8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) August 12, 2008 (August 6, 2008)

PHOENIX FOOTWEAR GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

001-31309	15-0327010
(Commission File Number)	(IRS Employer Identification No.)
5840 El Camino Real, Suite 106, Carlsbad, California	92008
(Address of Principal Executive Offices)	(Zip Code)

(760) 602-9688

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Section 2 Financial Information

Item 2.02 Results of Operation and Financial Condition

On August 12, 2008, Phoenix Footwear Group, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended June 28, 2008 and financial guidance for the full year ending January 3, 2009. A copy of Phoenix Footwear Group, Inc.’s press release is attached as Exhibit 99.1 to this current report on Form 8-K.

The information furnished pursuant to this Item 2.02 and the exhibit hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

Item 5.02 Departure of Directors or Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On August 6, 2008, the Company and James R. Reidman entered into a new employment agreement to continue to serve as Chairman of the Board and such other positions as the Board of Directors may designate from time to time. The agreement expires August 6, 2010, and thereafter extends annually for additional one year terms unless either party gives the other 30 days notice of its intention not to extend. The agreement provides for an annual base salary of $335,000 and participation in executive bonus plans as may be established. The agreement also provides for confidentiality, non-competition, and employee and customer non-solicitation that extend for 18 months after the termination of his employment.

Mr. Reidman’s employment agreement may be terminated by the Company at any time without cause, effective upon 30 days written notice of termination. Also, Mr. Riedman may terminate the employment agreement for good cause, as defined in the agreement. The Company may terminate Mr. Riedman’s employment agreement for cause, as defined in the agreement.

The employment agreement also provides that if his employment is terminated by the Company without cause or by Mr. Riedman for good reason, then the Company is obligated to pay Mr. Riedman accrued, but unpaid amounts under the agreement together with non-compete 18 monthly payments at his annual salary rate, unless it is in connection with a change—in-control, in which case such amount must be paid in single payment. The agreement also provides for parachute gross-up payment from the Company to Mr. Riedman if any payment due Mr. Riedman under the agreement together with any other payments or benefits which Mr. Riedman is entitled to result in an excess “parachute payment”, as defined in Internal Revenue Code Section 280G.

There is no arrangement or understanding between Mr. Riedman and any other person, pursuant to which either of them is to be selected as an officer of the Company that would require disclosure under Item 401(b) of Regulation S-K. Additionally, except as disclosed in the Company’s proxy statement filed with the Securities & Exchange Commission on April 28, 2008, there is no family relationship between Mr. Riedman and any other person that would require disclosure under Item 401(d) of Regulation S-K and Mr. Riedman is not a party to any transactions that would require disclosure under Item 404(a) of Regulation S-K.

The above is a summary of Mr. Riedman’s employment agreement is qualified in its entirety by the actual terms of the agreement, which is filed as Exhibit 10.1 with this report.

Item 9.01 Finance Statements and Exhibits.

(d) Exhibits.

10.1 Employment Agreement between Phoenix Footwear Group, Inc. and James R. Reidman dated

August 6, 2008.

99.1 Press Release issued August 12, 2008

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PHOENIX FOOTWEAR GROUP, INC.
Date: August 12, 2008	/s/ Scott Sporrer
	Name: Scott Sporrer
	Title: Interim Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
10.1	Employment Agreement between Phoenix Footwear Group, Inc. and James R. Reidman dated August 6, 2008.
99.1	Press Release issued August 12, 2008

EX-10.1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of the 6th day of August, 2008, between Phoenix Footwear Group, Inc. (the “Company”), and James R. Riedman (the “Executive”).

In consideration of the promises and covenants set forth below, the parties hereto agree as follows:

1. Employment. The Company hereby agrees to employ Executive, and Executive hereby agrees to accept such employment with the Company, on the terms and conditions set forth herein.

2. Term. The employment of Executive by the Company as provided in this Agreement commenced on the date hereof, and shall end on August 6, 2010 (“Expiration Date”), unless sooner terminated as provided in Section 5. If not so terminated, then on August 6, 2010, and on the 6th day of August of each year thereafter (each also an “Expiration Date”), the term of Executive’s employment hereunder shall automatically be extended for one additional year.

3. Position and Duties.

(a) Chairman of the Board. Executive shall serve as Chairman of the Board of the Company or such other position or positions as may be agreed upon by Executive and the Company’s Board of Directors.

(b) Duties. Executive shall at all times perform his duties and obligations faithfully and diligently and shall devote all of his business time, attention and efforts exclusively to the business of the Company and its related entities. Executive shall industriously perform his duties under the supervision of and report to the Board of Directors of the Company and shall accept and comply with all directions from and all policies established from time to time by the Board of Directors of the Company. Executive’s areas of emphasis, working closing with the CEO, shall include, without limitation, responsibility for the Company’s: strategic planning, investor relations, banking and financing related relationships, acquisitions and divestures and acting as liaison between the Company’s management and the Board of Directors and such other duties as may from time to time be prescribed by the Board of Directors of the Company. Executive shall promote the trade and business of the Company and its related entities to the best of his ability and shall adhere to the Company’s policies and procedures applicable to the Company’s employees generally.

