<PAGE>
 
                                                                     Exhibit 2.1
 

                           ASSET PURCHASE AGREEMENT

                                By and Between

                 OWENSBORO INVESTMENT COMPANY, INC., as Seller

                                      and

                       JUST FOR FEET, INC., as Purchaser


                          Dated as of March 17, 1997
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                                             TABLE OF CONTENTS

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ARTICLE I - Purchase and Sale of Assets...............................................................  1
     1.1   Assets to be Transferred...................................................................  1
     1.2   Excluded Assets............................................................................  1

ARTICLE II - Purchase Price, Payment and Allocation...................................................  2
     2.1   Purchase Price.............................................................................  2
     2.2   Payment....................................................................................  3
     2.3   Allocation of Purchase Price...............................................................  6
     2.4   Transfer Taxes.............................................................................  7

ARTICLE III - Assumption of Liabilities...............................................................  7

ARTICLE IV - Closing of Purchase and Sale.............................................................  7

ARTICLE V - Representations and Warranties of the Seller..............................................  7
     5.1   Corporate..................................................................................  7
     5.2   Authorization: Validity....................................................................  8
     5.3   No Violation...............................................................................  8
     5.4   Financial Statements.......................................................................  9
     5.5   Absence of Undisclosed Liabilities.........................................................  9
     5.6   Title to Properties; Encumbrances..........................................................  9
     5.7   Inventory.................................................................................. 10
     5.8   Compliance with Laws....................................................................... 10
     5.9   Litigation................................................................................. 10
     5.10  Contracts and Other Agreements............................................................. 10
     5.11  Real Estate................................................................................ 11
     5.12  Accounts and Notes Receivable.............................................................. 11
     5.13  Intellectual Property...................................................................... 11
     5.14  Broker's or Finder's Fees.................................................................. 11
     5.15  Employee Benefit Plans..................................................................... 11
     5.16  Labor Matters.............................................................................. 12
     5.17  Tax Matters................................................................................ 12
     5.18  Disclosure................................................................................. 12
     5.19  Investment Representation.................................................................. 12

ARTICLE VI - Representations and Warranties of the Purchaser.......................................... 13
     6.1   Due Incorporation and Qualification........................................................ 13
     6.2   Authorization.............................................................................. 13
     6.3   Non-Contravention.......................................................................... 13

                                                       -i-

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     6.4   Authority of the Purchaser................................................................. 14
     6.5   Litigation................................................................................. 14
     6.6   Broker's or Finder's Fees.................................................................. 14

ARTICLE VII - Covenants............................................................................... 14
     7.1   Conduct of Business........................................................................ 14
     7.2   Preservation of Business................................................................... 15
     7.3   Notice of Events........................................................................... 15
     7.4   Examinations and Inspections............................................................... 16
     7.5   Third Party Consents....................................................................... 16
     7.6   Properties................................................................................. 17
     7.7   Books and Records.......................................................................... 17
     7.8   Material Contracts......................................................................... 17
     7.9   Vacation Pay and Bonus Accruals............................................................ 17

ARTICLE VIII - Conditions Precedent to Obligation of Purchaser to Close............................... 17
     8.1   Representations and Covenants.............................................................. 17
     8.2   Litigation................................................................................. 17
     8.3   No Material Adverse Change................................................................. 17
     8.4   Good Standing Certificates, Etc............................................................ 18
     8.5   Consents................................................................................... 18
     8.6   Resolutions................................................................................ 18
     8.7   Governmental Permits and Approvals......................................................... 18
     8.8   Officer's Certificate...................................................................... 18
     8.9   Instruments of Transfer.................................................................... 18
     8.10  Opinion of Counsel to the Seller........................................................... 18
     8.11  Athletic Attic and Premium Sports Transactions............................................. 18
     8.12  Other Documents............................................................................ 19
     8.13  Employees.................................................................................. 19

ARTICLE IX - Conditions Precedent to Obligation of Seller to Close.................................... 19
     9.1   Representations and Warranties............................................................. 19
     9.2   Litigation................................................................................. 19
     9.3   Governmental Permits and Approvals......................................................... 19
     9.4   Resolutions................................................................................ 19
     9.5   Good Standing Certificates, Etc............................................................ 20
     9.6   Consents................................................................................... 20
     9.7   Officer's Certificate...................................................................... 20
     9.8   Assumption Agreement....................................................................... 20
     9.9   Opinion of Counsel to the Purchaser........................................................ 20
     9.10  Other Documents............................................................................ 20
     9.11  Athletic Attic and Premium Sports Transactions............................................. 20
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                                                   -ii-
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ARTICLE X - Survival of Representations and Warranties; Indemnification............................... 21
     10.1  By the Seller.............................................................................. 21
     10.2  By Purchaser............................................................................... 21
     10.3  Survival Period of Representations and Warranties and Other Matters........................ 21
     10.4  Indemnification of Third-Party Claims...................................................... 22
     10.5  Payment.................................................................................... 23
     10.6  No Waiver.................................................................................. 23
     10.7  Adjustment of Liability.................................................................... 24

ARTICLE XI  Termination of Agreement.................................................................. 24
     11.1  Termination................................................................................ 24
     11.2  Post-Termination Obligations............................................................... 25

ARTICLE XII - Miscellaneous........................................................................... 25
     12.1  Closing of the Athletic Attic and Premium Transactions..................................... 25
     12.2  Compliance with Bulk Transfer Laws......................................................... 25
     12.3  Further Assurances......................................................................... 26
     12.4  Announcements.............................................................................. 26
     12.5  Assignment; Parties in Interest............................................................ 26
     12.6  Law Governing Agreement.................................................................... 26
     12.7  Amendment and Modification................................................................. 26
     12.8  Notice..................................................................................... 26
     12.9  Expenses................................................................................... 28
     12.10 Entire Agreement........................................................................... 28
     12.11 Counterparts............................................................................... 28
     12.12 Headings................................................................................... 28

                                                     -iii-
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<PAGE>
 
Exhibits
--------

Exhibit A  Form of Lockup Agreement
Exhibit B  Opinion of Counsel to Seller
Exhibit C  Opinion of Counsel to Purchaser


Schedules
---------

Schedule 1.1  Purchased Assets
Schedule 1.2  Excluded Assets
Schedule 5.3  No Violation
Schedule 5.4  Financial Statements
Schedule 5.10  Material Contracts of Seller
Schedule 5.11  Real Property and Leases
Schedule 5.13  Intellectual Property

                                      -iv-
<PAGE>
 
                            ASSET PURCHASE AGREEMENT


     THIS AGREEMENT is made as of this 17th day of March, 1997, by and between
JUST FOR FEET, INC., an Alabama corporation (the "Purchaser"), and OWENSBORO
INVESTMENT COMPANY, INC., a Kentucky corporation (the "Seller").

                              W I T N E S S E T H:
                              - - - - - - - - - - 

     WHEREAS, Purchaser desires to purchase from Seller and Seller desires to
sell, transfer, assign, convey and deliver to Purchaser substantially all of the
assets used in Seller's business of operating a retail athletic footwear and
clothing business with locations in Louisville and Elizabethtown, Kentucky (the
"Subject Business") and assume substantially all of the liabilities in
connection with the Subject Business, all upon the terms and conditions as
hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual benefits to be derived, and
the mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Purchaser and
Seller agree as follows:


                                   ARTICLE I

                          Purchase and Sale of Assets
                          ---------------------------

     1.1   Assets to be Transferred. Subject to the terms and conditions of this
           ------------------------
Agreement, at the Closing (as defined in Article IV) Seller will sell, transfer,
assign, convey and deliver to Purchaser, and Purchaser will purchase from Seller
the assets, rights and properties described on Schedule 1.1 attached hereto, but
in each case excluding those assets described in Section 1.2 (hereinafter
collectively referred to as the "Purchased Assets").

     1.2   Excluded Assets.  The parties to this Agreement expressly acknowledge
           ---------------                                                      
and agree that there shall be excluded from the assets, rights and properties to
be transferred to the Purchaser hereunder the assets, rights and properties
described below and those assets, rights and properties described on Schedule
1.2 attached hereto (hereinafter collectively referred to as the "Excluded
Assets"):

           (a) All cash, cash equivalents and overdrafts of the Subject
Business;

           (b) Any books, records or files that do not relate to the Purchased
Assets or the Subject Business;

           (c) Seller's corporate minute books and tax records, and working
papers relating thereto;

                                      -1-
<PAGE>
 
           (d) Any claim, right or interest of Seller in or to any refund for
federal, state or local income or other taxes of any nature whatsoever relating
to periods prior to the close of business on the Closing Date; and

           (e) All other assets of Seller, whether real or personal, tangible or
intangible, not identified in Section 1.1.


                                  ARTICLE II

                     Purchase Price, Payment and Allocation
                     --------------------------------------

     2.1   Purchase Price.
           -------------- 

           2.1(a) The purchase price to be paid by Purchaser for the Purchased
Assets shall be FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100THS DOLLARS
($4,500,000.00) plus the value of the inventory of Seller as of the Closing Date
                ----
(based on Seller's inventory records and valued at the lower of cost or fair
market value and adjusted to the extent necessary in accordance with Section
2.1(b) below) (collectively, the "Purchase Price").

           2.1(b) Notwithstanding the actual value (based on the lower of cost
or fair market value) of the inventory of the Seller as of the Closing Date, if
the total value of the inventory does not exceed the total value of accounts
payable assumed under Article III hereof by at least $250,000 (the "Inventory
Excess Amount"), Purchaser shall be entitled to reduce the amount payable for
inventory hereunder on a dollar for dollar basis by the amount that such
Inventory Excess Amount is less than $250,000.

