<PAGE>

                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT (the "AGREEMENT"), made as of the 28th day of
June, 2005 by and between CHAMBERS DELAWARE ACQUISITION COMPANY, a Delaware
corporation, with its principal place of business located at 5759 Fleet Street,
Suite 220, Carlsbad, California 92008 (the "COMPANY") and KELLY GREEN, residing
at 165 Little Park Lane, Brentwood, California 90049 (the "EMPLOYEE").

                                    RECITALS

      A. The Company is a wholly-owned subsidiary of Phoenix Footwear Group,
Inc. ("PHOENIX FOOTWEAR" and together with the Company, the "BUYER").

      B. Pursuant to the Asset Purchase Agreement by and among the Company,
Chambers Belt Company ("CHAMBERS BELT"), the Employee and the other stockholders
of Chambers Belt dated April 18, 2005 (as amended, supplemented or modified from
time to time, the "ASSET PURCHASE AGREEMENT"), Chambers Belt agreed to sell to
the Company and the Company agreed to purchase from Chambers Belt certain
properties, goodwill and tangible and intangible business assets and assume
certain liabilities of Chambers Belt necessary for the business of designing,
manufacturing, sourcing, importing, warehousing, marketing, distributing, and
selling of men's, women's, boy's and girl's western dress and casual belts and
related leather accessories and products (collectively, the "BUSINESS").

      C. Concurrently with the execution hereof, pursuant to the terms of the
Asset Purchase Agreement, the Employee and the Company executed and delivered to
one another a Non-Competition and Confidentiality Agreement (as amended,
supplemented or modified from time to time, the "NON-COMPETITION AGREEMENT").

      D. As an inducement for, and to fulfill a material condition to, the
Company's consummation of the transactions contemplated in the Asset Purchase
Agreement, Employee is executing this Agreement pursuant to which Employee shall
become an employee of the Company on the terms and conditions herein.

      NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and such other consideration the receipt and sufficiency is
hereby acknowledged the parties agree as follows:

                                   ARTICLE 1
                                   EMPLOYMENT

      1.1 EMPLOYMENT. The Company hereby retains the Employee and the Employee
hereby agrees to be retained for employment on the terms and conditions herein.

<PAGE>

      1.2 EMPLOYMENT TERM. The employment term of this Agreement (the
"EMPLOYMENT TERM") shall be from the date hereof and continue until December 31,
2007 (the "EXPIRATION DATE"), unless earlier terminated pursuant to Section 3.1
or extended by mutual written agreement by the parties hereto.

      1.3 DUTIES. During the Employment Term, Employee shall serve as the
President of the Chambers Prestige Division of the Company and shall exercise
such powers and authority as are inherent in such office and perform such duties
as may be directed by Richard E. White, the Chief Executive Officer of the
Company, the Board of Directors of the Company (the "BOARD") and the Chief
Executive Officer of Phoenix Footwear. During the Employment Term, Employee
shall devote substantially all of his working time, efforts and attention to the
business and affairs of the Company. The Employee shall make such reports,
written or verbal, to Richard E. White, the Chief Executive Officer of the
Company, the Board or the officers or Board of Directors of Phoenix Footwear
(the "PHOENIX FOOTWEAR BOARD") as any of them may request from time to time
regarding the Company's business, operations and other activities undertaken by
Employee on behalf of the Company. During the Employment Term, Employee shall
provide the executive officers of the Company and Phoenix Footwear with: (a)
advice regarding the operations of the Business; (b) introductions and
assistance with relationships (including customers, third party manufacturers,
purchasing agents and suppliers), products and markets; and (c) assistance in
implementing the transition following the Company's purchase of the Business.
Notwithstanding the foregoing, Employee's duties shall be limited to those
involving the Business and Employee shall not be required to provide services to
the Company other than with respect to the Business or to Phoenix Footwear.

      1.4 PERFORMANCE OF SERVICES. Employee shall at all times perform his
duties and discharge his responsibilities hereunder in a faithful manner, to the
best of his ability and in the best interests of the Company. Employee shall
observe and comply with such rules, regulations and policies as may be
reasonably determined from time to time by the Board whether oral or in writing.