(c) Other Activities. Executive shall not directly or indirectly render any services of a business, commercial or professional nature to any other person, entity or organization, whether for compensation or otherwise, that would interfere with or impair his timely and proper performance of his duties and responsibilities hereunder. The foregoing shall not preclude Executive from (i) serving on boards of trade associations and/or charitable organizations or (ii) engaging in charitable activities and community affairs, with the prior consent of the Board and provided that such activities and directorships do not interfere with or impair his timely and proper performance of Executive’s duties and responsibilities hereunder.

4. Compensation and Related Matters.

(a) Salary. During the term of Executive’s employment hereunder, the Company shall pay to Executive a salary of $335,000 per annum, subject to increase (but not decrease) in the sole discretion of Board of Directors based on performance and salary reviews of Executive in accordance with Company policy. Such salary shall be paid in equal monthly installments (or such shorter intervals as the Company may elect). Executive’s salary shall be subject to annual review by the Company’s Board of Directors or its Compensation Committee.

(b) Bonus. During the term of Executive’s employment hereunder, Executive shall be eligible for such bonuses as may be determined and approved by the Board of Directors or its Compensation Committee from time to time.

(c) Vacations. During the term of Executive’s employment hereunder, Executive shall be entitled to four weeks (20 days) of vacation each year, earned at the rate of 1.66 vacation days for each month of active service. The maximum amount of vacation that can be earned is 25 days, at which point no additional vacation is earned until the earned amount is below such maximum amount.

(d) Medical Insurance and Other Benefits. During the term of Executive’s employment hereunder, Executive will be entitled to participate in any medical, dental and disability insurance plans, life insurance plans, retirement plans and other employee welfare and benefit plans or programs on the same terms as the Company’s other senior-level executives, as such plans and programs may be in effect from time to time.

(e) Expenses. During the term of Executive’s employment hereunder, Executive shall be entitled to receive reimbursement for all reasonable out-of-pocket travel and other expenses incurred by Executive in performing Executive’s services hereunder, provided that:

(i) Each such expenditure is of a nature qualifying it as a proper business expenditure of the Company and is approved by the Company; and

(ii) Executive furnishes to the Company adequate documentary evidence for the substantiation of such expenditures and Executive otherwise complies with Company policies with respect to expense reimbursement.

5. Termination.

(a) Agreement Terminable at Will. Notwithstanding anything herein to the contrary, this Agreement and Executive’s employment with the Company are terminable at will by the Company for any reason, with or without prior notice or cause, provided, however, that Executive’s entitlement to payments and benefits following such termination will depend on the type of termination and shall be governed by the following provisions of this Section 5. Upon termination for any reason, Executive hereby agrees that his membership on the Board also ends and will sign any document requested by Company to implement such ending.

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(b) Termination for Cause.

(i) The Company may terminate this Agreement and Executive’s employment hereunder for “Cause” pursuant to the provisions of this Section 5(b). Executive shall be given notice by the Board of Directors of the grounds for its intention to terminate Executive for Cause, and the Board shall give Executive an opportunity to address with the Board, the grounds on which the proposed termination for Cause is based. If Cause is cured to the Board’s satisfaction within twenty (20) days of such notice, a termination for Cause will not be implemented. For purposes of this Agreement, the Company shall have “Cause” to terminate Executive’s employment hereunder upon:

(A) Executive’s refusal to comply with lawful written instructions of the Board regarding specific actions Executive must do or not do;

(B) Executive’s engagement in an act of dishonesty or falsification or any transaction involving a material conflict of interest which was not disclosed to and approved by the Company’s Board of Directors; or

(C) Executive’s use of illegal narcotics; or

(D) Executive’s engagement in theft, embezzlement, fraud, misappropriation of funds, or other act involving moral turpitude; or

(E) Executive’s engagement in any violation of law relating to Executive’s employment by the Company.

(ii) If this Agreement is terminated by the Company for Cause pursuant to this Section 5(b), the Company shall have no further obligation or liability to Executive, except that Executive shall be entitled to receive only (A) the portion of Executive’s salary then in effect which has been earned up to the Date of Termination, (B) compensation for any accrued and unused vacation up to the Date of Termination, and (C) reimbursement, pursuant to Section 4(d) for business expenses incurred up to the Date of Termination (collectively, the “Minimum Payments”).

(c) Death.

(i) This Agreement and Executive’s employment hereunder shall terminate automatically upon Executive’s death.

(ii) If this Agreement is terminated because of Executive’s death pursuant to this Section 5(c), the Company shall have no further obligation or liability to Executive, except that Executive shall be entitled to receive only (i) the Minimum Payments, and (ii) any life insurance proceeds Executive is otherwise entitled to under any applicable life insurance in effect on the Date of Termination.

(d) Disability.