           2.1(c) At Closing, Seller shall estimate the value of Seller's
inventory as of the Closing Date (the "Estimated Inventory Value") and Purchaser
shall issue and deliver to Seller shares of JFF Stock, determined in accordance
with Section 2.2 hereof, equal in number to the amount determined by dividing
(i) $4,500,000 plus ninety percent (90%) of the Estimated Inventory Value by
(ii) the Average Closing Bid Price (as defined below).  Either on or before the
Closing Date (and if not on or before the Closing Date, no later than five (5)
days after the Closing Date), an actual physical count shall be taken of
Seller's inventory which physical count shall be reconciled to the actual value
of Seller's inventory as of the Closing Date.  If the value of Seller's
inventory resulting from such physical count reveals an inventory amount greater
than the Estimated Inventory Value, then Purchaser shall promptly cause to be
issued to Seller additional shares of JFF Stock equal in number to the value of
such difference divided by the Average Closing Bid Price.  If such physical
count shows an inventory value less than the Estimated Inventory Value, Seller
shall be obligated to return to Purchaser shares of JFF Stock equal in number to
the value of such difference divided by the Average Closing Bid Price.  Any
shares of JFF Stock required to be paid to Seller or returned to Purchaser
pursuant to this Section 2.1(c) shall be Registrable Securities.

                                      -2-
<PAGE>
 
           2.1(d) Any disagreements concerning the calculation of the inventory
valuation provided for in Section 2.1(c) above shall be settled by the final
determination of a "Big Six" accounting firm (or such other accounting firm as
the parties hereto may mutually agree upon), as agreed to between the parties
hereto, that is not then performing any services for either party, provided that
if no agreement is reached by Purchaser and Seller on such a firm, Price
Waterhouse shall be designated as such accounting firm for purposes hereof.  The
costs and expenses incurred in engaging such accounting firm shall be borne
equally by the Purchaser and Seller.

     2.2   Payment.  Upon the terms and subject to the conditions set forth in
           -------                                                            
this Agreement, the Purchaser, at the Closing, shall pay to Seller the Purchase
Price as follows:

           (i) Purchaser shall pay the Purchase Price to Seller in an amount of
common stock of the Purchaser ("JFF Stock") equal in value, as determined
hereunder, to the amount of the Purchase Price.  The number of shares (with any
resulting fractional amount to be paid in cash to the Seller) of JFF Stock shall
be determined by dividing the Purchase Price by the average Closing Bid Price
(as defined below) of the JFF Stock for the ten (10) Trading Days (as defined
below) immediately preceding the Closing Date (hereinafter the "Average Closing
Bid Price").  A "Trading Day" shall mean a day in which JFF Stock was traded on
the Nasdaq National Market System and the "Closing Bid Price" of JFF Stock shall
be the Closing Bid Price for JFF Stock as reported in the principal consolidated
transaction reporting system with respect to securities listed on the Nasdaq
National Market Reporting System for that day. The JFF Stock will be issued
hereunder consistent with the provisions of Section 2.1 and will be subject to
the restrictions and provisions set forth in Section 2.2(ii) and (iii) below;

           (ii) $1,500,000 in value of the JFF Stock delivered as Purchase Price
consideration shall not be subject to the registration requirement set forth in
Section 2.2(iii) below and at Closing, the Seller shall execute and deliver to
Purchaser a Lock Up Agreement in the form attached as Exhibit A, pursuant to
which such shares shall be restricted from transfer for a period of three (3)
years following the Closing Date; provided that transfers following any
distribution by Seller of JFF Stock to the shareholders of Seller, John Gasser
("J. Gasser") and Steven Gasser ("S. Gasser," and collectively with J. Gasser,
the "Gassers"), to members of their immediate family or trusts for their benefit
shall be permitted, subject to such transfer restriction; and

           (iii)   (a)   Certain Definitions.  As used in this Agreement,
                         -------------------                             
the following terms shall have the following respective meanings:

                   1.    The terms "register", "registered" and "registration"
     refer to a registration effected by preparing and filing a registration
     statement in compliance with the Securities Act (as defined below), and the
     declaration or ordering of effectiveness of such registration statement.

                                      -3-
<PAGE>
 
                   2.    "Registrable Securities" means (i) the shares of JFF
     Stock issued hereunder which are not covered by Section 2.2(ii) above (the
     "Registrable Shares"), and (ii) any other shares of Purchaser's Common
     Stock issued as (or issuable upon conversion or exercise of any warrant,
     right or other security which is issued as) a dividend or other
     distribution with respect to or exchange for or replacement of the
     Registrable Shares.

                   3.    "Non-Registrable Securities" means (i) the shares of
     JFF Stock issued hereunder which are covered by Section 2.2(ii) above (the
     "Non-Registrable Shares"), and (ii) any other shares of Purchaser's Common
     Stock issued as (or issuable upon conversion or exercise of any warrant,
     right or other security which is issued as) a dividend or other
     distribution with respect to or exchange for or replacement of the Non-
     Registrable Shares.

                   4.    "Securities Act" shall mean the Securities Act of 1933,
     as amended, and the rules or regulations of the SEC promulgated thereunder,
     all as the same shall be in effect at the time.

                   5.    "SEC" shall mean the Securities and Exchange Commission
     or any other federal agency at the time administering the Securities Act.

           (b) Registration on Form S-3.  Not later than forty-five (45) days
               ------------------------                                      
following the Closing Date, Purchaser agrees to prepare and file with the SEC a
Registration Statement on Form S-3 under the Securities Act (the "Registration
Statement") and proceed to use reasonable efforts to obtain all such
qualifications and compliances as may reasonably be requested by the Seller and
as would permit or facilitate the resale by the Seller of all of the Registrable
Securities; provided, however, that if Purchaser shall furnish to Seller a
certificate signed by the President of Purchaser stating that in the good faith
judgment of the Board of Directors of Purchaser, it would be seriously
detrimental to Purchaser and its stockholders for such registration to be
effected at such time, Purchaser shall have the right to defer the filing of the
Registration Statement for a period of not more than thirty (30) days.

           (c) Obligations of Purchaser.  In connection with the registration,
               ------------------------                                       
Purchaser shall (i) prepare and file the Registration Statement with the SEC,
and use its good faith efforts to cause the Registration Statement to become
effective and to remain effective until the earlier of the resale of all the
Registrable Securities so registered or one hundred eighty (180) days subsequent
to the effective date of such Registration Statement; (ii) prepare and file with
the SEC such amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to make and to keep
the Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the resale of the Registrable Securities until
the earlier of the resale of all the Registrable Securities so registered or one
hundred eighty (180) days subsequent to the effective date of the Registration
Statement; (iii) furnish to Seller such number of copies of any prospectus
(including any preliminary prospectus and any amended or supplemented
prospectus), in conformity with the requirements of the Securities Act, as

                                      -4-
<PAGE>
 
Seller may reasonably request in order to effect the resale of the Registrable
Securities; (iv) use its good faith efforts to register or qualify the
Registrable Securities covered by the Registration Statement under the
securities or blue sky laws of such states as Seller shall reasonably request,
maintain any such registration or qualification current until the earlier of the
resale of all the Registrable Securities so registered or one hundred eighty
(180) days subsequent to the effective date of the Registration Statement, and
take any and all other actions either necessary or advisable to enable Seller to
consummate the public resale of the Registrable Securities in jurisdictions
where the Seller desires to effect such resales; and (v) take other actions
reasonably necessary or desirable to permit the Registrable Securities to be
registered and sold in accordance herewith.

           (d) Expenses of Registration.  Purchaser shall pay all of the
               ------------------------                                 
reasonable out-of-pocket expenses incurred in connection with the Registration
Statement prepared and filed pursuant to this Section 2.2(iii), including,
without limitation, all SEC and blue sky registration and filing fees, printing
expenses, transfer agent and registrar fees, the fees and disbursements of
Purchaser's outside counsel and independent accountants including expenses
incurred in connection with any special audits incidental to or required by such
registration.  Any underwriting discounts, fees and disbursements of counsel to
the Seller, selling commissions and stock transfer taxes applicable to the
Registrable Securities registered on behalf of Seller shall be borne by Seller.

           (e)   Indemnification.
                 --------------- 

                 1. Purchaser will indemnify Seller and each person controlling
Seller within the meaning of Section 15 of the Securities Act and each
underwriter, if any, of the Registrable Securities covered by the Registration
Statement, with respect to any registration, qualification or compliance which
has been effected pursuant to this Agreement, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by Purchaser of any rule
or regulation promulgated under the Securities Act applicable to Purchaser in
connection with any such registration, qualification or compliance, and
Purchaser will reimburse Seller and each person controlling Seller for any legal
and any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that Purchaser will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in

                                      -5-
<PAGE>
 
conformity with written information furnished to Purchaser by Seller or
controlling person of Seller seeking indemnification.

                 2. Seller will indemnify Purchaser, each of its directors
and officers and each underwriter, if any, of the Registrable Securities covered
by the Registration Statement and each person who controls Purchaser or such
underwriters within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse Purchaser, such directors,
officers or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in the Registration Statement, prospectus, offering circular
or other document solely in reliance upon and in conformity with written
information furnished to Purchaser by Seller, provided that in no event shall
any indemnity under this subsection exceed the gross proceeds received by Seller
from the sale of any of the Registrable Securities.

           (f) Covenants with Respect to the Non-Registrable Securities.  With a
               --------------------------------------------------------         
view to making available the benefits of certain rules and regulations of the
SEC which may at any time permit the sale of the Non-Registrable Securities to
the public without registration, at all times from and after the third
anniversary of the Closing Date Purchaser agrees to:

           1. Make and keep public information available concerning the
Purchaser, as those terms are understood and defined in Rule 144 under the
Securities Act;

           2. File with the SEC in a timely manner all reports and other
documents required of Purchaser under the Securities Act and the Exchange Act;
and

           3. So long as Seller owns any Non-Registrable Securities, furnish to
Seller forthwith upon request a written statement by Purchaser as to its
compliance with the reporting requirements of said Rule 144, and of the
Securities Act and the Exchange Act, (i) an opinion of counsel addressed to the
Purchaser's transfer agent necessary to the effect the transfer of any and all
Non-Registrable Securities sold by the Seller; and (ii) a copy of the most
recent annual or quarterly report of Purchaser, and such other reports and
documents of Purchaser, and such other reports and documents so filed as Seller
may reasonably request in availing itself of any rule or regulation of the SEC

                                      -6-
<PAGE>
 
allowing Seller to sell any such Non-Registerable Securities without
registration.

