**ASSET
        SALE AND PURCHASE AGREEMENT**
 
 **ASSET
        SALE AND PURCHASE AGREEMENT** (the
“ Agreement ”)
        is
        made and entered into this 31 st day of
        January, 2006, by and between Steve’s Shoes, Inc., Debtor in Possession, a
        Missouri corporation (the “ Seller ”),
        and
        The Walking Company, a Delaware corporation (the “ Buyer ”,
        and
        collectively with the Seller, the “ Parties ”).
 
 **WITNESSETH:**
 
 **WHEREAS** ,
        Seller
        desires to sell, assign, transfer and convey to Buyer certain of its assets,
        and
        Buyer desires to acquire such assets, based upon the terms and conditions
        set
        forth herein;
 
 **WHEREAS** ,
        Seller
        is currently in possession of its assets as a Debtor in Possession pursuant
        to
        chapter 11 of title 11 of the United States Code (the “ Bankruptcy
        Code ”)
        in the
        chapter 11 case of Steve’s Shoes, Inc. (the “ Bankruptcy
        Case ”),
        presently pending in the United States Bankruptcy Court for the District
        of
        Kansas (Kansas City) (the “ Bankruptcy
        Court ”),
        and
        Seller, upon proper approval and authorization from the Bankruptcy Court,
        may
        sell and assign its assets outside of the ordinary course of
        business;
 
 **NOW,
        THEREFORE** ,
        in
        consideration of the promises and the mutual covenants and agreements contained
        herein, the Parties hereto agree as follows:
 
 **SECTION
        1**
 **DEFINITIONS**
 
 As
        used
        in this Agreement, the following terms shall have the designated meanings
        set
        forth below. Any capitalized term used in this Agreement and not otherwise
        defined herein shall have the meaning assigned to such term in the DRA
        (hereinafter defined).
 
 1.1. “ Affiliate ”
as
        applied to any Person, means any other Person directly or indirectly
        controlling, controlled by or under common control with, that Person. For
        the
        purposes of this definition, “control” (including, with correlative meanings,
        the terms “controlling,” “controlled by” and “under common control with”), as
        applied to any Person, means the possession, directly or indirectly, of the
        power to direct or cause the direction of the management and policies of
        that
        Person, whether through ownership of voting securities, by contract or
        otherwise. For purposes of this definition, a Person shall be deemed to be
        “controlled by” a Person if such Person possesses, directly or indirectly, the
        power to vote 10% or more of the securities having ordinary voting power
        for the
        election of directors of such Person.
 
 1.2. “ Assumed
        Lease(s) ”
means
        the thirty (30) real property leases listed in Schedule
        2.1 to this
        Agreement.
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  1.3. “ Assumed
        Liabilities ”
means
        all liabilities and obligations under or pursuant to each Lease and Contract
        that is assigned to Buyer under this Agreement which liabilities and obligations
        accrue and arise from and after the date such Lease or Contract is assigned
        to
        and assumed by Buyer under this Agreement.
 
 1.4. “ Closing ”
means
        the closing of the transactions contemplated by this Agreement.
 
 1.5. “ Closing
        Date ”
means
        January 31, 2006, or such other date as the Parties, LaSalle Retail Finance,
        Country Club Bank, and the Official Committee of Unsecured Creditors appointed
        in Seller’s Bankruptcy Case, may mutually agree upon in writing.
 
 1.6. “ Contract ”
means all
        executory contracts, indentures, licenses, agreements, commitments, bids,
        quotes, proposals ,
        purchase orders and sales orders, and personal property leases, other than
        the
        Assumed Leases and the Remaining Leases.
 
 1.7. “ Debtor ”
means
        Steve’s Shoes, Inc., the Debtor-in-Possession in the Chapter 11 case now pending
        as Case No. 06-20015 in the Bankruptcy Court.
 
 1.8. “ Deposit ”
means
        the Six Hundred Thousand Dollars ($600,000.00) in cash Buyer deposited with
        Evans & Mullinix for the account of the Debtor on January 20,
        2006.
 
 1.9. “ DRA ”
means
        the Designation Rights and Interim Operating Agreement, dated on or about
        January 31, 2006, by and between the Seller and Buyer, pursuant to which
        Buyer
        shall have (i) sixty (60) days to designate an additional fifteen (15) Remaining
        Leases for assumption and assignment as well as certain Contracts, and pursuant
        to which such assignment shall be completed no later than April 30, 2006;
        (ii)
        the right to use the Seller’s Distribution Center to assist in the transition of
        ownership for thirty (30) days following the Closing Date; and (iii) the
        right
        to manage and operate the Debtor’s retail stores, including the right to conduct
        going-out of-business sales.
 
 1.10. “ Distribution
        Center ”
means
        the real estate consisting of the Debtor’s headquarters/distribution center
        located at 11333 Strang Line Road in Lenexa, Kansas.
  1.11. “ Knowledge ”
means
        with respect to any party, the actual knowledge (without any duty to
        investigate) of the executive officers of such party.
 
 1.12. “ Lender ”
means
        the Debtor’s debtor-in-possession lender as defined in Seller’s Revolving Credit
        Loan and Security Agreement, dated as of January 6, 2006.
 
 1.13. “ Liability ”
means
        any liability, obligation, debt or commitment of any kind (whether known
        or
        unknown, whether asserted or unasserted, whether absolute or contingent,
        whether
        accrued or unaccrued, whether liquidated or unliquidated, and whether due
        or to
        become due), including any liability for taxes.
 
 1.14. “ Person ”
means
        any natural person, corporation, association, partnership, limited liability
        company, trust, joint venture, unincorporated organization, business,
        governmental body or any other legal entity.
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  1.15. “ Properties ”
means,
        collectively, (i) the Remaining Leased premises set forth on Schedule
        2.2 attached
        hereto, and (ii) the rights of Seller under the Remaining Leases relating
        thereto.
 
 1.16. “ Purchase
        Price ”
has
        the
        meaning assigned to that term in Section 3 of this Agreement.
 
