ASSET PURCHASE AGREEMENT

         THIS ASSET  PURCHASE  AGREEMENT  is dated as  November  16, 2000 by and
among (i) Footstar  Corporation,  a Texas  corporation  (the  "Buyer"),  (ii) J.
Baker,  Inc., a Massachusetts  corporation ("J. Baker"),  and (iii) JBI, Inc., a
Massachusetts  corporation  ("JBI"),  Morse Shoe,  Inc., a Delaware  corporation
("Morse"),  and those other  subsidiaries  of J. Baker,  if any, which after the
date hereof may be added as parties to this  Agreement and identified as Selling
Subsidiaries  on the  signature  page  hereof  (JBI,  Morse and each such  other
subsidiary a "Selling Subsidiary," collectively,  the Selling Subsidiaries," and
together with J. Baker, the "Seller" or the "Selling Entities").


                                    RECITALS

         J.  Baker and its  subsidiaries  (together,  "Baker")  operate  several
different business segments. Baker desires to dispose of its footwear businesses
(the  "Business")  in which  it  operates  licensed  footwear  departments  (the
"Footwear Departments") in discount,  department,  and specialty stores operated
by independent  third parties at the store  locations  listed on Schedule A (the
"Stores").  This Agreement relates only to the Business and not to Baker's other
businesses,  which includes, without limitation, its big and tall men's apparel,
workwear and loss prevention  consulting  service  business  (collectively,  the
"Non-Footwear Businesses").

         The Buyer desires to purchase  substantially all of the assets of Baker
that are used primarily in the Business, as further described below.


                                    AGREEMENT

         NOW, THEREFORE,  in consideration of the mutual promises and agreements
set forth herein, the Buyer and the Seller agree as follows:

         1.  PURCHASE AND SALE.

         1.1. Acquired Assets.  Subject to the terms and conditions set forth in
this Agreement, at the Closing referred to in Section 4 hereof, the Seller shall
sell,  assign,  transfer and deliver to the Buyer, and the Buyer shall purchase,
acquire and take  assignment  and delivery of, all of the assets (other than the
Excluded Assets specified in Section 1.2) owned by the Seller and used primarily
in the Business (all of which assets are hereinafter referred to collectively as
the "Acquired Assets"),  including, without limitation, the assets identified in
paragraphs (a) through (k) below,  but excluding any assets of the  Non-Footwear
Businesses.  For purposes of this  Agreement,  an asset is deemed to be owned by
the Seller if it is owned by J. Baker or by any direct or indirect subsidiary of
J.  Baker,  whether  or not that  subsidiary  has been  identified  as a Selling
Subsidiary and made a party hereto.

                  (a)  All  of the  Seller's  rights  under  the  contracts  and
  agreements  described  on  Schedule  1.1(a) (the  "Store  License  Contracts")
  between the Seller and the  licensor  thereunder  (such other  party,  whether
  designated  as  licensor,  lessor,  or any  other  term in the  Store  License
  Contract, is referred to herein as a "Licensor");

                  (b) All  moveable  trade  fixtures  and  furnishings  owned by
  Seller and used  primarily in the Business (but limited to those items used in
  or  located  in  the  Stores),  including,  without  limitation,  those  items
  generally  described  on  Schedule  1.1(b),  with such  additions  thereto and
  deletions  therefrom as may hereafter arise in the ordinary course of business
  prior to the Closing consistent with the Seller's  obligations under Section 7
  hereof (the "Furniture and Fixtures");

                  (c) All  items  of  tangible  personal  property  owned by the
  Seller and either  located at any of the Stores or otherwise used primarily in
  the Business as described on Schedule 1.1(c),  including,  without limitation,
  the store supplies,  phones, ticketing machines, and packaging,  marketing and
  ticketing  materials  owned by the Seller and used  primarily in the Business,
  and the computer  laptops and scanners  owned by the Seller and used primarily
  in the Business by the Seller's  field  personnel and the software  associated
  therewith (the "Miscellaneous Personal Property");

                  (d) All  footwear  merchandise  held for sale in the  ordinary
  course of the Business,  whether  located at one of the Stores,  in transit to
  one  of  the  Stores,  or  in  Seller's   distribution   facility  at  Canton,
  Massachusetts  or  any  other  distribution  facility  used  in  the  Business
  (together, the "Distribution  Facility"),  but excluding any merchandise which
  the Buyer  reasonably  determines  during the Inventory  Count (as hereinafter
  defined) is not usable or salable in the  ordinary  course of the  Business by
  virtue of being worn, damaged,  defective,  mismated (a pair of shoes that are
  not the same size),  and  excluding  the Closeout  Inventory  (as  hereinafter
  defined) (the "Inventory");

                  (e) All of the Seller's  rights  under the  footwear  purchase
  orders  described on Schedule  1.1(e),  which Schedule shall be updated by the
  Seller (subject to the Buyer's  acceptance)  three days prior to the scheduled
  Closing Date to delete those purchase  orders which have been completed  prior
  to the Closing Date and to include any additional purchase orders for footwear
  entered  into in the  ordinary  course of business  prior to the Closing  Date
  consistent  with the  Seller's  obligations  under  Section  7.4  hereof  (the
  "Purchase Orders");

                  (f)  All  of  the  Seller's   transferable  rights  under  the
contracts and agreements described on Schedule 1.1(f) (the "Other Contracts");

                  (g) All of the  Seller's  prepaid  expenses  for  advertising,
packaging or other items  listed on Schedule  1.1(g) (the  "Transferred  Prepaid
Expenses");

                  (h) The  Seller's  trademarks,  service  marks,  registrations
thereof or applications  for  registration  therefor,  trade names,  inventions,
patents,   patent   applications,    trade   secrets,   copyrights,    copyright
registrations,  applications for copyright registration,  drawings, designs, and
specifications,  or other similar type of  intellectual  property right, in each
case which is used primarily in the Business and is owned or licensed or used or
held for use by Baker, including,  without limitation, those agreements by which
intellectual  property is licensed  to the Seller for use in the  Business  (the
"Intellectual  Property  Licenses") and the other  intellectual  property rights
described on Schedule  1.1(h) (all such items listed in this  paragraph (h), the
"Intellectual Property");

                  (i) Copies of all of Baker's  sales  records,  paid  invoices,
cost and pricing information,  historical profit and loss statements, accounting
books,  records,  ledgers,  Purchase  Orders  outstanding  on the Closing  Date,
standard  operating  procedures  for Stores and training  manuals,  which relate
exclusively to the Business or the Acquired  Assets,  and, with respect to items
of the type listed above which relate to the Business or the Acquired Assets and
to Baker's other businesses,  copies of those portions of the items which relate
to the Business,  and all other  documents and records  relating to the Acquired
Assets (the "Records");

                  (j) All of the Seller's title to, interest in and rights under
the leases of personal  property  used in the Business and described on Schedule
1.1(j), to the extent assignable (the "Personal Property Leases"); and

                  (k) Cash on hand, if any, to be left by the Seller in the cash
registers at the Spiegel Stores at the Effective  Time, the amount of which (not
in excess of $50 per register) is to be designated by the Buyer to the Seller in
writing prior to the Closing Date (the "Remaining Cash").

         1.2. Excluded Assets. Notwithstanding the foregoing nor any Schedule to
this  Agreement,  the  Seller is not  selling  and the Buyer is not  purchasing,
pursuant to this  Agreement,  and the term "Acquired  Assets" shall not include,
any of the following assets (the "Excluded Assets"):

                  (a) the consideration to be received by the Seller pursuant to
                      this Agreement;

                  (b) the rights of the Seller under this Agreement;

                  (c) any amounts due to the Seller  from retail  customers  for
                      products  sold to retail  customers  prior to the  Closing
                      (whether   such  amounts  are  due  directly  from  retail
                      purchasers of products,  from credit card  processors,  or
                      from a  Licensor  that  has  collected  such  amounts  for
                      subsequent  disbursement to the Seller pursuant to a Store
                      License Contract, or otherwise);

                  (d) any  other   amounts  due  to  the  Seller  under  License
                      Agreements with respect to all periods or events occurring
                      prior to Closing;

                  (e) any asset not specifically enumerated as an Acquired Asset
                      and used in or in support of the Non-Footwear  Businesses,
                      including  without   limitation   intellectual   property,
                      software and hardware.

                  (f) any rights of the Seller with respect to any pension plans
                      and 401(k) plans and any other  Benefit  Plans (as defined
                      in Section 5.16 hereof);

                  (g) All  cash  and cash  equivalents,  such as bank  deposits,
                      certificates   of  deposit  and   marketable   securities,
                      including  any cash  used as  collateral  for  letters  of
                      credit  or  performance  bonds,  in each  case held by the
                      Seller, other than Remaining Cash;

                  (h) The corporate  names and marks "J.  Baker,"  "JBI," "Morse
                      Shoe," and  "Spencer  Companies,"  and any  variations  or
                      deviations thereof (collectively, the "Corporate Names");

                  (i) All  insurance  policies,   binders  and  related  prepaid
                      expenses  covering  the  Business or the  Acquired  Assets
                      other than Transferred Prepaid Expenses;

                  (j) All  rights  to  causes of  action,  lawsuits,  judgments,
                      claims and  demands of any  nature  available  to or being
                      pursued by the Seller to the extent  primarily  related to
                      any Retained  Liabilities or any Excluded Assets,  whether
                      arising by way of  counterclaim  or  otherwise;  provided,
                      however,  that the foregoing shall in no way limit Buyer's
                      right to  indemnification  pursuant  to Section 11 of this
                      Agreement;

                  (k) All accounts  receivable of the Seller,  except those that
                      shall  become the  property  of the Buyer  pursuant to the
                      post-Closing adjustment provisions of Section 4.3;

                  (l) All assets disposed of by the Seller prior to Closing in a
                      manner not in breach of this Agreement;

                  (m) All rights to any refunds,  rebates or similar  claims for
                      taxes,  duties,  tariffs, and vendor credits for payments,
                      except  to  the  extent  the  Buyer  is  entitled  thereto
                      pursuant to Section 4.3 hereof;

                  (n) All footwear inventory of the Non-Footwear Businesses;

                  (o) All rights of the Seller with respect to the  post-closing
                      obligations of the Buyer under this Agreement; and

                  (p) The  Seller's  rights  and  obligations  under  the  Store
                      License  Contract  with  Ames  Department   Stores,   Inc.
                      ("Ames") to operate  the  Footwear  Departments  in the 32
                      Stores which Ames  announced on or about  November 9, 2000
                      that it would close (the "Closeout Stores"), the Furniture
                      and Fixtures and  Miscellaneous  Personal  Property in the
                      Closeout  Stores on the  Closing  Date,  and all  footwear
                      merchandise  in the  Closeout  Stores on the Closing  Date
                      (the "Closeout Inventory").


         2. LIMITED ASSUMPTION OF OBLIGATIONS. Anything in this Agreement to the
contrary notwithstanding, the Buyer shall not assume, and shall not be deemed to
have assumed,  any liability or  obligation  whatsoever of any nature,  fixed or
contingent  or known or unknown,  of the Seller or relating to the  operation of
the Business or any other  business  operations  of Baker prior to the Effective
Time  (as  hereinafter  defined)  (with  all  such  unassumed   liabilities  and
obligations referred to herein as the "Retained Liabilities");  except for those
obligations of the Seller  accruing after the Effective Time under the following
contracts (the "Assumed Obligations"):

                  (a) The Store License Contracts  described on Schedule 1.1(a),
excluding  the  Seller's  contractual  rights and  obligations  to  operate  the
Footwear Departments in the Closeout Stores;

                  (b) The Purchase Orders described on Schedule 1.1(e);

                  (c)  The  Other  Contracts   described  on  Schedule   1.1(f);

                  (d) the Intellectual  Property Licenses  described on Schedule
1.1(h); and

                  (e) The Personal Property Leases described on Schedule 1.1(j).


         3.  PURCHASE PRICE.

         3.1.  Purchase  Price.  The purchase price for the Acquired Assets (the
"Purchase  Price")  shall be equal to the amount  calculated  as follows  (using
capitalized terms defined in Section 3.4):

                  (a) Wholesale Value of Inventory,  plus (b) Fixed Asset Value,
minus (c) Purchase Price Adjustment, and minus (d) Inventory Aging Adjustment.

         The  parties  currently  estimate  that  the  Purchase  Price  will  be
Fifty-Seven Million,  Seven Hundred Seventy-One Thousand Dollars  ($57,771,000),
based upon the assumptions and calculations set forth on Schedule 3.1.

         3.2.  Estimated  Purchase  Price. At least three and not more than five
days prior to the scheduled  Closing  Date,  the Seller shall deliver to Buyer a
good faith estimate,  prepared and certified by its Chief Financial Officer (the
"Seller's  Estimate"),  of the  Wholesale  Value of  Inventory  (which  shall be
calculated net of shrinkage for purposes of determining  the Estimated  Purchase
Price but not in determining  the actual  Purchase  Price),  the Inventory Aging
Adjustment,  and the  estimated  Purchase  Price,  based  on the  foregoing  two
estimates  and the  formula set forth in Section  3.1 (the  "Estimated  Purchase
Price"), together with a copy of the inventory records supporting such estimate.
The  Seller's  Estimate  shall be  computed  based on the  formula  set forth in
Section  3.1 and the  definitions  set forth in  Section  3.4,  but in all other
respects in a manner consistent with past practices of the Seller.

         3.3.  Payments at the Closing.  At the Closing,  the Buyer shall pay to
the Seller,  by wire transfer into an account or accounts  designated in writing
by J. Baker, that portion of the Purchase Price (the "Initial Payment") which is
equal to the Estimated  Purchase Price minus Six Million  Dollars  ($6,000,000),
and shall pay Six Million  Dollars  ($6,000,000)  (the  "Escrow  Payment")  into
escrow in accordance with Section 3.8.

         3.4.  Definitions.

         (a) The  term  "Wholesale  Value  of  Inventory"  means  the  aggregate
Inventory Retail Value of the Inventory on the Closing Date, multiplied by 49.3%
(the "Cost Complement").

         (b) The term  "Inventory  Retail Value" for any item of Inventory means
the  retail  price  (excluding  point-of-sale  markdowns)  which  the  Seller is
charging to consumers  for that item of  Inventory at the time of the  Inventory
Count, based on the Seller's retail price file maintained in the ordinary course
of business consistent with past practices,  which price file is attached hereto
as Schedule 3.4 and which  schedule  shall be updated as close to the  Effective
Time as practical.

         (c)  The  term  "Fixed  Asset  Value"  means  Eleven  Million   Dollars
($11,000,000).

         (d) The term  "Purchase  Price  Adjustment"  means One Million  Dollars
($1,000,000).

         (e) The term "Inventory Aging Adjustment" means an amount calculated as
follows:

                  (i) When the Inventory Count is taken,  Inventory will be aged
in the categories set forth below,  and each such  "Inventory  Category" will be
assigned a "Retail Realization Percentage" as set forth below:

<TABLE>
<CAPTION>

<S>                         <C>                        <C>                              <C>
  Inventory Category        Last Receipt Date          Last Receipt Date                Retail Realization
                            Core/Budget Stores         Better/Moderate Stores           Percentage
  ------------------------- -------------------------- -------------------------------- ----------------------------

  Current/Future Seasons    On or after 12/1/00        On or after 11/1/00              100%

  Aged One Season           6/1/00 through 11/30/00    6/1/00 through 10/31/00          50%

  Aged Two Seasons          12/1/99 through 5/31/00    SCOA on order received from      30%
                                                       2/29/00 through 5/31/00

  Aged Three Seasons        6/1/99 through 11/30/99    N/A                              20%

  Aged more than Three      Received prior to 6/1/99   Prior to 2/29/00                 0% for Core/Budget; 10%
  Seasons                                                                               for Better/Moderate

</TABLE>

                  If the  number  of  Stores  scheduled  to be  operated  by any
Licensor  identified  on Schedule  3.4(i)  decreases by more than 20% during the
period (the  "Interim  Period")  from the date hereof  through the Closing Date,
when  compared with the number of Stores  actually  operated by that Licensor on
the date  hereof,  then the Buyer shall have the right  (which shall be its sole
remedy hereunder for such event), exercisable by written notice delivered to the
Seller prior to the Closing,  and in any event no less than seven days after the
Seller notifies the Buyer in writing that there will be such a 20% decrease,  to
elect that all stores of such Licensor  which are scheduled to be closed but are
still operating on the Closing Date shall be deemed  Closeout Stores  hereunder.
If such an  election  is  made  by the  Buyer,  the  parties  shall  agree  upon
reasonable  mechanisms  to  accomplish  that  change,  including  proportionally
adjusting the Inventory  Target to reflect the elimination  from  "Inventory" of
the  footwear  in the Stores of that  Licensor  which are to be deemed  Closeout
Stores.  (As used  herein,  the number of Stores  scheduled  to be operated by a
Licensor on a given date are those  Stores  actually  operated by the  Licensor,
less the number of Stores the Licensor has publicly announced it will close.)

                  (ii) Within each Inventory Category, the "Unrealized Inventory
Value" equals (ww) the aggregate Inventory Retail Value of the Inventory in that
Category on the Closing Date, minus (xx) the aggregate Inventory Retail Value of
the  Inventory  in that  Category on the Closing Date  multiplied  by the Retail
Realization Percentage for that Category.