      1.5 REPRESENTATIONS AND WARRANTIES.

            (a) Employee represents and warrants to the Company that his
execution and delivery of this Agreement and the performance and observation of
his duties and obligations hereunder will not result in or constitute a breach
of or conflict with any term, covenant, condition, or provision of any
commitment, contract, or other agreement or instrument, including, without
limitation, any other employment agreement, to which Employee is or has been a
party.

            (b) Employee shall indemnify, defend, and hold harmless the Company
and Phoenix Footwear for, from, and against any and all losses, claims, suits,
damages, expenses, or liabilities, including reasonable court costs and counsel
fees, which they have incurred or to which they may become subject, insofar as
such losses, claims, suits, damages, expenses, liabilities, costs, or fees arise
out of or are based upon any failure of any representation or warranty of
Employee in Section 1.5(a) hereof to be true and correct when made.


<PAGE>

                                   ARTICLE 2
                                  COMPENSATION

      2.1 SALARY. In consideration for the performance of his services under
this Agreement as an employee of the Company, during the Employment Term the
Employee shall receive a salary, payable in accordance with the regular payroll
practices of the Company, at the annual rate of Two Hundred Twenty-Seven
Thousand Dollars ($227,000) (the "SALARY"). In addition to the Salary, Employee
shall be eligible to receive an annual performance bonus based on criteria
established by the Phoenix Footwear Board or a committee thereof. All Salary
payments and other compensation for services as an employee pursuant to this
Agreement shall be subject to the customary withholding of taxes as required by
law.

      2.2 REIMBURSEMENT OF EXPENSES. During the Employment Term, the Employee
shall be entitled to compensation for expenses reasonably incurred in the
performance of his duties for the Company, provided appropriate documentation is
provided to the Company and the expenses are in accordance with the Company's
policies for reimbursement of expenses.

      2.3 BENEFITS. During the Employment Term, Employee will be eligible to
participate in any group life, medical, health, dental, disability and/or other
benefit plans of the Company on the same terms generally made available to all
employees of the Company and all executive level employees of Phoenix Footwear
who hold similar positions with Phoenix Footwear or any of its subsidiaries as
does Employee with Company, subject to the eligibility requirements and the
other terms and conditions of such plans. The Employee shall also be entitled to
participate in any other benefits offered by Phoenix Footwear or any of its
subsidiaries to their executive level employees who hold similar positions with
Phoenix Footwear or any of its subsidiaries as does Employee with Company.

      2.4 INCENTIVE STOCK OPTIONS. Concurrently with the execution and delivery
of this Agreement by the parties hereto, the Employee shall receive from Phoenix
Footwear an option award under Phoenix Footwear's 2001 Long-Term Incentive Plan
to purchase up to 40,000 shares of Phoenix Footwear's common stock at the
closing sales price on the date of this Agreement. The terms and conditions of
the option award are set forth in and evidenced by a separate Stock Option
Agreement attached hereto as EXHIBIT A.

      2.5 VACATION. During the Employment Term, Employee will be entitled to
three weeks vacation annually. Vacation may not be carried over from one
calendar year to the next and shall be forfeited if not used in any calendar
year.

                                   ARTICLE 3
                                  TERMINATION

      3.1 TERMINATION. The Employee's employment hereunder by the Company shall
terminate upon the first occurrence of any of the following events:


<PAGE>

            (a) Termination for Cause. By the Company on written notice to the
Employee at any time for "CAUSE," which shall mean any of the following: (i) any
failure by the Employee to perform his duties or obligations under this
Agreement; provided, however that Company shall give Employee written notice any
such alleged failure and Employee shall have ten (10) days following his receipt
of such written notice to comply (or if compliance reasonably requires a longer
period, to commence good faith efforts to comply, and continue to prosecute same
and continue with such efforts until completion); (ii) any failure by the
Employee to follow the lawful written instructions of Richard E. White, the
Chief Executive Officer of the Company, the Board or the Chief Executive Officer
of Phoenix Footwear, (A) such instructions was within the scope of Employee's
duties, and (B) Employee has not complied (or if compliance reasonably requires
a longer period, has commenced good faith efforts to comply, and continue to
prosecute same and continued with such efforts until completion) with such
instructions within ten (10) days of written notice of such failure; (iii)
conviction of any felony or a crime involving moral turpitude, embezzlement, or
misappropriation of assets; (iv) the habitual use of drugs or intoxicants to an
extent that it impairs Employee's ability to properly perform his duties; and
(v) any breach of the Non-Competition Agreement.

