8-K/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) July 9, 2009

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))

EXPLANATORY NOTE

Phoenix Footwear Group, Inc. (“Phoenix Footwear”), filed a Current Report on Form 8-K dated April 29, 2009 (the “April 2009 Form 8-K”) in which Phoenix Footwear furnished information under Item 2.05 “Costs Associated with Exit or Disposal Activities” with respect to the execution of an Asset Purchase Agreement dated April 23, 2009 (the “Original Purchase Agreement”) between Phoenix Footwear’s wholly-owned subsidiary, Chambers Belt Company (“Chambers”) and Tandy Brands Accessories, Inc. (“Tandy”). The Original Purchase Agreement provided for Tandy’s purchase of Chambers private label business through an asset sale and the subsequent planned shut-down of Chambers upon the completion of the Wrangler Apparel, Inc. (“Wrangler”) licenses referred to below. Phoenix Footwear is now filing an amendment to the April 2009 Form 8-K in order to update and provide further detail on the restructuring plans under Item 2.05. Accordingly, the information in Item 2.05 below amends and restates in its entirety Item 2.05 of the April 2009 Form 8-K.

INFORMATION TO BE INCLUDED IN THE REPORT

Section 1-Registrant’s Business and Operations

Item 1.01 Entry Into a Material Definitive Agreement.

Amended and Restated Asset Purchase Agreement

On July 9, 2009, Chambers and Tandy entered into an Amended and Restated Asset Purchase Agreement (the “Amended Purchase Agreement”) which amended and restated the Original Purchase Agreement. The Amended Purchase Agreement provided for the additional sale of Chambers’ Wrangler brand business together with the private label business. Chambers conducted the Wrangler business under a License Agreement dated January 1, 2007 between Chambers and Wrangler pursuant to which Chambers had the right to sell Wrangler branded products to the mass market (the “Mass License”) and a License Agreement dated January 1, 2008 between Chambers and Wrangler pursuant to which Chambers had the right to sell to the western store market (the “Western License”).

On July 9, 2009, the transactions contemplated by the Amended Purchase Agreement were closed and in accordance therewith Chambers sold to Tandy substantially all of its assets (excluding, among other assets, accounts receivable, cash and cash equivalents). Also Tandy assumed all of Chambers obligations arising after the closing under vendor and customer purchase orders, Chambers’ Maquiladora Agreement and certain leases.

Pursuant to the Amended Purchase Agreement, in partial payment of the purchase price, Tandy paid to Chambers at the closing approximately $3.5 million in immediately available funds, including approximately $2.6 million for inventory. During the first 30 days after closing, Tandy has the right to audit the cost component of the inventory payment. As additional purchase price consideration, during the first 12 months after the closing Tandy is obligated to pay Chambers on a monthly basis 21.5% of the net revenue that Tandy recognizes from sales during this period of Chambers former products. These generally include private label products previously sold by Chambers, Chambers trademark branded products and Wrangler branded products to the mass merchandise market and the western market. Tandy is obligated to pay Chambers minimum earn-out payments that in the aggregate are not less than $2.0 million.

Concurrently with the closing of the Chambers asset sale, Chambers, Tandy and Wrangler entered into an Amendment, Assignment and Assumption of License Agreement pursuant to which Chambers assigned to Tandy all of its rights and Tandy assumed all of Chambers remaining obligations (other than the remaining quarterly royalty obligations due Wrangler which continues to be Chambers’ responsibility except in the case of a default on the license by Tandy) under the Mass License (which was amended to extend through and including June 30, 2010). Also, the same parties entered into an Amendment, Assignment and Assumption of License Agreement pursuant to which Chambers assigned to Tandy all of its rights and Tandy assumed all of Chambers remaining obligations under the Western License

The Amended Purchase Agreement contains limited representations and warranties, covenants and indemnification. At the closing, Phoenix Footwear executed and delivered its Guaranty dated July 9, 2008 guaranteeing Chambers post-closing obligations under the Amended Purchase Agreement.

Forbearance Agreement and First Amendment to Credit and Security Agreement

Effective July 9, 2009, Phoenix Footwear and its subsidiaries together with Wells Fargo National Bank Association (“Wells Fargo”), entered into an Amendment and Forbearance Agreement (the “Amendment”). The Amendment amends and modifies certain terms of the Credit and Security Agreement dated June 10, 2008 (the “Credit Agreement”) among Phoenix Footwear and its subsidiaries and Wells Fargo. In connection with the Amendment, Wells Fargo provided its consent to the Chambers asset sale and released its security interest and lien on the transferred Chambers’ assets.

Under the terms of the Amendment, the following changes were made to the Credit Agreement:

• the maximum availability under the line of credit was reduced to $6.5 million (subject to a borrowing base limit),

• the borrowing base was revised to reflect the Chambers asset sale and certain other requirements,

• the interest rate applicable to outstanding advances was changed to a daily three month LIBOR rate plus 5.50%,

• a new affirmative covenant was added that requires Phoenix Footwear to provide Wells Fargo with certain budgets and projections on a weekly basis and to participate in weekly teleconference calls,

• new financial covenants were added that require weekly minimum net sales and net cash flow,

• additional collateral was required in the form of a mortgage for the real property owed by Phoenix Footwear’s wholly-owned subsidiary, Penobscot Shoe Company, which is located in Penobscot, Maine, and

• there was eliminated a $340,000 exit fee that was payable if the Credit Agreement is repaid in full and the line of credit terminated under certain circumstances.

Under the Amendment, Wells Fargo agreed, during a forbearance period, to refrain from exercising any rights and remedies which it is or may become entitled to as a result of the existing past financial covenant defaults (the “Specified Events of Default”). Also, the Amendment provides for Wells Fargo to continue making advances under the line of credit, subject to the conditions of the Credit Agreement excluding, however, the Specified Events of Default. The forbearance period began on July 9, 2009 and ends on July 31, 2009, subject to earlier termination at the election of Wells Fargo in the event of an occurrence of any event of default under the Credit Agreement other than the Specified Events of Default, and subject to automatic termination in the event of the occurrence of certain insolvency proceedings involving Phoenix Footwear or its subsidiaries.

The Amendment provides that the continuing forbearance by Wells Fargo is conditioned upon Phoenix Footwear’s continuing engagement of a financial turnaround consulting firm (which has occurred) to provide specified financial consulting services and the repayment in full of all indebtedness owed to Wells Fargo before July 31, 2009. The Amendment requires Phoenix Footwear to pay a $340,000 forbearance fee, including $170,000 concurrent with the closing of the Chambers asset sale and $170,000 on the termination of the forbearance period.

The proceeds from the Chambers asset sale were used to pay down the outstanding indebtedness owed by Phoenix Footwear and its subsidiaries under the Credit Agreement. Following this application of proceeds, Phoenix Footwear had $4.5 million outstanding under the Credit Agreement with remaining availability of $2.0 million. Chambers plans to collect its accounts receivable and the earn-out payments owed by Tandy to repay this indebtedness. In addition, Phoenix Footwear is in active discussions with several replacement lenders and has received proposals to refinance its Wells Fargo indebtedness. There can be no assurance that such refinancing will be obtained or that it will be on favorable terms and conditions.

Prior to July 31, 2009, Phoenix Footwear plans to seek an extension of the forbearance period so that it may complete a refinancing of its remaining indebtedness and repay Wells Fargo in full. Based on the remaining collateral and Phoenix Footwear’s restructured operations, Phoenix Footwear expects such a request to be granted. However, there is no assurance that it will be granted or the terms and conditions thereof. If such a request is not granted, Wells Fargo may accelerate Phoenix Footwear’s indebtedness and/or foreclose on its assets.

The description of the agreements above is qualified in its entirety by reference to the full text of the applicable agreements, copies of which are attached as exhibits hereto

Section 2-Financial Information

Item 2.01 Completion of Acquisition or Disposition of Assets.

On July 9, 2009, Chambers sold substantially all of its assets (other than accounts receivable, cash and cash equivalents) to Tandy. The description of the transaction and the closing thereof set forth in Item 1.01 is hereby

incorporated by reference. The purchase price paid and due Chambers from Tandy was determined through arms-length negotiations between the parties.

Item 2.05 Costs Associated with Exit or Disposal Activities.

As reported under Section 1—Item 1.01 “Entry into a Material Definitive Agreement” above, with the Chambers asset sale completed, Chambers plans to wind-down its business by collecting its accounts receivable and Tandy earn-out payments and settling its accounts payable. In Item 2.05 of the April 2009 Form 8-K, Phoenix Footwear reported that it expected to incur a total cost of between $900,000 and $1.3 million on a pre-tax basis over several quarters in connection with the winding down of Chamber’s activities. The following information updates, amends and restates in its entirety the disclosures under Item 2.05 of the April 2009 Form 8-K.

For consolidated financial statement reporting purposes, commencing with the first quarter of the 2009 fiscal year (which ended April 4, 2009), Phoenix Footwear began reporting Chambers as discontinued operations. In connection with this discontinuance, the Phoenix Footwear estimates that it will incur a pre-tax charge of between $2.1 million and $2.5 million which will be recorded and reported in the second and third quarters of the 2009 fiscal year. The charge is expected to be comprised of approximately $500,000 to $600,000 of cash restructuring charges (related to severance payments and other costs associated with exiting the business) to be paid during the third and fourth quarters of the 2009 fiscal year and approximately $1.6 million to $1.8 million of non-cash restructuring charges (including write-offs of fixed assets, net of gain, and inventory).

Section 5-Corporate Governance and Management

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

Pursuant to authority granted by the Compensation Committee by the Company’s Board of Directors, on July 13, 2009, the Company increased the annual base salary of Dennis T. Nelson, the Company’s Chief Financial Officer, Secretary and Treasurer, from $145,000 to $175,000.

Section 8-Other Events

Item 8.01 Other Events.

On July 9, 2009, Phoenix Footwear issued a press release announcing that Chambers entered into the Amended Purchase Agreement and closed the Chambers asset sale A copy of the press release is filed as Exhibit 99.1 to this Current Report on

Form 8-K/A and is incorporated by reference into this Item 8.01.

Section 9-Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
2.1	Amended and Restated Asset Purchase Agreement between Chambers Belt Company and Tandy Brands Accessories, Inc. dated July 9, 2009 (Exhibits and Schedules have been omitted pursuant to Regulation S-K Item 601(b)(2), but will be provided to the Commission upon request)
10.2	Guaranty, dated as of July 9, 2009 by Phoenix Footwear Group, Inc. in favor of Tandy Brands Accessories, Inc.
10.3	Amendment, Assignment and Assumption Agreement dated July 9, 2009 among Chambers Belt Company, Tandy Brands Accessories, Inc. and Wrangler Apparel, Inc.
10.4	Amendment, Assignment and Assumption Agreement dated July 9, 2009 among Chambers Belt Company, Tandy Brands Accessories, Inc. and Wrangler Apparel, Inc.

10.5	Amendment and Forbearance Agreement dated July 9, 2009 among Phoenix Footwear Group, Inc. and its subsidiaries and Wells Fargo National Bank Association
99.1	Press Release dated July 9, 2009

FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are intended to be covered by the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements regarding the proposed sale of the Phoenix Footwear’s Chambers division, the likelihood and timing of the closings of the transactions 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. No assurances can be given that the future results or events covered by such forward-looking statements will be achieved or that the transactions described herein will be consummated. Further, 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. More information about potential factors that could affect the Phoenix Footwear’s business and financial results is included in the documents that the Phoenix Footwear files with the Securities and Exchange Commission (the “SEC”) on Forms 10-K, 10-Q and 8-K, including under the heading “Cautionary Statement Concerning Forward-Looking Information” contained in the Phoenix Footwear’s Annual Report on Form 10-K for the fiscal year ended January 3, 2009 filed with the SEC, all of which are available at the SEC’s website (http://www.sec.gov). All forward-looking statements included in this filing are based on information available at the time of this filing, and the Phoenix Footwear assumes no obligation to update any forward-looking statements after the date of this report.

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.
Dated, July 13, 2009	/s/    Dennis T. Nelson
	Name:	Dennis T. Nelson
	Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
2.1	Amended and Restated Asset Purchase Agreement between Chambers Belt Company and Tandy Brands Accessories, Inc. dated July 9, 2009 (Exhibits and Schedules have been omitted pursuant to Regulation S-K Item 601(b)(2), but will be provided to the Commission upon request)
10.2	Guaranty, dated as of July 9, 2009 by Phoenix Footwear Group, Inc. in favor of Tandy Brands Accessories, Inc.
10.3	Amendment, Assignment and Assumption Agreement dated July 9, 2009 among Chambers Belt Company, Tandy Brands Accessories, Inc. and Wrangler Apparel, Inc.
10.4	Amendment, Assignment and Assumption Agreement dated July 9, 2009 among Chambers Belt Company, Tandy Brands Accessories, Inc. and Wrangler Apparel, Inc.
10.5	Amendment and Forbearance Agreement dated July 9, 2009 among Phoenix Footwear Group, Inc. and its subsidiaries and Wells Fargo National Bank Association
99.1	Press Release dated July 9, 2009

EX-2.1

Exhibit 2.1

AMENDED AND RESTATED

ASSET PURCHASE AGREEMENT

This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT dated as of July 6, 2009, by TANDY BRANDS ACCESSORIES, INC., a Delaware corporation (“Tandy”) and CHAMBERS BELT COMPANY, a Delaware corporation (“Chambers”). Tandy and Chambers are each sometimes referred to herein separately as a “Party” and together as the “Parties”.

R E C I T A L S:

WHEREAS, Chambers is engaged in the design, development, manufacture, import, marketing, and sale of belts and leather accessories in the United States, Canada and Mexico (collectively, the “Business”), including products which are generally sold under private label names, products bearing the Chambers brand name, and products bearing trademarks licensed by Chambers from Wrangler Apparel Inc. (together with its successors in interest, “Wrangler”);

WHEREAS, pursuant to an Asset Purchase Agreement dated April 23, 2009, Tandy has agreed to purchase and acquire from Chambers and Chambers has agreed to sell and transfer to Tandy on the terms and conditions set forth therein certain assets used in the Business (excluding the Wrangler portion of the Business and the other Retained Assets, as defined below);

WHEREAS, concurrently herewith, the Parties, together with Wrangler, are executing and delivering the Wrangler Amendments and Assignments (defined below) which become effective concurrent with the Closing of the transactions contemplated hereby and Tandy is executing and delivering to Wrangler and Tandy is executing and delivering to Wrangler the Tandy Remaining Quarterly Royalty Obligations Guaranty (defined below); and

WHEREAS, in connection with the foregoing, the Parties desire to amend and restate the Asset Purchase Agreement on the terms and conditions herein to include the Wrangler portion of the Business;

P R O V I S I O N S:

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties and agreements herein contained, the Parties, intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS:

Section 1.1 Certain Terms. The following capitalized terms shall have the meanings given thereto:

“Accepted Inventory Styles” means the product style numbers set forth on Disclosure Schedule 1.1.

“Acquired Inventory Price” means the aggregate Inventory Cost of the Acquired Inventory.

“Affiliate” means, with respect Tandy, each Person which, directly or indirectly, controls or is controlled by or is under common control with Tandy or any of its Subsidiaries and, without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds 10% or more of any class of voting securities of Tandy or any of its Subsidiaries or 10% or more of the equity interest in Tandy or any of its Subsidiaries and (b) any Person which Tandy or any of its Subsidiaries beneficially owns or holds 10% or more of any class of voting securities or in which Tandy or any of its Subsidiaries beneficially owns or holds 10% or more of the equity interest. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Chambers de Mexico” means Maquiladora Chambers de Mexico, S.A. De C. V., which is a Mexican corporation owned by Charles Stewart and others, including a third party Mexican citizen.

“Chambers Mexico Facility” means the manufacturing facility located in Pitiqutio, Mexico owned by Chambers de Mexico.

“Chambers Products” means all belts and leather accessories which are of a style that (a) was sold by Chambers prior to the Closing and included in the Accepted Inventory Styles, (b) was approved for sale to Chambers’ customers prior to Closing but which have not yet been sold to customers prior to Closing and included in the Accepted Inventory Styles; and (i) is sold by Tandy or its Subsidiaries and Affiliates under private labels under which any of the Accepted Inventory Styles were sold by Chambers prior to Closing, (ii) is sold under the Chambers Trademark or the Absolutely Fresh Trademark following the Closing, and/or (iii) all replacement styles for any of the foregoing.

“Chambers’ Knowledge” means the actual knowledge of Russell Hall, James Riedman or Dennis Nelson.

“Commerce City Facility” means the manufacturing facility and distribution center located in Commerce City, California leased by Chambers.

“Commerce City Facility Lease” means the Lease Agreement dated March 23, 1994, as amended on March 26, 1996, July 10, 2000, July 1, 2003, April 6, 2005, June 28, 2005 and April 10, 2006, between Chambers (as assignee of Chambers Belt Company, an Arizona corporation (f/k/a PLC Leather Company, Inc.) and Jillson Development, Ltd., pursuant to which Chambers leases the Commerce City Facility.

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“Default Rate” means the prime rate then published in the Wall Street Journal plus 7% per annum.

“Denver Sales Office Lease” means the Office Lease Agreement dated October 29, 2007 between Chambers and Denver Merchandise Mart pursuant to which Chambers leases the Denver, Colorado, sales office.

“Earn-Out Minimum Amount” means $2,000,000.

“Earn-Out Payments” means the Earn-Out Initial Payment and the Earn-Out Monthly Payments.

“Inventory” means all of Chambers’ inventories, including all raw materials and supplies, manufactured and purchased parts, packaging materials, goods in-process and finished goods, and spare, replacement and component parts of finished goods (including all pre-production approved samples by customers, wherever located at the Closing Date).

“Inventory Cost” means Chambers’ landed costs for its inventory as recorded in its books of account as of the Closing Date, inclusive of net invoice cost, freight, duty and other direct costs, taxes, and assessments, all on a basis consistent with Chambers’ past practice.

“Maquiladora Agreement” means the Maquiladora Agreement dated June 28, 2005 between Chambers de Mexico and Chambers.

“Net Sales” means gross sales recognized by Tandy and its Subsidiaries or Affiliates from the sale of Products less discounts and rebates with respect to such sales and actual returns of Products which are included therein or allowances therefor determined in accordance with GAAP consistently applied and recorded (or required to be recorded) in the books and records of Tandy and its Subsidiaries and Affiliates in accordance with GAAP for the applicable portion of the Earn-Out Measurement Period.

“Ordinary Course of Business” means the ordinary course of business of a Party consistent with such Party’s past custom and practice (including with respect to quantity and frequency, but subject to current facts and circumstances).

“Person” means an individual, partnership, corporation, business trust, stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity of whatever nature.

“Products” means both Chamber Products and Wrangler Products.

