement or such other Loan Document and the Table of Contents (if any), preceding this Agreement or such other Loan Document are for reference purposes only and shall not control or affect the construction of this Agreement or such other Loan Document or the interpretation thereof in any respect;

1.2.6. Implied References to this Agreement.

article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified;

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1.2.7. Persons.

reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement or such other Loan Document, as the case may be, and reference to a Person in a particular capacity excludes such Person in any other capacity;

1.2.8. Modifications to Documents.

reference to any agreement (including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto), document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated;

1.2.9. From, To and Through.

relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”; and

1.2.10. Shall; Will.

references to “shall” and “will” are intended to have the same meaning.

1.3 Accounting Principles.

Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 8.2 [Negative Covenants] (and all defined terms used in the definition of any accounting term used in Section 8.2) shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing the Annual Statements referred to in Section 6.1.9(i) [Historical Statements]. In the event of any change after the date hereof in GAAP, and if such change would result in the inability to determine compliance with the financial covenants set forth in Section 8.2 based upon the Borrower’s regularly prepared financial statements by reason of the preceding sentence, then the parties hereto agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financial covenants in a manner that would not affect the substance thereof, but would allow compliance therewith to be determined in accordance with the Borrower’s financial statements at that time.

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2. REVOLVING CREDIT FACILITY

2.1 Revolving Credit and Swing Loan Commitments.

2.1.1. Revolving Credit Commitment.

Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans to the Borrower at any time or from time to time on or after the date hereof to the Expiration Date provided that after giving effect to such Revolving Credit Loan the aggregate amount of Revolving Credit Loans from such Lender shall not exceed such Lender’s Revolving Credit Commitment minus such Lender’s Revolving Credit Ratable Share of the Letters of Credit Outstanding. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.

2.1.2. Swing Loan Commitment.

Subject to the terms and conditions hereof including Section 2.4.2 and relying upon the representations and warranties herein set forth, and in order to facilitate loans and repayments between Settlement Dates, PNC Bank may at its option make swing loans (the “Swing Loans”) to the Borrower at any time or from time to time after the Loan Reduction Date to, but not including, the Revolving Credit Expiration Date, in an aggregate principal amount up to but not in excess of $5,000,000 (the “Swing Loan Commitment”), provided that after giving effect to such Swing Loans the Revolving Facility Usage shall not exceed the Revolving Credit Commitments. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and borrow again pursuant to this Section 2.1.2.

2.2 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans.

Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.4 [Revolving Credit/Term Loan Requests] in accordance with its Revolving Credit Ratable Share. The aggregate of each Lender’s Revolving Credit Loans outstanding hereunder to the Borrower at any time shall never exceed its Revolving Credit Commitment minus its Revolving Credit Ratable Share of the Letters of Credit Outstanding. The obligations of each Lender hereunder are several. The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations hereunder. The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.

2.3 Revolving Credit Commitment Fees.

Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the Agent for the account of each Lender, as consideration for such Lender’s Revolving Credit Commitment hereunder, a nonrefundable commitment fee (the “Revolving

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Credit Commitment Fee”) equal to the Applicable Revolving Credit Commitment Fee Rate (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) on the average daily difference between the amount of (i) such Lender’s Revolving Credit Commitment as the same may be constituted from time to time and the (ii) the sum of such Lender’s Revolving Credit Loans outstanding plus its Revolving Credit Ratable Share of Letters of Credit Outstanding. All Revolving Credit Commitment Fees shall be payable in arrears on the first day of each January, April, July and October after the date hereof and on the Expiration Date or upon acceleration of the Revolving Credit Notes.

2.4 Loan Requests.

2.4.1. Revolving Credit/Term Loan Requests.

Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request the Lenders to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans or Term Loans pursuant to Section 4.1[Interest Rate Options] and 4.2 [Interest Periods], by delivering to the Agent, not later than 10:00 a.m., Pittsburgh time, (i) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the Euro-Rate Option applies or the conversion to or the renewal of the Euro-Rate Option for any Loans; and (ii) one (1) Business Day prior to either the proposed Borrowing Date with respect to the making of a Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed request therefor substantially in the form of Exhibit 2.4.1 or a request by telephone immediately confirmed in writing by letter, facsimile or telex in such form (each, a “Revolving Credit/Term Loan Request”), it being understood that the Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Loan Request shall be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the proposed Loans comprising each Borrowing Tranche, which shall be in integral multiples of $500,000 and not less than $1,000,000 for each Borrowing Tranche to which the Euro-Rate Option applies and not less than the lesser of $500,000 or the maximum amount available for Borrowing Tranches to which the Base Rate Option applies; (iii) whether the Euro-Rate Option or Base Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to which the Euro-Rate Option applies, an appropriate Interest Period for the Loans comprising such Borrowing Tranche.

2.4.2. Swing Loan Requests.

Except as otherwise provided herein, the Borrower may from time to time after the Loan Reduction Date and prior to the Expiration Date request PNC Bank to make Swing Loans by delivering to PNC Bank not later than 2:00 p.m., Pittsburgh time on the proposed Borrowing Date a duly completed request therefor substantially in the form of Exhibit 2.4.2 hereto or a request by telephone immediately confirmed in writing by letter, facsimile or telex (each, a “Swing Loan Request”), it being understood that the PNC Bank may

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rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify (i) the proposed Borrowing Date, (ii) the Swing Loan Swing Loan Interest Period, and (iii) the principal amount of such Swing Loan, which shall be not less than $500,000 and shall be an integral multiple of $500,000.

2.5 Making Loans.

2.5.1. Making Revolving Credit Loans.

The Agent shall, promptly after receipt by it of a Revolving Credit/Term Loan Request pursuant to Section 2.4.1 [Revolving Credit Loan Requests], notify the Lenders of its receipt of such Revolving Credit/Term Loan Request specifying: (i) the proposed Borrowing Date and the time and method of disbursement of the Revolving Credit Loans requested thereby; (ii) the amount and type of each such Revolving Credit Loan and the applicable Interest Period (if any); and (iii) the apportionment among the Lenders of such Revolving Credit Loans as determined by the Agent in accordance with Section 2.2 [Nature of Lenders’ Obligations]. Each Lender shall remit the principal amount of each Revolving Credit Loan to the Agent such that the Agent is able to, and the Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject to Section 7.3 [Each Additional Loan], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 2:00 p.m., Pittsburgh time, on the applicable Borrowing Date, provided that if any Lender fails to remit such funds to the Agent in a timely manner, the Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in Section 10.16 [Availability of Funds].

2.5.2. Making Swing Loans; Repayment.

So long as PNC Bank makes Swing Loans, PNC Bank shall, after receipt by it of a Swing Loan Request pursuant to Section 2.4.2, fund such Swing Loan to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 3 p.m. Pittsburgh time on the Borrowing Date, such request to specify the Swing Loan Interest Period (the last day of which shall also be the due date (the “Swing Loan Due Date”) for such Swing Loan). Swing Loans shall bear interest at the Offered Rate Option. Swing Loans shall be repaid on the Swing Loan Due Date or such earlier times as may be specified in this Agreement.

2.6 Notes.

2.6.1. Revolving Credit Note.

The Obligation of the Borrower to repay the aggregate unpaid principal amount of the Revolving Credit Loans made to it by each Lender, together with interest thereon, shall be

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evidenced by a Revolving Credit Note dated the Closing Date payable to the order of such Lender in a face amount equal to the Revolving Credit Commitment of such Lender.

2.6.2. Swing Loan Note.

The obligation of the Borrower to repay the unpaid principal amount of the Swing Loans made to it by PNC Bank together with interest thereon shall be evidenced by a promissory note of the Borrower dated the Closing Date in substantially the form attached hereto as Exhibit 1.1(S) payable to the order of PNC Bank in a face amount equal to the Swing Loan Commitment.

2.7 Use of Proceeds.

The proceeds of the Revolving Credit Loans shall be used as provided for in the recitals and in accordance with Section 8.1.10 [Use of Proceeds].

2.8 Borrowings to Repay Swing Loans.

PNC Bank may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to such Lender’s Revolving Credit Ratable Share of the aggregate principal amount of the outstanding Swing Loans, plus, if PNC Bank so requests, accrued interest thereon, provided that no Lender shall be obligated in any event to make Revolving Credit Loans in excess of its Revolving Credit Commitment and that the Revolving Facility Usage shall not exceed the Revolving Credit Commitment. Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in accordance with Section 2.4.1 without regard to any of the requirements of that provision. PNC Bank shall provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Credit Loans are to be made under this Section 2.8 and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in Section 2.4.1 are then satisfied and whether or not an Event of Default or Potential Default (including any Event of Default specified in Section 9.1.15 or 9.1.16) exists at the time PNC Bank so requests) not later than 3:00 p.m. Pittsburgh time on the next Business Day after the date the Lenders receive such notice from PNC Bank.

2.9 Letter of Credit Subfacility.

2.9.1. Issuance of Letters of Credit.

Borrower may request the issuance of a letter of credit (each a “Letter of Credit”) on behalf of itself or another Loan Party by delivering or having such other Loan Party deliver to the Agent or any other Lender which agrees to issue Letters of Credit hereunder (each an “Issuing Lender”) (with a copy of such notice to the Agent) a completed application and agreement for letters of credit in such form as the Issuing Lender may specify from time to time by no later than 10:00 a.m., Pittsburgh time, at least five (5) Business Days in advance of the

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proposed date of issuance of Standby Letters of Credit, or such shorter period as may be agreed to by the Issuing Lender, or one (1) Business Day (such notice period may be increased to two (2) Business Days at the request of the Issuing Lender if it reasonably determines that it requires more notice) in advance of the proposed date of issuance of Trade Letters of Credit. Each Letter of Credit issued under the Prior Credit Agreement outstanding on the date hereof and listed on Schedule 8.2.1 shall be a Letter of Credit hereunder. Each Letter of Credit shall be a Standby Letter of Credit or a Trade Letter of Credit. Subject to the terms and conditions hereof and in reliance on the agreements of the other Lenders set forth in this Section 2.8, the Issuing Lender or any of the Issuing Lender’s Affiliates will issue a Letter of Credit provided that each Letter of Credit shall (A) have a maximum maturity of twelve (12) months from the date of issuance, and (B) in no event expire later than (i) with respect to Standby Letters of Credit, ten (10) Business Days prior to the Expiration Date and (ii) with respect to Trade Letters of Credit, one hundred eighty (180) days after the Expiration Date and providing that, except with respect to Trade Letters of Credit outstanding after the Revolving Credit Commitments have expired on the Expiration Date, in no event shall (i) the Letters of Credit Outstanding (excluding the JLB Letter of Credit) exceed, at any one time, $25,000,000, (ii) the JLB Letter of Credit have a face amount in excess of $10,000,000, or (iii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitments. Each Issuing Lender shall notify the Agent within one (1) Business Day after any new Letter of Credit is issued or the face amount of Letters of Credit outstanding and issued by such Issuing Lender has changed and shall from time to time and upon request of the Agent deliver a schedule of the outstanding Letters of Credit issued by such Issuing Lender. Each of the Lenders and the Loan Parties acknowledge and agree that notwithstanding that (a) no Loans shall be made after the Expiration Date and (b) no Letters of Credit (including Trade Letters of Credit) shall be issued after the Expiration Date: (1) the Reimbursement Obligations of the Loan Parties pursuant to Section 2.9.3 or elsewhere in this Agreement shall remain in effect after the Expiration Date so long as any Trade Letter of Credit is outstanding or any Reimbursement Obligation remains unpaid, (2) the Agent’s security interest in all Collateral shall remain in full force and effect until all Trade Letters of Credit have expired and all Reimbursement Obligations and other Obligations have been indefeasibly paid in full, and (3) the obligations of the Lenders under Sections 2.9.3 and 2.9.7 of this Agreement to reimburse the Issuing Lender with respect to Trade Letters of Credit, shall remain in effect after the Expiration Date so long as any Trade Letter of Credit remains outstanding and any Reimbursement Obligation remains unpaid.

2.9.2. Letter of Credit Fees.

The Borrower shall pay (i) to the Agent for the ratable account of the Lenders a fee (the “Letter of Credit Fee”) (1) for Standby Letters of Credit, equal to the Applicable Margin applicable to Revolving Credit Loans under the Euro-Rate Option (the “Revolver Euro-Rate Margin”) and (2) for Trade Letters of Credit, 50% of the Revolver Euro-Rate Margin, and (ii) to the Issuing Lender for its own account a fronting fee equal to 1/8% (computed on the basis of a year of 360 days and actual days elapsed), which fee shall be computed on the daily average Letters of Credit Outstanding and shall be payable quarterly in arrears commencing with the first Business Day of each January, April, July and October

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following issuance of each Letter of Credit and on the Expiration Date. The Borrower shall also pay to the Issuing Lender for the Issuing Lender’s sole account the Issuing Lender’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit as the Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, modification (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.

2.9.3. Disbursements, Reimbursement.

2.9.3.1 Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Lender a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Revolving Credit Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively.

2.9.3.2 In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender will promptly notify the Borrower and the Agent. Provided that it shall have received such notice, the Borrower shall reimburse (such obligation to reimburse the Issuing Lender shall sometimes be referred to as a “Reimbursement Obligation”) the Issuing Lender prior to 12:00 noon, Pittsburgh time on each date that an amount is paid by the Issuing Lender under any Letter of Credit (each such date, an “Drawing Date”) in an amount equal to the amount so paid by the Issuing Lender. In the event the Borrower fails to reimburse the Issuing Lender for the full amount of any drawing under any Letter of Credit by 12:00 noon, Pittsburgh time, on the Drawing Date, the Issuing Lender will promptly notify the Agent and each Lender thereof, and the Borrower shall be deemed to have requested that Revolving Credit Loans be made by the Lenders under the Base Rate Option to be disbursed on the Drawing Date under such Letter of Credit, subject to such request not exceeding the amount of the unutilized portion of the Revolving Credit Commitment and subject to the conditions set forth in Section 7.3 [Each Additional Loan] other than any notice requirements. Any notice given by the Issuing Lender pursuant to this Section 2.9.3.2 may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

2.9.3.3 Each Lender shall upon any notice pursuant to Section 2.9.3.2 make available to the Agent who shall thereafter disburse the same to the Issuing Lender an amount in immediately available funds equal to its Revolving Credit Ratable Share of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.9.3.4) each be deemed to have made a Revolving Credit Loan under the Base Rate Option to the Borrower in that amount. If any Lender so notified fails to make available to the Agent for the account of the Issuing Lender the amount of such Lender’s Revolving Credit Ratable Share of such amount by no later than 2:00 p.m., Pittsburgh time on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds

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Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Credit Loans under the Base Rate Option on and after the fourth day following the Drawing Date. The Issuing Lender will promptly give notice of the occurrence of the Drawing Date, but failure of the Issuing Lender to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.9.3.3.

2.9.3.4 With respect to any unreimbursed drawing that is not converted into Revolving Credit Loans under the Base Rate Option to the Borrower in whole or in part as contemplated by Section 2.9.3.2, because of the Borrower’s failure to satisfy the conditions set forth in Section 7.3 [Each Additional Loan or Letter of Credit] other than any notice requirements or for any other reason, the Borrower shall be deemed to have incurred from the Issuing Lender a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the Revolving Credit Loans under the Base Rate Option. Each Lender’s payment to the Agent for the benefit of the Issuing Lender pursuant to Section 2.9.3.3 shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Lender in satisfaction of its participation obligation under this Section 2.9.3.

2.9.4. Repayment of Participation Advances.

2.9.4.1 Upon (and only upon) receipt by the Agent for the benefit of the Issuing Lender of immediately available funds from the Borrower or receipt by the Issuing Lender of any such funds from the Agent (i) in reimbursement of any payment made by the Issuing Lender under the Letter of Credit with respect to which any Lender has made a Participation Advance to the Agent for the benefit of the Issuing Lender, or (ii) in payment of interest on such a payment made by the Issuing Lender under such a Letter of Credit, the Agent, or Issuing Lender, as the case may be, will pay to each Lender (or to the Agent for payment to each Lender), in the same funds as those received by the Agent or the Issuing Lender, as the case may be, the amount of such Lender’s Revolving Credit Ratable Share of such funds, except the Agent shall retain and turnover to the Issuing Lender (or the Issuing Lenders shall retain) the amount of the Revolving Credit Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment.

2.9.4.2 If the Agent or any Issuing Lender is required at any time to return to any Loan Party, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by any Loan Party to the Agent or by the Agent to such Issuing Lender pursuant to Section 2.9.4.1 in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of the Agent, forthwith return to the Agent or to the Agent for the benefit of such Issuing Lender the amount of its Revolving Credit Ratable Share of any amounts so returned plus interest thereon from the date such demand is made to the date such amounts are returned by such Lender to the

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Agent or the Issuing Lender, at a rate per annum equal to the Federal Funds Effective Rate in effect from time to time.

2.9.5. Documentation.

Each Loan Party agrees to be bound by the terms of the Issuing Lender’s application and agreement for letters of credit and the Issuing Lender’s written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Loan Party’s own. In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, the Issuing Lender shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

2.9.6. Determinations to Honor Drawing Requests.

In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.

2.9.7. Nature of Participation and Reimbursement Obligations.

Each Lender’s obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by Section 2.9.3, as a result of a drawing under a Letter of Credit, and the Obligations of the Borrower to reimburse the Issuing Lender upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.9.7 under all circumstances, including the following circumstances:

(i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Issuing Lender or any of its Affiliates, the Borrower or any other Person for any reason whatsoever;

(ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in Section 2.1 [Revolving Credit and Swing Loan Commitments] 2.4 [Loan Requests] 2.5 [Making Loans] or 7.3 [Each Additional Loan or Letter of Credit] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section 2.9.3;

(iii) any lack of validity or enforceability of any Letter of Credit;

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(iv) any claim of breach of warranty that might be made by any Loan Party or any Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the Issuing Lender or its Affiliates or any Lender or any other Person or, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured);

(v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on), or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of, any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if the Issuing Lender or any of the Issuing Lender’s Affiliates has been notified thereof;

(vi) payment by the Issuing Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;

(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;

(viii) any failure by the Issuing Lender or any of Issuing Lender’s Affiliates to issue any Letter of Credit in the form requested by any Loan Party, unless the Issuing Lender has received written notice from such Loan Party of such failure within three Business Days after the Issuing Lender shall have furnished such Loan Party a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;

(ix) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party or Subsidiaries of a Loan Party;

(x) any breach of this Agreement or any other Loan Document by any party thereto;

(xi) the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;

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(xii) the fact that an Event of Default or a Potential Default shall have occurred and be continuing;

(xiii) the fact that the Expiration Date shall have passed or this Agreement or the Commitments hereunder shall have been terminated; and

(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

2.9.8. Indemnity.

In addition to amounts payable as provided in Section 11.3 [Reimbursement and Indemnification of Lenders by Borrower, Etc.] and 10.5 [Reimbursement and Indemnification of Agent by Borrower, Etc.], the Borrower hereby agrees to protect, indemnify, pay and save harmless the Issuing Lender and any of Issuing Lender’s Affiliates that has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Issuing Lender or any of Issuing Lender’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful misconduct of the Issuing Lender or any of its Affiliates as determined by a final judgment of a court of competent jurisdiction or (B) the wrongful dishonor by the Issuing Lender or any of Issuing Lender’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions herein called “Governmental Acts”).

2.9.9. Liability for Acts and Omissions.

As between any Loan Party and the Issuing Lender, or the Issuing Lender’s Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lender shall not be responsible for any of the following including any losses or damages to any Loan Party or other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the Issuing Lender or the Issuing Lender’s Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter

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of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuing Lender or the Issuing Lender’s Affiliates, as applicable, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of the Issuing Lender’s or the Issuing Lender’s Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve the Issuing Lender from liability for the Issuing Lender’s or any of its Affiliates’ gross negligence or willful misconduct in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall the Issuing Lender or the Issuing Lender’s Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.

Without limiting the generality of the foregoing, the Issuing Lender and each of its Affiliates in the exercise of good faith, (i) may rely on any oral or other communication believed in good faith by the Issuing Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the Issuing Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Issuing Lender or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject to such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.

In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Issuing Lender or the Issuing Lender’s Affiliates under or in connection with the Letters of Credit issued by it or any documents and

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certificates delivered thereunder, if taken or omitted in good faith, shall not put the Issuing Lender or the Issuing Lender’s Affiliates under any resulting liability to the Borrower or any Lender.