(i) If Executive becomes disabled during Executive’s employment hereunder, this Agreement and Executive’s employment hereunder shall terminate. As used herein,

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“disability” shall mean any condition that qualifies as a disability under the Company’s long-term disability plan as in effect on the date of determination and which renders Executive incapable of performing his responsibilities hereunder for one hundred twenty (120) days or more in the aggregate during any 12-month period, and which at any time after such ninety (90) days the Company’s Board of Directors shall determine continues to render Executive incapable of performing such responsibilities.

(ii) If this Agreement is terminated because of Executive’s disability pursuant to this Section 5(d), the Company shall have no further obligation or liability to Executive, except that Executive shall be entitled to receive only (i) the Minimum Payments, and (ii) any benefits to which Executive is entitled under the Company’s long-term disability plan as in effect on the Date of Termination.

(e) Termination Other Than for Cause, Death or Disability.

(i) The Company shall, for any reason, be entitled to terminate this Agreement and Executive’s employment hereunder at any time without Cause and other than on account of Executive’s death or disability.

(ii) If this Agreement is terminated by the Company pursuant to this Section 5(e) or by Executive pursuant to Section 5(f) below, the Company shall have no further obligation or liability to Executive, except that Executive shall be entitled to receive only (i) the Minimum Payments, and (ii) the Non-Compete Payments (as defined in Section 7(d) below). Executive shall only be entitled to receive such payments from the Company upon execution and delivery to Company of a general release in a form acceptable the Company.

(f) Resignation for Good Reason.

(i) Executive shall be entitled to terminate this Agreement and Executive’s employment hereunder at any time for Good Reason pursuant to the provisions of this Section 5(f). For purposes of this Agreement, Executive shall have “Good Reason” to terminate Executive’s employment hereunder if without Executive’s express consent, the Company reduces Executive’s duties and responsibilities such that it results in a material adverse reduction in Executive’s position, authority or responsibilities, and the Company fails to cure such reduction in duties and responsibilities within twenty (20) days after its receipt of written notice from Executive specifying the particular acts objected to and the specific cure requested by Executive.

(ii) If this Agreement is terminated by Executive for Good Reason pursuant to this Section 5(f), the Company shall have no further obligation or liability to Executive, except that Executive shall be entitled to receive the same payments set forth in Section 5(e)(ii) above for a termination without Cause. Executive shall only be entitled to receive such payments from the Company upon execution and delivery to Company of a general release in a form acceptable the Company.

(g) Resignation without Good Reason.

(i) Executive shall be entitled to terminate this Agreement and Executive’s employment hereunder without Good Reason at any time on thirty (30) days prior written notice delivered by Executive to the Company.

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(ii) If this Agreement is terminated by Executive pursuant to this Section 5(g), the Company shall have no further obligation or liability to Executive, except that Executive shall be entitled to receive only the Minimum Payments.

(h) Termination of Employment Following a Change of Control.

(i) If a “Change of Control of the Company” occurs and either (A) Executive terminates his employment for Good Reason or (B) the Company or purchaser terminates Executive’s employment other than for Cause, death or disability, then the Company shall pay to Executive in a single lump-sum payment an amount equal to the sum of: (1) the Minimum Payments, (2) eighteen (18) months of salary then in effect for Executive and a pro rated amount of any bonus payment provided for in any bonus program in which the Executive is then participating to the extent and on the terms and conditions approved by the Board of Directors or the Compensation Committee; and (3) the Non-Compete Payments. Executive shall not be entitled to receive any such payment from the Company unless and until a general release is signed by the Executive in a form acceptable the Company.

(ii) For purposes of this Agreement, a “Change of Control of the Company” shall be deemed to have occurred if:

(A) the shareholders of the Company approve a definitive agreement to sell, transfer, or otherwise dispose of all or substantially all of the Company’s assets and properties; or

(B) any “person” (as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934) (other than Riedman Corporation or any affiliate of Riedman Corporation (including Executive or any entity controlled by him) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities; provided, however, that the following shall not constitute a “Change in Control” of the Company:

(1) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities); or

(2) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or

(C) the shareholders of the Company approve the dissolution or liquidation of the Company; or

(D) the shareholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another entity or entities, the result of which merger or consolidation is that less than 50% of the outstanding voting securities of the surviving or resulting entity are, or are to be, owned by holders of the Company’s common stock immediately prior to the merger.

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(i) Notice of Termination. Any termination of Executive’s employment by the Company or by Executive (other than termination pursuant to Section 5(c) above) shall be communicated by a written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” means a notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth the circumstances which provide a basis for termination of Executive’s employment under the provisions so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement in accordance with the terms of this Agreement.

(j) Notice Not to Extend. A written notice by either party given to the other at least 30 days prior to any Expiration Date not to extend this Agreement effectuates termination on the next Expiration Date. In the event of such termination, Executive shall be entitled to receive a severance payment of six (6) months salary in exchange for the general release referred to in Section 5(e)(ii).

