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                                                                   EXHIBIT 10.59

                         LA JOLLA PHARMACEUTICAL COMPANY
                           2004 EQUITY INCENTIVE PLAN

                                    ARTICLE I
                               GENERAL PROVISIONS

      1.01  DEFINITIONS.

            Terms used herein and not otherwise defined shall have the meanings
set forth below:

            (a) "Administrator" means the Board or a Committee that has been
delegated the authority to administer the Plan. (b) "Award" means an Incentive
Award or a Nonemployee Director's Option.

            (c) "Award Document" means an award agreement duly executed on
behalf of the Company and by the Recipient or, in the Administrator's
discretion, a confirming memorandum issued by the Company to the Recipient.

            (d) "Board" means the Board of Directors of the Company.

            (e) "Change in Control" means the following and shall be deemed to
occur if any of the following events occur:

                  (i) Except as provided by subsection (iii) hereof, the
acquisition (other than from the Company) by any person, entity or "group,"
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
(excluding, for this purpose, the Company or its subsidiaries, or any employee
benefit plan of the Company or its subsidiaries which acquires beneficial
ownership of voting securities of the Company), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of forty percent
(40%) or more of either the then outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; or

                  (ii) Individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, is or was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of the Plan,
considered as though such person were a member of the Incumbent Board; or

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                  (iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation with any other person, entity or
corporation, other than

                        (A) a merger or consolidation which would result in the
persons holding the voting securities of the Company outstanding immediately
prior thereto continuing to hold more than fifty percent (50%) of the combined
voting power of the voting securities of the Company or its successor which are
outstanding immediately after such merger or consolidation, or

                        (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires forty percent (40%) or more of the combined voting power of the
Company's then outstanding voting securities; or

                  (iv) Approval by the stockholders of the Company of a plan of
complete liquidation of the Company or an agreement for the sale or other
disposition by the Company of all or substantially all of the Company's assets.

            Notwithstanding the preceding, a Change in Control shall not be
deemed to have occurred (1) if the "person" is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of the Company's then outstanding voting securities solely in connection
with a public offering of the Company's securities, or (2) if the "person" is an
employee stock ownership plan or other employee benefit plan maintained by the
Company that is qualified under the provisions of the Employee Retirement Income
Security Act of 1974, as amended.

            (f) "Code" means the Internal Revenue Code of 1986, as amended.
Where the context so requires, a reference to a particular Code section shall
also refer to any successor provision of the Code to such section.

            (g) "Committee" means the committee appointed by the Board to
administer the Plan.

            (h) "Common Stock" means the common stock of the Company, $0.01 par
value.

            (i) "Company" means La Jolla Pharmaceutical Company.

            (j) "Dividend Equivalent" means a right granted by the Company under
Section 2.07 to a holder of an Option, Stock Appreciation Right, or other
Incentive Award denominated in shares of Common Stock to receive from the
Company during the Applicable Dividend Period (as defined in Section 2.07)
payments equivalent to the amount of dividends payable to holders of the number
of shares of Common Stock underlying such Option, Stock Appreciation Right, or
other Incentive Award.

            (k) "Eligible Person" means any director, Employee or consultant of
the Company or any Related Corporation.

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            (l) "Employee" means an individual who is in the employ of the
Company (or any Parent or Subsidiary) subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.

            (m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Where the context so requires, a reference to a particular section of
the Exchange Act or rule thereunder shall also refer to any successor provision
to such section or rule.

            (n) "Exercise Price" means the price at which the Holder may
purchase shares of Common Stock underlying an Option.

            (o) "Fair Market Value" of capital stock of the Company shall be
determined with reference to the closing price of such stock on the day in
question (or, if such day is not a trading day in the U.S. securities markets,
on the nearest preceding trading day), as reported with respect to the principal
market or trading system on which such stock is then traded; or, if no such
closing prices are reported, the mean between the high bid and low ask prices
that day on the principal market or national quotation system on which such
shares are then quoted; provided, however, that when appropriate, the
Administrator in determining Fair Market Value of capital stock of the Company
may take into account such other factors as may be deemed appropriate under the
circumstances. Notwithstanding the foregoing, the Fair Market Value of capital
stock for purposes of grants of Incentive Stock Options shall be determined in
compliance with applicable provisions of the Code. The Fair Market Value of
rights or property other than capital stock of the Company means the fair market
value thereof as determined by the Administrator on the basis of such factors as
it may deem appropriate.

            (p) "Holder" means the Recipient of an Award or any permitted
assignee holding the Award.

            (q) "Incentive Award" means any Option (other than a Nonemployee
Director's Option), Restricted Stock, Stock Appreciation Right, Stock Payment,
Performance Award or Dividend Equivalent granted or sold to an Eligible Person
under this Plan.

            (r) "Incentive Stock Option" means an Option that qualifies as an
incentive stock option under Section 422 (or any successor section) of the Code
and the regulations thereunder.

            (s) "Just Cause Dismissal" shall mean a termination of a Recipient's
Service for any of the following reasons: (i) the Recipient violates any
reasonable rule or regulation of the Company or the Recipient's superiors or the
Chief Executive Officer or President of the Company that (A) results in damage
to the Company or (B) after written notice to do so, the Recipient fails to
correct within a reasonable time; (ii) any willful misconduct or gross
negligence by the Recipient in the responsibilities assigned to him or her;
(iii) any willful failure to perform his or her job; (iv) any wrongful conduct
of a Recipient which has an adverse impact on the Company or which constitutes
fraud, embezzlement or dishonesty; (v) the Recipient's performing services for
any other person or entity which competes with the Company while he or she is
providing Service, without the written approval of the Chief Executive Officer
or President of the Company; or (vi) any other conduct that the Administrator
determines

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constitutes Just Cause for Dismissal; provided, however, that if the term of
concept has been defined in an employment agreement between the Company and the
Recipient, then Just Cause Dismissal shall have the definition set forth in such
employment agreement. The foregoing definition shall not in any way preclude or
restrict the right of the Company or any Related Corporation to discharge or
dismiss any Recipient or other person in the Service of the Company or any
Related Corporation for any other acts or omissions but such other acts or
omission shall not be deemed, for purposes of the Plan, to constitute grounds
for Just Cause Dismissal.

            (t) "Nonemployee Director" means a director of the Company who is
not an Employee of the Company or any of its Related Corporations.

            (u) "Nonemployee Director's Option" means a Nonqualified Stock
Option granted to a Nonemployee Director pursuant to Article III of the Plan.

            (v) "Nonqualified Stock Option" means an Option that does not
qualify as an Incentive Stock Option.

            (w) "Option" means a right to purchase stock of the Company granted
under this Plan, and can be an Incentive Stock Option or a Nonqualified Stock
Option.

            (x) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each
corporation in the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

            (y) "Performance Award" means an award, payable in cash, Common
Stock or a combination thereof, which vests and becomes payable over a period of
time upon attainment of performance criteria established in connection with the
grant of the award.