2.10 Reduction of Commitment.

The Borrower shall have the right at any time and from time to time upon five (5) Business Days’ prior written notice to the Agent to permanently reduce, in whole multiples of $1,000,000 of principal, or terminate the Revolving Credit Commitments without penalty or premium, except as hereinafter set forth, provided that any such reduction or termination shall be accompanied by (a) the payment in full of any Revolving Credit Commitment Fee then accrued on the amount of such reduction or termination and (b) prepayment of the Revolving Credit Notes, together with the full amount of interest accrued on the principal sum to be prepaid (and all amounts referred to in Section 5.7.2 hereof), to the extent that the aggregate amount thereof then outstanding exceeds the Revolving Credit Commitment as so reduced or terminated. From the effective date of any such reduction or termination the obligations of Borrower to pay the Commitment Fee pursuant to Section 2.3 shall correspondingly be reduced or cease.

3. TERM LOANS

3.1 Term Loan Commitments.

Subject to the terms and conditions hereof, and relying upon the representations and warranties herein set forth, each Lender severally agrees to make a term loan (the “Term Loan”) to the Borrower on the date that funds are required to be deposited with Borrower’s Tender Offer depositary in connection with payment for the Borrower’s common shares which the Borrower purchases pursuant to its Tender Offer (the “Tender Purchase Date”), in the principal amount of such Lender’s Term Loan Commitment. Borrower shall request the Term Loans by delivering a Revolving Credit/Term Loan Request at least three (3) Business Days prior to the Borrowing Date for such Loans, provided that Borrower shall request all such Term Loans under one Term Loan Request and all such Term Loans shall be funded on the same Borrowing Date.

3.2 Nature of Lenders’ Obligations with Respect to Term Loans.

The obligations of each Lender to make Term Loans to the Borrower shall be in the proportion that such Lender’s Term Loan Commitment bears to the Term Loan Commitments of all Lenders to the Borrower, but each Lender’s Term Loan to the Borrower shall not exceed its Term Loan Commitment. The failure of any Lender to make a Term Loan shall not relieve any other Lender of its obligations to make a Term Loan nor shall it impose any additional liability on any other Lender hereunder. The Term Loan Commitments are not revolving credit commitments, and the Borrower shall not have the right to borrow, repay and reborrow under Section 3.1 [Term Loan Commitments].

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3.3 Term Loan Notes.

The Obligation of the Borrower to repay the unpaid principal amount of the Term Loans made to it by each Lender shall be evidenced by a Term Note dated the Closing Date payable to the order of each Lender in a face amount equal to the Term Loan of such Lender. The principal amount as provided therein of the Term Notes, together with interest thereon, shall be payable as follows:

(1) if the Receivables Sale Date occurs prior to the Conversion Date, the Term Loans, together will all outstanding interest thereon, shall be payable in full on the date on which the Borrower or one of its Subsidiaries receives the proceeds from the receivable sale occurring on the Receivables Sale Date, or

(2) if the Receivables Sale Date does not occur prior to the Conversion Date, the Term Loans shall be payable as follows:

(i) in 16 quarterly installments of principal, each in the amount of $892,850, due on the first day of each calendar quarter, beginning on July 1, 2006;

(ii) the balance of such Term Loans, together with all outstanding interest thereon, shall be due on the Expiration Date.

3.4 Use of Proceeds.

The proceeds of the Term Loans shall be used as provided for in the recitals and in accordance with Section 8.1.10 [Use of Proceeds].

4. INTEREST RATES

4.1 Interest Rate Options.

The Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or Euro-Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrower may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche, provided that there shall not be at any one time outstanding more than eight (8) Borrowing Tranches in the aggregate among all of the Loans. If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate.

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4.1.1. Revolving Credit Interest Rate Options.

The Borrower shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:

(i) Base Rate Option: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or

(ii) Euro-Rate Option: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the Euro-Rate plus the Applicable Margin.

The Borrower shall pay interest on the Swing Loans under the Offered Rate Option.

4.1.2. Term Loan Interest Rate Options.

The Borrower shall have the right to select from the following Interest Rate Options applicable to the Term Loans:

(i) Term Loan Base Rate Option: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or

(ii) Term Loan Euro-Rate Option: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the Applicable Margin plus the greater of the following rates: (i) the Euro-Rate (computed in accordance with the definition of such term), and (ii) 2% per annum.

4.1.3. Rate Quotations.

The Borrower may call the Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding (except with respect to Swing Loans) on the Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.

4.2 Interest Periods.

At any time when the Borrower shall select, convert to or renew a Euro-Rate Option, the Borrower shall notify the Agent thereof at least three (3) Business Days prior to the

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effective date of such Euro-Rate Option by delivering a Revolving Credit/Term Loan Request. The notice shall specify an Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a Euro-Rate Option:

4.2.1. Amount of Borrowing Tranche.

Each Borrowing Tranche of Euro-Rate Loans shall be in integral multiples of $500,000 and not less than $1,000,000. Each Borrowing Tranche of Swing Loans shall be in integral multiples of $500,000 and not less than $500,000.

4.2.2. Renewals.

In the case of the renewal of a Euro-Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day.

4.3 Interest After Default.

To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived:

4.3.1. Letter of Credit Fees, Interest Rate.

the Letter of Credit Fees and the rate of interest for each Loan otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] or Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0% per annum; and

4.3.2. Other Obligations.

each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Revolving Credit Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomes due and payable and until it is paid in full.

4.3.3. Acknowledgment.

The Borrower acknowledges that the increase in rates referred to in this Section 4.3 reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled to additional compensation for such risk; and all such interest shall be payable by Borrower upon demand by Agent.

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4.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.

4.4.1. Unascertainable.

If on any date on which a Euro-Rate would otherwise be determined, the Agent shall have determined that:

(i) adequate and reasonable means do not exist for ascertaining such Euro-Rate, or

(ii) a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the Euro-Rate, the Agent shall have the rights specified in Section 4.4.3.

4.4.2. Illegality; Increased Costs; Deposits Not Available.

If at any time any Lender shall have determined that:

(i) the making, maintenance or funding of any Loan to which a Euro-Rate Option applies has been made impracticable or unlawful by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or

(ii) such Euro-Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan, or

(iii) after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Loan, or to banks generally, to which a Euro-Rate Option applies, respectively, are not available to such Lender with respect to such Loan, or to banks generally, in the interbank eurodollar market,

then the Agent shall have the rights specified in Section 4.4.3.

4.4.3. Agent’s and Lender’s Rights.

In the case of any event specified in Section 4.4.1 above, the Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.4.2 above, such Lender shall promptly so notify the Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Lenders, in the case of such notice given by the Agent, or (B) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a Euro-Rate Option shall be suspended until the Agent shall have later notified the

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Borrower, or such Lender shall have later notified the Agent, of the Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Agent makes a determination under Section 4.4.1 and the Borrower has previously notified the Agent of its selection of, conversion to or renewal of a Euro-Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If any Lender notifies the Agent of a determination under Section 4.4.2, the Borrower shall, subject to the Borrower’s indemnification Obligations under Section 5.7.2 [Indemnity], as to any Loan of the Lender to which a Euro-Rate Option applies, on the date specified in such notice either convert such Loan to the Base Rate Option otherwise available with respect to such Loan or prepay such Loan in accordance with Section 5.4 [Voluntary Prepayments]. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.

4.5 Selection of Interest Rate Options.

If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 4.2 [Interest Periods], the Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option, commencing upon the last day of the existing Interest Period.

5. PAYMENTS

5.1 Payments.

All payments and prepayments to be made in respect of principal, interest, Revolving Credit Commitment Fee, Letter of Credit Fees, Agent’s Fee or other fees or amounts due from the Borrower hereunder shall be payable prior to 11:00 a.m., Pittsburgh time, on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Agent at the Principal Office for the account of PNC Bank with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Loans in U.S. Dollars and in immediately available funds, and the Agent shall promptly distribute such amounts to the Lenders in immediately available funds, provided that in the event payments are received by 11:00 a.m., Pittsburgh time, by the Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Agent, the Agent shall pay the Lenders the Federal Funds Effective Rate with respect to the amount of such payments for each day held by the Agent and not distributed to the Lenders. The Agent’s and each Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the

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amount of principal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an “account stated.”

5.2 Pro Rata Treatment of Lenders.

Each borrowing shall be allocated to each Lender according to its Revolving Credit Ratable Share or Term Loan Ratable Share, as applicable, and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by the Borrower with respect to principal, interest, Revolving Credit Commitment Fee, Letter of Credit Fees, or other fees or amounts due from the Borrower hereunder to the Lenders with respect to the Loans, shall (except as provided in Section 4.4.3 [Agent’s and Lender’s Rights] in the case of an event specified in Section 4.4 [Euro-Rate Unascertainable; Etc.], 5.4.2 [Replacement of a Lender] or 5.7 [Additional Compensation in Certain Circumstances]) be made in proportion to the applicable Loans outstanding from each Lender and, if no such Loans are then outstanding, in proportion to the Revolving Credit Ratable Share or Term Loan Ratable Share, as applicable, of each Lender. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrower of principal, interest, fees or other amounts from the Borrower with respect to Swing Loans shall be made by or to PNC Bank in accordance with Section 2.

5.3 Interest Payment Dates.

Interest on Revolving Credit Loans to which the Base Rate Option applies shall be due and payable in arrears on the first day of each October, January, April and July after the date hereof and on the Expiration Date or upon acceleration of the Notes. Interest on Loans to which the Euro-Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest Period. Interest on Swing Loans shall be due and payable on the last day of the applicable Swing Loan Interest Period. Interest on mandatory prepayments of principal under Section 5.6 [Mandatory Prepayments] shall be due on the date such mandatory prepayment is due. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated maturity date, upon acceleration or otherwise).

5.4 Voluntary Prepayments.

5.4.1. Right to Prepay.

The Borrower shall have the right at its option from time to time to prepay the Loans in whole or part without premium or penalty (except as provided in Section 5.4.2 below or in Section 5.7 [Additional Compensation in Certain Circumstances] and except that that any prepayment of the Term Loan made after the Conversion Date shall be subject to the Term Loan Prepayment Premium which shall be payable on the date of such prepayment):

(i) at any time with respect to any Loan to which the Base Rate Option applies,

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(ii) on the last day of the applicable Interest Period with respect to Loans to which a Euro-Rate Option applies,

(iii) on the last day of the applicable Swing Loan Interest Period with respect to Swing Loan Loans,

(iv) on the date specified in a notice by any Lender pursuant to Section 4.4 [Euro-Rate Unascertainable, Etc.] with respect to any Loan to which a Euro-Rate Option applies.

Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Agent by 1:00 p.m. at least one (1) Business Day prior to the date of prepayment of Loans setting forth the following information:

(x) the date, which shall be a Business Day, on which the proposed prepayment is to be made;

(y) a statement indicating the application of the prepayment between the Loans; and

(z) the total principal amount of such prepayment, which shall not be less than the lesser of $500,000 for any Swing Loan, $1,000,000 for any Revolving Credit Loan or the remaining amount outstanding, or $1,000,000 for any Term Loan or the remaining amount outstanding.

All prepayment notices shall be irrevocable. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount except with respect to Loans to which the Base Rate Option applies, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. All Term Loan prepayments permitted pursuant to this Section 5.4.1 shall be applied to the unpaid installments of principal of the Term Loans in the inverse order of scheduled maturities. Except as provided in Section 4.4.3 [Agent’s and Lender’s rights], if the Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment shall be applied (i) first to Term Loans, then to Revolving Credit Loans; and (ii) after giving effect to the allocations in clause (i) above and in the preceding sentence, first to Loans to which the Base Rate Option applies, then to Loans to which the Euro-Rate Option applies. Any prepayment hereunder shall be subject to the Borrower’s Obligation to indemnify the Lenders under Section 5.7.2 [Indemnity].

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5.4.2. Replacement of a Lender.

In the event any Lender (i) gives notice under Section 4.4 [Euro-Rate Unascertainable, Etc.] or Section 5.7.1 [Increased Costs, Etc.], (ii) does not fund Loans because the making of such Loans would contravene any Law applicable to such Lender, or (iii) becomes subject to the control of an Official Body (other than normal and customary supervision), then the Borrower shall have the right at its option, with the consent of the Agent, which shall not be unreasonably withheld, conditioned or delayed, to prepay (without prepayment penalty or premium except as provided in this Section 5.4.2 below) the Loans of such Lender in whole, together with all interest accrued thereon, and terminate such Lender’s Commitments within ninety (90) days after (x) receipt of such Lender’s notice under Section 4.4 [Euro-Rate Unascertainable, Etc.] or 5.7.1 [Increased Costs, Etc.], (y) the date such Lender has failed to fund Loans because the making of such Loans would contravene Law applicable to such Lender, or (z) the date such Lender became subject to the control of an Official Body, as applicable; provided that the Borrower shall also pay to such Lender at the time of such prepayment any amounts required under Section 5.7 [Additional Compensation in Certain Circumstances] and any accrued interest due on such amount and any related fees, but the Borrower shall not be required to pay the Term Loan Prepayment Premium to such Lender; provided, however, that the Commitments of such Lender shall be provided by one or more of the remaining Lenders or a replacement bank acceptable to the Agent; provided, further, the remaining Lenders shall have no obligation hereunder to increase their Commitments. Notwithstanding the foregoing, the Agent may only be replaced subject to the requirements of Section 10.14 [Successor Agent] and provided that all Letters of Credit have expired or been terminated or replaced.

5.5 Change of Lending Office.

Each Lender agrees that upon the occurrence of any event giving rise to increased costs or other special payments under Section 4.4.2 [Illegality, Etc.] or 5.7.1 [Increased Costs, Etc.] with respect to such Lender, it will if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans or Letters of Credit affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no material economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 5.5 shall affect or postpone any of the Obligations of the Borrower or any other Loan Party or the rights of the Agent or any Lender provided in this Agreement.

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5.6 Mandatory Prepayments; Re-Allocation of Commitments on Term Loan Repayment Date.

5.6.1. Issuance of Indebtedness or Equity; Sale of Assets; Receipt of Insurance Proceeds; World Financial Sale.

Within the time period specified below following any of the following events (each a “Proceeds Event”), the Borrower shall make a mandatory prepayment of principal on the Loans and other Obligations to be applied as provided in Section 5.6.3 equal to the amount of proceeds received by the Borrower or its Subsidiaries (after taxes and expenses, if applicable, as estimated in good faith by the Borrower) in such Proceeds Event:

(i) Contemporaneously with the closing of the World Financial Sale, the Borrower shall apply the net proceeds thereof (1) first to repay in full and terminate the Trade Receivables Securitization, and (2) second to repay the Obligations hereunder as provided in Section 5.6.3. If such proceeds are not sufficient to repay all of the Term Loans in full, the entire remaining balance of the Term Loans, plus interest thereon, shall be due and payable within three (3) Business Days after the closing of the World Financial Sale.

(ii) Within 10 Business Days following the sale by the Borrower of assets which requires a mandatory prepayment of the Loans under Sections 8.2.7(vii) or 8.2.7(ix) [Disposition of Assets or Subsidiaries],

(iii) Within 10 Business Days following any receipt by the Borrower of insurance proceeds receivable by the Agent described in Section 8.1.3,

(iv) Simultaneously with the sale or other issuance of any equity (each a “Mandatory Prepayment in Respect of Equity Receipts”) by the Borrower or receipt by the Borrower of any contributions to Borrower’s equity or capital by the holders thereof (excluding any of same pursuant to any employee or director benefit or compensation plan), or

(iv) Simultaneously upon the issuance of any Indebtedness by any of the Loan Parties or their subsidiaries under Section 8.2.1(ix).

5.6.2. Excess Cash Flow.

In the event that the Conversion Date shall occur, then, within five (5) Business Days of the due date delivery of the Borrower’s annual financial statements pursuant to Section 8.3.3 [Annual Financial Statements] each year during the remaining term hereof, beginning with the financial statements for the fiscal year ending December 31, 2006, (each, a “Mandatory Prepayment Date”), the Borrower shall make a mandatory prepayment of principal on the Term Loans equal to 75% of Excess Cash Flow for such fiscal year, subject to a credit for voluntary prepayments of the Term Loans made pursuant to Section 5.4 [Voluntary Prepayments] during the immediately preceding fiscal year, together with accrued interest on such principal

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amount (each, a “Mandatory Prepayment of Excess Cash Flow”) and together with any amounts due pursuant to Section 5.7 [Additional Compensation in Certain Circumstances]; provided, however, that in the event of such payment there shall be no requirement to pay a Term Loan Prepayment Premium. Each Mandatory Prepayment of Excess Cash Flow shall be applied to payment of the Loans as provided in Section 5.6.3. To the extent that a Mandatory Prepayment of Excess Cash Flow exceeds the outstanding principal amount of the Term Loans, such prepayment shall be limited to the amount necessary to prepay the Term Loans in full.

5.6.3. Application of Mandatory Prepayments Among Obligations.

All prepayments required pursuant to this Section 5.6 shall be applied as follows (subject to Section 9.2.5 if an Event of Default exists and is continuing):

(i) first to the unpaid installments of principal of the Term Loans in the inverse order of scheduled maturities of such Term Loans;

(ii) second, any portion of a prepayment (other than a Mandatory Prepayment of Excess Cash Flow or Mandatory Prepayments in Respect of Equity Receipts) that remains after the Term Loans have been repaid in full shall then be allocated to the Revolving Credit Loans, such allocation to be first to the principal amount of the Revolving Credit Loans subject to the Base Rate Option, then to Revolving Credit Loans subject to a Euro-Rate Option, then to Swing Loans. In accordance with Section 5.7.2 [Indemnity], the Borrower shall indemnify the Lenders for any loss or expense, including loss of margin, incurred with respect to any such prepayments applied against Loans subject to a Euro-Rate Option on any day other than the last day of the applicable Interest Period.

5.6.4. Re-Allocation of Commitments on Term Loan Repayment Date.

On the date on which the Borrower repays the Term Loan in full (the “Term Loan Repayment Date”), whether pursuant to a mandatory repayment under this Section 5.6, a voluntary prepayment under Section 5.4 or otherwise, the Revolving Credit Commitments shall be re-allocated as set forth on Schedule 1.1(B) if on such date (i) the Revolving Credit Commitment of the Agent is less than the Minimum Agent Commitment On Term Loan Repayment Date and (ii) the Conversion Date has not occurred.

5.7 Additional Compensation in Certain Circumstances.

5.7.1. Increased Costs or Reduced Return Resulting from Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc.

If after the Closing Date any Law, guideline or interpretation or any change in any Law, guideline or interpretation or application thereof by any Official Body charged with

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the interpretation or administration thereof or compliance with any request or directive (whether or not having the force of Law) of any central bank or other Official Body:

(i) subjects any Lender to any tax or changes the basis of taxation with respect to this Agreement, the Notes, the Loans or payments by the Borrower of principal, interest, Revolving Credit Commitment Fees, or other amounts due from the Borrower hereunder or under the Notes (except for taxes on the overall net income of such Lender),

(ii) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against credits or commitments to extend credit extended by, or assets (funded or contingent) of, deposits with or for the account of, or other acquisitions of funds by, any Lender, or

(iii) imposes, modifies or deems applicable any capital adequacy or similar requirement (A) against assets (funded or contingent) of, or letters of credit, other credits or commitments to extend credit extended by, any Lender, or (B) otherwise applicable to the obligations of any Lender under this Agreement,

and the result of any of the foregoing is to increase the cost to, reduce the income receivable by, or impose any expense (including loss of margin) upon any Lender with respect to this Agreement, the Notes or the making, maintenance or funding of any part of the Loans (or, in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of return on any Lender’s capital, taking into consideration such Lender’s customary policies with respect to capital adequacy) by an amount which such Lender in its sole discretion deems to be material, such Lender shall from time to time notify the Borrower and the Agent of the amount determined in good faith (using any averaging and attribution methods employed in good faith) by such Lender to be necessary to compensate such Lender for such increase in cost, reduction of income, additional expense or reduced rate of return. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Lender ten (10) Business Days after such notice is given.

5.7.2. Indemnity.

In addition to the compensation required by Section 5.7.1 [Increased Costs, Etc.], the Borrower shall indemnify each Lender against all liabilities, losses or expenses (including loss of margin, any loss or expense incurred in liquidating or employing deposits from third parties and any loss or expense incurred in connection with funds acquired by a Lender to fund or maintain Loans subject to a Euro-Rate Option) which such Lender sustains or incurs as a consequence of any

(i) payment, prepayment, conversion or renewal of any Loan to which a Euro-Rate Option applies or any Swing Loan on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due),

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(ii) attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under Section 2.4 [Loan Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.4 [Voluntary Prepayments], or

(iii) default by the Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of the Borrower to pay when due (by acceleration or otherwise) any principal, interest, Revolving Credit Commitment Fees or any other amount due hereunder.