6. Parachute Gross-Up Payment

(a) Excise Tax. If, however, all, or any portion, of the payments and benefits described in this Agreement, either alone or together with other payments and benefits which Executive receives or is entitled to receive from the Company, would constitute an excess “parachute payment” within the meaning of Section 280G of the Code, (whether or not under an existing plan, arrangement, or other agreement) (each such amount, an “Excess Parachute Payment”), and would result in the imposition on Executive of an excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, (the “Code”), then, in addition to any other benefits to which Executive is entitled under this Agreement or otherwise from the Company, the Company (or its successor) shall pay to Executive an amount in cash equal to the sum of the excise taxes payable by Executive by reason of receiving Excess Parachute Payments plus the amount necessary to place Executive in the same after-tax position (taking into account any and all applicable federal, state and local excise, income or other taxes at the highest possible applicable rates on such Excess Parachute Payments including, without limitation, any payments under this Section 6) as if no excise taxes had been imposed with respect to Excess Parachute Payments (the “Parachute Gross-up”). Any Parachute Gross-up otherwise required by this Section 6 shall not be made later than the time of the corresponding payment or benefit hereunder giving rise to the underlying Section 4999 excise tax, even if the payment of the excise tax is not required under the Code until a later time.

(b) Tax Calculation. Subject to the provisions of the following Section 6(c) and except as may otherwise be agreed to by the Company and Executive, the amount or amounts (if any) payable under Section 6(a) shall be as conclusively determined by the Company’s independent public accountants (the “Accountants”), whose determination or determinations shall be final and binding on all parties. Executive hereby agrees to utilize such determination or determinations, as applicable, in filing all tax returns with respect to the excise tax imposed by Section 4999 of the Code, if any. If the Accounts fail or refuse to make the required determinations for any reason, then such determinations shall be made by a comparable firm or group of national or regional reputation selected by the Compensation Committee of the Board of Directors of the Company. All fees and expenses of the Accountant or its replacement shall be paid by the Company.

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(c) Underpayment. As a result of the uncertainty in the application of Section 4999 of the Code at the time of any initial determination by the Accountant hereunder, it is possible that Parachute Gross-up payments, if any, which will not have been made by the Company, should have been made, together with any interest, penalties or taxes of any kind thereon, consistent with the calculations required to be made hereunder (an “Underpayment”). The Company shall pay all such Underpayment to or for Executive’s benefit. Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Parachute Gross-up Payment within ten (10) business days after Executive is informed in writing of such claim. The Company shall notify Executive within ten (10) business days of receipt of the notice that the Company (i) will pay the Underpayment and do so on or before the date due, or (ii) that it desires to contest such claim. Executive will cooperate with the Company in any such contest; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold harmless Executive, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Parachute Gross-up Payment would be payable hereunder and Executive shall be entitled, at his expense, to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

7. Proprietary Information.

(a) Definition. Executive hereby acknowledges that Executive will learn and may make use of, acquire, create, develop or add to certain confidential and/or proprietary information regarding the Company and its business (whether in existence prior to, as of or after the date hereof, collectively, “Proprietary Information”), which Proprietary Information shall include, without limitation, all of the following materials and information (whether or not reduced to writing and whether or not patentable or protected by copyright): trade secrets, ideas or designs for product styles or concepts for footwear, apparel or accessories, inventions, processes, formulae, programs, technical data, “know-how,” procedures, manuals, confidential reports and communications, marketing methods, product sales or cost information, new product ideas or improvements, new packaging ideas or improvements, research and development programs, identities or lists of suppliers, vendors or customers, financial information and financial projections of the Company, or any other confidential or proprietary information relating to the Company and/or its business. The term “Proprietary Information” does not include any information that (i) at the time of disclosure is generally available to and known by the Executive and/or public (other than as a result of its disclosure by Executive), (ii) was available to Executive prior to disclosure by the Company, provided that the person who was the source of such information was not known by Executive to be subject to an obligation of confidentiality to the Company, or (iii) becomes available to Executive on a non-confidential basis from a person other than the Company or its representatives, provided that the source of such information was not known by Executive to be subject to an obligation of confidentiality to the Company.

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(b) Nondisclosure and No Misappropriation. During the term of this Agreement and thereafter, Executive will not, without the prior express written consent of the Board of Directors, disclose or make any use of any Proprietary Information except for the benefit of the Company and as may be required in the course of the performance of Executive’s services under this Agreement.

(c) Agreement Not to Solicit Employees and Customers. To protect the Proprietary Information and trade secrets of the Company, Executive agrees, during the term of this Agreement and for a period of eighteen (18) months after termination of this Agreement, not to, directly or indirectly, either on Executive’s own behalf or on behalf of any other person or entity, solicit or employ any person who is an employee of the Company or any Company subsidiary to resign and/or accept employment elsewhere, or to use such information to attempt to persuade any customer of the Company or any Company subsidiary to cease to do business or to reduce the amount of business which any customer of the Company or any Company subsidiary has customarily done or contemplates doing with the Company or the subsidiary. Executive agrees that the covenants contained in this paragraph are reasonable and desirable.