     2.3   Allocation of Purchase Price.  The parties hereto acknowledge and
           ----------------------------                                     
agree that the transactions contemplated hereunder must be reported in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code").  The parties hereto agree to report the transactions contemplated
hereunder for all purposes in accordance with the Purchase Price allocation
reasonably determined by Purchaser in accordance with the reporting requirements
of applicable law. The parties hereto agree to share information and to
cooperate to the extent necessary to permit the transactions to be properly,
timely, and consistently reported in accordance with Section 1060 of the Code
and the regulations promulgated thereunder.

     2.4   Transfer Taxes.  In addition to the payment of the Purchase Price,
           --------------                                                    
Purchaser shall pay all sales and transfer taxes, if any, imposed upon the sale
and transfer of the Purchased Assets provided herein.  Purchaser shall obtain
and furnish to Seller all required resale or other exemption certificates with
respect to the Purchased Assets hereunder.


                                  ARTICLE III

                           Assumption of Liabilities
                           -------------------------

     In addition to the payment of the Purchase Price, on and effective as of
the Closing Date, the Purchaser shall by written instrument assume and
thereafter shall fully and timely pay, perform and discharge (collectively, the
"Assumed Liabilities"): (i) all accounts payable liabilities incurred by Seller
in the ordinary course of business when due in accordance with their terms,
provided, that Purchaser shall not assume more than $350,000 in value of such
accounts payable, and (ii) the existing real property leases for Seller's retail
store locations in Louisville and Elizabethtown, Kentucky. The Assumed
Liabilities shall not include any other liabilities of Seller.

                                  ARTICLE IV

                         Closing of Purchase and Sale
                         ----------------------------

     Closing of the purchase and sale provided for herein (the "Closing") shall
take place at the offices of Smith, Gambrell & Russell, 3343 Peachtree Road,
N.E., Suite 1800, Atlanta, Georgia on March 17, 1997 or at such other time and
place as the parties shall mutually agree upon (the actual date such Closing
takes place referred to herein as the "Closing Date").


                                      -7-
<PAGE>
 
                                   ARTICLE V
 
                  Representations and Warranties of the Seller
                  --------------------------------------------

     The Seller represents and warrants to the Purchaser the following (both as
of the Closing Date and as of the date hereof):

     5.1   Corporate.
           --------- 

           5.1(a) Organization.  Seller is a corporation duly organized, validly
                  ------------                                                  
existing and in good standing under the laws of the State of Kentucky.  Seller
was incorporated on June 14, 1983. No entity has ever merged with or been
consolidated into Seller.

           5.1(b) Corporate Power. Seller has all requisite corporate power and
                  ---------------
authority to own, operate and lease its properties and to carry on its business
as and where such is now being conducted.

           5.1(c) Qualification. Seller is duly licensed or qualified to do
                  -------------
business as a foreign corporation, and is in good standing, in all jurisdictions
in which the nature of its business or the character of the properties owned or
leased by it makes such licensing or qualification necessary.

           5.1(d) Subsidiaries. Seller does not own, directly or indirectly, any
                  ------------
capital stock, or other equity securities of any corporation or have any direct
or indirect equity or other ownership interest in any entity or business.

           5.1(e) Corporate Documents, Etc. Copies of the certificate or
                  ------------------------
articles of incorporation and bylaws of Seller, including any amendments
thereto, which have been delivered by the Seller to Purchaser are true, correct
and complete copies of such instruments as presently in effect. The corporate
minute book and stock records of Seller which have been furnished to Purchaser
for inspection are true, correct and complete in all material respects and
accurately reflect all material corporate action taken by Seller, including all
transactions and actions with respect to the capital stock of Seller.
 
     5.2   Authorization: Validity. The execution and delivery of this Agreement
           -----------------------                                              
and the other agreements, instruments and documents contemplated hereby (such
other agreements, instruments and documents sometimes referred to herein as the
"Ancillary Instruments") to be executed and delivered by Seller and full
performance thereunder, have been duly authorized by the Board of Directors of
Seller and no other or further corporate act on the part of such corporation is
necessary therefor.  The sole shareholders of Seller are the Gassers.  This
Agreement has been duly and validly executed and delivered by Seller and is, and
when executed and delivered the Ancillary Instruments to be executed and
delivered by Seller pursuant hereto will be, the legal, valid and binding
obligation of such corporation, enforceable in accordance with its terms, except
as such may be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable principles.

                                      -8-
<PAGE>
 
     5.3   No Violation. Except as set forth on Schedule 5.3, no consent,
           ------------                                                  
authorization or approval of, or declaration, filing or registration with, any
governmental, administrative or regulatory body, or any consent, authorization
or approval of any other third party, is necessary in order to enable the Seller
to enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby, and neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will:

           (a) be in violation of the articles of incorporation or bylaws of the
Seller or constitute a breach of any evidence of indebtedness or agreement
relating to the Subject Business to which the Seller is a party;

           (b) cause a default under any mortgage or deed of trust or other
lien, charge or encumbrance to which any Purchased Asset is subject or under any
contract relating to the Subject Business to which the Seller is a party, or
permit the termination of any such contract by another person;

           (c) result in the creation or imposition of any security interest,
lien, charge or other encumbrance upon any Purchased Assets under any agreement
or commitment to which the Seller is bound;

           (d) accelerate, or constitute an event entitling, or which would, on
notice or lapse of time or both, entitle, the holder of any indebtedness of the
Seller to accelerate the maturity of any such indebtedness;

           (e) conflict with or result in the breach of any writ, injunction or
decree of any court or governmental instrumentality; or

           (f) violate any statute, law or regulation of any jurisdiction as
such statute, law or regulation relates to the properties of the Subject
Business.

     5.4   Financial Statements.  Attached as Schedule 5.4 is an unaudited
           --------------------                                           
consolidated balance sheet of Seller dated December 31, 1996 (the "Balance Sheet
Date"), together with the unaudited statement of earnings for the fiscal year
ending December 31, 1996 (collectively, the "Financial Statements").  The
Financial Statements were prepared from the books and records of the Subject
Business in a manner consistent with the preparation of financial statements
included within Seller's federal income tax return for calendar year 1995, and
fairly present the financial condition of Seller as of the respective dates
thereof on a basis consistent with that of prior periods.

     5.5   Absence of Undisclosed Liabilities.  All liabilities of the Seller
           ----------------------------------                                
with respect to the Subject Business and the Purchased Assets (whether accrued,
absolute, contingent or otherwise and whether due or to become due) are set
forth or adequately reserved against in the Financial Statements, except for
liabilities incurred since the Balance Sheet Date in the ordinary course of
business as theretofore conducted.  The total of all liabilities in respect of

                                      -9-
<PAGE>
 
accounts payable incurred in the ordinary course of business of Seller do not
exceed, and as of the Closing Date will not exceed, $350,000 in value.

     5.6   Title to Properties; Encumbrances.  Except for assets and properties
           ---------------------------------                                   
which have been sold or otherwise disposed of in the ordinary course of
business, the Seller has good, valid and marketable title (except for leasehold
interests, rights pursuant to easements, licenses and other interests of third
parties specifically set forth on any schedule annexed hereto) to all its
material properties and assets, including all properties and assets reflected in
the Financial Statements and all other properties and assets purchased by the
Seller since the Balance Sheet Date, in each case subject to no encumbrance,
lien, charge or other restriction of any kind or character, except for (i) liens
reflected in the Financial Statements, (ii) liens consisting of zoning or
planning restrictions, easements, permits and other restrictions or limitations
on the use of real property or irregularities in title thereto which do not
materially detract from the value of such property or materially impair the use
of such property by the Seller in the operation of the Subject Business, and
(iii) liens for current taxes, assessments or governmental charges or levies on
property not yet due and delinquent (liens of the type described in clause (i),
(ii) and (iii) above are hereinafter sometimes referred to as "Permitted
Liens").

     5.7   Inventory.  The inventory shown on the Financial Statements or
           ---------                                                     
thereafter acquired (the "Inventory") consists of products saleable in the
ordinary course of business as presently conducted by the Seller.  The amounts
at which the Inventory is carried on the Financial Statements fairly represent
the cost (or market value if lower) thereof.

     5.8   Compliance with Laws.  With respect to the Subject Business, (i)
           --------------------                                            
Seller has received no notice from any governmental authority that it is in
violation of applicable laws and regulations, and (ii) Seller has not received
any notification of past violations of such laws or regulations that could
reasonably be expected to result in future material claims against it.  Seller
holds all licenses, permits, orders and approvals of any federal, state or local
governmental or regulatory bodies that are material to or necessary for the
conduct of the Subject Business (collectively "Permits").  All Permits are in
full force and effect and no proceeding is pending or threatened to revoke or
limit any Permit.

     5.9   Litigation.  There are no actions, suits or claims, or legal,
           ----------                                                   
administrative or arbitral proceedings or investigations pending or, to the best
knowledge and belief of the Seller, threatened against or involving the Seller
or any of its properties or assets with respect to the Subject Business.

     5.10  Contracts and Other Agreements. Schedule 5.10 annexed hereto contains
           ------------------------------
a complete and accurate list of all of the following contracts and other
agreements with respect to the Subject Business to which the Seller is a party
or by or to which it or its assets or properties are bound or subject:

           (i) contracts and other agreements with any current or former
officer, director, or employee not cancelable without penalty on notice of
thirty (30) days or less;

                                      -10-
<PAGE>
 
           (ii) contracts and other agreements with material suppliers of
products sold or leased by Seller in the normal course of the Subject Business;

           (iii) contracts and other agreements relating to the borrowing of
money; and

           (iv) any other contract or other agreement which the Seller
reasonably believes is material to the Subject Business (other than those
reflected on any of the other schedules to this Agreement). There have been
delivered or made available to the Purchaser true and complete copies of all of
the contracts and other agreements set forth on Schedule 5.10 or on any other
schedule annexed hereto. All of such contracts and other agreements are valid
and binding upon the Seller in accordance with their terms, and the Seller is
not in material default under any such contracts.

