PHOENIX FOOTWEAR GROUP INC
EXHIBIT 10.2
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<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>a94279exv10w2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
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                                                                    EXHIBIT 10.2

                              CONSULTING AGREEMENT

         This CONSULTING AGREEMENT (the "Agreement") is made and entered into as
of the 31st day of October, 2003, by and between Royal Robbins, Inc., a
California corporation (the "Company"), and Dan J. Costa, who resides at 1204
Counterview, Modesto, California ("Consultant").

         A.       Douglas C. Vient, as trustee of the Dan J. and Denise L. Costa
1997 Family Trust and as trustee of the Kelsie L. Costa Trust and the Daniel S.
Costa Trust (each, a "Seller" and, collectively, the "Sellers"), Royal Robbins,
Inc., a California corporation (the "Target"), and Dan J. Costa as Sellers'
Agent, and Phoenix Footwear Group, Inc. (the "Buyer") have entered, or
contemporaneously with the execution of this Agreement are entering, into a
Stock Purchase Agreement (such agreement, together with any and all agreements
and instruments to be executed and delivered pursuant thereto and all schedules
and exhibits thereto, all as the same may be amended, supplemented or modified
from time to time, the "Stock Purchase Agreement"), under which the Sellers have
agreed to sell to Buyer and Buyer has agreed to purchase from Seller all of the
issued and outstanding shares of capital stock of Target.

         B.       Concurrently with the execution and delivery of the Stock
Purchase Agreement, the Consultant has executed and delivered to Buyer its
Guaranty (the "Guaranty") of the Sellers' obligations under the Stock Purchase
Agreement on the terms and conditions set forth therein.

         C.       Immediately following the closing of the transactions
contemplated by the Stock Purchase Agreement, the Company will be a wholly-owned
subsidiary of Buyer.

         D.       Prior to closing of the transactions contemplated by the Stock
Purchase Agreement, Consultant was employed by the Company.

         E.       The Company recognizes that the knowledge of Consultant will
be beneficial in maintaining and improving the performance of the Company
following the closing of the transactions contemplated by the Stock Purchase
Agreement and that Consultant has business expertise that will be beneficial to
the Company. Accordingly, it is a condition precedent to Buyer fulfilling its
obligations at the closing under the Stock Purchase Agreement that Company and
Consultant enter into this Agreement, pursuant to which the Company shall retain
Consultant to provide consulting services to the Company. It is also a condition
precedent to Buyer fulfilling its obligations at the closing under the Stock
Purchase Agreement that Company and Consultant enter into a Non-Competition and
Confidentiality Agreement in the form annexed to the Stock Purchase Agreement as
an exhibit (the "Non-Competition Agreement").

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

         1.       Term and Termination. This Agreement shall become effective
the closing of the transactions contemplated by the Stock Purchase Agreement and
shall terminate on the earlier of (a) two years and (b) the occurrence of any of
the following events:

<PAGE>

                  (i)      The termination of Consultant's consulting services
by the Company for Cause (as defined below);

                  (ii)     The termination of Consultant's consulting services
by the Company without Cause;

                  (iii)    The effective date of a written notice sent by
Consultant to the Company stating that Consultant is electing to terminate
Consultant's consulting services with the Company as a result of an Involuntary
Termination (as defined below);

                  (iv)     The death of Consultant; or

                  (v)      The disability of Consultant.

                  For purposes of this Agreement, the term "DISABILITY" shall
mean the inability of Consultant to perform the essential functions of his
duties hereunder for a period of ninety (90) days in any three hundred sixty
(360) day period, as determined by an independent medical professional selected
by the Company. The Consultant shall be deemed to have a disability if he fails
for thirty (30) or more days to submit to an examination by such a medical
professional upon the good faith request of the Company

                  If Consultant's consulting services are terminated by the
Company without Cause or Consultant terminates his consulting services with the
Company as a result of an Involuntary Termination, Consultant will be entitled
to receive the following:

                  (A)      The Company shall pay Consultant the Monthly
Consulting Fee (as defined below) for the month in which Consultant's services
are terminated; and

                  (B)      The Company shall pay to Consultant in a single lump
sum an amount equal to $12,500 times the number of months representing the
difference between twenty-four (24) months and the number of months (rounded to
the last day of the month during which the services were last rendered)
Consultant rendered services to the Company.

                  If Consultant's consulting services with the Company are
terminated by the Company for Cause or due to the Consultant's death or
disability or the Consultant terminates its consulting services with the Company
without Cause, then Consultant shall not be entitled to receive payment of any
amounts described in this Section 1, except the Company shall pay Consultant a
Monthly Consulting Fee for the month in which Consultant's services are
terminated.

         2.       Definitions. The following terms referred to in Section 1
above shall have the following meanings:

                  (a)      "Cause" for Consultant's termination will exist at
any time after the happening of one or more of the following events, in each
case as determined in good faith by the Company:

                                       -2-

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                           (i)      After fifteen (15) days advance written
notice is given to Consultant of any of the following circumstances, if the
Consultant shall not have removed such circumstances prior to the end of such
fifteen (15) day period (which shall include a statement that the Company
intends to terminate this Agreement for cause):

                                    (A)      Consultant's failure to perform his
duties under Section 3(a);

                                    (B)      Consultant's breach of any of his
other covenants herein;

                                    (C)      Consultant's willful misconduct in
the performance of Consultant's duties to the Company where such willful
misconduct has resulted in material damage to the Company;

                                    (D)      Consultant's breach or termination
of the Non-Competition Agreement; or

                                    (E)      Consultant's breach of the
Guaranty;

                           (ii)     Consultant's commission of any act of fraud
with respect to Buyer, the Company or any of their respective subsidiaries;

                           (iii)    Consultant's conviction or plea of guilty or
nolo contendre in respect of a felony crime or other crime involving a high
degree of moral turpitude; or

                           (iv)     Consultant's misappropriation or
embezzlement of funds from the Company or fraud against the Buyer, Company or
any of their respective subsidiaries.