            (b) Death of Employee. Immediately upon the death of Employee.

            (c) Disability of Employee. By the Company on written notice to the
Employee if Employee becomes "DISABLED" which means the inability of Employee to
perform his regular duties for the Company for a total of one hundred twenty
(120) days in any three hundred sixty (360) day period, as reasonably determined
by the Chief Executive Officer of Phoenix Footwear in accordance with the
foregoing. For purposes of this Agreement, Employee shall first be deemed
disabled on the date that is the one hundred twentieth (120th) day of the
disability in such three hundred sixty (360) day period.

            The Company shall not have the right to terminate Employee prior to
the Expiration Date except as provided in this Section 3.1.

            Any termination pursuant to a written notice as permitted in this
Section 3.1 shall take place and be effective as of the delivery of the written
notice in accordance with the terms of this Agreement. The date on which such
termination is effective is referred to as the "TERMINATION DATE."

      3.2 PAYMENTS UPON TERMINATION. In the event that the Employment Term shall
be terminated for any reason, Employee shall be entitled to receive, upon the
Termination Date: (a) any cash compensation payable pursuant to Section 2.1
hereof which shall have accrued as of the Termination Date; (b) any right to
reimbursement for expenses accrued as of the Termination Date payable pursuant
to Section 2.2 hereof, (c) any rights Employee shall have accrued as of the
Termination Date under the terms of any plans or arrangements in which he
participates pursuant to Section 2.3 hereof, and (d) the right to receive the
cash equivalent of vacation days accrued as of the Termination Date pursuant to
Section 2.5 hereof. The payments provided for in this Section 3.2 shall be the
only payments that the Employee is entitled to from the Company in the event of
his termination in accordance with the terms of Section 3.1 and shall be
considered liquidated damages; provided, however, that the foregoing liquidated
damages provision shall not apply if such termination is a material breach of
this Agreement.


<PAGE>

                                   ARTICLE 4
                             RESTRICTIVE COVENANTS

      4.1 CONFIDENTIAL INFORMATION.

            (a) The Employee acknowledges and agrees that:

                  (i) he has and will acquire confidential and proprietary
information belonging to the Company, Phoenix Footwear and their direct and
indirect subsidiaries (the "PHOENIX GROUP"), including, but not limited to, the
financial condition, customer lists, marketing strategy, employee names,
compensation amounts and formulas, sales amounts, research and development
activities, products, methods of manufacture, trade secrets, processes, business
or affairs or other confidential or proprietary information concerning the
businesses engaged in by the Phoenix Group (the "PHOENIX GROUP BUSINESS") and
any other information concerning the Phoenix Group Business that is not
generally available to the public (other than as a result of disclosure directly
or indirectly by Employee in violation of this Section) (collectively, the
"CONFIDENTIAL INFORMATION"). The Employee agrees that the failure of any
Confidential Information to be marked or otherwise labeled as confidential or
proprietary information shall not affect its status as Confidential Information.

                  (ii) The Confidential Information is confidential and
proprietary, and the development and protection of the Confidential Information
represents a substantial investment having a great economic and commercial value
to the Company and Phoenix Footwear.

                  (iii) Phoenix Footwear and the Company would be irreparably
damaged if any of the Confidential Information was disclosed to, or used or
exploited on behalf of, any person other than the Company or any other member of
the Phoenix Group.

                  (iv) Employee covenants and agrees that he shall not, at any
time, directly or indirectly, use, exploit, or disclose to any person or entity,
without the prior written consent of the Chief Executive Officer of Phoenix
Footwear, any Confidential Information, except (A) as compelled by any court
decree, subpoena or legal or administrative order or process; and (B) as is
required by law so long as no other means are readily available. Employee
further covenants and agrees that he shall deliver promptly to the Phoenix
Footwear or destroy, at the request and option of Phoenix Footwear, all tangible
embodiments (and all copies) of the Confidential Information which are in his
possession.

