Exhibit 10.1

 

CAUSE NO. 08-4526

 

CARL DICK,

 

Plaintiff,

 

v.

 

HEELYS, INC., et al.

 

Defendants.

§

§

§

§

§

§

§

§

§

§

IN THE COUNTY COURT

 

 

 

AT LAW NO. 1

 

 

 

 

DALLAS COUNTY, TEXAS

 

COMPROMISE AND SETTLEMENT AGREEMENT

 

ON THIS DAY, Plaintiff Carl Dick has agreed with Defendants Heelys, Inc.
(“Heelys”), Michael G. Staffaroni, Michael W. Hessong, Patrick F. Hamner, Roger
R. Adams, Richard E. Middlekauff, Samuel B. Ligon, the estate of William R.
Thomas, James T. Kindley, Jeffrey G. Peterson, Capital Southwest Corporation,
Capital Southwest Venture Corporation, Bear, Stearns & Co., Inc. n/k/a J.P
Morgan Securities Inc., Wachovia Capital Markets, L.L.C. n/k/a Wells Fargo
Securities, LLC, J.P. Morgan Securities, Inc., and CIBC World Markets Corp
(collectively, “Defendants;” Dick and Defendants are collectively the “Parties”)
for the compromise and settlement of all disputes and claims between them, as
follows:

 

1.             CARL DICK AND DEFENDANTS HEREBY COMPROMISE AND SETTLE ALL
DISPUTES AND CLAIMS BETWEEN THEM, INCLUDING WITHOUT LIMITATION THE CLAIMS
ASSERTED IN THE ABOVE-TITLED LAWSUIT (THE “LAWSUIT”), ON THE TERMS AND
CONDITIONS SET OUT IN THIS COMPROMISE AND SETTLEMENT AGREEMENT (THE
“AGREEMENT”).

 

2.             THE RELEASES AND COVENANTS NOT TO SUE CONTAINED IN THIS AGREEMENT
SHALL, ON BEHALF OF EACH PARTY TO THIS AGREEMENT, INCLUDE ITS, OR HIS,
RESPECTIVE PAST, PRESENT, AND FORMER DIRECTORS, OFFICERS, SHAREHOLDERS, AGENTS,
EMPLOYEES, ATTORNEYS, SERVANTS, PARENTS, SUBSIDIARIES, PARTNERS, MANAGERS,
OWNERS, AFFILIATES, INVESTORS, INTEREST OWNERS, OTHER REPRESENTATIVES,
SUCCESSORS,

 

1

--------------------------------------------------------------------------------

 

ASSIGNS, AND ALL OTHER PERSONS AND ENTITIES ACTING ON BEHALF OF OR BY, THROUGH,
OR UNDER ONE OR MORE OF THEM.

 

3.             DEFENDANTS SHALL, WITHIN SEVEN DAYS OF THE EXECUTION OF THIS
COMPROMISE AND SETTLEMENT AGREEMENT, PAY TO CARL DICK THE SUM OF $2,500,000 BY
WIRE TRANSFER TO THE DESIGNATED TRUST ACCOUNT OF HUTCHINSON LAW FIRM LLC.

 

4.             ON OR BEFORE DECEMBER 1, 2009, DEFENDANTS SHALL PAY TO CARL DICK
THE SUM OF $2,750,000 BY THE DELIVERY OF SUCH SUM BY WIRE TRANSFER TO THE
DESIGNATED TRUST ACCOUNT OF HUTCHINSON LAW FIRM LLC.