                  (b)      "Involuntary Termination" shall mean any termination
by Consultant upon the occurrence of any of the following circumstances provided
that Consultant shall first give the Company fifteen (15) days advance notice
that such circumstances exist and the Company shall not have removed such
circumstances prior to the end of such fifteen (15) day period:

                           (i)      the relocation of the Company's offices at
which Consultant is principally employed to a location more than forty (40)
miles from such offices and the Company's requirement that Consultant relocate
to such new offices; or

                           (ii)     the Company's continuing breach of any
provision of this Agreement.

         3.       Consulting. During the term of this Agreement, Consultant
will, at the reasonable request of the Company's executive officers, provide
consulting services consisting of (a) advice regarding the operations of the
Company; (b) introductions and assistance with relationships (including
customers, third party manufacturers, purchasing agents and suppliers), products
and markets; (c) assistance in implementing the transition following the closing
of the transactions contemplated by the Stock Purchase Agreement; and (d) such
other duties consistent with the foregoing as the Company's President and Chief
Executive Officer may reasonably request from time to time. The Company
acknowledges that Consultant may be employed by or a consultant

                                       -3-

<PAGE>

to 5.11, Inc., Pelandale Development, LLC, Invigour8 Ltd. or Mallards, Inc., or
its respective subsidiaries or successors in interest so long as such employment
or engagement does not breach the Non-Competition Agreement.

         4.       Consideration. As consideration for Consultant's services and
other obligations, the Company agrees to pay Consultant at the rate of $12,500
per month, payable on the last business day of the month during which the
services were rendered (the "Monthly Consulting Fee"). The consideration set
forth in Section 4 will be the sole compensation payable to Consultant for
consulting services and no additional compensation or fee will be payable by the
Company to Consultant by reason of any benefit gained by the Company directly or
indirectly through Consultant's consulting efforts hereunder, nor shall the
Company be liable in any way for any additional compensation or fee for
consulting services unless the Company shall have expressly agreed thereto in
writing.

         5.       Support. The Company will provide Consultant with such support
facilities and space as may be required in the Company's judgment to enable
Consultant to properly perform his services hereunder.

         6.       Expenses. Consultant will be reimbursed for reasonable travel
and other out-of-pocket expenses incurred by it in connection with Consultant's
services under this Agreement, provided that Consultant complies with the
Buyer's expense reimbursement policy. Such reimbursements will be paid in
accordance with Buyer's reimbursement policy.

         7.       Independent Contractor. Consultant's relationship with the
Company will be that of an independent contractor and not that of an employee.
Consultant will not be eligible for any employee benefits, nor will the Company
make deductions from payments made to Consultant for taxes, which will be
Consultant's responsibility. Consultant agrees to indemnify and hold the Company
harmless from any liability for, or assessment of, any such taxes imposed on the
Company by relevant taxing authorities.

         8.       Confidentiality. In addition to his obligation under the
Non-Competition Agreement, but subject to the exceptions set forth therein,
Consultant shall keep in confidence and shall not disclose or make available to
third parties or make any use of any information or documents relating to
Consultant's services under this Agreement, the research and development
activities, or to the products, methods of manufacture, trade secrets,
processes, business or affairs or confidential or proprietary information of the
Company (other than information in the public domain through no fault of
Consultant), except with the prior written consent of the Company or to the
extent necessary in performing tasks assigned to Consultant by the Company.
Within five (5) business days of termination of this Agreement, Consultant will
return to the Company all documents and other materials related to the services
provided hereunder or furnished to Consultant by the Company at any time.
Consultant's obligations under this Paragraph 9 will survive termination of this
Agreement.

         9.       Amendment. Any amendment to this Agreement must be in writing
signed by Consultant and the Company.

                                       -4-

<PAGE>

         10.      Notices. All notices, requests and other communications called
for by this Agreement shall be deemed to have been given if made in writing and
personally delivered or mailed, postage prepaid, if to Consultant at the address
set forth above and if to the Company at 5759 Fleet Street, Suite 220, Carlsbad,
California 92008, Attention: Chief Executive Officer, or to such other addresses
as either party shall specify to the other.

         11.      Governing Law. The laws of the State of Delaware, without
reference to conflict principles, shall govern the validity, performance and
construction of this Agreement.

         12.      Prior Agreements. This Agreement supersedes all other
agreements between Consultant and the Company with regard to the terms of
Consultant's service as a consultant to the Company on and after the closing
under the Stock Purchase Agreement.

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

                                             ROYAL ROBBINS, INC.

                                             By: /s/ Francisco Morales
                                                 -------------------------------
                                             Name:  Francisco Morales
                                             Title: President

                                             /s/ Dan J. Costa
                                             -----------------------------------
                                             Dan J. Costa

                                      -5-

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