If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Borrower of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Lender ten (10) Business Days after such notice is given.

5.8 Settlement Date Procedures.

In order to minimize the transfer of funds between the Lenders and the Agent, the Borrower may borrow, repay and borrow again Swing Loans and PNC Bank may make Swing Loans as provided in Section 2.1.2 hereof. Not later than 11:00 a.m., Pittsburgh time, on any Business Day (each a “Settlement Date”), the Agent may at its option for any reason notify each Lender of its Revolving Credit Ratable Share of the total of the Swing Loans. Prior to 2:00 p.m., Pittsburgh time, on such Settlement Date, each Lender shall pay to the Agent an amount equal to, and shall purchase, its Revolving Credit Ratable Share of the outstanding Swing Loans. These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this Section 5.8 shall relieve the Lenders of their obligations to fund Revolving Credit Loans.

6. REPRESENTATIONS AND WARRANTIES

6.1 Representations and Warranties.

The Loan Parties, jointly and severally, represent and warrant to the Agent and each of the Lenders as follows:

6.1.1. Organization and Qualification.

Each Loan Party and each Subsidiary of each Loan Party is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Each Loan Party and each Subsidiary of each Loan Party has the lawful power to own or lease its properties and to engage in the business it

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presently conducts or proposes to conduct. Each Loan Party and each Subsidiary of each Loan Party is duly licensed or qualified and in good standing in each jurisdiction listed on Schedule 6.1.1 and in all other jurisdictions where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary.

6.1.2. Capitalization and Ownership.

The authorized capital stock of the Borrower consists of common stock without nominal or par value, of which 8,257,313 shares (referred to herein as the “Shares”) were issued and outstanding as of June 30, 2005. All of the Shares have been validly issued and are fully paid and nonassessable. There are no options, warrants or other rights outstanding to purchase any such shares except as indicated on Schedule 6.1.2.

6.1.3. Subsidiaries.

Schedule 6.1.3 states the name of each of the Borrower’s Subsidiaries, its jurisdiction of incorporation, its authorized capital stock, the issued and outstanding shares (referred to herein as the “Subsidiary Shares”) and the owners thereof if it is a corporation, its outstanding partnership interests (the “Partnership Interests”) if it is a partnership and its outstanding limited liability company interests, interests assigned to managers thereof and the voting rights associated therewith (the “LLC Interests”) if it is a limited liability company. The Borrower and each Subsidiary of the Borrower has good and marketable title to all of the Subsidiary Shares, Partnership Interests and LLC Interests it purports to own, free and clear in each case of any Lien. All Subsidiary Shares, Partnership Interests and LLC Interests have been validly issued, and all Subsidiary Shares are fully paid and nonassessable. All capital contributions and other consideration required to be made or paid in connection with the issuance of the Partnership Interests and LLC Interests have been made or paid, as the case may be. There are no options, warrants or other rights outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests except as indicated on Schedule 6.1.3.

6.1.4. Power and Authority.

Each Loan Party has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is or will be a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part.

6.1.5. Validity and Binding Effect.

This Agreement has been duly and validly executed and delivered by each Loan Party, and each other Loan Document which any Loan Party is required to execute and deliver on or after the date hereof will have been duly executed and delivered by such Loan Party on the required date of delivery of such Loan Document. This Agreement and each other Loan

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Document constitutes, or will constitute, legal, valid and binding obligations of each Loan Party which is or will be a party thereto on and after its date of delivery thereof, enforceable against such Loan Party in accordance with its terms, except to the extent that enforceability of any of such Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance.

6.1.6. No Conflict.

Neither the execution and delivery of this Agreement or the other Loan Documents by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of any Loan Party or (ii) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which any Loan Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other than Liens granted under the Loan Documents).

6.1.7. Litigation.

Except as disclosed on Schedule 6.1.7, there are no material actions, suits, proceedings or investigations pending or, to the knowledge of any Loan Party, threatened against such Loan Party or any Subsidiary of such Loan Party at law or equity before any Official Body provided that such items disclosed on such Schedule, could not reasonably be expected to individually or in the aggregate result in any Material Adverse Change. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of any order, writ, injunction or any decree of any Official Body which may result in any Material Adverse Change.

6.1.8. Title to Properties.

The real property owned or leased by each Loan Party and each Subsidiary of each Loan Party is described on Schedule 6.1.8. Each Loan Party and each Subsidiary of each Loan Party has good and marketable title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted Liens, and subject to the terms and conditions of the applicable leases. All leases of property are in full force and effect without the necessity for any consent which has not previously been obtained upon consummation of the transactions contemplated hereby.

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6.1.9. Financial Statements.

(i) Historical Statements. The Borrower has delivered to the Agent copies of its audited consolidated year-end financial statements for and as of the end of the three (3) fiscal years ended December 31, 2004 (the “Annual Statements”). In addition, the Borrower has delivered to the Agent copies of its unaudited consolidated interim financial statements for the fiscal year to date and as of the end of the fiscal quarter ended March 31, 2005 (the “Interim Statements”) (the Annual and Interim Statements being collectively referred to as the “Historical Statements”). The Historical Statements were compiled from the books and records maintained by the Borrower’s management, are correct and complete and fairly represent the consolidated financial condition of the Borrower and its Subsidiaries as of their dates and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP consistently applied, subject (in the case of the Interim Statements) to normal year-end audit adjustments.

(ii) Financial Projections. The Borrower has delivered to the Agent financial projections of the Borrower and its Subsidiaries for the period 2005 through 2010 derived from various assumptions of the Borrower’s management (the “Financial Projections”). The Financial Projections represent a reasonable range of possible results in light of the history of the business, present and foreseeable conditions and the intentions of the Borrower’s management. The Financial Projections accurately reflect the liabilities of the Borrower and its Subsidiaries upon consummation of the transactions contemplated hereby as of the Closing Date.

(iii) Accuracy of Financial Statements. Neither the Borrower nor any Subsidiary of the Borrower has any liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Historical Statements or in the notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of the Borrower or any Subsidiary of the Borrower which may cause a Material Adverse Change. Since December 31, 2004, no Material Adverse Change has occurred.

6.1.10. Use of Proceeds; Margin Stock; Section 20 Subsidiaries.

6.1.10.1 General.

The Loan Parties intend to use the proceeds of the Loans in accordance with Sections 2.7 and 8.1.10.

6.1.10.2 Margin Stock.

None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U). No part of the proceeds of any Loan has

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been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or to refund Indebtedness originally incurred for such purpose, or for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System. None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock.

6.1.10.3 Section 20 Subsidiaries.

The Loan Parties do not intend to use and shall not use any portion of the proceeds of the Loans, directly or indirectly, to purchase during the underwriting period, or for thirty (30) days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.

6.1.11. Full Disclosure.

Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to the Agent or any Lender in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading. There is no fact known to any Loan Party which materially adversely affects the business, property, assets, financial condition, results of operations or prospects of any Loan Party or Subsidiary of any Loan Party which has not been set forth in this Agreement or in the certificates, statements, agreements or other documents furnished in writing to the Agent and the Lenders prior to or at the date hereof in connection with the transactions contemplated hereby.

6.1.12. Taxes.

All federal, state, local and other tax returns required to have been filed with respect to each Loan Party and each Subsidiary of each Loan Party have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that such taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made. There are no agreements or waivers extending the statutory period of limitations applicable to any federal income tax return of any Loan Party or Subsidiary of any Loan Party for any period.

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6.1.13. Consents and Approvals.

Except for the filing of financing statements in the state and county filing offices and the filing with the Securities and Exchange Commission and American Stock Exchange after the Closing Date, no consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents by any Loan Party, except as listed on Schedule 6.1.13, all of which shall have been obtained or made on or prior to the Closing Date except as otherwise indicated on Schedule 6.1.13.

6.1.14. No Event of Default; Compliance with Instruments.

No event has occurred and is continuing and no condition exists or will exist after giving effect to the borrowings or other extensions of credit to be made on the Closing Date under or pursuant to the Loan Documents which constitutes an Event of Default or Potential Default. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of (i) any term of its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents or (ii) any material agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound where such violation would constitute a Material Adverse Change.

6.1.15. Patents, Trademarks, Copyrights, Licenses, Etc.

Each Loan Party and each Subsidiary of each Loan Party owns or possesses all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and operate its properties and to carry on its business as presently conducted and planned to be conducted by such Loan Party or Subsidiary, without known possible, alleged or actual conflict with the rights of others. All material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises and permits of each Loan Party and each Subsidiary of each Loan Party are listed and described on Schedule 6.1.15.

6.1.16. Security Interests.

The Liens and security interests granted to the Agent for the benefit of the Lenders pursuant to the Patent, Trademark and Copyright Assignment, the Pledge Agreement and the Security Agreement in the Collateral (other than the Real Property) constitute and will continue to constitute Prior Security Interests under the Uniform Commercial Code as in effect in each applicable jurisdiction (the “Uniform Commercial Code”) or other applicable Law entitled to all the rights, benefits and priorities provided by the Uniform Commercial Code or such Law. Upon the filing of financing statements relating to said security interests in each office and in each jurisdiction where required in order to perfect the security interests described above, taking

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possession of any stock certificates or other certificates evidencing the Pledged Collateral and recordation of the Patent, Trademark and Copyright Assignment in the United States Patent and Trademark Office and United States Copyright Office, as applicable, all such action as is necessary or advisable to establish such rights of the Agent will have been taken, and there will be upon execution and delivery of the Patent, Trademark and Copyright Assignment, the Pledge Agreement and the Security Agreement, such filings and such taking of possession, no necessity for any further action in order to preserve, protect and continue such rights, except the filing of continuation statements with respect to such financing statements within six months prior to each five-year anniversary of the filing of such financing statements. All filing fees and other expenses in connection with each such action have been or will be paid by the Borrower.

6.1.17. Status of the Pledged Collateral.

All the shares of capital stock, Partnership Interests or LLC Interests included in the Pledged Collateral to be pledged pursuant to the Pledge Agreement are or will be upon issuance validly issued and nonassessable and owned beneficially and of record by the pledgor free and clear of any Lien or restriction on transfer, except as otherwise provided by the Pledge Agreement and except as the right of the Lenders to dispose of the Shares, Partnership Interests or LLC Interests may be limited by the Securities Act of 1933, as amended, and the regulations promulgated by the Securities and Exchange Commission thereunder and by applicable state securities laws. Except as disclosed on Schedule 6.1.17, there are no shareholder, partnership, limited liability company or other agreements or understandings with respect to the shares of capital stock, Partnership Interests or LLC Interests included in the Pledged Collateral. The Loan Parties have delivered true and correct copies of such partnership agreements and limited liability company agreements to the Agent.

6.1.18. Mortgage Liens.

The Liens granted to the Agent for the benefit of the Lenders pursuant to the Mortgages when so granted will constitute a valid first priority Lien under applicable law. All such action as will be necessary or advisable to establish such Lien of the Agent and its priority as described in the preceding sentence will be taken at or prior to the time required for such purpose, and there will be as of the date of execution and delivery of each Mortgage no necessity for any further action in order to protect, preserve and continue such Lien and such priority.

6.1.19. Insurance.

Schedule 6.1.19 lists all insurance policies and other bonds to which any Loan Party or Subsidiary of any Loan Party is a party, all of which are valid and in full force and effect. No notice has been given or claim made and no grounds exist to cancel or avoid any of such policies or bonds or to reduce the coverage provided thereby. Such policies and bonds provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each Loan Party and each Subsidiary of each Loan Party in

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accordance with prudent business practice in the industry of the Loan Parties and their Subsidiaries.

6.1.20. Compliance with Laws.

The Loan Parties and their Subsidiaries are in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 6.1.25 [Environmental Matters]) in all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is presently or will be doing business except where the failure to do so would not constitute a Material Adverse Change. The Borrower shall comply with applicable Laws, including SEC Rule 13e-4, in connection with its Tender Offer.

6.1.21. Material Contracts; Burdensome Restrictions.

Schedule 6.1.21 lists all material contracts relating to the business operations of each Loan Party and each Subsidiary of any Loan Party, including all employee benefit plans and Labor Contracts. All such material contracts are valid, binding and enforceable upon such Loan Party or Subsidiary and each of the other parties thereto in accordance with their respective terms, and there is no default thereunder, to the Loan Parties’ knowledge, with respect to parties other than such Loan Party or Subsidiary. To their knowledge, none of the Loan Parties or their Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which could result in a Material Adverse Change.

6.1.22. Investment Companies; Regulated Entities.

None of the Loan Parties or any Subsidiaries of any Loan Party is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.” None of the Loan Parties or any Subsidiaries of any Loan Party is subject to any other Federal or state statute or regulation limiting its ability to incur Indebtedness for borrowed money.

6.1.23. Plans and Benefit Arrangements.

Except as set forth on Schedule 6.1.23:

(i) The Borrower and each other member of the ERISA Group are in compliance in all material respects with any applicable provisions of ERISA with respect to all Benefit Arrangements, Plans and Multiemployer Plans. There has been no Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the best knowledge of the Borrower, with respect to any Multiemployer Plan or Multiple Employer Plan, which could result in any material liability of the Borrower or any other member of the ERISA Group. The Borrower and all other members of the ERISA Group have made when due any and

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all payments required to be made under any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto. With respect to each Plan and Multiemployer Plan, the Borrower and each other member of the ERISA Group (i) have fulfilled in all material respects their obligations under the minimum funding standards of ERISA, (ii) have not incurred any liability to the PBGC, and (iii) have not had asserted against them any penalty for failure to fulfill the minimum funding requirements of ERISA.

(ii) To the best of the Borrower’s knowledge, each Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder when due.

(iii) Neither the Borrower nor any other member of the ERISA Group has instituted or intends to institute proceedings to terminate any Plan.

(iv) No event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with respect to any Plan, and no amendment with respect to which security is required under Section 307 of ERISA has been made or is reasonably expected to be made to any Plan.

(v) The aggregate actuarial present value of all benefit liabilities (whether or not vested) under each Plan, determined on a plan termination basis, as disclosed in, and as of the date of, the most recent actuarial report for such Plan, does not exceed the aggregate fair market value of the assets of such Plan.

(vi) Neither the Borrower nor any other member of the ERISA Group has incurred or reasonably expects to incur any material withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any other member of the ERISA Group has been notified by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan has been terminated within the meaning of Title IV of ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan is reasonably expected to be reorganized or terminated, within the meaning of Title IV of ERISA.

(vii) To the extent that any Benefit Arrangement is insured, the Borrower and all other members of the ERISA Group have paid when due all premiums required to be paid for all periods through the Closing Date. To the extent that any Benefit Arrangement is funded other than with insurance, the Borrower and all other members of the ERISA Group have made when due all contributions required to be paid for all periods through the Closing Date.

(viii) All Plans, Benefit Arrangements and Multiemployer Plans have been administered in accordance with their terms and applicable Law.

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6.1.24. Employment Matters.

Each of the Loan Parties and each of their Subsidiaries is in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, where the failure to comply would constitute a Material Adverse Change. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of any of the Loan Parties or any of their Subsidiaries which in any case would constitute a Material Adverse Change. The Borrower has delivered to the Agent true and correct copies of each of the Labor Contracts, if any.

6.1.25. Environmental Matters.

Except as disclosed on Schedule 6.1.25:

(i) None of the Loan Parties has received any Environmental Complaint, whether directed or issued to any Loan Party or relating or pertaining to any prior owner, operator or occupant of the Property, and has no reason to believe that it might receive an Environmental Complaint.

(ii) No activity of any Loan Party at the Property is being or has been conducted in violation of any Environmental Law or Required Environmental Permit and to the knowledge of any Loan Party no activity of any prior owner, operator or occupant of the Property was conducted in violation of any Environmental Law.

(iii) To the Loan Parties’ knowledge, there are no Regulated Substances present on, in, under, or emanating from or to the Property or any portion thereof which result in Contamination.

(iv) Each Loan Party has all Required Environmental Permits and all such Required Environmental Permits are in full force and effect.

(v) Each Loan Party has submitted to an Official Body and/or maintains, as appropriate, all Required Environmental Notices.

(vi) No structures, improvements, equipment, fixtures, impoundments, pits, lagoons or aboveground or underground storage tanks located on the Property contain or use, except in compliance with Environmental Laws and Required Environmental Permits, Regulated Substances or otherwise are operated or maintained except in compliance with Environmental Laws and Required Environmental Permits. To the knowledge of each Loan Party, no structures, improvements, equipment, fixtures, impoundments, pits, lagoons or aboveground or underground storage tanks of prior owners, operators or occupants of the

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Property contained or used, except in compliance with Environmental Laws, Regulated Substances or otherwise were operated or maintained by any such prior owner, operator or occupant except in compliance with Environmental Laws.

(vii) To the knowledge of each Loan Party, no facility or site to which any Loan Party, either directly or indirectly by a third party, has sent Regulated Substances for storage, treatment, disposal or other management has been or is being operated in violation of Environmental Laws or pursuant to Environmental Laws is identified or proposed to be identified on any list of contaminated properties or other properties which pursuant to Environmental Laws are the subject of an investigation, cleanup, removal, remediation or other response action by an Official Body.

(viii) No portion of the Property is identified or to the knowledge of any Loan Party proposed to be identified on any list of contaminated properties or other properties which pursuant to Environmental Laws are the subject of an investigation or remediation action by an Official Body, nor to the knowledge of any Loan Party is any property adjoining or in the proximity of the Property identified or proposed to be identified on any such list.

(ix) No portion of the Property constitutes an Environmentally Sensitive Area.

(x) No lien or other encumbrance authorized by Environmental Laws exists against the Property and none of the Loan Parties has any reason to believe that such a lien or encumbrance may be imposed.

6.1.26. Senior Debt Status.

The Obligations of each Loan Party under this Agreement, the Notes, the Guaranty Agreement and each of the other Loan Documents to which it is a party do rank and will rank at least pari passu in priority of payment with all other Indebtedness of such Loan Party except Indebtedness of such Loan Party to the extent secured by Permitted Liens. There is no Lien upon or with respect to any of the properties or income of any Loan Party or Subsidiary of any Loan Party which secures indebtedness or other obligations of any Person except for Permitted Liens.

6.1.27. Solvency.

Each of the Loan Parties is Solvent. After giving effect to the transactions contemplated by the Loan Documents, including all Indebtedness incurred thereby, the Liens granted by the Borrower in connection therewith and the payment of all fees related thereto, each of the Loan Parties will be Solvent, determined as of the Closing Date.

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6.1.28. Anti-Terrorism Laws.

6.1.28.1 General.

None of the Loan Parties or any Affiliate of any Loan Party, is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

6.1.28.2 Executive Order No. 13224.

None of the Loan Parties, or any Affiliate of any Loan Party, or their respective agents acting or benefiting in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder, is any of the following (each a “Blocked Person”):

(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224;

(v) a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or

(vi) a person or entity who is affiliated or associated with a person or entity listed above.

No Loan Party or, to the knowledge of any Loan Party, any of its agents acting in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

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6.2 Updates to Schedules.

Should any of the information or disclosures on any of the following Schedules attached hereto be outdated or incorrect in any material respect as of the date on which Borrower delivers its Compliance Certificates pursuant to Section 8.3.4, Borrower shall deliver an amended and restated form of such Schedule together with such Compliance Certificate:

Schedule 6.1.1	-	Qualifications To Do Business
Schedule 6.1.2	-	Capitalization
Schedule 6.1.19	-	Insurance Policies
Schedule 6.1.21	-	Material Contracts

Should any of the information or disclosures provided on any of the following Schedules attached hereto become outdated or incorrect in any material respect, the Borrower shall promptly provide the Agent in writing with such revisions or updates to such Schedule as may be necessary or appropriate to update or correct same; provided, however, that no Schedule shall be deemed to have been amended, modified or superseded by any such correction or update, nor shall any breach of warranty or representation resulting from the inaccuracy or incompleteness of any such Schedule be deemed to have been cured thereby, unless and until the Required Lenders, in their sole and absolute discretion, shall have accepted in writing such revisions or updates to such Schedule.