(d) Agreement Not To Compete. During the term of Executive’s employment by the Company, Executive will not, directly or indirectly, whether as an officer, director, stockholder, partner, employee, representative or otherwise, become, or be associated in business with, any person, corporation, firm, partnership or other entity which engages in any business or activity which is a competitor of the Company. In consideration for the undertakings in, upon the termination of Executive’s employment with the Company for any reason, unless Executive is terminated for death, Disability or Cause, the Company shall for the first (18) months thereafter pay the Executive an amount equal to his salary and benefits then in effect; provided, however, in the event that the termination occurs in connection with a Change of Control and Executive is entitled to receive payment under Section 5(h)(i), then the amount payable under this Section 5(d) shall be paid in a single lump-sum payment concurrently with the termination of his employment (the “Non-Compete Payment”).

(e) Protection of Property. All records, files, manuals, documents, specifications, lists of customers, forms, materials, supplies, computer programs and other materials furnished to the Executive by the Company, used on its behalf or generated or obtained during the course of the performance of the Executive’s services hereunder, shall be the property of the Company. Upon termination of Executive’s employment with the Company for any reason, Executive shall immediately deliver to the Company, or its authorized representative, all such property, including all copies, remaining in Executive’s possession or control.

(f) Specific Performance. In the event of the breach by either party of any of the provisions of this Agreement, the non-breaching party may apply to the court of law or equity of competent jurisdiction as provided in Section 8(e) below for specific performance and/or injunctive relief in order to enforce or prevent further violations of the provisions hereof.

8. General Provisions.

(a) Successors. This Agreement is personal to the Executive and is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

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(b) Notice. For purposes of this Agreement, notices, demands and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered to the following address or mailed by United States registered mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:	Executive’s address as on file with the Company
If to Company:	Phoenix Footwear Group, Inc.
	5840 El Camino Real
	Suite #106
	Carlsbad, CA 92008
	Attention: Steven DePerrior, Chairman of Compensation
	Committee of the Board of Directors

or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt thereof.

(c) Entire Agreement. This Agreement, together with the documents referenced herein, contains the entire agreement of the parties hereto with respect to the subject matter hereof. It supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Employee by the Company. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, written, oral or otherwise, have been made by any party, or anyone acting on behalf of any parties, which are not embodied herein, and that any agreement, statement or promise not contained in this Agreement shall not be valid or enforceable.

(d) Amendment; Waiver; Governing Law. No provisions of this Agreement may be waived or modified unless such waiver or modification is agreed to in a writing signed by Executive and by such officer of the Company as may be specifically designated by the Company’s Board of Directors. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware.

(e) Submission to Jurisdiction. Each of the parties submits to the jurisdiction of any state or federal court located 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 further 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.

(f) Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

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(g) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.

(h) Withholding of Taxes; Tax Reporting. The Company may withhold from any amounts payable under this Agreement all such Federal, state, city and other taxes, and may file with appropriate governmental authorities all such information, returns or other reports with respect to the tax consequences of any amounts payable under this Agreement, as may, in its reasonable judgment, be required by law.

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

PHOENIX FOOTWEAR GROUP, INC.	EXECUTIVE
By:       /s/ Steven DePerrior	/s/ James R. Riedman
Name: Steven DePerrior	James R. Riedman
Title: Chairman of Compensation Committee of the Board of Directors

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EX-99.1

Exhibit 99.1

Phoenix Footwear Group, Inc.

________________________________________________________________________

PHOENIX FOOTWEAR GROUP ANNOUNCES SECOND

QUARTER 2008 FINANCIAL RESULTS

• Tommy Bahama sales grow 12% to $2.5 million

• Gross margin increases 40 basis points to 34.1% year-over-year

• New $17 million revolving credit facility with Wells Fargo Bank

• Debt, net of cash, down to $7.0 million from $20.3 million as of December 29, 2007 and $50.1 million a year ago

• Inventories decrease $2.6 million year-over-year

• Continued progress in all key areas of strategic plan

• Russell Hall appointed as President of Chambers Belt Company

Carlsbad, California, August 12, 2008 — Phoenix Footwear Group, Inc. (AMEX: PXG), a multi-brand footwear and accessories company, announced today consolidated results for the second quarter and six months ended June 28, 2008.

Jim Riedman, Phoenix Footwear’s Chairman, commented, “In spite of the very challenging economic headwinds our company faced, we were able to expand gross margins and achieved flat operating loss compared to a year ago. The substantial progress we have made is underscored by our new revolving credit facility with Wells Fargo Bank. We ended the quarter with an improved balance sheet, as reflected by much lower debt and inventory levels. We have significantly strengthened our portfolio of brands, attracted an experienced management team, renewed our focus on managing costs and solidified our capital structure. These steps position us well for further financial and operational improvement. While we are very encouraged by our accomplishments over the past twelve months, our board and management team are intensely committed to translating these into improved equity value for our shareholders.”

