STAY BONUS AGREEMENT
This Stay Bonus Agreement (this “ Agreement ”) is made as of February 6, 2007 by and between Wellco Enterprises, Inc., a North Carolina corporation (the “ Company ”), and Tammy Francis (“ Executive ”).
WHEREAS , Executive currently serves as an officer of the Company;
WHEREAS , the Company proposes to enter into an Agreement and Plan of Merger with Wasatch Merger Sub, Inc. and Wasatch Boot Holdings, Inc. pursuant to which the Company is to be merged with Wasatch Merger Sub, Inc. and as a result of such merger shares of the Company’s common stock are to be converted into the right to receive an amount of cash set forth in such Agreement and Plan of Merger, as it may be amended from time to time (such merger transaction and any other merger transaction to which the Company is a constituent party and pursuant to which the shares of common stock of the Company are to be converted into the right to receive cash, other property or the securities of another entity, or any sale of all or substantially all of the Company’s assets are referred herein as a “Company Sale Event”); and
WHEREAS , the Company wishes to provide an incentive to Executive to remain an employee of the Company through the effective date of the consummation of a Company Sale Event (the “ Effective Date ”);
NOW, THEREFORE , in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Executive agree as follows:
1. Stay Bonus . The Company shall pay and Executive shall receive a stay bonus of $150,000, less applicable withholding (the “ Stay Bonus ”), payable on the business day next succeeding the Effective Date. Notwithstanding the foregoing, the Stay Bonus will be reduced to the extent that it would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “ Code ”), and the regulations thereunder. If an amount in excess of the limit set forth in this Section 1 is paid to Executive, Executive must repay the excess amount to the Company upon demand, with interest at the rate provided in Code Section 1274(b)(2)(B). Executive and the Company agree to cooperate with each other reasonably in connection with any administrative or judicial proceedings concerning the existence or amount of any “excess parachute payment” that may be payable hereunder. The determination of whether any payment hereunder would constitute an “excess parachut