Document:

ASSET PURCHASE AGREEMENT

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

                                    RECITALS

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

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

                                    AGREEMENT

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

     1. PURCHASE AND SALE.
        -----------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     2. LIMITED ASSUMPTION OF OBLIGATIONS.
        ----------------------------------

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

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

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

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

          (d) the Intellectual  Property Licenses  described on Schedule 1.1(h);
     and
          (e)  The  Personal  Property  Leases  described  on  Schedule  1.1(j).

     3. PURCHASE PRICE.
        ---------------

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

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

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

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

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

     3.4. Definitions.

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

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

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

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

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

               (i) When the Inventory Count is taken,  Inventory will be aged in
          the categories  set forth below,  and each such  "Inventory  Category"
          will be assigned a "Retail Realization Percentage" as set forth below:
<TABLE>
  <S>                       <C>                        <C>                             <C>
  ------------------------- -------------------------- -------------------------------- ----------------------------
  Inventory Category        Last Receipt Date          Last Receipt Date                Retail Realization
                            Core/Budget Stores         Better/Moderate Stores           Percentage

  ------------------------- -------------------------- -------------------------------- ----------------------------
  Current/Future Seasons    On or after 12/1/00        On or after 11/1/00              100%
  ------------------------- -------------------------- -------------------------------- ----------------------------
  Aged One Season           6/1/00 through 11/30/00    6/1/00 through 10/31/00          50%
  ------------------------- -------------------------- -------------------------------- ----------------------------
  Aged Two Seasons          12/1/99 through 5/31/00    SCOA on order received from      30%
                             2/29/00 through 5/31/00
  ------------------------- -------------------------- -------------------------------- ----------------------------
  Aged Three Seasons        6/1/99 through 11/30/99    N/A                              20%
  ------------------------- -------------------------- -------------------------------- ----------------------------
  Aged more than Three      Received prior to 6/1/99   Prior to 2/29/00                 0% for Core/Budget; 10%
  Seasons                                                                               for Better/Moderate
  ------------------------- -------------------------- -------------------------------- ----------------------------
</TABLE>

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

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

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

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

         3.5.  Inventory Count.

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

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

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

     3.7. Allocation.

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

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

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

     4. CLOSING.
        --------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     5. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
        ---------------------------------------------

     Each of the Selling Entities jointly and severally  represents and warrants
to the Buyer as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     5.19. Taxes; Tax Returns.

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

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

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

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

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

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

     6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
        --------------------------------------------

     The Buyer  represents  and  warrants  to each of the  Selling  Entities  as
follows:

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

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

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

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

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

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

     7. CONDUCT OF BUSINESS BY THE SELLER PENDING CLOSING.
        --------------------------------------------------

     Each Selling Entity  covenants and agrees,  from and after the date of this
Agreement and until the Closing,  except as otherwise  specifically consented to
or approved by Footstar in writing, as follows:

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

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

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

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

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

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

     7.7. Preservation of Organization.

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

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

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

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

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

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

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

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

     8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
        --------------------------------------------

     The  obligation of the Buyer to consummate  the Closing shall be subject to
the satisfaction at or prior to the Closing of each of the following  conditions
(to the extent noncompliance is not waived in writing by Footstar):

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

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

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

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

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

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

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

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

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

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

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

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

     9.  CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.
         ---------------------------------------------

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

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

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

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

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

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

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

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

     10. CONFIDENTIAL INFORMATION.
         -------------------------

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

     11. INDEMNIFICATION; SURVIVAL.
         --------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         11.3.  Claims.