Schedule 6.1.3	-	Subsidiaries
Schedule 6.1.7	-	Litigation
Schedule 6.1.8	-	Owned And Leased Real Property
Schedule 6.1.13	-	Consents And Approvals
Schedule 6.1.15	-	Patents, Trademarks, Copyrights, Licenses, Etc.
Schedule 6.1.17	-	Partnership Agreements; LLC Agreements
Schedule 6.1.23	-	Employee Benefit Plan Disclosures
Schedule 6.1.25	-	Environmental Disclosures

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7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT

The obligation of each Lender to make Loans and of the Agent to issue Letters of Credit hereunder is subject to the performance by each of the Loan Parties of its Obligations to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to the satisfaction of the following further conditions:

7.1 First Loans and Letters of Credit.

On the Closing Date:

7.1.1. Officer’s Certificate.

The representations and warranties of each of the Loan Parties contained in Section 6.1 and in each of the other Loan Documents shall be true and accurate on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), and each of the Loan Parties shall have performed and complied with all covenants and conditions hereof and thereof, no Event of Default or Potential Default shall have occurred and be continuing or shall exist; and there shall be delivered to the Agent for the benefit of each Lender a certificate of each of the Loan Parties, dated the Closing Date and signed by the Chief Executive Officer, President or Chief Financial Officer of each of the Loan Parties, to each such effect.

7.1.2. Secretary’s Certificate.

There shall be delivered to the Agent for the benefit of each Lender a certificate dated the Closing Date and signed by the Secretary or an Assistant Secretary of each of the Loan Parties, certifying as appropriate as to:

(i) all action taken by each Loan Party in connection with this Agreement and the other Loan Documents;

(ii) the names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of each Loan Party for purposes of this Agreement and the true signatures of such officers, on which the Agent and each Lender may conclusively rely; and

(iii) copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing of each Loan Party in each state where organized or qualified to do business.

7.1.3. Delivery of Loan Documents.

The Guaranty Agreement, Notes, Intercompany Subordination Agreement, the Patent, Trademark and Copyright Assignment, Pledge Agreement and Security Agreement shall have been duly executed and delivered to the Agent for the benefit of the Lenders, together with all appropriate financing statements and appropriate stock powers and certificates evidencing the Shares, the Partnership Interests and the LLC Interests.

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7.1.4. Delivery of World Financial Sale Documents.

The Borrower shall have delivered to the Agent copies, certified as true and correct, of the executed World Financial Sale Documents and satisfactory evidence that (including all amendments, supplements, schedules and exhibits thereto), which shall be satisfactory to the Agent and have delivered satisfactory evidence that the net sale proceeds thereunder would not be less than $175,000,000 if sold on the Closing Date.

7.1.5. World Financial Consents and Closing.

The Borrower shall have informed the Agent of the status of governmental, shareholder and third party consents in connection with the World Financial Sale and the expected timing for receipt of such consents and closing date under the World Financial Sales Agreement which shall be not later than February 1, 2006.

7.1.6. EBITDA.

Evidence that the Borrower’s EBITDA for the period ended March 31, 2005, shall be at least equal to $30,000,000.

7.1.7. Pro Forma Financial Statements.

The Borrower shall have delivered to the Agent and the Lenders pro forma consolidated financial statements as to the Borrower and its subsidiaries, and forecasts prepared by management of the Borrower, each in form satisfactory to the Agent, consisting of balance sheets, income statements and cash flow statements on a quarterly basis for the first year following the Closing Date and on an annual basis for each year thereafter during the term of this Agreement. The assumptions used in preparing the forecast financial statements of the Borrower and its subsidiaries shall be reasonably acceptable to the Agent.

7.1.8. Minimum Liquidity.

The (1) Liquidity shall be at least $35,000,000, and (2) Revolver Availability shall be at least $15,000,000.

7.1.9. Opinion of Counsel.

There shall be delivered to the Agent for the benefit of each Lender a written opinion of Patton Boggs LLP, counsel for the Loan Parties (who may rely on the opinions of such other counsel as may be acceptable to the Agent), dated the Closing Date and in form and substance satisfactory to the Agent and its counsel:

(i) as to the matters set forth in Exhibit 7.1.9; and

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(ii) as to such other matters incident to the transactions contemplated herein as the Agent may reasonably request.

7.1.10. Legal Details.

All legal details and proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be in form and substance satisfactory to the Agent and counsel for the Agent, and the Agent shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to the Agent and said counsel, as the Agent or said counsel may reasonably request.

7.1.11. Payment of Fees.

The Borrower shall have paid or caused to be paid to the Agent for itself and for the account of the Lenders to the extent not previously paid all fees accrued through the Closing Date and the costs and expenses for which the Agent and the Lenders are entitled to be reimbursed.

7.1.12. Consents.

All material consents required to effectuate the transactions contemplated hereby as set forth on Schedule 6.1.13 shall have been obtained.

7.1.13. Officer’s Certificate Regarding MACs.

Since December 31, 2004, no Material Adverse Change shall have occurred; there shall have been no material change in the management of any Loan Party or Subsidiary of any Loan Party; and there shall have been delivered to the Agent for the benefit of each Lender a certificate dated the Closing Date and signed by the President, Chief Financial Officer or Treasurer of each Loan Party to each such effect.

7.1.14. No Violation of Laws.

The making of the Loans and the issuance of the Letters of Credit shall not contravene any Law applicable to any Loan Party or any of the Lenders.

7.1.15. No Actions or Proceedings.

No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, this Agreement, the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or which, in the Agent’s sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or any of the other Loan Documents.

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7.1.16. Insurance Policies; Certificates of Insurance; Endorsements.

The Loan Parties shall have delivered certificates of insurance and other evidence acceptable to the Agent that adequate insurance in compliance with Section 8.1.3 [Maintenance of Insurance] is in full force and effect and that all premiums then due thereon have been paid, together with copies of additional insured, mortgagee and lender loss payable special endorsements relating to each Loan Party’s casualty insurance policy or policies thereto in form and substance satisfactory to the Agent and its counsel naming the Agent as additional insured, mortgagee and lender loss payee.

7.1.17. Lien Searches

The Agent shall have received satisfactory results of a Lien search demonstrating that the Agent’s Lien constitutes a Prior Security Interest in favor of the Lenders and their exist no other Liens, including UCC filings, judgments, suits and tax and other claims, except for Permitted Liens.

7.1.18. Financing Statements.

The Agent shall have received executed originals of financing statements necessary to perfect the Lien of the Lenders on the Collateral.

7.1.19. Trade Receivables Securitization.

The Borrower shall have delivered evidence to the Agent that the parties to the Trade Receivables Securitization have entered into an amendment thereto in a form acceptable to the Agent and the parties thereto shall have closed on the transactions thereunder.

7.1.20. Filing Receipts.

The Agent shall have received (1) copies of all filing receipts and acknowledgments issued by any governmental authority to evidence any recordation or filing necessary to perfect the Lien of the Lenders on the Collateral or other satisfactory evidence of such recordation and filing and (2) evidence in a form acceptable to the Agent that such Lien constitutes a Prior Security Interest in favor of the Lenders and, in the case of the Mortgage, a valid and perfected first priority Lien.

7.1.21. Environmental Reports.

The Loan Parties shall deliver to the Agent copies of any environmental audit or reports that they have received within the period five (5) years immediately preceding the Closing Date with respect to the Real Property.

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7.1.22. Reserved.

7.1.23. Reserved.

7.1.24. Reserved.

7.1.25. Contingent Liabilities.

The Agent shall be satisfied as to the amount and nature of all tax, ERISA and other contingent liabilities to which the Loan Parties may be subject.

7.1.26. Due Diligence.

The Agent shall have completed its due diligence with respect to the Loan Parties.

7.1.27. Reserved.

7.1.28. Administrative Questionnaire.

Each of the Lenders and the Borrower shall have completed and delivered to the Agent the Agent’s form of administrative questionnaire.

7.2 Term Loan.

At the time of making the Term Loans and prior to making any payments for shares pursuant to the Tender Offer (and after giving effect to such Term Loans and the payments for shares and costs and expenses in connection with the Tender Offer), the Loan Parties shall have complied with the following conditions precedent:

7.2.1. Minimum Liquidity.

The (1) Liquidity shall be at least $35,000,000, and (2) Revolver Availability shall be at least $15,000,000.

7.2.2. Compliance Certificate.

The Loan Parties shall deliver a Compliance Certificate dated as of the Borrowing Date for such Term Loans:

(i) which demonstrates that the Loan Parties are in compliance with their covenant contained in Sections 7.2.1 [Minimum Liquidity] and Section 8.2.14 [Minimum EBITDA];

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(ii) which discloses the number of shares to be purchased under the Tender Offer, the price per share, the total amount that the Borrower shall pay in connection with the Tender Offer for shares and for related expenses and costs; and

(iii) pursuant to which the Loan Parties shall certify that they are in compliance with all of their other representations, warranties and covenants contained herein and that there exist no Events of Default or Potential Defaults.

7.2.3. Other Requirements.

The Loan Parties shall comply with Section 7.3 [Each Additional Loan or Letter of Credit].

7.2.4. Mortgages.

The Loan Parties shall have delivered to the Agent the Mortgage Documents and the Ancillary Mortgage Documents in accordance with Section 8.1.18 [Mortgage Liens], notwithstanding the time periods after the Closing Date within which such Mortgages are to be delivered with respect to Real Property Collateral owned on the Closing Date pursuant to such Section 8.1.18, other than the Real Property located in Starbrick, Pennsylvania and Erie, Pennsylvania.

7.2.5. Maximum Outstandings.

On the date on which the Term Loans are to be made, and after giving effect to the Loans made and Letters of Credit Outstanding on such date, the aggregate amount of Loans outstanding and Letters of Credit outstanding together with proceeds of the Trade Receivables Securitization shall not exceed $170,000,000.

7.3 Each Additional Loan or Letter of Credit.

At the time of making any Loans or issuing any Letters of Credit other than Loans made or Letters of Credit issued on the Closing Date and after giving effect to the proposed extensions of credit: the representations and warranties of the Loan Parties contained in Section 6.1 and in the other Loan Documents shall be true on and as of the date of such additional Loan or Letter of Credit with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein) and the Loan Parties shall have performed and complied with all covenants and conditions hereof; no Event of Default or Potential Default shall have occurred and be continuing or shall exist; no Funding Termination Period shall be in effect; the making of such Loans or issuance of such Letter of Credit shall not contravene any Law applicable to any Loan Party or Subsidiary of any Loan Party or any of the Lenders; and the Borrower shall have delivered to the Agent a duly executed and completed Loan Request or application for a Letter of Credit as the case may be.

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8. COVENANTS

8.1 Affirmative Covenants.

The Loan Parties, jointly and severally, covenant and agree that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings, and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations under the Loan Documents and termination of the Commitments, the Loan Parties shall comply at all times with the following affirmative covenants:

8.1.1. Preservation of Existence, Etc.

Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited liability company and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except as otherwise expressly permitted in Section 8.2.6 [Liquidations, Mergers, Etc.].

8.1.2. Payment of Liabilities, Including Taxes, Etc.

Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including all taxes, assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made, but only to the extent that failure to discharge any such liabilities would not result in any additional liability which would adversely affect to a material extent the financial condition of any Loan Party or Subsidiary of any Loan Party or which would affect the Collateral, provided that the Loan Parties and their Subsidiaries will pay all such liabilities forthwith upon the commencement of proceedings to foreclose any Lien which may have attached as security therefore.

8.1.3. Maintenance of Insurance.

Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage, workers’ compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts as similar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to the extent customary, all as reasonably determined by the Agent. At the request of the Agent, the Loan Parties shall deliver to the Agent

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and each of the Lenders (x) on the Closing Date and annually thereafter an original certificate of insurance signed by the Loan Parties’ independent insurance broker describing and certifying as to the existence of the insurance on the Collateral required to be maintained by this Agreement and the other Loan Documents, together with a copy of the endorsement described in the next sentence attached to such certificate and (y) from time to time a summary schedule indicating all insurance then in force with respect to each of the Loan Parties. Such policies of insurance shall contain special endorsements, in form and substance acceptable to the Agent, which shall (i) specify the Agent as an additional insured, mortgagee and lender loss payee as its interests may appear, with the understanding that any obligation imposed upon the insured (including the liability to pay premiums) shall be the sole obligation of the applicable Loan Parties and not that of the insured, (ii) provide that the interest of the Lenders shall be insured regardless of any breach or violation by the applicable Loan Parties of any warranties, declarations or conditions contained in such policies or any action or inaction of the applicable Loan Parties or others insured under such policies, (iii) provide a waiver of any right of the insurers to set off or counterclaim or any other deduction, whether by attachment or otherwise, (iv) provide that any and all rights of subrogation which the insurers may have or acquire shall be, at all times and in all respects, junior and subordinate to the prior payment in full of the Indebtedness hereunder and that no insurer shall exercise or assert any right of subrogation until such time as the Indebtedness hereunder has been paid in full and the Commitments have terminated, (v) provide, except in the case of public liability insurance and workmen’s compensation insurance, that all insurance proceeds for losses of less than $2,500,000 shall be adjusted with and payable to the applicable Loan Parties and that all insurance proceeds for losses of $2,500,000 or more shall be adjusted with and payable to the Agent, (vi) include effective waivers by the insurer of all claims for insurance premiums against the Agent, (vii) provide that no cancellation of such policies for any reason (including non-payment of premium) nor any change therein shall be effective until at least thirty (30) days after receipt by the Agent of written notice of such cancellation or change, (viii) be primary without right of contribution of any other insurance carried by or on behalf of any additional insureds with respect to their respective interests in the Collateral, and (ix) provide that inasmuch as the policy covers more than one insured, all terms, conditions, insuring agreements and endorsements (except limits of liability) shall operate as if there were a separate policy covering each insured. The applicable Loan Parties shall notify the Agent promptly of any occurrence causing a material loss or decline in value of the Collateral and the estimated (or actual, if available) amount of such loss or decline. Proceeds received by the Agent shall be applied as follows:

(1) If no Event of Default exists at the time the insurance proceeds are received, the Borrower may reinvest such proceeds in substitute assets provided that:

(i) the Borrower shall notify the Agent of Borrower’s intent to purchase substitute assets within ten (10) Business Days of the date of Borrower’s receipt of such proceeds, and

(ii) the Borrower shall purchase such substitute assets within ninety (90) days following such receipt.

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If (a) the Borrower fails to deliver the notice within ten (10) Business Days described in (i) above, the Borrower shall apply all of the proceeds received prepay the Loans and reduce the Revolving Credit Commitments pursuant to Section 5.6 on the last day of such 5 Business Day period, or (b) if Borrower delivers the notice described in clause (i) but does not invest all of the proceeds within 90 days pursuant to clause (ii), then the Borrower shall on the last day of such 90-day period apply all of the proceeds not so reinvested to repay Loans and reduce the Commitments pursuant to Section 5.6.

(2) If an Event of Default exists at the time the insurance proceeds are received, the Agent may elect (i) to apply the proceeds to repay the Loans as provided for in Section 9.2.5, or (ii) disburse such proceeds to the applicable Loan Parties on such terms as are deemed appropriate by the Agent for the repair, restoration and/or replacement of property in respect of which such proceeds were received.

8.1.4. Maintenance of Properties and Leases.

Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, such Loan Party will make or cause to be made all appropriate repairs, renewals or replacements thereof.

8.1.5. Maintenance of Patents, Trademarks, Etc.

Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises, permits and other authorizations necessary for the ownership and operation of its properties and business if the failure so to maintain the same would constitute a Material Adverse Change.

8.1.6. Visitation Rights.

Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Agent or any of the Lenders to visit and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as any of the Lenders may reasonably request, provided that each Lender shall provide the Borrower and the Agent with reasonable notice prior to any visit or inspection. In the event any Lender desires to conduct an audit of any Loan Party, such Lender shall make a reasonable effort to conduct such audit contemporaneously with any audit to be performed by the Agent.

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8.1.7. Keeping of Records and Books of Account.

The Borrower shall, and shall cause each Subsidiary of the Borrower to, maintain and keep proper books of record and account which enable the Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.

8.1.8. Plans and Benefit Arrangements.

The Borrower shall, and shall cause each other member of the ERISA Group to, comply with ERISA, the Internal Revenue Code and other applicable Laws applicable to Plans and Benefit Arrangements except where such failure, alone or in conjunction with any other failure, would not result in a Material Adverse Change. Without limiting the generality of the foregoing, the Borrower shall cause all of its Plans and all Plans maintained by any member of the ERISA Group to be funded in accordance with the minimum funding requirements of ERISA and shall make, and cause each member of the ERISA Group to make, in a timely manner, all contributions due to Plans, Benefit Arrangements and Multiemployer Plans.

8.1.9. Compliance with Laws.

Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in all respects, provided that it shall not be deemed to be a violation of this Section 8.1.9 if any failure to comply with any Law would not result in fines, penalties, remediation costs, other similar liabilities or injunctive relief which in the aggregate would constitute a Material Adverse Change.

8.1.10. Use of Proceeds.

The Loan Parties will use the Letters of Credit and the proceeds of the Loans only to (i) consummate the Tender Offer, (ii) repay the Prior Credit Agreement, (iii) pay fees and expenses and (iv) provide ongoing working capital and for other general corporate purposes of the Borrower and its Subsidiaries.

8.1.11. Further Assurances.

Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the Agent’s Lien on and Prior Security Interest in the Collateral as a continuing first priority perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Agent in its sole discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral.

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8.1.12. Subordination of Intercompany Loans.

Each Loan Party shall cause any intercompany Indebtedness, loans or advances owed by any Loan Party to any other Loan Party to be subordinated pursuant to the terms of the Intercompany Subordination Agreement.

8.1.13. Anti-Terrorism Laws.

The Loan Parties and their respective Affiliates and agents shall not (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224; or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law. The Borrower shall deliver to Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming Borrower’s compliance with this Section.

8.1.14. Requirements Following the Conversion Date—Required Interest Rate Hedge, Appraisals, Environmental Audit.

8.1.14.1 Interest Rate Hedge.

Within 60 calendar days after the Conversion Date (in the event that the Conversion Date shall occur), the Borrower shall have entered into an Interest Rate Hedge with a financial institution acceptable to the Agent for a period of at least two (2) years (i) in an amount equal to at least 100% of the Term Loans then outstanding, and (ii) with such other terms and conditions as shall be acceptable to the Agent (the “Required Interest Rate Hedge”). Documentation for the Required Interest Rate Hedge shall be in a standard International Swap Dealer Association Agreement, shall provide for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and shall be reasonably satisfactory to the Agent. If the Required Interest Rate Hedge meets the requirements of a Lender-Provided Interest Rate Hedge (contained in the definition of such term), the obligations thereunder shall be “Obligations” hereunder and secured by the Liens securing the Obligations hereunder. If such Required Interest Rate Hedge does not meet the requirements of a Lender-Provided Interest Rate Hedge, then the obligations thereunder shall not be “Obligations” hereunder and shall not be secured by the Liens securing the Obligations hereunder or otherwise require collateral security from the Loan Parties.

8.1.14.2 Appraisals.

Following the Conversion Date the Agent may, at the Borrower’s expense and with the Borrower’s cooperation, obtain appraisals of the Inventory, fixed assets,

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including equipment, furniture and fixtures, Real Property and improvements thereto of the Loan Parties, from appraisers and in a form reasonably acceptable to the Agent.

8.1.14.3 Environmental Audits.

Following the Conversion Date the Agent may, at the Borrower’s expense and with the Borrower’s cooperation, obtain an environmental audit with respect to the Real Property by consultants reasonably satisfactory to the Agent and who shall provide all reports and results of such audit in writing to the Agent. Such reports shall meet the Agent’s reasonable minimum requirements for phase I environmental assessments and any other reasonable requirements of the Agent or the Lenders.

8.1.14.4 Loan Reduction Date or Conversion Date.

On the earlier of the Loan Reduction Date or Conversion Date, the Loan Parties shall deliver a Compliance Certificate which demonstrates that the Loan Parties are in compliance with their covenants in Sections 8.2.15 [Maximum Leverage Ratio], and 8.2.16 [Minimum Fixed Charge Coverage Ratio and 8.2.17 [Minimum Tangible Net Worth].

8.1.15. Payments Under the Capital and Liquidity Agreement

The Borrower will comply with the covenant contained in Section 8.1.15 of Schedule 8A.

8.1.16. Pledge of Stock of JLB Service Bank

The Borrower will comply with the covenant contained in Section 8.1.16 of Schedule 8A.

8.1.17. Landlord’s Waivers.

Within sixty (60) days after the Closing Date, the Loan Parties shall deliver an executed Landlord’s Waiver in substantially the form of Exhibit 8.1.17 (or confirmation of the continuing effectiveness of an existing Landlord’s Waiver) from the lessor for each leased Collateral location, as listed on Schedule 6.1.8.