“Remaining Quarterly Royalty Obligations” has the meaning given thereto in the Wrangler Amendment and Assignment relating to the Wrangler Mass License.

“Riders Marks” means the Riders trademark which is owned by Wrangler and which Chambers has licensed from Wrangler.

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“Subsidiary” means, with respect to Tandy, a corporation of which shares of stock having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by Tandy, or a limited partnership of which Tandy or any of its Subsidiaries is a general partner or a business trust in which Tandy holds a majority interest (comparable to that for a corporation as described above).

“Tandy Remaining Royalty Obligation Guaranty” means the Guaranty executed on even date herewith by Tandy and delivered to Wrangler to guaranty the Remaining Quarterly Royalty Obligations (as defined in the Wrangler Amendment and Assignment relating to the Wrangler Mass License.

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Internal Revenue Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalty, or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

“Wells Fargo” means Wells Fargo Bank, National Association. or its successor in interest.

“Wrangler Amendment and Assignments” means (a) the Amendment, Assignment and Assumption of even date herewith among Chambers, Tandy and Wrangler which amends the Wrangler Mass License and provides for the assignment and transfer thereof by Chambers to Tandy and Tandy’s assumption of the obligations thereunder, and (b) the Amendment, Assignment and Assumption of even date herewith among Chambers, Tandy and Wrangler which amends the Wrangler Western License and provides for the assignment and transfer thereof by Chambers to Tandy and Tandy’s assumption of the obligations thereunder.

“Wrangler Licenses” means the Wrangler Mass License, the Wrangler Western License and other license rights or obligations which Chambers may have with or to Wrangler.

“Wrangler Marks” means those trademarks licensed to Chambers under the Wrangler Mass License, the Wrangler Western License and the Riders Marks.

“Wrangler Mass License” means the License Agreement dated as of January 1, 2007, as amended on even date herewith, providing Chambers with a license for the manufacture, sale and distribution of Wrangler Products to the mass store market.

“Wrangler Products” means any belt or leather accessories which is sold under the Wrangler Marks in the distribution channels permitted by the Wrangler Licenses.

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“Wrangler Western License” means the License Agreement dated as of January 1, 2008, as amended on even date herewith, providing Chambers with a license for the manufacture, sale and distribution of Wrangler Products to the western market.

Section 1.2 Schedule of Defined Terms. Defined terms used in this Agreement and the sections they are defined in are as follows:

Absolutely Fresh Trademarks	2.1(a)(iv)(C)
Accountants	3.1(c)(iii)
Acquired Assets	2.1(a)
Acquired Equipment	2.1(a)(ii)
Acquired Copyrights	2.1(a)(iv)(A)
Acquired Equipment	2.1(a)(ii)
Acquired Intellectual Property	2.1(a)(iv)
Acquired Inventory	2.1(a)(iii)
Arbitrator	3.1(e)
Assigned Orders	2.1(a)(i)
Assignment of Orders	3.2(b)(i)(A)
Assumed Liabilities	2.2(a)
Bill of Sale	3.2(b)(i)(D)
Business	Recitals
Chambers	Preamble
Chambers Closing Documents	3.2(b)(i)
Chambers Indemnitees	9.2
Chambers Mexico Acquired Equipment	2.1(a)(ii)(A)
Chambers Trademark	2.1(a)(iv)(B)
Closing	3.2(a)
Closing Date	3.2(a)
Conveyance Agreements	3.2(b)(i)(C)
Earn-Out Amount	3.1(d)(i)
Earn-Out Default	3.1(d)(v)
Earn-Out Initial Payment	3.1(b)
Earn-Out Measurement Period	3.1(d)(i)
Earn-Out Monthly Amount	3.1(d)(iii)
Earn-Out Monthly Certificate	3.1(d)(iii)
Earn-Out Monthly Payments	3.1(d)(iii)
Encumbrances	2.1(a)
Final Inventory Certificate	3.1(c)(iv)
Governmental Entity	4.3
Indemnified Party	9.4(a)
Indemnifying Party	9.4(a)
Inventory Count Certificate	3.1(c)(iii)
Losses	9.2
Preliminary Inventory Certificate	3.1(c)(iii)
Purchase Price	3.1(a)
Required Consents	4.3
Retained Liabilities	2.2(b)
Royalty Default	9.7(a)(i)
Tandy	Preamble
Tandy Closing Documents	3.2(b)(ii)
Tandy Indemnitees	9.3
Wrangler	Recitals

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ARTICLE II

ASSETS TO BE PURCHASED AND SOLD

Section 2.1 Acquired Assets.

(a) Acquired Assets. On the Closing Date (as defined herein at Section 3.2(a)), subject to the terms and conditions of this Agreement, Chambers shall sell, assign, transfer, convey and deliver, to Tandy, and Tandy shall purchase, pay for and accept from Chambers all of the right, title and interest of Chambers in all of the following assets held by Chambers as of the Closing Date (“Acquired Assets”), free and clear of all liens, claims, charges or encumbrances of any nature whatsoever (“Encumbrances”):

(i) Contracts. (A) All vendor and manufacturer/factory purchase orders for products, materials, supplies and services, and all customer orders for the purchase of Products (collectively, the “Assigned Orders”); and (B) the Maquiladora Agreement, in each case with respect to the rights arising on and after the Closing Date. The Assigned Orders outstanding on the date of this Agreement shall be listed on Disclosure Schedule 2.1(a)(i), which Schedule shall be updated by Chambers immediately prior to the Closing.

(ii) Acquired Equipment. (A) All fixed assets located at the Chambers Mexico Facility (the “Chambers Mexico Acquired Equipment”), (B) all manufacturing equipment located at the Commerce City Facility, and (C) all tools, jigs, molds, dies, embossing equipment, “in-store” displays, trade show displays, and signage, wherever located, all as more specifically identified on Disclosure Schedule 2.1(a)(ii) (collectively, the “Acquired Equipment”).

(iii) Acquired Inventory. All Inventory which relates to, is included in or constitutes part of the Accepted Inventory Styles (collectively, the “Acquired Inventory”), including those (A) located at facilities owned, used or leased by Chambers’ foreign agents; (B) located at facilities owned, used or leased by Chambers’ manufacturers or suppliers; (C) located at the Chambers Mexico Facility; (D) located at the Commerce City Facility, and (E) in transit.

(iv) Intangible Acquired Assets. All of the following intellectual property rights (collectively, the “Acquired Intellectual Property”).

(A) the copyright registrations identified and described in Disclosure Schedule 2.1(a)(iv)(A) (the “Acquired Copyrights”);

(B) the Chambers trademark registration identified and described in Disclosure Schedule 2.1(a)(iv)(B) (the “Chambers Trademark”);

(C) the Absolutely Fresh trademark registration identified and described in Disclosure Schedule 2.1(a)(iv)(C) (the “Absolutely Fresh Trademarks”);

(D) the trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and marketing plans and proposals) associated with the Business;

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(E) all advertising and promotional materials associated with the Business; and

(F) all copies and tangible embodiments of the foregoing (in whatever form or medium).

(v) Books and Records. All catalogues, slogans, quotations, sales and advertising materials (including samples, prototypes, sample books, showroom displays, product literature, advertising materials, mockups, brochures and catalogues), sales and purchase correspondence, product design and development records, lists of present and former customers and suppliers and third party manufacturers.

(vi) Goodwill. All goodwill related to the conduct of the Business (other than the goodwill that relates to the Wrangler Marks), and all rights to continue to use of the Acquired Assets.

(b) Retained Assets. Notwithstanding anything contained herein to the contrary, Chambers shall not sell, transfer, convey or deliver, or cause to be sold, transferred, conveyed or delivered, to Tandy, and Tandy shall not purchase from Chambers any of the following assets, properties, interests and rights of Chambers (the “Retained Assets”):

(i) Cash and Cash Equivalents. All cash or cash equivalents, including on-hand cash or bank deposits;

(ii) Non-Acquired Inventory. All Inventory other than Acquired Inventory;

(iii) Accounts and Notes Receivable. All accounts and notes receivable;

(iv) Leasehold Interests. All interests, options or rights in and to all real property and or leases of real property used or occupied by Chambers, together with all buildings, structures, improvements, easements, fixtures, rights of way and appurtenances located therein or thereon;

(v) Books and Records. All books and records of Chambers related to the Retained Assets or the Retained Liabilities (as defined herein at Section 2.2(b));

(vi) Other Assets. All other assets, properties, interests and rights of Chambers which are not specifically set forth in Section 2.1(a), including any rights or claims which Chambers may have against Phoenix Footwear Group, Inc.; and

(vii) Rights Under This Agreement. All of Chambers’ rights under this Agreement, the Conveyance Agreements (as defined in Section 3.2(b)(i)(D)) and all other agreements, documents and instruments executed and/or delivered in connection herewith.

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Section 2.2 Chambers’ Liabilities.

(a) Assumed Liabilities. On and as of the Closing Date, subject to the terms and conditions of this Agreement, Tandy shall assume and agree to pay, perform, discharge and satisfy as and when due only the liabilities and obligations of Chambers set forth in this Section 2.2 (collectively, the “Assumed Liabilities”). The assumption by Tandy of the Assumed Liabilities shall not in any way expand the rights or remedies which such third party would have had against any such party had Tandy not assumed such liabilities. Without limiting the generality of the foregoing, the assumption by Tandy of the Assumed Liabilities shall not create any third party beneficiary rights in favor of any third party. Chambers shall pay and discharge when due all of Chambers’ liabilities that Tandy has not specifically agreed to assume pursuant to this Section 2.2(a), provided that Chambers shall have the ability to contest, in good faith, any such claim of liability asserted by any Person. The Assumed Liabilities are limited to:

(i) The obligations of Chambers arising under the unfilled Assigned Orders and the Maquiladora Agreement, in each case existing as of the Closing Date that, by their terms, relate solely to periods following the Closing or are to be observed, paid, discharged or performed, as the case may be, in each case at any time after the Closing Date, but in any event excluding any liabilities for any breach or default by Chambers thereunder; and

(ii) All obligations and liabilities in respect of any and all Acquired Inventory sold by Tandy or any of its Subsidiaries or Affiliates on or after the Closing Date, including obligations and liabilities for product liability claims, defective products, personal, property or other damage, or for refunds, adjustments, allowances, rebates, repairs, exchanges, returns and warranties of merchantability and other contractual warranty claims which relate solely to periods following the Closing;

(b) Liabilities Not Assumed. Notwithstanding anything to the contrary contained in this Agreement, except for the Assumed Liabilities, Tandy shall not assume or in any manner become liable or responsible for any liability, obligation, commitment or expense of any kind, known or unknown, now existing or hereafter arising, of or related to Chambers, or the Acquired Assets and Chambers shall retain responsibility for all of its liabilities, payments or obligations other than the Assumed Liabilities (the “Retained Liabilities”). In furtherance and not in limitation of the foregoing, neither Tandy nor any of its Affiliates shall assume, and shall not be deemed to have assumed, any known or unknown debt, claim, obligation or other liability of Chambers or any of its Affiliates whatsoever (other than the Assumed Liabilities), including, but not limited to (i) any environmental costs or liabilities for any act, omission, condition, event or circumstance, including the handling, storage, transportation or disposal of hazardous materials or contaminants, (ii) any liabilities in respect of taxes of any nature whatsoever, (iii) any brokers’ or finders’ fees arising by reason of this Agreement, (iv) any indebtedness, (v) any obligations or liabilities for employees, including severance, pension, profit sharing or any other employee benefit plans, compensation, retiree or medical benefits and obligations, (vi) any liabilities or obligations related to the Retained Assets, or (vii) warranties, rebates, allowances, deductions and/or price discrepancies relating in any manner to products or services sold by Chambers prior to or after the Closing Date.

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ARTICLE III

PURCHASE PRICE AND CLOSING

Section 3.1 Purchase Price.

(a) Purchase Price. In consideration of the sale, transfer, conveyance and assignment of all the Acquired Assets, on the Closing Date, Tandy shall assume the Assumed Liabilities and as the purchase price pay to Wells Fargo for the benefit of Chambers so long as any monies are owed under the Credit and Security Agreement dated June 16, 2008 and thereafter to Chambers, the sum of the following (the “Purchase Price”) (i) $500,000, plus (ii) the Acquired Inventory Price plus (iii) the Earn-Out Amount (as defined herein at Section 3.1(d)(i)), including the Earn-Out Minimum Amount. Wells Fargo shall deliver written notice to Tandy in the event payments are no longer required to be remitted to Wells Fargo. Tandy will have fulfilled its obligation with respect to the payment of any portion of the Purchase Price to the extent such payment is made to Wells Fargo until such written notice is delivered to Tandy.

(b) Payment of Purchase Price.

(i) At Closing, as payment against the Purchase Price due Chambers, Tandy shall deliver to Chambers by wire transfer of immediately available funds an amount equal to the sum of the following (A) $500,000, (B) $430,000 (the “Earn-Out Initial Payment”), and (C) the Acquired Inventory Price, less the amount of any funds paid or accounts payable or purchase orders assumed and payable by Tandy to any Chambers’ vendor, in each case for Acquired Inventory being transferred at Closing to Tandy (such that Chambers was relieved of paying for the same or that Chambers would have been obligated to pay in the normal course of business absent the transactions contemplated by this Agreement), provided that written evidence thereof reasonably satisfactory to Chambers is provided to Chambers prior to or at Closing.

(ii) Following the Closing, Tandy shall pay the Earn-Out Monthly Payments which are due as provided in Section 3.1(d) below by wire transfer of immediately available funds. Except for the circumstances specifically provided for in Sections 9.7(a)(i) and (ii) below, the Earn-Out Monthly Payments shall not be subject to any right of offset, counterclaim or deduction of any kind.

(c) Determination of Acquired Inventory Price.

(i) After the execution and delivery hereof, Chambers shall not order from vendors or manufacturers/factories any Accepted Inventory Styles unless it is to fill a specific order received from a customer or it is otherwise approved in writing by Tandy.

(ii) Prior to Closing, promptly following a request by Tandy, Tandy shall be entitled to receive Chambers’ perpetual inventory records and Inventory Cost for the Accepted Inventory Styles. In addition, Tandy shall be entitled to conduct reviews and verification of the Acquired Inventory quantities and landed cost of such perpetual inventory records and is entitled to receive weekly sales and quantities reports prior to the Closing Date for inventories of each Accepted Inventory Style, as well as copies of receipts for such inventories with quantities and the Inventory Cost from the date of the perpetual inventory report through the Closing Date.

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(iii) Immediately prior to Closing, Tandy and Chambers shall jointly conduct a physical count and inspection of the Acquired Inventory held by Chambers which shall be observed by representatives of mutually agreeable independent accountants or if the Parties can not agree, then representatives from their respective independent accounting firms (the “Accountants”). Upon completion of the count, the Parties shall execute a certificate certifying the product styles and quantity thereof included in the Acquired Inventory (the “Inventory Count Certificate”). The Accountants shall determine any dispute between the Parties concerning the physical count which shall be final and binding on the Parties. Chambers shall then determine the Acquired Inventory Price using the information set forth in the Inventory Count Certificate and the Inventory Cost as reflected in its books and records and deliver to Tandy a certificate setting forth the amount of the Acquired Inventory Price and supporting calculations (the “Preliminary Inventory Certificate”).

(iv) At the Closing, Tandy shall pay to Chambers the sum due for the Acquired Inventory Price based on the Preliminary Inventory Certificate. During the 30 days following Closing, Tandy may review the Preliminary Inventory Certificate. If during such 30-day period Tandy notifies Chambers of any dispute (other than with respect to the information contained in the Inventory Count Certificate) with respect to the calculations set forth in the Preliminary Inventory Certificate, the Parties will negotiate in good faith to resolve such dispute. If the Parties are unable to resolve their differences, any remaining disputes will be resolved in accordance with Section 3.1(e) below and the determination of the Arbitrator pursuant thereto shall become the Final Inventory Certificate. If Tandy does not notify Chambers in writing of a dispute with the Preliminary Inventory Certificate within such 30 day period, the Preliminary Inventory Certificate shall be deemed to be final and binding on the Parties for purposes of determining the Acquired Inventory Cost and thereby become the “Final Inventory Certificate.” In the event the Final Inventory Certificate reflects an amount greater than or less than the amount reflected in the Preliminary Inventory Certificate, either Tandy or Chambers, as appropriate, shall, within five (5) days of the determination of the Final Inventory Certificate, pay to the other such difference.

(d) Earn-Out Amount.

(i) As part of the Purchase Price due for the acquisition of the Acquired Assets, Tandy shall pay Chambers an amount (the “Earn-Out Amount”) equal to (A) 21.5% of the Net Sales of all Products (other than Wrangler Products sold pursuant to the Wrangler Western License) sold by Tandy and its Subsidiaries and Affiliates during the 12 months ending on the first anniversary of the Closing Date (the “Earn-Out Measurement Period”), less $150,000; provided, however, that in no event shall such amount be less than the “Earn-Out Minimum Amount.”

(ii) Prior to the end of the Earn-Out Measurement Period, Tandy shall (A) not sell, transfer, assign, license or otherwise convey any of the Acquired Assets (or any rights with respect thereto) other than Acquired Inventory in the Ordinary Course of Business, (B) exercise commercially reasonable efforts to conduct the Business in a manner consistent with prudent

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business practices that seek to maximize its sales of the Products and (C) have no less than three personnel dedicated on a full-time basis to the marketing, promotion and sale of Products to customers and who have a substantial portion of their personal compensation during the Earn-Out Measurement Period based upon sales of Products during the Earn-Out Measurement Period. Upon request by Chambers (which shall not be more than four times during the Earn-Out Measurement Period), Tandy shall provide written information to Chambers which evidences its compliance with its obligations under this Paragraph 3.1(d)(ii), and such information shall be provided within 20 days of the written request by Chambers.

(iii) The Earn-Out Amount shall be payable in arrears on the 15^th day of the month (each such payment being an “Earn-Out Monthly Payment”) with the first eleven (11) such Earn-Out Monthly Payments in an amount (the “Earn-Out Monthly Amount”) equal to 21.5% of the Net Sales of the Products (other than Wrangler Products sold pursuant to the Wrangler Western License) in the immediately preceding calendar month. Concurrently with each Earn-Out Monthly Payment, Tandy shall submit to Chambers a certificate signed by Tandy’s Chief Financial Officer in the form of Exhibit D attached hereto (the “Earn-Out Monthly Certificate”). The Earn-Out Monthly Payments shall commence on August 15, 2009 and shall continue on the 15^th day of each of the next 10 calendar months thereafter. On July 15, 2010 a final Earn-Out Monthly Payment shall be payable in an amount equal to the greater of (A) 21.5% of the cumulative Net Sales of Products (other than Wrangler Products sold pursuant to the Wrangler Western License) for the Earn-Out Measurement Period, less $150,000 and less the sum of all Earn-Out Payments previously paid by Tandy to Chambers (or Wells Fargo for Chambers’ benefit), or (B) the Earn-Out Minimum Amount less the sum of all Earn-Out Payments previously paid by Tandy to Chambers (or Wells Fargo for Chambers’ benefit). In the event the final Earn-Out Monthly Payment would be less than zero dollars as a result of the credits described in subsection (A) of the immediately preceding sentence or otherwise, Chambers shall, by July 20, 2010, pay to Tandy by wire transfer of immediately available funds an amount equal to the amount by which Tandy had overpaid the Earn-Out Payments.