     5.11  Real Estate.
           ----------- 

           (a) Seller does not own any real property.

           (b) Schedule 5.11 annexed hereto sets forth a list and summary
description of all leases or other agreements under which the Seller is the
lessee of, or uses or occupies any real property (the "Leases"). All of the
Leases, true and complete copies of which have been delivered or made available
to the Purchaser, are in effect and the Seller is not in default under or with
respect to any of the Leases nor has the Seller received or sent any notice of
any default under or with respect to any of the same. No other party to any of
the Leases is in material default under or with respect to any of the same.

     5.12  Accounts and Notes Receivable.  All accounts receivable reflected on
           -----------------------------                                       
the Financial Statements, and all accounts receivable arising subsequent to the
Balance Sheet Date and prior to the Closing Date, have arisen, or will have
arisen at the Closing Date, in the ordinary course of business of the Seller and
represent, or will represent, valid obligations due to the Seller.

     5.13  Intellectual Property. Schedule 5.13 annexed hereto sets forth a list
           ---------------------
of all trademarks, service marks and trade names (collectively, "Intellectual
Property") that are used to identify the Subject Business or owned by the
Seller. Except as set forth on Schedules 5.6 or 5.13, all Intellectual Property
is owned outright by Seller, free and clear of any lien or encumbrance and
except as so set forth there exist no obligations with respect to any
Intellectual Property requiring the Seller to make any payment in respect of its
use or otherwise. Except as set forth on Schedule 5.13, the Seller has no notice
of any patent, trademark, service mark or trade name of any other person that
infringes upon, or is infringed upon by, any of the property set forth on
Schedule 5.13 or notice of any claim of any other person relating to any of the
Intellectual Property set forth on Schedule 5.13 or any process or confidential
information of the Seller.

                                      -11-
<PAGE>
 
     5.14  Broker's or Finder's Fees.  Other than Interstate/Johnson Lane as
           -------------------------                                        
provided under the Premium Purchase Agreement (as defined in Section 8.11 of
this Agreement), no agent, broker, person or firm acting on behalf of the Seller
is, or will be, entitled to any commission or broker's or finder's fees from any
of the parties hereto, or from any person controlling, controlled by or under
common control with any of the parties hereto, in connection with any of the
transactions contemplated herein.

     5.15  Employee Benefit Plans.  The Seller does not maintain any employee
           ----------------------                                            
benefit plans, as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other similar fringe or employee benefit plans, programs or arrangements,
and any employment or compensation agreements, written or otherwise.

     5.16  Labor Matters.  With respect to the Subject Business, the Seller is
           -------------                                                      
currently in compliance in all material respects with all applicable laws, rules
and regulations relating to the employment of labor, including those related to
wages, hours, collective registrations, and authorizations.  Seller has paid or
caused to be paid all compensation, including any bonuses and accrued vacation
pay, if any, due and payable to its employees through the date hereof and will
cause such amounts to be paid through the Closing Date.

     5.17  Tax Matters. All federal, state, foreign, county, local and other tax
           -----------
returns required to be filed by or on behalf of Seller have been timely filed
(or if filed late all applicable penalties and interest have been paid) and when
filed were true and correct in all material respects, and the taxes shown as due
thereon were paid or adequately accrued. True and complete copies of all tax
returns or reports filed by or on behalf of Seller for each of its 1994 and 1995
fiscal years have been delivered to Purchaser. Not later than the Closing Date,
Seller will deliver to the Purchaser a true and complete copy of the federal
income tax return of the Seller to be prepared and filed for its 1996 fiscal
year. Seller has duly withheld and paid all taxes which it is required to
withhold and pay relating to salaries and other compensation heretofore paid to
its respective employees.

     5.18  Disclosure.  No representation or warranty by the Seller in this
           ----------                                                      
Agreement, nor any statement, certificate, schedule or exhibit hereto furnished
or to be furnished by or on behalf of  the Seller pursuant to this Agreement,
nor any document or certificate delivered to Purchaser pursuant to this
Agreement or in connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not misleading.
All statements and information contained in any certificate, instrument,
schedule or document delivered by or on behalf of the Seller shall be deemed
representations and warranties by the Seller.

     5.19  Investment Representation.  Seller represents and warrants to
           -------------------------                                    
Purchaser that Seller is acquiring the Registrable Securities and Non-
Registrable Securities to be issued pursuant to this Agreement for investment

                                      -12-
<PAGE>
 
for Seller's own account, not on behalf of others and not with a view to resell
or otherwise distribute such Registrable Securities or Non-Registrable
Securities except pursuant to either a valid registration under the Securities
Act and applicable state securities laws or a valid exemption from such
registration requirements.  Seller acknowledges that the Registrable Securities
and Non-Registrable Securities have not been registered under the Securities
Act, or under any state securities laws and, therefore, cannot be resold unless
registered under the Securities Act and applicable state securities laws or
unless an exemption from registration is available and, as a result, Seller must
bear the risk of an investment in such JFF Stock for an indefinite period of
time.  The financial condition of Seller is currently adequate to bear the
substantial economic risk of an investment in Registrable Securities and Non-
Registrable Securities. Seller has sufficient knowledge and experience in
investment and business matters to understand the economic risk of such an
investment and the risk involved in a commercial enterprise such as Purchaser.
Seller is a corporation organized under the laws of the State of Kentucky and
all communications and information, written or oral, concerning the Registrable
Securities and Non-Registrable Securities and this Agreement have been directed
to Seller and have been received only in Kentucky, Georgia or Alabama. Seller
has had ample opportunity to obtain and carefully read all of SEC reports and
filing concerning Purchaser. Seller has had an opportunity to ask questions of,
and receive answers from, officers of Purchaser concerning Purchaser and the
Registrable Securities and Non-Registrable Securities and to obtain any
additional information which such Shareholder reasonably requested. Seller is an
"accredited investor" within the meaning of Regulation D under the Securities
Act, and Seller shall deliver to Purchaser such information as Purchaser shall
reasonably request to establish Seller's status as an "accredited investor." If
Seller declares a dividend to its Shareholders of any of the Registrable
Securities and Non-Registrable Securities received by it, Seller shall prior to
the delivery of such capital stock of Purchaser to Seller's Shareholders obtain
from each such Shareholder and deliver to Purchaser such documentation as
Purchaser may reasonably request at such time. Nothing stated herein shall be
deemed or construed to modify or reduce the obligations of Purchaser to register
the Registrable Shares in accordance with the terms of Section 2.2(iii) hereof.

                                  ARTICLE VI

                Representations and Warranties of the Purchaser
                -----------------------------------------------

     The Purchaser represents and warrants to the Seller the following (both as
of the Closing Date and as of the date hereof):

     6.1   Due Incorporation and Qualification.  The Purchaser is a corporation
           -----------------------------------                                 
duly organized, validly existing and in good standing under the laws of its
state of incorporation, and has the corporate power to carry on its business as
now being conducted and to own or lease its properties and assets as now owned,
leased or operated by it.  The Purchaser is duly qualified or otherwise
authorized as a foreign corporation to transact business and is in good standing
in each jurisdiction in which a failure to be so qualified would have a material
adverse effect on the business of the Purchaser.

                                      -13-
<PAGE>
 
     6.2   Authorization.  The Purchaser has full corporate power and authority
           -------------                                                       
under its articles of incorporation and bylaws and, the Board of Directors of
Purchaser has taken all necessary corporate action to authorize the Purchaser to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and assuming due authorization, execution and delivery of
this Agreement by the Seller, this Agreement constitutes the valid and binding
obligation of the Purchaser enforceable in accordance with its terms except that
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and the remedy of specific performance and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

     6.3   Non-Contravention.  Neither the execution and delivery of this
           -----------------                                             
Agreement or the other agreements contemplated hereby nor the consummation of
the transactions contemplated hereby does or will violate, conflict with, result
in a breach of any provision of, constitute a default under, result in the
termination of or permit any third party to terminate (with or without notice,
lapse of time or pursuant to any legal or equitable principle) or accelerate the
performance required on the part of the Purchaser by the terms of, or accelerate
the maturity of or require the prepayment of any indebtedness of the Purchaser
under, any judgment, order, decree or agreement or instrument to or by which the
Purchaser or any of its assets is subject or bound.

     6.4   Authority of the Purchaser. No consent, authorization or approval of,
           --------------------------
or declaration, filing or registration with, any governmental, administrative or
regulatory body, or any consent, authorization or approval of any other third
party, is necessary in connection with the Purchaser's purchase of the Purchased
Assets contemplated hereby or the consummation of the other transactions
contemplated hereby.

     6.5   Litigation.  There are no claims, actions, suits, proceedings or
           ----------                                                      
investigations pending or, to the best knowledge of the Purchaser, threatened by
or against the Purchaser with respect to the transactions contemplated hereby,
at law or in equity or before or by any federal, state, municipal, foreign or
other governmental department, commission, board, agency, instrumentality or
authority.

     6.6   Broker's or Finder's Fees.  Except for Croft & Bender, LLC, no agent,
           -------------------------                                            
broker, person or firm acting on behalf of Purchaser is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any person controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions contemplated
herein.  The liability of Croft & Bender, LLC, is the liability of, and shall be
paid in full by, the Purchaser.

