Exhibit 10.6
Option Cancellation Acknowledgement
February 6, 2007
TO: Fred Webb
Dear Fred:
     As you are aware, Wellco Enterprises, Inc. (the “Company” or “we”) has
entered into a definitive agreement (the “Merger Agreement”) to be acquired (the
“Transaction”) by Wasatch Boot Holdings, Inc. (“Holdings”). The Transaction will
be consummated through a merger between the Company and a subsidiary of
Holdings.
     As you know, you were granted an option to purchase common stock of the
Company (each, a “Plan Option”) under the terms of one or more of the following
(collectively, the “Plans”):

  •   1996 Stock Option Plan for Key Employees of Wellco Enterprises, Inc.;    
•   1997 Stock Option Plan for Key Employees of Wellco Enterprises, Inc.;     •
  1997 Stock Option Plan for Non-Employee Directors of Wellco Enterprises, Inc.;
    •   1999 Stock Option Plan for Key Employees of Wellco Enterprises, Inc.;
and     •   1999 Stock Option Plan for Non-Employee Directors of Wellco
Enterprises, Inc..

Exhibit A to this Option Cancellation Agreement sets forth for each outstanding
Plan Option and any rights to aquire securities or any equity interest in Wellco
Enterprises, Inc., (together, the “Options”), the grant date, exercise price and
number of shares of common stock of the Company (“Common Stock”) that may be
purchased under the Options.
     Holding’s acquisition terms provide for the cash-out of all Options
outstanding on the date the Transaction is consummated (such date, the
“Effective Time”) for a per share amount (the “Merger Consideration”) of $14.00
less the applicable exercise price(s) per share for the Options and any required
tax withholding amounts. The Compensation Committee of the Board of Directors of
the Company, as the administrator of the Plans, has approved the treatment of
the Options as described in this Option Cancellation Acknowledgement and as set
forth in the Merger Agreement.
     To receive this payment with respect to your Options, please sign your name
on the following page of this agreement where indicated (please also provide
your address and include your social security number).
     Reflecting the foregoing, you acknowledge and agree as follows:
     1. You represent and warrant that you are the holder of the Options listed
on Exhibit A, as applicable, and do not hold any other Option of any kind.

 

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     2. Effective as of the Effective Time, but subject in all events to the
consummation of the Transaction, your Option(s) will be terminated and become
null, void and of no further effect other than the right to receive, following
execution of this agreement and in accordance with the Merger Agreement, the
Merger Consideration payable with respect to your Options, as reduced by (A) the
applicable exercise price for each such Option and (B) any amounts required to
be withheld to satisfy applicable tax withholding requirements. To the extent
that the exercise price per share of any of your Options equals or exceeds the
Merger Consideration, you will not receive any payment for such Options.
Effective as of the payment of such amount (or, if no such amount is due,
effective as of the Effective Time) you hereby release and discharge Wellco
Enterprises, Inc. from any and all claims, demands, proceedings, causes of
action, court orders, obligations, agreements (express or implied), debts or
liabilities whatsoever, whether known or unknown, both at law and in equity,
which you has ever had or may hereafter have against any matter, cause or event
regarding the Options.
     3. If all or any portion of your Option(s) terminate in accordance with
their terms prior to the Effective Time, you will not be entitled to receive
payment under this Option Cancellation Acknowledgement or the Merger Agreement
with respect to such terminated portion of your Option(s).
     4. Holdings shall be entitled to rely upon your agreements set forth
herein.
[signature page follows]

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     If you agree with the terms and conditions set forth above, please complete
and sign below and return this Option Cancellation Acknowledgement to Tammy
Francis at the Company.

            WELLCO ENTERPRISES, INC.
      By:   /s/ Lee Ferguson         Lee Ferguson, President             

     
ACKNOWLEDGED AND AGREED:
   
 
   
/s/ Fred Webb

 
Signature
   
 
   
Print
Date: February 6, 2007
   
 
   
 
   
Print
Name: Fred K. Webb, Jr.
   
 
   
 
   
Print Address:
   
 
       
697 Brown Avenue

 
Waynesville, NC 28786

 
   
 
   
 
   
 
   
Social Security Number:
   
 
   
XXX-XX-XXXX

 
   

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Exhibit A
Options

                      Number of shares of common stock     Grant date  
purchasable under Options   Exercise price per share
11/16/1999
    7,000     $ 8.00  

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