            (z) "Performance-Based Compensation" means performance-based
compensation as described in Section 162(m) of the Code and the regulations
thereunder. If the amount of compensation an Eligible Person will receive under
any Incentive Award is not based solely on an increase in the value of Common
Stock after the date of grant or award, the Administrator, in order to qualify
an Incentive Award as performance-based compensation under Section 162(m) of the
Code and the regulations thereunder, can condition the grant, award, vesting, or
exercisability of such an award on the attainment of a preestablished, objective
performance goal. For this purpose, a preestablished, objective performance goal
may include one or more of the following performance criteria: (i) cash flow,
(ii) earnings per share (including earnings before interest, taxes, and
amortization), (iii) return on equity, (iv) total stockholder return, (v) return
on capital, (vi) return on assets or net assets, (vii) income or net income,
(viii) operating margin, (ix) return on operating revenue, (x) attainment of
stated goals related to the Company's research and development or clinical
trials programs, (xi) attainment of stated goals related to the Company's
capitalization, costs, financial condition, or results of operations, and (xii)
any other similar performance criteria.

            (aa) "Permanent Disability" shall mean the inability of the
Recipient to engage in any substantial gainful activity by reason of any
medically determinable physical or mental

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impairment which can be expected to result in death or has lasted or can be
expected to last for a continuous period of twelve months or more.

            (bb) "Plan" means the La Jolla Pharmaceutical Company 2004 Equity
Incentive Plan as set forth in this document.

            (cc) "Purchase Price" means the purchase price (if any) to be paid
by a Recipient for Restricted Stock as determined by the Administrator (which
price shall be at least equal to the minimum price required under applicable
laws and regulations for the issuance of Common Stock).

            (dd) "Recipient" means an Eligible Person who has received an Award
hereunder.

            (ee) "Related Corporation" means either a Parent or Subsidiary.

            (ff) "Restricted Stock" means Common Stock that is the subject of an
award made under Section 2.04 and which is nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met as set forth in
this Plan and in any Award Document.

            (gg) "Securities Act" means the Securities Act of 1933, as amended.

            (hh) "Service" means the performance of services for the Company or
its Related Corporations by a person in the capacity of an Employee, a director
or a consultant, except to the extent otherwise specifically provided in the
Award Document.

            (ii) "Stock Appreciation Right" means a right granted under Section
2.05 to receive a payment that is measured with reference to the amount by which
the Fair Market Value of a specified number of shares of Common Stock
appreciates from a specified date, such as the date of grant of the Stock
Appreciation Right, to the date of exercise.

            (jj) "Stock Payment" means a payment in shares of Common Stock to
replace all or any portion of the compensation (other than base salary) that
would otherwise become payable to a Recipient.

            (kk) "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, provided each
corporation in the unbroken chain (other than the last corporation) owns, at the
time of the determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

      1.02  PURPOSE OF THE PLAN.

            The Board has adopted this Plan to advance the interests of the
Company and its stockholders by (a) providing Eligible Persons with financial
incentives to promote the success of the Company's business objectives, and to
increase their proprietary interest in the success of the Company, and (b)
giving the Company a means to attract and retain Eligible Persons.

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      1.03  COMMON STOCK SUBJECT TO THE PLAN.

            (a) Number of Shares. Subject to Section 1.05(b), the maximum number
of shares of Common Stock that may be issued and outstanding or subject to
outstanding Awards under the Plan shall not exceed 2,000,000.

            (b) Source of Shares. The Common Stock to be issued under this Plan
will be made available, at the discretion of the Administrator, either from
authorized but unissued shares of Common Stock or from previously issued shares
of Common Stock reacquired by the Company, including shares purchased on the
open market.

            (c) Availability of Unused Shares. Shares of Common Stock subject to
unexercised portions of any Award granted under this Plan that expire, terminate
or are cancelled, and shares of Common Stock issued pursuant to an Award under
this Plan that are reacquired by the Company pursuant to the terms of the Award
under which such shares were issued, will again become available for the grant
of further Awards under this Plan.

            (d) Grant Limits. Notwithstanding any other provision of this Plan,
no Eligible Person shall be granted Awards with respect to more than 1,000,000
shares of Common Stock in the aggregate in any one calendar year; provided,
however, that this limitation shall not apply if it is not required in order for
the compensation attributable to Awards hereunder to qualify as
Performance-Based Compensation.

      1.04  ADMINISTRATION OF THE PLAN.

            (a) The Administrator. The Plan will be administered by a Committee,
which will consist of two or more members of the Board each of whom must be an
"independent director" as defined by applicable listing standards.
Notwithstanding the foregoing or any provision of the Plan to the contrary, the
Board may, in lieu of the Committee, exercise any authority granted to the
Committee pursuant to the provisions of the Plan. To obtain the benefits of Rule
16b-3, Incentive Awards must be granted by the entire Board or a Committee
comprised entirely of "non-employee directors" as such term is defined in Rule
16b-3. In addition, if Incentive Awards are to be made to persons subject to
Section 162(m) of the Code and such Awards are intended to constitute
Performance-Based Compensation, then such Incentive Awards must be granted by a
Committee comprised entirely of "outside directors" as such term is defined in
the regulations under Section 162(m) of the Code.

            (b) Authority of the Administrator. The Administrator has authority
in its discretion to select the Eligible Persons to whom, and the time or times
at which, Incentive Awards shall be granted or sold, the nature of each
Incentive Award, the number of shares of Common Stock or the number of rights
that make up or underlie each Incentive Award, the period for the exercise of
each Incentive Award, the performance criteria (which need not be identical)
utilized to measure the value of Performance Awards, and such other terms and
conditions applicable to each individual Incentive Award as the Administrator
shall determine. In addition, the Administrator shall have all other powers
granted to it in the Plan.

            (c) Interpretation. Subject to the express provisions of the Plan,
the Administrator has the authority to interpret the Plan and any Award
Documents, to determine the

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terms and conditions of Incentive Awards and to make all other determinations
necessary or advisable for the administration of the Plan. All interpretations,
determinations and actions by the Administrator shall be final, conclusive and
binding upon all parties. The Administrator has authority to prescribe, amend
and rescind rules and regulations relating to the Plan.

            (d) Special Rules Regarding Nonemployee Director Options.
Notwithstanding anything herein to the contrary, the Administrator shall have no
authority or discretion as to the selection of persons eligible to receive
Nonemployee Directors' Options granted under the Plan, the number of shares
covered by Nonemployee Directors' Options granted under the Plan, the timing of
such grants, or the Exercise Price of Nonemployee Directors' Options granted
under the Plan, which matters are specifically governed by the provisions of the
Plan.

            (e) No Liability. The Administrator and its delegates shall be
indemnified by the Company to the fullest extent provided for in the Company's
certificate of incorporation and bylaws.

      1.05  OTHER PROVISIONS.

            (a) Documentation. Each Award granted under the Plan shall be
evidenced by an Award Document which shall set forth the terms and conditions
applicable to the Award as the Administrator may in its discretion determine
consistent with the Plan, provided that the Administrator shall exercise no
discretion with respect to Nonemployee Directors' Options, which shall reflect
only the terms of the Award as set forth in Article III and certain
administrative matters dictated by the Plan. Award Documents shall comply with
and be subject to the terms and conditions of the Plan. In case of any conflict
between the Plan and any Award Document, the Plan shall control. Various Award
Documents covering the same types of Awards may but need not be identical.