                                      -14-
<PAGE>
 
                                  ARTICLE VII

                                   Covenants
                                   ---------

     7.1   Conduct of Business.  Between the date hereof and the Closing Date,
           -------------------                                                
Seller shall conduct the Subject Business in the ordinary course and in such a
manner so that the representations and warranties contained in Article V shall
continue to be true and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date.  Without limiting the
generality of the foregoing, with respect to the Subject Business and the assets
used therein Seller shall refrain from:

           (i) incurring any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), except in the ordinary course of
business;

           (ii) permitting any of its assets to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of any kind,
except in the ordinary course of business;

           (iii) selling, transferring or otherwise disposing of any assets
except in the ordinary course of business;

           (iv) making any capital expenditure or commitment therefor, except in
the ordinary course of business;

           (v) increasing its indebtedness for borrowed money, except current
borrowings in the ordinary course of business, or making any loan to any person;

           (vi) writing off as uncollectible any accounts receivable, except
write-offs in the ordinary course of business charged to applicable reserves,
none of which individually or in the aggregate shall be material to the Seller;

           (vii) granting any increase in the rate of wages, salaries, bonuses
or other remuneration of any executive employee or other employees, except in
the ordinary course of business;

           (viii) canceling or waiving any claims or rights of substantial
value;

           (ix) making any change in any method of accounting or auditing
practice;

           (x) otherwise conducting the Subject Business or entering into any
transaction with respect thereto, except in the usual and ordinary manner and in
the ordinary course of its business; or

           (xi) agreeing, whether or not in writing, to do any of the foregoing.

                                      -15-
<PAGE>
 
     The Seller represents and warrants to Purchaser that it has not taken any
action prohibited in clauses (i) through (xi) above between the Balance Sheet
Date and the date hereof.

     7.2   Preservation of Business.  The Seller shall (consistent with the
           ------------------------                                        
Seller's normal business practices) preserve the Subject Business, and maintain
the present suppliers and customers of the Subject Business.

     7.3   Notice of Events.  The Seller shall promptly notify the Purchaser of
           ----------------                                                    
(i) any event, condition or circumstance occurring from the date hereof through
the Closing Date and known to the Seller that would constitute a violation or
breach of this Agreement, or (ii) any event, occurrence, transaction or other
item known to the Seller which would have been required to have been disclosed
on any schedule or statement delivered hereunder, had such event, occurrence,
transaction or item existed on the date hereof, other than items arising in the
ordinary course of business which would not render any representation or
warranty of the Seller materially misleading.

     7.4   Examinations and Inspections.
           ---------------------------- 

           (a) Prior to the Closing Date, the Purchaser shall be entitled,
through its employees and representatives, including, without limitation, the
Purchaser's accountants and legal counsel, to make such inspection of the
assets, properties, business and operations of the Subject Business, and such
examination of the books, records and financial condition of the Subject
Business as the Purchaser reasonably desires.  Any such inspection and
examination shall be conducted at reasonable times and under reasonable
circumstances which do not disrupt the business, properties or assets of the
Subject Business and with respect to inspections and examinations relating to
the Subject Business and involving the property and assets of third parties,
subject to the consent of such third parties and consistent with their policies.
In order that the Purchaser may have full opportunity to make such business,
accounting and legal review, examination or inspection as it may reasonably
desire of the Subject Business, the Seller shall furnish the representatives of
the Purchaser during such period with all such information and copies of such
documents concerning the affairs of the Seller with respect to the Subject
Business as such representatives may reasonably request and cause its officers,
employees, agents, accountants and attorneys to cooperate with such
representatives in connection with such review and examination.

           (b) Purchaser agrees with respect to any information or documents
obtained from the Seller concerning its assets, properties, customers, policies,
finances, costs, sales, revenues, rights, obligations, liabilities, strategies,
business and operations ("Confidential Information"), that, unless and until the
transactions contemplated by this Agreement shall have been consummated, (a)
such information is confidential and/or proprietary to Seller and is entitled to
and shall receive treatment as such by Purchaser (except to the extent that any
such information is readily ascertainable from public or published information,
or trade sources), and (b) Purchaser will, and will cause all of its employees,
representatives, agents and advisors who have access to any Confidential

                                      -16-
<PAGE>
 
Information to, hold in confidence and not disclose or use (except in respect of
the transactions contemplated by this Agreement) any such Confidential
Information.  The Purchaser and the Seller shall also each comply with the
restrictions on publicity set forth in Section 12.4 of this Agreement.  If the
transactions contemplated by this Agreement are not closed all documents and
other materials obtained by the Purchaser from the Seller shall be returned.

     7.5   Third Party Consents.  The Seller agrees to obtain, prior to the
           --------------------                                            
Closing Date, such consents and approvals as may be required from parties to
material contracts or other agreements with the Seller in order to prevent the
Seller or the Purchaser from suffering a material adverse effect as a result of
the execution and delivery of this Agreement by the Seller or the consummation
of the transactions contemplated by this Agreement.  The Purchaser agrees to
provide to the Seller such assistance and information as may be required to
obtain the consents and approvals referred to above. Notwithstanding anything in
this Agreement to the contrary, this Agreement shall not constitute an agreement
by the Seller to assign, or the Purchaser to assume and agree to pay, perform or
otherwise discharge, any material contracts or other agreements included in the
Purchased Assets if an attempted assignment or assumption thereof without the
consent of a third person thereto would constitute a breach thereof unless and
until such consent is obtained.

     7.6   Properties.  The Seller shall maintain all of its properties used in
           ----------                                                          
the operation of the Subject Business in customary repair, order and condition,
reasonable wear and tear excepted, and will maintain insurance upon all such
properties, in such amounts and of such kinds as are comparable to that in
effect on the date hereof.

     7.7   Books and Records.  Until the Closing, the Seller shall maintain its
           -----------------                                                   
books, accounts and records in connection with the Subject Business in the usual
manner on a basis consistent with the prior years.

     7.8   Material Contracts.  The Seller shall refrain from amending,
           ------------------
modifying or consenting to the termination of any material contract or other
material agreements to be transferred to the Purchaser or waive any of the
Seller's material rights with respect thereto.

     7.9   Vacation Pay and Bonus Accruals.  No vacation pay or bonus accruals
           -------------------------------                                    
will be payable to employees of the Subject Business as of the Closing Date.

                                      -17-
<PAGE>
 
                                 ARTICLE VIII

                            Conditions Precedent to
                        Obligation of Purchaser to Close
                        --------------------------------

     The obligation of the Purchaser to enter into and complete the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived by Purchaser only in writing:

     8.1   Representations and Covenants.  The representations and warranties of
           -----------------------------                                        
the Seller contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.  The Seller shall have performed and
complied with all covenants and agreements (including, without limitation, those
contained in Article VII) required by this Agreement to be performed or complied
with by the Seller on or prior to the Closing Date.

     8.2   Litigation.  No action, suit or proceeding shall have been instituted
           ----------                                                           
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain or prevent the carrying out
of the transactions contemplated by this Agreement or to seek damages in
connection with such transactions, that has or could reasonably be expected to
have, in the opinion of the attorneys of the Purchaser, a materially adverse
effect on the assets, properties, business, operations or financial condition of
the Seller.

     8.3   No Material Adverse Change.  Purchaser shall be satisfied in its
           --------------------------                                      
reasonable discretion that since December 31, 1995 there has been no material
adverse change in the assets or liabilities, the business or financial condition
of the Subject Business.

     8.4   Good Standing Certificates, Etc.  Seller shall have delivered all
           -------------------------------
such certificates, documents or instruments with respect to Seller's corporate
existence and authority as Purchaser's counsel may have reasonably requested
prior to the Closing Date.

     8.5   Consents.  The Seller shall have obtained and delivered to the
           --------                                                      
Purchaser such consents as the Purchaser may have reasonably requested that the
Seller obtain in accordance with Section 7.5 hereof, except where the failure to
so obtain could not reasonably be expected to have a material adverse effect on
the Subject Business.

     8.6   Resolutions.  There shall have been delivered to the Purchaser a copy
           -----------                                                          
of the resolutions duly adopted by the board of directors of the Seller, and
certified accurate by an executive officer of the Seller as of the Closing Date,
authorizing and approving the execution and delivery by the Seller of this
Agreement and the consummation by the Seller of the transactions contemplated
hereby.

                                      -18-
<PAGE>
 
     8.7   Governmental Permits and Approvals.  All permits and approvals from
           ----------------------------------                                 
any governmental or regulatory body required for the lawful consummation of the
Closing shall have been obtained.

     8.8   Officer's Certificate.  There shall have been delivered to the
           ---------------------                                         
Purchaser a certificate of an executive officer of the Seller dated the Closing
Date certifying that the representations and warranties of the Seller contained
herein are true and correct on and as of the Closing Date.

     8.9   Instruments of Transfer.  The Seller shall have executed and
           -----------------------
delivered to the Purchaser lease assignments, bills of sale and consents and/or
waivers dated the Closing Date, transferring to the Purchaser all of the
Seller's right, title, and interest in and to the Purchased Assets without
representation or warranty by or recourse against the Seller.

     8.10  Opinion of Counsel to the Seller.  The Purchaser shall have received
           --------------------------------                                    
an opinion of counsel to the Seller reasonably satisfactory to the Purchaser,
dated the Closing Date, in form and substance reasonably satisfactory to the
Purchaser, substantially to the effect set forth in Exhibit B hereto.

     8.11  Athletic Attic and Premium Sports Transactions.  The transactions
           ----------------------------------------------                   
contemplated by each of (i) that certain Stock Purchase Agreement (the "Athletic
Attic Purchase Agreement"), dated as of December 12, 1996, among Premium Sports,
Inc. ("Premium"), Athletic Attic Properties, Inc. ("Athletic Attic") and the
shareholders of Athletic Attic, as amended pursuant to that certain Amendment to
Stock Purchase Agreement dated as of February 17, 1997 and that certain Second
Amendment to Stock Purchase Agreement, dated as of March 17, 1997, and (ii) that
certain Stock Purchase Agreement (the "Premium Purchase Agreement"), dated as of
the date hereof, among J. Gasser, Premium and Purchaser, shall have been
consummated in accordance with the terms of such agreements. The parties agree
to cooperate in good faith to close the transactions contemplated by this
Agreement, the Athletic Attic Purchase Agreement and the Premium Purchase
Agreement, in accordance with the terms of this Agreement and such other
agreements.

     8.12  Other Documents.  Seller shall have delivered all other documents,
           ----------------                                                  
instruments or writings required to be delivered to Purchaser at or prior to the
Closing pursuant to this Agreement and such other certificates of authority
(including good standing certificates), documents, instruments or writings as
Purchaser may reasonably request.

