Exhibit 10.5

PHOENIX FOOTWEAR GROUP, INC.

WAIVER AND RELEASE

THIS RELEASE is made October 26, 2007, by Sivaprasad Reddy, 4608 Old Grand River
Trail, Ada, MI, 49301 (hereinafter “Employee”), for the benefit of Phoenix
Footwear Group, Inc., with offices located at 5840 El Camino Real, Suite 106,
Carlsbad, CA 92008 (hereinafter “Phoenix Footwear Group, Inc.”), together with
parents, subsidiaries and affiliates, and the officers, directors, agents,
employees, successors and assigns of Phoenix Footwear Group, Inc. and each of
the other aforementioned entities (hereinafter Phoenix Footwear Group, Inc. and
the other aforementioned persons and entities to be referred to individually and
collectively as the (“The COMPANY”).

WHEREAS, Employee and Phoenix Footwear Group, Inc. mutually agree that
Employee’s employment with Phoenix Footwear Group, Inc. will terminate on
October 26, 2007 the effective date; and

WHEREAS, Employee and Phoenix Footwear Group, Inc. wish to enter into this
Agreement for the purpose of resolving any and all claims or disputes that exist
or may exist between them through the effective date of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises made and payments
provided for herein (“The Settlement”). Employee and Phoenix Footwear Group,
Inc. agree as follows:

The COMPANY, in full and complete settlement and satisfaction of all matters and
claims related to Employee’s employment with, and termination of employment
from, Phoenix Footwear Group, Inc., will:

1. Separation Payments. Contingent upon Employee’s faithful performance of
employee obligations defined under this Waiver and Release the COMPANY agrees to
pay to Employee a gross separation payment in the amount of ($92500.00) which is
equal to (six months of severance) of the Employee’s regular pay.

2. Medical and Dental Insurance. Employee’s present coverage will be continued
through the last day of the month in which Employee is receiving separation pay.
Thereafter, in accordance with the Consolidated Omnibus Budget Reconciliation
Act of 1985 (COBRA), Employee may choose continuation coverage under the
provisions of the Federal law, for up to eighteen months, provided Employee pays
the full cost of the premium, plus a two percent administrative fee. Please
refer to the COBRA qualifying event letter which will be sent under separate
cover.

3. Group Life Insurance. Employee’s coverage will terminate effective the
employment termination date of (10/26/07).

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4. Short-term Disability and Workers’ Compensation. These coverages cease upon
Employee’s last date of employment, (10/26/07).

5. Accrued Vacation Pay. The COMPANY will pay to Employee accrued vacation pay
in the amount of ($            ) whether or not Employee signs this Waiver and
Release.

6. All cash payments made to Employee under this Agreement shall be subject to
withholdings for Federal and State income taxes and where applicable for Social
Security and Unemployment Compensation taxes.

In consideration the payment of the SETTLEMENT to Employee by the COMPANY, and
other good and valuable consideration received, receipt of which is accepted and
acknowledged, Employee and COMPANY agree as follows:

1. Employee, on behalf of himself, respective heirs, executors, successors and
assigns, hereby fully and forever releases the COMPANY and any respective heirs,
executors, successors, agents, officers and directors, from and agree not to sue
concerning, any and all claims, actions, obligations, duties, causes of action,
whether now known or unknown, suspected or unsuspected, that employee may
possess based upon or arising out of any matter, cause, fact, thing, act, or
omission whatsoever occurring or existing at any time prior to and including the
date hereof (collectively, the “Released Matters”), including without
limitation,

a. Any and all claims relating to or arising from Employee’s employment with the
COMPANY and the termination of such relationship;

b. Any and all claims relating to, or arising from, Employee’s right to
purchase, or actual purchase of, shares of stock of the COMPANY, including,
without limitation any claims under a Stock Option Agreement between the
parties, any claims of fraud, misrepresentation, breach of fiduciary duty,
breach of duty under applicable state corporate law, and securities fraud under
any state or federal law;

c. Any and all claims for wrongful discharge of employment; termination in
violation of public policy; discrimination; breach of contract, both express and
implied; breach of a covenant of good faith and fair dealing, both express and
implied; promissory estoppel; negligent or intentional infliction of emotional
distress; negligent or intentional misrepresentation; negligent or intentional
interference with contract or prospective economic advantage; unfair business
practices; defamation; libel; slander; negligence; personal injury; assault;
battery; invasion of privacy; false imprisonment; and conversion;

d. Any and all claims for violation of any federal, state or municipal statute,
including, but not limited to, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974, the Worker Adjustment and
Retraining Notification Act, Older Workers Benefit Protection Act, the
California Fair Employment and Housing Act, and the California Labor Code
section 201, et. seq.;