                  (iii) The "Inventory Aging Adjustment" is determined by adding
together the Unrealized  Inventory Value for all Categories and multiplying that
sum by 40.5%.

         (f) The term "Last  Receipt  Date" means the last date the  merchandise
has actually been received at the Canton Distribution Facility.

         3.5.  Inventory Count.

         (a) The Buyer and Seller  shall cause to be taken a physical  inventory
count by stock keeping unit ("SKU") of all Inventory held by the Buyer as of the
Effective Time (the  "Inventory  Count").  The Inventory Count shall be taken by
RGIS  Inventory  Services  ("RGIS"),  or if RGIS is unable  to so  serve,  by an
independent  inventory  service  designated  jointly by the Seller and the Buyer
(the "Inventory Service"). The Seller shall pay the entire cost of the Inventory
Service.  The instructions to be delivered to the Inventory Service with respect
to the conduct of the Inventory Count shall be mutually agreed upon by the Buyer
and the Seller and shall be  delivered to the  Inventory  Service as promptly as
possible following execution of this Agreement; provided, that the Buyer and the
Seller shall each act reasonably in reaching an agreement on such  instructions.
The parties currently contemplate that the Inventory Count shall be accomplished
by physical counts taken at each of the Stores and at the Distribution  Facility
over a four week period  beginning  approximately  two weeks  before the Closing
Date and ending  approximately  two weeks  after the Closing  Date.  The parties
currently  contemplate  that the physical  counts will then be rolled forward or
backward,  as the case may be, based on Gross Rings, as hereinafter  defined. In
the event that the Inventory  Count is conducted at any Store location on a date
that is before the Closing Date,  then for the period from the completion of the
Inventory  Count at such Store location until the Closing Date, the Seller shall
keep a count of units sold  multiplied  by the  Inventory  Retail Value  ("Gross
Rings").  All such reports shall be made available by the Seller to the Buyer on
a daily basis.  In the event that the Inventory  Count is conducted at any Store
location on a date that is after the Closing Date,  then for the period from the
Closing Date to the  completion of the Inventory  Count at such Store  location,
the Buyer (or the Seller on the  Buyer's  behalf if such is called for under the
Transition  Services  Agreement) shall keep a count of the Gross Rings. All such
reports shall be made available by the Buyer to the Seller on a daily basis.

         (b) The Inventory Service shall be additionally instructed by the Buyer
and the  Seller to  prepare  and  deliver  to the  Buyer and the  Seller a final
certified report of Inventory Count immediately upon completion of the Inventory
Count,  and in no event  later than the  earlier of (i) 30  calendar  days after
Closing,  or (ii)  seven  days  after  the  Inventory  Count of the last  Store.
Promptly (and in no event later than seven calendar  days)  following the day on
which the Inventory  Service shall have  delivered the final report of Inventory
Count to Sellers and Buyer, Sellers and Buyer shall jointly calculate and agree,
each acting reasonably and in good faith, an actual Wholesale Value of Inventory
and Inventory Aging  Adjustment as of the Closing Date based upon the principles
set forth in  Section  3.1(a)  above and the  procedures  described  in  Section
3.5(a).  If the Buyer and the Seller are unable to reach an agreement  regarding
the Wholesale Value of Inventory and Inventory  Aging  Adjustment on or prior to
14 calendar days following the delivery of the Inventory  Count by the Inventory
Service, on the next Business Day thereafter the disagreement shall be presented
to a leading  independent  accounting firm to be mutually  selected by the Buyer
and the Seller.  Such  accounting  firm shall be  instructed to render a written
decision as to the Wholesale Value of Inventory and Inventory  Aging  Adjustment
within 30 calendar days thereafter, and such decision shall be final and binding
upon each of the parties.  The fees,  costs and expenses  incurred in connection
therewith shall be shared in equal amounts by the Buyer and the Seller. The date
on which the Buyer and the  Seller  jointly  agree upon the  Wholesale  Value of
Inventory and Inventory Aging  Adjustment,  or the date on which the independent
accounting firm renders its written  decision with respect to Wholesale Value of
Inventory and Inventory Aging Adjustment is the "Determination Date" hereunder.

         3.6. Final  Calculation of Purchase Price.  Following the Determination
Date,  if the Initial  Payment is less than the Purchase  Price as determined on
the Determination Date (the "Actual Purchase Price"),  the Buyer will pay to the
Seller an amount in cash equal to the difference between the Initial Payment and
the Actual Purchase Price. If the Actual Purchase Price is less than the Initial
Payment,  the  Seller  will pay to the  Buyer  an  amount  in cash  equal to the
difference  between the Initial Payment and the Actual Purchase Price.  Payments
required to be made by the Buyer to the Seller  under this  Section 3.6 shall be
made first from the Escrow and then, if there is a  deficiency,  from the Buyer,
by wire transfer into the account or accounts  designated in writing by J. Baker
pursuant to Section  3.3,  and in the same  proportions  as the  payments  under
Section 3.3, or otherwise as J. Baker shall have notified Footstar in writing on
or before the Determination  Date. Payments required to be made by the Seller to
the Buyer  under this  Section 3.6 shall be made first from the Escrow and then,
if there is a deficiency,  from the Seller, by wire transfer into the account or
accounts  designated  in  writing  by  Footstar  to J.  Baker on or  before  the
Determination  Date. All payments owing under this Section 3.6 shall be made not
later  than  the  close  of  business  on the  fourth  Business  Day  after  the
Determination  Date. If any such  payments are not timely made,  the amounts due
shall be paid with  interest  from the Closing  Date  through the payment  date,
calculated at a rate per annum (based on a 365 day year and the actual number of
days elapsed)  equal to the rate  announced by Fleet National Bank as its "Prime
or Base Rate" (the "Prime  Rate") plus two percent  (2%). To the extent that any
interest has accrued  under the Escrow,  the parties  shall be entitled to a pro
rata distribution  thereof in accordance with their respective ultimate interest
in the Escrow.

         3.7.  Allocation.

         (a) Within 90 days after the Closing  Date,  the Buyer shall provide to
the Seller copies of IRS Form 8594 and any required exhibits thereto (the "Asset
Acquisition  Statement")  with the Buyer's  proposed  allocation of the Purchase
Price. Within 30 days after the receipt of the Asset Acquisition Statement,  the
Seller shall propose to the Buyer any changes to the Asset Acquisition Statement
(and in the event no such  changes are  proposed in writing to the Buyer  within
that time period,  the Seller  shall be deemed to have agreed to, and  accepted,
the Asset  Acquisition  Statement).  The Buyer and the Seller shall  endeavor in
good faith to resolve  any  differences  with  respect to the Asset  Acquisition
Statement  promptly after the Buyer's receipt of any written notice of objection
from the Seller.

         (b)  Subject  to the  provisions  of the  following  sentence  of  this
paragraph  (b), the Purchase  Price shall be  allocated in  accordance  with the
Asset  Acquisition  Statement  provided  by the Buyer to the Seller  pursuant to
paragraph (a) above,  and subject to the requirements of applicable Tax law, all
Tax Returns  filed by the Buyer and the Seller  shall be  prepared  consistently
with such  allocation.  If the Seller  withholds  its consent to the  allocation
reflected in the Asset  Allocation  Statement,  and the Buyer and the Seller are
unable,  within 15 days  after the  Buyer's  receipt  of any  written  notice of
objection from the Seller,  to resolve their  differences  with respect to those
objections,  then the Buyer and the Seller shall submit all  remaining  disputed
matters for final and conclusive determination to an independent accounting firm
of recognized national standing (the "Allocation Arbiter") selected by the Buyer
and the Seller,  which firm shall not be the regular  accounting  firm of either
the Buyer or the Seller, and the cost of which shall be split evenly between the
buyer and the Seller.  The  Allocation  Arbiter  shall be directed to  determine
(based  solely  on  presentations  by  the  Seller  and  the  Buyer  and  not by
independent review) only those matters in dispute and to render a written report
as to the disputed matters and the resulting allocation of Purchase Price, which
report shall be conclusive and binding upon the parties.  The Allocation Arbiter
shall be  instructed  to make its  determination  and render its written  report
promptly,  but not  later  than 15 days  after  its  acceptance  of  appointment
hereunder.  The Buyer and the Seller shall,  subject to the  requirements of any
applicable  Tax law or  election,  file  all Tax  Returns  consistent  with  the
allocation provided in the Asset Acquisition  Statement,  or if applicable,  the
determination of the Allocation Arbiter.

         3.8. Escrow. At the Closing, the Buyer shall deposit the Escrow Payment
with  Goodwin,  Procter & Hoar LLP,  or another  law firm or bank upon which the
Seller and the Buyer mutually agree (the "Escrow  Agent") to be held and applied
by the Escrow Agent in  accordance  with the  provisions  of an  agreement  (the
"Escrow  Agreement")  in a form and substance  which shall be agreed upon by the
Buyer,  the Seller and the Escrow  Agent,  and which will provide for the Escrow
Agent to hold the  Escrow  until the  Actual  Purchase  Price  has been  finally
determined and to apply the Escrow as set forth herein.


         4.  CLOSING.

         4.1.  Time and  Place.  The  closing of the  transactions  contemplated
hereby (the  "Closing")  shall take place on February 3, 2001 or such other date
as shall be agreed upon by the Seller and the Buyer,  subject to satisfaction or
waiver of the  conditions  precedent  in  Sections  8 and 9  hereof.  The day of
Closing is called the "Closing Date." The Closing shall be held at the executive
offices of the Buyer in Mahwah,  New Jersey.  The Closing shall not be deemed to
have occurred until all actions necessary to complete the Closing have occurred.
The Closing  shall be deemed to have  occurred  at 12:01:01  a.m. on the Closing
Date (the "Effective  Time"). If the Closing Date falls on a weekend or holiday,
then the  parties  shall  close in escrow on the  preceding  business  day,  and
release  escrowed  funds on the  following  business  day, with interest on such
funds going to the Seller.

         4.2. Transactions and Deliveries at Closing. At the Closing, subject to
the satisfaction or waiver of each of the conditions specified in Sections 8 and
9:

                  (a) Asset  Transfer  Documents.  The Seller shall duly execute
and deliver to the Buyer or its nominee or nominees such bills of sale and other
instruments  of assignment  and transfer with respect to the Acquired  Assets as
the Buyer may  reasonably  request and as may be  necessary to vest in the Buyer
good title to all of the Acquired  Assets (the "Asset Transfer  Documents"),  in
each case subject to no Encumbrances (as hereinafter defined).

                  (b) Release of  Encumbrances.  The Seller shall deliver to the
Buyer lien discharges from all holders of liens on any Acquired Assets, or other
customary  and usual  evidence  reasonably  satisfactory  to the Buyer  that the
Acquired  Assets are being sold,  transferred  or assigned to the Buyer,  as the
case may be, free and clear of all security interests,  liens, claims,  charges,
options, mortgages, debts, leases (or subleases),  conditional sales agreements,
title retention  agreements,  encumbrances of any kind,  material  defects as to
title or restrictions against the transfer or assignment thereof  (collectively,
"Encumbrances"),  other than  restrictions  on the  transfer of Acquired  Assets
contained  within  any  Store  License   Contract,   Personal   Property  Lease,
Intellectual Property License or Other Contract.

                  (c)  Assumption  Documents.  The Buyer  shall  deliver  to the
Seller such  instruments of assumption as the Seller may reasonably  request and
as may be  necessary  in order for the Buyer to assume the  Assumed  Obligations
(the "Assumption Documents").

                  (d)  Initial  Payment.  The Buyer  shall  deliver  the Initial
Payment to the Seller or to such other  entity or entities  as the Seller  shall
designate to the Buyer.

                  (e) Escrow.  The Buyer,  the Seller and the Escrow Agent shall
execute and deliver the Escrow Agreement, and the Buyer shall deliver the Escrow
Payment to the Escrow Agent.

                  (f) Transition  Services  Agreement.  The Seller and the Buyer
shall  execute and deliver a  transition  services  agreement  (the  "Transition
Services  Agreement") covering those matters and including those terms set forth
on  Schedule  4.2,  and such other  terms and  conditions  as are  customary  in
transactions of this nature or that the parties may otherwise agree upon.

                  (g) Technology  License.  The Seller shall execute and deliver
to the  Buyer  a  non-exclusive,  perpetual,  worldwide,  royalty-free,  license
agreement  (the  "Software  License")  which  will  authorize  the Buyer and its
Affiliates to use the Seller's  proprietary  ticketing software and the Seller's
custom software for capturing  sales from  Licensors,  for flash sales reporting
and for  connecting  to Licensors for price and item master  downloads,  and the
Seller shall  provide the Buyer with a copy of the source code  relating to this
licensed software.

                  (h)  Seller's  Certificate.  The  Seller  shall  cause  to  be
delivered to the Buyer the certificate and required by Section 8.4 hereof.

                  (i) Opinion of Seller's Counsel.  The Seller shall cause to be
delivered to the Buyer the written opinion of the Seller's  counsel  required by
Section 8.5 hereof.

                  (j)  Consents of Third  Parties.  The Seller shall cause to be
delivered to the Buyer the consents required by Section 8.6 hereof.

                  (k) Buyer's Certificate. The Buyer shall cause to be delivered
to the Seller the certificate and required by Section 9.3 hereof.

                  (l)  Opinion of Buyer's  Counsel.  The Buyer shall cause to be
delivered to the Seller the written opinion of the Buyer's  counsel  required by
Section 9.4 hereof.

                  (m) Other  Documents.  There shall be  delivered to the Seller
and the Buyer  such  other  documents  and  instruments  as are  provided  to be
delivered under Sections 8 and 9 hereof.

         4.3.  Proration of Charges and Expenses; Credit for Employee Matters.

                  (a)  Non-Employee  Credits  and  Proration.  At  Closing,  the
parties will calculate,  settle and prorate between them any prepayments made or
amounts  owed in  conjunction  with  any of the  Store  License  Contracts,  the
Purchase Orders, the Intellectual Property Licenses, the Other Contracts and the
Personal Property Leases (except as hereinafter  provided),  utility charges (if
any) and other operating expenses. The parties will not prorate between them any
prepayments which are among the Transferred  Prepaid Expenses listed on Schedule
1.1(g).  In addition,  at Closing the Buyer shall  reimburse  the Seller for the
Remaining  Cash (if any). At Closing,  the Buyer shall receive a credit  against
the Purchase Price for the amount of outstanding merchandise credit vouchers (in
whatever  form) issued to customers of the Footwear  Departments  other than the
Footwear   Departments  in  the  Closeout   Stores  (the   "Purchased   Footwear
Departments") and outstanding as of the Closing Date; provided,  that if (i) the
form of merchandise credit voucher (such as a layaway or a gift certificate) was
issued by a Licensor, (ii) the Seller did not receive any consideration therefor
from the Licensor,  and (iii) the Seller (or the Buyer after the Closing)  would
be  entitled  to receive  the  consideration  therefor  from the  Licensor  upon
redemption  of the voucher for  merchandise,  then the Buyer shall not receive a
credit  against the  Purchase  Price for the amount of that  merchandise  credit
voucher;  and provided,  further,  that if the Seller receives any consideration
from a  Licensor  for a  layaway  item,  then the Buyer  shall  receive a credit
against the Purchase  Price equal to the amount of such  consideration,  and the
layaway item shall be deemed  "Inventory"  hereunder which shall be purchased by
the Buyer at the Closing.  At Closing,  the Buyer shall also receive a credit of
$150,000 against the Purchase Price for estimated future merchandise returns.

                  (b)  Employee-Related  Credits and Proration.  At Closing, the
Buyer shall receive a credit  against the Purchase  Price for the dollar amounts
the  Seller  would  have  been  obligated  to pay in  severance  to those of its
employees whose  employment is terminated by the Seller as of the Effective Time
and who are employed by the Buyer or its  Affiliates as of the  Effective  Time,
had the  employment  of those  Persons been so  terminated by the Seller and had
they not  thereafter  been employed by the Buyer or its  Affiliates or any other
employer. At Closing, the Buyer shall also receive a credit against the Purchase
Price for any  amount  the Buyer has  agreed in writing to pay in respect of any
obligation or liability arising in connection with the employment or termination
of  employment  of any Persons in the  Business  on or before the Closing  Date,
(such as but not limited to  liabilities  for accrued  vacation or bonuses which
the  Buyer may agree to assume in  accordance  with  Section  12.2(b)).  Nothing
herein  shall  obligate  the Buyer to credit any former  employee  of the Seller
hired  by Buyer  or one of its  affiliates  (whether  at the  Effective  Time or
thereafter)  (each a "Former JBI Employee") with employment  service beyond that
which  would have  otherwise  been  required  under any  employee  benefit  plan
affiliated with the Buyer or any employment  policy of the Buyer ("Buyer Plan or
Policy").  Notwithstanding  the  above,  should  the  Buyer  choose  in its sole
discretion to offer any Former JBI Employee  years of employment  service beyond
that which it would have otherwise been required under any Buyer Plan or Policy,
the  Seller  shall  have no  obligation  to:  (1) pay any sum to the  Buyer,  or
contribute to any of the Buyer's  plans,  on behalf of, or with respect to, such
Former JBI Employee as a result  thereof or (2)  reimburse  the Buyer for any of
its  payments or  contributions  made to, on behalf of, or with  respect to such
Former JBI Employee under any such Buyer Plan or Policy as a result thereof.