            (c) In the event that Employee intends to disclose any Confidential
Information as permitted by virtue of Sections 4.1(a)(iv) above, he will first
notify the Company and the Chief Executive Officer of Phoenix Footwear in
advance of the request or requirement so that Phoenix Footwear and/or the
Company may seek an appropriate protective order at its expense.


<PAGE>

      Section 4.2 NON-SOLICITATION. During the Employment Term and for a period
continuing the last day of the first twenty four (24) months after the
Termination Date, Employee shall not, without consent of the Chief Executive
Officer of Phoenix Footwear, either in his individual capacity or as an agent
for or on behalf of another: (a) hire or offer to hire (as an employee,
independent contractor or otherwise) any of the directors, officers, employees
or independent sales staff of the Company or any other member of the Phoenix
Group; (b) entice away or in any other manner persuade or attempt to persuade
any of the directors, officers, employees or independent sales staff of the
Company or any other member of the Phoenix Group, to discontinue their
relationship with the Company or any other member of the Phoenix Group; (c)
contract, solicit, divert, or attempt to divert from the Company or any other
Member of the Phoenix Group, any business whatsoever by influencing or
attempting to influence any customer of the Company or any other member of the
Phoenix Group, with whom the Company or any other member of the Phoenix Group
has engaged in sales discussions; or (d) contract, solicit, divert, or attempt
to divert from the Company or any other member of the Phoenix Group any
supplier, vendor, manufacturer, licensor or distributor.

      Section 4.3 NON-DISPARAGEMENT. Employee shall not at any time engage in
any action or make any public or private comments (a) that disparages, disrupts
or impairs the normal operations of the Company or any member of the Phoenix
Group or harms the reputation of or relationship between the directors, officers
or employees of customers, prospective customers, suppliers, vendors,
manufacturers, distributors, lenders or the public and the Company or any other
member of the Phoenix Group, or (b) that interferes with the existing
contractual relationships of the Company or any other member of the Phoenix
Group.

      Section 4.4 NOTICE TO FUTURE EMPLOYERS. Employee agrees to, and agrees
that the Company or Phoenix Footwear or any of their respective officers,
directors, employees, agents and representatives may inform any person or entity
for whom Employee performs services (or proposes to perform services) of the
Employee's restrictions and undertakings hereunder.

      Section 4.5 SPECIFIC PERFORMANCE; REMEDIES.

            (a) Employee acknowledges and agrees that the Company will suffer
irreparable harm in the event that Employee breaches any of his obligations
under this Article 4, and that monetary damages shall be inadequate to
compensate the Company for any such breach. Employee agrees that in the event of
any breach or threatened breach by Employee of any covenant, obligation or other
provision contained in this Agreement, the Company may seek any or all of the
following rights and remedies (in addition to any other remedy that may be
available), which shall be severally enforceable:

                  (i) A decree or order of specific performance to enforce the
observance and performance of such covenant, obligation or other provision;

                  (ii) A temporary restraining order, preliminary injunction and
an injunction restraining such breach or threatened breach or by Employee or any
or all of Employee's agents, representatives or other persons directly or
indirectly acting for, on behalf of, or with Employee, in all cases without the
necessity of posting bond; and/or; and/or


<PAGE>

                  (iii) An accounting for and repayment to Phoenix Footwear and
the Company of all damages caused by Employee's breach of this Agreement.

      EMPLOYEE HAS CAREFULLY READ AND CONSIDERED THE PROVISIONS OF ARTICLE 4
HEREOF AND, HAVING DONE SO, HEREBY AGREES THAT THE RESTRICTIVE COVENANTS SET
FORTH THEREIN ARE FAIR AND REASONABLE AND ARE REASONABLY REQUIRED FOR THE
PROTECTION OF THE INTERESTS OF THE COMPANY AND PHOENIX FOOTWEAR.

                                   ARTICLE 5
                                 MISCELLANEOUS

      5.1 MISCELLANEOUS.

            5.1 Notices. All notices required or permitted hereunder shall be in
writing and shall be delivered in person or sent by certified or registered
mail, return receipt requested, postage prepaid to each party at the address
first written above or at such other address as provided in writing.

            5.2 Amendments. This Agreement may not be changed or modified in
whole or in part except by a writing signed by the parties hereto and consented
to in writing by the Chief Executive Officer of Phoenix Footwear.