            (b) Adjustment Provisions. Should any change be made to the
outstanding shares of Common Stock by reason of a merger, consolidation,
reorganization, recapitalization, reclassification, combination of shares, stock
dividend, stock split, reverse stock split, exchange of shares or other change
affecting the outstanding Common Stock without the Company's receipt of
consideration, an appropriate and proportionate adjustment may be made in (i)
the maximum number and kind of shares subject to the Plan as provided in Section
1.03, (ii) the number and kind of shares or other securities subject to then
outstanding Awards, (iii) the price for each share or other unit of any other
securities subject to then outstanding Awards and (iv) the number and kind of
shares or other securities subject to the Nonemployee Director Options described
in Section 3.01 and 3.02. In addition, the per person limitation set forth in
Section 1.03(d) shall also be subject to adjustment as provided in this Section
1.05(b), but only to the extent such adjustment would not affect the status of
compensation attributable to Awards hereunder as Performance-Based Compensation.
Such adjustments are to be effected in a manner that shall preclude the
enlargement or dilution of rights and benefits under the Awards. In no event
shall any adjustments be made in connection with the conversion of preferred
stock or warrants into shares of Common Stock. No fractional interests will be
issued under the Plan resulting from any such adjustments.

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            (c) Continuation of Service. Nothing contained in this Plan (or in
Award Documents or in any other documents related to this Plan or to Awards
granted hereunder) shall confer upon any Eligible Person or Recipient any right
to continue in the Service of the Company or its Related Corporations or
constitute any contract or agreement of employment or engagement, or interfere
in any way with the right of the Company or its Related Corporations to reduce
such person's compensation or other benefits or to terminate the Service of such
Eligible Person or Recipient, with or without cause. Except as expressly
provided in the Plan or in any Award Document, the Company shall have the right
to deal with each Recipient in the same manner as if the Plan and any Award
Document did not exist, including, without limitation, with respect to all
matters related to the hiring, discharge, compensation and conditions of the
employment or engagement of the Recipient.

            (d) Restrictions. All Awards granted under the Plan shall be subject
to the requirement that, if at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to Awards granted under the Plan upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such an Award or the issuance, if any, or purchase of
shares in connection therewith, such Award may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company.

            (e) Additional Conditions. Any Incentive Award may also be subject
to such other provisions (whether or not applicable to any other Award or
Recipient) as the Administrator determines appropriate.

            (f) Tax Withholding. The Company's obligation to deliver shares of
Common Stock under the Plan shall be subject to the satisfaction of all
applicable income and employment tax withholding requirements.

            (g) Privileges of Stock Ownership. Except as otherwise set forth
herein, a Holder shall have no rights as a stockholder of the Company with
respect to any shares issuable or issued in connection with the Award until the
date of the receipt by the Company of all amounts payable in connection with
exercise of the Award, performance by the Holder of all obligations thereunder,
and the Company issues a stock certificate representing the appropriate number
of shares. Status as an Eligible Person shall not be construed as a commitment
that any Incentive Award will be granted under this Plan to an Eligible Person
or to Eligible Persons generally. No person shall have any right, title or
interest in any fund or in any specific asset (including shares of capital
stock) of the Company by reason of any Award granted hereunder. Neither this
Plan (or any documents related hereto) nor any action taken pursuant hereto
shall be construed to create a trust of any kind or a fiduciary relationship
between the Company and any person. To the extent that any person acquires a
right to receive an Award hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Company.

            (h) Effective Date and Duration of Plan; Amendment and Termination
of Plan. The Plan shall become effective upon its approval by the Company's
stockholders. Unless terminated by the Board prior to such time, the Plan shall
continue in effect until the 10th

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anniversary of the date the Plan was adopted, whereupon the Plan shall terminate
automatically. The Board may, insofar as permitted by law, from time to time
suspend or terminate the Plan. No Awards may be granted during any suspension of
this Plan or after its termination. Any Award outstanding after the termination
of the Plan shall remain in effect until such Award has been exercised or
expires in accordance with its terms and the terms of the Plan. The Board may,
insofar as permitted by law, from time to time revise or amend the Plan in any
respect except that no such amendment shall adversely affect any rights or
obligations of the Holder under any outstanding Award previously granted under
the Plan without the consent of the Holder. Amendments shall be subject to
stockholder approval to the extent such approval is required to comply with the
listing requirements imposed by any exchange or trading system upon which the
Company's securities trade or applicable law.

            (i) Amendment of Awards. The Administrator may make any
modifications in the terms and conditions of an outstanding Incentive Award,
provided that (i) the resultant provisions are permissible under the Plan and
(ii) the consent of the Holder shall be obtained if the amendment will adversely
affect his or her rights under the Award. However, the outstanding Options may
not be repriced without stockholder approval.

            (j) Nonassignability. No Incentive Stock Option granted under the
Plan shall be assignable or transferable except by will or by the laws of
descent and distribution. No other Awards granted under the Plan shall be
assignable or transferable except (i) by will or by the laws of descent and
distribution, (ii) to one or more of the Recipient's family members (as such
term is defined in the instructions to Form S-8) or (iii) upon dissolution of
marriage pursuant to a qualified domestic relations order. During the lifetime
of a Recipient, an Award granted to him or her shall be exercisable only by the
Holder or his or her guardian or legal representative.

            (k) Other Compensation Plans. The adoption of the Plan shall not
affect any other stock option, incentive or other compensation plans in effect
for the Company, and the existence of the Plan shall not preclude the Company
from establishing any other forms of incentive or other compensation for
Eligible Persons.

            (l) Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.

            (m) Participation by Foreign Employees. Notwithstanding anything to
the contrary herein, the Administrator may, in order to fulfill the purposes of
the Plan, structure grants of Incentive Awards to Recipients who are foreign
nationals or employed outside of the United States to recognize differences in
applicable law, tax policy or local custom.

                                   ARTICLE II
                                INCENTIVE AWARDS

      2.01  GRANTS OF INCENTIVE AWARDS.

            Subject to the express provisions of this Plan, the Administrator
may from time to time in its discretion select from the class of Eligible
Persons those individuals to whom

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Incentive Awards may be granted pursuant to its authority as set forth in
Section 1.04(b). Each Incentive Award shall be subject to the terms and
conditions of the Plan and such other terms and conditions established by the
Administrator as are not inconsistent with the provisions of the Plan.

      2.02  OPTIONS.

            (a) Nature of Options. The Administrator may grant Incentive Stock
Options and Nonqualified Stock Options under the Plan. However, Incentive Stock
Options may only be granted to Employees of the Company or its Related
Corporations.

            (b) Option Price. The Exercise Price per share for each Option
(other than a Nonemployee Director's Option) shall be determined by the
Administrator at the date such Option is granted and shall not be less than the
Fair Market Value of a share of Common Stock (or other securities, as
applicable) on the date of grant, except that the Exercise Price for a
Nonqualified Stock Option may reflect a discount of up to 15% of the Fair Market
Value at the time of grant if the amount of such discount is expressly in lieu
of a reasonable amount of salary or cash bonus. Notwithstanding the foregoing,
however, in no event shall the Exercise Price be less than the par value of the
shares of Common Stock.

            (c) Option Period and Vesting. Options (other than Nonemployee
Directors' Options) hereunder shall vest and may be exercised as determined by
the Administrator, except that exercise of such Options after termination of the
Recipient's Service shall be subject to Section 2.02(g). Each Option granted
hereunder (other than a Nonemployee Directors Option) and all rights or
obligations thereunder shall expire on such date as shall be determined by the
Administrator, but not later than ten years after the date the Option is granted
and shall be subject to earlier termination as herein provided.

            (d) Exercise of Options. Except as otherwise provided herein, an
Option may become exercisable, in whole or in part, on the date or dates
specified by the Administrator (or, in the case of Nonemployee Directors'
Options, the Plan) at the time the Option is granted and thereafter shall remain
exercisable until the expiration or earlier termination of the Option. No Option
shall be exercisable except in respect of whole shares, and fractional share
interests shall be disregarded. An Option shall be deemed to be exercised when
the Secretary of the Company receives written notice of such exercise from the
Holder, together with payment of the Exercise Price made in accordance with
Section 2.02(e). Upon proper exercise, the Company shall deliver to the person
entitled to exercise the Option or his or her designee a certificate or
certificates for the shares of stock for which the Option is exercised.