(iv) Tandy shall at all times maintain complete, true and correct books of account in accordance with GAAP for the sale of Products during the Earn-Out Measurement Period and the matters contemplated by Section 3.1(d)(ii), which books of account shall be in sufficient detail to enable the Earn-Out Amount and Earn-Out Monthly Payments to be readily computed and verified, including all information pertaining to the Net Sales of Products. Tandy shall permit Chambers, its agents and/or independent public accountants, to inspect and audit Tandy’s books and records relating to Net Sales of Products during the Earn-Out Measurement Period (including the right to make copies thereof) during normal business hours and upon reasonable notice to Tandy. In no event may Chambers exercise such right more than once in any three month period during the Earn-Out Measurement Period. In the event any such inspection and/or audit confirms that the Net Sales for Products during any portion of the Earn-Out Measurement Period have been understated, Tandy shall immediately pay the deficit amount shown to be due as a result of any such inspection or audit unless Tandy disputes such deficient amount in good faith by written notice to Chambers within thirty (30) days after being given notice thereof by Chambers, together with a statement setting forth in reasonable detail the basis for its dispute. Tandy’s determination of Net Sales and the Earn-Out Amount and the Earn-Out Monthly Payments, if any, for any Earn-Out Measurement Period shall be conclusive and binding on the Parties hereto unless, within 60 days following the delivery of the final Earn-Out

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Monthly Payment and Earn-Out Monthly Certificate, Chambers notifies Tandy in writing that it disagrees with Tandy’s calculation of Net Sales of the Products and the Earn-Out Amount. Such notice shall include Chambers’ statement setting forth in reasonable detail the basis for its dispute. If, in the 15 days following delivery of Chambers’ notice of dispute, Tandy and Chambers cannot reach an agreement on the Earn-Out Amount, all such disagreements shall be resolved in accordance with Section 3.1(e).

(v) If any Earn-Out Monthly Payments (which are not the subject of a bona fide dispute being determined in accordance with a proceeding under Section 3.1(e)) are not paid when due or Tandy breaches its obligations under this Section 3.1(d) (each an “Earn-Out Default”), then upon written notice by Chambers to Tandy thereof and a failure by Tandy to cure the same within thirty (30) days after such notice, an amount equal to the Earn-Out Minimum Amount less the Earn-Out Payments theretofore paid to Chambers (or Wells Fargo for Chambers’ benefit) shall become immediately due and payable by Tandy to Chambers in immediately available funds and until paid shall accrue interest thereon at the Default Rate. The payment of such amount shall not in any way relieve Tandy of its obligation to pay Chambers the Earn-Out Amount, except that the payment made pursuant to this Section 3.1(d)(v) (other than Default Interest) shall be credited thereto. Further, the acceleration of the Earn-Out Minimum Amount shall not be Chambers’ sole and exclusive remedy and Chambers shall not be limited in pursuing any legal or equitable right or claim against Tandy for damages arising out of or related to an Earn-Out Default. In the event that Chambers commences legal action to collect such payments, Tandy shall be responsible for and pay all of the attorneys’ fees incurred by Chambers in connection therewith.

(e) Disputes. Disputes regarding the Preliminary Inventory Certificate and the Acquired Inventory Price as well as the Earn-Out Monthly Payments or the Earn-Out Amount which are in accordance with the terms hereof shall be resolved as follows: (i) the Parties shall cooperate in good faith to resolve any such dispute as promptly as possible; (ii) in the event that the Parties are unable to resolve any such dispute within 15 days (or such longer period as they may agree upon in writing) of notice of such dispute, such dispute and the appropriate books and records related thereto shall be submitted to, and all issues having a bearing on such dispute shall be resolved by an independent accounting firm approved by both Parties in writing or failing such approval, within five (5) days of being requested by any Party, then by an independent accounting firm (which shall have no past or present relationship with either Party and shall certify thereto to each Party in writing) selected by the American Arbitration Association in accordance with the Commercial Arbitration Rules to be conducted in Wilmington, Delaware or such other location as the Parties agreed upon in writing (such identified accounting firm selected, the “Arbitrator”). Such resolution shall be final and binding on the Parties for purposes of determining the Final Inventory Certificate and Acquired Inventory Price, the Earn-Out Monthly Payments and/or the Earn-Out Amount, as appropriate. The Parties shall direct the Arbitrator to use commercially reasonable efforts to complete its work within 30 days following its engagement. The fees, costs and expenses of the Arbitrator shall be paid one-half by Tandy and one-half by Chambers.

(f) Default Rate. To the extent any amount is not paid by Tandy to Chambers when due hereunder, including any amount which Tandy agrees upon with Chambers was previously due or which is determined to have been due pursuant to Section 3.1(e), in addition to such amount and any and all other rights of Chambers, Tandy shall pay Chambers interest on such delinquent amount at the Default Rate from the date on which such payment was due until it is paid in full.

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Section 3.2 The Closing.

(a) Closing Date. Subject to the satisfaction of the conditions set forth in Article VII, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place (i) by fax or email/pdf exchange of signature pages and other documents, together with same day or next day deposit of signature pages and documents for delivery to the other party by over-night mail to the addresses provided in Section 11.3 or (ii) in person at the offices of Winsted PC, 1201 Elm, 5400 Renaissance Tower, Dallas, Texas 75270, in either case commencing at 10:00 a.m., local time, on July 6, 2009 (the “Closing Date”), or at such other time, date and place as may be agreed to by the Parties hereto in writing. The Parties shall exercise their commercially reasonable efforts to satisfy all of the conditions under their control in Article VII on or before July 6, 2009.

(b) Closing Deliveries.

(i) Chambers’ Deliveries. At or prior to the Closing, Chambers shall deliver or cause to be delivered to Tandy the following documents (the “Chambers Closing Documents”):

(A) an Assignment and Assumption of Orders Agreement in the form attached as Exhibit A hereto (the “Assignment of Orders”) executed by Chambers conveying all rights in and to the Assigned Orders (including a schedule thereto listing each of the Assigned Orders);

(B) an Assignment of Trademarks and Assignment of Copyrights in the forms attached as Exhibit B-1 and Exhibit B-2, respectively (the “Intellectual Property Assignments”) executed by Chambers conveying to Tandy the Acquired Intellectual Property;

(C) a Bill of Sale in the form attached as Exhibit C (including a schedule thereto) (the “Bill of Sale” and together with the Assignment of Orders and the Intellectual Property Assignments the “Conveyance Agreements”) executed by Chambers conveying the Acquired Inventory and such Acquired Inventory shall be made available at Chambers’ facilities to Tandy for shipping to a location Tandy designates as of the Closing at Tandy’s sole cost, expense and risk of loss;

(D) a Parent Guaranty in the form attached as Exhibit E (to be executed by Phoenix Footwear Group, Inc. pursuant to which such guarantor guarantees the obligations of Chambers under this Agreement and the Chambers’ Closing Documents on the terms and conditions therein);

(E) the books, lists and papers described in Section 2.1(a)(v);

(F) the Preliminary Inventory Certificate for the calculation of the Acquired Inventory Price contemplated under Section 3.1(c);

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(G) a UCC-11 search showing no security interests recorded against the Acquired Assets, except for Wells Fargo together with UCC-3 releases and an instrument signed by Wells Fargo pursuant to which it releases its security interest in the Acquired Assets, including the Acquired Intellectual Property Rights;

(H) a certificate executed by Chambers’ secretary certifying to the resolutions necessary to authorize Chambers’ execution and delivery of this Agreement, the Conveyance Agreements, and all other agreements, documents and instruments to be executed in connection herewith, and the performance of its obligations hereunder and thereunder;

(I) an incumbency certificate with respect to the officers of Chambers executing this Agreement and the Chambers Closing Documents and good standing certificates with respect to Chambers;

(J) the closing certificate contemplated by Section 7.1(a); and

(K) any other documents otherwise required by this Agreement to be delivered by Chambers at or prior to the Closing.

(ii) Tandy’s Deliveries. At the Closing, Tandy shall deliver or cause to be delivered to Chambers the payment of the Purchase Price as contemplated by Section 3.1(b) and the following documents (the “Tandy Closing Documents”):

(A) the Conveyance Agreements to which it will become a party, in each case executed by Tandy;

(B) a certificate executed by Tandy’s secretary certifying to the resolutions necessary to authorize Tandy’s execution and delivery of this Agreement, the Conveyance Agreements, and all other agreements, documents and instruments to be executed in connection herewith, and the performance of its obligations hereunder and thereunder;

(C) an incumbency certificate with respect to the officers of Tandy executing this Agreement and the Tandy Closing Documents and good standing certificates with respect to Tandy;

(D) the closing certificate contemplated by Section 7.2(a); and

(E) any other documents otherwise required by this Agreement to be delivered by Tandy at or prior to the Closing.

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ARTICLE IV

CHAMBERS

REPRESENTATIONS AND WARRANTIES

Chambers represents and warrants to Tandy, as of the date of this Agreement and as of the Closing Date, as follows:

Section 4.1 Organization. Chambers is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

Section 4.2 Authority. Chambers has the requisite corporate power and authority to execute and deliver this Agreement, the Wrangler Amendments and Assignments and the Chambers Closing Documents and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement, the Wrangler Amendments and Assignments and the Chambers Closing Documents by Chambers and the consummation by Chambers of the transactions contemplated hereby and thereby have been duly authorized by the Chambers Board of Directors and its sole stockholder, and no other corporate proceedings on the part of Chambers are necessary to authorize this Agreement, the Wrangler Amendments and Assignments, and the Chambers Closing Documents, or to consummate the transactions so contemplated. This Agreement and the Wrangler Amendments and Assignments have been and each of the Chambers Closing Documents upon delivery thereof pursuant to the terms hereof will be duly executed and delivered by Chambers and, further, constitutes or (to the extent such agreement is not being entered into as of the date hereof) will constitute a valid and binding obligation of Chambers, each enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 4.3 Consents and Approvals; No Violations. Except for the consent of Wells Fargo and as may be required under the Maquiladora Agreement (collectively, the “Required Consents”), together with compliance with any customer rules relating to the Assigned Orders (all of which shall have been disclosed to Tandy prior to Closing), none of the execution, delivery or performance of this Agreement, the Wrangler Amendments and Assignments (except to the extent of the consent by Wrangler provided for therein) or the Chambers Closing Documents by Chambers, or the consummation by Chambers of the transactions contemplated hereby or thereby and compliance by Chambers with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provisions of the Certificate of Incorporation or By-Laws of Chambers, (ii) require any filing by Chambers with, or any permit, authorization, consent or approval to be obtained by Chambers, any court, arbitral tribunal, administrative agency or commission or other governmental or regulatory authority or administrative agency or commission whether domestic or foreign (a “Governmental Entity”) (except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings would not have a material adverse effect on the Acquired Assets), (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, or result in the creation of any Encumbrances on any of the Acquired Assets pursuant to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement, franchise, permit, concession or other instrument, obligation, understanding, commitment or other arrangement to which Chambers is a party or by which it or any of the Acquired Assets may be bound or affected (other than the Maquiladora Agreement with respect to the Chambers Mexico Acquired Equipment) (each, a “Contract”), or (iv) violate any order, writ, injunction, decree, statute, ordinance, rule or regulation applicable to Chambers.

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Section 4.4 Title to Acquired Assets. Except for the Encumbrances created by Wells Fargo’s security interest and as provided below in this Section 4.4, Chambers owns the Acquired Asset, free and clear of any Encumbrances. At the Closing, Tandy will, directly or indirectly, acquire good and transferable title to the Acquired Assets, free and clear of any Encumbrances. Notwithstanding the foregoing, this representation and warranty shall not include or be with respect to the Acquired Intellectual Property Rights other than the Chambers Trademark.

Section 4.5 Inventory. The Acquired Inventory (a) is merchantable and fit within normal trade tolerances for the purpose for which it was procured or manufactured, (b) is not damaged, below standard quality, irregulars, seconds, defective, charge-backs or returns. Except as set forth in Disclosure Schedule 4.5, during the 12 months prior to the date hereof, Chambers has not been the subject of any product safety or false or deceptive or misleading advertising claims involving the products that may be included in the Acquired Inventory and has not been the subject of any investigation, proceeding, warning, citation or other claim by any Governmental Entity.

Section 4.6 Intellectual Property.

(a) With respect to the Chambers Trademark:

(i) it is not subject to any outstanding injunction, judgment, order, decree, ruling or charge;

(ii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to Chambers’ Knowledge, is threatened that challenges the legality, validity, enforceability, use or ownership of the Chambers Trademark, and, to Chambers’ Knowledge, there is no basis for the same;

(b) There is included in the Acquired Intellectual Property all of the copyrights, trademarks and other intellectual property rights which may exist and are claimed to be owned by Chambers.

(c) The Chambers Trademark (i) does not interfere with, infringe upon, or misappropriate any trademark rights of third parties, and (ii) Chambers has not received any charge, complaint, claim, demand, or notice alleging such interference, infringement, misappropriation, or violation.

Section 4.7 Taxes. Chambers and any predecessors in interest have withheld or collected from each payment made to each of their employees and/or shareholders the amount of all Taxes required to be withheld or collected therefrom, and Chambers and any predecessors in interest have paid the same to the proper tax depositories or collecting authorities. There are no liens on any of the Acquired Assets with respect to Taxes. There is no action, suit, investigation, audit, claim or assessment pending or proposed or threatened with respect to Taxes of Chambers or the Acquired Assets and, to Chambers’ Knowledge, no basis exists therefor. None of the Acquired Assets are properly treated as owned by persons other than Chambers for federal income tax purposes.

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Section 4.8 Mexican Operations. The property included in the Acquired Assets which is located at the Chambers Mexico Facility has been imported in accordance in all material respects with the Mexican custom laws and under a current and valid Maquiladora program held by Chambers de Mexico, as the importer of record. No event has occurred, and no circumstances exist, which would reasonably be expected to permit state, local or federal Mexican Governmental Entities to seize, put an Encumbrance on, or otherwise obtain control of any of the Acquired Assets located at the Chambers Mexico Facility, other than Taxes that are not yet due and payable in the Ordinary Course of Business.

Section 4.9 Legal Compliance. Chambers has, with respect to the Acquired Assets, complied in all material respects with all laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder of all Governmental Entities (and all agencies thereof)), including the immigration, anti-competitive practices, advertising and labeling rules, customs, tariff and importation rules, registration of trades used in textile and apparel merchandising, the Flammable Fabrics Act, the Fair Packaging and Labeling Act, the Magnsuon-Moss Warranty Act, the Consumer Product Safety Act, the Textile Fiber Products Identification Act and the Federal Trade Commission’s Care Labeling Rule. No action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been delivered to Chambers or filed or commenced against it alleging any failure so to comply.

Section 4.10 Customers. No customer of Chambers listed on Disclosure Schedule 4.10 has stopped buying products from Chambers or returned a material amount of products purchased from Chambers other than returns in the Ordinary Course of Business.

Section 4.11 No Other Representations or Warranties. Other than the representations and warranties contained in this Article IV, Chambers does not make any representation or warranty, express or implied, at law or in equity of any kind, including in respect of any of Acquired Assets, any liabilities (including the Assumed Liabilities), or operations of the Business and any such other representations or warranties are hereby disclaimed. WITHOUT LIMITING THE FOREGOING, EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE IV, CHAMBERS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, INCLUDING THE QUALITY, CONDITION, NON-INFRINGEMENT, MERCHANTABILITY, SALABILITY, OBSOLESCENCE, WORKING ORDER OR FITNESS FOR A PARTICULAR PURPOSE OF ANY OF THE ACQUIRED ASSETS. EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE IV, THE ACQUIRED ASSETS ARE SOLD TO TANDY “AS IS AND WHERE IS.”

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF TANDY

Tandy represents and warrants to Chambers, as of the date of this Agreement, as follows:

Section 5.1 Organization. Tandy is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business and the Business being acquired as now being conducted.

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Section 5.2 Authority. Tandy has the requisite corporate power and authority to execute and deliver this Agreement, the Wrangler Amendments and Assignments and the Tandy Closing Documents and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement, the Wrangler Amendments and Assignments and the Tandy Closing Documents by Tandy and the consummation by Tandy of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of Tandy, and no other corporate proceedings on the part of Tandy are necessary to authorize this Agreement, the Wrangler Amendments and Assignments and the Tandy Closing Documents (to the extent it will be a party thereto) or for Tandy to consummate the transactions so contemplated thereby. This Agreement and the Wrangler Amendments and Assignments have been, and each of the Tandy Closing Documents will upon execution and delivery thereof in accordance with the terms hereof be, duly executed and delivered by Tandy (to the extent such agreement is not being entered into as of the date hereof) will constitute a valid and binding obligation of Tandy, enforceable against Tandy in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3 Consents and Approvals; No Violations.

(a) Neither the execution, delivery or performance of this Agreement, the Wrangler Amendments and Assignments by Tandy or the consummation of the transactions contemplated hereby and thereby or by the Tandy Closing Documents nor compliance by Tandy with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the charter or by-laws of Tandy, (ii) require any filing by Tandy with, or any permit, authorization, consent or approval of, any Governmental Entity to be obtained by Tandy, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement, franchise, permit, concession or other instrument, obligation, understanding, commitment or other arrangement to which Tandy is a party or by which any of them or any of their properties or assets may be bound or affected, or (iv) violate any order, writ, injunction, decree, statute, ordinance, rule or regulation applicable to Tandy.

(b) Tandy is not in conflict with, or in default or violation of, any note, bond, mortgage, indenture, lease, license, contract, agreement, franchise, permit, concession or other instrument, obligation, understanding, commitment or other arrangement to which Tandy is a party or by which its properties or assets may be bound or affected.

Section 5.4 Sufficient Funds and Credit Availability. Tandy has and will have sufficient funds and credit availability to fund payment in full of the Purchase Price anticipated to be due at Closing and to make future payment of the Earn-Out Amount due hereunder after Closing, including, but not limited to, those contemplated under Section 3.1(d), and to fund those operations (including those of its Subsidiaries) as set forth in Section 3.1(d)(ii) and to meet those obligations.