                  (c)  Procedure  for  Credits  and  Proration.  If any  amounts
pursuant to this Section 4.3 are not known as of the Closing  Date,  the parties
shall reasonably estimate such amounts,  and as soon as the actual amount(s) can
be computed and  determined,  there shall be an appropriate  settlement  thereof
between  the Seller and the Buyer so that the Seller  will pay for its pro rata,
proportionate  share of such charges up to and including the Effective  Time and
the Buyer will pay for its pro rata  proportionate  share of such amounts  after
the  Effective  Time.  Any  subsequent  payments to be made after Closing by one
party to the other  hereunder shall be promptly made as soon as such amounts due
are determined,  but in no event later than ten days after the  determination of
any such  amounts by the parties.  The amount of any items to be prorated  which
are  payable in arrears  and have not been paid by the Seller on or prior to the
Closing  Date shall be credited to the Buyer.  Schedule  4.3 sets forth  certain
matters upon which the Buyer and the Seller have agreed  regarding the method of
determining and calculating the prorations called for by this Section 4.3.


         5.  REPRESENTATIONS  AND WARRANTIES OF THE SELLER.  Each of the Selling
Entities jointly and severally represents and warrants to the Buyer as follows:

         5.1. Organization; Authority. Each Selling Entity is a corporation duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  set forth next to its name on Schedule 5.1. Each Selling Entity is
duly   qualified  and  in  good  standing  as  a  foreign   corporation  in  all
jurisdictions  in which the nature of the  activities  conducted by the Business
makes such qualification  necessary,  except for those  jurisdictions  where the
failure  to be so  qualified  will not have a  material  adverse  effect  on the
Business.  Each Selling Entity has all requisite  power and authority to own and
hold the  Acquired  Assets owned or held by it, to carry on the Business as such
business is now  conducted  and to execute and deliver  this  Agreement  and the
other  documents,  instruments  and  agreements  contemplated  hereby or thereby
(collectively,  the "Transaction Documents") to which it is a party and to carry
out  all  actions  required  of it  pursuant  to the  terms  of the  Transaction
Documents.

         5.2.  Corporate  Approval;  Binding  Effect.  Each  Selling  Entity has
obtained all necessary  authorizations and approvals from its Board of Directors
and  shareholders  required for the  execution  and delivery of the  Transaction
Documents  to  which  it is a party  and the  consummation  of the  transactions
contemplated  hereby and thereby.  No consent or approval of the shareholders of
J. Baker is required for the  execution  and  delivery of this  Agreement or any
Transaction  Documents or for the consummation of the transactions  contemplated
hereby and  thereby.  Each of the  Transaction  Documents  to which any  Selling
Entity is a party has been duly  executed and  delivered by that Selling  Entity
and constitutes the legal,  valid and binding  obligation of that Selling Entity
enforceable   against  it  in  accordance  with  its  terms,   except  that  the
enforceability   thereof   may  be   limited  by  any   applicable   bankruptcy,
reorganization,  insolvency or other laws affecting  creditors' rights generally
or by general principles of equity.

         5.3.  Non-Contravention.  The  execution  and  delivery by each Selling
Entity of the Transaction  Documents to which it is a party and the consummation
by that Selling Entity of the transactions  contemplated hereby and thereby will
not  (a)  violate  or  conflict  with  any  provision  of  the   Certificate  of
Incorporation,  Articles of Incorporation, By-Laws or other governing documents,
each as amended to date (the "Governing Documents"),  of that Selling Entity; or
(b) constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any  Encumbrance  upon
any property of that Selling Entity (including,  without limitation,  any of the
Acquired  Assets)  pursuant  to  (i)  any  agreement,   contract,  indenture  or
instrument  to which that  Selling  Entity is a party or by which  that  Selling
Entity  or any of its  properties  (including,  without  limitation,  any of the
Acquired  Assets)  is bound  or to  which  that  Selling  Entity  or any of such
properties is subject, or (ii) any statute, judgment, decree, code, writ, award,
order, regulation or rule of any court or governmental or regulatory authority.

         5.4. Governmental  Consents;  Transferability of Licenses,  Etc. Except
for filings  and  submissions  required  under the  Hart-Scott-Rodino  Antitrust
Improvements  Act  of  1976,  as  amended  (the  "Hart-Scott-Rodino   Act")  and
expiration or termination  without  objection of the  applicable  waiting period
thereunder,  and except as set forth on Schedule  5.4,  no consent,  approval or
authorization  of, or registration,  declaration,  qualification or filing with,
any governmental  agency or authority is required for the execution and delivery
of this  Agreement  by any  Selling  Entity or the  consummation  by any Selling
Entity of the transactions  contemplated  hereby.  The Selling Entities have and
maintain all licenses,  permits and other  authorizations  from all governmental
authorities  as are  reasonably  necessary or  desirable  for the conduct of the
Business or in connection with the ownership or use of the Acquired Assets.

         5.5.  Financial  Statements.  The Seller has delivered to the Buyer the
income and loss statements of the Business on a per Licensor basis for the eight
month period ended  September 30, 2000, and the balance sheet of the Business as
of July 29, 2000,  each attached as Schedule 5.5 (the  "Financial  Statements").
The Financial Statements present fairly the financial condition of the Seller as
of the dates of such  statements  and the results of operation for such periods,
and  have  been  prepared  in  accordance  with  generally  accepted  accounting
principles ("GAAP") applied on a consistent basis throughout the periods covered
thereby, subject to the lack of footnotes and other presentation items.

         5.6. Absence of Certain  Changes.  Except as set forth on Schedule 5.6,
or, with respect to periods after the date hereof and prior to the Closing Date,
as permitted by Section 7.2,  since July 29, 2000, the Seller has carried on the
Business only in the ordinary course,  consistent with past practices including,
without limitation,  with respect to pricing of products,  the mix and amount of
inventory and (subject to changes in advertising practices permitted pursuant to
Section  7.2  hereof)  advertising  practices,  and  there  has not been (a) any
particular  change  in the  assets,  liabilities  or  sales  of the  Seller,  in
connection with the Business, or in its relationships with Licensors, other than
changes  which were (i) either in the ordinary  course of business or related to
the United States economy in general,  general market conditions of the footwear
business, or market prices for products sold by the Business, and (ii) either in
any  case  or in the  aggregate,  materially  adverse;  (b) any  acquisition  or
disposition  by the Seller of any  material  asset or  property  relating to the
Business  other  than in the  ordinary  course  of  business;  (c)  any  damage,
destruction or loss, whether or not covered by insurance,  materially  adversely
affecting the Business or the Acquired  Assets (other than  Inventory);  (d) any
increase in the  compensation,  pension or other  benefits  payable or to become
payable by the Seller to any of its officers or employees,  in  connection  with
the Business,  or any bonus payments or arrangements  made to or with any of the
Selling Entities (other than pursuant to pre-existing contractual  obligations),
provided  that  non-material  increases,  bonus  payments  or  arrangements  not
involving  Specified  Field  Employees  (as  hereinafter  defined)  need  not be
disclosed; (e) any forgiveness or cancellation of any corporate debt or claim by
the  Seller,  in  connection  with the  Business,  or any waiver of any right of
material value other than  compromises of accounts  receivable or payable in the
ordinary course of business; (f) any entry by the Seller, in connection with the
Business, into any transaction other than in the ordinary course of business; or
(g) any change in any method of accounting or accounting  practice by the Seller
except for any such change required by reason of a concurrent change in GAAP.

         5.7.  Litigation,  Etc. Except as set forth on Schedule 5.7, no action,
suit,  proceeding or investigation is pending or, to the actual knowledge of any
Selling Entity, threatened,  relating to or affecting any of the Acquired Assets
or the Business, or which questions the validity of the Transaction Documents or
challenges any of the transactions  contemplated hereby or thereby,  nor, to the
best  knowledge of any Selling  Entity,  is there any basis for any such action,
suit, proceeding or investigation.

         5.8.  Conformity  with Law.  Except as set forth on Schedule  5.8, each
Selling Entity has complied with, and is in compliance  with all Laws applicable
to the Business or any of the Acquired Assets  (including,  without  limitation,
any labor,  environmental,  occupational health,  zoning, customs or other Law).
Except  as set forth in  Schedule  5.8,  to the best  knowledge  of any  Selling
Entity,  no Selling  Entity has  committed,  been  charged  with,  or been under
investigation  with  respect  to, nor does there  exist,  any  violation  of any
provision of any Law in respect of the  Business or any of the Acquired  Assets.
Except  as set  forth in  Schedule  5.8,  no  Selling  Entity  is a party to any
outstanding orders, judgments,  injunctions,  awards or decrees which affect the
Acquired Assets or the operation of the Business. As used in this Agreement, the
capitalized  terms  "Law" and "Laws"  means any and all laws,  statutes,  rules,
regulations,  ordinances, judicial or administrative tribunal orders, judgments,
writs,  injunctions,  decrees or similar commands or  pronouncements  having the
effect of law of the United  States,  any  foreign  country or any  domestic  or
foreign  state,  county,  city or other  political  subdivision or of any court,
tribunal,   arbitrator,   authority,  agency,  commission,   official  or  other
instrumentality  of the United  States,  any foreign  country or any domestic or
foreign state, county, city or other political subdivision.

         5.9.  Title to Acquired  Assets.  The Seller is the lawful owner of and
has good title to all of the  Acquired  Assets,  and has the full right to sell,
convey,  transfer,  assign and deliver the Acquired Assets,  without the need to
obtain the consent or  approval of any third party other than the third  parties
listed on Schedule 5.9. Except for Encumbrances  generally described on Schedule
5.9, all of the Acquired Assets are entirely free and clear of any Encumbrances.

         5.10. Intellectual Property.  Schedule 1.1(h) sets forth a complete and
accurate list of all  Intellectual  Property used by the Seller primarily in the
Business,  specifying  as to  each,  as  applicable:  (i)  the  nature  of  such
Intellectual  Property;  (ii) the owner of such Intellectual Property; and (iii)
the respective  registration or application numbers.  Subject to the information
listed on Schedule 1.1(h), the Seller owns such Intellectual Property or has the
right to use such  Intellectual  Property  pursuant  to a license  agreement  or
permission  which is in full  force and  effect.  To the best  knowledge  of the
Selling  Entities,  no  charge,  complaint,  claim or  notice  of  interference,
infringement,  misappropriation,  or violation has been asserted, or is pending,
by any individual, corporation, association, partnership, organization, business
or other type of entity (each, a "Person") regarding the use of any Intellectual
Property or  challenging  or questioning  the validity or  effectiveness  of the
Intellectual Property Licenses or any other license or agreement relating to the
Intellectual  Property.  The Seller's use of the Intellectual  Property does not
interfere with,  infringe upon,  misappropriate  or otherwise  conflict with the
rights of any other Person.

         5.11. Furniture and Fixtures;  Personal Property.  Schedule 1.1(b) sets
forth a general list of all of the Furniture and Fixtures used  primarily in the
Business  (but  limited to those items used in or located in the  Stores)  other
than  (a)  items  acquired  by J.  Baker  or  any  of  its  direct  or  indirect
subsidiaries  in connection with the Business in the ordinary course of business
during  the  Interim  Period,  and (b) items  disposed  of by the  Seller in the
ordinary  course of business during the Interim  Period.  The Personal  Property
Leases  listed on Schedule  1.1(j)  include all leases by J. Baker or any of its
direct or indirect  subsidiaries of any item of personal property used primarily
in the  Business.  All the  Purchased  Footwear  Departments  are  equipped  and
complete  with all fixtures,  leasehold  improvements,  furnishings,  machinery,
equipment,  signs  and  other  tangible  personal  property  necessary  for  the
operation of the Purchased Footwear  Departments in accordance with the Seller's
customary  business  practices.  All Furniture and Fixture items  required to be
repaired and maintained by the Seller pursuant to the terms of any Store License
Contract are in the condition  required  under such Store  License  Contract and
shall be in the same  condition on the Closing Date subject to ordinary wear and
tear.

         5.12.  Inventory  Records.  The Seller's  Inventory records  accurately
reflect retail price and seasonality of the Inventory identified therein.

         5.13.   Insurance.   The   policies   of  fire,   liability,   worker's
compensation,  property  and casualty  and other  insurance  owned or held by J.
Baker or any of its  direct or  indirect  subsidiaries  in  connection  with the
Business  are  maintained  with  financially   sound  and  reputable   insurance
companies,  funds or underwriters  and are of the kinds and cover such risks and
are in such amounts and with such  deductibles  and exclusions as are consistent
with the Seller's  past  practice.  All such  policies (a) are in full force and
effect,  (b) are  sufficient  for  compliance by the Seller with all  applicable
requirements  of Law and all  agreements  to  which  the  Seller  is a party  in
connection  with the  Business,  and (c)  provide  that they will remain in full
force and  effect  through  the  Closing  Date.  Neither J. Baker nor any of its
direct or indirect  subsidiaries  is in default with respect to its  obligations
under  any of  such  insurance  policies  nor  has  any  of  them  received  any
notification of cancellation of any such insurance policies.

         5.14.  Material  Contracts.  Schedule  5.14 sets forth a  complete  and
accurate  list of all contracts  relating  primarily to the Business to which J.
Baker or any of its direct or indirect  subsidiaries  is a party or by which any
of them is bound or to which the  Business or any  Selling  Entity or any of the
Acquired  Assets is subject,  except (a) contracts  entered into in the ordinary
course of business after the date hereof and prior to the Closing, which will be
identified  to the  Buyer  in  writing  prior  to  the  Closing,  (b)  contracts
terminable by the Seller upon 30 days' notice or less without the payment of any
termination fee or penalty,  and (c) contracts listed in other Schedules hereto.
As used in this Section  5.14,  the word  "contract"  means and  includes  every
written  agreement  or  understanding  of any kind  whatsoever  which is legally
enforceable by or against J. Baker or any of its direct or indirect subsidiaries
relating to the  Business  and involves the receipt or payment by any of them of
more than $5,000,  and specifically  includes (a) contracts and other agreements
with any current officer, director,  employee,  consultant or shareholder or any
partnership,  corporation,  joint  venture or any other entity in which any such
Person has an  interest;  (b)  agreements  with any labor  union or  association
representing any employee;  (c) contracts and other agreements for the provision
of services by any Selling Entity in connection with the Business; (d) contracts
and other agreements for the sale of any assets or properties of J. Baker or any
of its direct or indirect  subsidiaries  relating to the Business  other than in
the  ordinary  course  of  business,  or for  the  grant  to any  Person  of any
preferential  rights to purchase any of their assets or  properties  relating to
the Business; (e) joint venture agreements relating to the assets, properties or
business of J. Baker or any of its direct or indirect subsidiaries in connection
with  the  Business  or by or to  which  it or any  assets  or  properties  used
primarily  in the Business  are bound or subject;  or (f) any other  contract or
other  agreement  whether or not made in the ordinary  course of  business.  The
Seller has delivered to the Buyer true,  correct and complete copies of all such
contracts,  together with all modifications and supplements thereto. Each of the
contracts  listed or required to be listed on Schedule  5.14 or any of the other
Schedules hereto (including,  without  limitation,  each Store License Contract,
Other  Contract,  Purchase  Order,  Intellectual  Property  License and Personal
Property  Lease)  (each of the  foregoing is a "Material  Contract")  is in full
force and effect,  no Selling Entity is in breach in any material respect of any
of the  provisions  (other than  insignificant  provisions) of any such Material
Contract (a "default"), nor, to the best knowledge of any Selling Entity, is any
other party to any such Material  Contract in default  thereunder,  nor does any
event or condition  exist which with notice or the passage of time or both would
constitute a default by either party thereunder. Without limiting the foregoing,
each  Selling  Entity  is  in  compliance  with  each  Store  License   Contract
performance  standard  identified on Schedule 5.14(a) which is applicable to it.
Subject to obtaining any necessary consents by the other party or parties to any
Material  Contract  (the  requirement  of any such  consent  being  reflected on
Schedule 5.14), no Material  Contract includes any provision the effect of which
may be to  enlarge  or  accelerate  any  obligations  of the Buyer to be assumed
thereunder or give  additional  rights to any other party thereto or will in any
other way be affected by, or  terminate or lapse by reason of, the  transactions
contemplated by this Agreement.

         5.15. Compensation of and Contracts with Employees.  Schedule 5.15 sets
forth a complete  and  accurate  list of each  employee of the  Business and the
current rate of compensation paid to such employee. Except as listed in Schedule
5,15, no Selling Entity has any written employment  agreement with any currently
active employee,  including any agreement to provide any bonus or benefit to any
such employee of the Business.