8.1.18. Mortgage Liens.

Each Loan Party which owns any Real Property Collateral shall (a) within fifteen (15) days after the Closing Date with respect to Real Property Collateral owned by such Loan Party as of the Closing Date (except for the Real Property owned as of the Closing Date and located in Starbrick, Pennsylvania and Erie, Pennsylvania), (b) within sixty (60) days after becoming the owner of future owned Real Property, and (c) with respect to the Real Property owned as of the Closing Date and located in Starbrick, Pennsylvania and Erie, Pennsylvania, if any of such Real property is still owned by a Loan Party and not subject to an agreement for sale as of

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the Conversion Date, within fifteen (15) days after the Conversion Date, execute and deliver any and all Mortgage Documents reasonably request by the Agent to grant a first priority Lien (subject only to Permitted Liens), on such Real Property in favor of the Agent for the benefit of the Lenders, as security for the Obligations. In furtherance of the foregoing, the Loan Parties shall diligently cooperate with and assist, at their own expense, the Agent in procuring any and all Ancillary Mortgage Documents. Each Loan Party hereby appoints any officer or agent of the Agent as its true and lawful attorney, for it and in its name, place and stead, to, after the occurrence of an Event of Default, make, execute, deliver, and cause to be recorded or filed any or all such mortgages, deeds of trust, assignments, pledges, security interests, financing statements and additional documents and agreements relating thereto, granting unto said attorney full power to do any and all things said attorney may consider reasonably necessary or appropriate to be done with respect to the Mortgage Documents as fully and effectively as such Loan Party might or could do, and hereby ratifying and confirming all its said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and all transactions hereunder. All costs and expenses incurred by the Agent in connection with the exercise of the rights under the Section shall be paid by the Loan Parties on demand of the Agent. The Loan Parties, the Lenders and the Agent agree that without any further action on the part of any of them, upon execution and/or delivery, the Mortgage Documents and the Ancillary Mortgage Documents shall become Loan Documents and the Real Property Collateral that is subject to the Mortgage Documents shall become Collateral.

8.1.19. Title Insurance; Flood Certificates.

Simultaneously with or prior to delivering the Mortgages pursuant to Section 8.1.18 [Mortgage Liens], the Loan Parties shall deliver a title insurance policy or policies or binder or binders in favor of the Agent for the benefit of the Lenders, in customary ALTA current mortgagee’s form, and in amounts acceptable to the Agent in its reasonable discretion, with premiums paid thereon, issued by a title insurance company acceptable to the Agent and insuring each Mortgage as a valid first priority Lien upon the applicable Loan Parties’ fee simple title to, the Real Property Collateral and all improvements and all appurtenances thereto (including such easements and appurtenances as may be required by the Agent), free and clear of any and all defects and encumbrances whatsoever, subject only to such exceptions as may be approved in writing by the Agent, with endorsements thereto as to such matters as the Agent may designate. The Loan Parties shall deliver flood certificates to the agent in a form acceptable to the Agent with respect to the Real Property Collateral prior to delivering the Mortgages.

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8.2 Negative Covenants.

The Loan Parties, jointly and severally, covenant and agree that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and termination of the Commitments, the Loan Parties shall comply with the following negative covenants:

8.2.1. Indebtedness.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:

(i) Indebtedness under the Loan Documents;

(ii) Existing Indebtedness, excluding Indebtedness described in clauses (i) through (vii) as set forth on Schedule 8.2.1 (including any extensions or renewals thereof, provided there is no increase in the amount thereof or other significant change in the terms thereof unless otherwise specified on Schedule 8.2.1;

(iii) Capital or other liabilities under the Trade Receivables Securitization, provided that the amount thereof shall not exceed $100,000,000;

(iv) Capitalized leases in an amount not to exceed $5,000,000. Borrower has listed on Schedule 8.2.1 the amount of capitalized leases existing on the Closing Date;

(v) Indebtedness, or Guaranties of Indebtedness, of a Loan Party to another Loan Party which is subordinated in accordance with the provisions of Section 8.1.12 [Subordination of Intercompany Loans];

(vi) Any Lender-Provided Interest Rate Hedge or other Interest Rate Hedge (including the Required Interest Rate Hedge) approved by the Agent;

(vii) The Indebtedness related to JLB Service Bank described in Section 8.2.1(vii) of Schedule 8A;

(viii) letters of credit incurred by the Loan Parties in an amount not to exceed $2,000,000 which may be secured by cash collateral; and

(ix) Any other Indebtedness approved by the Required Lenders provided that the proceeds thereof are applied to prepay the Loans as provided under Section 5.6.

8.2.2. Liens; Negative Pledges.

8.2.2.1 Liens.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens.

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8.2.2.2 Negative Pledges.

Each of the Loan Parties covenants and agrees that, other than this Agreement, it shall not, and shall not permit any of its Subsidiaries to, enter into any agreement, commitment, promise or other obligation, contingent or otherwise, with any Person which prohibits, restricts or limits the right of any of the Loan Parties or their Subsidiaries (including both Foreign Subsidiaries and domestic Subsidiaries) from granting any Liens in their assets or their ownership interests to the Agent or the Lenders.

8.2.3. Guaranties.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain directly or contingently liable upon or with respect to any obligation or liability of any other Person, except for Guaranties of Indebtedness of the Loan Parties permitted hereunder and except for the Capital and Liquidity Agreement provided that the aggregate payments made by the Borrower thereunder do not exceed the amounts permitted under clause (vi) of Section 7.2.4 [Loans and Investments].

8.2.4. Loans and Investments.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any Guaranty for the benefit of or any other investment or interest in, or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing (collectively “Investments”), except:

(i) trade credit extended on usual and customary terms in the ordinary course of business;

(ii) advances to employees to meet expenses incurred by such employees in the ordinary course of business;

(iii) Permitted Investments;

(iv) Investments in other Loan Parties;

(v) Investments in Foreign Subsidiaries not to exceed $1,500,000; and

(vi) The Investments related to JLB Service Bank described in Section 8.2.4 (vi) of Schedule 8A.

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8.2.5. Dividends and Related Distributions and Stock Repurchases; Payments Pursuant to the Tender Offer.

8.2.5.1 Dividends and Related Distributions and Stock Repurchases.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, make or pay, or agree to become or remain liable to make or pay, any dividend or other distribution of any nature (whether in cash, property, securities or otherwise) on account of or in respect of its shares of capital stock, partnership interests or limited liability company interests on account of the purchase, redemption, retirement or acquisition of its shares of capital stock (or warrants, options or rights therefor), partnership interests or limited liability company interests, except dividends or other distributions payable to another Loan Party, except for dividends paid by the Borrower and repurchases by the Borrower of its Shares provided that (1) there shall exist no Potential Default or Event of Default on the date of any such payment of a dividend or stock repurchase, (2) quarterly dividends paid by the Borrower prior to the Loan Reduction Date shall not exceed the amount of quarterly dividends paid per common share in the first fiscal quarter of 2005 and (3) the total consideration paid for all stock repurchases by the Borrower over the term of this Agreement shall (a) prior to the Loan Reduction Date, be limited to the amount paid pursuant to the Tender Offer under Section 8.2.5.2 and (b) after the Loan Reduction Date, be limited to $5,000,000 per fiscal year.

8.2.5.2 Payments Pursuant to the Tender Offer.

The total amount paid by Loan Parties to shareholders pursuant to its Tender Offer shall not exceed $190,000,000.

8.2.6. Liquidations, Mergers, Consolidations, Acquisitions.

The Loan Parties shall not, and shall not permit any of their Subsidiaries (other than Allegheny Trails Corporation) to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise all or substantially all of the assets or capital stock of any other Person, except that (A) any Subsidiary of the Borrower may consolidate or merge into the Borrower or any other Loan Party or its Subsidiary, provided that the Loan Parties shall (1) notify the Agent at least 10 Business Days prior to any such merger, and (2) take all steps necessary or appropriate or reasonably requested by the Agent to cause the successor to grant Liens in of the assets of the merging entity in favor of the Agent for the benefit of the Lenders; and that (B) after the Loan Reduction Date, the Loan Parties or a Subsidiary thereof may merge with or purchase, lease or otherwise acquire all of the assets of another Person (each a “Transaction”) provided that (i) the aggregate consideration paid or given, whether in cash, stock, or other property, and liabilities assumed by the Borrower and its Subsidiaries in all Transactions during each fiscal year of the Borrower (the “Transaction Consideration”) does not exceed $7,500,000; (ii) the Loan Party shall be the surviving Person if

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the Transaction is a merger to which the Loan Party is a party; (iii) the Loan Parties and the acquired business shall comply with Section 8.2.10 [Continuation of or Change in Business], (iv) after giving effect to such Transaction there shall not be continuing any Event of Default under this Agreement; (v) the board of directors or equivalent governing officers of the acquired business shall have consented to such transaction, (vi) the Borrower shall notify the Agent and the Lenders of such Transaction within five (5) Business Days before the date of such Transaction if the Transaction Consideration exceeds $1,000,000 and such notice shall describe such Transaction, the purpose therefore, the parties thereto, and the amount and type of the Consideration paid and (vii) the Loan Parties and the new Subsidiaries being formed or acquired in connection therewith shall have delivered to the Agent prior to such sale joinders and other documents described in Section 11.18 required to cause the acquired or newly formed Subsidiaries to join the Loan Documents as Guarantors, grant Liens in their assets and for their owners to grant Liens in the ownership interests in such Subsidiaries; and (c) after the World Financial Sale, Blair Credit Services Corporation, Blair Factoring Company and JLB Service Bank may be dissolved and wound up and upon the commencement of such dissolution and notification thereof from Borrower to the Agent shall be released from all obligations, if any, as a Loan Party hereunder or with respect to any other Loan Document, as confirmed by the Agent without any action on the part of the other Lenders; provided, that if Blair Credit Services Corporation is to be dissolved, the Borrower shall deliver a certification to the Agent that the Loan Parties are and will be in compliance with the covenant with respect to Blair Credit Services Corporation contained in Section 8.2.18 on and after the date of such dissolution.

8.2.7. Dispositions of Assets or Subsidiaries.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, sell, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or without recourse or of capital stock, shares of beneficial interest, partnership interests or limited liability company interests of a Subsidiary of such Loan Party), except:

(i) transactions involving the sale of inventory in the ordinary course of business;

(ii) sales of the Excluded Assets in connection with the Trade Receivables Securitization;

(iii) any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of such Loan Party’s or such Subsidiary’s business;

(iv) any sale, transfer or lease of assets by any wholly owned Subsidiary of such Loan Party to another Loan Party;

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(v) any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets acquired or leased, provided such substitute assets are subject to the Lenders’ Prior Security Interest; or

(vi) the World Financial Sale, subject to the obligations of the Borrower under Section 5.6 [Mandatory Prepayments] and provided that such sale shall occur on or before March 31, 2006;

(vii) after the Loan Reduction Date, any sale, transfer or lease of assets not in the ordinary course if the amount of after tax proceeds therefrom is less than $1,000,000;

(viii) any sale, transfer or lease of assets, other than those specifically excepted pursuant to clauses (i) through (vi) above, which is approved by the Required Lenders, so long as the after-tax proceeds (as reasonably estimated by the Borrower) are applied as a mandatory prepayment of the Loans in accordance with the provisions of Section 5.6.1 [Issuance of Indebtedness or Equity; Sale of Assets; Receipt of Insurance Proceeds; World Financial Sale] if the amount of such proceeds exceeds $1,000,000, subject to Section 5.7 [Additional Compensation in Certain Circumstances], but otherwise, without payment of the Term Loan Prepayment Premium;

(ix) the sale or other disposition of the Real Property owned as of the Closing Date and located in Starbrick, Pennsylvania or Erie, Pennsylvania, so long as the after-tax proceeds (as reasonably estimated by the Borrower) are applied as a mandatory prepayment of the Loans in accordance with the provisions of Section 5.6.1 [Sale of Assets; Receipt of Insurance Proceeds], subject to Section 5.7 [Additional Compensation in Certain Circumstances], but otherwise, without payment of the Term Loan Prepayment Premium.

8.2.8. Affiliate Transactions.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction (including purchasing property or services from or selling property or services to any Affiliate of any Loan Party or other Person) unless such transaction is not otherwise prohibited by this Agreement, is entered into in the ordinary course of business upon fair and reasonable arm’s-length terms and conditions which are fully disclosed to the Agent and is in accordance with all applicable Law.

8.2.9. Subsidiaries, Partnerships and Joint Ventures.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, own or create directly or indirectly any Subsidiaries other than (i) any Subsidiary which has joined this Agreement as Guarantor on the Closing Date; (ii) any Subsidiary formed after the Closing Date which joins this Agreement as a Guarantor pursuant to Section 11.18 [Joinder of Guarantors], and (iii) any of the Excluded Subsidiaries, provided that the Required

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Lenders shall have consented to any formation of each Subsidiary described in clause (ii) and joinder by such Subsidiary to this Agreement and the other Loan Documents and that such Subsidiary and the Loan Parties, as applicable, shall grant and cause to be perfected first priority Liens to the Agent for the benefit of the Lenders in such Subsidiary’s inventory and the assets (excluding Excluded Assets) held by, and stock of or other ownership interests in, such Subsidiary. Each of the Loan Parties shall not become or agree to (1) become a general or limited partner in any general or limited partnership, except that the Loan Parties may be general or limited partners in other Loan Parties, (2) become a member or manager of, or hold a limited liability company interest in, a limited liability company, except that the Loan Parties may be members or managers of, or hold limited liability company interests in, other Loan Parties or Excluded Subsidiaries, or (3) become a joint venturer or hold a joint venture interest in any joint venture.

8.2.10. Continuation of or Change in Business.

The Loan Parties shall not, and shall not permit any of their Subsidiaries to, engage in any business other than the retail catalogue business, the ownership and use of related intellectual property, and the maintenance, sale and servicing of trade and customer receivables arising therefrom or in connection therewith substantially as conducted and operated by such Borrower or Subsidiary during the present fiscal year, and such Loan Party or Subsidiary shall not permit any material change in such business.

8.2.11. Plans and Benefit Arrangements.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to:

(i) fail to satisfy the minimum funding requirements of ERISA and the Internal Revenue Code with respect to any Plan;

(ii) request a minimum funding waiver from the Internal Revenue Service with respect to any Plan;

(iii) engage in a Prohibited Transaction with any Plan, Benefit Arrangement or Multiemployer Plan which, alone or in conjunction with any other circumstances or set of circumstances resulting in liability under ERISA, would constitute a Material Adverse Change;

(iv) permit the aggregate actuarial present value of all benefit liabilities (whether or not vested) under each Plan, determined on a plan termination basis, as disclosed in the most recent actuarial report completed with respect to such Plan, to exceed, as of any actuarial valuation date, the fair market value of the assets of such Plan;

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(v) fail to make when due any contribution to any Multiemployer Plan that the Borrower or any member of the ERISA Group may be required to make under any agreement relating to such Multiemployer Plan, or any Law pertaining thereto;

(vi) withdraw (completely or partially) from any Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from any Multiple Employer Plan, where any such withdrawal is likely to result in a material liability of the Borrower or any member of the ERISA Group;

(vii) terminate, or institute proceedings to terminate, any Plan, where such termination is likely to result in a material liability to the Borrower or any member of the ERISA Group;

(viii) make any amendment to any Plan with respect to which security is required under Section 307 of ERISA; or

(ix) fail to give any and all notices and make all disclosures and governmental filings required under ERISA or the Internal Revenue Code, where such failure is likely to result in a Material Adverse Change.

8.2.12. Fiscal Year.

The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, change its fiscal year from the twelve-month period beginning January 1 and ending December 31.

8.2.13. Changes in Organizational Documents.

Other than with respect to the Loan Parties other than the Borrower, in accordance with Section 8.2.6 hereof, each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, amend in any respect its certificate of incorporation (including any provisions or resolutions relating to capital stock), by-laws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents without providing at least fifteen (15) calendar days’ prior written notice to the Agent and the Lenders and, in the event such change would be adverse to the Lenders as determined by the Agent in its sole discretion, obtaining the prior written consent of the Required Lenders.

8.2.14. Minimum EBITDA.

At the end of each month ending prior to the earlier of the Conversion Date or the Loan Reduction Date, the Loan Parties shall not permit their EBITDA for the twelve months then ended to be less than $27,000,000.

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8.2.15. Maximum Leverage Ratio.

The Loan Parties shall not permit the Leverage Ratio to exceed 3.00 to 1.00 at any time after the earlier of the Loan Reduction Date or the Conversion Date.

8.2.16. Minimum Fixed Charge Coverage Ratio.

The Loan Parties shall not permit the Fixed Charge Coverage Ratio, calculated as of the end of each fiscal quarter for the four (4) fiscal quarters then ended, to be less than (i) 1.40 to 1.00 at any time after the Loan Reduction Date has occurred or (ii) 1.10 to 1.00 at any time after the Conversion Date has occurred.

8.2.17. Minimum Consolidated Net Worth.

At any time after the earlier of (i) the Loan Reduction Date or (ii) the Conversion Date, the Borrower shall not permit Consolidated Net Worth to be less than Base Net Worth.

8.2.18. Excluded Subsidiaries Status; Blair Credit Services Corporation.

The Loan Parties shall not at any time permit (i) Allegheny Trail Corporation to own any assets or to incur any liabilities or conduct any business, other than assets owned, liabilities existing or business conducted on the Closing Date, (ii) Blair Factoring Company or JLB Service Bank, to own any material assets or incur any material liabilities or conduct any business subsequent to the World Financial Sale, other than the assets owned, liabilities existing or business conducted prior to the World Financial Sale and the Loan Parties shall make no additional Investment in such Persons or (iii) at the time of and at all times after the release of Blair Credit Services Corporation under its Guaranty Agreement, Blair Credit Services Corporation to own any material assets, have any material liabilities, or conduct any business.

8.2.19. World Financial Sale Proceeds.

The Loan Parties shall not permit the net sale proceeds of the World Financial Sale to be less than an amount sufficient to repay in full and terminate the Trade Receivable Securitization and the Term Loans and after giving effect to such repayment with the proceeds of such sale, the Loan Parties shall have Liquidity of at least $35,000,000.

8.3 Reporting Requirements.

The Loan Parties, jointly and severally, covenant and agree that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and under the other Loan Documents and termination of the

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Commitments, the Loan Parties will furnish or cause to be furnished to the Agent and each of the Lenders:

8.3.1. Monthly Financial Statements.

Prior to the earlier of (i) the Loan Reduction Date or (ii) the Conversion Date, as soon as available and in any event within fifteen (15) Business Days after the end of each fiscal month (except the month of December, when statements will be provided as soon as available and in any event within forty-five (45) days after the end of such month), financial statements of the Borrower, consisting of a consolidated and consolidating balance sheet as of the end of such fiscal month and related consolidated and consolidating statements of income, stockholders’ equity and cash flows for the fiscal month then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the President, Chief Financial Officer, or Treasurer of the Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding month and period in the previous fiscal year.

8.3.2. Quarterly Financial Statements.

As soon as available and in any event within forty-five (45) calendar days after the end of each of the first three fiscal quarters in each fiscal year, financial statements of the Borrower, consisting of a consolidated and consolidating balance sheet as of the end of such fiscal quarter and related consolidated and consolidating statements of income, stockholders’ equity and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the President, Chief Financial Officer, or Treasurer of the Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.

8.3.3. Annual Financial Statements.

As soon as available and in any event within ninety (90) days after the end of each fiscal year of the Borrower, financial statements of the Borrower consisting of a consolidated and consolidating balance sheet as of the end of such fiscal year, and related consolidated and consolidating statements of income, stockholders’ equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing satisfactory to the Agent. The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur) and shall not indicate the occurrence or existence of any event, condition or contingency which would materially impair the prospect of payment or performance of any covenant, agreement or duty of any Loan Party under any of the Loan Documents. The Loan Parties shall deliver with such financial statements and certification by their accountants a letter of

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such accountants to the Agent and the Lenders substantially (i) to the effect that, based upon their ordinary and customary examination of the affairs of the Borrower, performed in connection with the preparation of such consolidated financial statements, and in accordance with generally accepted auditing standards, they are not aware of the existence of any condition or event which constitutes an Event of Default or Potential Default or, if they are aware of such condition or event, stating the nature thereof and confirming the Borrower’s calculations with respect to the certificate to be delivered pursuant to Section 8.3.4 [Certificate of the Borrower] with respect to such financial statements and (ii) to the effect that the Lenders are intended to rely upon such accountant’s certification of the annual financial statements and that such accountants authorize the Loan Parties to deliver such reports and certificate to the Lenders on such accountants’ behalf.