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Section 5.5 Reliance on Representations and Warranties. Tandy acknowledges that it enters into this Agreement and agrees to consummate the transactions contemplated hereby in sole reliance on the express representations and warranties contained in this Agreement and not upon any other information furnished to Tandy by or on behalf of Chambers. TANDY FURTHER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE IV, CHAMBERS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, INCLUDING THE QUALITY, CONDITION, NON-INFRINGEMENT, MERCHANTABILITY, SALABILITY, OBSOLESCENCE, WORKING ORDER OR FITNESS FOR A PARTICULAR PURPOSE OF ANY OF THE ACQUIRED ASSETS. EXCEPT AS EXPRESSLY SO SET FORTH IN ARTICLE IV, THE ACQUIRED ASSETS ARE SOLD TO TANDY “AS IS AND WHERE IS.”

ARTICLE VI

COVENANTS

Section 6.1 Conduct of Chambers’ Business. During the period from the date of this Agreement and continuing until the Closing Date, Chambers agrees that, except as otherwise expressly provided for in this Agreement, or to the extent that Tandy shall otherwise consent in writing:

(a) Ordinary Course. Chambers shall conduct the operations of its Business in the Ordinary Course of Business and exercise commercially reasonable efforts to preserve substantially intact its relationships with its material customers and suppliers relating to the Business. Chambers shall maintain at current levels all insurance related to the Acquired Assets and the Business, and shall not terminate the services of its present employees dedicated to the Business.

(b) Specific Actions. Without limiting the generality of the foregoing, from the date hereof to the Closing Date, Chambers will not:

(i) Sell, pledge, lease, license or otherwise dispose of any of the Acquired Assets, other than inventory in the Ordinary Course of Business;

(ii) Create or incur any Encumbrance upon the Acquired Assets or suffer to exist any such Encumbrance other than any Encumbrance associated with the Wells Fargo debt;

(iii) Enter into any contracts or commitments involving or engage in any transactions involving the Acquired Assets, in either case that is not in the Ordinary Course of Business;

(iv) Fail to maintain its books and records relating to the Acquired Assets in the Ordinary Course of Business; or

(v) Agree or commit to do any of the foregoing.

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Section 6.2 Reasonable Efforts. Subject to the terms and conditions of this Agreement each of the Parties agree to use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under this Agreement and under applicable contracts, laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including satisfying all conditions precedent that are under their respective control, and will promptly cooperate with and furnish information to each other in connection with any such requirements imposed upon any of them;

Section 6.3 Access to Information. Upon reasonable notice, Chambers shall afford to the officers, employees, accountants, counsel and other representatives of Tandy, access, during normal business hours during the period prior to the Closing Date and for a reasonable period of time following the Closing Date to the extent necessary for Tandy to prepare or evaluate any schedules or filings contemplated by this Agreement, and to inspect all its properties, books, contracts, commitments and records and all other information related solely to the Acquired Assets, and the Assumed Liabilities as Tandy may reasonably request.

Section 6.4 Confidentiality. The Parties hereto acknowledge that they have previously entered into a Confidentiality Agreement dated November 12, 2008 and that such agreement continues in full force and effect notwithstanding the execution of this Agreement and that it shall continue in full force effect after the Closing.

Section 6.5 Employee Matters. At Tandy’s request, Chambers shall cooperate with Tandy in identifying those employees of Chambers or Chambers de Mexico who Tandy may wish to hire, either as employees or consultants and in facilitating the employment or the engagement as consultants by Tandy, after the Closing Date, of such individuals, which Tandy elects to employ or engage as a consultant, including permitting Tandy to interview and offer employment or consulting agreements to such employees. The Parties hereby acknowledge that Tandy is under no obligation whatsoever to employ any current or future employees of Chambers.

Section 6.6 Notification of Certain Matters.

(a) Each Party shall give prompt notice to the other of (i) the occurrence, or non-occurrence, of any event the occurrence, or non-occurrence, of which would be reasonably likely to cause (A) any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect or (B) any covenant, condition or agreement made by such Party in this Agreement not to be complied with or satisfied in any material respect and (ii) any failure of such Party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder in any material respect. Subject to Section 6.6(b) or as otherwise expressly provided herein, the delivery of any notice pursuant to this Section 6.6(a) shall not limit or otherwise affect the remedies hereunder of the Party receiving such notice.

(b) Upon the occurrence after the date hereof of any event, fact or circumstance which would cause any of the representations or warranties in Section 4.10 to be false, inaccurate or breached, and upon the delivery of any notice thereof to Tandy

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pursuant to Section 6.6(a), Tandy shall be deemed to have waived any claim for damages, Losses (as defined herein at Section 9.2) or any other remedy or relief arising therefrom and Tandy shall be entitled to terminate this Agreement to the extent provided in Section 10.1(c).

Section 6.7 Fees and Expenses. Whether or not the transactions contemplated by this Agreement are consummated, except as otherwise specifically provided for in this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses.

Section 6.8 Transfer Taxes. Tandy and Chambers shall each be responsible to pay for one-half of all sales, use, transfer, recording, and other similar Taxes and fees, including, without limitation, all bulk sales Taxes arising out of or in connection with the transactions contemplated by this Agreement

ARTICLE VII

CONDITIONS

Section 7.1 Conditions of Obligations of Tandy. The obligations of Tandy to effect the transactions contemplated by this Agreement are subject to the satisfaction, on or prior to the Closing Date, of the following conditions unless waived in writing by Tandy:

(a) Representations and Warranties. The representations and warranties of Chambers set forth in Article IV shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except to the extent that such representations and warranties are qualified by the term “material,” in which case such representations and warranties shall be true and correct in all respects), and Chambers shall have delivered to Tandy at Closing a certificate to such effect executed by an officer of Chambers.

(b) No Litigation. No action, suit, or proceeding shall be pending or threatened before any Governmental Entity or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would be reasonably expected to (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, or (iii) materially adversely affect the right of Tandy to own the Acquired Assets.

(c) Performance of Obligations of Chambers. Chambers shall have performed and complied with in all material respects all covenants required to be performed by it under this Agreement at or prior to the Closing Date (except to the extent that such covenants are qualified by the term “material,” in which case such covenants shall be performed in all respects).

(d) Chambers Closing Documents. Chambers shall have executed and delivered to Tandy all Chambers Closing Documents.

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(e) Termination of Encumbrances. Tandy shall have received evidence reasonably satisfactory to Tandy of the release of all Encumbrances affecting the Acquired Assets, including pay-off letters and copies of such UCC-1 terminations under the Uniform Commercial Code and any other similar applicable regulation of any financing or similar statements filed against any of the Acquired Assets in all applicable jurisdictions or Chambers shall otherwise provide evidence reasonably satisfactory to Tandy that all such Encumbrances are no longer effective.

Section 7.2 Conditions of Obligations of Chambers. The obligation of Chambers to effect the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions, on or prior to the Closing Date, unless waived in writing by Chambers:

(a) Representations and Warranties. The representations and warranties of Tandy set forth in Article V shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except to the extent that such representations and warranties are qualified by the term “material,” in which case such representations and warranties shall be true and correct in all respects), and Tandy shall have delivered to Chambers at Closing a certificate to such effect executed by an officer of Tandy.

(b) No Litigation. No action, suit, or proceeding shall be pending or threatened before any Governmental Entity or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would reasonably be expected to (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or (iii) materially adversely affect Tandy’s ability to perform and observe its post-Closing obligations under Section 3.1(d).

(c) Performance of Covenants of Tandy. Tandy shall have performed and complied with in all material respects all covenants required to be performed by Tandy under this Agreement at or prior to the Closing Date (except to the extent that such covenants are qualified by the term “material,” in which case such covenants shall be performed in all respects).

(d) Tandy Closing Documents. Tandy shall have executed and delivered to Chambers all of the Tandy Closing Documents.

(e) Required Consents. The Required Consents shall have been obtained on terms and conditions acceptable to Chambers and Wells Fargo shall have agreed to release its security interest in the Acquired Assets.

Section 7.3 If Conditions Not Satisfied. In the event that any of the foregoing conditions of obligations of a Party shall fail to have been satisfied, such Party may elect, in its sole discretion, to consummate the transactions contemplated by this Agreement despite such failure, in which event such Party shall be deemed to have waived any claim for damages, Losses (as defined herein at Section 9.2) or other relief arising from or in connection with such failure, unless otherwise agreed in a writing executed by both Parties.

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ARTICLE VIII

CERTAIN POST-CLOSING COVENANTS

Section 8.1 Books and Records.

(a) Tandy shall not within six (6) years after the Closing Date dispose of or destroy any business records or files related to the Acquired Assets for periods prior to the Closing Date, without first offering to turn over possession thereof to Chambers by written notice at least thirty (30) days prior to the proposed dates of such disposition or destruction.

(b) From and after the Closing Date, to the extent reasonably required in connection with the preparation of tax returns or other legitimate purposes specified in writing, Tandy shall allow Chambers and its agents access to all business records and files included as part of the Acquired Assets for all periods prior to the Closing Date, upon reasonable advance notice during normal working hours, and Chambers shall have the right, at its own expense, to make copies of any such records and files, provided, however, that any such access or copying shall be had or done in such a manner so as not to interfere with the normal conduct of business of Tandy.

Section 8.2 Chambers Corporate Name. At the Closing, Tandy shall be deemed to grant to Chambers a royalty free, worldwide, perpetual and non-terminable license to use the name “Chambers” solely in its corporate name, and Chambers shall discontinue further use of the “Chambers” name, except where legally required to identify Chambers until its name has been changed. Chambers shall file articles of amendment or otherwise take such action as may be necessary to change its name to another name not including the word “Chambers” and otherwise not being confusingly similar to its present name within forty-five (45) days following Closing. Chambers shall not use a trademark, trade name or service mark in connection with the new name which is similar to any trademark, trade name or service mark used by the Business.

Section 8.3 Bulk Sales Law. Tandy hereby waives compliance with any bulk sales law in connection with the transactions contemplated by this Agreement. Chambers agrees to pay and discharge all claims of creditors which may be asserted against Tandy by reason of Chambers’ non-compliance with the provisions of the bulk sales law of any state (excluding Assumed Liabilities) which may require bulk sales law compliance on account of the provisions herein and the transactions contemplated hereby.

Section 8.4 Further Assurances; Subsequent Transfers. From time to time, each of the Parties hereto will execute and deliver such further instruments and will take such other actions as Tandy, on the one hand, or Chambers, on the other hand, may reasonably request in order to effectuate the purposes of this Agreement and to carry out the terms hereof. Without limiting the generality of the foregoing, at any time and from time to time after the Closing Date, (a) at the request of Tandy, Chambers will execute and deliver such other instruments of transfer, and take such action as Tandy may reasonably deem necessary in order to effectively transfer, convey and assign to Tandy all of the Acquired Assets, to put Tandy in actual possession and operating control thereof (which excludes physically moving or delivery of any Acquired Assets) and to permit Tandy to exercise all rights with respect thereto (including, without limitation, rights under contracts and other arrangements as to which the consent of any third party to the transfer

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thereof shall not have previously been obtained) and to properly assume and discharge the related Assumed Liabilities, and (b) at the request of Chambers, Tandy will execute and deliver such other instruments and agreements, and take such action, as Chambers may reasonably deem necessary in order ensure that Tandy has assumed from Chambers all of the Assumed Liabilities and to confirm Chambers’ right, title and interest in and to the Retained Assets.

Section 8.5 Delivery of Acquired Assets. On the Closing Date, Tandy at its sole cost and expense shall cause all Acquired Assets to be physically removed from Chamber’s facilities and business premises and shall have full risk of loss with respect to all of the Acquired Assets.

ARTICLE IX

INDEMNIFICATION

Section 9.1 Survival of Representations and Warranties.

(a) All representations and warranties of the Parties set forth in this Agreement shall terminate and expire on the first anniversary of the Closing. Notice with respect to any claim in respect of any breach of any representation or warranty shall be in writing, shall state specifically the particulars of any such breach, the alleged amount of Losses (as defined in Section 9.2) resulting therefrom and a reasonable explanation of the basis therefor and shall be delivered to the Party against which such claim is asserted. Any representation or warranty shall survive the time it would otherwise terminate pursuant to this Section 9.1 to the extent that the Party claiming indemnification for such breach shall have delivered to the other Party written notice in accordance with the foregoing prior to the expiration of such time pursuant to this Section 9.1; provided, that after the delivery of any such notice, the Party claiming indemnification shall expeditiously pursue the resolution of such claim.

(b) All covenants and agreements made by the Parties to this Agreement which contemplate performance following the Closing Date, including those under Section 3.1, and Articles VIII, IX and XI shall survive the Closing Date. All other covenants and agreements shall not survive the Closing Date and shall terminate as of the Closing.

Section 9.2 Chambers’ Indemnification. Subject to the terms and conditions herein, Chambers hereby agrees to indemnify and hold Tandy and its directors, officers, employees and agents (“Chambers Indemnitees”) harmless from all loss, injury, liability, cost, expense or actual damages (including, without limitation, interest, penalties and reasonable attorneys’ fees and disbursements incurred in enforcing its rights hereunder but excluding indirect or consequential damages) (“Losses”) at all times from and after the Closing Date to the extent resulting from or caused by:

(a) Any breach by Chambers’ of its (i) representations or warranties for which written notice has been provided to Chambers in accordance with Section 9.1 or (ii) covenants contained herein;

(b) Any and all demands, claims, actions, suits, proceedings or assessments claimed or brought by any third party to the extent based (i) on any fact, event or circumstance which would result in a valid claim under Section 9.2(a), (ii) the Retained Liabilities or (iii) Chambers failure to fully comply with the laws referred to in Section 8.3 hereof, together with any judgments and reasonable costs and legal and other expenses associated therewith.

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Section 9.3 Tandy’s Indemnification. Subject to the terms and conditions herein, Tandy hereby agrees to indemnify, defend and hold Chambers and its directors, officers, stockholders, employees and agents (“Tandy Indemnitees”) harmless from all Losses resulting from or caused by (a) any breach by Tandy of its (i) representations or warranties for which written notice has been provided to Tandy in accordance with Section 9.1 or (ii) covenants contained herein, (b) any Assumed Liabilities and (c) any and all demands, claims, actions, suits or proceedings or assessments claimed or brought by any third party to the extent based on any fact, event or circumstance which would result in a valid claim under Section 9.3(a), together with any judgments and reasonable costs and legal and other expenses associated therewith.

Section 9.4 Procedures.

(a) If any Chambers Indemnitee or Tandy Indemnitee (each, an “Indemnified Party”) believes that it has suffered or incurred or will suffer or incur any Losses for which it is entitled to indemnification under this Article IX, such Indemnified Party shall so notify the Party or Parties from whom indemnification is being claimed (the “Indemnifying Party”) with reasonable promptness and reasonable particularity in light of the circumstances then existing. If any action at law or suit in equity is instituted by or against a third party with respect to which any Indemnified Party intends to claim any Losses, such Indemnified Party shall promptly notify the Indemnifying Party of such action or suit. The failure of an Indemnified Party to give any notice required by this Section shall not affect any of such Party’s rights under this Article IX or otherwise except and to the extent that such failure is actually prejudicial to the rights or obligations of the Indemnified Party.

(b) Upon being given notice of any third party claim against an Indemnified Party, the Indemnifying Party shall have the right upon written notice to the Indemnified Party to assume the defense and conduct and control, through counsel of its choosing, of such third party claim, action or suit contemplated by Section 9.2(b) or 9.3(b), as applicable. The Indemnified Party shall cooperate in all reasonable respects with the Indemnifying Party and its attorneys in the investigation, trial and defense of the third party claim and any appeal arising therefrom. Upon assuming the defense of a third party claim, the Indemnifying Party may compromise or settle the same, provided either that (i) the settlement shall include as an unconditional term thereof the giving of a complete release from liability with respect to such action or suit to the Indemnified Party or (ii) the Indemnifying Party shall give the Indemnified Party advance notice of any proposed compromise or settlement and the Indemnified Party shall have consented in advance in writing to the proposed compromise or settlement (which consent shall not be unreasonably withheld). The Indemnifying Party shall permit the Indemnified Party to participate in the defense of any such action or suit through counsel chosen by the Indemnified Party, provided that the fees and expenses of such counsel shall be borne by the Indemnified Party. If the Indemnifying Party undertakes to conduct and control the conduct and settlement of such action or suit, the Indemnifying Party shall not thereby permit to exist any Encumbrance upon any asset of the Indemnified Party as a result of the claim being indemnified. The Indemnifying Party shall permit the Indemnified Party to participate in any settlement negotiations through counsel chosen by the Indemnified Party (at its own cost and expense).

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If an Indemnifying Party fails to assume the defense of a third party claim within fifteen (15) calendar days after receipt of the notice of the third party claim as provided above, the Indemnified Party against which such third party claim has been asserted will upon delivering notice to such effect to the Indemnifying Party have the right to undertake, at the Indemnified Party’s cost, risk and expense, the defense, compromise or settlement of such Third Party Claim on behalf of and for the account and risk of Indemnifying Parties; provided, however, that such third party claim shall not be compromised or settled without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld). If the Indemnified Party assumes the defense of the third party claim, the Indemnified Party will keep the Indemnifying Party reasonably informed of the progress of any such defense, compromise or settlement of any action effected pursuant to and in accordance herewith.

Section 9.5 Limitations on Indemnification Rights.

(a) Threshold Amount. An Indemnifying Party under this Article IX shall not be liable to the Indemnified Party for Losses associated with misrepresentations or breaches of warranties which do not result in Losses that do not exceed $50,000 in the aggregate; PROVIDED, HOWEVER, that this limitation shall not apply with respect to the indemnification otherwise due for any claims brought by a third party.

(b) Maximum Amount. Notwithstanding anything herein, the maximum liability of Chambers under this Article IX based on or relating to any breach or alleged breach of any representation or warranty shall be an amount equal to the Purchase Price, excluding, however the Earn-Out Amount.

(c) Time Period. The indemnification provisions under this Article IX (other than those based solely on a breach of a covenant) shall continue for one year from the Closing Date and shall terminate upon expiration of such period. Any claim or demand made under Section 9.2 against Chambers or Section 9.3 against Tandy of which notice has been given in good faith pursuant to Section 9.4 at or prior to the expiration of the one year period shall continue to be subject to indemnification hereunder notwithstanding the expiration of such period.

Section 9.6 Exclusivity.

(a) The Parties hereby acknowledge and agree that as of and after the Closing, their sole and exclusive remedy with respect to any and all claims (other than those based on a breach of a covenant) shall be pursuant to the indemnification provisions set forth in this Article IX. In furtherance of the foregoing, the Parties hereby waive (other than with respect to a breach of a covenant), to the fullest extent permitted under applicable law, any and all rights, claims and causes of action it may have against the other arising under or based upon any federal, state or local statute, law ordinance, rule or regulation (including any such rights, claims or causes of action arising under or based upon common law or otherwise) with respect to all such claims. Notwithstanding anything else contained in this Article IX, neither party shall be entitled to indirect or consequential damages hereunder.