         5.16. Employee Benefit Plans.  Schedule 5.16 is a complete and accurate
list of all of Baker's  "employee  pension  benefit plans" as defined in Section
3(2)  of the  Employee  Retirement  Income  Security  Act of  1974,  as  amended
("ERISA"),  "welfare  benefit  plans"  as  defined  in  Section  3(1) of  ERISA,
executive  plans and any other  written  arrangements  or  agreements to provide
employee benefits currently  maintained/provided  and/or contributed to by Baker
including,  but not limited to, insurance  coverage  (including any self-insured
arrangements),  retirement benefits, disability,  workers' compensation,  profit
sharing,  supplemental unemployment,  hospitalization and major medical, dental,
group insurance plans, vacation,  holidays,  severance, sick pay, bonuses, stock
options, stock appreciation or other forms of incentive  compensation,  deferred
compensation or fringe benefit plans applicable to officers,  employees or other
person of the Business  (each a "Benefit  Plan" and  collectively,  the "Benefit
Plans").  The J. Baker 401(k) Plan (the "Seller's ss. 401(k) Plan") has received
a favorable determination letter from the Internal Revenue Service regarding its
qualification  and the Seller knows of no reason for Seller's ss. 401(k) Plan to
lose  such   qualification.   Schedule  5.16  also  identifies  each  and  every
"multiemployer  plan" (within the meaning of ERISA  Section  3(37)) to which the
Seller or any of its ERISA  Affiliates  is  obligated  to  contribute  as of the
Closing Date for any of its  employees  whose  employment  is  terminated by the
Seller  as of the  Effective  Time  and who are  employed  by the  Buyer  or its
Affiliates as of the Effective Time ("Multiemployer Plans").

         With respect to each Multiemployer Plan; (A) neither the Seller nor any
of its ERISA  Affiliates  have  received any notice that any such  Multiemployer
Plan is in reorganization, or that any such Multiemployer Plan is for may become
insolvent;  and (B)  neither  the  Seller nor any of its ERISA  Affiliates  have
received any notice that any such Multiemployer  Plan is in  reorganization,  or
that  increased  contributions  may be  required  to avoid a  reduction  in plan
benefits or the  imposition  of any excise  tax, or that any such  Multiemployer
Plan is or may become  insolvent.  "ERISA  Affiliates" means with respect to the
Seller,  each other trade or business  (whether or not  incorporated)  that is a
member  of the  "controlled  group"  of which  the  Seller  is a member or under
"common control" with the Seller within the meaning of Section 414(b) and (c) of
the Internal  Revenue  Code of 1986,  as amended (the "Code") or Section 4001 of
ERISA.

         5.17. Labor  Relations.  Except as set forth on Schedule 5.17, there is
no charge  pending or, to the best knowledge of any Selling  Entity,  threatened
against  any  Selling  Entity in relation  to the  Business,  alleging  unlawful
discrimination in employment  practices before any court or agency.  There is no
charge of or proceeding with regard to any unfair labor practice, in relation to
the  Business,  against any Selling  Entity  pending  before the National  Labor
Relations Board. There is no labor strike,  dispute,  slow-down or work stoppage
actually  pending or, to the best  knowledge of any Selling  Entity,  threatened
against or involving  the  Business.  To the  knowledge of the Seller,  based on
inquiry of the General  Counsel and the Vice President of Human  Resources of J.
Baker,  except as set forth on Schedule 5.17, no one has  petitioned  within the
last three (3) years, and no one is now petitioning, for union representation of
any employees of any Selling Entity that are employed in the Business. Except as
set forth on Schedule 5.17, no grievance or arbitration  proceeding  arising out
of or under any collective  bargaining  agreement is pending against any Selling
Entity in relation to the  Business  and no claim  therefor  has been  asserted.
Except as described on Schedule  5.17,  none of the employees of the Business is
covered by any collective  bargaining  agreement,  and no collective  bargaining
agreement is currently being  negotiated by any Selling Entity.  Except as fully
described on Schedule 5.17, the Business has not  experienced  any work stoppage
during the last five years.

         5.18. Suppliers.  Schedule 5.18 sets forth the 20 largest suppliers (by
dollar volume) of inventory to the Business  during fiscal year 2000, and the 20
largest  suppliers (by dollar volume) of inventory to the Business during fiscal
year 2001 to date. To the best of Seller's  knowledge,  the relationships of the
Seller with such suppliers are good commercial working relationships and, except
as set forth on  Schedule  5.18,  no  supplier  of  material  importance  to the
Business has  cancelled  or otherwise  terminated,  or  threatened  to cancel or
otherwise to terminate,  its relationship with the Seller or has during the last
twelve (12) months  decreased  materially,  or  threatened  to decrease or limit
materially,  its services,  supplies or materials  for use in the Business.  The
Seller has no knowledge  that any such  supplier  intends to cancel or otherwise
substantially  modify  its  relationship  with the  Seller  with  respect to the
Business or to decrease materially or limit its services,  supplies or materials
to the Seller with respect to the Business.

         5.19.  Taxes; Tax Returns.

                  (a) The Seller has  withheld  and paid all Taxes  required  to
have been  withheld  and paid in  connection  with  amounts paid or owing to any
employee,  independent contractor,  creditor,  stockholder, or other third party
for services performed for, or on behalf of, the Business.

                  (b) There are outstanding no liens for Taxes (other than Taxes
not yet due and payable) upon the Acquired Assets.

                  (c) As used in this Agreement, the term "Tax" or "Taxes" means
any federal, state, local, foreign or other income, profits, capital, franchise,
sales, use, excise, gross receipts, value added, transfer, ad valorem, property,
lease, occupancy,  unemployment insurance, social security,  disability, workers
compensation,   occupational,   withholding,   payroll,  employment,  severance,
production,  windfall profits, estimated,  minimum,  alternative minimum, add-on
minimum,  premium, real and personal property,  import, export, customs, duties,
tariffs or other taxes (including,  without limitation,  any fee, assessment, or
other  charge  in the  nature of or in lieu of any tax),  fees,  assessments  or
charges of any kind  whatsoever,  including  any interest  and any  penalties or
additional amounts with respect thereto.  The term "Tax Return" or "Tax Returns"
means  all  returns  (including,   without  limitation,   information  returns),
declarations, reports, statements, and other documents required to be filed with
respect to Taxes or with any governmental  agency charged with the collection of
any Tax.

         5.20.  Purchase  Orders.  Schedule  1.1(e)  sets forth a  complete  and
accurate list of all Purchase  Orders  outstanding on the date hereof,  and upon
Schedule 1.1(e) being updated in accordance with Section 1.1(e) hereof, Schedule
1.1(e)  will set forth a  complete  and  accurate  list of all  Purchase  Orders
outstanding  immediately  prior to the Closing  Date.  All Purchase  Orders were
entered  into by the Sellers in the ordinary  course of business and  consistent
with past practices.

         5.21.  Environmental  Matters. Baker has never manufactured footwear in
the United States.  Without  limiting the generality of Section 5.8, to the best
knowledge of any Selling  Entity,  no Selling Entity has received any written or
oral  notice,   report  or  other  information   regarding  any  liabilities  or
investigatory,  remedial or corrective obligations, relating to the Business and
arising  under   Environmental   and  Safety   Requirements.   As  used  herein,
"Environmental  and Safety  Requirements"  means all federal,  state,  local and
foreign statutes, regulations,  ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations, all
contractual  obligations  and all common  law,  in each case  concerning  public
health and safety,  worker  health and safety and pollution or protection of the
environment  (including  all those  relating to the presence,  use,  production,
generation,  handling, transport,  treatment,  storage, disposal,  distribution,
labeling, testing, processing,  discharge, release, threatened release, control,
or cleanup of any hazardous substance).

         5.22.  Broker.  No  Selling  Entity  has  retained,  utilized  or  been
represented by any broker,  agent, finder or intermediary in connection with the
negotiation or consummation of the transactions contemplated by this Agreement.


         6.  REPRESENTATIONS  AND WARRANTIES OF THE BUYER.  The Buyer represents
and warrants to each of the Selling Entities as follows:

         6.1.  Organization;   Authority.   The  Buyer  is  a  corporation  duly
organized,  validly  existing and in good standing under the laws of Texas.  The
Buyer  has all  requisite  power  and  authority  to  execute  and  deliver  the
Transaction  Documents  to which  it is a party  and to  carry  out all  actions
required of it pursuant to the terms of the Transaction Documents.

         6.2.  Corporate  Approval;  Binding Effect.  The Buyer has obtained all
necessary   authorizations  and  approvals  from  its  Board  of  Directors  and
shareholders  required  for  the  execution  and  delivery  of  the  Transaction
Documents  to  which  it is a party  and the  consummation  of the  transactions
contemplated hereby and thereby.  Each of the Transaction Documents to which the
Buyer  is a party  has  been  duly  executed  and  delivered  by the  Buyer  and
constitutes  the legal,  valid and binding  obligation of the Buyer  enforceable
against it in accordance with its terms, except that the enforceability  thereof
may be limited by any applicable bankruptcy, reorganization, insolvency or other
Laws affecting creditors' rights generally or by general principles of equity.

         6.3. Non-Contravention.  The execution and delivery by the Buyer of the
Transaction  Documents to which it is a party and the  consummation by the Buyer
of the  transactions  contemplated  hereby and  thereby  will not (a) violate or
conflict  with any  provision of the  Governing  Documents of the Buyer;  or (b)
constitute a violation  of, or be in conflict  with,  or  constitute or create a
default  under,  or result in the  creation or  imposition  of any lien upon any
property of the Buyer  pursuant to (i) any  agreement,  contract,  indenture  or
instrument  to which  the  Buyer is a party or by which  the Buyer or any of its
properties is bound or to which the Buyer or any of such  properties is subject,
or (ii) any statute, judgment, decree, order, regulation or rule of any court or
governmental or regulatory authority.

         6.4.  Governmental  and Third  Party  Consents.  Except for filings and
submissions  required  under  the   Hart-Scott-Rodino   Act  and  expiration  or
termination  without objection of the applicable waiting period thereunder,  and
except as set forth on Schedule 6.4, no consent,  approval or authorization  of,
or  registration,  qualification  or filing  with,  any  governmental  agency or
authority,  or any non-governmental  Person, is required for the consummation by
the Buyer of the transactions contemplated hereby.

         6.5.  Litigation,  Etc. Except as set forth on Schedule 6.5, no action,
suit, proceeding or investigation is pending or, to the best knowledge of Buyer,
threatened,  which  questions  the  validity  of the  Transaction  Documents  or
challenges any of the transactions  contemplated hereby or thereby,  nor, to the
best  knowledge  of  Buyer,  is  there  any  basis  for any such  action,  suit,
proceeding or investigation.

         6.6. Broker.  The Buyer has not retained,  utilized or been represented
by any broker,  agent, finder or intermediary in connection with the negotiation
or consummation of the transactions contemplated by this Agreement.


         7.  CONDUCT OF BUSINESS BY THE SELLER  PENDING  CLOSING.  Each  Selling
Entity covenants and agrees, from and after the date of this Agreement and until
the  Closing,  except as  otherwise  specifically  consented  to or  approved by
Footstar in writing, as follows:

         7.1. Full Access. Each Selling Entity shall afford to the Buyer and its
authorized  representatives  full  access  during  normal  business  hours  upon
reasonable notice to all properties,  books, records, contracts and documents of
the Selling Entity relating to the Business and a full  opportunity to make such
reasonable  investigations  as the Buyer shall desire to make of the Business or
with respect to the Acquired  Assets,  and each Selling  Entity shall furnish or
cause to be furnished to the Buyer and its authorized  representatives  all such
information  with respect to the affairs and businesses of the Business and with
respect to the Acquired Assets as the Buyer may reasonably  request.  The Seller
shall  facilitate  meetings,  as the Buyer may  request,  between  the Buyer and
representatives  of the licensors and others  having  significant  relationships
with the Business.  The Buyer  acknowledges the Seller's policy of not releasing
personnel  files to a third party in the absence of the express  written consent
of the employee.  Accordingly,  the Buyer shall not request access to, or copies
of, such files unless and until such consent has been voluntarily obtained.  The
Seller hereby agrees that it will not object if the Buyer makes the provision of
such consent a condition  to its  willingness  to interview  any employee of the
Seller for a position with the Buyer.

         7.2. Carry on in Regular Course.  Each Selling Entity shall conduct its
business  operations in the Stores in the ordinary  course  consistent with past
practices,  except for taking such steps as may be  necessary or proper to carry
out and consummate their obligations  under this Agreement.  Each Selling Entity
shall  maintain its space within each Store in accordance  with the terms of the
Store  License  Contract  for that Store.  In all other  respects,  each Selling
Entity shall  maintain  the  Acquired  Assets in good  operating  condition  and
repair,  reasonable  wear and tear  excepted,  and make all necessary  renewals,
additions and replacements  thereto,  and shall carry on its business diligently
and  substantially  in the same  manner  as  heretofore  and  shall  not make or
institute any unusual or novel  methods of purchase,  sale,  lease,  management,
accounting or operation.  Notwithstanding anything to the contrary herein, prior
to the  Effective  Time,  the Seller shall be entitled,  in all cases subject to
Article 3 and Section 8.10 hereof:  (i) to sell any inventory from the Purchased
Footwear  Departments  to  liquidators at prices it determines to be in its best
interest,  (ii) to sell any inventory from the Purchased Footwear Departments to
customers  of the  Stores  pursuant  to  promotions  in the  ordinary  course of
business  consistent with past  practices,  and (iii) to sell any inventory from
the  Purchased  Footwear  Departments  to  customers  of the Stores  pursuant to
promotions  outside the  ordinary  course of business,  with the Seller's  prior
consent which shall not unreasonably be withheld.

         7.3.  No  General   Increases.   Except  as  required  by  pre-existing
contractual  obligations,  no Selling  Entity shall grant any general or uniform
increase in the rates of pay of employees of the Business, nor grant any general
or uniform  increase in the  benefits  under any bonus or pension  plan or other
contract or commitment to, for or with any such employees; and no Selling Entity
shall  increase  the  compensation  payable or to become  payable  to  officers,
salaried employees or agents of any Selling Entity or the Business,  or increase
any bonus, insurance, pension or other benefit plan, payment or arrangement made
to,  for or with any such  officers,  key  salaried  employees  or agents of any
Selling Entity or the Business.

         7.4. Contracts and Commitments. Without the prior consent of the Buyer,
no Selling Entity shall enter into any contract or commitment,  or engage in any
discussion  or  negotiation  for the  purpose of  securing  any new  contract or
commitment,  with  respect to the  Business  or engage in any  transaction  with
respect to the  Business  not in the usual and  ordinary  course of business and
consistent with the prior business practices of the Business.  In no event shall
any Selling Entity,  without the Buyer's prior consent,  enter into any contract
or commitment,  or engage in any  discussion or  negotiation  for the purpose of
securing any new contract or  commitment,  under which the Selling  Entity would
provide  footwear  to, or service the footwear  department  of, any entity other
than  the  current  Licensors.  In  furtherance  and  not in  limitation  of the
foregoing,  the Seller shall not enter into any of the  agreements  or agreement
modifications referred to in Schedule 7.4 without the Buyer's prior consent.

         7.5. Merchandising  Activities.  The Seller shall consult in good faith
with  the  Buyer  and  obtain  the  prior  consent   (which  consent  shall  not
unreasonably be withheld or delayed) of the Buyer's merchandising representative
responsible for the substantive category in question (who shall be made known to
the Seller in writing by an officer of the Buyer)  before  issuing any order for
merchandise after the date hereof (each, a "Subsequent Purchase Orders"). If the
Seller, in writing, notifies the Buyer about and seeks the Buyer's prior consent
to, a Subsequent  Purchase Order which the Seller  reasonably  believes to be in
the best  interests of the Business,  and the Buyer does not respond within five
business days  thereafter,  the Buyer shall be deemed to have  consented to that
Subsequent  Purchase  Order.  Neither (i)  Seller's  issuance of any  Subsequent
Purchase Order if such order was issued in accordance with the provisions hereof
nor (ii)  Seller's  failure to issue a  Subsequent  Purchase  Order that was not
consented  to by the  Buyer's  merchandising  representative,  shall  be used as
grounds for any claim by the Buyer that Seller has  breached  any  provision  of
this Agreement.

         7.6.  Insurance.  The Seller shall,  in  connection  with the Business,
maintain with  financially  sound and reputable  insurance  companies,  funds or
underwriters  adequate  insurance of the kinds,  covering such risks and in such
amounts and with such  deductibles  and exclusions as are  consistent  with that
heretofore maintained by the Seller in connection with the Business.

         7.7.  Preservation of Organization.

         (a) The  Selling  Entities  acknowledge  that the  preservation  of the
Business  during the  Interim  Period is an  integral  part of the  transactions
contemplated  by this Agreement and that,  without  assurances that the Business
would be adequately  staffed and operated during the Interim  Period,  the Buyer
would not have entered into this  Agreement.  Accordingly,  each Selling  Entity
shall use reasonable  efforts,  which shall be deemed to include those bonus and
retention efforts described on Schedule 7.7, to preserve the Business's business
organization   intact,  to  keep  available  to  the  Buyer   substantially  all
strategically  important  employees  of  each  Selling  Entity  relating  to the
Business,  to facilitate an orderly transition from the Seller's operations with
respect to the Business to those  contemplated by the Buyer of certain employees
to be hired by Buyer,  and to preserve for the Buyer to the extent practical and
within  the  control of the Seller the  present  relationships  of each  Selling
Entity's  suppliers and others having business relations with any Selling Entity
in connection with the Business.

