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                                                                   EXHIBIT 10.18

                                                                       EXHIBIT B

                          TAX INDEMNIFICATION AGREEMENT

         TAX INDEMNIFICATION AGREEMENT, dated as of January 3, 2004 (the
"Agreement"), among Bakers Footwear Group, Inc., a Missouri corporation (the
"Company"), and the persons listed on SCHEDULE A attached hereto (individually,
a "Stockholder" and, collectively, the "Stockholders").

         WHEREAS, the Company is and has been an "S corporation" (within the
meaning of section 1361(a)(1) of the Internal Revenue Code of 1986, as amended
(the "Code")) since January 1, 1984;

         WHEREAS, the Company contemplates a public offering (the "Offering") of
its stock;

         WHEREAS, the execution of this Agreement by the Company and the
Stockholders is a condition to the closing (the "Closing") of the contemplated
Offering;

         WHEREAS, it is anticipated that the Company's election to be an S
corporation will terminate as a result of revocation of such status in
accordance with section 1362(d)(1) of the Code, the day prior to the day of the
Closing;

         WHEREAS, in connection with the Offering, the Company and Stockholders
wish to provide for certain indemnification with respect to the Company's prior
status as an S corporation.

         NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, and intended to be legally
bound hereby, the parties hereto agree as follows:

                                   ARTICLE I.
                                   DEFINITIONS

         1.1.     Definitions. The following terms as used herein have the
following meanings:

         "Closing Date" means the date on which the Offering closes.

         "Final Determination" means the final resolution of any income tax
liability (including all related interest and penalties) for a taxable period. A
Final Determination shall result from the first to occur of:

                  (i)      the expiration of the period, if any, during which
the taxpayer may file a claim for refund following receipt from the Internal
Revenue Service (the "IRS") of a fully executed Waiver of Restrictions on
Assessment and Collection of Deficiency in Tax and

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Acceptance of Overassessment on IRS Form 870 or a fully executed IRS Form 870-AD
that, in either case, determines the tax liability of the taxpayer for the
taxable period (the "Waiver") (or any successor form or any comparable form with
respect to any comparable agreement under the laws of any other jurisdiction),
provided the taxpayer does not file a claim for refund during that period;

                  (ii)     a final decision by a court of competent jurisdiction
in respect of which all rights to appeal have expired or have been exhausted;

                  (iii)    the execution of a closing agreement under section
7121 of the Code that finally determines the tax liability of the taxpayer for
the taxable period;

                  (iv)     the acceptance by the IRS of an offer to compromise
described in Treasury regulation section 301.7122-1(e)(5) that finally
determines the tax liability of the taxpayer for the taxable period;

                  (v)      the expiration of the applicable statute of
limitations for the taxable period; or

                  (vi)     any other event that the parties hereto agree is a
final determination of the liability at issue.

         "S Taxable Year" means any taxable year (or portion thereof) of the
Company during which the Company was an S corporation.

         "Tax Liability" means any federal or state income tax liability. For
purposes of this Agreement federal income tax liability shall be deemed to be
(i) the highest applicable individual federal income tax rate, multiplied by
(ii) a Stockholder's allocable portion of the Company's taxable income. For
purposes of this Agreement, state income tax liability shall be deemed to be (i)
the highest applicable individual state income tax rate of the applicable state,
multiplied by (ii) a Stockholder's allocable portion of the Company's taxable
income in that state. Tax Liability shall also include any interest and
penalties.

         "Taxing Authority" means the IRS or any comparable state or foreign
taxing authority.

         "Termination Date" means the date on which the S corporation status of
the Company will terminate pursuant to section 1362(d) of the Code, which shall
be January 4, 2004.

                                   ARTICLE II.
          TERMINATION OF S CORPORATION STATUS AND ALLOCATION OF INCOME

         2.1.     Termination of S Corporation Status. The Company and the
Stockholders shall cause the Company to terminate its S corporation status
pursuant to section 1362(d)(1) of the Code no later than one day before the
Closing by filing the form attached hereto and marked as EXHIBIT 1 no later than
one day before the Closing. The Stockholders shall each consent to the

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revocation of the S corporation election by providing the Company with the
statement of consent, attached hereto and marked as EXHIBIT 2, no later than one
day before the Closing.

                                  ARTICLE III.
                                  OBLIGATIONS

         3.1.     Company's Indemnification of Stockholders for Tax Liabilities.
The Company hereby agrees to indemnify and hold each of the Stockholders
harmless from, against and in respect of any Tax Liability incurred by such
Stockholder as a result of a Final Determination to the Company's tax returns
that increases the Tax Liability of the Stockholder for an S Taxable Year in
excess of amounts previously distributed to such Stockholder. With respect to
states in which the Company has previously filed composite returns including a
Stockholder, the foregoing obligation shall be accomplished by the Company, as
necessary, re-filing the composite returns and paying directly any additional
amounts owed.