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(b) For avoidance of doubt, Tandy acknowledges and agrees that the foregoing exclusivity provisions and limitations shall not apply in any respect to its covenants and undertakings in Section 3.1.

Section 9.7 Limited Right of Set-Off.

(a) The Parties agree and acknowledge that Tandy shall have the right in accordance with the terms of this Section 9.7 to set-off any Losses claimed by a Chambers Indemnitee pursuant to this Article IX or any payments by Tandy pursuant to and as required by the Tandy Remaining Royalty Obligation Guaranty against all or any portion of the Earn-Out Monthly Payments or the Earn-Out Amount which may be payable pursuant to this Agreement if and only if, and to the extent (in terms of dollars) that:

(i) Chambers has failed to make all or any portion of a Remaining Quarterly Royalty Obligation (a “Royalty Default”) when due (unless and except to the extent the amount thereof is disputed in good faith by Chambers in accordance with the terms of the Wrangler Mass License or the Wrangler Amendment and Assignment relating to the Wrangler Mass License) and Tandy has made a payment with respect thereto under the Tandy Remaining Royalty Obligation Guaranty, provided that written notice of such Royalty Default together with evidence of Tandy’s payment thereof is delivered to Chambers and Chambers has not reimbursed Tandy therefore within two (2) business days following the date of such notice;

(ii) Chambers and Tandy have entered into a binding written agreement setting forth an agreed upon amount with respect to Losses to be paid by Chambers to Tandy pursuant to Article IX; or

(iii) a final, non-appealable judgment is entered against Chambers based on an order of a Court which has jurisdiction with respect to such matter pursuant to Section 11.8 which requires payment of Losses from Chambers to Tandy pursuant to a claim under Article IX.

(b) Tandy expressly agrees and acknowledges that it shall not be entitled to withhold from any Earn Out Payment any Losses or other amounts alleged to be due and owing based thereon, whether set forth in an indemnification notice or otherwise, other than with respect to Losses described in Section 9.7(a)(i), (ii) or (iii). If any portion of an Earn-Out Payment is withheld on the basis of an unresolved claim under Article IX or any other provision of this Agreement or any other instrument, agreement or document executed and delivered in connection herewith or based on a claim at common law, such withholding shall constitute an Earn-Out Default and Chambers shall have its rights and remedies with respect thereto as any other rights and remedies which may be available as a result thereof.

ARTICLE X

TERMINATION AND AMENDMENT

Section 10.1 Termination. This Agreement may be terminated at any time prior to the Closing Date as follows:

(a) by mutual written consent of Tandy and Chambers;

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(b) by either Party if the Closing shall not have occurred on or before July 10, 2009 (unless the failure to so consummate the Closing by such date shall be due to the action or failure to act of the Party seeking to terminate this Agreement, which action or failure to act constitutes a breach of this Agreement);

(c) by Tandy if (i) there has been a material breach on the part of Chambers in the representations, warranties or covenants of Chambers set forth herein, or (ii) any failure on the part of Chambers to comply with its obligations hereunder, such that, in any such case, any of the conditions to the Closing set forth in Section 7.1 hereof could not be satisfied on or prior to July 6, 2009, provided Tandy first gives Chambers written notice thereof and such material breach or failure of performance is not cured within 10 days thereafter; or

(d) by Chambers if (i) there has been a material breach on the part of Tandy in the representations, warranties or covenants of Tandy set forth herein, or (ii) any failure on the part of Tandy to comply with its obligations hereunder, such that, in any such case, any of the conditions to the Closing set forth in Section 7.2 hereof could not be satisfied on or prior to July 6, 2009, provided Chambers first gives Tandy written notice thereof and such material breach or failure of performance is not cured within 10 days thereafter.

Section 10.2 Effect of Termination. In the event of a termination of this Agreement as provided in Section 10.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Tandy, Chambers or their affiliates or respective officers or directors; provided, however, that any such termination shall not relieve any Party from liability for any breach of this Agreement existing as of the date of termination.

ARTICLE XI

MISCELLANEOUS

Section 11.1 Amendment. This Agreement may be amended by the Parties hereto at any time by an instrument in writing signed by each of the Parties hereto.

Section 11.2 Extension; Waiver. At any time prior to the Closing Date, the Parties hereto may agree to (a) extend the time for the performance of any of the obligations or other acts of the other Parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (c) waive compliance with any of the agreements or conditions contained here. Any agreement on the part of a Party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party.

Section 11.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given on the date delivered if delivered personally (including by reputable overnight courier) or on the date received if mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

(a) if to Chambers, to:

c/o Phoenix Footwear Group, Inc.

5840 El Camino Real, Suite 106

Carlsbad, California 92008

Attention: James Riedman, Chairman

Email Address: james.riedman@phxg.com

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with a copy to:

Woods Oviatt Gilman LLP

700 Crossroads Building

Rochester, New York 14614

Attention: Gordon E. Forth, Esq.

Email Address: gforth@woodsoviatt.com

(b) if to Tandy, to:

Tandy Brands Accessories, Inc.

690 E. Lamar Blvd., Suite 200

Arlington, Texas 76011

Attention: N. Roderick McGeachy, III, President

Email Address: rod_mcgeachy@tandybrands.com

with a copy to:

Winstead PC

1201 Elm, 5400 Renaissance Tower

Dallas, Texas 75270

Attention: Christopher D. Williams, Esq.

Email Address: cwilliams@winstead.com

Section 11.4 Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.” The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date first set forth in the beginning of this Agreement. The Parties have been represented by counsel who have carefully negotiated the provisions hereof. As a consequence, the Parties do not intend that the presumptions of any laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement and therefore waive their effects. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intent of the Parties.

Section 11.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. Either Party may execute this Agreement by facsimile signature and the other Party is entitled to rely on such facsimile signature as evidence that this Agreement has been duly executed by such Party.

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Section 11.6 Entire Agreement; No Third Party Beneficiaries. This Agreement (including the documents and the instruments referred to herein) together with the Wrangler Amendment and Assignments (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof and thereof, and (b) is not intended to confer upon any person other than the Parties hereto and thereto any rights or remedies hereunder or thereunder.

Section 11.7 Governing Law. This Agreement has been executed and delivered in the State of Delaware and shall be governed and construed in accordance with the laws of the State of Delaware without regard to any applicable conflicts of law principles.

Section 11.8 Jurisdiction and Venue. 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 (including any action or proceeding for the enforcement of any arbitration award made in connection with any arbitration of a dispute hereunder) and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Except as otherwise provided in Section 3.1(e), 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. Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 11.3 above. Nothing in this Section, however, shall affect the right of any Party to serve legal process in any other manner permitted by law or at equity. Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. All proceedings under this Section 11.8, and all evidence given or discovered pursuant hereto, shall be maintained in confidence by all parties and the arbitrators.

Section 11.9 Publicity. Except as otherwise required by law or stock exchange rules, neither Tandy nor Chambers shall issue or cause the publication of any press release or other public announcement with respect to the transactions contemplated by this Agreement without the consent of the other Party, which consent shall not be unreasonably withheld or delayed.

Section 11.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto (whether by operation of law or otherwise) without the prior written consent of the other Parties; except that Chambers may collaterally assign all of its rights hereunder to Wells Fargo. This Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, Tandy and Chambers have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.

TANDY BRANDS ACCESSORIES, INC.

By:

Name:

Title:

CHAMBERS BELT COMPANY

By:

Name:

Title:

List of Exhibits

Exhibit A	-	Assignment and Assumption of Orders Agreement
Exhibit B-1	-	Assignment of Trademarks
Exhibit B-2	-	Assignment of Copyrights
Exhibit C	-	Bill of Sale
Exhibit D	-	Phoenix Footwear Group, Inc. Guaranty
Exhibit E	-	Earn-Out Monthly Certificate

List of Disclosure Schedules

1.1	Accepted Inventory Styles
2.1(a)(i)	Assigned Orders
2.1(a)(ii)	Acquired Equipment
2.1(a)(iv)(A)	Acquired Copyrights
2.1(a)(iv)(B)	Chambers Trademark
2.1(a)(iv)(C)	Absolutely Fresh Trademark
4.5	Product Safety Violations, etc.
4.10	Material Customers

(Exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but a copy will be furnished supplementally to the Securities and Exchange Commission upon request)

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EX-10.2

Exhibit 10.2

GUARANTY

Reference is hereby made to that certain Amended and Restated Asset Purchase Agreement dated as of July 9, 2009 (the “Purchase Agreement”) between Tandy Brand Accessories, Inc. (“Tandy”) and _,Chambers Belt Company (“Chambers”). Capitalized terms used herein and not otherwise defined shall have the meaning given thereto in the Purchase Agreement.

1. This Guaranty is being executed pursuant to the Purchase Agreement to satisfy a condition to closing.

2. Phoenix Footwear Group, Inc. (“Parent”) hereby irrevocably and unconditionally guarantees, subject to Paragraph 4 below, Chambers’ performance of all of its obligations under the Purchase Agreement and the Chambers Closing Documents, including payment of any liability, on the terms and conditions therein. During the term of this Guaranty, Parent shall not be discharged or released hereunder by reason of the discharge or release of Chambers from its obligations under the Purchase Agreement or the Chambers Closing Documents for any reason, including a discharge of Chambers in bankruptcy, receivership or other insolvency proceeding, a stay or other enforcement restriction in any such proceeding, or any other reduction, modification, impairment or limitation of the liability of Chambers.

3. Parent hereby acknowledges, subject to Paragraph 4 below, that Tandy may proceed directly against it to enforce its rights under this Agreement or the Chambers Closing Documents and waives any rights it may have to compel Tandy to first proceed against Chambers.

4. Notwithstanding anything herein or elsewhere to the contrary, Parent’s obligations under this Guaranty shall at all times be subject to all defenses, offsets and cross claims or counterclaims which may exist in favor of Chambers against Tandy or any Tandy Indemnitee other than defenses based solely on bankruptcy or insolvency laws referred to above.

5. This Guaranty constitutes the sole agreement between Tandy and Parent concerning the subject matter hereof and may be amended or modified only by a written instrument executed by both Tandy and Parent specifically referring to this Guaranty.

6. This Guaranty shall be governed by the laws of Delaware.

7. Any litigation involving this Guaranty shall be adjudicated in a Court located in the State of Delaware. Parent and Tandy by accepting this Guaranty irrevocably consent to the jurisdiction and venue of such courts and waive any objection thereto.

PHOENIX FOOTWEAR GROUP, INC.

By

Name:

Title:

Date:

Accepted and Agreed:

TANDY BRANDS ACCESSORIES, INC.

Name:

Title:

Date:

EX-10.3

Exhibit 10.3

AMENDMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS AMENDMENT, ASSIGNMENT, AND ASSUMPTION AGREEMENT (this “Amendment and Assignment”) effective as of the Closing Date, as hereinafter defined, is entered into by and among Wrangler Apparel Corp., a Delaware corporation (“Licensor”), Chambers Belt Company, a Delaware corporation (“Assignor”), and Tandy Brands Accessories, Inc., a Delaware corporation (“Assignee”) (Licensor, Assignor, and Assignee being hereinafter sometimes collectively referred to as the “Parties”).

W I T N E S S E T H:

WHEREAS, Licensor and Assignor entered into a License Agreement effective as of January 1, 2007 (the “Original License Agreement”) for the manufacture, distribution, and sale of Licensed Products in the Licensed Territory;

WHEREAS, Assignor and Assignee have previously entered into an Asset Purchase Agreement dated as of April 23, 2009 (the “Purchase Agreement”), whereby Assignee has agreed to purchase certain assets of Assignor and to assume, pay, satisfy, and discharge certain liabilities and obligations of Assignor;

WHEREAS, the Purchase Agreement specifically excludes the assignment and assumption of the Original License Agreement;

WHEREAS, concurrently herewith, the Assignor and Assignee are amending and restating the Purchase Agreement by executing and delivering an Amended and Restated Purchase Agreement (the Purchase Agreement as so amended and restated hereinafter being referred to as the “Amended Purchase Agreement”), which, among other things, provides for Assignor’s assignment, transfer, and conveyance to Assignee of all of Assignor’s right, title, and interest in and to the Original License Agreement, as amended hereby, with respect to all periods after the Closing and Assignee’s assumption of all of the contractual obligations of Assignor thereunder after the Closing, excluding, however, the Remaining Quarterly Royalty Obligations;

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WHEREAS, concurrent with the assignment and assumption of the Original License Agreement, effective as of the Closing, the Parties wish to amend the Original License Agreement in accordance with the terms of this Amendment and Assignment;

WHEREAS, Assignor has provided evidence satisfactory to Licensor of payment in full of the outstanding amounts owed by Assignor to American Belt Company in connection with phase 1 of a fixtures program for an Authorized Retailer administered by American Belt Company in which Assignor participated (the “American Belt Fixture Program”); and

WHEREAS, Assignee has executed a guaranty that will become effective on the Closing Date if the Closing occurs (the “Guaranty”) in favor of Licensor in the total amount of the Remaining Quarterly Royalty Obligations, and Licensor is relying on such Guaranty in entering into this Amendment and Assignment.

NOW, THEREFORE, in consideration of the terms and conditions set forth below and other good and valuable consideration, receipt of which is hereby acknowledged, the Parties agree as follows:

1. The Original License Agreement, as amended by this Amendment and Assignment, shall hereinafter be referred to as the “Agreement;” the terms capitalized herein and defined herein shall have the meanings ascribed to such terms herein; the terms “Closing” and “Closing Date” shall have the meanings ascribed to those terms in the Purchase Agreement; the term “Contractual Obligations” shall mean all covenants, duties, undertakings and obligations to be observed, paid, discharged or performed, as the case may be, at any time after the Closing Date under the Agreement; and all other terms capitalized but not defined in this Amendment and Assignment shall have the meanings ascribed to those terms in the Original License Agreement.

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2. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting the chart in Section 5.1 thereof and by substituting the following chart in lieu thereof:

CONTRACT YEAR	PERCENTAGE ROYALTY
First: January 1, 2007 – December 31, 2007	5%
Second: January 1, 2008 – December 31, 2008	5%
Third: January 1, 2009 – June 30, 2009	5%
Fourth: July 1, 2009 – December 31, 2009	5%
Fifth: January 1, 2010 – June 30, 2010	4%

3. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting Section 5.2 thereof and by substituting the following in lieu thereof:

5.2 For each Contract Year, Licensee shall pay the minimum royalty (the “Minimum Royalty”) shown for each Contract Year in the chart below, except that Licensee shall pay $800,000 in Minimum Royalty for the Third and Fourth Contract Years combined. The Minimum Royalty shall be paid as provided in Section 5.4 hereof.

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CONTRACT YEAR	MINIMUM ROYALTY
First: January 1, 2007 – December 31, 2007	$600,000
Second: January 1, 2008 – December 31, 2008	$700,000
Third: January 1, 2009 – June 30, 2009	See text of Section 5.2 above
Fourth: July 1, 2009 – December 31, 2009	See text of Section 5.2 above
Fifth: January 1, 2010 – June 30, 2010	$0

4. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting the chart in Section 5.3 thereof and by substituting the following chart in lieu thereof:

CONTRACT YEAR	MINIMUM NET SALES
First: January 1, 2007 – December 31, 2007	$12,000,000
Second: January 1, 2008 – December 31, 2008	$14,000,000
Third: January 1, 2009 – June 30, 2009	$0
Fourth: July 1, 2009 – December 31, 2009	$0
Fifth: January 1, 2010 – June 30, 2010	$0

5. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting Section 5.7 thereof and by substituting the following in lieu thereof:

5.7 (a)  Licensee agrees to expend in each of the First, Second, and Third Contract Years in advertising Licensed Products  (“Advertising Expenditures”) a sum not less than one percent (1%) of Net Sales, which sum shall be expended for  Advertising in support of the Licensed Trademarks, and for Licensee’s proportionate share of expense, as agreed between

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Licensor’s Representative and Licensee, all as approved by Licensor in accordance with Section 2.4 hereof. In trade advertising and under any marketing support fund, Licensee shall closely follow the advertising image and copy concepts indicated by Licensor’s Representative in advertising its products for sale under the Licensed Trademarks. Licensee shall keep a true and accurate account of all Advertising Expenditures and shall submit to Licensor’s Representative, quarter-annually for the quarters ending on the last days of March, June, September, and December of each year, an advertising expenditures report in the form attached as Schedule 5.7 hereto with actual advertisements attached (“Quarterly Advertising Expenditures Report”), each such Quarterly Advertising Expenditures Report to be received by Licensor within twenty-five (25) days after the end of the quarter for which the Quarterly Advertising Expenditures Report is due. Licensee shall pay to Licensor within twenty-five (25) days after the end of each Contract Year except the Third Contract Year a sum equal to one percent (1%) of Net Sales minus the amount of the Advertising Expenditures for which Licensor’s Representative has received evidence satisfactory to it, in its sole discretion relating to such Contract Year. With regard to the Third Contract Year, such payment shall be made within twenty-five (25) days after the end of the Fourth Contract Year. Notwithstanding the foregoing, all Advertising Expenditures of Five Hundred Dollars ($500) or greater must be pre-approved in writing by Licensor’s Representative. Licensor shall have the right to terminate this Agreement upon written notice to Licensee if Licensee fails to expend the full amount of Advertising Expenditures required by this Section 5.7 or if Licensee fails to submit the Quarterly Advertising Expenditures Reports required by this Section 5.7 for two (2) or more consecutive quarters.

  (b) Licensee shall have no obligation to pay Advertising Expenditures in the Fourth or Fifth Contract Years. Licensee shall, however, immediately report to the employee designated by Licensor’s Representative under Section 30.2 hereof any requests by third parties for Advertising Expenditures. Licensor shall determine which requests, if any, should be granted, and Licensor and Licensee agree to negotiate in good faith whether any of the requests granted by Licensor will be funded by Licensee and, if so, what portion thereof.

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6. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by adding a new subsection (g) to Section 9.1 thereof as follows:

  (g) Licensed Products. Licensee shall submit five (5) samples of each style of Licensed Product to be manufactured under the Agreement to Licensor with a request for approval thereof, and Licensor shall return one (1) such sample, along with the approval or disapproval referenced above in this Section 9.1, to Assignee within ten (10) business days from the date that Licensor receives such samples and request for approval.

7. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting Section 11.2 and substituting the following in lieu thereof:

11.2 At any time prior to six (6) months before the date of expiration of this Agreement, Licensor may appoint a new licensee or distributor for the Licensed Products in the Distribution and Sales Licensed Territory, or it may determine to conduct the WRANGLER® mass channel belt business internally through the Wrangler Division of VF Jeanswear Limited Partnership, without utilizing a third- party licensee. In the event that Licensor appoints a new licensee or distributor or determines to conduct the WRANGLER® mass channel belt business internally through the Wrangler Division, it shall provide written notice of such intent to Licensee. Following such notice, Licensor or its newly appointed licensee or distributor may participate in any process required by an Authorized Retailer as a condition precedent to selling Licensed Products to such Authorized Retailer for shipment subsequent to the date of expiration of this Agreement, but Licensor or its newly appointed licensee or distributor may only sell Licensed Products in the Distribution and Sales Licensed Territory after December 31, 2009 for shipment subsequent to the date of expiration of this Agreement.

8. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting Article 18 in its entirety and by substituting the following in lieu thereof, and such amended Article 18 shall

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apply, constitute, and serve as the notice provision for all requirements under this Assignment and Amendment and as such is incorporated by reference herein:

ARTICLE 18 — Notices

All notices given or required to be given hereunder shall be deemed to be given and received (a) as of the date sent if sent by overnight courier or facsimile, with the facsimile notice promptly confirmed by United States registered mail, postage paid, return receipt requested, or (b) three (3) business days after being sent by United States certified mail, postage paid, return receipt requested and addressed as follows or to such other address as shall have been provided pursuant to notice under this Article:

LICENSOR:	General Counsel
	Wrangler Apparel Corp.
	3411 Silverside Road
	Wilmington, Delaware 19810
	Telephone: 302.477.3930
	Facsimile: 302.477.3932
with a copy to:	Vice President / General Manager – Mass Mens
	VF Jeanswear Limited Partnership
	400 North Elm Street
	Greensboro, NC 27401
	Telephone: 336.332.4436
	Facsimile: 336.332.4259
And with a copy to:	Director of Licensing
	VF Jeanswear Limited Partnership
	400 North Elm Street
	Greensboro, NC 27401
	Telephone: 336.332.4636
	Facsimile: 336.332.4650

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LICENSEE:	Mr. Rod McGeachy
	CEO
	Tandy Brands Accessories, Inc.
	690 E. Lamar Blvd., Ste. 200
	Arlington, TX 76011
	Telephone: 817-548-0090
	Facsimile: 817-548-1144
	E-mail: rod_mcgeachy@tandybrands.com
ASSIGNOR:	Mr. Rusty D. Hall
	President
	Chambers Belt Company
	5840 El Camino Real, Suite No. 106
	Carlsbad, CA 92008
	Telephone: 760.602.9688
	Facsimile: 760.602.9684
	E-mail: rhall@phxg.com

9. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting Article 24 thereof and by substituting the following in lieu thereof:

ARTICLE 24 — Term

This Agreement shall become effective as of January 1, 2007 and shall expire on June 30, 2010, unless sooner terminated as herein provided.

10. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original Agreement is hereby amended by adding new Articles 30 and 31 thereto as follows:

ARTICLE 30 — Transition of Business

30.1 Licensor contemplates that after the expiration of the Agreement, the WRANGLER® mass channel belt business may be conducted by the Wrangler Division without utilizing a third-party licensee. In order to facilitate the transition from Licensee to Licensor, Licensee agrees to provide Licensor’s Representative with the following with respect to Licensed

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Products for the period from the Closing Date through the expiration of the Agreement in a format mutually agreed upon between Licensor and Licensee:

(a) complete design specifications for each style of Licensed Product designed, manufactured, advertised, or sold under the Agreement, including all trim, leather, and/or component details;

(b) product development calendar for each season;

(c) five (5) samples of each style of Licensed Product to be manufactured under the Agreement. Submission of five (5) samples under Section 9.1 and Article 22 hereof shall satisfy the requirement of this Subsection 30.1(c);

(d) On October 1, 2009 and every time thereafter through the expiration of this Agreement that a new style is added to a particular Third Party Manufacturer’s production schedule or is moved from one Third Party Manufacturer to another or moved from one of a Third Party Manufacturer’s factories to another, Licensee shall provide Licensor with a list of the Licensed Products, broken down by style, color, and size, manufactured at each Third Party Manufacturer’s factory, as well as the complete name, mailing address, and exact physical location of each such Third Party Manufacturer factory;

(e) Licensee’s wholesale price list for each style, size, and color of Licensed Product as sold to each Approved Retailer;

(f) monthly inventory of finished Licensed Products that Licensee has on hand by style, color, and size;

(g) monthly inventory of Licensed Products in the process of manufacture by style, color, and size;

(h) to the extent available, the following point-of-sale information on a monthly basis, broken down by Approved Retailer:

(i) total number of units of Licensed Products sold, broken down by style, color, and size;

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(ii) total dollar amount of Licensed Products sold, broken down by style, color, and size;

(iii) total number of Licensed Products received by each Approved Retailer that month, broken down by style, color, and size;

(iv) total wholesale cost of Licensed Products received by each Approved Retailer that month multiplied by the number of units received, broken down by style, color, and size;

(v) total number of Licensed Product units in each Approved Retailer’s physical inventory at the end of the applicable month, broken down by style, color, and size;

(vi) total retail price of Licensed Product units in each Approved Retailer’s physical inventory the end of the applicable month, broken down by style, color, and size;

(i) to the extent available, the following department and item information on a monthly basis, broken down by Approved Retailer:

(i) Approved Retailer department number;

(ii) Approved Retailer fineline or other account-specific document listing relevant style grouping, size grouping, and color grouping variables;

(iii) Licensee style number;

(iv) Licensee UPC number;

(v) Approved Retailer item number and item description;

(vi) Approved Retailer size description;

(vii) Approved Retailer average price; and

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(viii) Total number of stores operated by each Approved Retailer where Licensed Products are sold.

(j) Within two (2) weeks after the Closing Date, a six (6)-month forecast for the period from the Closing Date to December 31, 2009 for each Approved Retailer, broken down by style, color, and size; and

(k) Any other information reasonably requested by Licensor that reasonably relates to transition of the WRANGLER® mass channel belt business.

Items to be provided monthly shall be submitted no later than the twenty-fifth (25^th) day of the month after the month for which such item is being submitted. Items to be provided weekly shall be submitted on Monday for the previous week.

30.2 Licensor shall notify Licensee of the name and contact information of the employee to participate in meetings with Approved Retailers on behalf of Licensor’s Representative. Licensee agrees to invite such employee to participate in all meetings with Approved Retailers relating to Licensed Product, with ample advance notice to allow for scheduling of attendance.

30.3 Within twenty (20) days after receipt of notice pursuant to Section 11.2 hereof, Licensee shall provide Licensor with a complete inventory of all finished Licensed Products and all Licensed Products on order from Third Party Manufacturers, as well as the anticipated delivery date(s) thereof. Licensor shall purchase, at Licensee’s cost including Licensee’s in-bound freight cost, all of Licensee’s finished active inventory of Licensed Products and all Licensed Products on order from Third Party Manufacturers against which Licensee has demonstrated, to Licensor’s sole satisfaction, a future forecast for sales. The Parties agree to negotiate in good faith to reach agreement on the timing of such purchase, as well as the timing and remaining logistics of the transfer of the business, except that the Parties agree that the inventory that Licensor is required by this Section 30.3 to purchase shall be made available to Licensor no later than two (2) months before expiration of this Agreement. Until the transfer of the business has been completed or the expiration of this Agreement, whichever occurs first, Licensee shall continue to take and fill orders for Licensed Products and shall continue to use its best efforts to promote the sale of the Licensed Products in the Distribution and Sales Licensed Territory.

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ARTICLE 31 — Licensor’s Representative a Third-Party Beneficiary

Licensor’s Representative is a third-party beneficiary of Article 30 of this Agreement.

11. In the event the Closing occurs, then effective on the Closing Date, all terms and conditions of the Original License Agreement not amended hereby shall remain the same and in full force and effect and shall be deemed to be ratified and affirmed in all respects and to continue as part of the terms of the Agreement, and all terms and conditions of the Original License Agreement amended hereby shall become in full force and effect as so amended and shall be deemed to be ratified and affirmed in all respects and to continue, as so amended, as part of the terms of the Agreement. Assignee hereby acknowledges and agrees that Assignor makes no representation or warranty whatsoever with respect to the Original License Agreement or the Agreement.

12. In the event the Closing occurs and, in such event, effective as of the Closing Date, Assignor hereby grants, sells, assigns, conveys, transfers, and delivers unto Assignee all of Assignor’s right, title, and interest in and to all rights arising under the Agreement after the Closing Date, and Assignee hereby accepts and assumes all liabilities and obligations of Assignor arising from and after the Closing Date under the Agreement, except for the obligation to pay unpaid quarterly royalty payments through and including December 30, 2010 on Net Sales, which includes both the Percentage Royalty and, if due, the Minimum Royalty, provided, however, notwithstanding the foregoing, Assignor shall not have an obligation to pay any Minimum Royalty payments which become due upon termination of the Agreement pursuant to Article 11 thereof (Assignor’s obligation to make such quarterly payments being referred to herein as the “Remaining Quarterly Royalty Obligations”). In furtherance of the foregoing, Licensor and Assignee hereby agree that Licensor and Assignee shall deliver to Assignor concurrently with their delivery to one another copies of all communications (including e-mails, correspondence, faxes, etc.) which affect, determine, or implicate in any manner the

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Remaining Quarterly Royalty Obligations. Licensor and Assignor further agree that notwithstanding anything in the Original License Agreement or the Agreement to the contrary, including Section 5.6 thereof, that Assignor’s obligation to pay the Percentage Royalty or the Minimum Royalty, if due, shall be 15 business days after it receives information which establishes the amount that it is obligated to pay, including copies of the monthly sales report pursuant to Section 6.5 of the Original License Agreement and the Quarterly Performance Report pursuant to Section 6.1 of the Original License Agreement, and that no interest shall be due until the 26^th day after such 15^th business day. Licensor and Assignee shall notify Assignor in writing whenever Licensor exercises any rights under Section 6.5 of the Agreement to conduct an audit of Assignee, and Assignor shall have the right to be present at any such audit and observe the same and shall be provided with the results thereof promptly following the conclusion thereof. The Parties acknowledge and agree that Assignor shall also retain all rights to challenge and dispute the amount of any royalty payments to the extent that the Licensee has such rights under the Agreement and that Assignee/Licensee shall not have the right or authority to consent or agree on Assignor’s behalf with respect to the royalty amounts without Assignor’s prior written consent.

Assignee hereby waives any subrogation rights it may have against Assignor for any payments made under the Guaranty and agrees that its sole right to recover against Assignee thereunder shall be the set-off rights that it has under the Amended Purchase Agreement with respect to certain earn-out payments provided for therein.

13. Subject to and on the terms and conditions set forth in Article 9 of the Amended Purchase Agreement, in the event the Closing occurs and in such event, Assignee shall thereafter indemnify, hold harmless, and defend Assignor from and against any and all obligations, liabilities, costs, and claims (including reasonable attorneys’ fees) arising as a result of or with respect to any of the Contractual Obligations (excluding the Remaining Quarterly Royalty Obligations) that are attributable to the period of time from and after the Closing Date.

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14. Subject to and on the terms and conditions set forth in Article 9 of the Amended Purchase Agreement, in the event the Closing occurs and in such event, Assignor shall thereafter indemnify, hold harmless, and defend Assignee from and against any all third party obligations, liabilities, costs, and claims (including reasonable attorneys’ fees) arising under the Original License Agreement solely to the extent attributable to the period of time prior to the Closing Date.

15. The Parties agree to execute all documents and to perform such other proper acts as may be necessary to secure to the Parties the rights provided for herein.

16. In the event the Closing occurs and in such event, effective on the Closing Date, Licensor (a) hereby consents to (i) the assignment of the Agreement from Assignor to Assignee on the terms and conditions contained herein, and to Assignee’s assumption of Assignor’s Contractual Obligations under the Agreement and at such time and at all times thereafter, all references to Licensee in the Agreement shall be to Assignee, and (ii) Assignor’s sale and transfer to Assignee of Licensed Products and all other assets bearing the Licensed Trademarks together with all other transactions contemplated by the Amended Purchase Agreement which may require Licensor’s consent under the Original License Agreement; and (b) assumes and agrees to discharge in a timely manner and shall indemnify, defend and hold harmless Chambers from any remaining obligations under the American Belt Fixture Program. For avoidance of doubt, no royalty payments shall be due from Assignor to Licensor based on the transfer and sale by Assignor to Assignee of Licensed Products or based on the transfer and sale by Assignor to Assignee of anything else.

17. In the event that the Closing occurs, and in such event, Assignor shall concurrently therewith, and with no further action required by Licensor, be deemed to be released and forever discharged by Licensor from any and all obligations, liabilities, claims, complaints, suits, damages, actions, causes of action, losses, expenses, fees and/or demands whatsoever from the beginning of time through and

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including the Closing Date, including without limitation with respect to the Original License Agreement and the Agreement, except for (a) the Remaining Quarterly Royalty Obligations; (b) payments due, if any, solely in connection with underpayment by Assignor of Advertising Expenditures under the Original License Agreement due for 2008 and 2009; and (c) any indemnification or hold harmless obligations owed by Assignor under the Original License Agreement for claims brought by third parties based solely on Licensed Products sold by Assignor to customers (excluding any sales of Licensed Products to Assignee).

18. Licensor acknowledges and agrees that any Percentage Royalty and Advertising Expenditure payments made by Assignor under the Original License Agreement prior to or on the Closing Date will be credited for purposes of determining Assignee’s compliance with the Agreement following the Closing Date.

19. This Amendment and Assignment shall terminate without further force or effect if the Closing does not occur and in such event, the Original License Agreement, without any of the amendments otherwise contemplated herein, shall continue in full force and effect thereafter in accordance with its terms and conditions.

20. This Amendment and Assignment may be executed in multiple counterparts, each one of which shall for all purposes be deemed an original. This Amendment and Assignment and the Amended Purchase Agreement constitute the entire agreement between Assignor and Assignee with respect to the transfer and assumption. Licensor expressly acknowledges that it is not a third-party beneficiary of the Amended Purchase Agreement and has no rights or claims thereunder of any kind. This Amendment and Assignment and the Agreement constitute the entire agreement among the Parties with respect to the transactions contemplated hereunder relating to the Agreement. This Amendment and Assignment may not be amended, modified, or waived except pursuant to a written instrument executed by all of the Parties; provided, however, that

(a) Licensor and Assignee may without Assignor’s consent amend, modify, or waive any term of the Agreement other than any terms, conditions, or provisions thereof which affect in any respect Assignor’s rights and obligation with respect to the Remaining

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Quarterly Royalty Obligations or Assignor’s unreleased obligations under the Agreement, as referred to in Section 17 hereof, and accordingly no such provision may be amended or modified in any respect without Assignor’s prior written consent; and

(b) Assignor and Assignee may amend, modify, or amend any term or provision of the Agreement which relates only to the Amended Purchase Agreement and to the transfer, assignment, and assumption of the Original License Agreement and the Agreement as between them.

21. This Amendment and Assignment shall be governed and construed in accordance with the internal laws of the State of Delaware, without regard to its provisions governing conflicts of law, and the Parties submit to the non-exclusive jurisdiction of the courts of the State of Delaware for any disputes involving this Amendment and Assignment.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have caused this Amendment and Assignment to be executed as of the day and year first above written.

WRANGLER APPAREL CORP.
By:
	Helen L. Winslow
	Vice President
Date:
CHAMBERS BELT COMPANY
By:
Name:
Title:
Date:
TANDY BRANDS ACCESSORIES, INC.
By:
Name:	Rod McGeachy
Title:	CEO
Date:

17

EX-10.4

Exhibit 10.4

AMENDMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS AMENDMENT, ASSIGNMENT, AND ASSUMPTION AGREEMENT (this “Amendment and Assignment”) effective as of the Closing Date, as hereinafter defined, is entered into by and among Wrangler Apparel Corp., a Delaware corporation (“Licensor”), Chambers Belt Company, a Delaware corporation (“Assignor”), and Tandy Brands Accessories, Inc., a Delaware corporation (“Assignee”) (Licensor, Assignor, and Assignee being hereinafter sometimes collectively referred to as the “Parties”).

W I T N E S S E T H:

WHEREAS, Licensor and Assignor entered into a License Agreement effective as of January 1, 2008 (the “Original License Agreement”) for the manufacture, distribution, and sale of Licensed Products in the Licensed Territory;

WHEREAS, Assignor and Assignee have previously entered into an Asset Purchase Agreement dated as of April 23, 2009 (the “Purchase Agreement”), whereby Assignee has agreed to purchase certain assets of Assignor and to assume, pay, satisfy, and discharge certain liabilities and obligations of Assignor;

WHEREAS, the Purchase Agreement specifically excludes the assignment and assumption of the Original License Agreement;

WHEREAS, concurrently herewith, the Assignor and Assignee are amending and restating the Purchase Agreement by executing and delivering an Amended and Restated Purchase Agreement (the Purchase Agreement as so amended and restated hereinafter being referred to as the “Amended Purchase Agreement”), which, among other things, provides for Assignor’s assignment, transfer, and conveyance to Assignee of all of Assignor’s right, title, and interest in and to the Original License Agreement, as amended hereby, with respect to all periods after the Closing and Assignee’s assumption of all of the contractual obligations of Assignor thereunder after the Closing;

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WHEREAS, concurrent with the assignment and assumption of the Original License Agreement, effective as of the Closing, the Parties wish to amend the Original License Agreement in accordance with the terms of this Amendment and Assignment;

NOW, THEREFORE, in consideration of the terms and conditions set forth below and other good and valuable consideration, receipt of which is hereby acknowledged, the Parties agree as follows:

1. The Original License Agreement, as amended by this Amendment and Assignment, shall hereinafter be referred to as the “Agreement;” the terms capitalized herein and defined herein shall have the meanings ascribed to such terms herein; the terms “Closing” and “Closing Date shall have the meanings ascribed to those terms in the Purchase Agreement; the term “Contractual Obligations” shall mean all covenants, duties, undertakings and obligations to be observed, paid, discharged or performed, as the case may be, at any time after the Closing Date under the Agreement; and all other terms capitalized but not defined in this Amendment and Assignment shall have the meanings ascribed to those terms in the Original License Agreement.

2. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is amended by adding a new subsection (g) to Section 9.1 thereof as follows:

(g) Licensed Products. Licensee shall submit five (5) samples of each style of Licensed Product to be manufactured under the Agreement to Licensor with a request for approval thereof, and Licensor shall return one (1) such sample, along with the approval or disapproval referenced above in this Section 9.1, to Licensee within ten (10) business days from the date that Licensor receives such samples and request for approval.