            (e) Form of Exercise Price. The aggregate Exercise Price shall be
immediately due and payable upon the exercise of an Option and shall, subject to
the provisions of the Award Document, be payable in one or more of the
following: (i) by delivery of legal tender of the United States, (ii) by
delivery of shares of Common Stock held for the requisite period, if any,
necessary to avoid a charge to the Company's earnings for financial reporting
purposes, and/or (iii) through a sale and remittance procedure pursuant to which
the Holder shall concurrently provide irrevocable instructions to (A) a
brokerage firm to effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on the

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settlement date, sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable income and employment taxes
required to be withheld by the Company by reason of such exercise and (B) the
Company to deliver the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale. Any shares of Company stock or
other non-cash consideration assigned and delivered to the Company in payment or
partial payment of the Exercise Price will be valued at Fair Market Value on the
exercise date.

            (f) Limitation on Exercise of Incentive Stock Options. The aggregate
Fair Market Value (determined as of the respective date or dates of grant) of
the Common Stock for which one or more Options granted to any Recipient under
the Plan (or any other option plan of the Company or any of its subsidiaries or
affiliates) may for the first time become exercisable as Incentive Stock Options
under the Code during any one calendar year shall not exceed $100,000. Any
Options granted as Incentive Stock Options pursuant to the Plan in excess of
such limitation shall be treated as Nonqualified Stock Options. Options are to
be taken into account in the order in which they were awarded.

            (g) Termination of Service.

                  (i) Termination for Cause. Except as otherwise provided by the
Administrator, in the event of a Just Cause Dismissal of a Recipient, all of the
outstanding Options granted to such Recipient shall expire and become
unexercisable as of the date of such Just Cause Dismissal.

                  (ii) Termination Other Than For Cause. Subject to subsection
(i) above and except as otherwise provided by the Administrator, in the event of
a Recipient's termination of Service from the Company or its Related
Corporations due to:

                        (A) any reason other than Just Cause Dismissal, death,
or Permanent Disability, or normal retirement, the outstanding Options granted
to such Recipient, whether or not vested, shall expire and become unexercisable
as of the earlier of (1) the date such Options would expire in accordance with
their terms if the Recipient had remained in Service or (2) three calendar
months after the date the Recipient's Service terminated in the case of
Incentive Stock Options, or six months after the Recipient's Service terminated,
in the case of Nonqualified Stock Options.

                        (B) death or Permanent Disability, the outstanding
Options granted to such Recipient, whether or not vested, shall expire and
become unexercisable as of the earlier of (1) the date such Options would expire
in accordance with their terms if the Recipient had remained in Service or (2)
twelve months after the date of termination.

                        (C) normal retirement, the outstanding Options granted
to such Recipient, whether or not vested, shall expire and become unexercisable
as of the earlier of (A) the date such Options expire in accordance with their
terms or (B) twenty-four months after the date of retirement.

                  (iii) Termination of Director Service. In the event that a
Director shall cease to be a Nonemployee Director, all outstanding Options
(other than a Nonemployee Director's Option) granted to such Recipient shall be
exercisable, to the extent already vested and

                                       11

<PAGE>

exercisable on the date such Recipient ceases to be a Nonemployee Director and
regardless of the reason the Recipient ceases to be a Nonemployee Director until
the fifth anniversary of the date such Director ceases to be a Nonemployee
Director; provided that the Administrator may extend such post-termination
period to up to the expiration date of the Option.

      2.03  PERFORMANCE AWARDS.

            (a) Grant of Performance Award. The Administrator may grant
Performance Awards under the Plan and shall determine the performance criteria
(which need not be identical and may be established on an individual or group
basis) governing Performance Awards, the terms thereof, and the form and timing
of payment of Performance Awards.

            (b) Payment of Award; Limitation. Upon satisfaction of the
conditions applicable to a Performance Award, payment will be made to the Holder
in cash or in shares of Common Stock valued at Fair Market Value or a
combination of Common Stock and cash, as the Administrator in its discretion may
determine. Notwithstanding any other provision of this Plan, no Eligible Person
shall be paid Performance Awards with a value in excess of $1,000,000 in any one
calendar year; provided, however, that this limitation shall not apply if it is
not required in order for the compensation attributable to the Performance Award
hereunder to qualify as Performance-Based Compensation.

            (c) Expiration of Performance Award. If any Recipient's Service is
terminated for any reason other than normal retirement, death or Permanent
Disability prior to the time a Performance Award or any portion thereof becomes
payable, all of the Holder's rights under the unpaid portion of the Performance
Award shall expire unless otherwise determined by the Administrator. In the
event of termination of Service by reason of death, Permanent Disability or
normal retirement, the Administrator, in its discretion, may determine what
portions, if any, of the Performance Award should be paid to the Holder.

      2.04  RESTRICTED STOCK.

            (a) Award of Restricted Stock. The Administrator may issue
Restricted Stock under the Plan. The Administrator shall determine the Purchase
Price (if any), the forms of payment of the Purchase Price (which shall be
either cash or past services), the restrictions upon the Restricted Stock, and
when such restrictions shall lapse (provided that the restriction period shall
be at least one year for performance-based grants and three years for
non-performance-based grants).

            (b) Requirements of Restricted Stock. All shares of Restricted Stock
granted or sold pursuant to the Plan will be subject to the following
conditions:

                  (i) No Transfer. The shares of Restricted Stock may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
alienated or encumbered until the restrictions are removed or expire;

                  (ii) Certificates. The Administrator may require that the
certificates representing shares of Restricted Stock granted or sold to a Holder
pursuant to the Plan remain in

                                       12

<PAGE>

the physical custody of an escrow holder or the Company until all restrictions
are removed or expire;

                  (iii) Restrictive Legends. Each certificate representing
shares of Restricted Stock granted or sold to a Holder pursuant to the Plan will
bear such legend or legends making reference to the restrictions imposed upon
such Restricted Stock as the Administrator in its discretion deems necessary or
appropriate to enforce such restrictions; and

                  (iv) Other Restrictions. The Administrator may impose such
other conditions on Restricted Stock as the Administrator may deem advisable
including, without limitation, restrictions under the Securities Act, under the
Exchange Act, under the requirements of any stock exchange or upon which such
Restricted Stock or shares of the same class are then listed and under any blue
sky or other securities laws applicable to such shares.

            (c) Rights of Holder. Subject to the provisions of Section 2.04(b)
and any additional restrictions imposed by the Administrator, the Holder will
have all rights of a stockholder with respect to the Restricted Stock, including
the right to vote the shares and receive all dividends and other distributions
paid or made with respect thereto.

            (d) Termination of Service. Unless the Administrator in its
discretion determines otherwise, upon a Recipient's termination of Service for
any reason, all of the Restricted Stock issued to the Recipient that remains
subject to restrictions imposed pursuant to the Plan on the date of such
termination of Service may be repurchased by the Company at the Purchase Price
(if any).

            (e) Adjustments. Any new, substituted or additional securities or
other property which Holder may have the right to receive with respect to the
Holder's shares of Restricted Stock by reason of a merger, consolidation,
reorganization, recapitalization, reclassification, combination of shares, stock
dividend, stock split, reverse stock split, exchange of shares or other change
affecting the outstanding Common Stock without the Company's receipt of
consideration shall be issued subject to the same vesting requirements
applicable to the Holder's shares of Restricted Stock and shall be treated as if
they had been acquired on the same date as such shares.