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

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

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

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

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

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

     11.8. Survival.

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

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

     12. OTHER COVENANTS OF THE PARTIES.
     -----------------------------------

     The parties hereto covenant and agree as follows:

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

     12.2. Employees of Seller.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     13. GENERAL.
         --------

     13.1 Termination. This Agreement may be terminated:

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

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

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

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

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

     13.2. Expenses; Termination Fee.

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

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

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

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

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

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

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

         If to the Buyer, to:

                  Footstar Corporation
                  933 MacArthur Boulevard
                  Mahwah, New Jersey 07430

                  Attention:  Chairman, President and Chief Executive Officer

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

            [The remainder of this page is intentionally left blank]

<PAGE>

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

THE BUYER:

                                         FOOTSTAR CORPORATION

                                         By:  /s/ Carlos E. Alberini
                                         Name:    Carlos E. Alberini
                                         Title:   Senior Vice President and
                                                  Chief Financial Officer

THE SELLER:

                                         J. BAKER, INC.

                                         By:  /s/ Alan I. Weinstein
                                         Name:    Alan I. Weinstein
                                         Title:   President and
                                                  Chief Executive Officer

THE SELLING ENTITIES:

                                         JBI, INC.

                                         By:  /s/ Alan I. Weinstein
                                         Name:    Alan I. Weinstein
                                         Title:   President and
                                                  Chief Executive Officer

                                         MORSE SHOE, INC.

                                         By:  /s/ Alan I. Weinstein
                                         Name:    Alan I. Weinstein
                                         Title:   President and
                                                  Chief Executive Officer

<PAGE>-------------------------------------------------------------------------------
THIRD AMENDMENT TO
1999 LOAN AND SECURITY AGREEMENT                       Fleet Retail Finance Inc.
                                                       ADMINISTRATIVE AGENT
                                                       AND COLLATERAL AGENT
-------------------------------------------------------------------------------
                                                               November 15, 2000

     THIS THIRD  AMENDMENT  is made in  consideration  of the  mutual  covenants
contained  herein and  benefits  to be derived  herefrom  to the August 30, 1999
agreement  styled "1999 Loan and Security  Agreement"  (as amended to date,  the
"Loan Agreement") between

                    BankBoston  Retail  Finance Inc.  (now known as Fleet Retail
               Finance  Inc.),  a  Delaware   corporation   with  its  principal
               executive offices at 40 Broad Street, Boston,  Massachusetts,  as
               Administrative  Agent and as  Collateral  Agent  for the  ratable
               benefit of (i) a  syndicate  of lenders  (defined  therein as the
               "Revolving Credit Lenders") and (ii) Back Bay Capital Funding LLC
               (defined  therein  as  the  "Term  Lender")  a  Delaware  limited
               liability company,

               and

                    The Revolving Credit Lenders

               and

                    The Term Lender

               On the one hand

               and

                    J.  Baker,  Inc.,  a  Massachusetts   corporation  with  its
               principal  executive  offices  at 555  Turnpike  Street,  Canton,
               Massachusetts 02021 as agent for the following:

                    Morse Shoe, Inc. ( a Delaware corporation with its principal
               executive offices at 555 Turnpike Street,  Canton,  Massachusetts
               02021);

                    JBI, Inc. ( a Massachusetts  corporation  with its principal
               executive offices at 555 Turnpike Street,  Canton,  Massachusetts
               02021);

                    JBI  Apparel,  Inc.( a  Massachusetts  corporation  with its
               principal  executive  offices  at 555  Turnpike  Street,  Canton,
               Massachusetts 02021);

<PAGE>

                    The Casual Male, Inc. (a Massachusetts  corporation with its
               principal  executive  offices  at 437  Turnpike  Street,  Canton,
               Massachusetts 02021);

                    WGS Corp. ( a Massachusetts  corporation  with its principal
               executive offices at 555 Turnpike Street,  Canton,  Massachusetts
               02021); and

                    TCMB&T, Inc.( a Massachusetts corporation with its principal
               executive offices at 437 Turnpike Street,  Canton,  Massachusetts
               02021);

               on the other,

                                   WITNESSETH:

          1. AMENDMENT OF LOAN AGREEMENT:

         Article  1 of the Loan  Agreement  is  amended  so that  the  following
Definition, included therein, read as follows:

         "Consolidated EBITDA":  The  Borrowers'  Consolidated  earnings  before
                  interest,  taxes,  depreciation,  and  amortization,  each  as
                  determined  in accordance  with GAAP,  provided  however,  the
                  determination of Consolidated  EBITDA shall exclude charges of
                  up to $40 Million on account of discontinued  operations of J.
                  Baker's shoe division.