            5.3 Successors and Assigns. This Agreement will not be assignable by
either the Employee or the Company, except that the rights and obligations of
the Company under this Agreement may be assigned to an entity which succeeds to
the Company's Business. Phoenix Footwear is made an express third party
beneficiary of this Agreement and may bring an action in its name to enforce the
terms hereof.

            5.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.

            5.5 Submission to Jurisdiction. Each of the parties submits to the
jurisdiction of any state or federal court sitting in the State of Delaware, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.

            5.6 Severability. If any provision of this Agreement is declared
invalid by any tribunal, then such provision shall be deemed automatically
modified to conform to the


<PAGE>

requirements for validity as declared at such time, and as so modified, shall be
deemed a provision of this Agreement as though originally included herein. In
the event that the provision invalidated is of such a nature that it cannot be
so modified, the provision shall be deemed deleted from this Agreement as though
the provision had never been included herein. In either case, the remaining
provisions of this Agreement shall remain in effect.

            5.7 Counterparts. This Agreement may be executed in counterparts
which when taken together will constitute one instrument. Any copy of this
Agreement with the original signatures of all parties appended will constitute
an original.

            5.8 Captions. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

            5.9 Entire Agreement. This Agreement, the Non-Competition Agreement,
and the Stock Option Agreement constitute the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance or usage of trade inconsistent with any of
the terms hereof. The parties agree that this Agreement shall not be interpreted
against either party solely because this Agreement was drafted by counsel to
Buyer. The Employee agrees that the obligations under the above mentioned
agreements are independent of one another and that Buyer's rights against
Employee under each agreement shall be cumulative together with those available
at law and Buyer may pursue any and all remedies available to it without
limitation.

                            [SIGNATURE PAGE FOLLOWS]


<PAGE>

                    [SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

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

                                    CHAMBERS DELAWARE ACQUISITION COMPANY

                                    By: /s/ James Riedman
                                        -----------------------------------
                                    Name: James Riedman
                                    Title: Chairman

                                    /s/ Kelly Green
                                    ---------------------------------------
                                    Kelly Green


<PAGE>

                       EXHIBIT A TO EMPLOYMENT AGREEMENT

                             STOCK OPTION AGREEMENT
                        (2001 LONG-TERM INCENTIVE PLAN)
                      (EMPLOYEE - INCENTIVE STOCK OPTION)

      This STOCK OPTION AGREEMENT (the "OPTION AGREEMENT"), is entered into as
of this ___ day of _____, 2005 between PHOENIX FOOTWEAR GROUP, INC., a Delaware
corporation (the "COMPANY") and the natural person signatory hereto (the
"OPTIONEE").

                              W I T N E S S E T H:

      I. This Agreement is being entered into by the Company and the Optionee to
evidence and set forth the terms and conditions of options to purchase shares of
the Company's common stock, par value $.01 per share (the "COMMON STOCK") which
have been awarded to the Optionee under the Company's 2001 Long Term Incentive
Plan (the "PLAN"), the identifying provisions of which are as follows:

      B.    Optionee: ________________________________________

      B.    Grant Date: _______________________________________

      C.    Number of Option Shares: ___________________________

      D.    Vesting: (i) one-third (1/3) of Option Shares on the first
            anniversary of the date of this Agreement; (ii) one-third (1/3) of
            Option Shares on the second anniversary of the date of this
            Agreement; and (iii) one-third (1/3) of Option Shares on [INSERT THE
            DATE THAT IS SIX MONTHS FOLLOWING THE END OF THE SECOND CONTINGENT
            EARN-OUT PERIOD]

      E.    Exercise Price (Per Share): ___________________________

      II. All capitalized terms used herein and not otherwise defined shall have
the meanings given thereto in the Plan;

                              P R O V I S I O N S:

      NOW, THEREFORE, in consideration of the premises, the terms and conditions
set forth herein, the mutual benefits to be gained by the performance thereof
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

      1. GRANT OF OPTION/CONSIDERATION. Subject to the terms and conditions
herein, the Company hereby grants to the Optionee the right and option to
purchase (the "OPTION") from the Company the Number of Shares Optioned (the
"OPTION SHARES") at the Exercise Price per share


<PAGE>

(the "EXERCISE PRICE"). The number of shares of Common Stock purchasable
hereunder and the Exercise Price are subject to adjustment upon the occurrence
of certain events to the extent and in the manner provided in Section 4(c) of
the Plan. In consideration of, and in acceptance of, this Stock Option, the
Optionee agrees to continue his employment with or service to the Company for
not less than six (6) months from Grant Date.