      2.05  STOCK APPRECIATION RIGHTS.

            (a) Granting of Stock Appreciation Rights. The Administrator may
grant Stock Appreciation Rights, either related or unrelated to Options, under
the Plan.

            (b) Stock Appreciation Rights Related to Options.

                  (i) A Stock Appreciation Right granted in connection with an
Option granted under this Plan will entitle the holder of the related Option,
upon exercise of the Stock Appreciation Right, to surrender such Option, or any
portion thereof to the extent unexercised, with respect to the number of shares
as to which such Stock Appreciation Right is exercised, and to receive payment
of an amount computed pursuant to Section 2.05(b)(iii). Such Option will, to the
extent surrendered, then cease to be exercisable.

                                       13

<PAGE>

                  (ii) A Stock Appreciation Right granted in connection with an
Option hereunder will be exercisable at such time or times, and only to the
extent that, the related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.

                  (iii) Upon the exercise of a Stock Appreciation Right related
to an Option, the Holder will be entitled to receive payment of an amount
determined by multiplying: (i) the difference obtained by subtracting the
Exercise Price of a share of Common Stock specified in the related Option from
the Fair Market Value of a share of Common Stock on the date of exercise of such
Stock Appreciation Right (or as of such other date or as of the occurrence of
such event as may have been specified in the instrument evidencing the grant of
the Stock Appreciation Right), by (ii) the number of shares as to which such
Stock Appreciation Right is exercised.

            (c) Stock Appreciation Rights Unrelated to Options. The
Administrator may grant Stock Appreciation Rights unrelated to Options to
Eligible Persons. Section 2.05(b)(iii) shall be used to determine the amount
payable at exercise under such Stock Appreciation Right, except that in lieu of
the Exercise Price specified in the related Option the initial base amount
specified in the Incentive Award shall be used.

            (d) Limits. Notwithstanding the foregoing, the Administrator, in its
discretion, may place a dollar limitation on the maximum amount that will be
payable upon the exercise of a Stock Appreciation Right under the Plan.

            (e) Payments. Payment of the amount determined under the foregoing
provisions may be made solely in whole shares of Common Stock valued at their
Fair Market Value on the date of exercise of the Stock Appreciation Right, in
cash or in a combination of cash and shares of Common Stock as the Administrator
deems advisable. If permitted by the Administrator, the Holder may elect to
receive cash in full or partial settlement of a Stock Appreciation Right. If the
Administrator decides to make full payment in shares of Common Stock, and the
amount payable results in a fractional share, payment for the fractional share
will be made in cash.

            (f) Termination of Service. Section 2.02(g) will govern the
treatment of Stock Appreciation Rights upon the termination of a Recipient's
Service.

      2.06  STOCK PAYMENTS.

            The Administrator may issue Stock Payments under the Plan for all or
any portion of the compensation (other than base salary) or other payment that
would otherwise become payable by the Company to the Eligible Person in cash.

      2.07  DIVIDEND EQUIVALENTS.

            The Administrator may grant Dividend Equivalents to any Recipient
who has received an Option, Stock Appreciation Right, or other Incentive Award
denominated in shares of Common Stock. Such Dividend Equivalents shall be
effective and shall entitle the Recipients thereof to payments during the
"Applicable Dividend Period," which shall be (a) the period

                                       14

<PAGE>

between the date the Dividend Equivalent is granted and the date the related
Option, Stock Appreciation Right, or other Incentive Award is exercised,
terminates, or is converted to Common Stock, or (b) such other time as the
Administrator may specify in the Award Document. Dividend Equivalents may be
paid in cash, Common Stock, or other Incentive Awards; the amount of Dividend
Equivalents paid other than in cash shall be determined by the Administrator by
application of such formula as the Administrator may deem appropriate to
translate the cash value of dividends paid to the alternative form of payment of
the Dividend Equivalent. Dividend Equivalents shall be computed as of each
dividend record date and shall be payable to Recipients thereof at such time as
the Administrator may determine. Notwithstanding the foregoing, if it is
intended that an Incentive Award qualify as Performance-Based Compensation and
the amount of the compensation the Eligible Person could receive under the award
is based solely on an increase in value of the underlying stock after the date
of grant or award (i.e., the grant, vesting, or exercisability of the award is
not conditioned upon the attainment of a preestablished, objective performance
goal described in Section 1.01(x)), then the payment of any Dividend Equivalents
related to the Award shall not be made contingent on the exercise of the Award.

                                   ARTICLE III
                         NONEMPLOYEE DIRECTOR'S OPTIONS

      3.01  GRANTS OF INITIAL OPTIONS.

            Each Nonemployee Director shall, upon first becoming a Nonemployee
Director, receive a one-time grant of a Nonqualified Stock Option to purchase up
to 40,000 shares of Common Stock at an Exercise Price per share equal to the
Fair Market Value of the Common Stock on the date of grant. Options granted
under this Section 3.01 vest in accordance with Section 3.04(a) hereof and are
"Initial Options" for purposes hereof.

      3.02  GRANTS OF ADDITIONAL OPTIONS.

            On the date of the annual meeting of stockholders of the Company
next following a Nonemployee Director becoming such, and on the date of each
subsequent annual meeting of stockholders of the Company, in each case if the
Nonemployee Director has served as a director since his or her election or
appointment and has been re-elected as a director at such annual meeting or is
continuing as a director without being re-elected due to the classification of
the Board, such Nonemployee Director shall automatically receive a Nonqualified
Stock Option to purchase up to 10,000 shares of Common Stock at an Exercise
Price per share equal to the Fair Market Value of Common Stock on the date of
grant. Options granted under this Section 3.02 vest in accordance with Section
3.04(b) hereof and are "Additional Options" for purposes hereof. Notwithstanding
the foregoing to the contrary, the first grant of Additional Options shall be
made to eligible Nonemployee Directors on the date of the 2005 annual meeting of
stockholders.

      3.03  EXERCISE PRICE.

            The Exercise Price for Nonemployee Directors' Options shall be
payable as set forth in Section 2.02(e).

                                       15

<PAGE>

      3.04  VESTING AND EXERCISE.

            (a) Initial Options shall vest and become exercisable with respect
to 25% of the underlying shares on the grant date and with respect to an
additional 25% of the underlying shares on the dates of each of the first three
anniversaries of the date of grant provided the Recipient has remained a
Nonemployee Director for the entire period from the date of grant to such date.

            (b) Additional Options shall vest and become exercisable upon the
earlier of (i) the first anniversary of the grant date or (ii) immediately prior
to the annual meeting of stockholders of the Company next following the grant
date, provided the Recipient has remained a Nonemployee Director for the entire
period from the date of grant to such earlier date.

            (c) Notwithstanding the foregoing, however, Initial Options and
Additional Options that have not vested and become exercisable at the time the
Recipient ceases to be a Nonemployee Director shall expire.

      3.05  TERM OF OPTIONS AND EFFECT OF TERMINATION.

            No Nonemployee Directors' Option shall be exercisable after the
expiration of ten years from the date of its grant. In the event that the
Recipient of a Nonemployee Director's Option shall cease to be a Nonemployee
Director, all outstanding Nonemployee Directors' Options granted to such
Recipient shall be exercisable, to the extent already vested and exercisable on
the date such Recipient ceases to be a Nonemployee Director and regardless of
the reason the Recipient ceases to be a Nonemployee Director until the fifth
anniversary of the date such Director ceases to be a Nonemployee Director;
provided that the Administrator may extend such post-termination period to the
expiration date of the Option.