         (b)  Using  the  definitions  set forth  below,  if the Field  Employee
Differential  is more than ten  percent  (10%) of the Number of  Original  Field
Employees,  then Buyer shall be entitled to a credit  against the Purchase Price
equal to (x)  $1,500  multiplied  by the  number  by which  the  Field  Employee
Differential  exceeds  ten  percent  (10%)  of  the  Number  of  Original  Field
Employees,  up to the  point at which the Field  Employee  Differential  exceeds
twenty percent (20%) of the Number of Original Field Employees,  plus (y) $2,500
multiplied by the number by which the Field Employee Differential exceeds twenty
percent  (20%)  of  the  Number  of  Original  Field  Employees.  The  following
definitions are used in this Section:  The "Field Employee  Differential" is the
number (if  positive)  obtained by  subtracting  the Number of  Remaining  Field
Employees from the Number of Original Field  Employees.  The "Number of Original
Field  Employees"  means the number of  Specified  Field  Employees  on the date
hereof,  multiplied by the Closed Store Fraction. The "Closed Store Fraction" is
the number of Stores whose business is actually  transferred to the Buyer on the
Closing  Date,  divided  by  the  number  of  Stores  whose  business  would  be
transferred to the Buyer hereunder if the Closing Date were to occur immediately
following the date hereof.  The "Number of Remaining Field  Employees" means (x)
the number of persons who are  employed in the  Business on the day prior to the
Closing Date in Stores whose  business will be  transferred  to the Buyer on the
Closing  Date and who hold  positions  at that  time  which are held on the date
hereof by the Specified  Field  Employees,  plus (y) the Number of  Disqualified
Reductions. The "Number of Disqualified Reductions" means the number of persons,
if any,  who  meet  each of the  following  three  tests:  (i) the  person  is a
Specified Field Employee on the date hereof, (ii) the person holds a position on
the date hereof in a Store whose  business is actually  transferred to the Buyer
on the Closing Date,  and (iii) the person leaves the Seller's  employ after the
date hereof and Buyer  contributes  to his or her  attrition  in a material  way
including,  without limitation,  failing to offer the person comparable benefits
and a  salary  which  is the  same or  better  than  that to  which he or she is
entitled as an  employee  of the  Seller,  or failing to provide the person with
information  regarding the employee  benefits of the Buyer or other  information
customarily supplied to newly hired or prospective employees.  When used in this
subsection (b) the term "Employee" means only full-time employees,  and the term
"Store"  means only those Stores for which the Store License  Contract  requires
that the Seller have one or more full-time employees work in the Store.

         7.8. No Default.  No Selling  Entity shall do any act or omit to do any
act, or permit any act or omission to act, which will cause a material breach of
any contract,  commitment or  obligation of any Selling  Entity  relating to the
Business,  including,  without  limitation,  any of the Store License Contracts,
Personal Property Leases,  Intellectual  Property  Licenses,  Purchase Orders or
Other Contracts.

         7.9.  Compliance  with Laws.  Each  Selling  Entity shall comply in all
material  respects  with all Laws  applicable  to the  Business or the  Acquired
Assets  or as may be  required  for the  valid  and  effective  transfer  of the
Acquired Assets.

         7.10.  Advice of Change.  The Seller will promptly  advise the Buyer in
writing  of: (i) any  notice or other  communications  from any Person  that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement; (ii) any notice or other communications from any
governmental   or  regulatory   agency  or  authority  in  connection  with  the
transactions  contemplated by this Agreement;  (iii) any actions, suits, claims,
investigations or proceedings  commenced or, to the best of Seller's  knowledge,
threatened  against,  relating to or otherwise involving any Selling Entity, the
Acquired  Assets or the Business that, if pending on the date of this Agreement,
would have been  required to have been  disclosed  in a schedule  hereto or that
relate to the  consummation  by the Seller of the  transactions  contemplated by
this Agreement;  (iv) any fact or circumstance of which the Seller has knowledge
which would make any  representation  or  warranty  set forth  herein  untrue or
inaccurate in any material  respect as of the Closing Date;  and (v) any planned
or  threatened  labor  dispute,  organization  efforts,  strike or work stoppage
affecting the Seller's employees at the Stores.

         7.11.  Exclusivity.  J. Baker  shall not,  and shall  cause each of its
Affiliates and  Representatives  not to,  directly or  indirectly,  (i) solicit,
initiate,  or encourage,  or take any other action knowingly to facilitate,  any
Competing Proposal, or (ii) enter into, continue or otherwise participate in any
discussions or negotiations  regarding, or furnish to any Person any information
with respect to, or assist or participate  in, or facilitate or cooperate  with,
in any other  manner,  any effort or  attempt by any Person to make a  Competing
Proposal  or  otherwise  do or seek a  Competing  Transaction.  J.  Baker  shall
immediately  terminate,  or cause  to be  terminated,  any and all  discussions,
negotiations and provision of information  with respect to a possible  Competing
Proposal or Competing  Transaction  which are now  occurring or have  previously
occurred,  and shall  immediately  request the prompt return of all confidential
information  relating to the Business previously  furnished to any third parties
with  respect  thereto.  Subject  to  pre-existing  contractual  obligations  of
confidentiality,  the Seller shall (i) notify the Buyer  immediately both orally
and in writing if any Person makes any  Competing  Proposal or makes any inquiry
to or communication  with the Seller or any Representative of J. Baker which the
Seller  reasonably  believes could lead to a Competing  Proposal,  the terms and
conditions of such Competing Proposal,  inquiry or communication  (including any
subsequent  amendment or other  modification  thereof),  and the identity of the
Person making such Competing  Proposal,  inquiry or communication  and (ii) keep
the Buyer  informed  in all  material  respects  of the status  and the  details
(including  any  subsequent  amendment or other  modification  thereof),  of any
Competing  Proposal,  inquiry or  communication.  As used in this Agreement,  an
"Affiliate"  of any Person  means any  corporation,  individual  or other entity
directly or indirectly  in control of,  controlled  by, or under common  control
with, such Person.  Each of the following shall be deemed a "Representative"  of
J. Baker hereunder: any director,  officer or employee of J. Baker or any of its
subsidiaries or any investment banker, attorney,  accountant or other advisor or
representative  of J. Baker or any of its subsidiaries.  A "Competing  Proposal"
means any  inquiry,  proposal  or offer  from any  Person  other  than the Buyer
relating  to, or that is  reasonably  likely to lead to, any direct or  indirect
acquisition, in one transaction or a series of transactions (including,  without
limitation,  by way of any asset  sale,  merger,  consolidation,  tender  offer,
exchange   offer,   business   combination,    recapitalization,    liquidation,
dissolution,  joint venture, or similar transaction),  of all or any significant
portion of the  Business or the  Acquired  Assets (a  "Competing  Transaction").
Notwithstanding  the  foregoing,  an inquiry,  proposal or offer from any Person
other than the Buyer  relating to, or that is reasonably  likely to lead to, any
direct or indirect  acquisition,  in one transaction or a series of transactions
(including, without limitation, by way of any asset sale, merger, consolidation,
tender  offer,   exchange   offer,   business   combination,   recapitalization,
liquidation,  dissolution,  joint venture,  or similar  transaction),  of all or
substantially  all the assets or  securities  of J.  Baker,  including  both the
Business  and the  Non-Footwear  Business,  under  circumstances  in  which  the
potential  acquiror is bound to honor the terms of this Agreement and consummate
(or cause the Seller to consummate) the transactions  contemplated hereby, shall
not be deemed a Competing Proposal, and the resulting transaction (if any) shall
not be deemed a Competing Transaction.

         7.12.  Consents  of Third  Parties.  Each  Selling  Entity  will employ
reasonable efforts to secure,  before the Closing Date, the consent, in form and
substance  reasonably  satisfactory to the Buyer and the Buyer's counsel, to the
consummation of the transactions contemplated by this Agreement by each party to
any of the Store License Contracts,  Personal Property Leases,  Purchase Orders,
Intellectual  Property  Licenses,  Other Contracts under which such transactions
would constitute a default,  would accelerate  obligations of any Selling Entity
in  connection  with the  Business  or  would  permit  cancellation  of any such
contract.

         7.13.  Satisfaction of Conditions  Precedent.  Each Selling Entity will
use reasonable  efforts to cause the  satisfaction  of the conditions  precedent
contained herein.


         8. CONDITIONS PRECEDENT TO BUYER'S  OBLIGATIONS.  The obligation of the
Buyer to consummate the Closing shall be subject to the satisfaction at or prior
to the Closing of each of the following  conditions (to the extent noncompliance
is not waived in writing by Footstar):

         8.1.    Representations   and   Warranties   True   at   Closing.   The
representations  and  warranties  made by each Selling  Entity in or pursuant to
this Agreement  shall be true and correct in all material  respects at and as of
the  Closing  Date  with the same  effect  as though  such  representations  and
warranties had been made or given at and as of the Closing Date.

         8.2.  Compliance  with  Agreement.   Each  Selling  Entity  shall  have
performed  and complied in all  material  respects  with all of its  obligations
under this  Agreement to be performed or complied  with by it on or prior to the
Closing Date.

         8.3. Adverse Change. The business, assets or properties of each Selling
Entity relating to the Business and the Acquired Assets shall not have been, and
shall not be threatened  to be,  materially  adversely  affected in any way as a
result of fire, explosion, earthquake, disaster, any action by the United States
or any other  governmental  authority,  flood,  drought,  embargo,  riot,  civil
disturbance,  uprising,  activity of armed forces or act of God or public enemy.
In addition, none of the following shall have occurred:

         (a) at any  time  during  the  Interim  Period  there  is  pending  any
proceeding (a "Insolvency  Proceeding") which is instituted by or against either
Ames or Stein Mart,  Inc.  (each a "Key  Licensor")  or any  Affiliate  of a Key
Licensor  (i)  seeking  to  adjudicate  it  bankrupt  or  insolvent,  or seeking
reorganization,  arrangement, adjustment or composition of it or its debts under
any law  relating  to  bankruptcy,  insolvency  or  reorganization  or relief of
debtors, or (ii) seeking appointment of a receiver, trustee, or similar official
for it or for any substantial  part of its property,  or any Key Licensor or any
Affiliate  of any Key  Licensor  takes any action to authorize or consent to any
Insolvency Proceeding, or

         (b) the number of Stores  scheduled  to be  operated  by any of the Key
Licensors  decreases by more than 20% during the Interim  Period,  when compared
with the number of Stores actually operated by that Licensor on the date hereof.
(As used herein,  the number of Stores scheduled to be operated by a Licensor on
a given date are those Stores actually operated by the Licensor, less the number
of Stores the Licensor has publicly announced it will close.)

         8.4. Seller's Certificate. The Seller shall have delivered to the Buyer
in  writing,  at and as of the  Closing,  a  certificate  duly  executed by each
Selling Entity, in form and substance  reasonably  satisfactory to the Buyer and
the Buyer's counsel,  certifying that the conditions in each of Section 8.1, 8.2
and 8.3 have been satisfied.

         8.5.  Opinion of Counsel.  Goodwin,  Procter & Hoar LLP, counsel to the
Seller,  shall have delivered to the Buyer a written  opinion,  addressed to the
Buyer and dated the Closing Date, substantially in the form of Exhibit 8.5.

         8.6.  Agreements  with  Licensors.  The Seller shall have  obtained and
delivered to the Buyer  agreements  from the  Licensors  identified  on Schedule
8.6(a), in the form set forth on Schedule 8.6(a). The Seller shall have obtained
and delivered to the Buyer agreements from the Licensors  identified on Schedule
8.6(b),  substantially  in the form set  forth on  Schedule  8.6(b),  or, in the
absence of any such agreement,  the Purchase Price shall be reduced by an amount
determined  in the  manner set forth on  Schedule  8.6(b)  with  respect to such
agreement.

         8.7. Hart-Scott-Rodino;  No Litigation. The parties shall have made all
filings  and  submissions  required  under  the  Hart-Scott-Rodino  Act  and the
applicable  waiting  period  thereunder  shall have  expired or been  terminated
without objection,  or the Federal Trade Commission (the "FTC") or the Antitrust
Division of the United  States  Department  of Justice  United (the "DOJ") shall
have otherwise consented to the transactions  contemplated by this Agreement. No
restraining  order or injunction shall prevent the transactions  contemplated by
this Agreement and no action,  suit or proceeding shall be pending or threatened
before  any  court or  administrative  body in which it will be or is  sought to
restrain or prohibit or obtain  damages or other relief in connection  with this
Agreement or the consummation of the transactions contemplated hereby.

         8.8.  Other  Agreements.  Each Selling  Entity shall have  executed and
delivered  all  other  Transaction  Documents  to which it is a party,  and such
agreements shall be in full force and effect.

         8.9.  Proceedings  and  Documents  Satisfactory.   All  proceedings  in
connection  with  the  transactions  contemplated  by  this  Agreement  and  all
certificates  and  documents  delivered  to the  Buyer  in  connection  with the
transactions  contemplated  by  this  Agreement  shall  be  satisfactory  in all
reasonable  respects to the Buyer and the Buyer's  counsel,  and the Buyer shall
have received the originals or certified or other copies of all such records and
documents  (including  corporate  organizational  documents)  as the  Buyer  may
reasonably request.

         8.10.  Inventory  Target.  The  Buyer  shall  have  determined,  in its
reasonable  judgment,  that it is likely  that as of the Closing  Date:  (a) the
aggregate  Inventory  Retail  Value at Closing  will equal or exceed One Hundred
Sixteen Million Dollars  ($116,000,000)  (the  "Inventory  Target"),  and (b) at
least 70% of the aggregate  Inventory  (measured by Inventory Retail Value) will
be in the Inventory Categories "Current / Future Seasons" or "Aged One Season."


         9. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.  The obligation of the
Seller to  consummate  the Closing shall be subject to the  satisfaction,  at or
prior  to the  Closing,  of  each of the  following  conditions  (to the  extent
noncompliance is not waived in writing by J. Baker):

         9.1.    Representations   and   Warranties   True   at   Closing.   The
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects at and as of the Closing Date with the same
effect as though such  representations  and warranties had been made or given at
and as of the Closing Date.

         9.2.  Compliance  with  Agreement.  The Buyer shall have  performed and
complied  in all  material  respects  with  all of its  obligations  under  this
Agreement  that are to be  performed  or complied  with by it at or prior to the
Closing.

         9.3. Closing Certificate.  The Buyer shall have delivered to the Seller
in writing,  at and as of the Closing,  a certificate duly executed by Buyer, in
form and substance  satisfactory to the Seller and the Seller's counsel,  to the
effect that the conditions in each of Sections 9.1 and 9.2 have been satisfied.

         9.4. Opinion of Counsel.  Pitney,  Hardin, Kipp & Szuch LLP, counsel to
the Buyer,  shall have  delivered  to the  Seller a written  opinion,  dated the
Closing Date and addressed to the Seller,  substantially  in the form of Exhibit
9.4.

         9.5. Hart-Scott-Rodino;  No Litigation. The parties shall have made all
filings  and  submissions  required  under  the  Hart-Scott-Rodino  Act  and the
applicable  waiting  period  thereunder  shall have  expired or been  terminated
without objection,  or the FTC or the DOJ shall have otherwise  consented to the
transactions  contemplated by this Agreement. No restraining order or injunction
shall prevent the  transactions  contemplated  by this  Agreement and no action,
suit  or  proceeding  shall  be  pending  or  threatened  before  any  court  or
administrative  body in which it will be or is sought to restrain or prohibit or
obtain  damages  or other  relief  in  connection  with  this  Agreement  or the
consummation of the transactions contemplated hereby.

         9.6.  Agreements.  The Buyer  shall have  executed  and  delivered  the
Transaction  Documents to which it is a party,  and such agreements  shall be in
full force and effect.

         9.7.  Proceedings  and  Documents  Satisfactory.   All  proceedings  in
connection  with  the  transactions  contemplated  by  this  Agreement  and  all
certificates  and  documents  delivered  to the  Seller in  connection  with the
transactions  contemplated  by  this  Agreement  shall  be  satisfactory  in all
reasonable  respects to the Seller and its  counsel,  and the Seller  shall have
received  the  originals  or  certified  or other copies of all such records and
documents as the Seller may reasonably request.


         10. CONFIDENTIAL INFORMATION.  Any and all information disclosed by the
Buyer  to  the  Seller  or by  the  Seller  to  the  Buyer  as a  result  of the
negotiations  leading to the  execution  of this  Agreement,  or in  furtherance
thereof,  which information was not already known to the Seller or to the Buyer,
as the case may be, shall remain  confidential to the Seller and the Buyer. Each
of the Seller and the Buyer agree not to further  divulge or disclose or use for
its benefit or purposes any such information at any time in the future unless it
has otherwise  become public.  The information  intended to be protected  hereby
shall include, but not be limited to, financial  information,  customers,  sales
representatives,  and anything  else having an economic or pecuniary  benefit to
the Buyer or the Seller, respectively.  If the Closing occurs hereunder, any and
all  information  disclosed  by the  Seller  to the Buyer  and  relating  to the
Business or the Acquired  Assets  shall  thereafter  be deemed the  confidential
information of the Buyer,  rather than of the Seller,  and the Seller agrees not
to further  divulge or  disclose  or use for its  benefit or  purposes  any such
information at any time in the future unless it has otherwise become public. The
confidentiality letter agreement (the "Confidentiality  Letter") dated September
5, 2000  between the J. Baker and  Footstar,  Inc.,  is  incorporated  herein by
reference and shall  continue in force and effect after the date hereof,  except
that (a) the Buyer, rather than Footstar,  Inc., shall be deemed the "Recipient"
as that term is used in the  Confidentiality  Letter, (b) to the extent that any
terms of the  Confidentiality  Letter  are  inconsistent  with any terms of this
Agreement  (not  including  the  Confidentiality  Agreement),  the terms of this
Agreement shall govern,  (c) until the Closing occurs or this Agreement has been
validly terminated, paragraph 8 of the Confidentiality Letter shall not restrict
actions by the Buyer in furtherance of its acquisition of the Business,  and (d)
paragraph  4 of  the  Confidentiality  Letter  shall  not  survive  the  Closing
hereunder.