 

5.             AS CONSIDERATION FOR THE PAYMENT DESCRIBED IN PARAGRAPHS 3 AND 4
ABOVE, CARL DICK RELEASES ALL CLAIMS THAT WERE ASSERTED OR COULD HAVE BEEN
ASSERTED AGAINST DEFENDANTS IN THE ABOVE-TITLED SUIT AND ALL CLAIMS OR CAUSES OF
ACTION (KNOWN OR UNKNOWN) BASED UPON FEDERAL OR STATE OR ANY OTHER APPLICABLE
LAW ARISING IN ANY WAY OUT OF THE PURCHASE, SALE, OR HOLDING OF ANY HEELYS STOCK
OR HEELYS SECURITY BY CARL DICK.  ALL LITIGATION BETWEEN CARL DICK AND
DEFENDANTS, INCLUDING CLAIMS THAT HAVE BEEN BROUGHT OR COULD HAVE BEEN BROUGHT,
WILL BE DISMISSED WITH PREJUDICE.  WITHIN THREE DAYS OF RECEIPT OF THE PAYMENT
SET FORTH IN PARAGRAPH 3 ABOVE, CARL DICK SHALL FILE WITH THE COURT THE
APPROPRIATE PAPERS TO DISMISS THE LAWSUIT WITH PREJUDICE.

 

6.             EACH PARTY TO THIS AGREEMENT HEREBY COVENANTS, REPRESENTS AND
WARRANTS TO EACH OTHER PARTY THAT:

 

(A)           SUCH PARTY IS CORRECTLY DESCRIBED AND NAMED IN THIS AGREEMENT.

 

(B)           BEFORE EXECUTING THIS AGREEMENT, SUCH PARTY BECAME FULLY INFORMED
OF THE TERMS, CONTENTS, PROVISION, AND EFFECT OF THIS AGREEMENT AND ANY EXHIBITS
TO EITHER OR BOTH OF THEM.

 

2

--------------------------------------------------------------------------------

 

(C)           THE SIGNATORY TO THIS AGREEMENT SIGNING ON BEHALF OF A PARTY IS
FULLY AUTHORIZED AND LEGALLY COMPETENT TO EXECUTE THIS AGREEMENT AS THE LEGAL,
VALID AND BINDING ACT AND DEED OF SUCH PARTY.

 

(D)           THIS AGREEMENT IS FULLY AND FOREVER BINDING ON AND ENFORCEABLE
AGAINST, SUCH PARTY IN ACCORDANCE WITH ITS TERMS.

 

(E)           THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND ANY OTHER
DOCUMENTS, AGREEMENTS OR INSTRUMENTS EXECUTED OR DELIVERED BY SUCH PARTY
PURSUANT HERETO AND THE CONSUMMATION OF THE TRANSACTIONS HEREIN OR THEREIN
CONTEMPLATED DOES NOT CONFLICT WITH OR RESULT IN A BREACH OF ANY OF THE TERMS OR
PROVISIONS OF, OR CONSTITUTE A DEFAULT UNDER, ANY MATERIAL AGREEMENT OR
INSTRUMENT TO WHICH SUCH PARTY IS A PARTY OR ANY PROVISION OF LAW, STATUTE,
RULE OR REGULATION APPLICABLE TO SUCH PARTY OR ANY JUDICIAL OR ADMINISTRATIVE
ORDER OR DECREE BY WHICH SUCH PARTY IS BOUND.

 

(F)            SUCH PARTY HAS MADE AN INVESTIGATION TO SUCH PARTY’S SATISFACTION
OF ALL FACTS AND REASONS WHY SUCH PARTY SHOULD ENTER INTO THIS AGREEMENT AND
AGREES, BASED UPON SUCH PARTY’S KNOWLEDGE, EXPERIENCE, INVESTIGATION, AND
CONSULTATION WITH COUNSEL THAT THIS AGREEMENT IS FAIR AND JUST.

 

(G)           SUCH PARTY REPRESENTS THAT HE, OR IT, AS THE CASE MAY BE, HAS NOT
RELIED UPON AND WILL NOT RELY UPON, ANY STATEMENTS, ACTS OR OMISSIONS BY ANY
OTHER PARTY, OTHER THAN AS SET OUT IN THIS AGREEMENT IN MAKING ITS DECISION TO
ENTER INTO THIS AGREEMENT.