 1.17. “ Purchased
        Assets ”
has
        the
        meaning assigned to that term in Section 2.1 of this Agreement.
 
 1.18. “ Remaining
        Lease(s) ”
means
        the leases identified in Schedules 2.2 to this Agreement.
 
 **SECTION
        2**
 **PURCHASE
        OF ASSETS AND ASSUMPTION OF LIABILITIES**
 
 2.1. **Purchased
        Assets** .
 
 a. Subject
        to the terms and conditions hereof, and subject to the representations and
        warranties made herein, on the Closing Date Seller will sell, assign, transfer
        and convey to Buyer all of Seller’s right, title and interest in and to all
        assets of Seller, including but not limited to the assets set forth on Schedule
        1 hereto
        (the “ Purchased
        Assets ”)
        free
        and clear of all liens, charges, claims, encumbrances and interests, but
        excluding the assets described in Section 2.4 herein (the “ Excluded
        Assets ”).
 
 b. Buyer
        further agrees that, as set forth more fully in the DRA, Buyer shall assume
        at
        least five (5) Remaining Leases listed on Schedule
        2.2 (the
“ TWC
        Designated Leases ”).
 
 c. Cash
        for Operations .
        Seller
        agrees to leave cash (the “ Operating
        Cash ”)
        in the
        cash register, or some other secure location, on-site at each of the Properties,
        in order to facilitate the transition from Seller’s operation of a store to
        Purchaser’s operation of that store with respect to each of the stores being
        transferred herein. The Operating Cash shall total Eighteen Thousand Dollars
        ($18,000.00), with that sum to be allocated by Seller to each such store
        in a
        manner that reasonably relates to the anticipated needs of such store based
        on
        historical demands. Purchaser shall compensate Seller for the Operating Cash
        either through the delivery of a payment to Seller on the Closing Date or
        through an increase of Eighteen Thousand Dollars ($18,000.00) in the Purchase
        Price contemplated herein.
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  2.2. **“AS
        IS” TRANSACTION** **.
        BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE EXPRESSLY
        PROVIDED HEREIN, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND,
        EXPRESS OR IMPLIED, WITH RESPECT TO THE PURCHASED ASSETS OR ANY OTHER MATTER
        WHATSOEVER, INCLUDING, WITHOUT LIMITATION, INCOME TO BE DERIVED OR EXPENSES
        TO
        BE INCURRED IN CONNECTION WITH THE PURCHASED ASSETS, THE PHYSICAL CONDITION
        OF
        THE PURCHASED ASSETS, THE ENVIRONMENTAL CONDITION, ZONING, OR OTHER MATTER
        RELATING TO THE CONDITION OF THE PURCHASED ASSETS, INCLUDING THE REAL ESTATE
        WHICH IS PART OF THE PURCHASED ASSETS, THE VALUE OF THE PURCHASED ASSETS,
        THE
        TERMS, AMOUNT, VALIDITY OR ENFORCEABILITY OF ANY ASSUMED LIABILITIES, THE
        MERCHANTABILITY OR FITNESS OF THE PURCHASED ASSETS FOR ANY PARTICULAR PURPOSE,
        OR ANY OTHER MATTER OR THING RELATING TO THE PURCHASED ASSETS. WITHOUT IN
        ANY
        WAY LIMITING THE FOREGOING, SELLER HEREBY DISCLAIMS ANY WARRANTY, EXPRESS
        OR
        IMPLIED, OF MERCHANTABILITY OR FITNESS OF THE PURCHASED ASSETS FOR ANY
        PARTICULAR PURPOSE. BUYER FURTHER ACKNOWLEDGES THAT BUYER HAS CONDUCTED AN
        INDEPENDENT INSPECTION AND INVESTIGATION OF THE PHYSICAL CONDITION OF THE
        PURCHASED ASSETS AND ALL SUCH OTHER MATTERS RELATING TO OR AFFECTING THE
        PURCHASED ASSETS AS BUYER DEEMED NECESSARY OR APPROPRIATE AND THAT IN PROCEEDING
        WITH ITS ACQUISITION OF THE PURCHASED ASSETS, EXCEPT FOR ANY REPRESENTATIONS
        AND
        WARRANTIES EXPRESSLY SET FORTH HEREIN, BUYER IS DOING SO BASED SOLELY UPON
        SUCH
        INDEPENDENT INSPECTIONS AND INVESTIGATIONS. ACCORDINGLY, BUYER WILL ACCEPT
        THE
        PURCHASED ASSETS AT THE CLOSING “AS IS,” “WHERE IS,” AND “WITH ALL
        FAULTS.”**
  In
        regard
        to the foregoing, and without limitation, Buyer acknowledges that it will
        not be
        entitled to any Closing or post-Closing adjustment to the Purchase Price
        based
        on its later inspection of the Purchased Assets being acquired.
 
 2.3. **Liabilities** .
 
 a. Subject
        to the terms and conditions of this Agreement, Buyer hereby agrees, as of
        the
        Closing Date, to assume and discharge all liabilities and obligations under
        or
        pursuant to each Assumed Lease and Contract that is assigned to Buyer under
        this
        Agreement which liabilities and obligations accrue and arise from and after
        the
        date such Lease or Contract is assigned to Buyer under this Agreement (the
        “ Assumed
        Liabilities ”).
 
 b. Buyer
        also agrees to honor gift certificates issued by Seller for its merchandise
        that
        are outstanding on the Closing Date, in an amount not to exceed Sixty Five
        Thousand Dollars ($65,000.00), and the obligation to accept returned merchandise
        sold by Seller in the ordinary course of business prior to the Closing Date
        in
        accordance with standard return policies.
 