Second Quarter 2008 Results

• Net sales from continuing operations decreased 10% to $17.9 million, compared to $19.8 million for the second quarter of fiscal 2007. The Company’s footwear brands were down 4% for the quarter while the Company’s accessories business declined 14%, reflecting the challenging retail environment, particularly within the mass channel.

• Gross margin expanded 40 basis points to 34.1%, compared to 33.7% for the second quarter of 2007. The increase was due to improved margins on sales to mass merchant customers by the Company’s accessories segment, which was offset by sales incentives and allowances in the footwear and premium footwear segments, as well as additional royalty fees associated with the Tommy Bahama Footwear brand.

• Operating expenses decreased 8% to $7.5 million, or 42% of net sales, compared to $8.1 million, or 41% of net sales, for the second quarter of fiscal 2007. The decrease in operating expenses is primarily attributable to expense reimbursements received under the Transition Services Agreement entered into concurrently with the Company’s divestiture of Altama Delta Corporation.

• Operating loss was flat at $1.4 million.

• Net loss from continuing operations was $2.2 million, or $0.27 per share, on 8.2 million weighted-average shares outstanding, compared to net loss of $1.0 million, or $0.13 per share, from continuing operations a year ago. The 2008 net loss included the non-cash write-off of $622,000 in debt issuance costs previously capitalized under the Company’s previous credit facility, which was replaced during the second quarter of fiscal 2008.

“Our second quarter results were negatively impacted by the challenging economic environment and extraordinary softness at retail. In spite of this hurdle Tommy Bahama maintained strong double digit growth and we were pleased with the sell through rates of products within our other brands. As our retail partners focused on inventory reduction however, reorders came in well below our expectations, resulting in lower sales overall,” commented Cathy Taylor, Phoenix Footwear’s Chief Executive Officer. “To best manage our business through this more uncertain environment, we continued to carefully review each of our brands with a particular focus on product quality, customer deliveries and achieving our primary goal of profitable growth. The positive response to our new product initiatives we received at the recent WSA show from our customers validates our ongoing investments in our brands and our ability to quickly react to changing demands in the market place. We believe we have the right foundation in place and are very excited to see momentum building across all of our divisions, and believe we will return to profitability and positive organic growth during the second half of 2008.”

Recent Operating Highlights by Brand

• Tommy Bahama – Further door and product expansion is anticipated within Nordstrom, Macy’s and Lord & Taylor. Additionally, the line has been further expanded to capture key product and price categories. In the wake of WSA and our current open orders, we expect Tommy Bahama to return to a more robust growth rate during the fourth quarter.

• H.S. Trask – The Company has re-entered the market for late Fall 2008 with a more sophisticated look that speaks and returns to the core H.S. Trask customer. This re-launch of the brand has been well received thus far. The Company is currently focusing on opening new doors for the product and expects to begin shipping the new series in the fall of this year.

• Trotters – The Company continued to evolve its Trotters brand by improved innovation in its designs, expanding categories and positioning product at new key price points in an effort to speak to a broader consumer base. Since WSA, Trotters has enjoyed a growing order book and the Company expects Trotters to post improved results during the second half of the year.

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• SoftWalk – Similarly the Company has focused on improved styling within its SoftWalk line. The Company is currently experiencing an expanding order book with this brand and expects it to deliver growth for both the second half and year.

• Chambers – Appointed Russell Hall as President of the division and continued to expand its presence at Wal-Mart. The business is presently pursuing additional license opportunities in an effort to further expand its distribution. Additionally, a number of process improvements have begun to yield improved margins within this business even with the current softness. We expect these initiatives will produce further improvements over the remainder of the year.

First Six Months of 2008 Results

• Net sales from continuing operations decreased 3% to $39.9 million, compared to $41.1 million for the first six months of fiscal 2007. The net sales decrease was a result of growth in the Company’s footwear brands of 4% offset by a 9% decrease in its accessories business.

• Gross margin was 35.1%, compared to 36.5% for first six months of 2007. The decrease in gross margin was primarily attributable to an increase in sales incentives and allowances during the first quarter of 2008.

• Operating expenses decreased 11% to $15.3 million, or 38% of net sales, compared to $17.2 million, or 42% of net sales, for the first six months of fiscal 2007. The decrease was attributable to headcount reductions and decreased spending on brand expenses, as well as expense reimbursements received under the Transition Services Agreement entered into concurrently with the Company’s divestiture of Altama Delta Corporation.

• Operating loss narrowed to $1.3 million, compared to $2.2 million a year ago.

• Net loss from continuing operations was $2.5 million, or $0.31 per share, on 8.1 million weighted-average shares outstanding. This compares to net loss of $2.0 million, or $0.25 per share, from continuing operations for the first six months of fiscal 2007. The 2008 net loss included the write-off of $622,000 in debt issuance costs previously capitalized under the Company’s old credit facility, which was replaced during the second quarter of fiscal 2008.