         11.  INDEMNIFICATION; SURVIVAL.

         11.1.  Indemnity by the Seller.  Subject to the terms and conditions of
this Section 11, each Selling Entity jointly and severally  agrees to indemnify,
defend and hold the Buyer and its Affiliates (collectively, for purposes of this
Section 11, the "Buyer  Indemnified  Parties") harmless from and with respect to
any and all claims,  liabilities,  losses,  damages, costs and expenses (whether
made  or  incurred  before  or  after  the  Closing  Date),  including,  without
limitation, the reasonable fees and disbursements of counsel (collectively,  the
"Losses"),  to the extent such Losses result  directly or indirectly from any of
the following:

                           (i) the inaccuracy of any  representation or warranty
         made by any Selling Entity in or pursuant to this Agreement  (including
         the Schedules and Exhibits hereto) or any other statement,  certificate
         or other instrument delivered pursuant hereto; provided,  however, that
         the Selling  Entities  shall be liable  under this  Section  11.1(i) in
         respect  of Losses  only to the  extent the  aggregate  of such  Losses
         exceeds  $100,000  in which case the Selling  Entities  shall be liable
         under this 11.1(i) for the amount of such Losses in excess of $100,000.

                           (ii) any failure or any breach by any Selling  Entity
         of any covenant,  obligation or undertaking  made by the Selling Entity
         in or pursuant to this Agreement  (including the Schedules and Exhibits
         hereto)  or  any  other  statement,  certificate  or  other  instrument
         delivered pursuant hereto;

                           (iii) any claim, liability, obligation or damage with
         respect to the Retained Liabilities, including, without limitation, any
         claim,  obligation or liability  arising in  connection  with a Benefit
         Plan of the Seller or the  employment or  termination  of employment of
         any Persons in the  Business on or before the Closing  Date,  including
         any  worker's   compensation  claims,  any  employee  grievances,   any
         liabilities  with  respect  to  pension,  medical  or other  employment
         benefits and any liabilities for accrued  vacation,  bonus or severance
         payments  arising as a result of the  consummation of the  transactions
         contemplated by this Agreement, except to the extent that the Buyer has
         agreed in writing to be responsible  for such payments and has received
         a credit therefor in accordance with Section 4.3.

                           (iv) any claim or  liability  arising  under the bulk
         sales  laws  of  any  jurisdiction  in  connection  with   transactions
         contemplated  by this  Agreement  to the  extent  that  such  claim  or
         liability does not arise  pursuant to a Purchase  Order  outstanding at
         the  Effective  Time or  another  Assumed  Obligation  (in view of such
         indemnification   obligation  the  Buyer  hereby  waives  the  Seller's
         compliance  with any such bulk sales laws as a condition to the Closing
         hereunder);

                           (v)  any  claim  that  any   Inventory   violates  or
         infringes upon the  intellectual  property  rights of a Person,  or any
         product liability claim with respect to any Inventory;

                           (vi) any claims  against,  or debts,  liabilities  or
         obligations of any of the Selling Entities,  whether or not relating to
         the Acquired  Assets or the  Business,  and whether or not disclosed on
         any of the Schedules  attached hereto,  unless such debt,  liability or
         obligation is an Assumed Obligation;

                          (vii) any claim for any brokerage commissions asserted
         by any broker as a result of any action by any Selling Entity;

                           (viii) any Tax liabilities of the Seller,  including,
         without limitation, any Tax liabilities of the Seller that arose before
         the Closing Date, any Tax  liabilities of the Seller not assumed by the
         Buyer  hereunder  but  transferred  to the Buyer  under any  transferee
         liability  Laws,  and any Tax liability of the Seller  arising from the
         sale of the Acquired Assets;

                           (ix) the Seller's complete or partial withdrawal from
         any Multiemployer Plan on or prior to the Closing Date, or the Seller's
         failure  to  make  contributions  or a  withdrawal  liability  payment,
         including,  but not limited to, any exit fees, security deposits, claim
         costs,  or any  other  similar  type  expenses  ("Withdrawal  Liability
         Payment"),  to each  Multiemployer  Plan that have been assessed to the
         Seller or which may be assessed to the Seller at any time in the future
         by such Multiemployer Plan; and

                           (x) the Buyer's  complete or partial  withdrawal from
         any of the Multiemployer  Plans within the relevant  Multiemployer Plan
         plan year in which the  Closing  Date  occurs and the five  consecutive
         plan years of each respective  Multiemployer Plan beginning on or after
         the Closing Date, but, the  indemnified  portion of complete or partial
         withdrawal  liability  will  only be the  portion  of  such  Withdrawal
         Liability  Payment  that  exceeds  the  amount  that  the  Buyer  would
         otherwise  incur  without any  attribution  to it of any portion of the
         contribution  history  of the  Seller  with  respect  to  the  relevant
         Multiemployer Plan, or to the extent taken into account by the relevant
         Multiemployer  Plan as permitted by section  4211(c)(4) of ERISA, other
         history of the Seller  including the service of any Specified  Employee
         with the Seller.  Notwithstanding  any  provision of this Section 11 to
         the contrary, the indemnification provisions of this Subsection 11.1(x)
         shall  survive the Closing and shall  continue in full force and effect
         without  limit  until the last day of the  fifth  full plan year of any
         Multiemployer  Plan that begins on or after the Closing,  or if earlier
         with respect to any  Multiemployer  Plan, the date the Buyer completely
         withdraws  from  any  such  respective   Multiemployer   Plan.  Further
         provided, the amount of any indemnification  payment by Seller to Buyer
         under this Subsection  11.1(x) with respect to any  Multiemployer  Plan
         shall be reduced by the  amount of the same type  Withdrawal  Liability
         Payment made by Seller  either as an  indemnification  payment to Buyer
         under Subsection  11.1(ix) above, or as a direct payment by Seller with
         respect to the same such Multiemployer Plan.

         11.2.  Indemnity by the Buyer.  Subject to the terms and  conditions of
this  Section 11, the Buyer  agrees to  indemnify,  defend and hold each Selling
Entity and its  Affiliates  (collectively,  for purposes of this Section 11, the
"Seller  Indemnified  Parties")  harmless  from and with  respect to any and all
Losses,  to the extent such Losses result directly or indirectly from any of the
following:

                           (i) the inaccuracy of any  representation or warranty
         made by the  Buyer in or  pursuant  to this  Agreement  (including  the
         Schedules and Exhibits hereto) or any other  statement,  certificate or
         other instrument delivered pursuant hereto; provided, however, that the
         Buyer shall be liable under this  Section  11.2(i) in respect of Losses
         only to the extent the  aggregate  of such Losses  exceeds  $100,000 in
         which case the Buyer shall be liable  under this 11.2(i) for the amount
         of such Losses in excess of $100,000;

                           (ii) any  failure  or any  breach by the Buyer of any
         covenant, obligation or undertaking made by the Buyer in or pursuant to
         this  Agreement  (including  the Schedules and Exhibits  hereto) or any
         other  statement,  certificate or other instrument  delivered  pursuant
         hereto,  including  any breach of the Buyer's  agreement  to assume the
         Assumed Obligations pursuant to Section 2;

                           (iii) any claims  against,  or debts,  liabilities or
         obligations  of the Buyer,  whether  or not  relating  to the  Acquired
         Assets or the operation of the Business after the Closing,  unless such
         debt, liability or obligation is one for which the Seller has agreed to
         indemnify Buyer hereunder; and

                           (iv) any claim for any brokerage commissions asserted
         by any broker as a result of any action by the Buyer.

         11.3.  Claims.

                  (a) Notice. Any party seeking  indemnification  hereunder (the
"Indemnified   Party")  shall  promptly  notify  the  other  party  hereto  (the
"Indemnifying Party") in writing of any action, suit, proceeding, demand, breach
or  assertion  of right for payment  and/or  offset (a "Claim")  with respect to
which the  Indemnified  Party claims  indemnification  hereunder,  provided that
failure of the  Indemnified  Party to give such  notice  shall not  relieve  the
Indemnifying  Party of its  obligations  under  this  Section  11  except to the
extent,  if at all,  that such  Indemnifying  Party  shall have been  prejudiced
thereby.  The notice shall include the amount of and  circumstances  surrounding
such claim, and the basis for the indemnification obligation.

                  (b) Third Party  Claims.  If such Claim relates to any action,
suit,  proceeding or demand instituted  against the Indemnified Party by a third
party (a "Third  Party  Claim"),  the  Indemnifying  Party  shall be entitled to
participate  in the defense of such Third Party Claim after receipt of notice of
such claim from the Indemnified Party.  Within thirty (30) days after receipt of
notice of a particular matter from the Indemnified Party, the Indemnifying Party
may assume the defense of such Third Party Claim, in which case the Indemnifying
Party shall have the  authority to negotiate,  compromise  and settle such Third
Party  Claim,  if and only if the  Indemnified  Party  shall not have  given the
Indemnifying Party written notice that it has determined, in the exercise of its
reasonable discretion, that a conflict of interest makes separate representation
by the Indemnified  Party's own counsel  advisable.  The Indemnified Party shall
retain the right to employ its own counsel and to  participate in the defense of
any Third Party Claim, the defense of which has been assumed by the Indemnifying
Party pursuant hereto,  but the Indemnified Party shall bear and shall be solely
responsible   for  its  own  costs  and   expenses  in   connection   with  such
participation.

         11.4.  Method and Manner of Paying  Claims.  In the event of any claims
under this  Section 11, the  claimant  shall advise the party or parties who are
required  to  provide  indemnification  therefor  in  writing  of the amount and
circumstances  surrounding  such claim in  reasonable  detail.  With  respect to
liquidated  claims, if within thirty days the other party has not contested such
claim in writing,  the other party will pay the full amount  thereof  within ten
days after the  expiration  of such period.  Any amount owed by an  Indemnifying
Party  hereunder  with  respect to any Claim may be  set-off by the  Indemnified
Party  against any amounts  owed by the  Indemnified  Party to any  Indemnifying
Party.  The unpaid balance of a Claim shall bear interest at the Prime Rate from
the date notice thereof is given by the  Indemnified  Party to the  Indemnifying
Party.

         11.5. Shared  Liability.  To the extent, if any, the same factual bases
give rise both to a claim for  indemnification  by the Buyer  against the Seller
under Section 11.1,  and a claim for  indemnification  by the Seller against the
Buyer  under  Section  11.2,  each party shall bear a  proportion  of the Losses
resulting   from  such  factual  bases  equal  to  such  party's   proportionate
responsibility for such factual bases.

         11.6. Insurance.  In the event that the Indemnified Party is at anytime
paid for any Losses by an  insurance  company  under a policy owned by, and with
the respect to which the premiums are paid by, the  Indemnifying  Party, and (i)
if the Indemnified  Party has previously  received payment from the Indemnifying
Party with  respect  to such  Losses,  the  Indemnified  Party  shall pay to the
Indemnifying Party the amount by which the amount paid by the Indemnifying Party
and the insurance proceeds exceeds the Losses, or (ii) the Indemnified Party has
not previously received payment from the Indemnifying Party with respect to such
Losses,  the  Indemnifying  Party  shall  receive a credit in the amount of such
insurance  proceeds  against  the amount  otherwise  payable to the  Indemnified
Party.

         11.7.  Representative of Selling Entities.  Wherever in this Section 11
reference is made to multiple  parties as Indemnifying  or Indemnified  Parties,
Baker shall be deemed the representative of all the Selling Entities. Notices to
or from such  representative  shall be deemed  notice to or from all  parties so
represented,  and the  decisions  of such  representative  regarding  defense of
claims  and other  matters  arising  under  this  Section 11 shall be deemed the
decisions of all parties so represented, in each case unless the context clearly
indicates otherwise.

         11.8.  Survival.

                  (a)  Seller's  Representations,   Warranties,   Covenants  and
Indemnities. All of the representations and warranties of the Seller (except for
those contained in Section 5.1 (Organization),  5.2 (Corporate Approval) and 5.9
(Title to Acquired Assets), contained herein or in any document,  certificate or
other  instrument  required to be delivered  hereunder shall survive the Closing
and continue in full force and effect for 12 months  following the Closing Date.
The  representations and warranties of the Seller contained in Sections 5.1, 5.2
and 5.9 shall  survive the  Closing and shall  continue in full force and effect
without limit as to time (subject to any  applicable  statutes of  limitations).
All covenants and indemnities of the Seller in this Agreement or in any document
or certificate delivered hereunder shall, unless otherwise specifically provided
therein,  shall survive the Closing and shall  continue in full force and effect
without limit as to time (subject to any applicable statutes of limitations).

                  (b)  Buyer's   Representations,   Warranties,   Covenants  and
Indemnities. All of the representations and warranties of the Buyer contained in
Section 6 (except  for those  contained  in Section 6.1  (Organization)  and 6.2
(Corporate  Approval),  or in any  document,  certificate  or  other  instrument
required to be delivered  hereunder shall survive the Closing and shall continue
in full  force  and  effect  for 12  months  following  the  Closing  Date.  The
representations  and  warranties of the Buyer  contained in Sections 6.1 and 6.2
shall  survive the Closing and shall  continue in full force and effect  without
limit as to time  (subject  to any  applicable  statutes  of  limitations).  All
covenants and  indemnities  of the Buyer in this Agreement or in any document or
certificate  delivered hereunder shall, unless otherwise  specifically  provided
therein,  shall survive the Closing and shall  continue in full force and effect
without limit as to time (subject to any applicable statutes of limitations).


         12.  OTHER COVENANTS OF THE PARTIES.  The parties hereto covenant and
agree as follows:

         12.1. Hart-Scott-Rodino Act. Each of the parties hereto shall cooperate
with each other and promptly file any  notification and report forms and related
material  that it may be  required  to file  with the FTC and the DOJ  under the
Hart-Scott-Rodino   Act,  shall  use  reasonable  efforts  to  obtain  an  early
termination of the applicable waiting period, and shall make any further filings
or information submissions pursuant thereto that may be necessary.

         12.2.  Employees of Seller.

                  (a) The Buyer  may,  with  reasonable  notice  to the  Seller,
  contact such of Seller's  employees  engaged  primarily in the Business as the
  Buyer may  determine  for the purpose of  discussing  the  employment  of such
  employees  by the Buyer  after the  Closing,  and the Seller  will  reasonably
  cooperate with the Buyer in such regard.  The Buyer shall offer  employment to
  the "Specified Field  Employees,"  which term means the Seller's  employees at
  the local store, dual manager, group manager, district merchandiser,  district
  manager,  senior district  merchandiser and senior district manager levels who
  are  employed  by the  Seller up to the day prior to the  Closing,  except (i)
  those  employed  at any of the  Closeout  Stores  and  (ii) any  temporary  or
  seasonal  employees.  The Buyer shall have no  obligation  to employ any other
  employees of the Seller,  and shall have no other  obligation  or liability to
  any employees  arising out of the  termination by the Seller of the employment
  of any such  employees as a result of the  transactions  contemplated  by this
  Agreement, all of which obligations and liabilities, if any, shall be the sole
  responsibility  of  the  Seller.   Without  limiting  the  generality  of  the
  foregoing,  each Selling Entity shall jointly and severally indemnify and save
  harmless the Buyer from and against any and all liabilities and obligations of
  Baker or any Selling Entity to its current or former  employees,  consultants,
  salesmen and others providing services to Baker or any Selling Entity relating
  to their  services  prior to the  Closing or arising as a  consequence  of the
  Closing,  including,  without limitation, (w) wages, salaries, bonuses and any
  other direct  compensation,  (x) Baker or any Selling Entity's obligations and
  liabilities   under   any   retirement,   deferred   compensation,    pension,
  profit-sharing or other employee benefit plan (including,  without limitation,
  the Benefit Plans and  Multiemployer  Plans in accordance  with Section 11.1),
  (y) any severance or termination pay or benefit arrangement or agreement,  any
  accrued vacation pay, any life,  health, or disability  insurance or benefits,
  worker's  compensation  and any other employee  benefits or other  liabilities
  relating  to Baker or any  Selling  Entity `s current or former  employees  or
  other  service  providers,  and (z) any and all  liabilities  and  obligations
  arising out of the Worker Adjustment and Retraining  Notification Act ("WARN")
  or any similar state Law, the Comprehensive  Omnibus Budget Reconciliation Act
  ("COBRA"),  and any  other  Laws.  The  Buyer's  continued  employment  of the
  Specified  Employees who cease  employment  with the Seller in accordance with
  this Subsection 12.2(a) shall not cause such Specified  Employees to change or
  modify any  continuing  employment  relationship  that may exist  between such
  Specified Employees and a Licensor.

