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                                                                    Exhibit 10.1


                           THIRD AMENDED AND RESTATED
                    REVOLVING CREDIT AND TERM LOAN AGREEMENT
                               AMENDMENT NUMBER 1

      This THIRD AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
AMENDMENT NUMBER 1 ("Amendment") is made as of the ___ day of February, 2005, by
and among PHOENIX FOOTWEAR GROUP, INC., a corporation formed under the laws of
the State of Delaware ("Borrower") and MANUFACTURERS AND TRADERS TRUST COMPANY,
a bank formed under the laws of the State of New York ("Bank").

      This Amendment amends the Third Amended and Restated Revolving Credit and
Term Loan Agreement (the "Credit Agreement") dated as of July 19, 2004 made
between the Borrower and the Bank. All references in all notes, agreements, and
other documents to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended hereby, and all guarantees and collateral for the
Obligations shall continue to be guarantees and collateral for the Obligations
as amended hereby.

      This Amendment evidences terms and conditions related to an Overline of
Credit Facility available between the date hereof and May 30, 2005. This
Amendment will remain in effect through and including May 30, 2005, but
thereafter will be of no further force and effect and at such time the Credit
Agreement shall revert to its original terms.

      1.    The following definitions are hereby added to Section 1.1 of the
Credit Agreement to read in their entirety:

                  "Overline Credit Facility" means the overline credit facility
      established pursuant to Section 2.1 of this Agreement.

                  "Overline Credit Loan" means a loan made by the Bank to
      Borrower under the Overline Credit Facility.

                  "Overline Credit Note" means the $4,000,000 Overline Credit
      Note, as such note may be amended, modified or restated from time to time.

      2.    Subsection (b) of the definition of "Borrowing Base" in Section 1.1
of the Credit Agreement is hereby amended to read in its entirety as follows:

            (b)   plus 50% of the Eligible Inventories of Borrower and its
      Subsidiaries that are used in their business, with a $3,500,000 inventory
      cap for Borrower, $2,000,000 inventory cap for the Trask Business,
      $2,000,000 inventory cap for the Royal Business, and $3,000,000 inventory
      cap for the Altama Business, provided, however, that such inventory caps
      for Borrower, the Trask Business, the Royal Business, and the Altama
      Business shall not apply during the period commencing January 1, 2005 and
      ending May 30, 2005,

      3.    The definition of "Commitment" in Section 1.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:

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                  "Commitment" means the obligation of the Bank to make
      Revolving Credit Loans to the Borrower, to make Overline Credit Loans to
      the Borrower during the period described in Section 2.1, and to issue
      Letters of Credit for the account of the Borrower pursuant to the
      provisions of Section 2.1 and 4.1, respectively.

      4.    Subsection (b) of the definition of "Interest Period" in Section 1.1
of the Credit Agreement is hereby amended to read in its entirety as follows:

            (b)   No Interest Period may extend beyond the Termination Date, or
      in the case of Overline Credit Loans, beyond May 30, 2005; and

      5.    The definition of "Loans" in Section 1.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:

                  "Loan(s)" means, collectively, the Revolving Credit Loans, the
      Overline Credit Loans, and the Term Loans, or the Revolving Credit Loans,
      the Overline Credit Loans, or the Term Loans, as the context requires.

      6.    The definition of "Notes" in Section 1.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:

                  "Notes" means, collectively, the Revolving Credit Note, the
      Overline Credit Note, and the Term Notes, and "Note" means any of the
      Notes.

      7.    The definition of "Obligations" in Section 1.1 of the Credit
Agreement is hereby amended to read in its entirety as follows:

                  "Obligations" shall include all of the Borrower's obligations
      related to the Agreement of any kind or nature, arising now or in the
      future, including, without limitation, obligations under the Revolving
      Credit Note, the Overline Credit Note, the Term Notes, and the
      Reimbursement Agreements.

      8.    Sections 2.1 through and including 2.4 of the Credit Agreement are
hereby amended to read in their entirety as follows:

            2.1   Commitment. The Bank agrees, subject to Section 2.2 and the
      other terms and conditions hereinafter set forth, to make Revolving Credit
      Loans to the Borrower from time to time during the period from the date of
      this Agreement up to but not including the Termination Date in an
      aggregate principal amount not to exceed at any time outstanding the
      amount of $18,000,000, as such amount may be reduced pursuant to Section
      2.3.