 c. As
        more
        fully set forth in the DRA, Buyer shall be responsible for, and shall pay
        in
        accordance with Section 2.6 of the DRA, all obligations that are specifically
        attributed to the Properties and the Contracts from January 31, 2006. Buyer’s
        obligation for such costs will terminate as set forth in the DRA.
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  d. As
        more
        fully set forth in the DRA, with respect to each Lease for which Buyer
        designates as the Designee either itself or any Purchaser Affiliate, to the
        extent that the costs of curing monetary defaults arising prior to the Carrying
        Cost Date on such Lease (and relating solely to the obligation to pay rent
        and
        other occupancy costs to the landlords for such Lease) exceeds $75,000 in
        the
        aggregate for the month of January, 2006, Buyer shall be responsible and
        obligated to pay such excess portion of the cure cost to or for the benefit
        of
        the Seller within ten (10) days of Seller providing to Buyer written notice
        that
        such payment is due together with a reasonable written calculation of the
        amount
        of excess amount, and subject to the same dispute procedures as set forth
        in
        Section 2.4(a) of the DRA with respect to Lease Rejection Dilution
        Amounts.
 
 e. Buyer
        further agrees that, pursuant to the DRA, in consideration for the Seller
        permitting the Buyer to utilize its Distribution Center for a period of no
        more
        than thirty (30) days, Buyer shall be responsible for the costs associated
        with
        its use of the Distribution Center as set forth in the DRA.
 
 f. Any
        and
        all other obligations and liabilities of Seller, whether accrued or contingent
        or due or not due, which are not specifically assumed herein, shall be and
        remain the obligations and liabilities of Seller to pay and discharge, and
        Buyer
        shall not be obligated therefor. For purposes of example, but without
        limitation, the Parties acknowledge and agree that Buyer is not assuming
        any
        liability under or in regard to (i) any obligation or claim under or
        relating to any Lease or Contract that accrued, arose or relates to events
        occurring on or prior to the date as of which such Assumed Lease or Contract
        is
        assigned to Buyer (except as provided in the DRA), (ii) any liability with
        respect to sales taxes or similar or other taxes or obligations of Seller
        occurring on or prior to the Closing Date and (iii) any obligation, claim
        or right of or to any employee of Buyer, whether relating to benefits, wages,
        employee benefit plans, vacation pay, severance liability, union claims or
        otherwise, whether arising in connection with any individual’s employment by the
        Debtor or otherwise.
 
 2.4. **Excluded
        Assets** .
        The
        Excluded Assets are (i) the Distribution Center, (ii) all cash held by
        the Debtor as of the Closing Date, except as set forth in Section 2.1c.,
        (iii) any Contract that is not designated by Buyer as a Purchased Asset,
        (iv) any Remaining Lease that is not designated by Buyer pursuant to the
        DRA,
        (v) all fraudulent conveyance and preference actions with respect to Debtor’s
        insiders and lenders, and any claims arising under the Debtor’s D&O
        insurance; provided that
        Buyer reserves the right to pursue an action against any insider or employee
        of
        the Debtor for misappropriation of any Purchased Assets and (vi) any other
        assets of Seller expressly excluded in Schedule 1 from the Purchased Assets.
 
 2.5. **Designation
        Rights and Operating Agreement** **.** On the
        Closing Date, the Parties will enter into the DRA in substantially the form
        attached as **Exhibit
        “A”** .
 
 2.6. **Use
        and Occupancy of the Distribution Center** **.** Seller
        agrees that Buyer shall have full access to and the exclusive right to use
        the
        Distribution Center for thirty (30) days following the Closing, for the purpose
        of facilitating the transfer of the Purchased Assets and the conversion of
        the
        Debtor’s retail locations to Buyer’s stores. Buyer agrees to pay the occupancy
        costs related to its use of the Distribution Center as set forth in the DRA.
        Buyer shall cooperate in good faith with Seller to allow Seller reasonable
        access to the Distribution Center to market the Distribution Center and to
        facilitate the transfer of the Purchased Assets and the wind down of Debtor’s
        business. Requests for access to the Distribution Center will be coordinated
        through the Seller’s Chief Restructuring Officer and Buyer’s Chief Financial
        Officer.
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  **SECTION
        3**
 **PURCHASE
        PRICE**
 
 3.1. The
        purchase price for the Purchased Assets (the “ Purchase
        Price ”)
        shall
        be **Four
        Million Two Hundred Thousand Dollars ($4,200,000.00).**
 
 3.2. Seller
        acknowledges that on January 20, 2006, Buyer paid the Deposit to
        Seller.
 
 3.3. Upon
        the
        satisfaction or waiver of the Buyer Closing Conditions, at the Closing on
        the
        Closing Date, Seller shall apply the Deposit to the Purchase Price and Buyer
        shall pay the balance of the Purchase Price in the amount of **Three
        Million Six Hundred Thousand Dollars ($3,600,000)** to
        Seller by wire transfer of immediately available federal funds to a bank
        account
        to be designated by Seller in writing prior to the Closing Date.
 
 **SECTION
        4**
 **CLOSING**
 
 4.1. **The
        Closing** .
        The
        Closing shall take place on the Closing Date promptly following the entry
        of an
        order by the Bankruptcy Court authorizing Seller’s entry into this Agreement
        pursuant to Section 8.6 herein, which Closing shall take place at the United
        States Bankruptcy Court or a location to mutually determined by the Parties.
        At
        the Closing on the Closing Date:
 
 a. Seller
        shall sell, assign, transfer and convey to Buyer all of Seller’s right, title
        and interest in and to the Purchased Assets, other than the Excluded Assets
        and
        the Remaining Leases and the Contracts not then assigned, free and clear
        of all
        liens, claims, charges, encumbrances and interests. Such sale, assignment,
        transfer and conveyance shall be effected or evidenced by delivery by Seller
        to
        Buyer of appropriate bills of sale, assignments and other documents reasonably
        acceptable in form and substance to Buyer and Seller. Seller shall pay any
        applicable transfer, sales and use taxes on the transfer if any. All utility
        charges, rents and other amounts payable under Assumed Leases, licenses and
        other Contracts assumed and assigned to Buyer at the Closing will be prorated
        as
        of Closing. Nothing in this Section 4.1.a. shall alter or otherwise affect
        Buyer’s liabilities under Section 2.3 herein or under the DRA.
 
 b. Buyer
        shall assume the Assumed Liabilities as to the Assumed Leases as provided
        in
        Section 2.3.
 
 c. The
        Parties will enter into the DRA in substantially the form attached hereto
        as
        Exhibit A.
 