                  (b) The Seller will  terminate,  as of the Effective Time, the
  employment  of all of its  employees  who are  engaged  in the  Business,  and
  provide on a timely basis to such  employees and  representatives  any notices
  required,  if any, under WARN,  COBRA and/or ERISA.  The Seller will fully pay
  all such employees (within normal pay periods or as otherwise required by Law)
  for all  sums due  them  from the  Seller  including  but not  limited  to all
  commissions, bonuses, accrued vacation pay and other employee benefits, except
  to the extent that the Buyer has agreed in writing to be responsible  for such
  payments and has received a credit  therefor in  accordance  with Section 4.3.
  The Seller  shall  also  fully pay all sums which are due with  respect to the
  Seller's  employment  of  such  persons  for  state  and  federal  income  tax
  withholding,  medical insurance  payments,  social security and Medicare (both
  employee   and   employer    shares),    workers'    compensation    premiums,
  unemployment/disability  compensation  payments, and any and all other amounts
  which  are  due or  which  may  become  due as a  result  of the  terminations
  contemplated by this section. At or prior to the time of such termination, the
  Seller shall remind all terminated employees of their obligations with respect
  to the  confidential  information of the Seller,  which  obligations  continue
  beyond the Closing Date and will be enforceable by the Buyer after the Closing
  Date.  The Seller shall make, or cause to be made,  all payments now or in the
  future  required to be made, and shall provide,  or cause to be provided,  all
  benefits now or in the future  required to be provided,  to Persons who retire
  from  employment with the Seller,  and the Buyer shall have no  responsibility
  therefor. This termination by Seller is not intended to have any impact on the
  continuing  employment  relationship that may exist between any union employee
  and a Licensor who had been treated as a joint employer with Seller.

                  (c) All of the  non-union  employees  who are  engaged  in the
  Business  and whose  employment  will be  terminated  in  connection  with the
  transactions contemplated by this Agreement and who will be hired by the Buyer
  shall cease to participate in any of the Benefit Plans in accordance  with the
  terms of such Benefit Plans and as required by applicable Law.

                  (d) Notwithstanding the foregoing, the Seller will transfer to
  the Buyer, and include as an Acquired Asset, or enforce on behalf of the Buyer
  if  non-transferable,  all  interests  of the  Seller  in any  confidentiality
  agreement  which it has entered into with (x) any of its employees  engaged in
  the Business and whose  employment  will be terminated in connection  with the
  transactions  contemplated  by this Agreement,  or (y) any  consultants  whose
  consulting  services  have been  used by the  Business  and  whose  consulting
  arrangement  is not  being  assigned  to the  Buyer  in  connection  with  the
  transactions contemplated by this Agreement.

         12.3.  Non-Competition.  In  consideration  for, and as a condition to,
Buyer's  agreement  to enter  into  this  Agreement,  the  Buyer and each of the
Selling Entities agree as follows:

                  (a) Scope of Agreement.  Each of the Selling  Entities  agrees
that during the period  beginning  on the  Closing  Date and ending on the fifth
anniversary of the Closing Date (the "Non-Competition Period"), it will not, and
will cause each of its subsidiaries  not to, directly or indirectly,  either for
themselves  or for  any  other  Person,  permit  their  names  to be  used by or
participate  in any  business  or  enterprise  identical  to or  similar  to the
Business as the same is engaged in as of the date of this Agreement and which is
located in North America. In furtherance and not in limitation of the foregoing,
any one or more of the following  actions shall be deemed to be the operation of
a "business or enterprise identical to or similar to the Business:" operation of
stand-alone  footwear  stores,  operation of licensed  footwear  departments  in
stores operated by independent  third parties,  acting as a supplier of footwear
to stores operated by independent  third parties,  or bidding for or negotiating
for the right to do any of the foregoing.  For purposes of this  Agreement,  the
term  "participate"  includes any direct or indirect interest in any enterprise,
whether as an officer,  director,  employee,  partner,  sole proprietor,  agent,
representative,  independent  contractor,  consultant,  franchisor,  franchisee,
creditor,  owner, investor or otherwise;  provided,  that the term "participate"
shall  not  include  ownership  of less  than  two  percent  of the  stock  of a
publicly-held  corporation  whose  stock  is  traded  on a  national  securities
exchange or in the over-the-counter market.  Notwithstanding the foregoing, this
covenant shall not restrict the Seller's continued  operation of its Casual Male
Big & Tall, B&T Factory Stores and Repp Big & Tall businesses,  its Work `n Gear
business,  or the Footwear  Departments at the Closeout Stores,  in each case as
the same are currently being operated.  Each of the Selling Entities agrees that
this covenant is reasonable with respect to its duration,  geographical area and
scope.

                  (b)  Tolling  of  Non-Competition  Period.  In the event of an
alleged breach or violation by any such Persons of any of the provisions of this
Section 12.3, the  Non-Competition  Period  described above will be tolled until
such alleged  breach or violation is resolved.  Each Selling  Entity agrees that
these restrictions are reasonable.

                  (c)  Reasonableness.  If, at the time of enforcement of any of
the provisions of this Section 12.3, a court holds that the restrictions  stated
therein are  unreasonable  under the  circumstances  then existing,  the Parties
hereto agree that the maximum  period,  scope or  geographical  area  reasonable
under such  circumstances  will be substituted  for the stated period,  scope or
area.

                  (d) Independent Agreement. Each Selling Entity agrees that, if
the Closing occurs  hereunder,  the covenants  made in Section  12.3(a) shall be
construed as an agreement  independent of any other  provision of this Agreement
and shall survive any order of a court of competent jurisdiction terminating any
other provision of this Agreement.

         12.4. Disclosure Supplements.  From time to time prior to the Effective
Time, each party hereto will promptly  supplement or amend (by written notice to
the other) its respective  Disclosure  Schedules  delivered pursuant hereto with
respect to any matter hereafter  arising which, if existing,  occurring or known
at the date of this  Agreement  would  have  been  required  to be set  forth or
described in such Schedules or which is necessary to correct any  information in
such Schedules which has been rendered  materially  inaccurate  thereby.  If the
disclosure  contained  in any such  supplement  (i) relates to events  occurring
before  execution  of this  Agreement  or (ii)  alone  or  together  with  other
supplements or amendments  materially  adversely  affects the  representation to
which the amendment or supplement relates,  the party receiving the amendment or
supplement  may  determine  not to accept it as a  modification  of the relevant
representation.  Notice of such  determination,  if made,  shall be given by the
receiving  party to the other party not later than 15 days after it received the
disclosure in question. If such notice is not timely given, or if the disclosure
in question did not contain any matter of the nature  specified in clause (i) or
(ii) of the second  preceding  sentence,  the relevant  representation  shall be
deemed  modified by the disclosure in the amendment or supplement  with the same
effect as though that  disclosure  had been included in the relevant  Disclosure
Schedule as furnished prior to execution of this Agreement.

         12.5 Tax Clearances.  Between the date hereof and the Closing Date, the
Seller  shall  obtain and  provide to the Buyer all  clearance  certificates  or
similar  documents that are required by any state,  local or other Tax authority
in order to  relieve  the Buyer of any  obligation  to  withhold  or escrow  any
portion of the Purchase  Price or otherwise be subject to  transferee  liability
for any Tax liabilities of the Seller.

         12.6 Precautionary  Filings.  The Seller has: (i) filed certain Uniform
Commercial Code Financing Statements (the "Precautionary Filings"),  designating
one of the  Selling  Entities as owner of  footwear  inventory  in the Stores of
certain Licensors,  which are more particularly  described on Schedule 12.6. The
Buyer acknowledges that the Seller has neither made such  Precautionary  Filings
with respect to the inventory in all Stores,  not sent  notification  letters to
the secured parties of any Licensor.  The Seller shall:  (i) execute and deliver
to the Buyer  assignments of the  Precautionary  Filings  assigning the Seller's
interest in the Precautionary Filings to the Buyer, utilizing uniform commercial
code assignment forms prepared by the Buyer or the Buyer's counsel,  and in form
and  substance  reasonably  satisfactory  to the Seller and the Buyer;  and (ii)
cooperate  with and  assist  Buyer,  either  before  or after  the  Closing,  in
notifying each of the Licensors'  secured parties of the Buyer's interest in the
inventory,  furniture, fixtures, proceeds and other collateral identified in the
Precautionary Filings in order to protect such inventory,  furniture,  fixtures,
proceeds  and  other  assets  owned  by the  Buyer  from  the  creditors  of the
Licensors' secured parties.

         12.7  Disposition of Furniture and Fixtures.  The Seller shall identify
in writing to the Buyer, prior to the Closing, each item of Furniture or Fixture
acquired or disposed of during the Interim  Period  which has a value of $100 or
more; provided,  that an item disposed of for no consideration (i.e., discarded)
need not be identified unless it had a value in excess of $500.

         12.8 Special Provision Regarding  Insolvency.  If prior to the Closing,
there is pending with respect to any Licensor  identified on Schedule  3.4(i) an
Insolvency Proceeding pursuant to Chapter 7, Title 11, United States Code or any
comparable  state law provision,  the Buyer shall have the right (which shall be
its sole  remedy  hereunder  for such  event),  exercisable  by  written  notice
delivered  to the  Seller  prior to the  Closing,  and in any event no less than
seven days after public  announcement  of the Insolvency  Proceeding,  to remove
from the Acquired Assets those assets relating to that Licensor,  in which event
the parties shall agree upon  reasonable  mechanisms to accomplish  that change,
including   proportionally   adjusting  the  Inventory  Target  to  reflect  the
elimination from "Inventory" of the footwear in the Stores of that Licensor.


         13.  GENERAL.

         13.1     Termination.  This Agreement may be terminated:

                  (a) at any time prior to the  Closing by mutual  agreement  of
the Buyer and the Seller;

                  (b) by either the Buyer or the Seller by written notice to the
other if the Closing has not occurred by February 28, 2001 (the "Cutoff  Date");
provided,  that the right to terminate this Agreement under this Section 13.1(b)
shall not be  available  to any party whose  failure to fulfill in any  material
respect any obligation or closing  condition  under this Agreement has caused or
resulted in the failure of the Closing to occur on or before the Cutoff Date;

                  (c) by the Buyer,  at any time when the Seller is in breach of
any  of  its  material   covenants   pursuant  to  this   Agreement  or  if  any
representation  or warranty of the Seller is false or misleading in any material
respect; and such default is not capable of being cured; provided that the Buyer
shall  not have the right to  terminate  hereunder  based  solely on a breach of
Section 5.6; or

                  (d) by the Seller,  at any time when the Buyer is in breach of
any  of  its  material   covenants   pursuant  to  this   Agreement  or  if  any
representation  or warranty of the Buyer is false or  misleading in any material
respect; and such default is not capable of being cured.

                  If this Agreement is terminated pursuant to this Section 13.1,
this Agreement  shall become void and of no effect with no liability on the part
of any party hereto,  except that (a) the  agreements  contained in this Section
13.1, in Section 13.2, and in Section 10 shall survive the  termination  hereof,
and (b) no such termination  shall relieve any party of any liability or damages
resulting  from any willful breach or default of any  representation,  warranty,
covenant, agreement,  provision or term in any Transaction Document which exists
at the time of such termination.

         13.2.  Expenses; Termination Fee.

         (a) All transfer  and sales Taxes  payable with respect to the sale and
conveyance of the Acquired Assets to the Buyer shall be paid by the Seller.  All
fees and expenses  incurred in connection  with the  preparation,  execution and
consummation  of this  Agreement and of the  transactions  contemplated  hereby,
including,  without limitation,  attorneys',  accountants' and outside advisers'
fees and  disbursements,  shall be borne by the party  incurring  such expenses,
except as  otherwise  provided in Section 3.5,  whether or not the  transactions
contemplated hereby are consummated.  Without limiting the foregoing, each party
shall pay its own costs,  in connection  with  preparing  the  Hart-Scott-Rodino
filings  referenced herein, it being understood that the Buyer, as the acquiring
party, shall be solely responsible for paying the Hart-Scott-Rodino filing fees.

         (b)  Notwithstanding  subsection  (a)  above,  in the event  that (i) a
Competing  Proposal shall have been made after the date hereof,  (ii) thereafter
this Agreement is terminated (x) by the Seller prior to June 1, 2001 pursuant to
Section  13.1(b),  or (y) by the Buyer  pursuant  to either  Section  13.1(b) or
Section  13.1(c)  (other  than  where  the  Buyer  relies,  as the basis for its
termination or its failure to close by the Cutoff Date,  solely on (ww) breaches
of material  covenants with which the Seller could not have complied through the
exercise  of  commercially   reasonable  efforts  and/or  (xx)  the  failure  of
representations and warranties,  which were true in all material respects on the
date  hereof,  to be true in all  material  respects  at or near an  anticipated
closing  date so as to satisfy  Section  8.1,  where the  Seller  could not have
caused such initially true representations and warranties to satisfy Section 8.1
through the exercise of commercially reasonable efforts), and (iii) prior to, or
within 12 months after,  such termination any Selling Entity (x) enters into any
letter  of  intent,   memorandum  of  understanding,   agreement  in  principle,
acquisition  agreement,   merger  agreement,  option  agreement,  joint  venture
agreement, partnership agreement or other agreement (an "Acquisition Agreement")
which constitutes a Competing  Proposal,  or is related to, or which is intended
to or is  reasonably  likely  to  lead  to,  a  Competing  Transaction,  or  (y)
consummates a Competing Transaction;  then immediately after all conditions (i),
(ii) and (iii) above are met,  the Seller  shall pay to the Buyer a fee equal to
Four Million Dollars  ($4,000,000) (the  "Termination  Fee") by wire transfer of
same day funds to an account designated by the Buyer.

         (c) The parties  acknowledge  that the agreements  contained in Section
13.2(b) are an integral part of the transactions contemplated by this Agreement,
and that,  without  these  agreements,  the  parties  would not enter  into this
Agreement;   accordingly,   the  Buyer  shall  be  entitled  to  its  reasonable
out-of-pocket  legal fees and  expenses  incurred  to enforce the payment of the
Termination Fee and if the Seller fails promptly to pay the Termination Fee when
due,  the  Seller  shall  be  required  to  pay  to the  Buyer  interest  on the
Termination  Fee from the due date  through the  payment  date at the Prime Rate
plus 2%.

         13.3. Notices. All notices,  demands and other communications hereunder
shall be in  writing,  and shall be deemed to have been duly given if  delivered
personally or if mailed by certified  mail,  return receipt  requested,  postage
prepaid, or if sent by overnight courier, as follows:

         If to the Seller or to any Selling Entity, to:

                  J. Baker, Inc.
                  555 Turnpike Street
                  Canton, Massachusetts 02021
                  Attention:  Chief Executive Officer

         with a copy sent contemporaneously to the same address,
                  Attention:  General Counsel

         If to the Buyer, to:

                  Footstar Corporation
                  933 MacArthur Boulevard
                  Mahwah, New Jersey 07430
                  Attention:  Chairman, President and Chief Executive Officer

         with a copy sent contemporaneously to the same address,
                  Attention:  General Counsel

         Any such notice shall be effective  (a) if delivered  personally,  when
received,  (b) if sent by  overnight  courier,  when  receipted  for, and (c) if
mailed, three (3) days after being mailed as described above.

         13.4.  Governing Law. The validity and  construction  of this Agreement
shall be governed by and construed in accordance with the internal laws (and not
the choice-of-law rules) of the State of Delaware.

         13.5.  Sections  and Section  Headings.  The  headings of sections  and
subsections  are for  reference  only and shall not limit or control the meaning
thereof.

         13.6.  Assigns.  This Agreement  shall be binding upon and inure to the
benefit  of the  parties  hereto  and their  respective  heirs,  successors  and
permitted  assigns.  Neither this  Agreement  nor the  obligations  of any party
hereunder  shall be assignable or  transferable  by such party without the prior
written  consent of the other party  hereto;  provided,  however,  that  nothing
contained in this Section 13.6 shall  prevent the Buyer,  without the consent of
the Seller,  from transferring or assigning all or part of this Agreement or all
or any part of its rights or obligations hereunder to an Affiliate of the Buyer,
but no such  transfer or assignment  shall relieve the Buyer of its  obligations
under this Agreement.

         13.7. Severability. In the event that any covenant, condition, or other
provision herein contained is held to be invalid,  void, or illegal by any court
of competent  jurisdiction,  the same shall be deemed to be  severable  from the
remainder of this  Agreement and shall in no way affect,  impair,  or invalidate
any other covenant, condition, or other provision contained herein.

         13.8.  Further  Assurances.  The parties agree to take such  reasonable
steps and  execute  such other and  further  documents  as may be  necessary  or
appropriate  to cause the terms and  conditions  contained  herein to be carried
into effect.

         13.9.  Absence of Third Party Beneficiary  Rights.  Except as otherwise
expressly provided herein, no provision of this Agreement is intended,  nor will
any  provision  be  interpreted,  to  provide  or  to  create  any  third  party
beneficiary  rights or any other rights of any kind in any Person other than the
Seller and the Buyer.