8.3.4. Certificate of the Borrower.

Concurrently with the financial statements of the Borrower furnished to the Agent and to the Lenders pursuant to Sections 8.3.1 [Monthly Financial Statements], 8.3.2 [Quarterly Financial Statements] and 8.3.3 [Annual Financial Statements], a certificate (each a “Compliance Certificate”) of the Borrower signed by the President, Chief Financial Officer, or Treasurer of the Borrower, in the form of Exhibit 8.3.4, to the effect that, except as described pursuant to Section 8.3.5 [Notice of Default], (i) the representations and warranties of the Borrower contained in Section 5.1 and in the other Loan Documents are true on and as of the date of such certificate with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time) and the Loan Parties have performed and complied with all covenants and conditions hereof, (ii) no Event of Default or Potential Default exists and is continuing on the date of such certificate and (iii) containing calculations in sufficient detail to demonstrate compliance as of the date of such financial statements with all financial covenants contained in Section 8.2 [Negative Covenants].

8.3.5. Notice of Default.

Promptly after any officer of any Loan Party has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by the President, Chief Financial Officer or Treasurer of such Loan Party setting forth the details of such Event of Default or Potential Default and the action which the such Loan Party proposes to take with respect thereto.

8.3.6. Notice of Litigation.

Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against any Loan Party or Subsidiary of any Loan Party which relate to the Collateral, involve a claim or series of claims in excess of $1,000,000 or which if adversely determined would constitute a Material Adverse Change.

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8.3.7. Certain Events.

Written notice to the Agent:

(i) at least fifteen (15) calendar days prior thereto, with respect to any proposed sale or transfer of assets pursuant to Section 8.2.7(v), (vi), or (vii);

(ii) within the time limits set forth in Section 8.2.13 [Changes in Organizational Documents], any amendment to the organizational documents of any Loan Party; and

(iii) at least fifteen (15) calendar days prior thereto, with respect to any change in any Loan Party’s locations from the locations set forth in Schedule A to the Security Agreement.

8.3.8. Budgets, Forecasts, Other Reports, Insurance Policies and Information.

Promptly upon there becoming available to the Borrower:

(i) the annual budget and any forecasts or projections of the Borrower, to be supplied not later than thirty (30) days after the commencement of the fiscal year to which any of the foregoing may be applicable,

(ii) any reports including management letters submitted to the Borrower by independent accountants in connection with any annual, interim or special audit,

(iii) any reports, notices or proxy statements generally distributed by the Borrower to its stockholders on a date no later than the date supplied to such stockholders,

(iv) regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower with the Securities and Exchange Commission, including the Offer to Purchase, Schedule TO and letter of Transmittal and, upon the request of the Agent, any other filings filed in connection with its Tender Offer,

(v) a copy of any order in any proceeding to which the Borrower or any of its Subsidiaries is a party issued by any Official Body, and

(vi) such other reports and information, including copies of insurance policies, as the Agent or any of the Lenders may from time to time reasonably request. The Borrower shall also notify the Lenders promptly of the enactment or adoption of any Law which may result in a Material Adverse Change.

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8.3.9. Notices Regarding Plans and Benefit Arrangements.

8.3.9.1 Certain Events.

Promptly upon becoming aware of the occurrence thereof, notice (including the nature of the event and, when known, any action taken or threatened by the Internal Revenue Service or the PBGC with respect thereto) of:

(i) any Reportable Event with respect to the Borrower or any other member of the ERISA Group (regardless of whether the obligation to report said Reportable Event to the PBGC has been waived),

(ii) any Prohibited Transaction which could subject the Borrower or any other member of the ERISA Group to a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in connection with any Plan, any Benefit Arrangement or any trust created thereunder,

(iii) any assertion of material withdrawal liability with respect to any Multiemployer Plan,

(iv) any partial or complete withdrawal from a Multiemployer Plan by the Borrower or any other member of the ERISA Group under Title IV of ERISA (or assertion thereof), where such withdrawal is likely to result in material withdrawal liability,

(v) any cessation of operations (by the Borrower or any other member of the ERISA Group) at a facility in the circumstances described in Section 4062(e) of ERISA,

(vi) withdrawal by the Borrower or any other member of the ERISA Group from a Multiple Employer Plan,

(vii) a failure by the Borrower or any other member of the ERISA Group to make a payment to a Plan required to avoid imposition of a Lien under Section 302(f) of ERISA,

(viii) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA, or

(ix) any change in the actuarial assumptions or funding methods used for any Plan, where the effect of such change is to materially increase or materially reduce the unfunded benefit liability or obligation to make periodic contributions.

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8.3.9.2 Notices of Involuntary Termination and Annual Reports.

Promptly after receipt thereof, copies of (a) all notices received by the Borrower or any other member of the ERISA Group of the PBGC’s intent to terminate any Plan administered or maintained by the Borrower or any member of the ERISA Group, or to have a trustee appointed to administer any such Plan; and (b) at the request of the Agent or any Lender each annual report (IRS Form 5500 series) and all accompanying schedules, the most recent actuarial reports, the most recent financial information concerning the financial status of each Plan administered or maintained by the Borrower or any other member of the ERISA Group, and schedules showing the amounts contributed to each such Plan by or on behalf of the Borrower or any other member of the ERISA Group in which any of their personnel participate or from which such personnel may derive a benefit, and each Schedule B (Actuarial Information) to the annual report filed by the Borrower or any other member of the ERISA Group with the Internal Revenue Service with respect to each such Plan.

8.3.9.3 Notice of Voluntary Termination.

Promptly upon the filing thereof, copies of any Form 5310, or any successor or equivalent form to Form 5310, filed with the PBGC in connection with the termination of any Plan.

9. DEFAULT

9.1 Events of Default.

An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):

9.1.1. Payments Under Loan Documents.

The Borrower shall fail to pay any principal of any Loan (including scheduled installments, mandatory prepayments or the payment due at maturity), Reimbursement Obligation or Letter of Credit Borrowing or shall fail to pay any interest on any Loan, Reimbursement Obligation or Letter of Credit Borrowing or any other amount owing hereunder or under the other Loan Documents after such principal, interest or other amount becomes due in accordance with the terms hereof or thereof;

9.1.2. Breach of Warranty.

Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate,

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other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished;

9.1.3. Breach of Negative Covenants or Visitation Rights.

Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 8.1.6 [Visitation Rights] or Section 8.2 [Negative Covenants];

9.1.4. Breach of Other Covenants.

Any of the Loan Parties shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document and such default shall continue unremedied for a period of twenty (20) days after any officer of any Loan Party becomes aware of the occurrence thereof (such grace period to be applicable only in the event such default can be remedied by corrective action of the Loan Parties as determined by the Agent in its sole discretion);

9.1.5. Defaults in Other Agreements or Indebtedness.

A default or event of default shall occur at any time under the terms of any other agreement involving borrowed money or the extension of credit or any other Indebtedness under which any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or guarantor in excess of $1,000,000 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend;

9.1.6. Final Judgments or Orders.

Any final judgments or orders for the payment of money in excess of $1,000,000 in the aggregate shall be entered against any Loan Party by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry;

9.1.7. Loan Document Unenforceable.

Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the party executing the same or such party’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested or cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby;

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9.1.8. Uninsured Losses; Proceedings Against Assets.

There shall occur any material uninsured damage to or loss, theft or destruction of any of the Collateral in excess of $1,000,000 or the Collateral or any other of the Loan Parties’ or any of their Subsidiaries’ assets are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same is not cured within thirty (30) days thereafter;

9.1.9. Notice of Lien or Assessment.

A notice of Lien or assessment in excess of $1,000,000 which is not a Permitted Lien is filed of record with respect to all or any part of any of the Loan Parties’ or any of their Subsidiaries’ assets by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, including the PBGC, or any taxes or debts owing at any time or times hereafter to any one of these becomes payable and the same is not paid within thirty (30) days after the same becomes payable;

9.1.10. Insolvency.

Any Loan Party or any Subsidiary of a Loan Party ceases to be Solvent or admits in writing its inability to pay its debts as they mature;

9.1.11. Capital Adequacy.

The event described in Section 9.1.11 of Schedule 8A shall occur;

9.1.12. Events Relating to Plans and Benefit Arrangements.

Any of the following occurs: (i) any Reportable Event, which the Agent determines in good faith constitutes grounds for the termination of any Plan by the PBGC or the appointment of a trustee to administer or liquidate any Plan, shall have occurred and be continuing; (ii) proceedings shall have been instituted or other action taken to terminate any Plan, or a termination notice shall have been filed with respect to any Plan; (iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) the PBGC shall give notice of its intent to institute proceedings to terminate any Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and, in the case of the occurrence of (i), (ii), (iii) or (iv) above, the Agent determines in good faith that the amount of the Borrower’s liability is likely to exceed 10% of its consolidated tangible net worth; (v) the Borrower or any member of the ERISA Group shall fail to make any contributions when due to a Plan or a Multiemployer Plan; (vi) the Borrower or any other member of the ERISA Group shall make any amendment to a Plan with respect to which security is required under Section 307 of ERISA; (vii) the Borrower or any other member of the ERISA Group shall withdraw completely or partially from a Multiemployer Plan; (viii) the Borrower or any other member of the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any applicable Law is adopted, changed or interpreted by any Official Body with respect to or otherwise

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affecting one or more Plans, Multiemployer Plans or Benefit Arrangements and, with respect to any of the events specified in (v), (vi), (vii), (viii) or (ix), the Agent determines in good faith that any such occurrence would be reasonably likely to materially and adversely affect the total enterprise represented by the Borrower and the other members of the ERISA Group;

9.1.13. Cessation of Business.

Any Loan Party or Subsidiary of a Loan Party ceases to conduct its business as contemplated, except as expressly permitted under Section 8.2.6 [Liquidations, Mergers, Etc.] or 8.2.7 [Disposition of Assets, etc.], or any Loan Party or Subsidiary of a Loan Party is enjoined, restrained or in any way prevented by final court order from conducting all or any material part of its business and such injunction, restraint or other preventive order is not dismissed within thirty (30) days after the entry thereof;

9.1.14. Change of Control.

Any person or group of persons (within the meaning of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act) 40% or more of the outstanding voting capital stock of the Borrower; or (ii)within a period of twelve (12) consecutive calendar months, individuals who were directors of the Borrower on the first day of such period shall cease to constitute a majority of the board of directors of the Borrower;

9.1.15. Involuntary Proceedings.

A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of any Loan Party or Subsidiary of a Loan Party in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or Subsidiary of a Loan Party for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of forty-five (45) consecutive days or such court shall enter a decree or order granting any of the relief sought in such proceeding; or

9.1.16. Voluntary Proceedings.

Any Loan Party or Subsidiary of a Loan Party shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or other similar official) of itself or for any substantial part of its property or shall make a general assignment for the benefit of creditors, or

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shall fail generally to pay its debts as they become due, or shall take any action in furtherance of any of the foregoing.

9.2 Consequences of Event of Default.

9.2.1. Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.

If an Event of Default specified under Sections 9.1.1 through 9.1.14 shall occur and be continuing, the Lenders and the Agent shall be under no further obligation to make Loans or issue Letters of Credit, as the case may be, and the Agent may, and upon the request of the Required Lenders, shall (i) by written notice to the Borrower, declare the unpaid principal amount of the Notes then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Agent for the benefit of each Lender without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (ii) require the Borrower to, and the Borrower shall thereupon, deposit in a non-interest-bearing account with the Agent, as cash collateral for its Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrower hereby pledges to the Agent and the Lenders, and grants to the Agent and the Lenders a security interest in, all such cash as security for such Obligations. Upon the curing of all existing Events of Default to the satisfaction of the Required Lenders, the Agent shall return such cash collateral to the Borrower; and

9.2.2. Bankruptcy, Insolvency or Reorganization Proceedings.

If an Event of Default specified under Section 9.1.15 [Involuntary Proceedings] or 9.1.16 [Voluntary Proceedings] shall occur, the Lenders shall be under no further obligations to make Loans hereunder and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and

9.2.3. Set-off.

If an Event of Default shall occur and be continuing, any Lender to whom any Obligation is owed by any Loan Party hereunder or under any other Loan Document or any participant of such Lender which has agreed in writing to be bound by the provisions of Section 10.13 [Equalization of Lenders] and any branch, Subsidiary or Affiliate of such Lender or participant anywhere in the world shall have the right, in addition to all other rights and remedies available to it, without notice to such Loan Party, to set-off against and apply to the then unpaid balance of all the Loans and all other Obligations of the Borrower and the other Loan Parties

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hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, the Borrower or such other Loan Party by such Lender or participant or by such branch, Subsidiary or Affiliate, including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or hereafter maintained by the Borrower or such other Loan Party for its own account (but not including funds held in custodian or trust accounts) with such Lender or participant or such branch, Subsidiary or Affiliate. Such right shall be subject to Section 9.2.5 [Application of Proceeds, etc.] and 10.13 [Equalization of Lenders] and shall exist whether or not any Lender or the Agent shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or funds held for the account of the Borrower or such other Loan Party is or are matured or unmatured and regardless of the existence or adequacy of any Collateral, Guaranty or any other security, right or remedy available to any Lender or the Agent; and

9.2.4. Suits, Actions, Proceedings.

If an Event of Default shall occur and be continuing, and whether or not the Agent shall have accelerated the maturity of Loans pursuant to any of the foregoing provisions of this Section 9.2, the Agent or any Lender, if owed any amount with respect to the Loans, may proceed to protect and enforce its rights by suit in equity, action at law and/or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement or the other Loan Documents, including as permitted by applicable Law the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Agent or such Lender; and

9.2.5. Application of Proceeds; Collateral Sharing; Subordination of Term Loan.

9.2.5.1 Application of Proceeds.

Notwithstanding any provision herein to the contrary or in the other Loan Documents, any proceeds received by the Agent from any payment made by the Borrower under this Agreement or the other Loan Documents after the occurrence of an Event of Default and acceleration (which has not been rescinded) of the Obligations, or received by the Agent from the foreclosure, sale, lease, collection upon, realization of or other disposition of any Collateral which may have been provided to the Agent for the obligations of the Borrower hereunder after the Commitments have been terminated (including without limitation insurance proceeds), shall be applied by the Agent as follows, unless otherwise agreed by all the Lenders:

(i) first, to reimburse the Agent and the Lenders for out-of-pocket costs, expenses and disbursements, including reasonable attorneys’ and paralegals’ fees and legal expenses, incurred by the Agent or the Lenders in connection with realizing on the Collateral or collection of any Obligations of any of the Loan Parties under any of the Loan Documents, including advances made by the Lenders or any one of them or the

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Agent for the reasonable maintenance, preservation, protection or enforcement of, or realization upon, the Collateral, including advances for taxes, insurance, repairs and the like and reasonable expenses incurred to sell or otherwise realize on, or prepare for sale or other realization on, any of the Collateral;

(ii) second, to accrued and unpaid interest and principal on the Revolving Credit Loans and Swing Loans, by deposits into cash collateral accounts to secure Letters of Credit as provided in this Agreement and the other Loan Documents and to obligations under a Lender-Provided Interest Rate Hedge to fees payable to the Revolving Lenders under this Agreement or any of the other Loan Documents (ratably according to the respective amounts then outstanding, but otherwise in such manner as the Agent may determine in its discretion). All Liens granted under the Loan Documents to the Agent shall secure ratably and such Revolving Credit Loans, Swing Loan, Letters of Credit and related obligations and obligations under a Lender-Provided Interest Rate Hedge on a pari passu basis

(iii) third, to accrued and unpaid interest and principal on the Term Loans and fees payable to the Term Lenders (ratably according to the respective amounts then outstanding, but otherwise in such manner as the Agent may determine in its discretion)

(iv) fourth, to the repayment of all other Obligations then due and unpaid of the Borrower to any of the Lenders incurred under or secured by this Agreement or any of the other Loan Documents, whether of principal, interest, fees, expenses or otherwise (ratably according to the respective amounts then outstanding, but otherwise in such manner as the Agent may determine in its discretion); and

(v) fifth, the balance, if any, as required by Law.

9.2.5.2 Subordination of Term Loans.

As is reflected in the order of payments established in the foregoing Section 9.2.5.1, the parties hereby agree that subsequent to the occurrence of an Event of Default and acceleration (which has not been rescinded) of the Obligations, payment of the interest on and principal of the Term Loans, and any other amounts payable to the Term Lenders under the Loan Documents from any payments by the Borrower or any other Loan Party under any of the Loan Documents or otherwise from the disposition of the Collateral (collectively “Payments”), shall be subject and subordinate to payment of the interest on and principal of the Revolving Credit Loans and Swing Loans, and any other amounts payable to the Revolving Lenders under this Agreement and to any obligations owing to a Lender providing a Lender-Provided Interest Rate Hedge (the “IRH Provider”) in connection therewith. Notwithstanding any other provision of this Agreement, following such time as the Term Lenders have actual knowledge of the occurrence of an Event of Default and acceleration (which has not been rescinded) of the Obligations, any amounts received by any Term Lender, whether pursuant to Section 9.2.5.1 or otherwise, prior to the payment in full of all amounts due to the Revolving Lenders and IRH Providers hereunder and

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under the other Loan Documents shall be held in trust by such Term Lender for the benefit of the Revolving Lenders and IRH Provider, and promptly paid over to the Agent for application pursuant to the provisions of Section 9.2.5.1.

9.2.5.3 Rights in Bankruptcy Proceedings.

The provisions of this Section 9.2.5 shall continue in full force and effect after the filing of any petition by or against the Borrower (or any other Loan Party under any of the Loan Documents) under the United States Bankruptcy Code (the “Bankruptcy Code”) and all converted, consolidated or succeeding cases in respect thereof. If any Loan Party shall become subject to a proceeding under the Bankruptcy Code, it is the intention of the parties hereto that by virtue different priorities of the liens and security interest held by the Agent on behalf of the Revolving Lenders and IRH Providers, on the one hand, and the Term Lenders, on the other hand, the Obligations of the Borrower to the Revolving Lenders and the IRH Providers and the Obligations of the Borrower to the Term Lenders would constitute separate classes of secured claims in any such proceeding.

9.2.5.4 Collateral Agency.

The Agent under the Patent, Trademark and Copyright Assignment, the Pledge Agreement, the Mortgages, the Security Agreement and any other Loan Document (the “Collateral Documents”) shall be deemed to serve as the collateral agent (the “Collateral Agent”) for the any Lender which provides a Lender-Provided Interest Rate Hedge (the “IRH Provider”) and the Lenders hereunder, provided that the Collateral Agent shall comply with the instructions and directions of the Agent (or the Lenders under this Agreement to the extent that this Agreement or any other Loan Documents empowers the Lenders to direct the Agent), as to all matters relating to the Collateral, including the maintenance and disposition thereof. No IRH Provider (except in its capacity as a Lender hereunder) shall be entitled or have the power to direct or instruct the Collateral Agent on any such matters or to control or direct in any manner the maintenance or disposition of the Collateral.

9.2.6. Other Rights and Remedies.

In addition to all of the rights and remedies contained in this Agreement or in any of the other Loan Documents, the Agent shall have all of the rights and remedies of a secured party under the Uniform Commercial Code or other applicable Law, all of which rights and remedies shall be cumulative and non-exclusive, to the extent permitted by Law. The Agent may, and upon the request of the Required Lenders shall, exercise all post-default rights granted to the Agent and the Lenders under the Loan Documents or applicable Law.

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9.3 Notice of Sale.

Any notice required to be given by the Agent of a sale, lease, or other disposition of the Collateral or any other intended action by the Agent, if given ten (10) days prior to such proposed action, shall constitute commercially reasonable and fair notice thereof to the Borrower.

10. THE AGENT

10.1 Appointment.

Each Lender hereby irrevocably designates, appoints and authorizes PNC Bank to act as Agent for such Lender under this Agreement and to execute and deliver or accept on behalf of each of the Lenders the other Loan Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of a Note shall be deemed irrevocably to authorize, the Agent to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and any other instruments and agreements referred to herein, and to exercise such powers and to perform such duties hereunder as are specifically delegated to or required of the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. PNC Bank agrees to act as the Agent on behalf of the Lenders to the extent provided in this Agreement.

10.2 Delegation of Duties.

The Agent may perform any of its duties hereunder by or through agents or employees (provided such delegation does not constitute a relinquishment of its duties as Agent) and, subject to Sections 10.5 [Reimbursement of Agent by Borrower, Etc.] and 10.6, shall be entitled to engage and pay for the advice or services of any attorneys, accountants or other experts concerning all matters pertaining to its duties hereunder and to rely upon any advice so obtained.