      2. VESTING. The Option shall vest and become exercisable as to the number
of Option Shares and on the dates specified in I.D. above, provided the Optionee
is an employee on date of vesting. It is understood that the right to purchase
Option Shares shall be cumulative so that the Optionee may purchase on or after
any such anniversary and during the remainder of the Option Period (defined
below) those quantities of Option Shares which the Optionee was entitled to
purchase but did not purchase during any preceding period or periods.

      3. TIME OF EXERCISE. Except as limited in Section 4, the Optionee may
exercise the vested portion of the Option at any time during the ten (10) year
period beginning on the Grant Date ("OPTION PERIOD"). Notwithstanding anything
to the contrary contained herein, the Option shall terminate and be of no
further force or effect upon the expiration of the Option Period. To the extent
that the Shares with respect to which the Option first becomes exercisable
during any calendar year, together with any Shares subject to any other
incentive stock options that first become exercisable in such calendar year,
would have an aggregate value (determined as of the date of grant of such
options) in excess of $100,000, the portion of the Option and options
represented by such excess will not be treated as incentive stock options, but
rather non-qualified options.

      4. TERMINATION AND ACCELERATION OF OPTION.

            (a) In the event that the Optionee ceases to be an employee of the
either the Company or one of its subsidiaries for any reason, then the portion
of the Option which is unvested as of the date of such termination shall
terminate and be of no further force or effect and, except as specified in
Section 4(c), the portion of the Option which is vested as of the date of such
termination shall terminate ninety (90) days thereafter and be of no further
force or effect. For purposes of this Agreement, Optionee shall not be deemed to
have ceased to be an employee of the Company so long as he continues to be an
employee, or serve as an officer, of the Company or one or more of its
subsidiaries.

            (b) Notwithstanding anything else herein to the contrary, the Option
shall automatically vest and become immediately exercisable upon the occurrence
of a Change of Control as provided in Section 7(h) of the Plan prior to the
expiration or termination of this Option. Such acceleration shall be effective
as of the date of that the Change of Control occurs and each Option so
accelerated may be exercised by the Optionee during the twelve (12) month period
beginning on such date, provided, however, that the Option may not be exercised
after the end of the Option Period.

            (c) In the event that the Optionee ceases to be an employee of the
Company during the Option Period by reason of death or total and permanent
disability, then the unvested portion of the Option shall terminate and be of no
further force or effect and the vested portion of


<PAGE>

the Option may be exercised by the person or persons entitled thereto under the
Optionee's will or the laws for descent and distribution during the twelve (12)
month period beginning on such date, provided, however, that the Option may not
be exercised after the end of the Option Period.

      5. METHOD OF EXERCISE. The Option may be exercised only by the Optionee by
giving written notice to the Secretary of the Company setting forth the number
of Option Shares with respect to which the Option is to be exercised, which
notice shall be accompanied by payment of the full amount of the aggregate
Exercise Price due for the Options Shares being purchased and appropriate
withholding taxes. Such notice shall specify the address to which the
certificate or certificates for such shares are to be mailed. If permitted by
the Committee, payment may also be made by means of tendering Common Stock,
another Award, including Restricted Stock valued at Fair Market Value on the
date of exercise or any combination thereof. As promptly as practicable
following the receipt of such written notification and payment, the Company
shall deliver to the Optionee certificates for the number of Option Shares with
respect to which such Option has been exercised.

      6. TRANSFER AND ASSIGNMENT. Except as provided in Section 12 of the Plan,
no right or benefit under the Plan shall be subject to anticipation, alienation,
transfer, sale, assignment, pledge, encumbrance or charge, whether voluntary,
involuntary, direct or indirect, by operation of law or otherwise, including,
without limitation, a change in beneficial interest of any trust and a change in
ownership of a corporation or partnership, but not including a change of legal
and beneficial title of a right or benefit resulting from the death of any
Optionee or the spouse of any Optionee (any such proscribed transaction
hereinafter a "DISPOSITION") and any attempted Disposition will be null and
void. No right or benefit hereunder shall in any manner be liable for or subject
to any debts, contracts, liabilities or torts of any Optionee or other person
entitled to such benefits.