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3. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting Section 11.2 and substituting the following in lieu thereof:

11.2 At any time prior to six (6) months before the date of expiration of this Agreement, Licensor may appoint a new licensee or distributor for the Licensed Products in the Distribution and Sales Licensed Territory, or it may determine to conduct the WRANGLER® Western belt business internally through the Wrangler Division of VF Jeanswear Limited Partnership, without utilizing a third-party licensee. In the event that Licensor appoints a new licensee or distributor or determines to conduct the WRANGLER® Western belt business internally through the Wrangler Division, it shall provide written notice of such intent to Licensee. Following such notice, Licensor or its newly appointed licensee or distributor may participate in any process required by an Authorized Retailer as a condition precedent to selling Licensed Products to such Authorized Retailer for shipment subsequent to the date of expiration of this Agreement, But Licensor or its newly appointed licensee or distributor may only sell Licensed Products in the Distribution and Sales Licensed Territory after June 30, 2010, for shipment subsequent to the date of expiration of this Agreement.

4. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by deleting Article 18 in its entirety and substituting the following in lieu thereof:

ARTICLE 18 — Notices

All notices given or required to be given hereunder shall be deemed to be given and received (a) as of the date sent if sent by overnight courier or facsimile, with the facsimile notice promptly confirmed by United States registered mail, postage paid, return receipt requested, or (b) three (3) business days after being sent by United States certified mail, postage paid, return receipt requested and addressed as follows or to such other address as shall have been provided pursuant to notice under this Article:

LICENSOR:	General Counsel
	Wrangler Apparel Corp.
	3411 Silverside Road
	Wilmington, Delaware 19810
	Telephone: 302.477.3930
	Facsimile: 302.477.3932

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with a copy to:	Director of Licensing
	VF Jeanswear Limited Partnership
	400 North Elm Street
	Greensboro, NC 27401
	Telephone: 336.332.4636
	Facsimile: 336.332.4650
LICENSEE:	Mr. Rod McGeachy
	CEO
	Tandy Brands Accessories, Inc.
	690 E. Lamar Blvd., Ste. 200
	Arlington, TX 76011
	Telephone: 817-548-0090
	Facsimile: 817-548-1144
	E-mail: rod_mcgeachy@tandybrands.com

5. In the event the Closing occurs and, in such event, effective as of the Closing Date, the Original License Agreement is hereby amended by adding new Articles 30 and 31 thereto as follows:

ARTICLE 30 — Transition of Business

30.1 Licensor contemplates that after the expiration of the Agreement, the WRANGLER^® Western belt business may be conducted by the Wrangler Division without utilizing a third-party licensee. In order to facilitate the transition from Licensee to Licensor, Licensee agrees to provide Licensor’s Representative with the following with respect to Licensed Products for the period from the Closing Date through the expiration of this Agreement in a format mutually agreed upon between Licensor and Licensee:

(a) complete design specifications for each style of Licensed Product designed, manufactured, advertised, or sold under the Agreement, including all trim, leather, and/or component details;

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(b) product development calendar for each season;

(c) five (5) samples of each style of Licensed Product to be manufactured under the Agreement. Submission of five (5) samples under Section 9.1 and Article 22 hereof shall satisfy the requirement of this Subsection 30.1(c);

(d) On April 1, 2010 and every time thereafter through the expiration of this Agreement that a new style is added to a particular Third Party Manufacturer’s production schedule or is moved from one Third Party Manufacturer to another or moved from one of a Third Party Manufacturer’s factories to another, Licensee shall provide Licensor with a list of the Licensed Products, broken down by style, color, and size, manufactured at each Third Party Manufacturer’s factory, as well as the complete name, mailing address, and exact physical location of each such Third Party Manufacturer factory;

(e) Licensee’s wholesale price list for each style, size, and color of Licensed Product as sold to each Approved Retailer;

(f) monthly inventory of finished Licensed Products that Licensee has on hand by style, color, and size;

(g) monthly inventory of Licensed Products in the process of manufacture by style, color, and size;

(h) to the extent available, the following point-of-sale information on a monthly basis, broken down by Approved Retailer:

(i) total number of units of Licensed Products sold, broken down by style, color, and size;

(ii) total dollar amount of Licensed Products sold, broken down by style, color, and size;

(iii) total number of Licensed Products received by each Approved Retailer that month, broken down by style, color, and size;

(iv) total wholesale cost of Licensed Products received by each Approved Retailer that month multiplied by the number of units received, broken down by style, color, and size;

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(v) total number of Licensed Product units in each Approved Retailer’s physical inventory at the end of the applicable month, broken down by style, color, and size;

(vi) total retail price of Licensed Product units in each Approved Retailer’s physical inventory the end of the applicable month, broken down by style, color, and size;

(i) to the extent available, the following department and item information on a monthly basis, broken down by Approved Retailer:

(i) Approved Retailer department number;

(ii) Approved Retailer fineline or other account-specific document listing relevant style grouping, size grouping, and color grouping variables;

(iii) Licensee style number;

(iv) Licensee UPC number;

(v) Approved Retailer item number and item description;

(vi) Approved Retailer size description;

(vii) Approved Retailer average price; and

(viii) Total number of stores operated by each Approved Retailer where Licensed Products are sold.

(j) Within two (2) weeks after the Closing Date, a six (6)-month forecast for the period from the Closing Date to December 31, 2009 for each Approved Retailer, broken down by style, color, and size;

(k) Any other information reasonably requested by Licensor that reasonably relates to transition of the WRANGLER® Western belt business.

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Items to be provided monthly shall be submitted no later than the twenty-fifth (25 ^th) day of the month after the month for which such item is being submitted. Items to be provided weekly shall be submitted on Monday for the previous week.

30.2 Licensor shall notify Licensee of the name and contact information of the employee to participate in meetings with Approved Retailers on behalf of Licensor’s Representative. Licensee agrees to invite such employee to participate in all meetings with Approved Retailers relating to Licensed Product, with ample advance notice to allow for scheduling of attendance.

30.3 Within twenty (20) days after receipt of notice pursuant to Section 11.2 hereof, Licensee shall provide Licensor with a complete inventory of all finished Licensed Products and all Licensed Products on order from Third Party Manufacturers, as well as the anticipated delivery date(s) thereof. Licensor shall purchase, at Licensee’s cost including Licensee’s in-bound freight cost, all of Licensee’s finished active inventory of Licensed Products and all Licensed Products on order from Third Party Manufacturers against which Licensee has demonstrated, to Licensor’s sole satisfaction, a future forecast for sales. The Parties agree to negotiate in good faith to reach agreement on the timing of such purchase, as well as the timing and remaining logistics of the transfer of the business, except that the Parties agree that the inventory that Licensor is required by this Section 30.3 to purchase shall be made available to Licensor no later than two (2) months before the expiration of this Agreement. Until the transfer of the business has been completed or the expiration of this Agreement, whichever occurs first, Licensee shall continue to take and fill orders for Licensed Products and shall continue to use its best efforts to promote the sale of the Licensed Products in the Distribution and Sales Licensed Territory.

ARTICLE 31 — Licensor’s Representative a Third-Party Beneficiary

Licensor’s Representative is a third-party beneficiary of Article 30 of this Agreement.

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6. In the event the Closing occurs, then effective on the Closing Date, all terms and conditions of the Original Licensee Agreement not amended hereby shall remain the same and in full force and effect and shall be deemed to be ratified and affirmed in all respects and to continue as part of the terms of the Agreement, and all terms and conditions of the Original License Agreement amended hereby shall become in full force and effect as so amended and shall be deemed to be ratified and affirmed in all respects and to continue, as so amended, as part of the terms of the Agreement. Assignee hereby acknowledges and agrees that Assignor makes no representation or warranty whatsoever with respect to the Original License Agreement or the Agreement.

7. In the event the Closing occurs and, in such event, effective as of the Closing Date, Assignor hereby grants, sells, assigns, conveys, transfers, and delivers unto Assignee all of Assignor’s right, title, and interest in and to all rights arising under the Agreement after the Closing Date, and Assignee hereby accepts and assumes all liabilities and obligations of Assignor arising from and after the Closing Date under the Agreement.

8. Subject to and on the terms and conditions set forth in Article 9 of the Amended Purchase Agreement, in the event the Closing occurs and in such event, Assignee shall thereafter indemnify, hold harmless, and defend Assignor from and against any and all obligations, liabilities, costs, and claims (including reasonable attorneys’ fees) arising as a result of or with respect to any of the Contractual Obligations that are attributable to the period of time from and after the Closing Date.

9. Subject to and on the terms and conditions set forth in Article 9 of the Amended Purchase Agreement, in the event the Closing occurs and in such event, Assignee shall thereafter indemnify, hold harmless, and defend Assignee from and against any all third party obligations, liabilities, costs, and claims (including reasonable attorneys’ fees) arising under the Original License Agreement solely to the extent attributable to the period of time prior to the Closing Date.

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10. The Parties agree to execute all documents and to perform such other proper acts as may be necessary to secure to the Parties provided for herein.

11. In the event the Closing occurs and in such event, effective on the Closing Date, Licensor consents to (a) the assignment of the Agreement, from Assignor to Assignee on the terms and conditions contained herein, and to Assignee’s assumption of Assignor’s Contractual Obligations under the Agreement and at such time and at all times thereafter, all references to Licensee in the Agreement shall be to Assignee, and (b) Assignor’s sale and transfer to Assignee of Licensed Products and all other assets bearing the Licensed Trademarks together with all other transactions contemplated by the Amended Purchase Agreement that may require Licensor’s consent under the Original License Agreement. For the avoidance of doubt, no royalty payments shall be due from Assignor to Licensor based on the transfer and sale by Assignor of Licensed Products or anything else to Licensee.

12. In the event the Closing occurs and in such event, effective on the Closing Date, Assignor shall concurrently therewith, and with no further action required by Licensor, be deemed to be released and forever discharged by Licensor from any and all obligations, liabilities, claims, complaints, suits, damages, actions, causes of action, losses, expenses, fees and/or demands whatsoever from the beginning of time through and including the Closing Date, including without limitation with respect to the Original License Agreement and the Agreement, except for (a) payments due, if any, solely in connection with underpayment by Assignor of Advertising Expenditures under the Original License Agreement due for 2008 and 2009; and (b) any indemnification or hold harmless obligations owed by Assignor under the Original License Agreement for claims brought by third parties based solely on Licensed Products sold by Assignor to customers (excluding any sales of Licensed Products to Assignee).

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13. Licensor acknowledges and agrees that any Percentage Royalty and Advertising Expenditure payments made by Assignor under the Original License Agreement prior to the Closing Date will be credited for purposes of determining Assignee’s compliance with the Agreement following the Closing Date.

14. This Amendment and Assignment shall terminate without further force or effect if the Closing does not occur and in such event, the Original License Agreement, without any of the amendments otherwise contemplated herein, shall continue in full force and effect thereafter in accordance with its terms and conditions.

15. This Amendment and Assignment may be executed in multiple counterparts, each one of which shall for all purposes be deemed an original. This Amendment and Assignment and the Amended Purchase Agreement constitute the entire agreement between Assignor and Assignee with respect to the transfer and assumption. Licensor expressly acknowledges that it is not a third party beneficiary of the Amended Purchase Agreement and has no rights or claims thereunder of any kind. This Amendment and Assignment and the Agreement constitute the entire agreement among the Parties with respect to the transactions contemplated hereunder relating to the Agreement. This Amendment and Assignment may not be amended, modified, or waived except pursuant to a written instrument executed by all of the Parties; provided, however, that

(a) Licensor and Assignee may without Assignor’s consent amend, modify, or waive any term of the Agreement other than any terms, conditions, or provisions thereof which affect in any respect Assignor’s unreleased obligations under the Agreement, as referred to in Section 17 hereof, and accordingly no such provision may be amended or modified in any respect without Assignor’s prior written consent; and

(b) Assignor and Assignee may amend, modify, or amend any term or provision of the Agreement which relates only to he Amended Purchase Agreement and to the transfer, assignment, and assumption of the Original License Agreement and the Agreement as between them.

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16. This Amendment and Assignment shall be governed and construed in accordance with the internal laws of the State of Delaware, without regard to its provisions governing conflicts of law, and the parties submit to the non-exclusive jurisdiction of the courts of that state for any disputes involving this Amendment and Assignment.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have caused this Amendment and Assignment to be executed as of the day and year first above written.

WRANGLER APPAREL CORP.
By:
	Helen L. Winslow
	Vice President
Date:
CHAMBERS BELT COMPANY
By:
Name:
Title:
Date:
TANDY BRANDS ACCESSORIES, INC.
By:
Name:	Rod McGeachy
Title:	CEO
Date:

12

EX-10.5

Exhibit 10.5

FORBEARANCE AGREEMENT AND FIRST AMENDMENT

TO CREDIT AND SECURITY AGREEMENT

THIS FORBEARANCE AGREEMENT AND FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the “Amendment”), dated July     , 2009, is entered into by and among PHOENIX FOOTWEAR GROUP, INC., a Delaware corporation (“Phoenix Footwear”), PENOBSCOT SHOE COMPANY, a Maine corporation (“Penobscot”), H.S. TRASK & CO., a Montana corporation (“Trask”), CHAMBERS BELT COMPANY, a Delaware corporation (“Chambers”), and PHOENIX DELAWARE ACQUISITION, INC., a Delaware corporation (“Phoenix Acquisition”, and together with Phoenix Footwear, Penobscot, Trask and Chambers, each individually, a “Company,” and collectively, the “Companies”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), acting through its Wells Fargo Business Credit operating division.

RECITALS

A. Companies and Wells Fargo are parties to a Credit and Security Agreement dated as of June 10, 2008 (as amended from time to time, the “Credit Agreement”). Capitalized terms used in these recitals have the meanings given to them in the Credit Agreement unless otherwise specified.

B. Companies have delivered to Wells Fargo a weekly cash budget forecast (the “Weekly Cash Budget”) attached hereto as Exhibit G.

C. As of the date hereof, the following Events of Default have occurred and are continuing under the Credit Agreement (the “Designated Events of Default”): (i) Companies failed to satisfy the minimum Net Income requirement set forth in Section 5.2(a) of the Credit Agreement for the July 1, 2008 through September 30, 2008 period, as Companies’ actual Net Income was $<2,051,000> versus the minimum requirement of $500,000; and (ii) Companies failed to satisfy the minimum Net Income requirement set forth in Section 5.2(a) of the Credit Agreement for the July 1, 2008 through December 31, 2008 period, as Companies’ actual Net Income for such period was <$5,965,000> versus the minimum requirement of $2,000,000. As a result of the Designated Events of Default, Wells Fargo is entitled to exercise Wells Fargo’s rights and remedies under the Loan Documents and otherwise.

D. Chambers and Tandy Brands, Accessories, Inc., a Delaware corporation (“Tandy”) have entered into an Amended and Restated Asset Purchase Agreement, dated              , 2009 (“APA”), which provides for the purchase by Tandy from Chambers of certain assets of Chambers as described in the APA.

Forbearance Agreement and First Amendment

to Credit and Security Agreement

(WFBC/Phoenix)

E. Additionally, Companies have requested that Wells Fargo (i) forbear from exercising any rights or remedies based on the Designated Events of Default (including, but not limited to, refusing to make Advances, accelerating any Indebtedness, foreclosing on any Collateral or filing a petition for bankruptcy) for the temporary period of time set forth in this Amendment, and (ii) amend certain provisions of the Loan Documents as set forth in this Amendment. Wells Fargo has agreed to forbear for the temporary period hereinafter specified in this Amendment and amend the Loan Documents, subject in each case to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:

1. Temporary Forbearance. Subject to the satisfaction of the terms and conditions set forth herein, until that date (the “Forbearance Termination Date”) which is the earliest to occur of (a) 5:00 p.m. Pacific time on July 31, 2009; (b) the date of the occurrence of any Event of Default (other than (i) the Designated Events of Default, or (ii) any breaches of Section 5.2 of the Credit Agreement that occur on or prior to July 31, 2009 (the “Forbearance Period Financial Covenant Defaults”)); (c) Tandy has notified Chambers that is will longer be pursuing the consummation of the Chambers Sale (referred to Section 3.1 of this Amendment); (d) the date of the occurrence of any breach of any term or provisions of this Amendment, including, but not limited to, Section 8 and Section 13 of this Amendment; or (e) the Termination Date, Wells Fargo will not exercise or enforce its rights or remedies against Companies which Wells Fargo would be entitled to exercise or enforce under the terms of the Loan Documents by reason of the occurrence of the Designated Events of Default; provided that such forbearance shall not act as a waiver of Wells Fargo’s right to enforce all claims, rights, and remedies from time to time on or after the Forbearance Termination Date. Furthermore, nothing contained herein shall be construed as requiring Wells Fargo to extend the Forbearance Termination Date. Companies acknowledge and agree that Wells Fargo has not waived, and by entering into this Amendment Wells Fargo is not waiving, the Designated Events of Default or any Forbearance Period Financial Covenant Defaults that may occur on or prior to July 31, 2009.

2. Line of Credit Prior to Forbearance Termination Date. Prior to the Forbearance Termination Date (and provided that there exists no Default or Event of Default under the Loan Documents other than the Designated Events of Default or the Forbearance Period Financial Covenant Defaults), Wells Fargo shall continue to administer the revolving line of credit described in Section 1.1 of the Credit Agreement (the “Line of Credit”) and make Advances and repayments thereunder in the same manner and in accordance with the same terms as those governing the Loan Documents applicable thereto (including, but not limited to, satisfaction of all conditions precedent in Article III of the Credit Agreement) as though the Designated Events of Default do not exist. It is expressly acknowledged and agreed by Companies that any election by Wells Fargo to continue administering the Line of Credit and making Advances as provided for hereby from the date of this Amendment and ending on the Forbearance Termination Date shall not in any manner be deemed to prejudice Wells Fargo or act as a waiver of its otherwise applicable rights and remedies, including, without limitation, to collect and enforce the full amount of the Indebtedness from and after the Forbearance Termination Date.

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Forbearance Agreement and First Amendment

to Credit and Security Agreement

(WFBC/Phoenix)

3. Amendments to Credit Agreement.

3.1 Section 1.1 of the Credit Agreement. Section 1.1(a) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(a) Line of Credit and Limitations on Borrowing. Wells Fargo shall make Advances to Companies under the Line of Credit that, together with the L/C Amount, shall not at any time exceed in the aggregate the lesser of (i) the Maximum Line Amount (as in effect from time to time as described below), or (ii) the Borrowing Base limitations described in Section 1.2. Within these limits, Companies may periodically borrow, prepay in whole or in part, and reborrow. Wells Fargo has no obligation to make an Advance during a Default Period or at any time Wells Fargo believes that an Advance would result in an Event of Default. As of the First Amendment Effective Date, the “Maximum Line Amount” shall initially be $9,500,000. The Maximum Line Amount shall be automatically decreased to $6,500,000 upon the receipt of funds by Companies from the sale of certain assets of Chambers to Tandy Brands, Accessories, Inc. in accordance with that certain Amended and Restated Asset Purchase Agreement, dated as of July     , 2009, between Chambers and Tandy Brands, Accessories, Inc. (the “Chambers Sale”). The date that the Chambers Sale is consummated is referred to herein as the “Chambers Closing Date.”