         Article 1 of the Loan  Agreement is further  amended by the addition of
the following Definition in alphabetical order therein:

         "Shoe    Division  Sale":  The  sale of a  substantial  portion  of the
                  assets of the Shoe  Division  Borrowers on  substantially  the
                  same terms and  conditions  as outlined  in a certain  letter,
                  dated November 8, 2000, from the Borrowers'  Representative to
                  the Administrative Agent.

                  Section  5-24(b) of the Loan  Agreement  is amended to read as
follows:

         The net  aggregate  of  intercompany  cash  advances  between  the Shoe
Division  Borrowers,  on the one hand, and the Apparel Division Borrowers on the
other (determined without regard to intercompany  accounts outstanding on August
1, 1999), shall not exceed the following at any one time outstanding.

               (i) Until  the  consummation  of the Shoe  Division  Sale:  $17.5
               Million.

               (ii) Upon and  following  the  consummation  of the Shoe Division
               Sale: $1.0 Million.
<PAGE>

         2.       CONDITIONS TO EFFECTIVENESS OF AMENDMENT:

                  The  effectiveness  of this  Amendment is  conditioned  on the
satisfaction of each of the following:

                  (a) The delivery to the  Administrative  Agent of Certificates
executed  respectively  by the Chief  Executive  Officer and the Chief Financial
Officer of J. Baker, Inc. stating that at the delivery of such Certificates,  no
Suspension  Event has  occurred  which is then  continuing  and that neither the
execution  nor the  effectiveness  of this Third  Amendment is  prohibited by or
constitutes a breach of any agreement to which the Borrowers'  Representative or
any Borrower is a party or by which any is bound.

                  (b) The  delivery  of an opinion  of counsel to the  Borrowers
which confirms the due execution,  binding effect,  and  enforceability  of this
Third  Amendment  and  absence  of  conflict  of this Third  Amendment  with any
agreement to which the Borrowers'  Representative  or any Borrower is a party or
by which any is bound (which  opinion may be subject to the same  qualifications
as had been included in such counsel's  opinion  rendered in connection with the
execution of the Loan Agreement).

         3.       RATIFICATION OF LOAN DOCUMENTS. NO CLAIMS AGAINST ANY LENDER:

                  (a) Except as provided herein, all terms and conditions of the
Loan Agreement and of the other Loan Documents  remain in full force and effect.
The Borrowers'  Representative and each Borrower hereby ratifies,  confirms, and
re-affirms all and singular the terms and  conditions,  including  execution and
delivery, of the Loan Documents.

                  (b) There is no basis nor set of facts on which any amount (or
any portion  thereof)  owed by any Borrower  under the Loan  Agreement  could be
reduced,  offset, waived, or forgiven, by rescission or otherwise;  nor is there
any claim,  counterclaim,  off set, or defense (or other right, remedy, or basis
having a similar effect)  available to any Borrower with regard to thereto;  nor
is there any basis on which the terms and  conditions of any of the  Liabilities
could be  claimed to be other than as stated on the  written  instruments  which
evidence such Liabilities. To the extent that any Borrower or any such guarantor
has (or ever had) any such claims  against the Agent or any Lender,  each hereby
affirmatively WAIVES and RELEASES the same.

         4.       MISCELLANEOUS:

               (a) Terms used in the Third  Amendment  which are  defined in the
               Loan Agreement are used as so defined.
<PAGE>

               (b) This Third Amendment may be executed in several  counterparts
               and by each party on a separate  counterpart,  each of which when
               so executed and delivered shall be an original,  and all of which
               together shall constitute one instrument.