      7. NO STOCKHOLDER RIGHTS. The Optionee shall have no rights as a
stockholder of the Company with respect to the Option Shares unless and until
certificates evidencing such Option Shares shall have been issued by the Company
to the Optionee. Until such time, the Optionee shall not be entitled to
dividends or distributions in respect of any Option Shares or to vote such
Option Shares on any matter submitted to the shareholders of the Company. In
addition, except as to such adjustments that from time to time be made by the
Company or the Committee in accordance with Section 4(c) of the Plan, no
adjustment shall be made or required to be made in respect of dividends
(ordinary or extraordinary, whether in cash, securities or any other property)
or distributions paid or made by the Company or any other rights granted in
respect of any Option Shares for which the record date for such payment,
distribution or grant is prior to the date upon which certificates evidencing
such Option Shares shall have been issued by the Company.

      8. WITHHOLDING TAXES. The Company may make such provisions as it may deem
appropriate for the withholding of any taxes that it determines is required in
connection with the Option granted pursuant hereto.

      9. SECURITIES LAWS. The Option is granted on the condition that the
purchase of shares of Common Stock hereunder shall be for the account of the
Optionee (or other individual


<PAGE>

or individuals exercising the Option) for investment purposes and not with a
view to the resale or distribution thereof, except that such condition shall be
inoperative if the offering and sale of shares subject to the Option is
registered under the Securities Act of 1933, as amended, or if in the opinion of
counsel for the Company such shares may be resold without registration. At the
time of any exercise of the Option, the Optionee will execute such further
agreements as the Company may require to implement the foregoing condition and
to acknowledge the Optionee's familiarity with restrictions on the resale of the
shares under applicable securities laws.

      10. NOTICE. Unless otherwise provided herein, any notice or other
communication hereunder shall be in writing and shall be given by registered or
certified mail. All notices of the exercise by the Optionee of the Option
granted pursuant hereto shall be directed to the Company, Attention: Secretary,
at the Company's current address. Any notice given by the Company to the
Optionee directed to him at his address on file with the Company shall be
effective to bind any other person who shall acquire rights hereunder. The
Company shall be under no obligation whatsoever to advise or notify the Optionee
of the existence, maturity or termination of any rights hereunder and the
Optionee shall be deemed to have familiarized himself with all matters contained
herein and in the Plan which may affect any of the Optionee's rights or
privileges hereunder.

      11. MEANING OF OPTIONEE. Whenever the term "OPTIONEE" is used hereunder
under circumstances applicable to any other person or persons to whom this Award
may be assigned in accordance with the provisions of Paragraph 6, the term
"Optionee" shall be deemed to include such person or persons. References to the
masculine gender herein also include the feminine gender for all purposes.

      12 INCENTIVE STOCK OPTION. The Option is intended to be an "incentive
stock option" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended. The Company makes no representation as to the tax treatment to the
Optionee upon receipt or exercise of the Option or the sale or other disposition
of the Shares covered by the Option.

      13. PLAN CONTROLS. This Agreement is subject to the Plan, a copy of which
has been furnished to the Optionee and for which the Optionee acknowledges
receipt. The terms and provisions of the Plan (including any subsequent
amendments thereto) are incorporated by referenced herein. In the event of a
conflict between any term or provision contained herein and a term or provision
of the Plan, the applicable terms and provisions of the Plan shall govern and
prevail.

      14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.

      15. SUBMISSION TO JURISDICTION. Each of the parties submits to the
jurisdiction of any state or federal court sitting in the State of Delaware, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

                    SIGNATURE PAGE TO STOCK OPTION AGREEMENT

      IN WITNESS WHEREOF, this Agreement has been executed as of the Grant Date.

                                    PHOENIX FOOTWEAR GROUP, INC.

                                    By: ______________________________________
                                    Name: Richard White
                                    Title: Chief Executive Officer and President

                                    OPTIONEE:

                                    ______________________________________
                                    SIGNATURE

                                    ______________________________________
                                    STREET ADDRESS

                                    ______________________________________
                                    CITY, STATE, ZIP CODE