            Subject to Section 2.2 and the other terms and conditions
      hereinafter set forth, the Bank agrees to make Overline Credit Loans to
      the Borrower from time to time during the period from January 1, 2005 up
      to but not including May 30, 2005 in an aggregate principal amount not to
      exceed at any time outstanding the amount of $4,000,000, as such amount
      may be reduced pursuant to Section 2.3.

                                        2

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            Each Revolving Credit Loan and Overline Credit Loan which shall not
      utilize the Commitment in full shall be in an amount not less than Fifty
      Thousand Dollars ($50,000), provided that each LIBOR Loan shall be in an
      amount not less than Five Hundred Thousand Dollars ($500,000). During the
      period from the Closing Date to the Termination Date and within the limits
      of the Commitment and subject to Section 2.2, the Borrower may borrow,
      prepay pursuant to Section 2.8, and reborrow under the Revolving Credit
      Facility under this Section 2.1. During the period commencing January 1,
      2005 and ending May 30, 2005 and within the limits of the Commitment and
      subject to Section 2.2, the Borrower may borrow, prepay pursuant to
      Section 2.8, and reborrow under the Overline Credit Facility under this
      Section 2.1. On such terms and conditions, the Revolving Credit Loans may
      be outstanding as Prime Loans or LIBOR Loans, and Overline Credit Loans
      may be outstanding only as Prime Loans. Each type of Revolving Credit Loan
      and Overline Credit Loan shall be made and maintained at the Bank's
      Principal Office.

            2.2   Borrowing Base. Notwithstanding the provisions of Section 2.1,
      the aggregate principal amount of all outstanding Revolving Credit Loans,
      Overline Credit Loans, and all Letter of Credit Obligations shall not
      exceed the lesser of the Borrowing Base and the Commitment. At any time
      that the aggregate principal amount of all outstanding Revolving Credit
      Loans, Overline Credit Loans, and all Letter of Credit Obligations exceeds
      the lesser of the Borrowing Base and the Commitment, the Borrower shall
      immediate prepay first the Overline Credit Loans and then the Revolving
      Credit Loans pursuant to Section 2.8 hereof.

            2.3   Reduction of Commitment. The Borrower shall have the right,
      upon at least three (3) Business Days' notice to the Bank, to terminate in
      whole or reduce in part the unused portion of the Commitment on the
      following terms and conditions;

                  (a)   each partial reduction in the Commitment shall be in the
      amount of at least One Million Dollars ($1,000,000);

                  (b)   unless financed from a Non-Premium Event, a reduction in
      the Commitment requires concurrent payment to Bank of a Reduction Fee.

                  (c)   no reduction in the Commitment shall be permitted if,
      after giving effect thereto, and to any prepayment made therewith, the
      outstanding and unpaid principal amount of the Revolving Credit Loans, the
      Overline Credit Loans, and the Letter of Credit Obligations shall exceed
      the lesser of Commitment or the Borrowing Base; and

                  (d)   the Commitment, once reduced or terminated, may not be
      reinstated.

            2.4   Notice and Manner of Borrowing. Borrower agrees to give the
      Bank notice of any Revolving Credit Loan under this Agreement, at least
      one (1) Business Day before each Prime Loan, and at least three (3)
      Business Days before each LIBOR Loan, specifying: (a) the date of such
      Loan; (b) the amount of such Loan; (c) the type of Loan;

                                        3

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      and (d) in the case of a LIBOR Loan, the duration of the Interest Period
      applicable thereto. Not later than 3:00 P.M. (eastern standard time) on
      the date of such Revolving Credit Loan and upon fulfillment of the
      applicable conditions set forth in Article VII, the Bank will make such
      Revolving Credit Loan available to the Borrower in immediately available
      funds by crediting the amount thereof to the Borrower's account with the
      Bank.

            Borrower agrees to give the Bank notice of any Overline Credit Loan
      under this Agreement, at least one (1) Business Day before each Prime
      Loan. Not later than 3:00 P.M. (eastern standard time) on the date of such
      Overline Credit Loan and upon fulfillment of the applicable conditions set
      forth in Article VII, the Bank will make such Overline Credit Loan
      available to the Borrower in immediately available funds by crediting the
      amount thereof to the Borrower's account with the Bank.

            All notice given under this Section 2.4 shall be irrevocable and
      shall be given not later than 11:00 A.M. (eastern standard time) on the
      day which is not less than the number of Business Days specified above for
      such notice.