                                   ARTICLE IV
                      RECAPITALIZATIONS AND REORGANIZATIONS

      4.01  CORPORATE TRANSACTIONS.

            (a) Options. Unless the Administrator provides otherwise in the
Award Document or another written agreement, in the event of a Change in
Control, the Administrator shall provide that all Options (other than
Non-employee Director Options) either (i) vest in full immediately preceding the
Change in Control and terminate upon the Change in Control, (ii) are assumed or
continued in effect in connection with the Change in Control transaction, (iii)
are cashed out for an amount equal to the deal consideration per share less the
Exercise Price or (iv) are substituted for similar awards of the surviving
corporation. Each Option that is assumed or otherwise continued in effect in
connection with a Change in Control shall be appropriately adjusted, immediately
after such Change in Control, to apply to the number and class of securities
which would have been issuable to Recipient in consummation of such Change in
Control had the Recipient been exercised immediately prior to such Change in
Control. Appropriate adjustments to reflect such Change in Control shall also be
made to (A) the Exercise Price payable per share under each outstanding Option,
provided the aggregate Exercise Price

                                       16

<PAGE>

payable for such securities shall remain the same, (B) the maximum number and/or
class of securities available for issuance over the remaining term of the Plan,
(C) the maximum number and/or class of securities for which any one person may
be granted options and direct stock issuances pursuant to the Plan per calendar
year and (D) the number and/or class of securities subject to Nonemployee
Director's Options. To the extent the holders of Common Stock receive cash
consideration in whole or part for their Common Stock in consummation of the
Change in Control, the successor corporation may, in connection with the
assumption of the outstanding Options, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control transaction.

            (b) Nonemployee Directors' Options. Immediately prior to a Change of
Control, all outstanding Nonemployee Directors' Options shall vest in full.

            (c) Other Incentive Awards. The Administrator may specify the effect
that a Change in Control has on an Incentive Award (other than an Option)
outstanding at the time such a Change in Control occurs either in the applicable
Award Document or by subsequent modification of the Award.

      4.02  NO RESTRAINT.

            The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all of any part of
its business or assets.

                                       17<PAGE>
                                                                   Exhibit 10.6

                          REGISTRATION RIGHTS AGREEMENT

      This REGISTRATION RIGHTS AGREEMENT ("AGREEMENT"), dated as of July 19,
2004, is by and between PHOENIX FOOTWEAR GROUP, INC., a Delaware corporation
(the "COMPANY"), and W. WHTILOW WYATT (the "SHAREHOLDER").

                              W I T N E S S E T H :

      A. The Company has issued to the Shareholder One Hundred Ninety Six
Thousand Nine Hundred Sixty Seven (196,967) shares of common stock, par value
$.01 per share, of the Company (hereinafter referred to as the "REGISTRABLE
SHARES") pursuant to the Stock Purchase Agreement dated June  15, 2004 among the
Company, Altama Delta Corporation ("ALTAMA") and the Shareholder (the "STOCK
PURCHASE AGREEMENT").

      B. The Registrable Shares have not been registered under the Securities
Act of 1933, as amended (the "1933 ACT") and, as an inducement to Shareholder to
enter into the Stock Purchase Agreement and to consummate the transactions
contemplated thereunder (the "ACQUISITION"), the Company has agreed to grant to
Shareholder certain registration rights with respect to the Registrable Shares
as set forth herein.

      NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

      1.    DEMAND REGISTRATION.

            (a) Subject to Section 1(b) below, at any time following the first
one hundred eighty (180) days after the date hereof and prior to the third
anniversary hereof, the Company, upon receipt of a written request from the
Shareholder (a "SHAREHOLDER DEMAND"), shall on one (1) occasion use commercially
reasonable efforts to register the resale of all or any portion of the
Registrable Shares with the Securities and Exchange Commission (the "SEC")
pursuant to a registration statement under the 1933 Act (a "DEMAND REGISTRATION
STATEMENT"), provided the registration covers at least fifty percent (50%) of
the Registrable Shares originally issued pursuant to the Stock Purchase
Agreement. The Company shall use commercially reasonable efforts to cause such
Demand Registration Statement to be declared effective as soon after it is filed
as is reasonably practicable and to keep such registration statement effective
until the sooner of all such Registrable Shares having been distributed, or
until one hundred twenty (120) days have elapsed since such registration
statement became effective (subject to extension of this period each day for any
day during which the Shareholder is prohibited from selling Registerable Shares
thereunder pursuant to the terms hereof). The Shareholder Demand shall specify
the number of shares of Registrable Shares to be registered and will also
specify the intended methods of disposition thereof.

            (b) Notwithstanding the foregoing, the Company may delay the filing
of a Demand Registration Statement for up to 120 days if, at the time of a
request for registration

<PAGE>

under Section 1(a), (i) the Company is a party to a transaction involving the
purchase, sale, conversion or issuance of securities of the Company (other than
a transaction which is specifically not prohibited in Regulation M promulgated
by the SEC), (ii) in the good faith judgment of the Company's Chief Executive
Officer, there is material undisclosed information concerning the Company or any
subsidiary of the Company which has not been disclosed to the general public for
business reasons, or (iii) financial statements required to be included or
incorporated in the Demand Registration Statement have not been prepared or are
otherwise not available. In addition, the Company shall not be obligated to
honor any Shareholder Demand under Section 1(a)(e) at any time starting with the
date 30 days prior to the Company's good faith estimate of the date of filing
of, and ending on the date 120 days following the effective date of, a
registration statement in connection with a bona fide public offering. The
Company shall promptly notify the Shareholder of any delay in such filing, the
reasons for such delay and proposed length of such delay.

            (c) If the Shareholder so elects, the offering of such Registrable
Shares pursuant to such Demand Registration shall be in the form of an
underwritten offering. In any such underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Shareholder; provided, that such investment bankers and
managers must be reasonably acceptable to the Company.

      2. "PIGGY-BACK"REGISTRATION. Except as otherwise provided below, at any
time after the date hereof and continuing thereafter until the third (3rd)
anniversary thereof, if the Company proposes to register any of its common stock
under the 1933 Act in connection with the public offering of such securities for
its own account or for the account of its security holders (a "PIGGY-BACK
REGISTRATION STATEMENT"), except for a registration relating solely to the sale
of securities to participants in the Company's stock plans or employee benefit
plans or a registration relating solely to a transaction for which SEC Form S-4
may be used, then:

            (a) The Company shall give written notice of such determination to
the Shareholder and the Shareholder shall have the right to request, by written
notice given to the Company within fifteen (15) days of the date that such
written notice was mailed by the Company to the Shareholder, that a specific
number of Registrable Shares held by him be included in the Piggy-Back
Registration Statement (and related underwritten offering, if any);

            (b) If the Piggy-Back Registration Statement relates to an
underwritten offering, the notice given to the Shareholder shall specify the
name or names of the managing underwriter or underwriters for such offering. In
addition, such notice shall also specify the number of securities to be
registered for the account of the Company and for the account of its security
holders, if any;