               (c) This Third Amendment  expresses the entire  understanding  of
               the parties with respect to the transactions contemplated hereby.
               No prior  negotiations  or discussions  shall limit,  modify,  or
               otherwise affect the provisions hereof.

               (d) Any determination  that any provision of this Third Amendment
               or any application hereof is invalid,  illegal,  or unenforceable
               in any respect and in any instance shall not affect the validity,
               legality,  or  enforceability  of  such  provision  in any  other
               instance,  or the validity,  legality,  or  enforceability of any
               other provisions of this Third Amendment.

               (e) The  Borrower  shall pay on demand all  reasonable  costs and
               expenses of the Agents, including, without limitation, reasonable
               attorneys' fees in connection with the preparation,  negotiation,
               execution, and delivery of this Third Amendment.

               (f) This  Third  Amendment  shall  be  construed,  governed,  and
               enforced   pursuant   to  the   laws  of  The   Commonwealth   of
               Massachusetts and shall take effect as sealed instrument.

         Except  as  amended  hereby  all  terms  and  conditions  of  the  Loan
Agreement, as previously amended to date, shall remain in full force and effect.

                          THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT:
                          FLEET  RETAIL FINANCE INC.

                          By:               /s/ Sally A. Sheehan
                          Name:             Sally A. Sheehan
                          Title:            Director

<PAGE>

                          THE REVOLVING CREDIT LENDERS:
                          FLEET  RETAIL FINANCE INC.

                          By:               /s/ Sally A. Sheehan
                          Name:             Sally A. Sheehan
                          Title:            Director

                          DEBIS FINANCIAL SERVICES, INC.

                          By:               /s/ James M. Vandervalk
                          Name:             James M. Vandervalk
                          Title:            President, ABL Division

                          HELLER FINANCIAL, INC.

                          By:               /s/ Richard J. Holston
                          Name:             Richard J. Holston
                          Title:            Assistant Vice President

                          ORIX BUSINESS CREDIT, INC.

                          By:               /s/ Michael J. Cox
                          Name:             Michael J. Cox
                          Title:            Senior Vice President

<PAGE>

                          FOOTHILL CAPITAL CORPORATION

                          By:               /s/  Stacy Yucht
                          Name:             Stacy Yucht
                          Title:            Vice President

                          NATIONAL CITY COMMERCIAL FINANCE, INC.

                          By:               /s/ Gregory A. Godic
                          Name:             Gregory A. Godic
                          Title:            Senior Vice President

                          AMSOUTH BANK

                          By:               /s/ Frank D. Marsicano
                          Name:             Frank D. Marsicano
                          Title:            Attorney in Fact

                          LASALLE BUSINESS CREDIT

                          By:               /s/ Anthony Lavinid
                          Name:             Anthony Lavinid
                          Title:            Assistant Vice President

<PAGE>
                          THE PROVIDENT BANK

                          By:               /s/ Jose V. Garde
                          Name:             Jose V. Garde
                          Title:            Vice President

                          FINOVA CAPITAL CORPORATION

                          By:               /s/ Gerard C. Wordell
                          Name:             Gerard C. Wordell
                          Title:            Authorized Signer

                          IBJ WHITEHALL BUSINESS CREDIT CORP.

                          By:               /s/ John N. Favale
                          Name:             John N. Favale
                          Title:            AVP

                          SOVEREIGN BANK

                          By:               /s/ Robert E. Cook
                          Name:             Robert E. Cook
                          Title:            Vice President

<PAGE>

                          THE TERM LENDER:
                          BACK BAY CAPITAL LLC

                          By:               /s/ Michael L. Pizette
                          Name:             Michael L. Pizette
                          Title:            Managing Director

                          BORROWERS' REPRESENTATIVE
                          J. BAKER, INC., as Agent

                          By:               /s/ Alan I. Weinstein
                          Name:             Alan I Weinstein
                          Title:            President and CEO

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