 

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e. Any and all claims for violation of the federal, or any state, constitution;

f. Any and all claims arising out of any other laws and regulations relating to
employment or employment discrimination;

g. Any and all claims for attorneys’ fees and costs; and

h. Any and all claims the Employee may have against the COMPANY for any acts
occurring at any time prior to the execution of this Release.

Each of the parties agrees that the foregoing enumeration of claims released is
illustrative, and the claims hereby released are in no way limited by the above
recitation of specific claims, it being the intent of the parties to fully and
completely release all claims whatsoever in any way relating to the Employee’
employment with the COMPANY and to the termination of such employment. This
release does not extend to any obligations incurred under this Waiver and
Release Agreement or the stock options referred to herein.

2. Employee represents that Employee has no lawsuits, claims or actions pending
in Employee’s name, or on behalf of any other person or entity, against the
COMPANY or any other person or entity referred to herein. Employee also
represents that Employee does not intend to bring any claims on Employee’s own
behalf against the COMPANY or any other person or entity referred to herein.

3. Employee acknowledges that employee has been advised by legal counsel and is
familiar with Section 1542 of the Civil Code of the State of California, which
states:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Employee expressly waives any right or benefit which employee has or may have
under Section 1542 of the California Civil Code or any similar provision of the
statutory or non-statutory law of any other jurisdiction. The Employee
acknowledges that in the future employee may discover claims or facts in
addition to or different from those that they now know or believe to exist with
respect to the subject matter of this Release and that the Employee intends to
fully, finally, and forever settle all of the Released matters in exchange for
the Settlement. This release will remain in effect as a full and complete
release notwithstanding the discovery or existence of any additional claims or
facts.

4. Employee represents and agrees that employee’s employment with Phoenix
Footwear Group, Inc. was terminated effective (10/26/07), and employee waives
any right to hereafter seek or apply for employment with the COMPANY.

 

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5. Employee represents and agrees that employee has not disclosed, and will not
at anytime disclose, to any person, firm, corporation or entity any confidential
or proprietary information concerning the business affairs of the COMPANY which
employee acquired in the course of, or as incident to, employee’s employment,
for employee’s own benefit, the benefit of any other person, firm, corporation
or entity, or to the detriment or intended or probable detriment of the COMPANY.
Employee agrees that the Employee shall have no proprietary interest in any work
product developed or used by Employee and arising out of employment by Phoenix
Footwear Group, Inc, including but not limited to all forms of invention (as
understood from Title 35 of the United States Code), patents and patent
applications (and all divisions, parts and continuations thereof), all
copyrightable work, and any trademarks or servicemarks (registered or
unregistered) and trade names. Employee shall, from time to time as may be
requested by the COMPANY, do all things which may be necessary to establish or
document the COMPANY’S ownership in any such work product including, but not
limited to, execution of appropriate copyright, patent and trademark
applications, or assignments. Employee agrees that all papers, documents and
equipment which have come into the possession of Employee in the course of
business remain the property of Phoenix Footwear Group and/or the COMPANY, and
shall not be disclosed, disseminated, taken, removed from Phoenix Footwear
Group, Inc.’s premises or copied without the express written permission of
Phoenix Footwear Group, Inc. Employee further agrees that employee will return
on or before October 26, 2007 all records and property in his possession or
custody belonging to or relating in any way to the affairs of the COMPANY.

6. Employee understands and agrees that this Waiver and Release, the SETTLEMENT
and the actions and matters settled and provided for herein, shall not
constitute (and may not be construed as) an admission of liability in any
respect by the COMPANY, and Employee agrees to make no such representations to
any person or entity.