 4.2. **Post-Closing
        Assignment of Contracts and Remaining Leases.** **** On
        or
        before April 30, 2006, Seller will assume and assign to Buyer all of Seller’s
        Remaining Leases and Contracts that Buyer has designated to be assigned to
        Buyer
        (collectively the “ Assumed
        Remaining Leases and Contracts ”).
        As
        more fully set forth in the DRA, Buyer shall be required to assume the leases
        for no less than five (5) of the Remaining Leases. Such assignment shall
        be
        effected or evidenced by entry of an appropriate Bankruptcy Court Order.
        The
        Remaining Leases and Contracts that Buyer elects to have assigned to it shall
        be
        identified by Buyer in a written notice as required in the DRA.
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  **SECTION
        5**
 **SELLER’S
        REPRESENTATIONS AND WARRANTIES**
 
 Seller
        hereby represents and warrants to Buyer as follows:
 
 5.1. **Authorization
        for Agreement** .
        The
        execution, delivery and performance of this Agreement by Seller and the
        consummation of the transactions contemplated hereby will have been duly
        authorized by all necessary actions of Seller prior to the Closing, and this
        Agreement is, and any documents or instruments to be executed and delivered
        by
        Seller pursuant hereto will be, legal, valid and binding obligations of Seller
        enforceable in accordance with their terms, except as enforceability may
        be
        limited by applicable bankruptcy, insolvency, moratorium or similar laws
        from
        time to time in effect which affect creditors’ rights generally and by legal and
        equitable limitations on the availability of equitable remedies.
 
 5.2. **Organization** .
        Seller
        is a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Missouri. Subject to Bankruptcy Court approval, Seller
        has
        all requisite corporate power and authority to enter into this Agreement
        and to
        sell, assign, transfer and convey the Purchased Assets to Buyer under this
        Agreement. Except as set forth on the Disclosure Schedule, neither the execution
        and delivery of this Agreement nor the sale of the Purchased Assets by Seller
        requires the consent or approval of, the giving of notice to, registration,
        filing or recording with or the taking of any other action by Seller in respect
        of any federal, state or local governmental authority.
 
 5.3. **Title
        to Properties** .
        Seller
        has, and at the Closing will transfer to Buyer, title to all of the Purchased
        Assets.
 
 5.4. **No
        Litigation** .
        No
        suit, action or legal, administrative, arbitration or other proceeding or,
        to
        Seller’s Knowledge, no investigation by any governmental agency, pertaining to
        the Purchased Assets, is pending or, to Seller’s Knowledge, has been threatened
        by or against Seller which would be likely to have a material adverse effect
        on
        the material Purchased Assets.
 
 5.5. **No
        Finder’s Fee** .
        Seller
        has retained Alliance Management, Inc. (“ AMI ”)
        to
        manage the sale of its assets. Any fees due AMI shall be paid by Seller in
        accordance with any order of the Bankruptcy Court approving its
        retention.
 
 **SECTION
        6**
 **REPRESENTATIONS
        AND WARRANTIES OF BUYER**
 
 Buyer
        represents and warrants to Seller as follows:
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  6.1. **Authorization
        for Agreement** .
        The
        execution, delivery and performance of this Agreement by Buyer and the
        consummation of the transactions contemplated hereby will have been duly
        authorized by all necessary actions of Buyer prior to the Closing, and this
        Agreement is, and any documents or instruments to be executed and delivered
        by
        Buyer pursuant hereto will be, legal, valid and binding obligations of Buyer
        enforceable in accordance with their terms, except as enforceability may
        be
        limited by applicable bankruptcy, insolvency, moratorium or similar laws
        from
        time to time in effect which affect creditors’ rights generally and by legal and
        equitable limitations on the availability of equitable remedies.
 
 6.2. **Organization** .
        Buyer
        is a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of Delaware. Buyer has all requisite power and authority
        to
        enter into this Agreement and to perform its obligations hereunder. Neither
        the
        execution and delivery of this Agreement nor the consummation of the
        transactions contemplated hereby by Buyer requires the consent or approval
        of,
        the giving of notice to, registration, filing or recording with or the taking
        of
        any other action by Buyer in respect of any federal, state or local governmental
        authority.
 
 6.3. **No
        Violation** .
        The
        execution and delivery of this Agreement by Buyer, and the performance by
        Buyer
        of its obligations hereunder, will not conflict with, violate or constitute
        a
        breach or default under the organizational documents of Buyer or any provision
        of any mortgage, trust indenture, lien, lease, agreement, instrument, court
        order, judgment or decree by which Buyer is bound.
 
 6.4. **Finder’s
        Fees** .
        Buyer
        has not employed or retained any broker, agent, finder or other party, or
        incurred any obligation for brokerage fees, finder’s fees or commissions with
        respect to the transactions contemplated by this Agreement, or otherwise
        dealt
        with anyone purporting to act in the capacity of a finder or broker with
        respect
        thereto whereby Seller may be obligated to pay such a fee or a
        commission.
 
 6.5. **No
        Litigation** .
        No
        suit, action or legal, administrative, arbitration or other proceeding or,
        to
        Buyer’s Knowledge, no investigation by any governmental agency, is pending or,
        to Buyer’s Knowledge, has been threatened by or against Buyer which would
        materially and adversely affect the ability of Buyer to consummate the
        transaction provided for in this Agreement.
 
 6.6. **No
        Financing Contingency** .
        Buyer’s
        obligations hereunder are not contingent upon procuring financing for the
        transaction contemplated hereunder.
 
 6.7. **No
        Rights or Options to Purchase** **.** Buyer
        does not have, nor does any Affiliate of Buyer have, any interest in, right
        or
        option to purchase any of the Purchased Assets which arise or exist outside
        of
        the terms of this Agreement, and to the extent any such interest, right or
        option is possessed by Buyer or any Affiliate of Buyer, such interest, right
        and
        option is hereby waived by Buyer for itself and all Affiliates of
        Buyer.
 