 

(H)           SUCH PARTY ACKNOWLEDGES THAT ITS AFORESAID REPRESENTATIONS ARE A
MATERIAL INDUCEMENT TO EVERY OTHER PARTY TO ENTER INTO THIS AGREEMENT.

 

(I)            EACH PARTY, AND EACH PERSON SIGNING THIS AGREEMENT, OWNS AND
CONTROLS ALL CLAIMS RELEASED IN THIS AGREEMENT AND HAS NOT ASSIGNED OR
HYPOTHECATED ANY OF SUCH CLAIMS.

 

7.             CARL DICK AND DEFENDANTS SHALL EACH BE INDIVIDUALLY RESPONSIBLE
FOR THEIR OWN FEES AND EXPENSES INCURRED IN CONNECTION WITH THIS AND ALL OTHER
ACTIONS AND CLAIMS BEING RELEASED.

 

8.             CARL DICK AND DEFENDANTS AGREE TO EXECUTE SUCH FURTHER
INSTRUMENTS AND DOCUMENTS AS MAY BE REASONABLY NECESSARY TO CARRY OUT AND
EFFECTUATE THE TERMS, CONDITIONS AND INTENTION OF THIS AGREEMENT.

 

3

--------------------------------------------------------------------------------

 

9.             THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE
PARTIES AND SUPERSEDES ALL PRIOR ARRANGEMENTS, AGREEMENTS AND UNDERSTANDINGS
WITH RESPECT TO THIS COMPROMISE AND SETTLEMENT AGREEMENT, WHETHER WRITTEN OR
ORAL.

 

10.           THE PARTIES ACKNOWLEDGE THAT BONA FIDE DISPUTES AND CONTROVERSIES
EXIST BETWEEN THEM, AND IT IS UNDERSTOOD AND AGREED THAT THIS AGREEMENT IS A
COMPROMISE OF DISPUTED CLAIMS, AND THAT NOTHING CONTAINED HEREIN SHALL BE
CONSTRUED AS AN ADMISSION OF LIABILITY BY OR ON BEHALF OF ANY PARTY, ALL SUCH
LIABILITY BEING EXPRESSLY DENIED.  IN THIS REGARD, THE PARTIES UNDERSTAND AND
AGREE THAT THE FACTS WITH RESPECT TO WHICH THIS AGREEMENT IS GIVEN MAY HEREAFTER
PROVE TO BE DIFFERENT FROM THE FACTS NOW KNOWN OR BELIEVED BY THEM AND THEY
HEREBY ACCEPT AND ASSUME THE RISK THEREOF AND AGREE THAT THIS AGREEMENT SHALL
REMAIN IN ALL RESPECTS EFFECTIVE AND NOT SUBJECT TO TERMINATION OR RESCISSION BY
REASON OF ANY SUCH DIFFERENCES IN FACTS.  DEFENDANTS EXPRESSLY DENY THAT THE
SETTLEMENT CONSIDERATION REPRESENTS OR, IN ANY WAY, REFLECTS THE VALUE OF THE
CLAIMS AGAINST IT, AND RATHER STATE THAT THEY ARE SETTLING TO AVOID THE EXPENSE
AND INCONVENIENCE OF ONGOING LITIGATION.

 

11.           THIS AGREEMENT BINDS AND INURES TO THE BENEFIT OF EACH PARTY TO
THIS AGREEMENT, INCLUDING ITS, OR HIS, RESPECTIVE PAST, PRESENT, AND FORMER
DIRECTORS, OFFICERS, SHAREHOLDERS, AGENTS, EMPLOYEES, SERVANTS, PARENTS,
SUBSIDIARIES, PARTNERS, MANAGERS, OWNERS, AFFILIATES, INVESTORS, INTEREST
OWNERS, OTHER REPRESENTATIVES, SUCCESSORS, ASSIGNS, AND ALL OTHER PERSONS AND
ENTITIES ACTING ON BEHALF OF OR BY, THROUGH, OR UNDER ONE OR MORE OF THEM.