7. In accordance with the reference policy of the COMPANY, prospective employers
will receive information only regarding dates of employment and positions
Employee held. If the prospective employer requests salary and compensation
information, it will also be disclosed with the consent of Employee.

8. Employee agrees to make themselves available to the company for not more than
4 hours per week during the first two months of the separation period. These
hours may be utilized by the company for information and knowledge transfer
related services to minimize inconsistencies that may occur to business
processes in which the employer was involved. Hours incurred by the employee
related to the aforementioned services do not qualify for additional
consideration and are considered essentials to compliance with this Waiver &
Release.

9. Employee represents and agrees that employee is entering into this Waiver and
Release freely and voluntarily, and with a complete understanding of its terms
and consequences. Employee further represents and agrees that the COMPANY
encouraged employee to review this Waiver and Release with his own private
attorney prior to his execution hereof and that employee has had the opportunity
to thoroughly discuss all aspects of this Waiver and Release with a private
attorney of his own choosing.

 

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10. Employee represents and agrees that the COMPANY offered employee a period of
twenty-one (21) days from the date Employee first received this Waiver and
Release from the COMPANY to review and consider this Waiver and Release.
Employee further acknowledges (he/she) has seven (7) days from the date of this
Waiver and Release to revoke this Waiver and Release.

The Separation Period

11. Employee further understands and agrees that the SETTLEMENT shall be paid to
Employee over six months, in accordance with the COMPANY’S normal payroll
practice, commencing as soon as reasonably practicable after the aforementioned
seven (7) day revocation period has expired, provided the Employee has not
revoked this Waiver and Release as previously described.

12. Employee understands and acknowledges that the COMPANY’s purpose for
entering into this Agreement and Release was to avoid litigation. Therefore, if
any legal action is instituted by or brought on behalf of Employee against
COMPANY, Employee agrees to pay back to COMPANY all monies received as well as
any other thing of value received under this Waiver and Release and to pay
COMPANY its costs and attorneys’ fees in such action.

a. This paragraph 12 does not apply to any thing of value given to Employee for
which Employee actually performed services and by law Employee is entitled to
receive.

13. Employee represents and agrees that employee has read the entire contents of
this Waiver and Release and that this Waiver and Release represents the entire
understanding and agreement between Employee and the COMPANY, except that it
does not replace or supersede any covenant not to solicit, covenant not to
compete or confidentiality agreement previously signed by Employee. Employee
agrees that no representations or agreements have been made with respect to
these matters other than those contained in this Waiver and Release.

14. Employee agrees that, if any of the provisions of this Waiver and Release
shall be deemed illegal, invalid or unenforceable, such illegality, invalidity
or unenforceability shall not invalidate or render unenforceable the entire
Waiver and Release, but rather the entire Waiver and Release shall be construed
as if not containing the particular illegal, invalid or unenforceable provision
or provisions, and the rights and obligations of Employee and the COMPANY shall
be construed and enforced accordingly. Further, under such circumstances, the
COMPANY and Employee agree to exercise their best efforts to carry out the
original intention of this Waiver and Release and shall make such amendments and
take such steps as may be necessary to ensure the continued validity of this
Waiver and Release.

15. Employee agrees that this Waiver and Release shall be governed by California
law and that any action or proceeding arising out of this Waiver and Release
and/or Employee’s employment with Phoenix Footwear Group, Inc. shall be venued
in California.

 

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EMPLOYEE HAS CONSULTED WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE AND
UNDERSTANDS THAT, BY SIGNING THIS RELEASE, EMPLOYEE IS GIVING UP ANY LEGAL
CLAIMS EMPLOYEE HAS AGAINST THE COMPANY. EMPLOYEE FURTHER ACKNOWLEDGES THAT
EMPLOYEE DOES SO KNOWINGLY, WILLINGLY, AND VOLUNTARILY IN EXCHANGE FOR THE
BENEFITS DESCRIBED IN THIS WAIVER AND RELEASE AGREEMENT.

 

Dated: 10-26-07

   

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    Sivaprasad Reddy

Dated: 10-26-07

  By:  

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    Phoenix Footwear Group, Inc.

 

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