     8.13  Employees.  Seller shall have provided evidence to Purchaser of its
           ---------                                                          
termination of all employees of the Subject Business effective as of the Closing
Date and payment of vacation pay and bonus accruals, if any, required to be paid
by Seller pursuant to Section 7.9 of this Agreement.


                                      -19-
<PAGE>
 
                                  ARTICLE IX
 
                            Conditions Precedent to
                         Obligation of Seller to Close
                         -----------------------------

     The obligation of the Seller to enter into and complete the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived by the Seller only in
writing:

     9.1   Representations and Warranties.  The representations and warranties
           ------------------------------
of the Purchaser contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date. The Purchaser shall have performed
and complied with all covenants and agreements (including, without limitation,
those contained in Article VII) required by this Agreement to be performed or
complied with by the Purchaser on or prior to the Closing Date.

     9.2   Litigation.  No action, suit or proceeding shall have been instituted
           ----------                                                           
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain or prevent the carrying out
of the transactions contemplated hereby, or to seek damages in connection with
such transactions, that has or could reasonably be expected to have, in the
opinion of the attorneys of the Seller, a materially adverse effect on the
assets, properties, business, operations or financial condition of the
Purchaser.

     9.3   Governmental Permits and Approvals.  All permits and approvals from
           ----------------------------------                                 
any governmental or regulatory body required for the lawful consummation of the
Closing shall have been obtained.

     9.4   Resolutions.  There shall have been delivered to the Seller a copy of
           -----------                                                          
the resolutions duly adopted by the board of directors of the Purchaser, and
certified accurate by an executive officer of the Purchaser as of the Closing
Date, authorizing and approving the execution and delivery by the Purchaser of
this Agreement and the consummation by the Purchaser of the transactions
contemplated hereby.

     9.5   Good Standing Certificates, Etc.  Purchaser shall have delivered all
           -------------------------------                                     
such certified resolutions, certificates, documents or instruments with respect
to Purchaser's corporate existence and authority as Seller's counsel may have
reasonably requested prior to the Closing Date.

     9.6   Consents.  The Seller shall have obtained such consents of third
           --------                                                        
parties as Seller may deem necessary to consummate the transaction contemplated
herein, such consents to include releases of any and all obligations of Seller
or its affiliates to third parties under any contracts or agreements between
Seller and such third parties.

     9.7   Officer's Certificate.  There shall have been delivered to the Seller
           ---------------------                                                
a certificate of an executive officer of the Purchaser dated the Closing Date
certifying that the representations and warranties of the Purchaser contained
herein are true and correct on and as of the Closing Date.

                                      -20-
<PAGE>
 
     9.8   Assumption Agreement.  The Purchaser shall have executed and
           --------------------
delivered to the Seller an assumption agreement pursuant to which the Purchaser
assumes those obligations relating to the Subject Business contemplated in
Article III.

     9.9   Opinion of Counsel to the Purchaser.  The Seller shall have received
           -----------------------------------                                 
an opinion of counsel to the Purchaser reasonably satisfactory to the Seller,
dated the Closing Date, in form and substance reasonably satisfactory to counsel
for the Seller substantially to the effect set forth in Exhibit C hereto.

     9.10  Other Documents.  Purchaser shall have delivered all other documents,
           ----------------                                                     
instruments or writings required to be delivered to Seller at or prior to the
Closing pursuant to this Agreement and such other certificates of authority
(including good standing certificates), documents, instruments or writings as
Seller may reasonably request.

     9.11  Athletic Attic and Premium Sports Transactions.  The transactions
           ----------------------------------------------                   
contemplated by each of (i) the Athletic Attic Purchase Agreement, and (ii) the
Premium Purchase Agreement, shall have been or will be consummated in accordance
with the terms of such agreements contemporaneously with this Agreement.


                                   ARTICLE X

                        Survival of Representations and
                          Warranties; Indemnification
                         -------------------------------

     10.1  By the Seller.  Subject to the terms and conditions of this
           -------------                                              
Article 10, the Seller shall indemnify, defend and hold harmless Purchaser, and
its successors and assigns, and directors, officers, employees, and agents
(hereinafter "Purchaser's Affiliates") from and against all Claims (as defined
below) asserted against, resulting to, imposed upon, or incurred by Purchaser or
Purchaser's Affiliates, directly or indirectly, by reason of, arising out of or
resulting from:

     (a)   the inaccuracy or breach of any representation or warranty of the
           Seller contained in or made pursuant to this Agreement or any of the
           Ancillary Instruments (regardless of whether such breach is deemed
           "material" for purposes of Section 8.1);

     (b)   the breach of any covenant of the Seller contained in this
           Agreement or any of the Ancillary Instruments; or

                                      -21-
<PAGE>
 
     (c)   any Claim by any person or entity, whether or not identified in
           this Agreement, that such person has or had any rights with respect
           to the Purchased Assets.

As used in this Article 10, the term "Claim" shall include (i) all debts,
liabilities and obligations; (ii) all losses, damages (including, without
limitation, consequential damages), judgments, awards, settlements, costs and
expenses (including, without limitation, interest (including prejudgment
interest in any litigated matter), penalties, court costs and attorneys fees and
expenses (including those incurred to enforce rights under this Article X); and
(iii) all demands, claims, suits, actions, costs of investigation, causes of
action, proceedings and assessments, whether or not ultimately determined to be
valid.

     10.2  By Purchaser.  Subject to the terms and conditions of this
           ------------                                              
Article X, Purchaser hereby agrees to indemnify, defend and hold harmless the
Seller from and against all Claims asserted against, resulting to, imposed upon
or incurred by Seller, directly or indirectly, by reason of, arising out of or
resulting from (a) the inaccuracy or breach of any representation or warranty of
Purchaser contained in or made pursuant to this Agreement or any of the
Ancillary Instruments (regardless of whether such breach is deemed "material"
for purposes of Section 9.1), (b) the breach of any covenant or agreement of
Purchaser contained in this Agreement or any of the Ancillary Instruments, or
(c) any and all claims for brokerage commissions or finders fees incurred by
Purchaser in connection with the execution of this Agreement or the consummation
of the transactions contemplated hereby.

     10.3  Survival Period of Representations and Warranties and Other Matters.
           -------------------------------------------------------------------

           10.3(a) For indemnification purposes only, the representations and
warranties covered in this Agreement will survive for a period of eighteen (18)
months immediately following the Closing Date; provided, however that the
representations and warranties as to tax matters, including those in Section
5.17, shall survive for the period of time equal to the applicable statute of
limitations in respect of Claims related thereto.  Any Claim for indemnification
for breach of a representation or warranty must be instituted prior to the
expiration of the representation and warranty survival period as specified in
this Section 10.3.

           10.3(b) The maximum liability of Seller for any and all Claims under
this Article X shall be in an amount equal to $3,000,000 plus the value of the
inventory of the Seller as of the Closing Date. Seller shall have no liability
under this Article X unless the aggregate amount of the damages and losses to
the Purchaser exceeds ten thousand dollars ($10,000) (the "Threshold"), and
thereafter Seller shall be required to pay all Claims hereunder, including those
Claims aggregating the initial ten thousand dollars ($10,000) in claims. It is
agreed that as to liability for any Claims under this Agreement, Seller may
satisfy any such Claims by means of a return to Purchaser of such number of
shares of Registrable Securities of Purchaser received by the Gassers or Seller
under this Agreement as is equal in value to

                                      -22-
<PAGE>
 
the amount of the applicable Claim(s), based on the value at which such capital
stock was issued to Seller under this Agreement.

     10.4  Indemnification of Third-Party Claims.  The obligations and
           -------------------------------------                      
liabilities of any party to indemnify any other under this Article X with
respect to a Claim relating to or arising from a Claim relating to third parties
(a "Third Party Claim") shall be subject to the following terms and conditions:

           10.4(a)  Notice and Defense.  The party or parties to be indemnified
                    ------------------                                         
(whether one or more, the "Indemnified Party") will give the party from whom
indemnification is sought (the "Indemnifying Party") prompt written notice of
any such Claim, and the Indemnifying Party may undertake the defense thereof by
representatives chosen by it.  Failure to give notice shall not affect the
Indemnifying Party's duty or obligations under this Article X, except to the
extent the Indemnifying Party is prejudiced thereby.  If the Indemnifying Party
undertakes the defense of a Third Party Claim, then the Indemnifying Party shall
be deemed to accept that it has an indemnification obligation under this Article
X with respect to such Third Party Claim, unless it shall in writing reserve the
right to contest its obligation to provide indemnity with respect to such Third
Party Claim.  So long as the Indemnifying Party is defending any such Third
Party Claim actively and in good faith, the Indemnified Party shall not settle
such Claim.  The Indemnified Party shall make available to the Indemnifying
Party or its representatives all records and other materials required by them
and in the possession or under the control of the Indemnified Party, for the use
of the Indemnifying Party and its representatives in defending any such Claim,
and shall in other respects give reasonable cooperation in such defense.

           10.4(b)      Failure to Defend.  If the Indemnifying Party, within
                        -----------------                                    
thirty (30) days after notice of any such Claim, fails to dispute the obligation
of the Indemnifying Party with respect to such Claim and fails to defend such
Claim actively and in good faith, then the Indemnified Party will (upon written
notice to the Indemnifying Party) have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a judgment
with respect to such Claim, on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall thereafter have no right to
challenge the Indemnified Party's defense, compromise, settlement or consent to
judgment therein.

           10.4(c)  Indemnified Party's Rights.  Anything in this Section 10.4
                    --------------------------
to the contrary notwithstanding, (i) if there is a reasonable probability that a
Claim may materially and adversely affect the Indemnified Party other than as a
result of money damages or other money payments, the Indemnified Party shall
have the right to defend, compromise or settle such Claim, and (ii) the
Indemnifying Party shall not, without the written consent of the Indemnified
Party, settle or compromise any Claim or consent to the entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Claim.