 **SECTION
        7**
 **COVENANTS
        OF SELLER**
 
 7.1. **Seller’s
        Chapter 11 Bankruptcy Case** .
        This
        Agreement and the transactions contemplated hereby are contingent upon the
        approval and authorization of the Bankruptcy Court, which approval and
        authorization shall be obtained on or before January 31, 2006.
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  7.2. **Access** .
        From
        and after the date of this Agreement until the Closing Date, Seller shall,
        upon
        reasonable advance notice, afford to Buyer’s officers, independent public
        accountants, counsel, lenders, consultants and other representatives, reasonable
        access during normal business hours to the Purchased Assets and all records
        pertaining to the Purchased Assets. Buyer expressly acknowledges that nothing
        in
        this Section is intended to give rise to any contingency to Buyer’s obligations
        to proceed with the transactions contemplated herein.
 
 **SECTION
        8**
 **CONDITIONS
        PRECEDENT TO BUYER’S OBLIGATIONS**
 
 The
        obligations of Buyer at the Closing hereunder are subject, at Buyer’s election,
        to the satisfaction on or prior to the Closing Date of the conditions set
        forth
        below. Notwithstanding the failure of any one or more of such conditions
        (other
        than the approval of the Bankruptcy Court), Buyer may nevertheless proceed
        with
        Closing without satisfaction, in whole or in part, of any one or more of
        such
        conditions and without written waiver. To the extent that as of the Closing
        Date
        Buyer has Knowledge of the failure of any of such conditions or the breach
        by
        Seller of any of the representations or warranties contained in this Agreement
        and nevertheless proceeds with Closing, Buyer shall be deemed to have waived
        for
        all purposes any rights or remedies it may have against Seller by reason
        of the
        failure of any such condition or the breach of any such representation or
        warranty, provided that by proceeding with Closing Buyer shall not be deemed
        to
        have waived any rights or remedies it may have against Seller by reason of
        failure of any condition or for breach of any representation or warranty
        as to
        which Buyer does not have Knowledge as of the Closing Date.
 
 8.1. **Representations
        and Warranties True** .
        The
        representations and warranties made by Seller in this Agreement shall be
        true
        and correct in all material respects on and as of the Closing Date with the
        same
        effect as though such representations and warranties had been made or given
        on
        and as of the Closing Date.
 
 8.2. **Compliance
        with Agreement** .
        Seller
        shall have performed and complied in all material respects with all of its
        obligations under this Agreement which are to be performed or complied with
        by
        it prior to or on the Closing Date.
 
 8.3. **Designation
        Rights Agreement** .
        Prior
        to the Closing Date, Seller shall enter into a DRA on terms and conditions
        reasonably acceptable to the Parties.
 
 8.4. **Condition
        of Purchased Assets** .
        The
        Purchased Assets shall be in substantially the same condition as the condition
        they are in on the date of this Agreement, ordinary wear and tear
        excepted.
 
 8.5. **Bankruptcy
        Court Approval** **.** The
        Bankruptcy Court shall have entered an order approving this Agreement no
        later
        than January 31, 2006, containing and providing for all of the following:
 
 a. approving
        the transactions contemplated hereby and the terms and conditions of this
        Agreement;
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  b. containing
        a determination with respect to the creation of a reserve account for payment
        of
        the cure amounts required under Bankruptcy Code § 365(a), as of the Closing
        Date, to cure any default under the Assumed Leases;
 
 c. approving
        and authorizing the assumption of the Assumed Leases and the assignment of
        the
        Assumed Leases to Buyer and finding that Buyer has demonstrated adequate
        assurance of future performance with respect to such Assumed Leases;
 
 d. providing
        to Buyer the right to designate an assignee for the Remaining Leases pursuant
        to
§ 365 of the Bankruptcy Code, at the direction of Buyer pursuant to the
        DRA, to be effected at any time prior to April 30, 2006;
 
 e. providing
        for the sale of the Purchased Assets free and clear of all liens, claims,
        encumbrances, charges, and interests, other than the Assumed Liabilities
        under
        this Agreement, with such liens, claims, charges, encumbrances, and interest
        to
        attach to the consideration to be received by Seller in the same priority
        and
        subject to the same defenses and avoidability, if any, as before the Closing;
 
 f. finding
        that Buyer shall have the right to conduct going-out-of-business sales at
        the
        stores set forth on Schedule 2.2. and pursuant to the sale guidelines set
        forth
        on Schedule 2.3 and Buyer shall further have the right to transfer like
        inventory into said stores;
 
 g. finding
        that notice of the hearing concerning approval of the transactions contemplated
        under this Agreement was given in accordance with this Court’s *Ex
        Parte Blanket Order Restricting Notice* and
        constitutes such notice as is appropriate under the particular
        circumstances;
 
 h. finding
        that Seller has the legal right and capacity to convey all right, title and
        interest of Seller in and to the Purchased Assets and that Buyer is a good
        faith
        Buyer entitled to the protections afforded by Bankruptcy Code § 363(m);
        and
 
 i. waiving
        the ten-day stay provided for by the Federal Rules of Bankruptcy
        Procedure.
 
 j. The
        Parties further agree to use commercially reasonable, good faith efforts
        to
        include in such order a finding that (i) Buyer is only buying the Purchased
        Assets and is not a successor in interest to Seller and that Buyer’s acquisition
        of the Purchased Assets does not reflect a substantial continuity of the
        operation of Seller’s business; and (ii) the Seller and Buyer have satisfied the
        requirements for adequate assurance of performance and assumption and assignment
        with respect to the Remaining Leases and Contracts.
 