      9.    Sections 2.6 through and including 2.10 of the Credit Agreement are
hereby amended to read in their entirety as follows:

            2.6   Interest. Borrower shall pay interest to the Bank on the
      outstanding and unpaid principal amount of the Revolving Credit Loans made
      under this Agreement at a rate per annum of LIBOR plus 250 basis points or
      Prime plus .25% through December 31, 2004, and thereafter, at a rate per
      annum selected by Borrower, at the appropriate level, from the two
      Revolver columns of the pricing grid attached as Exhibit B to this
      Agreement. Borrower shall pay interest to the Bank on the outstanding and
      unpaid principal amount of the Overline Credit Loans made under this
      Agreement at a rate per annum of Prime plus .50%. Any change in the
      interest rate resulting from a change in the Prime Rate shall be effective
      as of the opening of business on the day on which such change in the Prime
      Rate becomes effective. Interest on each Loan shall be calculated on the
      basis of a year of 360 days for the actual number of days elapsed.
      Interest on the Loans shall be paid in immediately available funds to the
      Bank at its Principal Office, in the case of Prime Loans on the first day
      of each month and in the case of LIBOR Loans, on the last day of the
      Interest Period with respect thereto. All accrued and unpaid interest
      shall be due and payable on the Termination Date, or in the case of
      Overline Credit Loans, on May 30, 2005.

            2.7   Notes. Borrower's obligation to repay the Revolving Credit
      Loan shall be evidenced by the Revolving Credit Note in substantially the
      form of Exhibit D to this Agreement, with blanks appropriately completed.
      All Revolving Credit Loans shall be repaid on the Termination Date.

            Borrower's obligation to repay the Overline Credit Loan shall be
      evidenced by the Overline Credit Note in substantially the form of Exhibit
      D-2 to this Agreement, with blanks appropriately completed. All Overline
      Credit Loans shall be repaid on May 30, 2005.

                                        4

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            2.8   Prepayments. Borrower may prepay the Revolving Credit Note and
      the Overline Credit Note in whole or in part with accrued interest to the
      date of such prepayment on the amount prepaid, but without premium or
      penalty, provided that (a) each partial payment shall be in a principal
      amount of not less then Fifty Thousand Dollars ($50,000); and (b) LIBOR
      Loans may be prepaid only on the last day of the Interest Period for such
      Loans. In addition, at any time that the Borrower becomes aware or receive
      notice (oral or written) that the aggregate outstanding principal amount
      of all Revolving Credit Loans and Overline Credit Loans exceeds the
      Borrowing Base, Borrower shall immediately prepay first the Overline
      Credit Loans and then the Revolving Credit Loans by the amount necessary
      to comply with the provisions of Section 2.2.

            2.9   Method of Payment. Borrower shall make each payment under this
      Agreement and under the Notes not later than 12:00 P.M. (eastern standard
      time) on the date when due in lawful money of the United States to the
      Bank at its Principal Office in immediately available funds. Borrower
      hereby authorizes the Bank, if and to the extent payment is not made when
      due under this Agreement or under the Notes, to change from time to time
      against any account of Borrower with the Bank any amount as due. Whenever
      any payment to be made under this Agreement or under the Notes shall be
      stated to be due on a day other than a Business Day, such payments shall
      be made on the next succeeding Business Day, and such extension of time
      shall be included in the computation of the payment of interest and the
      commitment fee, as the case may be, except, in the case of a LIBOR Loan,
      if the result of such extension would be to extend such payment into
      another calendar month, such payment shall be made on the immediately
      preceding Business Day.

            2.10  Use of Proceeds. The proceeds of the Revolving Credit Loans
      and the Overline Credit Loans hereunder shall be used to finance the
      working capital requirements of the Borrower. Borrower will not, directly
      or indirectly, use any part of such proceeds for the purpose of purchasing
      or carrying any margin stock within the meaning of Regulation U of the
      Board of Governors of the Federal Reserve System or to extend credit to
      any person for the purpose of purchasing or carrying any such margin
      stock, or for any purpose which violates, or is inconsistent with,
      Regulation X of such Board of Governors.