         3.2.     Gross Up for Additional Tax. In all events and to the extent
not otherwise reimbursed, the Company hereby agrees that if any payment pursuant
to this Article III is deemed to be taxable income to a Stockholder, the amount
of such payment to the Stockholder shall be increased by an amount necessary to
equal the Stockholder's additional Tax Liability related to such amount
(including, without limitation, any taxes on such additional amounts) so that
the net amount payment, after reduction for all Tax Liability associated with
its receipt, is equal to the amount of the Tax Liability in respect of which
such payment is made.

         3.3.     Payment. Any payment required to be made pursuant to this
Agreement shall be paid within ten days after receipt of written notice from the
Stockholder that a payment is due hereunder.

                                   ARTICLE IV.
                              CONTESTS/COOPERATION

         4.1.     Cooperation. The parties shall make available to each other,
as reasonably requested, and to any Taxing Authority all information, records or
documents relating to any liability for taxes covered by this Agreement and
shall preserve such information, records and documents until the expiration of
any applicable statute of limitations or extensions thereof. The party
requesting such information shall reimburse the other party for all reasonable
out-of-pocket costs incurred in producing such information.

                                   ARTICLE V.
                                  MISCELLANEOUS

         5.1.     Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
counterparts collectively shall constitute a single instrument representing the
agreement among the parties hereto.

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         5.2.     Construction of Terms. Nothing herein expressed or implied is
intended, or shall be construed, to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.

         5.3.     Governing Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of Missouri without regard to any choice of law
rules.

         5.4.     Amendment and Modification. This Agreement may be amended,
modified or supplemented only by a writing executed by all the parties hereto.

         5.5.     Assignment. Except by operation of law or in connection with
the sale of all or substantially all the assets of a party, this Agreement shall
not be assignable, in whole or in part, directly or indirectly, by the
Stockholders without the written consent of the Company or by the Company
without written consent of the Stockholders. Any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be void. The
provisions of this Agreement shall be binding upon and inure to the benefit of,
and be enforceable by, the parties hereto and their respective successors and
permitted assigns.

         5.6.     Interpretation. The title, article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties, and shall not in any way affect the
meaning or interpretation of this Agreement.

         5.7.     Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be illegal, invalid or
unenforceable in any respect, the same shall not in any respect affect the
validity, legality or enforceability of the remainder of this Agreement, and the
parties shall use their best efforts to replace such illegal, invalid or
unenforceable provision with an enforceable provision approximating, to the
extent possible, the original intent of the parties.

         5.8.     Entire Agreement. This Agreement embodies the entire agreement
and understanding of the parties hereto in respect to the subject matter
contained herein. There are no representations, promises, warranties, covenants
or undertakings other than those expressly set forth herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter, including without limitation the Tax
Indemnification Agreement sent to you in 2002.

         5.9.     Further Assurances. Subject to the provisions of this
Agreement, the parties shall acknowledge such other instruments and documents
and take all other actions that may be reasonably required in order to
effectuate the purposes of this Agreement.

         5.10.    Waivers, Etc. No failure or delay on the part of any party in
exercising any power or right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power or
any abandonment or discontinuance of steps to enforce such right or power
preclude any other or further exercise thereof or the exercise of any

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other right or power. No waiver of any provision of this Agreement nor consent
to any departure by the parties therefrom shall in any event be effective unless
it shall be in writing, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which it was given.

         5.11.    Set-off. All payments to be made by the Company under this
Agreement shall be made without set-off, counterclaim or withholding, all of
which are expressly waived.

         5.12.    Change of Law. If, due to any change in applicable law or
regulations or the interpretation thereof by any court or other governing body
having jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement shall be impracticable or impossible, the parties
shall use their best efforts to find an alternative means to achieve the same or
substantially the same results as are contemplated by such provision.

         5.13.    Notices. All notices under this Agreement shall be validly
given if in writing and delivered personally or sent by registered mail, postage
prepaid to the Company at:

         2815 Scott Avenue
         St. Louis, Missouri, 63103
         Attention:
                   ---------------

or at such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by mail shall be deemed
delivered five calendar days after the date mailed.

         5.14.    Termination of Agreement. This Agreement shall terminate and
be void, as if it never had been executed, if the Closing does not occur on or
before March 15, 2004.

              [Remainder of this page is intentionally left blank]

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

                                  BAKERS FOOTWEAR GROUP, INC.