10.3 Nature of Duties; Independent Credit Investigation.

The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and no implied covenants, functions, responsibilities, duties, obligations, or liabilities shall be read into this Agreement or otherwise exist. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary or trust relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement except as expressly set forth herein. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Each Lender expressly acknowledges (i) that the Agent has not made any

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representations or warranties to it and that no act by the Agent hereafter taken, including any review of the affairs of any of the Loan Parties, shall be deemed to constitute any representation or warranty by the Agent to any Lender; (ii) that it has made and will continue to make, without reliance upon the Agent, its own independent investigation of the financial condition and affairs and its own appraisal of the creditworthiness of each of the Loan Parties in connection with this Agreement and the making and continuance of the Loans hereunder; and (iii) except as expressly provided herein, that the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of any Loan or at any time or times thereafter.

10.4 Actions in Discretion of Agent; Instructions From the Lenders.

The Agent agrees, upon the written request of the Required Lenders, to take or refrain from taking any action of the type specified as being within the Agent’s rights, powers or discretion herein, provided that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or any other Loan Document or applicable Law. In the absence of a request by the Required Lenders, the Agent shall have authority, in its sole discretion, to take or not to take any such action, unless this Agreement specifically requires the consent of the Required Lenders or all of the Lenders. Any action taken or failure to act pursuant to such instructions or discretion shall be binding on the Lenders, subject to Section 10.6 [Exculpatory Provisions, Etc.]. Subject to the provisions of Section 10.6, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders, or in the absence of such instructions, in the absolute discretion of the Agent.

10.5 Reimbursement and Indemnification of Agent by the Borrower.

The Borrower unconditionally agrees to pay or reimburse the Agent and hold the Agent harmless against (a) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements, including the reasonable fees and expenses of counsel, appraisers and environmental consultants, incurred by the Agent (i) in connection with the development, negotiation, preparation, printing, execution, administration, syndication, interpretation and performance of this Agreement and the other Loan Documents, (ii) relating to any requested amendments, waivers or consents pursuant to the provisions hereof, (iii) in connection with the enforcement of this Agreement or any other Loan Document or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, and (iv) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings, and (b) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating to or arising out of this

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Agreement or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder, provided that the Borrower shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements if the same results from the Agent’s gross negligence or willful misconduct, or if the Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that the Borrower shall remain liable to the extent such failure to give notice does not result in a loss to the Borrower), or if the same results from a compromise or settlement agreement entered into without the consent of the Borrower, which shall not be unreasonably withheld. In addition, the Borrower agrees to reimburse and pay all reasonable out-of-pocket expenses of the Agent’s regular employees and agents engaged periodically to perform audits of the Loan Parties’ books, records and business properties not to exceed one (1) such audit per year if no Event of Default exists or is continuing or the Conversion Date has not occurred (but without limitation of number if any Event of Default exists and is continuing or the Conversion Date has occurred). The Borrower agrees to reimburse and pay all reasonable out-of-pocket expenses of the Agent for appraisals and environmental audits and other due diligence as provided by Section 8.1.14.

10.6 Exculpatory Provisions; Limitation of Liability.

Neither the Agent nor any of its directors, officers, employees, agents, attorneys or Affiliates shall (a) be liable to any Lender for any action taken or omitted to be taken by it or them hereunder, or in connection herewith including pursuant to any Loan Document, unless caused by its or their own gross negligence or willful misconduct, (b) be responsible in any manner to any of the Lenders for the effectiveness, enforceability, genuineness, validity or the due execution of this Agreement or any other Loan Documents or for any recital, representation, warranty, document, certificate, report or statement herein or made or furnished under or in connection with this Agreement or any other Loan Documents, or (c) be under any obligation to any of the Lenders to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions hereof or thereof on the part of the Loan Parties, or the financial condition of the Loan Parties, or the existence or possible existence of any Event of Default or Potential Default. No claim may be made by any of the Loan Parties, any Lender, the Agent or any of their respective Subsidiaries against the Agent, any Lender or any of their respective directors, officers, employees, agents, attorneys or Affiliates, or any of them, for any special, indirect or consequential damages or, to the fullest extent permitted by Law, for any punitive damages in respect of any claim or cause of action (whether based on contract, tort, statutory liability, or any other ground) based on, arising out of or related to any Loan Document or the transactions contemplated hereby or any act, omission or event occurring in connection therewith, including the negotiation, documentation, administration or collection of the Loans, and each of the Loan Parties, (for itself and on behalf of each of its Subsidiaries), the Agent and each Lender hereby waive, releases and agree never to sue upon any claim for any such damages, whether such claim now exists or hereafter arises and whether or not it is now known or suspected to exist in its favor. Each Lender agrees that, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder or given to the Agent for the account of or with copies for the Lenders, the Agent and each of its directors, officers,

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employees, agents, attorneys or Affiliates shall not have any duty or responsibility to provide any Lender with an credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Loan Parties which may come into the possession of the Agent or any of its directors, officers, employees, agents, attorneys or Affiliates.

10.7 Reimbursement and Indemnification of Agent by Lenders.

Each Lender agrees to reimburse and indemnify the Agent (to the extent not reimbursed by the Borrower and without limiting the Obligation of the Borrower to do so) in proportion to its Aggregate Ratable Share from and against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements, including attorneys’ fees and disbursements (including the allocated costs of staff counsel), and costs of appraisers and environmental consultants, of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (a) if the same results from the Agent’s gross negligence or willful misconduct, or (b) if such Lender was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that such Lender shall remain liable to the extent such failure to give notice does not result in a loss to the Lender), or (c) if the same results from a compromise and settlement agreement entered into without the consent of such Lender, which shall not be unreasonably withheld. In addition, each Lender agrees promptly upon demand to reimburse the Agent (to the extent not reimbursed by the Borrower and without limiting the Obligation of the Borrower to do so) in proportion to its Aggregate Ratable Share for all amounts due and payable by the Borrower to the Agent in connection with the Agent’s periodic audit of the Loan Parties’ books, records and business properties.

10.8 Reliance by Agent.

The Agent shall be entitled to rely upon any writing, telegram, telex or teletype message, resolution, notice, consent, certificate, letter, cablegram, statement, order or other document or conversation by telephone or otherwise believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon the advice and opinions of counsel and other professional advisers selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.

10.9 Notice of Default.

The Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential Default or Event of Default unless the Agent has received written notice from a

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Lender or the Borrower referring to this Agreement, describing such Potential Default or Event of Default and stating that such notice is a “notice of default.”

10.10 Notices.

The Agent shall promptly send to each Lender a copy of all notices received from the Borrower pursuant to the provisions of this Agreement or the other Loan Documents promptly upon receipt thereof. The Agent shall promptly notify the Borrower and the other Lenders of each change in the Base Rate and the effective date thereof.

10.11 Lenders in Their Individual Capacities; Agent in its Individual Capacity.

With respect to its Commitments and the Loans made by it and any other rights and powers given to it as a Lender hereunder or under any of the other Loan Documents, the Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not the Agent, and the term “Lender” and “Lenders” shall, unless the context otherwise indicates, include the Agent in its individual capacity. PNC Bank and its Affiliates and each of the Lenders and their respective Affiliates may, without liability to account, except as prohibited herein, make loans to, issue letters of credit for the account of, acquire equity interests in, accept deposits from, discount drafts for, act as trustee under indentures of, and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with, the Loan Parties and their Affiliates, in the case of the Agent, as though it were not acting as Agent hereunder and in the case of each Lender, as though such Lender were not a Lender hereunder, in each case without notice to or consent of the other Lenders. The Lenders acknowledge that, pursuant to such activities, the Agent or its Affiliates may (i) receive information regarding the Loan Parties or any of their Subsidiaries or Affiliates (including information that may be subject to confidentiality obligations in favor of the Loan Parties or such Subsidiary or Affiliate) and acknowledge that the Agent shall be under no obligation to provide such information to them, and (ii) accept fees and other consideration from the Loan Parties for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.

10.12 Holders of Notes.

The Agent may deem and treat any payee of any Note as the owner thereof for all purposes hereof unless and until written notice of the assignment or transfer thereof shall have been filed with the Agent. Any request, authority or consent of any Person who at the time of making such request or giving such authority or consent is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor.

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10.13 Equalization of Lenders.

The Lenders and the holders of any participations in any Notes agree among themselves that, with respect to all amounts received by any Lender or any such holder for application on any Obligation hereunder or under any Note or under any such participation, whether received by voluntary payment, by realization upon security, by the exercise of the right of set-off or banker’s lien, by counterclaim or by any other non-pro rata source, equitable adjustment will be made in the manner stated in the following sentence so that, in effect, all such excess amounts will be shared ratably among the Lenders and such holders in proportion to their interests in payments under the Notes, except as otherwise provided in Section 4.4.3 [Agent’s and Lender’s Rights], 5.4.2 [Replacement of a Lender] or 5.7 [Additional Compensation in Certain Circumstances]. The Lenders or any such holder receiving any such amount shall purchase for cash from each of the other Lenders an interest in such Lender’s Loans in such amount as shall result in a ratable participation by the Lenders and each such holder in the aggregate unpaid amount under the Notes, provided that if all or any portion of such excess amount is thereafter recovered from the Lender or the holder making such purchase, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by law (including court order) to be paid by the Lender or the holder making such purchase.

10.14 Successor Agent.

The Agent (i) may resign as Agent or (ii) shall resign if such resignation is requested by the Required Lenders (if the Agent is a Lender, the Agent’s Loans and its Revolving Credit Commitment shall be considered in determining whether the Required Lenders have requested such resignation) or required by Section 5.4.2 [Replacement of a Lender], in either case of (i) or (ii) by giving not less than thirty (30) days’ prior written notice to the Borrower. If the Agent shall resign under this Agreement, then either (a) the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, subject to the consent of the Borrower, such consent not to be unreasonably withheld, or (b) if a successor agent shall not be so appointed and approved within the thirty (30) day period following the Agent’s notice to the Lenders of its resignation, then the Agent shall appoint, with the consent of the Borrower, such consent not to be unreasonably withheld, a successor agent who shall serve as Agent until such time as the Required Lenders appoint and the Borrower consents to the appointment of a successor agent. Upon its appointment pursuant to either clause (a) or (b) above, such successor agent shall succeed to the rights, powers and duties of the Agent, and the term “Agent” shall mean such successor agent, effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement. After the resignation of any Agent hereunder, the provisions of this Section 10 shall inure to the benefit of such former Agent and such former Agent shall not by reason of such resignation be deemed to be released from liability for any actions taken or not taken by it while it was an Agent under this Agreement.

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10.15 Agent’s Fee.

The Borrower shall pay to the Agent a nonrefundable fee (the “Agent’s Fee”) under the terms of a letter (the “Agent’s Letter”) between the Borrower and Agent, as amended from time to time.

10.16 Availability of Funds.

The Agent may assume that each Lender has made or will make the proceeds of a Loan available to the Agent unless the Agent shall have been notified by such Lender on or before the later of (1) the close of Business on the Business Day preceding the Borrowing Date with respect to such Loan or two (2) hours before the time on which the Agent actually funds the proceeds of such Loan to the Borrower (whether using its own funds pursuant to this Section 10.16 or using proceeds deposited with the Agent by the Lenders and whether such funding occurs before or after the time on which Lenders are required to deposit the proceeds of such Loan with the Agent). The Agent may, in reliance upon such assumption (but shall not be required to), make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Agent by such Lender, the Agent shall be entitled to recover such amount on demand from such Lender (or, if such Lender fails to pay such amount forthwith upon such demand from the Borrower) together with interest thereon, in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on the date the Agent recovers such amount, at a rate per annum equal to (i) the Federal Funds Effective Rate during the first three (3) days after such interest shall begin to accrue and (ii) the applicable interest rate in respect of such Loan after the end of such three-day period.

10.17 Calculations.

In the absence of gross negligence or willful misconduct, the Agent shall not be liable for any error in computing the amount payable to any Lender whether in respect of the Loans, fees or any other amounts due to the Lenders under this Agreement. In the event an error in computing any amount payable to any Lender is made, the Agent, the Borrower and each affected Lender shall, forthwith upon discovery of such error, make such adjustments as shall be required to correct such error, and any compensation therefor will be calculated at the Federal Funds Effective Rate.

10.18 No Reliance on Agent’s Customer Identification Program.

Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the

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following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any recordkeeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other Laws.

10.19 Beneficiaries.

Except as expressly provided herein, the provisions of this Section 10 are solely for the benefit of the Agent and the Lenders, and the Loan Parties shall not have any rights to rely on or enforce any of the provisions hereof. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for any of the Loan Parties.

11. MISCELLANEOUS

11.1 Modifications, Amendments or Waivers.

With the written consent of the Required Lenders, the Agent, acting on behalf of all the Lenders, and the Borrower, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant written waivers or consents to a departure from the due performance of the Obligations of the Loan Parties hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Loan Parties, subject to the following:

(I) Without the written consent of all the Lenders, no such agreement, waiver or consent may be made which will:

(i) Increase of Commitment; Extension of Expiration Date.

Increase the amount of the Revolving Credit Commitment or Term Loan of any Lender hereunder or extend the Expiration Date;

(ii) Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment.

Whether or not any Revolving Credit Loans are outstanding, extend the time for payment of principal or interest of any Revolving Credit Loan (excluding the due date of any mandatory prepayment of a Revolving Credit Loan or any mandatory Revolving Credit Commitment reduction in connection with such a mandatory prepayment hereunder except for mandatory reductions of the Revolving Credit Commitments on the Expiration Date), the

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Revolving Credit Commitment Fees or any other fee payable to any Lender, or reduce the principal amount of or the rate of interest borne by any Revolving Credit Loan or reduce the Revolving Credit Commitment Fees or any other fee payable to any Lender, or otherwise affect the terms of payment of the principal of or interest of any Revolving Credit Loan, the Revolving Credit Commitment Fees or any other fee payable to any Revolving Credit Lender;

(iii) Release of Collateral or Guarantor.

Except for transactions permitted by Section 8.2.6 [Liquidations, Mergers etc.] and for sales of assets permitted by Section 8.2.7 [Disposition of Assets or Subsidiaries], release any Collateral the book value of which exceeds $1,000,000 or consists of capital stock or other ownership interests of any Loan Party or its Subsidiary, or any Guarantor from its Obligations under the Guaranty Agreement; or

(iv) Miscellaneous.

Amend Section 5.2 [Pro Rata Treatment of Lenders], 10.6 [Exculpatory Provisions, Etc.] or 10.13 [Equalization of Lenders] or this Section 11.1, alter any provision regarding the pro rata treatment of the Lenders, change the definition of Required Lenders, Required Revolving Credit Lenders or Required Term Lenders or change any requirement providing for the Lenders or the Required Lenders, Required Revolving Credit Lenders or Required Term Lenders to authorize the taking of any action hereunder;

(II) Any waiver, amendment or consent which will have the effect of requiring the Revolving Credit Lenders to fund Revolving Credit Loans or Swing Loans or issue Letters of Credit shall require the approval of the Required Lenders and the Required Revolving Lenders;

(III) Any amendment, waiver or consent under Section 3 [Term Loans] or relating solely to the Term Loan facility (including interest and fees payable thereon, extensions of the due dates for payment thereof (except for payments due on the Expiration Date) and other related provisions, but excluding any agreement to accelerate the due date of principal of such Term Loan) shall require the approval only of the Required Term Lenders, provided that without the written consent of all the Term Lenders, no such agreement, waiver or consent may be made which will (i) extend the time for scheduled payment of principal or interest of any Term Loan (excluding the due date of any mandatory prepayment of a Term Loan and excluding any payment due on the Expiration Date (which is addressed in clause I above), or any fee payable to any Term Lender, or (ii) reduce the principal amount of or the rate of interest borne by any Term Loan or (iii) reduce any fee payable to any Term Lender, or (iv) otherwise affect the terms of payment of the principal of or interest of any Term Loan, or fee payable to any Term Lender;

(IV) no agreement, waiver or consent which would modify the interests, rights or obligations of the Agent in its capacity as Agent shall be effective without the written consent of the Agent; and

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(V) no agreement, waiver or consent which would modify the interests, rights or obligations of the Issuing Bank as the issuer of Letters of Credit shall be effective without the written consent of such Issuing Bank.

11.2 No Implied Waivers; Cumulative Remedies; Writing Required.

No course of dealing and no delay or failure of the Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or privilege preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Agent and the Lenders under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have. Any waiver, permit, consent or approval of any kind or character on the part of any Lender of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.

11.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes.

The Borrower agrees unconditionally upon demand to pay or reimburse to each Lender (other than the Agent, as to which the Borrower’s Obligations are set forth in Section 10.5 [Reimbursement of Agent By Borrower, Etc.]) and to save such Lender harmless against (i) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements (including reasonable fees and expenses of counsel for each Lender except with respect to (a) and (b) below), incurred by such Lender (a) in connection with the administration and interpretation of this Agreement, and other instruments and documents to be delivered hereunder, (b) relating to any amendments, waivers or consents pursuant to the provisions hereof, (c) in connection with the enforcement of this Agreement or any other Loan Document, or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, and (d) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings, or (ii) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Lender, in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by such Lender hereunder or thereunder, provided that the Borrower shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (A) if the same results from such Lender’s gross negligence or willful misconduct, or (B) if the Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that the Borrower shall remain liable to the extent such failure to give notice does not result in a loss to the Borrower), or (C) if the same results

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from a compromise or settlement agreement entered into without the consent of the Borrower, which shall not be unreasonably withheld. The Lenders will attempt to minimize the fees and expenses of legal counsel for the Lenders which are subject to reimbursement by the Borrower hereunder by considering the usage of one law firm to represent the Lenders and the Agent if appropriate under the circumstances. The Borrower agrees unconditionally to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Agent or any Lender to be payable in connection with this Agreement or any other Loan Document, and the Borrower agrees unconditionally to save the Agent and the Lenders harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, unless the same is caused by their gross negligence or willful misconduct.

11.4 Holidays.

Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in Section 4.2 [Interest Periods] with respect to Revolving Credit Interest Periods under the Euro-Rate Option) and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.

11.5 Funding by Branch, Subsidiary or Affiliate.

11.5.1. Notional Funding.

Each Lender shall have the right from time to time, without notice to the Borrower, to deem any branch, Subsidiary or Affiliate (which for the purposes of this Section 11.5 shall mean any corporation or association which is directly or indirectly controlled by or is under direct or indirect common control with any corporation or association which directly or indirectly controls such Lender) of such Lender to have made, maintained or funded any Loan to which the Euro-Rate Option applies at any time, provided that immediately following (on the assumption that a payment were then due from the Borrower to such other office), and as a result of such change, the Borrower would not be under any greater financial obligation pursuant to Sections 4.4 [Euro-Rate Unascertainable], 5.4 [Voluntary Prepayments], or 5.7 [Additional Compensation in Certain Circumstances] than it would have been in the absence of such change. Notional funding offices may be selected by each Lender without regard to such Lender’s actual methods of making, maintaining or funding the Loans or any sources of funding actually used by or available to such Lender.

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11.5.2. Actual Funding.

Each Lender shall have the right from time to time to make or maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such Lender to make or maintain such Loan subject to the last sentence of this Section 11.5.2. If any Lender causes a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder, all terms and conditions of this Agreement shall, except where the context clearly requires otherwise, be applicable to such part of the Loans to the same extent as if such Loans were made or maintained by such Lender, but in no event shall any Lender’s use of such a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder cause such Lender or such branch, Subsidiary or Affiliate to incur any cost or expenses payable by the Borrower hereunder or require the Borrower to pay any other compensation to any Lender (including any expenses incurred or payable pursuant to Sections 4.4 [Euro-Rate Unascertainable], 5.4 [Voluntary Prepayments], or 5.7 [Additional Compensation in Certain Circumstances]) which would otherwise not be incurred.

11.6 Notices.

Any notice, request, demand, direction or other communication (for purposes of this Section 11.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Agreement shall be given or made by telephone or in writing (which includes means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 11.6) in accordance with this Section 11.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Schedule 1.1(B) hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 11.6. Any Notice shall be effective:

(i) In the case of hand-delivery, when delivered;

(ii) If given by mail, four (4) days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(iii) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or overnight courier delivery of a confirmatory notice (received at or before noon on such next Business Day);

(iv) In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;

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(v) In the case of electronic transmission, when actually received;

(vi) In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such web site) by another means set forth in this Section 11.6; and

(vii) If given by any other means (including by overnight courier), when actually received.

Any Lender giving a Notice to a Loan Party shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.

11.7 Severability.

The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

11.8 Governing Law.

Each Letter of Credit and Section 2.9 [Letter of Credit Subfacility] shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be revised or amended from time to time, and to the extent not inconsistent therewith, the internal laws of the Commonwealth of Pennsylvania without regard to its conflict of laws principles, and the balance of this Agreement shall be deemed to be a contract under the Laws of the Commonwealth of Pennsylvania and for all purposes shall be governed by and construed and enforced in accordance with the internal laws of the Commonwealth of Pennsylvania without regard to its conflict of laws principles.