            (c) If the Piggy-Back Registration Statement relates to an
underwritten offering, the Shareholder, as a condition to including any of his
Registrable Shares in the registration, must agree (i) to sell such Registrable
Shares on the same basis as provided in the underwriting arrangement approved by
the Company, and (ii) to timely complete and execute all questionnaires, powers
of attorney, indemnities, hold-back agreements, underwriting agreements

                                      -2-
<PAGE>

and other documents required under the terms of such underwriting arrangements
or by the SEC or by any state securities regulatory body;

            (d) If the managing underwriter or underwriters for the underwritten
offering under the Piggy-Back Registration Statement determines that inclusion
of all or any portion of the Registrable Shares in such offering would
materially adversely affect the ability of the underwriters for such offering to
sell all of the securities requested to be included for sale in such offering at
the best price obtainable therefor, the aggregate number of Registrable Shares
that may be sold by the Shareholder shall be limited to such number of
Registrable Shares, if any, that the managing underwriter or underwriters
determine may be included therein without such adverse effect as provided below.
If the number of securities proposed to be sold in such underwritten offering
exceeds the number of securities that may be sold in such offering, there shall
be included in the offering, first, up to the maximum number of securities to be
sold by the Company for its own account, and second, as to the balance, if any,
Registrable Shares requested to be included therein by the Shareholder thereof
on a pro rata basis as between the Shareholder and all other holders of common
stock of the Company exercising registration rights of any kind based upon the
number of shares of common stock proposed to be registered by each, or in such
other proportions as the managing underwriter or underwriters for the offering
may require.

            (e) The Shareholder shall have the right to withdraw his Registrable
Shares from the Piggy-Back Registration Statement, but if the same relates to an
underwritten offering, he may only do so during the time period and on the terms
agreed upon among the underwriters for such underwritten offering and the
Shareholder;

            (f) The Shareholder will advise the Company at the time a
registration becomes effective whether the Registrable Shares included in the
registration will be underwritten or sold directly by the Shareholder;

      3. TERMINATION OF REGISTRATION OBLIGATIONS. Notwithstanding anything
herein to the contrary, all of the Shareholder's registration rights herein
shall terminate when all of the Registrable Shares then outstanding may be sold
pursuant to Rule 144(k) promulgated under the 1933 Act ("RULE 144(K)").

      4. OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Shares pursuant to this Agreement, the Company
shall, as expeditiously as reasonably possible:

            (a) Furnish to the Shareholder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as he may reasonably
request in order to facilitate the disposition of Registrable Shares owned by
him;

            (b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition

                                      -3-
<PAGE>

of all securities covered by such registration statement, or one hundred twenty
(120) days have elapsed since such registration statement became effective
(subject to the extension of this period as provided below);

            (c) Use commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Shareholder, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify as a broker-dealer in any states
or jurisdictions or to do business or to file a general consent to service of
process in any such states or jurisdictions;

            (d) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with the managing
underwriter of such offering, in usual and customary form reasonably
satisfactory to the Company and the Shareholder, provided the Shareholder shall
also enter into and perform his obligations under such an agreement; and

            (e) Notify each holder of Registrable Shares covered by such
registration statement, at any time when a prospectus relating thereto and
covered by such registration statement is required to be delivered under the
1933 Act, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.

            (f) Notwithstanding anything herein to the contrary, in the event of
a notification provided for in Section 4(e) above, the Company shall use
commercially reasonable efforts to prepare and file with the SEC (and to provide
copies thereof to the Shareholder) as soon as reasonably possible an amended
prospectus complying with the 1933 Act, and the period during which the
prospectus referred to in the notice provided for in Section 4(e) above cannot
be used and the time period prior to the use of the amended prospectus referred
to in this Section 4(f) shall not be counted in the one hundred twenty (120) day
period referred to in Section 1(a) above.

      5.    FURNISH INFORMATION.

            (a) It shall be a condition precedent to the obligations of the
Company hereunder that the Shareholder shall furnish to the Company any and all
information reasonably requested by the Company, its officers, directors,
employees, counsel, agents or representatives, the underwriter or underwriters,
if any, and the SEC or any other governmental authority, including, but not
limited to: (i) such information regarding the Shareholder, the Registrable
Shares held by him, and the intended method of disposition of such securities,
as shall be required to effect the registration of their Registrable Shares; and
(ii) the identity of and compensation to be paid to any proposed underwriter or
broker-dealer to be employed in connection therewith.

                                      -4-
<PAGE>

            (b) In connection with the preparation and filing of each
registration statement registering Registrable Shares under the 1933 Act, the
Company shall give the Shareholder his underwriters, if any, and his counsel and
accountants, at the Shareholder's sole cost and expense (except as otherwise set
forth herein), such access to copies of the Company's records and documents and
such opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial statements
as shall be reasonably necessary in the opinion of the Shareholder and such
underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the 1933 Act.

      6. EXPENSES OF REGISTRATION. All registration, filing and qualification
fees, printer's expenses, accounting and legal fees and expenses of the Company
incurred in connection with the registration of the Registrable Shares pursuant
to this Agreement shall be borne by the Company. The Shareholder shall be
responsible for all underwriting discounts and commissions applicable to the
Registrable Shares sold by the Shareholder and any fees, costs or expenses
incurred by the Shareholder in connection with any registration.

      7. INDEMNIFICATION REGARDING REGISTRATION RIGHTS. If any Registrable
Shares are included in a registration statement pursuant to this Agreement:

            (a) To the extent permitted by law, the Company will indemnify and
hold harmless the Shareholder and each person, if any, who controls the
underwriter within the meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 ACT"), against any losses, claims, damages,
liabilities (joint or several) or any legal or other costs and expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action to which they may become subject
under the 1933 Act, the 1934 Act or state law, insofar as such losses, claims,
damages, costs, expenses or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (each a "VIOLATION"): (i) any untrue statement or alleged untrue
statement of a material fact with respect to the Company or its securities
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements therein;
(ii) the omission or alleged omission to state therein a material fact with
respect to the Company or its securities required to be stated therein or
necessary to make the statements therein not misleading; or (iii) any violation
or alleged violation by the Company of the 1933 Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the 1933 Act, the
1934 Act or any state securities law. Notwithstanding the foregoing, the
indemnity agreement contained in this Section 7(a) shall not apply and the
Company shall not be liable (w) in any such case for any such loss, claim,
damage, costs, expenses, liability or action to the extent that it arises out of
or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by the Shareholder, underwriter or any of its controlling persons,
(x) for amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld, (y) any
representations or warranties made by the Shareholder in the Stock Purchase
Agreement, or (z) if the statement or omission was corrected

                                      -5-
<PAGE>

in a subsequent preliminary or final prospectus or amendment or supplement
thereto, and the Shareholder failed to deliver such document to the purchaser of
its securities.

            (b) To the extent permitted by law, the Shareholder shall indemnify
and hold harmless the Company, each of its directors and officers who have
signed the registration statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the 1933 Act, the 1934 Act or any state
securities law, each of the Company's employees, agents, counsel and
representatives, any underwriter and any other person selling securities in any
registration statement in which the resale of Registrable Shares have been
included, or any of its directors or officers, or any person who controls such
securities holder, against any losses, claims, damages, costs, expenses,
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, employee, agent, representative, underwriter, or
such holder, or director, officer or controlling person thereof, may become
subject, under the 1933 Act, the 1934 Act or other federal or state law, only
insofar as such losses, claims, damages, costs, expenses or liabilities or
actions in respect thereto arise out of or are based upon any Violation, in each
case to the extent and only to the extent that such Violation occurs in reliance
upon and in conformity with written information furnished by the Shareholder
expressly for use in connection with such registration. The Shareholder will
indemnify any legal or other expenses reasonably incurred by the Company or any
such director, officer, employee, agent representative, controlling person,
underwriter or other securities holder, or officer, director or of any
controlling person thereof, in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, costs, expenses, liability
or action if such settlement is effected without the prior written consent of
the Shareholder, which consent shall not be unreasonably withheld.