 **SECTION
        9**
 **CONDITIONS
        PRECEDENT TO SELLER’S OBLIGATIONS**
  -
            10
            -
  The
        obligations of Seller at the Closing hereunder are subject, at Seller’s
        election, to the satisfaction on or prior to the Closing Date of the conditions
        set forth below (the “ Buyer
        Closing Conditions ”).
        Notwithstanding the failure of any one or more of such conditions, Seller
        may
        nevertheless proceed with Closing without satisfaction, in whole or in part,
        of
        any one or more of such conditions and without written waiver. To the extent
        that as of the Closing Date Seller has Knowledge of the failure of any of
        such
        conditions or the breach by Buyer of any of the representations or warranties
        contained in this Agreement and nevertheless proceeds with Closing, Seller
        shall
        be deemed to have waived for all purposes any rights or remedies it may have
        against Buyer by reason of failure of any condition or the breach of any
        such
        representation or warranty, provided that by proceeding with Closing Seller
        shall not be deemed to have waived any rights or remedies it may have against
        Buyer by reason of failure of any condition or for breach of any representation
        or warranty as to which Seller does not have Knowledge as of the Closing
        Date.
 
 9.1. **Representations
        and Warranties True** .
        The
        representations and warranties made by Buyer in this Agreement shall be true
        and
        correct in all material respects on and as of the Closing Date with the same
        effect as though such representations and warranties had been made or given
        on
        and as of the Closing Date.
 
 9.2. **Compliance
        with Agreement** .
        Buyer
        shall have performed and complied in all material respects with all of its
        obligations under this Agreement which are to be performed or complied with
        by
        it prior to or on the Closing Date.
 
 9.3. **Bankruptcy
        Court Approval** .
        This
        Agreement and the transactions contemplated hereby shall have been approved
        by
        the Bankruptcy Court as provided in Section 8.5.
 
 **SECTION
        10**
 **SURVIVAL
        OF COVENANTS, AGREEMENTS,**
 **REPRESENTATIONS
        AND WARRANTIES**
 
 The
        representations and warranties contained in this Agreement shall not survive
        the
        Closing.
 
 **SECTION
        11**
 **MISCELLANEOUS**
 
 11.1. **Expenses** .
        Each of
        the Parties hereto agrees to be responsible for its own, without right of
        reimbursement from the other, costs incurred by it incident to the performance
        of its obligations hereunder, whether or not the transactions contemplated
        by
        this Agreement shall be consummated, including, without limitation, those
        costs
        incident to the preparation of this Agreement, and the fees and disbursements
        of
        legal counsel, accountants and consultants employed by the respective Parties
        in
        connection with the transactions contemplated by this
        Agreement.
  -
            11
            -
  11.2. **Termination
        and Abandonment** .
        This
        Agreement may be terminated and abandoned as follows: (a) by mutual written
        consent of the Parties, (b) by Seller if the conditions precedent contained
        in Section 9 hereof have not been fulfilled on or prior to the Closing,
        (c) by Buyer if the conditions precedent contained in Section 8 hereof have
        not been fulfilled on or prior to the Closing Date, or (d) by either party
        if the approval of this Agreement by the Bankruptcy Court is not obtained
        on or
        before January 31, 2006. In the event of termination by any party as
        provided above, written notice shall promptly be given to the other party
        and
        each party shall pay its own expenses incident to the preparation for the
        consummation of this Agreement and the transactions contemplated hereby.
        If the
        Closing does not occur due to a breach of this Agreement by Buyer, Seller
        may
        retain the Deposit, in addition to any other remedies available at law or
        in
        equity. If the Closing does not occur for any reason other than breach of
        this
        Agreement by Buyer, the Deposit shall be promptly returned to Buyer without
        further Order of the Bankruptcy Court. Buyer acknowledges and agrees that
        the
        only remedy for a breach of any representation or warranty made by Seller
        or any
        covenant required to be performed by Seller prior to the Closing, shall be
        Buyer’s option to terminate this Agreement pursuant to and to the extent
        permitted by this Section 11.2.
 
 11.3. **Inform
        of Litigation** .
        During
        the period from the date of this Agreement to the Closing Date, each party
        will
        promptly inform the other party in writing of any litigation commenced against
        such party in respect of the transactions contemplated by this
        Agreement.
 
 11.4. **Assignment** .
        Except
        as set forth in the DRA, this Agreement shall not be assigned by either party
        without the prior written consent of the other party and any attempted
        assignment without such written consent shall be null and void and without
        legal
        effect.
 
 11.5. **Governing
        Law** .
        This
        Agreement shall be governed by, construed and interpreted in accordance with
        the
        laws of the State of Kansas applicable to agreements made and to be performed
        entirely within such state, including all matters of construction, validity
        and
        performance.
 
 11.6. **Amendment
        and Modification** .
        Buyer
        and Seller may amend, modify and supplement this Agreement in such manner
        as may
        be mutually agreed by them in writing.
 
 11.7. **Notices** .
        All
        notices, requests, demands and other communications hereunder shall be deemed
        to
        be duly given if delivered by hand, if mailed by certified or registered
        mail
        with postage prepaid, if delivered by fax (with confirmation confirmed) or
        if
        sent by nationally-recognized overnight courier as follows:
 
 If
        to
        Seller, addressed to:
 
 Steve’s
        Shoes, Inc.
 11333
        Strang Line Road
 Lenexa,
        KS 66215
 Attn:
        Michael G. Yeager, President
 Facsimile
        No.
 
 -with
        copies to-
 
 Evans
        & Mullinix, P.A.
 7225
        Renner Road, Ste 200
 Shawnee,
        KS 66217
 Attn:
        Joanne B. Stutz, Esq.
 Facsimile
        No. (913) 962-8701
  -
            12
            -
  Kronish
        Lieb Weiner & Hellman LLP
 1114
        Avenue of the Americas
 New
        York,
        New York 10036
 Attn:
        Jay
        R. Indyke, Esq.
 Facsimile
        No. (212) 479-6275
 
 If
        to
        Buyer, addressed to:
 
 The
        Walking Company
 121
        Gray
        Avenue
 Santa
        Barbara, CA 93101
 Attn:
        Anthony J. Wall
 Facsimile:
        (805) 962-9460
 
 -with
        a
        copy to-
 
 Sheppard,
        Mullin, Richter & Hampton LLP
 333
        South
        Hope Street, 48th Floor
 Los
        Angeles, CA 90071
 Attn:
        Mette H. Kurth, Esq.
 Facsimile
        No. (213) 443-2746
 
 or
        to
        such other addresses as either party may provide to the other in
        writing.
 