     10.5  Payment.  The Indemnifying Party shall promptly pay the
           -------                                                
Indemnified Party any amount due under this Article X, which payment may be
accomplished in whole or in part, at the option of the Indemnified Party, by the

                                      -23-
<PAGE>
 
Indemnified Party setting off any amount owed (whether arising hereunder or
otherwise) to the Indemnifying Party by the Indemnified Party.  To the extent
set off is made by an Indemnified Party in satisfaction or partial satisfaction
of an indemnity obligation under this Article X that is disputed by the
Indemnifying Party, upon a subsequent determination by final judgment not
subject to appeal that all or a portion of such indemnity obligation was not
owed to the Indemnified Party, the Indemnified Party shall pay the Indemnifying
Party the amount which was set off and not owed together with interest from the
date of set off until the date of such payment at an annual rate equal to the
average annual rate in effect as of the date of the set off, on those three
maturities of United States Treasury obligations having a remaining life, as of
such date, closest to the period from the date of the set off to the date of
such judgment.  Upon judgment, determination, settlement or compromise of any
Third Party Claim, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by
judgment, determination, settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of a judgment an
appeal is made from the judgment.  If the Indemnifying Party desires to appeal
from an adverse judgment, then the Indemnifying Party shall post and pay the
cost of the security or bond to stay execution of the judgment pending appeal.
Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to the
extent not waived in settlement, against the third party who made such Third
Party Claim.

     10.6  No Waiver.  The closing of the transactions contemplated by this
           ---------
Agreement shall not constitute a waiver by any party of its rights to
Indemnification hereunder, regardless of whether the party seeking
Indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing.

     10.7  Adjustment of Liability.  In the event an Indemnifying Party is
           -----------------------                                        
required to make any payment under this Article X in respect of any damages,
liability, obligation, loss, claim, or other amount indemnified hereunder, such
Indemnifying Party shall pay the Indemnified Party an amount (the "Adjusted
Amount") which is equal to the sum of (i) the amount of such damages, liability,
obligation, loss, claim or other amount, minus (ii) the amount of any insurance
proceeds the Indemnified Party actually receives with respect thereto, minus
(iii) any third party payments actually received by the Indemnified Party with
respect to such damages, liability, obligation, loss, claim or other amount
after demand or notice to such third party from the Indemnifying Party (with the
consent of the Indemnified Party which will not be unreasonably withheld), plus
(iv) the amount of the Net Tax Liability.  "Net Tax Liability" shall be equal to
the amount, if any, by which, the sum of all federal, state, and local taxes, if
any, required to be paid by such Indemnified Party in respect of the receipt or
accrual of the Adjusted Amount exceeds the sum of (a) the value of any reduction
in taxes of such Indemnified Party by reason of deductions, credits or
allowances in respect of the payment or accrual of the damages, liability,
obligation, loss, claim or other amount included in clause (i) above recognized
by such Indemnified Party in the same year in which the taxes in respect of the
receipt or accrual by such Indemnified Party of the Adjusted Amount would be

                                      -24-
<PAGE>
 
payable and (b) the net present value of any reduction in taxes of such
Indemnified Party by reason of deductions, credits or allowances in respect of
the payment or accrual of the damages, liability, obligation, loss, claim or
other amount included in clause (i) above recognized by such Indemnified Party
in years thereafter.  The net present value of any such reduction in taxes shall
be determined by discounting the amount of such reduction in taxes semi-annually
from the date such tax saving is recognized or reasonably expected to be
recognized (which shall be deemed to be the date the applicable tax return on
which such tax saving would be properly reflected is due, without extensions) to
the date of payment of the applicable indemnity by such Indemnifying Party,
applying a discount factor equal to the interest rate on federal income tax
deficiencies in effect at the time of such adjustment.  For purposes of
determining the amount of any taxes required to be paid and any tax savings
recognized or reasonably expected to be recognized by such Indemnified Party
hereunder, it shall be assumed that such Indemnified Party is subject to tax in
each applicable taxing jurisdiction at the highest applicable marginal rate then
in effect in such jurisdiction.


                                  ARTICLE XI

                            Termination of Agreement
                            ------------------------

     11.1  Termination.  This Agreement may be terminated prior to the Closing
           -----------
as follows:

           (a) at the election of the Seller, if any one or more of the
conditions to the obligations of the Seller to close has not been fulfilled as
of the Closing Date, or if the Purchaser has materially breached any
representation, warranty, covenant or agreement contained in this Agreement or
in any document or other papers delivered pursuant to this Agreement;

           (b) at the election of the Purchaser, if any one or more of the
conditions to its obligations to close has not been fulfilled as of the Closing
Date, or if the Seller has materially breached any representation, warranty,
covenant or agreement contained in this Agreement or in any document or other
papers delivered pursuant to this Agreement;

           (c) at the election of the Seller or the Purchaser, if any legal
proceeding is commenced or threatened by any governmental regulatory body or
other person directed against the consummation of the Closing or any other
transaction contemplated under this Agreement and either the Seller or the
Purchaser, as the case may be, reasonably and in good faith deem it impractical
or inadvisable to proceed in view of such legal proceeding or threat thereof;

           (d) at any time on or prior to the Closing Date, by mutual written
consent of the parties hereto; or

                                      -25-
<PAGE>
 
           (e)  at any time after March 31, 1997 at the election of the Seller
on the one hand, or the Purchaser on the other hand.

     11.2  Post-Termination Obligations.  If this Agreement is terminated
           ----------------------------                                  
pursuant to Section 11.1, this Agreement shall become void and of no further
force and effect, except for Section 12.4 (relating to publicity) and Section
12.9 (relating to expenses), and none of the parties hereto shall have any
liability in respect of such termination except that any party shall be liable
to the extent that failure to satisfy the conditions of Article II, VII, VIII or
IX results from the intentional or willful violation of the representations,
warranties, covenants or agreements of such party under this Agreement.


                                  ARTICLE XII

                                 Miscellaneous
                                 -------------

     12.1  Closing of the Athletic Attic and Premium Transactions.  Purchaser
           ------------------------------------------------------
and Seller acknowledge and agree that it is the intent of the parties hereto
that the Closing of the purchase and sale of the Purchased Assets be consummated
simultaneously with the closing of the transactions contemplated by the Athletic
Attic Purchase Agreement and the Premium Purchase Agreement. Accordingly, the
parties hereto agree that unless and until the transactions contemplated by both
the Premium Purchase Agreement and the Athletic Asset Purchase Agreement are
consummated as provided thereunder, the Closing of the transactions contemplated
by this Agreement shall not be deemed finally closed and consummated until the
parties hereto are satisfied that the Athletic Attic Purchase Agreement and the
Premium Purchase Agreement transactions have been consummated.

     12.2  Compliance with Bulk Transfer Laws.  Purchaser and Seller agree to
           ----------------------------------                                
waive compliance with any applicable bulk transfer laws; provided, however, that
Seller hereby agrees to indemnify Purchaser for any liabilities incurred by
Purchaser as a result of such noncompliance.

     12.3  Further Assurances.  From time to time, at the request of Purchaser
           ------------------                                                 
and without further consideration, the Seller will execute and deliver to
Purchaser such documents and take such other action as Purchaser may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.

     12.4  Announcements.  Prior to Closing, except as otherwise required by
           -------------
law, none of the parties hereto shall issue any press release, place any
advertisements or tombstones, or make any other public statement, in each case
relating to or in connection with or arising out of this Agreement or the
matters contained herein, without obtaining prior approval of all parties hereto
as to the contents and manner of presentation and publication thereof, which
approval shall not be unreasonably withheld or delayed. Following Closing, the

                                      -26-
<PAGE>
 
parties hereto shall not be bound by the foregoing restrictions of this Section
12.8, provided that any obligations of confidentiality shall survive for the
period otherwise applicable thereto.

     12.5  Assignment; Parties in Interest.  Except as expressly provided
           -------------------------------
herein, the rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the other
parties. The Purchaser may assign its rights and obligations hereunder to any
direct or indirect wholly-owned subsidiary for purposes of consummating the
transactions contemplated herein. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the respective successors and permitted
assigns of the parties hereto. Nothing contained herein shall be deemed to
confer upon any other person or entity any right or remedy under or by reason of
this Agreement.

     12.6  Law Governing Agreement.  This Agreement may not be modified or
           -----------------------                                        
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Georgia excluding any choice of law rules that may
direct the application of the laws of another jurisdiction.

     12.7  Amendment and Modification.  Purchaser and the Seller may amend,
           --------------------------                                      
modify and supplement this Agreement in such manner as may be agreed upon in
writing between Purchaser and the Seller.

     12.8  Notice.  All notices, requests, demands and other communications
           ------                                                          
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service.
The respective addresses to be used for all such notices, demands or requests
are as follows:

           (a)     If to the Purchaser, to:

                   Just for Feet, Inc.
                   153 Cahaba Valley Parkway North
                   Pelham, Alabama 35124
                   Attention:  Chairman
                   Facsimile: (205) 403-8163

                   with a copy to:
 
                   Smith, Gambrell & Russell, LLP
                   3343 Peachtree Road
                   Suite 1800
                   Atlanta, Georgia  30326
                   Attention: Arthur Jay Schwartz, Esq.
                   Facsimile: (404) 264-2652

                                      -27-
<PAGE>
 
           (b)     If to the Seller, to:

                   Owensboro Investment Company, Inc.
                   c/o 100 Emerald Lane
                   Madison, Alabama 35758
                   Attention:  John Gasser
                   Facsimile: (205) 461-0466

                   with a copy to:

                   Morris, Manning & Martin, LLP
                   3343 Peachtree Road
                   Suite 1600
                   Atlanta, Georgia 30326
                   Attention: Oby T. Brewer, III, Esq.
                   Facsimile: (404) 365-9532

     If personally delivered, such communication shall be deemed delivered upon
actual receipt; if electronically transmitted pursuant to this paragraph, such
communication shall be deemed delivered the next business day after transmission
(and sender shall bear the burden of proof of delivery); if sent by overnight
courier pursuant to this paragraph, such communication shall be deemed delivered
upon receipt; and if sent by U.S. mail pursuant to this paragraph, such
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service, or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal. Any party
to this Agreement may change its address for the purposes of this Agreement by
giving notice thereof in accordance with this Section 12.8.