            (c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonable fees and expenses
of such counsel to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential conflict of interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve the indemnifying party of its obligations under this Section 7, except
to the extent that the failure results in a failure of actual notice to the
indemnifying party and such indemnifying party is prejudiced in its ability to
defend such action solely as a result of the failure to give such notice.

                                      -6-
<PAGE>

            (d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under this Section 7 in respect of any
losses, claims, damages, costs, expenses, liabilities or actions referred to
herein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, costs, expenses, liabilities or
actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand and of the Shareholder, on the other, in connection
with the Violation that resulted in such losses, claims, damages, costs,
expenses, liabilities or actions. The relative fault of the Company, on the one
hand, and of the Shareholder, on the other, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of the
material fact or the omission to state a material fact relates to information
supplied by the Company or by the Shareholder, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

            (e) The Company, on the one hand, and the Shareholder, on the other,
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by a pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of losses, claims, damages, costs, expenses,
liabilities and actions referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses incurred by such indemnified party in connection with
defending any such action or claim. Notwithstanding the provisions of this
Section 7, neither the Company nor the Shareholder shall be required to
contribute any amount in excess of the amount by which the total price at which
the securities were offered to the public exceeds the amount of any damages
which the Company or the Shareholder has otherwise been required to pay by
reason of such Violation. No person guilty of fraudulent misrepresentations
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.

      8. REPORTS UNDER THE 1934 ACT. So long as the Company has a class of
securities registered pursuant to Section 12 of the 1934 Act, with a view to
making available to the Shareholder the benefits of Rule 144 and any other rule
or regulation of the SEC that may at any time permit the Shareholder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, if applicable, the Company agrees to use its
reasonable efforts to:

            (a) Make and keep public information available, as those terms are
understood and defined in Rule 144, at all times; and

            (b) File with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act.

      9. OTHER MATTERS.

                                      -7-
<PAGE>

            (a) The Shareholder hereby agrees with respect to each offering of
the Registrable Shares, whether the Shareholder is offering such Registrable
Shares in an underwritten or non-underwritten offering, the Shareholder will
comply with Regulation M promulgated by the SEC or such other or additional
anti-manipulation rules then in effect until such offering has been completed,
and in respect of any non-underwritten offering, in writing will inform the
Company, any other securities holder who are selling shareholders, and any
national securities exchange upon which the securities of the Company are
listed, that the Registrable Shares have been sold and will, upon the Company's
request, furnish the distribution list of the Registrable Shares. In addition,
upon the request of the Company, the Shareholder will supply the Company with
such documents and information as the Company may reasonably request with
respect to the subject matter set forth and described in this Section 9.

            (b) The Shareholder hereby agrees that upon receipt of any notice
from the Company of the happening of any event which makes any statement made in
the registration statement, the prospectus or any document incorporated therein
by reference, untrue in any material respect or which requires the making of any
changes in the registration statement, the prospectus or any document
incorporated therein by reference, in order to make the statements therein not
misleading in any material respect, the Shareholder will forthwith discontinue
disposition of Registrable Shares under the prospectus related to the applicable
registration statement until the Shareholder's receipt of the copies of the
supplemented or amended prospectus, or until it is advised in writing by the
Company that the use of the prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
the prospectus.

            (c) The Shareholder agrees, upon the request of the underwriter(s)
in any underwritten offering conducted by the Company, not to effect any public
sale or distribution of securities of the Company of the same class as the
securities or any security convertible into or exchangeable or exercisable for
such security, included in such Registration Statement, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
registration), during the 30-day period prior to, and during the 120-day period
beginning on, the closing date of any such underwritten offering made pursuant
to such registration statement, to the extent timely notified in writing by the
Company or such underwriter(s).

      10. WAIVERS AND MODIFICATIONS. All modifications, consents, amendments or
waivers of any provision of this Agreement shall be effective only if the same
shall be in writing by the Shareholder and then shall be effective only in the
specific instance and for the purpose for which given. No notice or demand given
in any case shall constitute a waiver of the right to take other action in the
same, similar or other instances without such notice or demand. No failure to
exercise, and no delay in exercising, on the part of the Shareholder, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right. The rights of the Shareholder hereunder shall be in addition
to all other rights provided by law.

      11. GOVERNING LAW. This Agreement will be governed by the laws of the
State of Delaware without regard to conflicts of law principles.

                                      -8-
<PAGE>

      12. INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws during the term
of this Agreement, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable
provision shall be added as part of this Agreement a provision mutually
agreeable to the Company and the Shareholder as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable. In the event the Company and the Shareholder are unable
to agree upon a provision to be added to this Agreement within a period of ten
(10) business days after a provision of this Agreement is held to be illegal,
invalid or unenforceable, then a provision acceptable to independent
arbitrators, such to be selected in accordance with the provisions of the
American Arbitration Association, as similar in terms to the illegal, invalid or
unenforceable provision as is possible and be legal, valid and enforceable shall
be added automatically to this Agreement. In either case, the effective date of
the added provision shall be the date upon which the prior provision was held to
be illegal, invalid or unenforceable.

      13. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Shareholder and his representatives, executors, administrators,
estate and heirs and on the Company and its successors and assigns. The
Shareholder may not assign his rights hereunder.

      14. NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits of
this Agreement to inure to any third party, nor shall this Agreement be
construed to make or render the Shareholder liable to any third party.
Notwithstanding anything contained herein, no conduct by any or all of the
parties hereto, before or after signing this Agreement, shall be construed as
creating any right, claim or cause of action against the Shareholder, in favor
of third party other than the Company.

      15. NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be either hand delivered in
person, sent by facsimile, sent by certified or registered first-class mail,
postage pre-paid, or sent by nationally recognized express courier service. Such
notices and other communications shall be effective upon receipt if hand
delivered or sent by facsimile, five days after mailing if sent by mail, and one
day after dispatch if sent by express courier, to the following addresses, or
such other addresses as any party may notify the other parties in accordance
with this Section 6(a):

If to Company:            Phoenix Footwear Group, Inc.
                          5759 Fleet Street, Suite 220
                          Carlsbad, California  92008
                          Attention:  James R. Riedman, Chairman
                          Facsimile No. (760) 602-9684

If to the Shareholder:    W. Whitlow Wyatt
                          2879 Rivermeade Drive

                                      -9-
<PAGE>

                          Atlanta, Georgia 30327
                          Facsimile No.     (404) 885-1938

      16. GOVERNING LAW. This Agreement will be governed by and interpreted
according to the substantive laws of the State of Delaware without regard to
such state's conflicts laws.

      17. 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.

      18. 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.

      19. ENTIRE AGREEMENT. This Agreement constitutes 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.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -10-
<PAGE>

      IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
executed and delivered as of the date and year first above written.

                                      PHOENIX FOOTWEAR GROUP, INC.

                                      By:    /s/ Richard E. White
                                             ---------------------------------
                                      Name:  Richard E. White
                                      Title: CEO

                                      /s/ W. Whitlow Wyatt
                                      ----------------------------------------
                                      W. Whitlow Wyatt

                                      -11-

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