 11.8. **Entire
        Agreement** .
        Except
        for any confidentiality agreements between the Parties (which shall survive
        the
        execution and delivery of this Agreement) and the DRA contemplated herein,
        this
        Agreement cancels, merges and supersedes all prior and contemporaneous
        understandings and agreements relating to the subject matter of this Agreement,
        written or oral, between the Parties hereto and contains the entire agreement
        of
        the Parties hereto, and the Parties hereto have no agreements, representations
        or warranties relating to the subject matter of this Agreement which are
        not set
        forth herein.
 
 11.9. **Successors** .
        This
        Agreement shall be binding upon and shall inure to the benefit of each of
        the
        Parties hereto and to their respective successors and permitted assigns.
        In the
        event that a Chapter 11 trustee should be appointed for Seller, or in the
        event
        that Seller’s Chapter 11 case should be converted to a case under Chapter 7, the
        obligations of Seller hereunder shall be binding upon such trustee or successor
        Chapter 7 estate.
 
 11.10. **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 but one and
        the
        same instrument.
  -
            13
            -
  11.11. **Headings** .
        The
        headings used in this Agreement are for convenience only and shall not
        constitute a part of this Agreement.
 
 11.12. **Schedules** .
        All of
        the exhibits and schedules attached hereto are incorporated herein and made
        a
        part of this Agreement by reference.
 
 11.13. **Jurisdiction** .
        During
        Seller’s Bankruptcy Case, any suit, action or proceeding between the Parties
        hereto relating to this Agreement or to any agreement, document or instrument
        delivered pursuant hereto or in connection with the transactions contemplated
        hereby, or in any other manner arising out of or relating to the transactions
        contemplated by or referenced in this Agreement, shall be commenced and
        maintained exclusively in the Bankruptcy Court. The Parties hereto submit
        themselves unconditionally and irrevocably to the personal jurisdiction of
        such
        court. Subsequent to Seller’s Bankruptcy Case, any suit, action or proceeding
        between the Parties hereto relating to this Agreement or to any agreement,
        document or instrument delivered pursuant hereto or in connection with the
        transactions contemplated hereby, or in any other manner arising out of or
        relating to the transactions contemplated by or referenced in this Agreement,
        shall be commenced and maintained exclusively in the United States District
        Court for the District of Kansas, Kansas City, or if that court lacks
        jurisdiction over the subject matter, in a state court of competent subject
        matter jurisdiction sitting in Johnson County, Kansas. The Parties hereto
        submit
        themselves unconditionally and irrevocably to the personal jurisdiction of
        such
        courts, as applicable. The Parties further agree that venue shall be in the
        District of Kansas, Kansas City. The Parties hereto irrevocably waive any
        objection to such personal jurisdiction or venue, including, but not limited
        to,
        the objection that any suit, action or proceeding brought in the District
        of
        Kansas, Kansas City, has been brought in an inconvenient forum.
 
 **IN
        WITNESS WHEREOF** ,
        the
        Parties hereto have caused this Agreement to be duly executed as of the day
        and
        year first above written.
 
 **STEVE’S
                  SHOES, INC.****Debtor
                  in Possession**By:
              /s/MICHAEL
                  YEAGERMichael
                  G. Yeager, President**THE
                  WALKING COMPANY**By:
              ANTHONY
                  WALLName:  Anthony
                  J. WallTitle:   
                  Executive Vice President
 -
              14
              -
  Exhibits
 
 A
              Designation
                  Rights Agreement
 
 Schedules
 
 1
              Purchased
                  Assets
 
 2.1
              Assumed
                  Leases
 
 2.2
              Remaining
                  Leases
 
 2.3
              Sale
                  Guidelines
  -
            15
            -
  **Schedule
        1**
 
 Purchased
        Assets
 
 Purchased
        Assets . “Purchased
        Assets” include, without limitation,
 
 a. All
        inventory owned by Seller, wherever located (whether in the stores, warehouse,
        or in transit);
 
 b. All
        tangible personal property owned by Seller, wherever located, including but
        not
        limited to, all furniture, fixtures, equipment, machinery, furnishings, motor
        vehicles, computers, computer systems and software, office equipment, tools
        and
        other articles of personal property, but excluding the phone system in the
        Distribution Center;
 
 c. All
        right, title and interest in trademarks, and all other intellectual property
        rights, to the extent assignable under applicable law and to the extent owned
        by
        Seller;
 
 d. All
        trade
        accounts receivable and customer credits that remain outstanding as of the
        Closing Date;
 
 e. The
        30
        Leases listed in Schedule 2.1;
 
 f. 90-day
        designation rights with respect to the 15 Remaining Leases (as set forth
        in
        Schedule 2.2) as provided in the DRA, which designation rights include the
        right
        to designate the Buyer as the assignee of any such Remaining Lease;
 
 g. All
        of
        Seller’s preference actions with respect to trade vendors and landlords, which
        Buyer agrees not to pursue; but excluding all fraudulent conveyance and
        preference actions with respect to Debtor’s insiders and lenders, and any claims
        arising under Debtor’s D&O insurance; provided that Buyer reserves the right
        to pursue an action against any insider or employee for misappropriation
        of any
        Purchased Assets;
 
 h. To
        the
        extent assignable by Seller to Buyer, all rights, claims, credits, suits,
        actions, demands, hearings, proceedings, judgments, orders, injunctions writs,
        awards, decrees and rulings of any federal, state, local or foreign government
        or court of competent jurisdiction, administrative agency, commission, or
        other
        governmental or regulatory authority or instrumentality (“ Governmental
        Entity ”)
        to the
        extent relating to any Purchased Asset or any Assumed Liability, including
        any
        such items arising under guarantees, warranties, indemnities and similar
        rights
        in favor of Seller in respect of any Purchased Asset or such Assumed
        Liability;
 