 

12.           THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH
OF WHICH IS AN ORIGINAL FOR ALL PURPOSES, AND ALL OF WHICH TOGETHER CONSTITUTE
ONE AGREEMENT.  FAXED COPIES BEARING SIGNATURES OF THE PARTIES SHALL BE REGARDED
AS ORIGINAL COUNTERPARTS.

 

4

--------------------------------------------------------------------------------

 

13.           THE PARTIES ACKNOWLEDGE THAT DISBURSEMENT OF THE SETTLEMENT
PROCEEDS, AS DESCRIBED ABOVE, AND THE COVENANTS AND RECITALS IN THIS AGREEMENT,
PROVIDE GOOD AND SUFFICIENT CONSIDERATION FOR EVERY PROMISE, DUTY, RELEASE,
OBLIGATION, AND RIGHT CONTAINED IN THIS AGREEMENT.

 

14.           NEITHER THIS AGREEMENT, NOR ANY OF ITS TERMS, MAY BE CHANGED,
WAIVED, DISCHARGED, OR TERMINATED ORALLY, BUT ONLY BY WRITTEN AGREEMENT SIGNED
BY ALL OF THE PARTIES HERETO.

 

15.           THE PARTIES AGREE THAT THIS AGREEMENT HAS BEEN MUTUALLY DRAFTED
AND AUTHORED BY ALL THE PARTIES AND THAT IT SHALL NOT BE CONSTRUED AGAINST ANY
ONE PARTY.

 

16.           THIS AGREEMENT HAS BEEN DULY AUTHORIZED AND CONSTITUTES A LEGAL,
VALID AND BINDING OBLIGATION OF EACH PARTY HERETO, AND IS ENFORCEABLE AGAINST
EACH OF THEM IN ACCORDANCE WITH ITS TERMS.  TO THE EXTENT THAT ANY PART OF THIS
AGREEMENT IS SUBSEQUENTLY DECLARED BY ANY COURT OF COMPETENT JURISDICTION, OR BY
ANY OTHER BODY HAVING AUTHORITY TO DO SO, TO BE VOID OR OTHERWISE UNENFORCEABLE,
THE REMAINING PROVISIONS OF THIS AGREEMENT SHALL CONTINUE IN FULL FORCE AND
EFFECT.

 

17.           THE PARTIES SHALL KEEP THIS AGREEMENT, ITS TERMS, AND THE
NEGOTIATION THEREOF CONFIDENTIAL EXCEPT THAT (A) CARL DICK MAY DISCLOSE THE
AGREEMENT AND ITS TERMS TO HIS LAWYERS, ACCOUNTANTS AND/OR INVESTMENT ADVISORS
TO THE EXTENT NECESSARY FOR TAX OR INVESTMENT PURPOSES; (B) CARL DICK MAY
DISCLOSE THE AGREEMENT AND ITS TERMS TO ANY THIRD PARTY OTHER THAN A PUBLIC
MEDIA SO LONG AS THAT DISCLOSURE INCLUDES ONLY THE FACTS, TERMS, AND DETAILS OF
ANY DEFENDANT’S  PUBLIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION; AND
(C) DEFENDANTS MAY DISCLOSE THE AGREEMENT AND ITS TERMS, TO THE EXTENT
DEFENDANTS DEEM SUCH DISCLOSURE NECESSARY, (I) TO THEIR INSURERS, LAWYERS,
ACCOUNTANTS AND ADVISORS, (II) TO THEIR SHAREHOLDERS, (III) IN PUBLIC FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION, AND (IV) IN RESPONSE TO INQUIRIES
BY ANY COURT OF

 

5

--------------------------------------------------------------------------------

 

LAW.  CARL DICK AGREES NOT TO DISCUSS THE LAWSUIT OR THIS AGREEMENT WITH,
THROUGH, OR BY ANY PUBLIC MEDIA.  THE NAMES OF ANY INSURERS FUNDING ANY PORTION
OF THIS SETTLEMENT SHALL NOT BE PUBLICLY DISCLOSED.