3.2 Section 1.2(a) of the Credit Agreement. Section 1.2(a) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(a) Borrowing Base. The borrowing base (the “Borrowing Base”) is an amount equal to:

(i) 85% or such lesser percentage of Eligible Accounts as Wells Fargo in its sole discretion may deem appropriate; provided that this rate may be reduced at any time by Wells Fargo’s in its sole discretion by one percent (1%) for each percentage point by which Dilution on the date of determination is in excess of five percent (5.0%) (Companies acknowledge that the current advance rate applicable to Eligible Accounts is 81%, with such advance rate subject to adjustment from time to time as provided above); plus

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Forbearance Agreement and First Amendment

to Credit and Security Agreement

(WFBC/Phoenix)

(ii) the least of (x) 85% or such lesser percentage (as Wells Fargo in its sole discretion may deem appropriate) of the Net Orderly Liquidation Value of Eligible Inventory, (y) 46% or such lesser percentage (as Wells Fargo in its sole discretion may deem appropriate) of Eligible Inventory valued at the lower of cost or fair market value in accordance with GAAP, or (z) the Inventory Sublimit; provided that (A) Advances and/or Letters of Credit supported by Wrangler branded inventory shall not exceed $2,500,000, provided that Advances and/or Letters of Credit supported by Wrangler branded inventory shall be automatically reduced to $-0- upon the initial receipt of funds by Chambers in respect of the Chambers Sale, and (B) (1) prior to the Chambers Closing Date, the maximum amount of Eligible In-Transit Inventory that may be included as Eligible Inventory for purposes of this paragraph (ii) shall not exceed $475,000 (based on the lower of cost or fair market value), and (2) from and after the Chambers Closing Date Eligible In-Transit Inventory shall be excluded from Eligible Inventory; less

(iii) the Borrowing Base Reserve (such reserve to be adjusted monthly or more frequently in Wells Fargo’s discretion, and to include, without limitation, (x) unpaid freight charges and customs duties for in-transit inventory and (y) accrued and unpaid royalty and license payments owing by Companies), less

(iv) Indebtedness that Companies owe Wells Fargo that has not been advanced on the Revolving Note, less

(v) Indebtedness that is not otherwise described in Section 1 that Wells Fargo in its sole discretion finds on the date of determination to be equal to Wells Fargo’s net credit exposure with respect to any swap, derivative, foreign exchange, hedge, deposit, treasury management or similar transaction or arrangement extended to any Company by Wells Fargo and any Indebtedness owed by Company to Wells Fargo Merchant Services, L.L.C.”

3.3 Section 1.3(a)(i)(B) of the Credit Agreement. Section 1.3(a)(i)(B) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(B) LIBOR Advances. [Intentionally Omitted].”

3.4 Section 1.4 of the Credit Agreement. Section 1.4 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“1.4 LIBOR Advances. [Intentionally Omitted].”

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Forbearance Agreement and First Amendment

to Credit and Security Agreement

(WFBC/Phoenix)

3.5 Section 1.6(a) of the Credit Agreement. Section 1.6(a) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

“(a) Interest Rates Applicable to Line of Credit. Except as otherwise provided in this Agreement, the unpaid principal amount of each Line of Credit Advance evidenced by the Revolving Note shall accrue interest at an annual interest rate calculated as follows:

Floating Rate Pricing

The “Floating Rate” for Line of Credit Advances = the Daily Three Month LIBOR rate plus five and one-half percent (5.50%), which rate shall change whenever the Daily Three Month LIBOR rate changes.”

3.6 Section 1.7 of the Credit Agreement. Section 1.7(f) of the Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

“(f) Line of Credit Termination and/or Reduction Fees. [Intentionally Omitted].”

3.7 Section 1.10(a) of the Credit Agreement. Section 1.10(a) of the Credit Agreement is hereby amended by deleting the amount “$7,500,000” and replacing it with “$1,000,000” where it appears in such section.

3.8 Section 5.1 of the Credit Agreement. The following new paragraphs (s) and (t) are hereby added to the end of Section 5.1 of the Credit Agreement:

“(s) Weekly Cash Budget Reporting. On or before Tuesday of each week, or more frequently if Wells Fargo so requires, (1) a report of the Companies’ actual sales and cash disbursements as compared to Companies’ forecasted sales and cash disbursements for same week, in the form substantially similar to the Weekly Cash Budget (as defined in the Forbearance Agreement); and (2) with respect to each of the financial tests described in Section 4 of the Forbearance Agreement, Companies shall provide Wells Fargo with a compliance certificate, prepared and signed by Companies’ chief financial officer (or such other Person satisfactory to Wells Fargo) and in form and substance acceptable to Wells Fargo, setting forth the calculations for each of such financial tests.”

“(t) Weekly Telephone Reporting. On or before Wednesday of each week, Companies shall participate in a telephone call with Wells Fargo which is scheduled at a reasonable time to discuss the status of the Chambers Sale, the weekly cash budget report delivered by Companies, and such other matters as Wells Fargo may require in its sole discretion; provided, it shall not be an Event of Default unless Wells Fargo provides Companies with an Authenticated Record that they have so failed to comply and Companies do not make themselves available to participate in a call within two (2) Business Days thereafter.”

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Forbearance Agreement and First Amendment

to Credit and Security Agreement

(WFBC/Phoenix)

3.9 Exhibit A to the Credit Agreement. Exhibit A to the Credit Agreement is hereby amended as follows:

(a) The following definitions are hereby added to Exhibit A to the Credit Agreement in the appropriate alphabetical position:

“Chambers Closing Date” has the meaning set forth in Section 1.1(a) of the Credit Agreement.

“Chambers Sale” has the meaning set forth in Section 1.1(a) of the Credit Agreement.

“Daily Three Month LIBOR” means, for any day, the rate of interest equal to LIBOR then in effect for delivery for a
three (3) month period. When interest is determined in relation to Daily Three Month LIBOR, each change in the interest rate shall become effective each Business Day that Wells Fargo determines that Daily Three Month LIBOR has changed.

“First Amendment Effective Date” means the date that each of the conditions precedent described in Section 7 of the Forbearance Agreement have been satisfied.

“Forbearance Agreement” means that certain Forbearance Agreement and First Amendment to Credit and Security Agreement, among the Companies and Wells Fargo, dated as of July     , 2009.

(b) The definition of “Inventory Sublimit” is hereby deleted in its entirety and replaced with the following:

“Inventory Sublimit” shall initially mean $5,000,000; provided that if the Maximum Line Amount is decreased to $6,500,000 upon the Chambers Closing Date in accordance with this Agreement, the Inventory Sublimit shall be $3,500,000.”

(c) The definitions of “LIBOR Advance” and “LIBOR Advance Rate” shall be deleted in their entirety and shall not be replaced. Any reference to such terms in the Loan Documents shall have no further force and effect and shall be read as if such sentence had not included such terms, mutatis mutandis.

3.10 Exhibit G to the Credit Agreement. Exhibit G to this Amendment is hereby added as a new Exhibit G to the Credit Agreement.

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4. Financial Covenants During the Forbearance Period. Commencing June 7, 2009, and continuing through (and including) July 31, 2009, Companies shall comply with the following financial covenants (collectively, the “Financial Tests”):

4.1 Minimum Net Sales. Companies, on a consolidated basis, shall achieve, for each period set forth below, Net Sales, determined as of the following test dates, of not less than the amount set forth for each such period:

Period and Test Date	Minimum Net Sales
June 7, 2009 through June 27, 2009	$	2,174,000
June 7, 2009 through July 11, 2009	$	4,051,000
June 7, 2009 through July 25, 2009	$	4,592,000

4.2 Minimum Net Cash Flow. Companies shall achieve, for each period set forth below, Net Cash Flow, determined as of the following test dates, of not less than the amount set forth for each such period.

Period and Test Date	Minimum Net Cash Flow
June 7, 2009 through June 27, 2009	$	<444,000>
June 7, 2009 through July 11, 2009	$	<1,442,000>
June 7, 2009 through July 25, 2009	$	<2,434,000>

For purposes of this Section 4, (i) “Net Sales” means the Companies’ gross sales, on a consolidated basis, less applicable returns, discounts and allowances, and (ii) “Net Cash Flow” means total cash receipts received by Companies less total disbursements of the Companies, on a consolidated basis; provided, that in order to calculate the Companies’ Net Cash Flow, amounts received by Companies from the sale of Chambers’ assets referred to in Section 3.1 of this Amendment shall not be included in such calculation.

5. No Other Changes. Except as explicitly amended or waived by this Amendment, all of the terms and conditions of the Credit Agreement shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.

6. Forbearance Fee. Companies shall pay Wells Fargo a forbearance fee (the “Forbearance Fee”), which fee shall be deemed fully earned and non-refundable as of the date of this Amendment in the amount of $340,000, payable in accordance with the following schedule: (i) $170,000 payable on the earlier of the Chambers Closing Date or the Forbearance Termination Date; and (ii) $170,000 payable upon the Forbearance Termination Date.

7. Conditions Precedent. This Amendment shall be effective when Wells Fargo shall have received and accepted an executed original of this Amendment, together with each of the following, each in substance and form acceptable to Wells Fargo in its sole discretion:

7.1 The Mortgage, Assignment of Rents and Security Agreement (the “Mortgage”) for that certain property located at 107 Main Street, Penobscot, Maine, duly executed by Penobscot;

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7.2 A Certificate of the Secretary of each Company certifying as to (i) the resolutions of the board of directors of such Company approving the execution and delivery of this Amendment, (ii) the fact that the articles of incorporation and bylaws of such Company, which were certified and delivered to Wells Fargo pursuant to the Certificate of Authority of such Company’s secretary or assistant secretary dated [                    ], continue in full force and effect and have not been amended or otherwise modified except as set forth in the Certificate to be delivered, and (iii) certifying that the officers and agents of such Company who have been certified to Wells Fargo, pursuant to the Certificate of Authority of such Company’s secretary or assistant secretary dated [                    ], as being authorized to sign and to act on behalf of such Company continue to be so authorized or setting forth the sample signatures of each of the officers and agents of such Company authorized to execute and deliver this Amendment and all other documents, agreements and certificates on behalf of such Company; and

7.3 Such other matters as Wells Fargo may require.

8. Covenants; Conditions Subsequent. During the Forbearance Period, Companies shall comply with the following covenants, unless Wells Fargo shall consent otherwise in an Authenticated Record delivered to the applicable Company.

8.1 Companies shall consummate the Chambers Sale on or before July 15, 2009;

8.2 Companies shall cause Focus Management Group or such other third party management services reasonably acceptable to Wells Fargo to provide support to Companies, including, but not necessarily limited to, (i) monitoring the Companies’ performance in relation to the Companies’ 13-week cash flow budget; (ii) assisting with the preparation of a weekly cash budget reports; (iii) participating with the Companies in the weekly telephone calls with Wells Fargo required by this Amendment; and (iv) providing cash planning support to Companies; and

8.3 On or before July 31, 2009, Companies shall pay to Wells Fargo in immediately available funds an amount sufficient to repay the Indebtedness in full.

Companies’ failure to timely comply with the items described in the foregoing Sections 8.1, 8.2 and 8.3 shall constitute an immediate Event of Default with no applicable cure period.

9. Chambers Sale. Concurrent with the First Amendment Effective Date, Wells Fargo shall execute and deliver to Chambers that certain Waiver, Consent and Partial Lien Termination in the form attached hereto as Exhibit A.

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10. Events of Default. In the event Company fails to comply with any or all of the terms, conditions, or covenants set forth in this Amendment or if any other Event of Default (other than a Designated Event of Default) shall occur, the Forbearance Period shall automatically end, and Wells Fargo may, in Wells Fargo’s sole discretion, immediately proceed to exercise any or all legal rights and remedies in any order selected by Wells Fargo, including the recordation and enforcement of the Mortgage in the State of Maine, and those other rights and remedies contained in the Loan and Security Documents, all without any further notice to Companies (except as expressly required by the Loan Documents or applicable law).

11. Representations and Warranties. Each Company hereby represents and warrants to Wells Fargo as follows:

11.1 Such Company has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder, and this Amendment and all such other agreements and instruments has been duly executed and delivered by such Company and constitute the legal, valid and binding obligation of such Company, enforceable in accordance with its terms.

11.2 The execution, delivery and performance by such Company of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to such Company, or the articles of incorporation or by-laws of such Company, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which such Company is a party or by which it or its properties may be bound or affected.

11.3 All of the representations and warranties contained in Article IV of the Credit Agreement are correct on and as of the date hereof as though made on and as of such date, except (i) to the extent that such representations and warranties relate solely to an earlier date, (ii) that the Designated Events of Default have occurred; and (iii) to the extent otherwise disclosed to Wells Fargo in writing and consented to or waived by Wells Fargo.

12. References. All references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby; and any and all references in the Security Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

13. Maine Property. Companies agree that they will not transfer or encumber the real property described in the Mortgage, except in favor of Wells Fargo.

14. No Other Waiver. The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreement (including, but not limited to, the Designated Events of Default) or a waiver of any breach, default or event of default under any Security Document or other document held by Wells Fargo, whether or not known to Wells Fargo and whether or not existing on the date of this Amendment.

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15. Release. Each Company hereby absolutely and unconditionally releases and forever discharges Wells Fargo, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents, attorneys, and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Company has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown. It is the intention of each Company in executing this release that the same shall be effective as a bar to each and every claim, demand and cause of action specified and in furtherance of this intention the Company waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California, which provides:

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

The parties acknowledge that each may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, or causes of action and agree that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts.

16. Costs and Expenses. Companies hereby reaffirm their agreement under the Credit Agreement to pay or reimburse Wells Fargo on demand for all costs and expenses incurred by Wells Fargo in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, Companies specifically agree to pay all fees and disbursements of counsel to Wells Fargo for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. Companies hereby agree that Wells Fargo may, at any time or from time to time in its sole discretion and without further authorization by Companies, make a loan to Companies under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses and the Forbearance Fee required under Section 6 of this Amendment.

17. Miscellaneous. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument. Signed counterparts delivered by facsimile or electronic mail transmission shall also be binding of the parties, regardless of whether a signed original is also delivered.

[Signatures on the next page]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

PHOENIX FOOTWEAR GROUP, INC.
By:
Print Name:
Title:
PENOBSCOT SHOE COMPANY
By:
Print Name:
Title:
H.S. TRASK & CO.
By:
Print Name:
Title:
CHAMBERS BELT COMPANY
By:
Print Name:
Title:
PHOENIX DELAWARE ACQUISITION, INC.
By:
Print Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
Print Name:	Harry L. Joe
Title:	Vice President

(Exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but a copy will be furnished supplementally to the Securities and Exchange Commission upon request)

Forbearance Agreement and First Amendment

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EX-99.1

Exhibit 99.1

PHOENIX FOOTWEAR GROUP ANNOUNCES

COMPLETION OF CHAMBERS ASSET SALE

CARLSBAD, Calif., July 9, 2009 — Phoenix Footwear Group, Inc. (NYSE Amex: PXG) announced today its wholly-owned subsidiary, Chambers Belt Company has closed the previously announced asset sale transaction with Tandy Brands Accessories, Inc. (Nasdaq: TBAC) relating to its accessories business. The transaction was completed pursuant to an Amended and Restated Asset Purchase Agreement dated July 7, 2009 which amended a previous agreement between the parties.

Under the terms of the transaction, Tandy purchased all of Chambers’ manufacturing equipment, substantially all of Chambers’ inventory at cost and all of Chambers’ intellectual property and customer relationships. Tandy has also hired certain former Chambers employees who are expected to facilitate the transition of customer relationships and related revenue.

As part of the purchase price, at closing, Tandy paid $2.6 million for inventory and $500,000 for equipment. Tandy has a right to audit the cost component of the inventory payment for 30 days after closing. In addition to the closing payments, Tandy will pay Chambers an earn-out which is a percentage of Tandy’s revenue during the 12 months following the closing that is generally generated from the sale of products formerly sold by the Chambers’ business. This earn-out is not capped and provides for $2,000,000 in minimum aggregate payments. These payments are to be paid on a monthly basis, except for a $430,000 advance payment that was made to Chambers at closing.

Concurrent with the closing of the Chambers sale, Wrangler Apparel, Inc. extended until June 30, 2010 Chambers’ license to sell Wrangler products in the mass market. Further, as part of the transaction, Tandy assumed both this license and Chambers’ license to sell Wrangler products to the western market. Chambers, however, has retained responsibility for paying Wrangler the remaining royalty obligations on the mass license through June 30, 2010 from a portion of its earn-out payments.

The assets being sold do not include Chambers’ cash and cash equivalents or account receivables. Chambers will be collecting these receivables and winding down its remaining operations.

The above is only a summary of the Chambers asset sale transaction and reference is made to the Amended and Restated Asset Purchase Agreement which will be included as an exhibit to Phoenix Footwear’s Current Report on Form 8-K that will be filed with the Securities & Exchange Commission reporting the transaction and the status of Phoenix Footwear’s secured credit facility.

About Phoenix Footwear Group, Inc.

Phoenix Footwear Group, Inc., headquartered in Carlsbad, California, designs, develops and markets men’s and women’s footwear and accessories. Phoenix Footwear’s brands include Trotters^®, SoftWalk^® and H.S. Trask^®. 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 NYSE Amex 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 are preceded by, followed by or include the words “believes,” “could,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “seeks,” “exploring” or similar expressions. Many of these risks and uncertainties are discussed in Phoenix Footwear’s Annual Report on Form 10-K for the fiscal year ended January 3, 2009 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 obtain a replacement bank facility or waiver of defaults and amendments to its defaulted secured credit arrangement and the attendant risk of increased costs or stockholder dilution from refinancing the defaulted debt or foreclosure on the Company’s assets if a waiver/amendment is not obtained or the debt is not refinanced; the risk that Phoenix Footwear will not be able to continue as a going concern; Phoenix Footwear’s ability to return to profitability despite its restructuring efforts and debt reduction; risk associated with the recent disruptions in the overall economy and the impact on the retail industry, including Phoenix Footwear’s customers; risk associated with Phoenix’s accessories business; and, risk associated with claims arising from divestiture transactions, including indemnification claims. 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 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.

Contact:

Dennis Nelson

Chief Financial Officer

Phoenix Footwear Group, Inc.

(760) 602-9688

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