         13.10.  Counterparts.  This  Agreement  may  be  executed  in  multiple
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

         13.11.  Satisfaction of Conditions Precedent.  Subject to the terms and
conditions herein provided,  each of the parties hereto agrees to use reasonable
business  efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary,  proper or advisable under applicable laws and
regulations  to satisfy the  conditions  to Closing and to  consummate  and make
effective the transactions  contemplated by this Agreement,  including,  without
limitation,  using reasonable business efforts to lift or rescind any injunction
or  restraining  order or other  order  adversely  affecting  the ability of the
parties to consummate the transactions  contemplated by this Agreement and using
reasonable  business  efforts  to  prevent  the  breach  of any  representation,
warranty,  covenant or agreement of such party  contained or referred to in this
Agreement and to promptly  remedy the same.  Each party will promptly inform the
other  of any  facts  applicable  to it that  would  be  likely  to  prevent  or
materially delay  completion of the Agreement.  Nothing in this section shall be
construed  to  require  any  party to waive any right or  condition  under  this
Agreement.

         13.12.  Business Records.  The Buyer acknowledges that certain business
records of the Seller  relating to the  Business  prior to the  Closing  will be
conveyed to the Buyer as part of the  Acquired  Assets,  and that the Seller may
from time to time require access to or copies of such records in connection with
Tax matters and claims  arising  with respect to their  operations  prior to the
Closing  or the  winding up of their  affairs,  and the Buyer  agrees  that upon
reasonable prior notice from the Seller,  it will, during normal business hours,
provide the Seller with either  access to or, at the Buyer's  option,  copies of
such  records  for such  purposes.  The Seller  agrees to hold any  confidential
information so provided in confidence and to use such  information  only for the
purposes described above. The Buyer agrees that it will not within six (6) years
after the  Closing  Date  destroy any  business  records  prepared  prior to the
Closing  without first  notifying the Seller and affording it the opportunity to
remove or copy them. For purposes of the preceding sentence, any notice from the
Buyer  delivered in accordance  with Section 13.3 shall be deemed to be adequate
notice if not responded to in writing by the Seller within thirty (30) days.

         The Seller  acknowledges that the Buyer, in connection with Tax matters
and claims  arising with respect to its operations  after the Closing,  may from
time to time  require  access to or copies of certain  records  which the Seller
does not convey to the Buyer  hereunder  (whether  by  mistake  or because  such
records  are  intertwined  with  the  Seller's  records  relating  to its  other
businesses and the portions  relating  solely to the Business  cannot readily be
conveyed).  The Seller agrees that upon reasonable  prior notice from the Buyer,
it will,  during normal business hours,  provide the Buyer with either access to
or, at the Seller's  option,  copies of such records for such purposes.  Without
limiting the foregoing, the Seller shall upon the Buyer's request provide to the
Buyer access to or, at the Seller's option, copies of employment Tax returns and
records,  including state unemployment  insurance records and returns, sales and
use Tax returns and personal property  renditions,  to the extent related to the
Business.  The Buyer agrees to hold any confidential  information so provided in
confidence and to use such  information  only for the purposes  described above.
The Seller  agrees that it will not within six (6) years after the Closing  Date
destroy any business  records  prepared prior to the Closing and relating in any
way to the  Business  without  first  notifying  the Buyer and  affording it the
opportunity to remove or copy them. For purposes of the preceding sentence,  any
notice from the Seller delivered in accordance with Section 13.3 shall be deemed
to be adequate  notice if not responded to in writing by the Buyer within thirty
(30) days.

         13.13. Press Releases. No press release, announcement, report or filing
with respect to the  transactions  contemplated  by this  Agreement  (other than
those  required by law) shall be issued,  made,  delivered or filed  without the
prior  mutual  agreement of the parties,  and any such legally  required  action
shall be taken only after consultation with the other party.

         13.14.   Entire   Agreement.   This   Agreement   contains  the  entire
understanding of the parties, supersedes all prior agreements and understandings
relating  to the  subject  matter  hereof and shall not be  amended  except by a
written instrument hereafter signed by all of the parties hereto.

         13.15.  Risk of  Loss.  The  risk of loss or  damage  by fire or  other
casualty to the Acquired Assets until the Closing Date shall be upon the Seller.
In the event of such loss or damage prior to the Closing Date,  the Seller shall
promptly  restore,  replace  or repair the  damaged  property  to its  condition
immediately  prior to such  loss or damage  at its own cost or  expense.  In the
event such loss or damage  shall not be  restored,  replaced  or repaired by the
Closing  Date,  the Buyer shall,  at its option (a) defer the Closing Date until
such restorations, replacements, or repairs are made, or (b) receive the damaged
assets and all  insurance  proceeds  to which the Seller  would be entitled as a
result of such loss or damage plus an amount equal to the applicable deductible,
or (c) reject  such  damaged  assets,  excluding  such  damaged  assets from the
Acquired  Assets and, to the extent such  damaged  assets would  otherwise  have
constituted  Inventory,  excluding  such damaged  assets from the  definition of
Inventory for purposes of the purchase price calculation in Section 3 hereof.

         13.16 Additional  Parties.  J. Baker has endeavored to identify each of
its direct or indirect subsidiaries that own any assets which are used primarily
in the  Business,  and has  caused  each of them to  execute  and  deliver  this
Agreement as a Selling  Subsidiary.  If it is  subsequently  determined that any
direct or indirect  subsidiary of J. Baker owns any assets used primarily in the
Business  and is not a party  hereto,  J. Baker shall  promptly  cause each such
subsidiary to become a party hereto as a Selling Subsidiary. Until such time, J.
Baker shall be deemed to have made all representations, warranties and covenants
with respect to such assets as though J. Baker were the owner thereof.

         13.17  Construction.  When this  Agreement  refers to an asset which is
"used primarily in the Business" (or words of similar import),  the intent is to
refer to (a) those assets which are used  exclusively  in the Business,  and (b)
those  assets  which are used almost  exclusively  in the Business but which may
have  some  minimal   connection  with,  or  minimal  use  in  the  Non-Footwear
Businesses,  such that the  transfer  of those  assets  would be expected by any
reasonable   purchaser   of  the  Business  and  would  have  no  effect  or  an
insignificant effect on the Non-Footwear Business.

         13.18. Exhibits and Schedules. The Exhibits and Schedules identified in
this  Agreement  are  incorporated  herein by reference  and made a part hereof.
Disclosure  of a  particular  item on one Schedule  shall be deemed  adequate to
disclose  an  exception  to a  representation  or  warranty  made in a different
Schedule  if  such   disclosure   identifies  the  exception   with   reasonable
particularity.

         13.19. Specific Performance;  Remedies.  Each party hereto acknowledges
that the  Business  is unique and that the  Buyer's  opportunity  to acquire the
Business  is  a  unique  business  opportunity  for  Buyer.  Each  party  hereto
acknowledges  that the other parties will be  irreparably  harmed and that there
will be no adequate remedy at law for any violation by any of them of any of the
covenants  or  agreements  contained  in  this  Agreement,   including,  without
limitation,  the  covenants  or  agreements  contained  in Section  12.3 and the
confidentiality  obligations  set forth in Section 10. It is accordingly  agreed
that, in addition to any other  remedies  which may be available upon the breach
of any such covenants or  agreements,  each party hereto shall have the right to
obtain  injunctive  relief to  restrain  a breach or  threatened  breach  of, or
otherwise  to obtain  specific  performance  of, the  covenants  and  agreements
contained in this Agreement.  Notwithstanding the foregoing, if the transactions
contemplated  hereby are consummated on the Closing Date, then the parties' sole
remedy  and   recourse   following   the  Closing  Date  for  a  breach  of  any
representation,  warranty,  covenant or agreement contained herein (other than a
breach  of the  covenants  or  agreements  contained  in  Section  12.3  and the
confidentiality   obligations   set   forth  in   Section   10)   shall  be  the
indemnification provisions of Section 11.

         13.20.  DISCLAIMER OF OTHER  REPRESENTATIONS AND WARRANTIES.  EXCEPT AS
EXPRESSLY  SET FORTH IN THIS  AGREEMENT,  NEITHER THE SELLER NOR THE BUYER MAKES
ANY REPRESENTATIONS OR WARRANTIES TO THE OTHER, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY,  INCLUDING,  WITHOUT  LIMITATION,  WITH  RESPECT TO  MERCHANTABILITY  OR
FITNESS  FOR ANY  PARTICULAR  PURPOSE,  AND ANY SUCH  OTHER  REPRESENTATIONS  OR
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

         13.21. Non-waiver.  Any party's failure to exercise any right or remedy
hereunder or to require compliance with any duty, obligation,  or responsibility
of any party  under this  Agreement  shall not be a waiver or an estoppel of the
right to exercise  such right or remedy or to insist on such  compliance  at any
other time or on any other occasion.

         13.22.  Cumulative  Remedies.  Except  as  expressly  provided  to  the
contrary herein, no remedy herein conferred upon or reserved to the Buyer or the
Seller is  intended  to be  exclusive  of any other  remedy and each such remedy
shall be cumulative,  and shall be in addition to every other remedy given under
this Agreement, or now or hereafter existing at law or in equity or by statute.

         13.23.  Representations  and  Warranties not Modified by Due Diligence.
Each party  intends to, and is  entitled  to,  rely on the  representations  and
warranties of the other herein, and no representation or warranty made hereunder
shall be deemed  limited or diminished  in any way by virtue of any  information
which the party to whom that  representation  or warranty obtained or had access
to,  as  part  of  its  due  diligence  in  connection  with  the   transactions
contemplated by this Agreement, or otherwise.

         13.24.  Mutual  Drafting.  This  Agreement is the mutual product of the
parties  hereto,  and each  provision  hereof  has been  subject  to the  mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.

            [The remainder of this page is intentionally left blank]


<PAGE>


         IN WITNESS  WHEREOF,  and  intending to be legally  bound  hereby,  the
parties hereto have caused this Agreement to be duly executed and delivered as a
sealed instrument as of the date and year first above written.



THE BUYER:
                                            FOOTSTAR CORPORATION


                                            By: CARLOS E. ALBERINI
                                               ---------------------------------
                                      Name:     Carlos E. Alberini
                                     Title:     Senior Vice President and
                                                Chief Financial Officer


THE SELLER:
                                            J. BAKER, INC.


                                            By: ALAN I. WEINSTEIN
                                               ---------------------------------
                                      Name:     Alan I. Weinstein
                                     Title:     President and Chief Executive
                                                Officer

THE SELLING ENTITIES:
                                            JBI, INC.



                                            By: ALAN I. WEINSTEIN
                                               ---------------------------------
                                      Name:     Alan I. Weinstein
                                     Title:     President and Chief Executive
                                                Officer

                                            MORSE SHOE, INC.



                                            By: ALAN I. WEINSTEIN
                                               ---------------------------------
                                      Name:     Alan I. Weinstein
                                     Title:     President and Chief Executive


<PAGE>


                                   Exhibit 8.5

                             FORM OF CLOSING OPINION
                               OF SELLER'S COUNSEL

                                     [Date]

To the Buyer

Ladies and Gentlemen:

         We are  furnishing  this  opinion to you pursuant to Section ___ of the
Asset  Purchase   Agreement  dated  as  of  ___________,   2000  (the  "Purchase
Agreement") among Footstar  Corporation,  a Texas corporation (the "Buyer"),  J.
Baker,  Inc.,  a  Massachusetts  corporation  (the  "Company"),   JBI,  Inc.,  a
Massachusetts  corporation  ("JBI"),  Morse Shoe,  Inc., a Delaware  corporation
("Morse")  and the  other  subsidiaries  of the  Company,  JBI and Morse who are
identified  on the  signature  page  thereto.  Capitalized  terms not  otherwise
defined herein have the meanings set forth in the Purchase Agreement.

         We have examined such documents and made such other investigation as we
have deemed appropriate to render the opinions set forth below. As to matters of
fact material to our opinions, we have relied, without independent verification,
on representations made in the Transaction  Documents and certificates and other
inquiries of officers of the Company and the Selling Subsidiaries.  We also have
relied on certificates of public officials.

         Based upon the foregoing and subject to the  additional  qualifications
set forth below, we are of the opinion that:


         1. The Company and each  Selling  Subsidiary  is validly  existing as a
corporation  and  in  good  standing  under  the  law  of  its  jurisdiction  of
incorporation and has the corporate power to execute and deliver the Transaction
Documents to which it is a party and to perform its obligations thereunder.

         2.  Each  of  the  Company  and  the  Selling   Subsidiaries  has  duly
authorized,  executed and delivered the  Transaction  Documents to which it is a
party,  and  such  Transaction   Documents  constitute  its  valid  and  binding
obligations enforceable against it in accordance with their terms.

         3. The  execution  and  delivery by each of the Company and the Selling
Subsidiaries of the Transaction  Documents to which it is a party do not and the
performance  by  it  of  its   obligations   thereunder  will  not  (i)  violate
Massachusetts  , Delaware or federal law or any court order,  judgment or decree
listed  on  Schedule  __ to the to the  Purchase  Agreement  , (ii)  result in a
violation  of or  constitute  a  default  under or  breach  of, or result in the
creation of a Lien or a right of  acceleration  under,  any of the agreements or
instruments  listed on Schedule ___ to the Purchase  Agreement or (iii)  violate
its charter or by-laws.

         Our opinions  above are subject to bankruptcy,  insolvency,  fraudulent
transfer,   reorganization,   moratorium  and  other  similar  laws  of  general
application  affecting  the  rights and  remedies  of  creditors  and to general
principles of equity.

         This opinion shall be interpreted in accordance  with the Legal Opinion
Principles  issued  by the  Committee  on Legal  Opinions  of the  American  Bar
Association's  Business Law Section as published in 53 Business  Lawyer 831 (May
1998).

         This  opinion is being  furnished  only to you in  connection  with the
transaction  described  above and may not be relied on without our prior written
consent for any other purpose or by anyone else other than your participants and
assignees permitted by the Purchase Agreement.


                                                     Very truly yours,





<PAGE>


                                   Exhibit 9.4

                             FORM OF CLOSING OPINION
                               OF BUYER'S COUNSEL

                                     [Date]

To the Seller

Ladies and Gentlemen:

         We are  furnishing  this  opinion to you pursuant to Section ___ of the
Asset  Purchase   Agreement  dated  as  of  ___________,   2000  (the  "Purchase
Agreement") among Footstar  Corporation,  a Texas corporation (the "Buyer"),  J.
Baker,  Inc.,  a  Massachusetts  corporation  (the  "Company"),   JBI,  Inc.,  a
Massachusetts  corporation  ("JBI"),  Morse Shoe,  Inc., a Delaware  corporation
("Morse")  and the  other  subsidiaries  of the  Company,  JBI and Morse who are
identified  on the  signature  page  thereto.  Capitalized  terms not  otherwise
defined herein have the meanings set forth in the Purchase Agreement.

         We have examined such documents and made such other investigation as we
have deemed appropriate to render the opinions set forth below. As to matters of
fact material to our opinions, we have relied, without independent verification,
on representations made in the Transaction  Documents and certificates and other
inquiries  of officers  of the Buyer.  We also have  relied on  certificates  of
public officials.

         Based upon the foregoing and subject to the  additional  qualifications
set forth below, we are of the opinion that:


         1. The Buyer is validly  existing as a corporation and in good standing
under the law of its jurisdiction of  incorporation  and has the corporate power
to execute and deliver the  Transaction  Documents to which it is a party and to
perform its obligations thereunder.

         2.  The  Buyer  has  duly   authorized,   executed  and  delivered  the
Transaction  Documents to which it is a party,  and such  Transaction  Documents
constitute  its  valid  and  binding  obligations   enforceable  against  it  in
accordance with their terms.

         3. The execution and delivery by the Buyer of the Transaction Documents
to  which  it is a party  do not and the  performance  by it of its  obligations
thereunder  will  not (i)  violate  Texas or  federal  law or any  court  order,
judgment or decree listed on Schedule __ to the to the Purchase Agreement , (ii)
result in a violation of or  constitute a default  under or breach of, or result
in  the  creation  of a  Lien  or a  right  of  acceleration  under,  any of the
agreements or  instruments  listed on Schedule ___ to the Purchase  Agreement or
(iii) violate its charter or by-laws.  [Those portions of this opinion  governed
by Texas law shall be given by the Buyer's General Counsel or Assistant  General
Counsel,  relying solely on a review of corporate  records.  Such counsel is not
admitted to the Texas bar.]

         Our opinions  above are subject to bankruptcy,  insolvency,  fraudulent
transfer,   reorganization,   moratorium  and  other  similar  laws  of  general
application  affecting  the  rights and  remedies  of  creditors  and to general
principles of equity.

         This opinion shall be interpreted in accordance  with the Legal Opinion
Principles  issued  by the  Committee  on Legal  Opinions  of the  American  Bar
Association's  Business Law Section as published in 53 Business  Lawyer 831 (May
1998). [Alternatively,  counsel's opinion may contain assumptions and exceptions
which  are  not   materially   inconsistent   with   those   contained   in  the
above-references Legal Opinion Principles.]

         This  opinion is being  furnished  only to you in  connection  with the
transaction  described  above and may not be relied on without our prior written
consent for any other purpose or by anyone else other than your participants and
assignees permitted by the Purchase Agreement.


                                                     Very truly yours,