     12.9  Expenses.  Regardless of whether or not the transactions contemplated
           --------
hereby are consummated:

           (a) Expenses to be Paid by the Seller.  The Seller agrees to pay, and
               ---------------------------------                                
to indemnify, defend and hold Purchaser harmless from and against, each of the
following:  (i) any sales, use or excise tax imposed with respect to the sale to
the Purchaser of the Purchased Assets, and any interest or penalties related
thereto; and (ii) all legal fees and expenses related to legal fees, of the
Seller attributable to or incurred in connection with or preparation for the
transactions contemplated hereby.

           (b) Costs of Litigation.  The parties agree that the prevailing party
               -------------------                                              
in any action brought with respect to or to enforce any right or remedy under
this Agreement shall be entitled to recover from the other party or parties all
reasonable costs and expenses of any nature whatsoever incurred by the
prevailing party in connection with such action, including without limitation
attorneys' fees and prejudgment interest.

                                      -28-
<PAGE>
 
           (c) Other.  Each of the parties shall bear its own expenses and the
               -----                                                          
expenses of its other agents in connection with the transactions contemplated
hereby.

     12.10 Entire Agreement.  This Agreement, including the Schedules attached
           ----------------                                                   
hereto which are incorporated herein by reference and made a part hereof, embody
the entire agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements, representations
or warranties between the parties other than those set forth or provided for
herein.

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

     12.12 Headings.  The table of contents and article and section herein are
           --------                                                           
for convenience of reference only, do not constitute a part of this Agreement,
and shall not be deemed to limit or affect any of the provisions hereof.



                         [SIGNATURES ON FOLLOWING PAGE]

                                      -29-
<PAGE>
 
     IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement under seal as of the date first above
written.

                                    "PURCHASER"

                                    JUST FOR FEET, INC.


                                    By:________________________________
                                       Name:___________________________
                                       Title: _________________________

[CORPORATE SEAL]

                                    "SELLER"

                                    OWENSBORO INVESTMENT COMPANY, INC.


                                    By:________________________________
                                       Name:___________________________
                                       Title: _________________________

[CORPORATE SEAL]

                                      -30-
<PAGE>
 
                                 SCHEDULE 1.1

                               PURCHASED ASSETS


1.       All of the following assets and property rights of the Seller used or
useful in connection with the Subject Business:

         a.   All personal property, equipment, inventory, supplies, furniture
              and fixtures, materials, and leasehold improvements owned by the
              Seller, including, if applicable, typewriters, computers, computer
                                 -------------
              software programs and manuals, waste baskets, coffee machine and
              supplies, flip charts, credenzas, coffee tables, rolling carts,
              overhead projector equipment, telephone equipment, podiums,
              printers, computer peripherals, copiers, calculators, desks
              chairs, bookcases, microwave, shelving, refrigerator, kitchenette,
              security alarm system, steno chair, cabinets, filing cabinets,
              office supplies (pens, paper, pencils, paper clips, rubber bands,
              etc.), plants, all signage, clocks, postage, artwork, stationery,
              diskettes, manuals and books, used exclusively at or located at
              the aforementioned office location.

         b.   All of the Seller's right, title and interest in, to and under the
              following contracts and commitments:

              (i)   Any and all white and yellow page telephone references and
                    advertisements relating to the Subject Business.

              (ii)  Lease Agreements and Franchise Agreements referenced in
                    Schedule 5.3.

              (iii) Any and all equipment leases for equipment used in the
                    Subject Business.

         c.   Any security deposit or prepaid lease deposit relating to any of
              the contracts and commitments listed in item 1.b. above.

         d.   Books and records pertaining exclusively to the Subject Business
              (excluding the Seller's corporate minute book); provided, however,
              that the Seller shall have the right to retain copies of the same
              for its records.

         e.   All customer lists, mailing lists and records, supplier/vendor
              lists and purchase orders of the Seller that relate exclusively to
              the Subject Business.

         f.   All accounts receivable of the Seller that relate exclusively to
              the Subject Business.

         g.   All of the Seller's inventory used or useful in the Subject
              Business.

                                      -31-
<PAGE>
 
2.   The following assets, which are located at Jefferson Mall in Louisville,
Kentucky:

Quantity

     3    Nike mannequin
     2    Nike shoe floor display
     1    Airwalk shoe display
     1    6-112 foot chair
     19   Chrome round rack
     3    Nike 4-way rack
     26   Black grill display rack
     6    4-way chrome rack
     22   Folding chairs
     1    Wooden block jean display
     2    Pop Shot basketball machine
     6    Tables
     1    Impulse sign machine
     2    Casio CE-4200 cash register
     2    Verifone Printer 900
     2    Accelarm credit card machine
     3    Glass showcase
     1    Glass block display assembly
     2    Aluminum ladder
     2    4-drawer file cabinet
     1    File cabinet 2-drawer
     1    Office desk and chair
     1    Sharp UX-3200 phone fax
     1    Clocks Inc. time clock
     10   2-way radios and chargers
     1    Sharp 3F-7370 copier
     1    Combination safe
     2    Straight rack
     1    Eureka vacuum cleaner
     1    2-Wheel truck

3.   The following assets, which are located at Store No. A-8 at Towne Mall in
Elizabethtown, Kentucky:


                                      -32-
<PAGE>
 
Quantity
 
      6   Chrome round display rack
      2   Nike 4-way display rack
     15   Black grill display racks
      2   4-way clothing display rack
     20   Folding chairs
      7   Tables
      1   Glass squares display assembly
      1   Lighted glass showcase
      2   2-way display rack
      2   Nike shoe floor display
      1   Refrigerator - Hot Point
      1   Aluminum ladder
      1   Copy machine Mita DC 1455
      2   Sanyo ECR 580
      1   Verifone Printer 900
      1   Access credit card machine
      1   Lathem time clock
      1   Impulse sign printer
      4   Motorola P50 mobile radios
      4   Chargers for radios
      1   Office desk and chair
      4   Straight rack
      1   Kenmore vacuum cleaner
      1   Combination safe

                                      -33-
<PAGE>
 
                                 SCHEDULE 1.2

                          ADDITIONAL EXCLUDED ASSETS

There are no other excluded assets.


                                      -34-
<PAGE>
 
                                 SCHEDULE 5.3

                                 NO VIOLATION

The consummation of the transaction contemplated by this Agreement requires the
prior written approval of the following:

1.   JEFFERSON MALL COMPANY -- Lessor consent is required for assignment of the
lease for Seller's store in the Jefferson Mall ("Jefferson Mall Store").

2.   TOWNE MALL PARTNERS -- Lessor consent is required for assignment of the
lease for Seller's store in the Towne Mall in Elizabethtown, Kentucky
("Elizabethtown Store").

3.   ATHLETIC ATTIC MARKETING, INC.--Seller's franchise agreements with Athletic
Attic Marketing, Inc. (AAMI) requires AAMI's prior written approval.
Additionally, Seller is obligated to deliver any bona fide offer from a third
party to AAMI and AAMI has 35 days from receipt of such bona fide offer to match
the bona fide offer. Purchaser has requested Seller not to obtain AAMI's consent
for the transaction contemplated by this Agreement.

                                      -35-

<PAGE>
 
                                 SCHEDULE 5.4

                             FINANCIAL STATEMENTS

The unaudited consolidated balance sheet of Seller dated December 31, 1996,
together with the unaudited statement of earnings for the fiscal year ending
December 31, 1996 is attached.

                                      -36-

<PAGE>
 
                                 SCHEDULE 5.10

                         MATERIAL CONTRACTS OF SELLER

LEASE AGREEMENTS REFERENCED IN SCHEDULE 5.3.

FRANCHISE AGREEMENTS REFERENCED IN SCHEDULE 5.3.

OUTDOOR SYSTEM ADVERTISING AGREEMENT

Seller (d/b/a Athletic Attic) entered into an Agreement commencing on November
16, 1996 and continuing until November 15, 1998. The cost of the billboard is
$840 per month.

BENEFITS

Seller pays the following monthly premiums for health insurance coverage for
Seller's employees indicated below:
 
--------------------------------------------------------------------------------
                 EMPLOYEE                          MONTHLY PREMIUM
--------------------------------------------------------------------------------
        Steve and Susan Gasser                          $394.48
--------------------------------------------------------------------------------
        Jason and Kelly Gasser                          $173.89
--------------------------------------------------------------------------------
        Lyndsay Gasser                                  $111.63
--------------------------------------------------------------------------------
        Courtney Gasser                                 $111.63
--------------------------------------------------------------------------------
        Margaret Crutcher                               $139.83
--------------------------------------------------------------------------------

                                      -37-
<PAGE>
 
                                 SCHEDULE 5.11

                           REAL PROPERTY AND LEASES

LEASE AGREEMENTS

Seller provided Purchaser prior to Closing the following lease agreements
entered into by Seller:

1.   JEFFERSON MALL STORE - Lease Agreement dated April 20, 1995 with Jefferson
Mall Company.

2.   ELIZABETHTOWN STORE - Lease Agreement dated June 17, 1994 with Towne Mall
Partners.


FRANCHISE AGREEMENTS

1.   JEFFERSON MALL STORE - The Gassers have been operating an "Athletic Attic"
franchise pursuant to the attached un-executed franchise agreement and the
attached Monthly Store Owners' Monthly Franchise Fee Modification Agreement
dated January 1, 1985 as amended by amendment dated December 1, 1988 that has
been provided by Seller to Purchaser.

2.   ELIZABETHTOWN STORE - Franchise Agreement entered into by John Gasser,
Steve Gasser, and James J. Carnes on July 31, 1985 as amended by an amendment
dated December 1, 1988.

                                      -38-

<PAGE>
 
                                 SCHEDULE 5.13

                             INTELLECTUAL PROPERTY

"Athletic Attic" is licensed by Seller for use in the Subject Business according
to the terms of the franchise agreements referenced in Schedule 5.11.

                                      -39-