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Balance Sheet and Liquidity

As of June 28, 2008, tangible net worth totaled $17.7 million, or $2.17 per share. The Company’s bank debt, net of cash, totaled $7.0 million. As of June 28, 2008, the Company had $16.2 million in working capital, an increase of $24.7 million from one year ago.

During the second quarter, the Company entered into a new $17 million revolving credit facility with Wells Fargo Bank. The facility replaces the Company’s previous facility with Manufacturers and Traders Trust Company which has been retired. The new facility is expandable to $20 million with the consent of the lender. The new credit facility provides for interest at prime minus 0.25% or, LIBOR plus 2.4%.

Financial Guidance

Ms. Taylor concluded, “In light of the unusual softness at retail this summer we are behind our original projections and do not anticipate that we will be able to close the gap sufficiently to meet our previously issued guidance of sales and operating income. Nonetheless, we expect to achieve sales growth of approximately 5-10% for fiscal 2008, to return to profitability during the fourth quarter and to be approximately break-even for the whole year on an operating basis.”

The preceding statements regarding Phoenix Footwear’s expected financial performance and condition are based on current information and expectations, and actual results may differ materially. Phoenix Footwear can give no assurances that such expectations will prove correct. These statements do not include the potential impact of any future mergers, acquisitions or other business combinations or divestitures that may be completed. Phoenix Footwear makes these statements as of today and undertakes no obligation to update this information based on actual results during the period or changes in assumptions or estimates or other changes in the period. While it is currently expected that this guidance will not be updated prior to the release of Phoenix Footwear’s fiscal 2008 earnings announcement, Phoenix Footwear reserves the right to update its financial guidance for any reason during the year, including the occurrence of material events.

Second Quarter 2008 Conference Call

Phoenix Footwear will host a conference call to discuss the first quarter results today at 4:30 p.m. Eastern Time. To participate in the conference call, investors should dial 800-762-8795 ten minutes prior to the scheduled start time. International callers should dial 480-629-9031. If you are unable to participate in the live call, a replay will be available beginning Tuesday, August 12, at 7:30 p.m. Eastern Time, through Tuesday, August 19, at midnight Eastern Time. To access the replay, dial 800-406-7325 (passcode: 3908629). International callers should dial 303-590-3030 and use the same passcode. The call will also be broadcast live over the Internet and can be accessed on the Investor section of Phoenix Footwear’s website at www.phoenixfootwear.com. For those unable to participate during the live broadcast, the webcast will be archived.

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About Phoenix Footwear Group, Inc.

Phoenix Footwear Group, Inc., headquartered in Carlsbad, California, designs, develops and markets a diversified selection of men’s and women’s dress and casual footwear, belts, and other accessories. Phoenix Footwear’s brands and licenses include Tommy Bahama Footwear and Accessories^®, Trotters^®, SoftWalk^®, H.S. Trask^®, Chambers Belts^® and Wrangler. Emphasizing quality, fit and traditional and authentic designs, these brands are primarily sold through department stores, specialty retailers, mass merchants and catalogs. Phoenix Footwear Group, Inc. is traded on the American Stock Exchange under the symbol PXG.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements regarding future growth and performance of individual brands, Phoenix Footwear’s expected financial performance and condition for fiscal 2008 and beyond and/or statements preceded by, followed by or that include the words “believes,” “could,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “seeks,” “exploring, “ or similar expressions. Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Many of these risks and uncertainties are discussed in Phoenix Footwear’s Annual Report on Form 10-K for the fiscal year ended December 29, 2007 filed with the Securities and Exchange Commission (the “SEC”), and in any subsequent reports filed with the SEC, all of which are available at the SEC’s website at http://www.sec.gov. These include without limitation: Phoenix Footwear’s ability to comply with the financial covenants under its new revolving credit facility; risk associated with claims arising from past divestitures, including indemnification claims; risks associated with future acquisitions, including potential dilution and integration issues; the concentration of Phoenix Footwear’s sales to a relatively small group of customers; changing consumer preferences and fashion trends; Phoenix’s ability to execute on its growth strategies; competition from other companies in Phoenix Footwear’s markets; the potential financial instability of Phoenix Footwear’s customers and the risk of loss of future and pending orders; Phoenix Footwear’s ability to protect its intellectual property rights; the risk of losing third party trademark licenses; Phoenix Footwear’s ability to manage inventory levels; fluctuations in its financial results as a result of the seasonality in its business; the risks of doing business in international markets; Phoenix Footwear’s reliance on independent manufacturers; disruptions in Phoenix Footwear’s manufacturing system; the loss of one or more senior executives; fluctuations in the price, availability and quality of raw materials; a decline in general economic conditions; and, the possibility of impairment charges resulting from future adjustments to the value of goodwill recorded in connection with past or future acquisitions. Although Phoenix Footwear believes that the assumptions underlying the forward- looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward- looking statements included herein, the inclusion of such information should not be regarded as a representation by Phoenix

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Footwear or any other person that the objectives and plans of Phoenix Footwear will be achieved. All forward-looking statements included in this press release are based on Phoenix Footwear’s current expectations and projections about future events, based on information available at the time of the release, and Phoenix Footwear assumes no obligation to update any forward-looking statements.