11.9 Prior Understanding.

This Agreement and the other Loan Documents supersede all prior understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein and therein, including any prior confidentiality agreements and commitments.

11.10 Duration; Survival.

All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the making of Loans and issuance of Letters of Credit and shall not be waived by the execution and delivery of this Agreement, any investigation by the Agent or the Lenders, the making of Loans, issuance of Letters of Credit, or payment in full of the Loans.

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All covenants and agreements of the Loan Parties contained in Sections 8.1 [Affirmative Covenants], 8.2 [Negative Covenants] and 8.3 [Reporting Requirements] herein shall continue in full force and effect from and after the date hereof so long as the Borrower may borrow or request Letters of Credit hereunder and until termination of the Commitments and payment in full of the Loans and expiration or termination of all Letters of Credit. All covenants and agreements of the Borrower contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Notes, Section 5 [Payments] and Sections 10.5 [Reimbursement of Agent by Borrower, Etc.], 10.7 [Reimbursement of Agent by Lenders, Etc.] and 11.3 [Reimbursement of Lenders by Borrower; Etc.], shall survive payment in full of the Loans, expiration or termination of the Letters of Credit and termination of the Commitments.

11.11 Successors and Assigns.

(i) This Agreement shall be binding upon and shall inure to the benefit of the Lenders, the Agent, the Loan Parties and their respective successors and assigns, except that none of the Loan Parties may assign or transfer any of its rights and Obligations hereunder or any interest herein. Each Lender may, at its own cost, make assignments of or sell participations in all or any part of its Commitments and the Loans made by it to one or more banks or other entities, subject to the consent of the Borrower and the Agent with respect to any assignee, such consent not to be unreasonably withheld, provided that (1) no consent of the Borrower shall be required (A) if an Event of Default exists and is continuing, or (B) in the case of an assignment by a Lender to an Affiliate of such Lender, and (2) any assignment by a Lender to a Person other than an Affiliate of such Lender may not be made in amounts less than the lesser of $1,000,000 or the amount of the assigning Lender’s Commitment. In the case of an assignment, upon receipt by the Agent of the assignment and assumption agreement in a form acceptable to the Agent, the assignee shall have, to the extent of such assignment (unless otherwise provided therein), the same rights, benefits and obligations as it would have if it had been a signatory Lender hereunder, the Commitments shall be adjusted accordingly, and upon surrender of any Note subject to such assignment, the Borrower shall execute and deliver a new Note to the assignee in an amount equal to the amount of the Commitment assumed by it and a new Note to the assigning Lender in an amount equal to the Commitment retained by it hereunder. Any Lender which assigns any or all of its Commitment or Loans to a Person other than an Affiliate of such Lender shall pay to the Agent a service fee in the amount of $3,500 for each assignment. In the case of a participation, the participant shall only have the rights specified in Section 9.2.3 [Set-off] (the participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto and not to include any voting rights except with respect to changes of the type referenced in Sections 11.1(I)(i) [Increase of Commitment, Etc.], 11.1(I)(ii) [Extension of Payment, Etc.], or 11.1(I)(iii) [Release of Collateral or Guarantor]), all of such Lender’s obligations under this Agreement or any other Loan Document shall remain unchanged, and all amounts payable by any Loan Party hereunder or thereunder shall be determined as if such Lender had not sold such participation.

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(ii) Any assignee or participant which is not incorporated under the Laws of the United States of America or a state thereof shall deliver to the Borrower and the Agent the form of certificate described in Section 11.17.1 [Tax Withholding Clause] relating to federal income tax withholding. Each Lender may furnish any publicly available information concerning any Loan Party or its Subsidiaries and any other information concerning any Loan Party or its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees or participants), provided that such assignees and participants agree to be bound by the provisions of Section 11.12 [Confidentiality].

(iii) Notwithstanding any other provision in this Agreement, any Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement, its Note and the other Loan Documents to any Federal Reserve Lender in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent of the Borrower or the Agent. No such pledge or grant of a security interest shall release the transferor Lender of its obligations hereunder or under any other Loan Document.

11.12 Confidentiality.

11.12.1. General.

The Agent and the Lenders each agree to keep confidential all information obtained from any Loan Party or its Subsidiaries which is nonpublic and confidential or proprietary in nature (including any information the Borrower specifically designates as confidential), except as provided below, and to use such information only in connection with their respective capacities under this Agreement and for the purposes contemplated hereby. The Agent and the Lenders shall be permitted to disclose such information (i) to outside legal counsel, accountants and other professional advisors who need to know such information in connection with the administration and enforcement of this Agreement, subject to agreement of such Persons to maintain the confidentiality, (ii) to assignees and participants as contemplated by Section 11.11, and prospective assignees and participants, subject to the agreement of such Person to maintain the confidentiality thereof, (iii) to the extent requested by any bank regulatory authority or, with notice to the Borrower, as otherwise required by applicable Law or by any subpoena or similar legal process, or in connection with any investigation or proceeding arising out of the transactions contemplated by this Agreement, (iv) if it becomes publicly available other than as a result of a breach of this Agreement or becomes available from a source not known to be subject to confidentiality restrictions, or (v) if the Borrower shall have consented to such disclosure.

11.12.2. Sharing Information With Affiliates of the Lenders.

Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each of the Loan Parties hereby authorizes

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each Lender to share any information delivered to such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or affiliate of any Lender receiving such information shall be bound by the provisions of Section 11.12.1 as if it were a Lender hereunder. Such Authorization shall survive the repayment of the Loans and other Obligations and the termination of the Commitments.

11.13 Counterparts.

This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument.

11.14 Agent’s or Lender’s Consent.

Whenever the Agent’s or any Lender’s consent is required to be obtained under this Agreement or any of the other Loan Documents as a condition to any action, inaction, condition or event, except as expressly provided herein or therein, the Agent and each Lender shall be authorized to give or withhold such consent in its sole and absolute discretion and to condition its consent upon the giving of additional collateral, the payment of money or any other matter.

11.15 Exceptions.

The representations, warranties and covenants contained herein shall be independent of each other, and no exception to any representation, warranty or covenant shall be deemed to be an exception to any other representation, warranty or covenant contained herein unless expressly provided, nor shall any such exceptions be deemed to permit any action or omission that would be in contravention of applicable Law.

11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.

EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 11.6 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND

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THE LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

11.17 Certifications From Lenders and Participants

11.17.1. Tax Withholding Clause.

Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of the Agent, each other Lender or assignee or participant of a Lender) agrees that it will deliver to each of the Borrower and the Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under § 1.1441-1(c)(16) of the Income Tax Regulations (the “Regulations”)) certifying its status (i.e. U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Internal Revenue Code. The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under § 1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in § 1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Internal Revenue Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person. Each Lender, assignee or participant required to deliver to the Borrower and the Agent a Withholding Certificate pursuant to the preceding sentence shall deliver such valid Withholding Certificate as follows: (A) each Lender which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by the Borrower hereunder for the account of such Lender; (B) each assignee or participant shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless the Agent in its sole discretion shall permit such assignee or participant to deliver such valid Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by the Agent). Each Lender, assignee or participant which so delivers a valid Withholding Certificate further undertakes to deliver to each of the Borrower and the Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Agent. Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax, the Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under § 1.1441-7(b) of the Regulations. Further, the Agent is indemnified under § 1.1461-1(e) of the Regulations against any claims and demands of any Lender or assignee or participant of a Lender for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Internal Revenue Code.

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11.17.2. USA Patriot Act.

Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United states or foreign county, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA Patriot Act and the applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA Patriot Act.

11.18 Joinder of Guarantors.

Any Subsidiary of the Borrower which is required to join this Agreement as a Guarantor pursuant to Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures] shall execute and deliver to the Agent (i) a Guarantor Joinder in substantially the form attached hereto as Exhibit 1.1(G)(1) pursuant to which it shall join as a Guarantor each of the documents to which the Guarantors are parties; (ii) documents in the forms described in Section 7.1 [First Loans] modified as appropriate to relate to such Subsidiary; and (iii) documents necessary to grant and perfect Prior Security Interests to the Agent for the benefit of the Lenders in all Collateral held by such Subsidiary. The Loan Parties shall deliver such Guarantor Joinder and related documents to the Agent within fifteen (15) Business Days after the date of the filing of such Subsidiary’s articles of incorporation if the Subsidiary is a corporation, the date of the filing of its certificate of limited partnership if it is a limited partnership or the date of its organization if it is an entity other than a limited partnership or corporation.

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[SIGNATURE PAGE TO THE CREDIT AGREEMENT]

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.

BORROWER:
BLAIR CORPORATION
By:	/s/ BRYAN J. FLANAGAN
Name:	Bryan J. Flanagan
Title:	Senior Vice President and Chief Financial Officer

GUARANTORS:
BLAIR HOLDINGS, INC.
By:	/s/ JOHN A. LASHER
Name:	John A. Lasher
Title:	President

BLAIR PAYROLL, LLC
By:	/s/ EDWARD R. SIERZEGA
Name:	Edward R. Sierzega
Title:	Secretary

BLAIR CREDIT SERVICES CORPORATION
By:	/s/ ROGER H. ALLEN
Name:	Roger H. Allen
Title:	Treasurer

BLAIR INTERNATIONAL HOLDINGS, INC.
By:	/s/ EDWARD R. SIERZEGA
Name:	Edward R. Sierzega
Title:	Secretary

[SIGNATURE PAGE TO THE CREDIT AGREEMENT]

PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By:	/s/ LILA BACHELIER
Title:	Vice President

[SIGNATURE PAGE TO THE CREDIT AGREEMENT]

FIFTH THIRD BANK
/s/ JIM JANOVSKY
By:	Jim Janovsky
Title:	Vice President

[SIGNATURE PAGE TO THE CREDIT AGREEMENT]

HSBC BANK USA, NATIONAL ASSOCIATION
/s/ DOUGLAS D. SMITH
By:	Douglas D. Smith
Title:	Vice President

SCHEDULE 1.1(A)

PRICING GRID—

VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO

Level	Leverage Ratio	Revolving Credit Commitment Fee		Base Rate Margin			Euro-Rate Margin
I	Less than or equal to 1.0 to 1.0	.250	%		0	%	1.00	%
II	Greater than 1.0 to 1.0 but less than or equal to 2.0 to 1.0	.275	%		0	%	1.25	%
III	Greater than 2.0 to 1.0	.300	%		0	%	1.50	%

For purposes of determining the Applicable Margin and the Applicable Revolving Credit Commitment Fee Rate, the Applicable Margin and the Applicable Revolving Credit Commitment Fee Rate shall be first computed under the terms of this grid on the Loan Reduction Date based on the Leverage Ratio as of the Loan Reduction Date as indicated in the Compliance Certificate due on such date pursuant to Section 8.1.14.4 [Loan Reduction or Conversion Date]. Thereafter, the Applicable Margin and the Applicable Revolving Credit Commitment Fee Rate shall be recomputed as of the end of each subsequent fiscal quarter end and shall be effective on the date on which the Borrower is required to deliver its Compliance Certificate for such quarter.

SCHEDULE 1.1(A) - 1

SCHEDULE 1.1(B)

REVOLVING CREDIT COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES

Page 1 of 2

Part 1 - Commitments of Lenders and Addresses for Notices to Lenders

Lender	Amount of Commitment for Revolving Credit Loans		Amount of Commitment for Term Loans		Revolving Credit Ratable Share		Term Loan Ratable Share		Aggregate Ratable Share
PNC Bank, National Association 901 State Street Erie, PA 16501 Attention: Lila Bachelier Telephone: 814-871-9290 Telecopier: 814-871-99432 Email: Lila.bachelier@pncbank.com	$	25,000,000	$	25,000,000	33.333333334	%	100.00	%	50.000000000	%
with a copy to: Rini Davis Assistant Vice President PNC Firstside Center 500 First Avenue, 3rd Floor Pittsburgh, PA 15219 Attention: Rini Davis Telephone: 412-762-7638 Telecopier: 412-762-8672 Email: rini.davis@pnc.com

Fifth Third Bank Gulf Tower 707 Grant Street, 21st Floor Pittsburgh, PA 15219 Attention: James Janovsky Telephone: 412-291-5457 Telecopier: 412-291-5411 Email: jim.janovsky@53.com	$	25,000,000	$	0	33.333333333	%	0	%	25.000000000	%
HSBC Bank USA, National Accociation One HSBC Center - Lobby Level Buffalo, NY 14203 Attention: Douglas D. Smith Telephone: 716-841-7411 Telecopier: 716-855-0384 douglas.d.smith@us.hsbc.com	$	25,000,000	$	0	33.333333333	%	0	%	25.000000000	%
Total	$	75,000,000	$	25,000,000	100	%	100	%	100	%

The Revolving Credit Commitments shall be re-allocated as follows on the Term Loan Repayment Date, if as of such date, the Revolving Credit Commitment of the Agent is less than the Minimum Agent Commitment On Term Loan Repayment Date:

1. The Revolving Credit Commitment of the Agent shall be increased so that it shall equal the Minimum Agent Commitment On Term Loan Repayment Date (the amount of such increase shall be referred to as the “Agent’s Increase”);

2. The Revolving Credit Commitments of the other Lenders shall be reduced by an aggregate amount equal to the Agent’s Increase, to be allocated ratably in proportion to the then outstanding Revolving Credit Commitments of such Lenders (so that the aggregate of the Revolving Credit Commitments of all of the Lenders, including the Agent, shall be the same immediately before and after the Term Loan Reduction Date);

3. There shall be a deemed repayment of all of the Loans and re-borrowing in like amount except that the re-borrowing shall be allocated among the Lenders according to the Revolving Credit Commitments of such Lenders after the reallocation (the “Reallocation”) described in items 1 and 2 immediately above. The Agent shall pay to the other Lenders, as appropriate, its ratable share (after giving effect to such Reallocation) of the outstanding Loans. Such deemed repayment and re-borrowing shall not be subject to the indemnity described in Section 5.7.2(i) (sometimes referred to as “breakage”).

4. The Borrower shall issue new Revolving Credit Notes in the amounts equal to the Revolving Credit Commitments of the Lenders after giving effect to the Reallocation.

5. There shall be no further reallocations after the Term Loan Repayment Date in the event that the Revolving Credit Commitment of the Agent shall be subsequently reduced.

Minimum Agent Commitment on Term Loan Repayment Date shall mean, as of the Term Loan Repayment Date, the lesser of, (i) $21,000,000 or (ii) 28% of the total of the Revolving Credit Commitments.

SCHEDULE 1.1(B)

COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES

Page 2 of 2

Part 2 - Addresses for Notices to Borrower:

BORROWER AND GUARANTORS:

Address for Notices:

Blair Corporation

220 Hickory Street

Warren, PA 16366-0001

Telecopier No. (814) 726-6123

Attention: Roger H. Allen, Treasurer

Telephone No. 814-726-6298

SCHEDULE 8A

COVENANTS AND EVENTS OF DEFAULT RELATED TO JLB SERVICE BANK

Section 8.1.15 Payments Under the Capital and Liquidity Agreement

The Borrower will notify the Agent and the Lenders at least seven (7) Business Days before the Borrower shall make any Capital and Liquidity Agreement Payment to JLB Service Bank. In the event that, after giving effect to such Capital and Liquidity Agreement Payment, the aggregate amount of Capital and Liquidity Agreement Payments shall exceed $5,000,000 (the “$5,000,000 Limit”) over the term of this Credit Agreement, as it may hereafter be extended (subject to the last sentence of this Section 8.1.15 below), the Borrower may not request and the Lenders shall not be obligated to fund any additional Loans and the Loan Parties shall not be permitted to request, and Agent shall not be obligated to issue any Letters of Credit, during the period (the “Funding Termination Period”) beginning on the date on which the Borrower or JLB Service Bank shall have first learned of the obligation of the Borrower to make such Capital and Liquidity Agreement Payment and ending upon the earlier of the following events:

(1) The Required Lenders shall consent in writing to fund additional Loans and to permit the Agent to issue additional Letters of Credit, or

(2) The Borrower shall demonstrate, to the satisfaction of the Required Lenders (as evidenced by written confirmation by the Required Lenders), that the obligation to make such Capital and Liquidity Agreement Payment has ceased (for example because JLB Service Bank will be terminating its operations) or has been waived permanently in writing by the FDIC and by JLB Service Bank.

If the Expiration Date is hereafter extended and any Capital and Liquidity Agreement Payments have been made prior to the effective date of such extension, the Loan Parties may request that the $5,000,000 Limit be increased by an amount not to exceed the lesser of (A) $5,000,000 or (B) the amount of Capital and Liquidity Agreement Payments which have previously been made, and the Lenders will reasonably consider modifying the Credit Agreement in response to such request.

8.1.16 Pledge of Stock of JLB Service Bank.

Following the occurrence of an Event of Default, the Borrower, the Agent or the Required Lenders may at any time request that the Borrower pledge the stock of JLB Service Bank to the Agent for the benefit of the Lenders. Upon receipt of such request, the Borrower shall use reasonable commercial efforts (1) to obtain promptly the consent of any

Person required in order for the Borrower to pledge such stock to the Agent, such efforts to include initiating written application therefor within thirty (30) days after the date of receiving such request from the Agent or the Required Lenders, and (2) to complete the pledge of such stock to the Agent (including the grant of a Priority Security Interest in such stock to the Agent and the delivery to the Agent and the Lenders of a satisfactory opinion of the Borrower’s outside counsel confirming that such Priority Security Interest has been granted) within 15 days after the later of (i) the date of such request for pledge, or (ii) the date on which all consents described in clause (1) of this sentence have been obtained in the event that any such consents are required for such pledge.

Section 8.2.1(vii)—)Permitted Indebtedness Related to JLB Service Bank.

(1) JLB Deposits in JLB Service Bank from the Borrower, provided that each of the conditions set forth in clauses (1), (2) and (3) of Section 8.2.4(vi) is met with respect to each such JLB Deposit.

(2) Indebtedness incurred by JLB Service Bank under the Capital and Liquidity Agreement (subject to the limitation on payments made thereunder as provided in clause (ix) of Section 7.2.4 [Loans and Investments]).

Section 8.2.4(vi)—)Permitted Investments Related to JLB Service Bank.

(1) Investments in JLB Service Bank not to exceed $2,500,000 at any time following receipt of applicable federal and state regulatory approvals for the organization and operation thereof.

(2) JLB Deposits made by the Borrower in JLB Service Bank, provided that each of the following conditions is met:

With respect to any JLB Deposit that shall be used to collateralize the origination by JLB Service Bank of trade receivables after the Initial Receivables Purchase Period (and not be used to purchase any of the Initial Receivables to be Purchased) (each a “Collateralization JLB Deposit”), the Borrower and JLB Service Bank will comply with the following requirements:

(i) the amount of Collateralization JLB Deposits shall not at any time exceed $10 million; and

(ii) JLB Service Bank shall use its best efforts to return to the Borrower each Collateralization JLB Deposit on or before the close of business on the day in which such Collateralization JLB Deposit is made provided that (1) in no event shall any Collateralization JLB Deposit remain outstanding for more than 2 Business Days,

and (2) if on at the end of any Business Day the Borrower shall fail to repay all Collateralization JLB Deposits then outstanding, the Borrower shall repay all outstanding Collateralization JLB Deposits at the close of business on the next succeeding Business Day.

(3) The following Investments in JLB Service Bank (such Investments are in addition to the JLB Deposits described in, and permitted under, clause (vii) of Section 8.2.1):

(a) an initial capital contribution by the Borrower in JLB Service Bank (which is in the amount of $2,000,000);

(b) a deposit in the amount of $500,000;

(c) a Letter of Credit issued under this Agreement in an amount not to exceed $10,000,000 naming JLB Service Bank as the beneficiary thereof (the “JLB Letter of Credit”) in satisfaction of the obligation of the Borrower under Section 3(A)(i) of the Capital and Liquidity Agreement to do the following: “maintain a liquidity reserve deposit . . . of $10 million in cash or unencumbered securities acceptable to the FDIC” with an unaffiliated FDIC-insured depository institution to meet any credit card funding obligations of the Applicant”.

(d) Capital and Liquidity Agreement Payments, subject to the provisions of Section 8.1.15 [Payments Under the Capital and Liquidity Agreement].

Section 9.1.11—Event of Default Related to JLB Service Bank.

Capital Adequacy. The capital ratios of JLB Service Bank shall at any time fall below the “Minimum Capital Ratios” or the “Revised Capital Ratios” as such terms are defined in Sections 2(A) and (B) of the Capital and Liquidity Agreement.