TABLE OF CONTENTS

ARTICLE 1
THE MERGER
1.01 The Merger			1
1.02 Effective Time			2
1.03 Effects of the Merger			2
1.04 Articles of Incorporation and Bylaws of the Surviving Corporation			2
1.05 Directors			2
1.06 Officers			2
1.07 Closing			2
1.08 Additional Actions			2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY AND MERGER SUB
2.01 Effect on Shares of Capital Stock			3
2.02 Options; Stock Plans			4
2.03 Payment for Common Shares and Options in the Merger			5
2.04 Adjustments			7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification			7
3.02 Charter Documents and Bylaws			8
3.03 Capitalization			8
3.04 Authority Relative to this Agreement			8
3.05 Company Subsidiaries			9
3.06 No Violation; Required Filings and Consents			9
3.07 SEC Reports and Financial Statements			10
3.08 Compliance with Applicable Laws			11
3.09 Absence of Certain Changes or Events			11
3.10 Change of Control			13
3.11 Litigation			13
3.12 Information in Proxy Statement			13
3.13 Benefit Plans			14
3.14 Taxes			15
3.15 Intellectual Property			17
3.16 Licenses and Permits			18
3.17 Material Contracts			18
3.18 Environmental Laws			19
3.19 Opinion of Financial Advisor			20
3.20 Brokers			20
3.21 Special Committee and Company Board Recommendations			20
3.22 Required Shareholder Vote			20
3.23 Properties and Assets			20
3.24 Labor Matters			21

3.25 Insurance			21
3.26 Government Contract and Regulatory Matters			22
3.27 State Takeover Statutes			25
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT
4.01 Organization and Qualification			25
4.02 Charter Documents and Bylaws			26
4.03 Authority Relative to this Agreement			26
4.04 No Violation; Required Filings and Consents			26
4.05 Litigation			27
4.06 Brokers			27
4.07 Beneficial Ownership of Common Shares			27
4.08 Information Supplied			27
4.09 Ownership and Operations of Merger Sub			27
4.10 Other Agreements			27
4.11 Financing			27
ARTICLE 5
COVENANTS
5.01 Interim Operations			28
5.02 Shareholders Meeting			31
5.03 Filings and Consents			32
5.04 Access to Information			32
5.05 Notification of Certain Matters			33
5.06 Public Announcements			33
5.07 Indemnification; Directors and Officers Insurance			33
5.08 Further Assurances; Reasonable Efforts			35
5.09 No Solicitation			35
5.10 Third Party Standstill Agreements			37
5.11 SEC Reports			37
5.12 Delisting			38
5.13 Cooperation with Financing			38
5.14 Shareholder Litigation			38
5.15 Conveyance Taxes			38
5.16 Special Meeting			38
5.17 State Takeover Laws			39
5.18 Employee Matters			39
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
6.01 Conditions to the Obligations of Each Party			39
6.02 Conditions to Obligations of Merger Sub and Parent			40
6.03 Conditions to Obligation of the Company			41

ARTICLE 7
TERMINATION
7.01 Termination by Mutual Consent			42
7.02 Termination by Merger Sub, Parent or the Company			42
7.03 Termination by Merger Sub and Parent			42
7.04 Termination by the Company			43
7.05 Effect of Termination			43
ARTICLE 8
MISCELLANEOUS
8.01 Payment of Fees and Expenses			44
8.02 Survival			45
8.03 Modification or Amendment			45
8.04 Entire Agreement; Assignment			45
8.05 Validity			45
8.06 Notices			45
8.07 Governing Law			46
8.08 Descriptive Headings			46
8.09 Counterparts			46
8.10 Certain Definitions. As used in this Agreement:			46
8.11 Specific Performance			47
8.12 Company Disclosure Schedule			47
8.13 Extension; Waiver			47
8.14 Third-Party Beneficiaries			47
8.15 Severability			47

Exhibits

Exhibit 1.02		Articles of Merger
Exhibit 1.04(a)		Articles of Incorporation of the Surviving Corporation
Exhibit 2.02(c)		Form of the Option Holder Written Acknowledgment
Exhibit 3.19		Opinion of Financial Advisor
Exhibit 5.06		Form of Press Release

AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (this Agreement), dated as of February 6, 2007, is entered into by and among Wellco Enterprises, Inc., a North Carolina corporation (the Company), Wasatch Merger Sub, Inc., a North Carolina corporation (the Merger Sub) and Wasatch Boot Holdings, Inc., a Delaware corporation (Parent). Merger Sub is a wholly owned direct or indirect subsidiary of Parent.

RECITALS

     WHEREAS, a special committee (the Special Committee) of the board of directors of the Company (the Company Board), subject to the terms and conditions set forth herein, has unanimously recommended that the Company Board approve and adopt this Agreement and the transactions contemplated hereby (the Transactions), and recommend the Merger (as defined below) to the shareholders of the Company, and has received a written opinion of the Financial Advisor (as defined in Section 3.19) as set forth in Section 3.19 herein;

     WHEREAS, the Company Board, based upon the recommendation of the Special Committee, at a meeting duly called and held, has (i) declared the advisability of this Agreement and the Transactions and approved and adopted this Agreement and the Transactions, including the Merger, in accordance with the NCBCA and the Companys articles of incorporation and bylaws, and (ii) subject to the provisions of Section 5.02 hereof, resolved to recommend that the shareholders of the Company approve this Agreement and the Merger.;

     WHEREAS, the Special Committee, the Company Board and the board of directors of Merger Sub have approved the merger of Merger Sub with and into the Company, with the Company as the surviving corporation, upon the terms and subject to the conditions set forth in this Agreement and the North Carolina Business Corporation Act, as amended (the NCBCA), whereby (i) each issued and outstanding share of the common stock, par value $1.00 per share (the Common Shares), of the Company, other than Common Shares to be canceled pursuant to Section 2.01(b) and Dissenting Shares (as defined in Section 2.01(d)), shall be converted into the right to receive the Merger Consideration (as defined in Section 2.01(a)) and, (ii) each Option (as defined in Section 2.02(a)) shall be converted into the right to receive the Merger Consideration that the holder of such Option would have been entitled to receive, if any, assuming such holder had exercised such Option immediately prior to the consummation of the Merger, all as more particularly set forth in Section 2.02(b);

     WHEREAS, the Company, Merger Sub and Parent desire to make certain representations, warranties, covenants and agreements in connection with the Merger, and also to prescribe various conditions to the Merger.

     NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1

THE MERGER

     1.01 The Merger. At the Effective Time (as defined in Section 1.02), subject to the terms and conditions of this Agreement and in accordance with the provisions of the NCBCA, Merger Sub shall be merged (the Merger) with and into the Company. Following the Merger, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation

(sometimes hereinafter referred to as the Surviving Corporation) and shall continue to be governed by the laws of the State of North Carolina.

     1.02 Effective Time. On the Closing Date (as defined in Section 1.07), and provided that this Agreement has not been terminated or abandoned pursuant to Article 7 hereof, the Company and Merger Sub will cause Articles of Merger in the form attached hereto as Exhibit 1.02 (the Articles of Merger) to be duly executed and filed, in the manner required by the NCBCA, with the Secretary of State of the State of North Carolina, and the parties shall take such other and further actions as may be required by law to make the Merger effective. The time the Merger becomes effective in accordance with applicable law is referred to herein as the Effective Time.