      10.   Section 4.1 of the Credit Agreement is hereby amended to read in its
entirety as follows:

            4.1   Letter of Credit Subfacility. Subject to the terms and
      conditions of this Agreement and provided the Borrower complies with all
      application requirements of the Bank for issuing letters of credit, prior
      to the Termination Date, the Bank agrees to issue and extend standby and
      commercial letters of credit (individually, a "Letter of Credit") for the
      account of Borrower: provided, however, that (a) no Letter of Credit
      (other than the Earn-Out Letter of Credit) shall have an expiration date
      that is later than the earlier of one year after the date of issuance
      thereof or the Termination Date (provided that a Letter of Credit may
      provide that it is extendable for consecutive one year periods if such
      period does not end after the Termination Date); (b) Borrower shall not
      request that the Bank

                                        5

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      issue any Letter of Credit, if, after giving effect to such issuance, the
      sum of the aggregate Letter of Credit Obligations plus the aggregate
      outstanding principal amount of all outstanding Revolving Credit Loans and
      Overline Credit Loans would exceed the Commitment; and (c) Borrower shall
      not request that the Bank issue any Letter of Credit if after giving
      effect to such issuance, the aggregate Letter of Credit Obligations would
      exceed $6,000,000.

      11.   The introductory paragraph of Section 7.2 is hereby amended to read
in its entirety as follows:

            7.2   Subsequent Loans and Letters of Credit. The obligation of the
      Bank to make any Revolving Credit Loan or issue any Letters of Credit, and
      the making of any Overline Credit Loan, shall at all times be subject to
      the following continuing conditions:

      12.   Section 10.1 is amended to read in its entirety as follows:

            10.1  Average Borrowed Funds to EBITDA. Maintain an Average Borrowed
      Funds to EBITDA Ratio, on a consolidated basis, measured at the end of
      each Fiscal Quarter, as follows:

                  (a)   On March 31, 2005: no greater than 3.8 to 1.0;

                  (b)   On June 30, 2005: no greater than 3.8 to 1.0;

                  (c)   On September 30, 2005: no greater than 3.5 to 1.0; and

                  (i)   From and after October 1, 2005: no greater than 3.0 to
                        1.0.

      13.   Section 10.3 is amended to read in its entirety as follows:

            10.3  Cash Flow Coverage Ratio. Maintain a Cash Flow Coverage Ratio,
      on a consolidated basis, equal to or greater than (i) .6 to 1.0 on March
      31, 2005 (ii) 1.2 to 1 .0 from April 1, 2005 until the Termination Date,
      and (ii) thereafter, a ratio set by the Bank by giving ninety (90) days
      prior written notice thereof to Borrower, each measured at the end of each
      Fiscal Quarter.

      14.   Exhibit A to the Credit Agreement is amended to read in its entirety
 in the Form Attached hereto as Exhibit A.

      15.   A new Exhibit D-2 is hereby added to the Credit Agreement to read in
 its entirety in the form attached hereto as Exhibit D-2.

      16.   As a condition of this Amendment becoming effective, the Borrower
 shall pay to the Bank a fee of $20,000.

      17.   The terms and conditions of the Credit Agreement except as amended
 hereby shall remain in full force and effect.

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<PAGE>

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

MANUFACTURERS AND TRADERS TRUST COMPANY

By:    /s/ Kevin Wilmot
       __________________________________
Name:  Kevin Wilmot
Title: Assistant Vice President

PHOENIX FOOTWEAR GROUP, INC.

By:    /s/ James R. Riedman
       __________________________
Name:  James R. Riedman
Title: Chairman

                                        7

<PAGE>

                                    Exhibit A

                   Form of Quarterly Covenant Compliance Sheet

                             PHOENIX FOOTWEAR GROUP
                         FINANCIAL COVENANT CALCULATION

                              As of ______________:

<TABLE>
<CAPTION>
Credit Agreement                                              Calculation as of  Compliance
     Section                Covenant                              Above Date      (Yes/No)                 Requirement
---------------- --------------------------------             -----------------  ---------- ----------------------------------------
<S>              <C>                                          <C>                <C>        <C>
Section 10.1     Average Borrowed Funds to EBITDA             ____ to 1.0                   On March 31, 2005 and June 30, 2005, no
                                                                                            greater than 3.8 to 1.0

                                                                                            On September 30, 2005, no greater than
                                                                                            3.5 to 1.0

                                                                                            From and after October 1, 2005, no
                                                                                            greater than 3.00:1.00

Section 10.2     Minimum Current Ratio                        ____ to 1.0                   On March 31, 2005, at least .6 to 1.0

                                                                                            From April 1, 2005 to the Termination
                                                                                            Date, at least 1.35:1.00

                                                                                            After the Termination Date, as set by
                                                                                            the Bank

Section 10.3     Cash Flow Coverage Ratio                     ___ to 1.0                    At least 1.20:1.00

Section 10.4     Net Income                                   Last 2 Quarters:              No negative income for two consecutive
                                                              $____________                 quarters
                                                              and
                                                              $____________
</TABLE>