 

18.           CARL DICK SHALL TIMELY FILE THE APPROPRIATE PAPERS TO OPT OUT OF
ANY SETTLEMENT CLASS AND SHALL NOT PARTICIPATE OR FILE ANY CLAIM FORM IN ANY
OTHER LITIGATION CONCERNING HEELYS SECURITIES, INCLUDING WITHOUT LIMITATION
RINES V. HEELYS, INC., ET AL., CIVIL ACTION NO. 3:07-CV-01468-K;  IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION.

 

19.           THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED AND ENFORCED UNDER
THE LAWS OF THE STATE OF TEXAS.  EXCLUSIVE JURISDICTION AND VENUE OF ANY DISPUTE
REGARDING, CONCERNING, OR IN ANY WAY ARISING OUT OF, THIS AGREEMENT SHALL BE
WITHIN THE COURTS OF THE STATE OF TEXAS FOR DALLAS COUNTY, TEXAS OR COURTS FOR
THE UNITED STATES OF AMERICA LOCATED IN THE NORTHERN DISTRICT OF TEXAS.

 

20.           THIS AGREEMENT IS EFFECTIVE AS OF AUGUST 21, 2009.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

6

--------------------------------------------------------------------------------

 

DATED:  August 21, 2009.

 

 

/s/ CARL DICK

 

CARL DICK

 

 

 

 

HEELYS, INC,

 

 

/s/ LISA PETERSON

 

By: LISA PETERSON

 

Title: CHIEF FINANCIAL OFFICER

 

 

 

/s/ ROGER ADAMS

 

ROGER ADAMS

 

 

/s/ PATRICK F. HAMNER

 

PATRICK F. HAMNER

 

 

/s/ MICHAEL W. HESSONG

 

MICHAEL W. HESSONG

 

 

/s/ RICHARD E. MIDDLEKAUFF

 

RICHARD E. MIDDLEKAUFF

 

 

/s/ MICHAEL G. STAFFARONI

 

MICHAEL G. STAFFARONI

 

 

/s/ SAMUEL B. LIGON

 

SAMUEL B. LIGON

 

 

/s/ WILLIAM R. THOMAS II, EXECUTOR

 

THE ESTATE OF WILLIAM R. THOMAS

 

 

/s/ JAMES T. KINDLEY

 

JAMES T. KINDLEY

 

7

--------------------------------------------------------------------------------

 

 

/s/ JEFFREY G. PETERSON

 

JEFFREY G. PETERSON

 

 

 

 

CAPITAL SOUTHWEST VENTURE CORPORATION

 

 

 

/s/ GARY L. MARTIN

 

By: GARY L. MARTIN

 

Title: PRESIDENT

 

 

 

 

 

CAPITAL SOUTHEST CORPORATION

 

 

 

/s/ GARY L. MARTIN

 

By: GARY L. MARTIN

 

Title: PRESIDENT

 

 

 

 

BEAR STEARNS & CO., INC., n/k/a

 

J.P. MORGAN SECURITIES INC.

 

 

/s/ ORMAN ANDERSON

 

By: ORMAN ANDERSON

 

Title: EXECUTIVE DIRECTOR

 

 

 

 

WACHOVIA CAPITAL MARKETS, L.L.C.

 

n/k/a WELLS FARGO SECURITIES, LLC

 

 

 

/s/ DAVID RICE

 

By: DAVID RICE

 

Title: VICE PRESIDENT ASSISTANT GENERAL COUNSEL

 

 

 

 

J.P. MORGAN SECURITIES INC.

 

 

/s/ ORMAN ANDERSON

 

By: ORMAN ANDERSON

 

Title: Executive Director

 

8

--------------------------------------------------------------------------------

 

 

CIBC WORLD MARKETS CORP.

 

 

/s/ IAN D. KATZ

 

By: IAN D. KATZ

 

Title: EXECUTIVE DIRECTOR/SENIOR COUNSEL

 

9

--------------------------------------------------------------------------------