                                  By:
                                     -------------------------------------------
                                  Peter A. Edison, Chairman of the Board of
                                  Directors and Chief Executive Officer

                                  STOCKHOLDERS

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

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

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

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

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

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                                   SCHEDULE A

                              LIST OF STOCKHOLDERS

1.   Peter A. Edison

2.   Bernard A. Edison Revocable Trust
     Dated 6/18/91

3.   Bernard A. Edison, Co-Trustee
     Beatrice C. Edison Irrevocable Trust
     F/B/O Bernard A. Edison

4.   Robin Haar, Co-Trustee
     Beatrice C. Edison Irrevocable Trust
     F/B/O Bernard A. Edison

5.   Beatrice C. Edison Trust F/B/O
     Bernard A. Edison

6.   Susan H. Edison

7.   David A. Edison
     Trustee of David A. Edison
     Revocable Trust

8.   Bernard A. Edison
     Trustee of David A. Edison
     Revocable Trust

9.   Julian Edison

10.  Marilyn Sue Edison

11.  Joseph Russell

12.  Michelle Bergerac
     Trustee of Michele A. Bergerac
     Revocable Trust

13.  Mark Jenkins

14.  Andrew N. Baur Trust

15.  Stanley K. Tusman, Joint Trustee
     The Stanley K. Tusman and Gail F.
     Tusman Declaration of Trust Dated
     December 1, 1999

16.  Gail F. Tusman, Joint Trustee
     The Stanley K. Tusman and Gail F.
     Tusman Declaration of Trust Dated
     December 1, 1999

17.  Mark H. Brown

18.  Elizabeth Brown

19.  Joseph R. Vander Pluym

20.  Janice K. Vander Pluym

21.  Mark D. Ianni

22.  Kathy M. Ianni

23.  Lawrence Spanley

24.  Linda K. Spanley

25.  Sanford W. Weiss, Voting Trustee of
     the Class B Shareholder Voting Trust
     Agreement

26.  Sanford W. Weiss, as Trustee U/I
     Sanford W. Weiss

27.  Sanford W. Weiss, as Trustee of
     Richard S. Weiss Marital Trust

28.  Charles H. Weiss, as Trustee U/I/T
     of Charles H. Weiss

29.  Ellen Weiss

30.  Rochelle Weiss

31.  Stephen Weiss

32.  David Weiss

33.  Michael Weiss

34.  Alyson Weiss

35.  Jennifer Weiss

36.  Colby Oliver

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                                    EXHIBIT 1

                       STATEMENT OF REVOCATION OF ELECTION

Internal Revenue Service Center
Kansas City, Missouri, [64999]

  RE:    Bakers Footwear Group, Inc., EIN 43-0577980
         Revocation of S Corporation Election

         The S corporation election under Internal Revenue Code section 1362(a)
of Bakers Footwear Group, Inc., a Missouri corporation, with its principal
office located at 2815 Scott Avenue, St. Louis, Missouri, 63103, is hereby
revoked as of January 4, 2004, the first day of the fiscal year. At the time of
revocation the number of shares (issued and outstanding) of Bakers Footwear
Group, Inc.'s stock, including non-voting stock, is [                ]
                                                     ----------------

         Attached are the consent to the revocation by shareholders owning more
than one-half of the issued and outstanding shares of stock in Bakers Footwear
Group, Inc., including non-voting stock.

                                  BAKERS FOOTWEAR GROUP, INC.

                                  By:
                                     -------------------------------------------
                                  [Name, Title]

     [FILE STATEMENT OF REVOCATION WITH SHAREHOLDERS' CONSENTS WITH THE IRS
                       REQUESTING A COPY STAMPED "FILED"]

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                                    EXHIBIT 2

          SHAREHOLDERS' STATEMENT OF CONSENT TO REVOCATION OF ELECTION

         We, the undersigned, being shareholders of Bakers Footwear Group, Inc.
EIN 43-0577980, holding more than one-half of our corporation's issued and
outstanding shares (including non-voting stock), do hereby consent to the
revocation by our corporation of its S corporation election under Internal
Revenue Code section 1362(a). The revocation is to be effective as of January 4,
2004, the first day of our fiscal year.

         Under penalties of perjury, the undersigned declare that the facts
presented in the accompanying statement are, to the best of our knowledge and
belief, true, correct and complete.

<TABLE>
<CAPTION>
                                       NUMBER OF
 SHAREHOLDER                          SHARES OWNED,
  NAME AND        SOCIAL SECURITY     INCLUDING NON-   DATE(S)    TAX YEAR END
  ADDRESS              NUMBER         VOTING SHARES    ACQUIRED   (MONTH & DAY)
--------------------------------------------------------------------------------
<S>               <C>                 <C>              <C>        <C>

--------------------------------------------------------------------------------
</TABLE>

                                                  ------------------------------
                                                  [Shareholder Signature]

                                                  ------------------------------
                                                  [Shareholder Signature]

                                                  ------------------------------
                                                  [Shareholder Signature]

                                                  ------------------------------
                                                  [Shareholder Signature]

         [FILE SHAREHOLDERS' CONSENTS WITH THE STATEMENT OF REVOCATION]