 k. All
        books
        of account, ledgers, financial accounting and Tax (as hereinafter defined)
        records and all general and personnel records, files, invoices, customer
        lists,
        suppliers’ lists, other distribution and mailing lists, price lists, reports,
        plans, advertising materials, catalogues, billing records, sales and promotional
        literature, manuals, and customer and supplier correspondence (the “ Records ”)
        that
        are used in the Business, in all cases in any form or medium. The term
“ Tax ”
as
        used
        herein shall mean any and all federal, state, local or foreign income, sales,
        use, transfer, payroll, unemployment, Social Security, property, occupancy
        or
        other tax, levy, impost, fee, imposition, assessment or similar charge, together
        with any related addition to tax, penalties or interest
        thereon;
  
  l. All
        sundry items, including telephone numbers, key and lock combinations and
        passwords which are necessary to Buyer’s use of the Purchased Assets in the
        ordinary course of business;
 
 m. All
        goodwill generated by, associated with or attributable to the Business and
        the
        intellectual property;
 
 n. All
        prepaid assets and security deposits;
 
 o. To
        the
        extent assignable by Seller to Buyer, all of Seller’s rights in, to and under
        third-party manufacturers’ warranties, other than warranties with respect to the
        Excluded Assets;
 
 p. To
        the
        extent transferable, any approval, consent, permit, license, waiver or other
        authorization issued, granted, given or otherwise made available by or under
        any
        Governmental Entity or pursuant to any Law which is material to the Business;
        and
 
 q. To
        the
        extent assignable by Seller to Buyer, all insurance coverage under Seller’s
        insurance policies and insurance Contracts covering any loss or damage to
        any of
        the Purchased Assets that occurred, with respect to “occurrence based coverage,”
between January 20, 2006, and the Closing Date and with respect to “claims made
        coverage,” between the date hereof and the Closing Date, including, but not
        limited to, any claim, action or other right Seller may have for insurance
        coverage under such policies and Contracts that relates to any loss or damage
        to
        any Purchased Assets that occurred with respect to “occurrence based coverage,”
between January 20, 2006, and the Closing Date and with respect to “claims made
        coverage,” between the date hereof and the Closing Date, and, regardless of
        whether or not such claims or coverage are assignable, any proceeds received
        from any such policy or Contract after the Closing pertaining to such time
        period. Notwithstanding the foregoing, Seller shall retain all insurance
        coverage and Contracts and any claims, actions or other rights related to
        the
        Excluded Assets.
  
  **Schedule
        2.1**
  **Assumed
        Leases**
 
 **LANDLORD**
                **LOCATION**
                **CITY**CBL
                    & Assoc.
                Park
                    Plaza Shopping Center
                Little
                    RockCBL
                    &Assoc.
                Brookfield
                    Square
                BrookfieldCBL
                    & Assoc.
                Fayette
                    Mall
                LexingtonCBL
                    & Assoc.
                Oak
                    Park Mall
                Overland
                    ParkGeneral
                    Growth
                Boise
                    Towne Square
                BoiseGeneral
                    Growth
                Park
                    Meadows Center
                LittletonGeneral
                    Growth
                Ridgedale
                    Shopping Center
                MeinnetonkaGeneral
                    Growth
                St.
                    Louis Galleria
                St.
                    LouisHighwoods
                    Properties
                Country
                    Club Plaza
                Kansas
                    CityInland
                    Southwest
                The
                    Gateway
                Salt
                    LakeJones
                    Lang Lasalle
                Rosedale
                    Center
                RosevilleMacerich
                Valley
                    River Mall
                EugeneMacerich
                Northwest
                    Arkansas Mall
                FayettevilleSimon
                    Properties
                Woodland
                    Hills Mall
                TulsaSimon
                    Properties
                Wolfchase
                    Galleria
                MemphisSimon
                    Properties
                Orland
                    Square
                Orland
                    ParkSimon
                    Properties
                University
                    Park Mall
                MishawakaSimon
                    Properties
                Independence
                    Center
                IndependenceSomerset
                    Collection
                Somerset
                    Collection
                TroyThe
                    Mills Properties
                Meadowood
                    Mall
                RenoWestcor
                Flatiron
                    Crossing
                Broomfield
  
  Westfield
                South
                    Center Shoppingtown
                TukwilaWestfield
                Hawthorn
                    Center
                Vernon
                    HillsWestcor
                Chandler
                    Fashion Center
                ChandlerGeneral
                    Growth
                Stonebriar
                    Center
                FriscoGeneral
                    Growth
                Rivertown
                    Crossings
                GrandvilleSimon
                    Properties
                Northeast
                    Mall
                HurstWestcor
                Arrowhead
                    Towne Center
                GlendaleSimon
                    Properties
                Battlefield
                    Mall
                SpringfieldLong
                    Pehrson Association
                Yorktown
                Lombard
  
  **Schedule
        2.2**
  **Remaining
        Leases**
 
 **LANDLORD**
              **LOCATION**
              **CITY**Taubman
              Woodfield
                  Mall
              SchaumburgWestcor
              Scottsdale
                  Fashion Sq.
              ScottsdaleGeneral
                  Growth
              Foothills
                  Fashion Mall
              Fort
                  CollinsWestfield
              Fox
                  Valley Center
              AuroraGeneral
                  Growth
              Fashion
                  Place Mall
              MurrayGeneral
                  Growth
              Coronado
                  Center
              AlbuquerqueGeneral
                  Growth
              Alderwood
                  Mall
              LynnwoodGeneral
                  Growth
              Jordan
                  Creek Town Center
              Des
                  MoinesMacerich
              Washington
                  Sq. Mall
              TigardSimon
                  Properties
              Columbia
                  Center
              KennewickSimon
                  Properties
              Castleton
                  Square
              IndianapolisSimon
                  Properties
              Westridge
                  Mall
              TopekaWestcor
              Superstition
                  Springs Center
              MesaWestfield
              Franklin
                  Park
              ToledoWestfield
              West
                  County Center
              Des
                  Peres