Contacts:

Scott Sporrer Interim Chief Financial Officer Phoenix Footwear Group, Inc. (760) 602-9688 Andrew Greenebaum / Lena Adams ICR, Inc. (310) 954-1100 agreenebaum@icrinc.com or ladams@icrinc.com

# # #

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Phoenix Footwear Group, Inc.

Consolidated Condensed Statement of Operations

(In thousands)

	For the Three Months Ended										For the Six Months Ended
	(Unaudited)										(Unaudited)
	June 28 2008					June 30 2007					June 28 2008					June 30 2007
Net sales	$	17,924		100.0	%	$	19,815		100.0	%	$	39,922		100.0	%	$	41,143		100.0	%
Cost of goods sold		11,811		65.9	%		13,146		66.3	%		25,918		64.9	%		26,140		63.5	%
Gross profit		6,113		34.1	%		6,669		33.7	%		14,004		35.1	%		15,003		36.5	%
Operating expenses:
Selling and administrative expenses		8,027		44.8	%		7,723		39.0	%		16,372		41.0	%		16,469		40.0	%
Non cash 401k stock grant compensation		43		0.2	%		133		0.7	%		86		0.2	%		267		0.6	%
Amortization		153		0.9	%		225		1.1	%		305		0.8	%		449		1.1	%
Other (income) expense, net		(750	)	—	%		—		—	%		(1,500	)	—	%		2		—	%
Total operating expenses		7,473		41.7	%		8,081		40.8	%		15,263		38.2	%		17,187		41.8	%
Operating Loss		(1,360	)	-7.6	%		(1,412	)	-7.1	%		(1,259	)	-3.2	%		(2,184	)	-5.3	%
Interest expense, net		859					319					1,223					666
Loss before income taxes and discontinued operations		(2,219	)	-12.4	%		(1,731	)	-8.7	%		(2,482	)	-6.2	%		(2,850	)	-6.9	%
Income tax provision (benefit)		21					(685	)				38					(824	)
Loss before discontinued operations		(2,240	)	-12.5	%		(1,046	)	-5.3	%		(2,520	)	-6.3	%		(2,026	)	-4.9	%
Earnings from discontinued operations, net of tax		81		0.5	%		117		0.6	%		81		0.2	%		1,511		3.7	%
Net Loss	$	(2,159	)	-12.0	%	$	(929	)	-4.7	%	$	(2,439	)	-6.1	%	$	(515	)	-1.3	%
Loss per common share:
Basic
Continuing operations	$	(0.27	)			$	(0.13	)			$	(0.31	)			$	(0.25	)
Discontinued operations		0.01					0.01					0.01					0.19
Net loss	$	(0.26	)			$	(0.12	)			$	(0.30	)			$	(0.06	)
Diluted
Continuing operations	$	(0.27	)			$	(0.13	)			$	(0.31	)			$	(0.25	)
Discontinued operations		0.01					0.01					0.01					0.19
Net loss	$	(0.26	)			$	(0.12	)			$	(0.30	)			$	(0.06	)
Weighted-average shares outstanding:
Basic		8,166,191					8,044,871					8,120,863					8,016,207
Diluted		8,166,191					8,044,871					8,120,863					8,016,207

Phoenix Footwear Group, Inc.

Consolidated Condensed Balance Sheets

(In thousands)

	As of June 28, 2008		As of December 29, 2007		As of June 30, 2007
	(Unaudited)				(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,085	$	2,355	$	963
Restricted cash		3,000		—		—
Accounts receivable, net		13,888		14,323		14,643
Inventories, net		17,679		19,874		20,233
Notes receivable		—		13,303		—
Other current assets		1,619		1,661		2,909
Income taxes receivable		542		2,657		2,865
Deferred income tax asset		—		—		1,591
Current assets of discontinued operations		—		—		15,358
Total current assets		37,813		54,173		58,562
Property, plant & equipment, net		2,258		1,996		2,153
Goodwill & unamortizable intangibles		6,190		6,190		11,064
Intangible assets, net		4,963		5,268		6,885
Other assets		113		50		50
Deferred income tax asset		—		—		540
Long term assets of discontinued operations		—		—		25,856
	$	51,337	$	67,677	$	105,110
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable - Line of Credit	$	11,071	$	22,666	$	51,166
Accounts payable		6,372		7,032		5,989
Accrued expenses		3,090		3,833		4,061
Other liabilities		1,090		1,467		1,066
Income taxes payable		10		444		215
Current liabilities of discontinued operations		—		—		4,607
Total current liabilities		21,633		35,442		67,104
Other long term liabilities		835		1,127		1,381
Deferred income tax liability		21		21		—
Long term liabilities of discontinued operations		—		—		4,699
Total liabilities		22,489		36,590		73,184
Stockholders’ equity		28,848		31,087		31,926
	$	51,337	$	67,677	$	105,110