Exhibit 10.7
SEPARATION AGREEMENT
This Separation Agreement (“Agreement”) is made and entered into as of
November 4, 2009 by and between Matthew Burns, an individual (“Burns”), and
HealthSport, Inc., a Delaware corporation (“HealthSport”), with respect to the
following facts:
A. Burns has served as an independent consultant for HealthSport pursuant to an
independent consultant agreement with HealthSport (the “Consultant Agreement”).
Burns has served as a director of HealthSport since May 2007. Burns has also in
the past served as HealthSport’s chief operating officer and secretary but is
not an officer of HealthSport as of the date of this Agreement.
B. Burns now desires to terminate the Consultant Agreement and Burns’s position
of independent consultant with HealthSport.
C. Burns and HealthSport now desire to release one another from certain claims
that they may have against one another arising out of Burns’s Consultant
Agreement with HealthSport, with Burns’s past employment with HealthSport and
otherwise prior to the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and intending to be legally bound, HealthSport and Burns agree as
follows:
Section 1. Resignation. Burns hereby resigns as an independent consultant of
HealthSport effective as of the date of this Agreement. Burns shall remain a
director of HealthSport. The Consultant Agreement is terminated as of the date
of this Agreement. Burns shall not be an employee of HealthSport. Burns will
return to HealthSport all property owned by HealthSport, including all originals
and copies of the following, whether in Burns’s possession or previously removed
by Burns from HealthSport’s premises and still existing, and whether recorded on
paper, computer disk, other computer readable-form, or any other medium: all
computers, office equipment, company assets, lists, correspondence, books,
letters, records, financial data, product information, formulas, sales
information and other materials and other materials and writing owned by
HealthSport or used by it in connection with the conduct of its business.
Section 2. Separation Payment. As separation compensation, HealthSport shall,
subject to Burns’ satisfaction of any withholding or other taxes that may be
due:
(i) Pay to Burns the sum of $35,000 on or before December 1, 2009; and
(ii) Issue 100,000 unregistered shares of common stock of HealthSport to Burns
on or before December 1, 2009.
Burns shall be solely responsible for payment of any and all applicable taxes
associated with this Agreement.

 

 

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Section 3. Section 409A Compliance. This Agreement is intended to comply with
the requirements of section 409A of the Internal Revenue Code (“409A”). In the
event this Agreement or any benefit paid to Burns hereunder is deemed to be
subject to 409A, Burns hereby consents to the Company adopting such conforming
amendments as the Company deems necessary, in its reasonable discretion, to
comply with 409A. If upon Burns’s “separation from service” within the meaning
of 409A, he is then a “specified employee” (as defined in 409A), then solely to
the extent necessary to comply with 409A and avoid the imposition of taxes under
409A, the Company shall defer payment of “nonqualified deferred compensation”
subject to 409A payable as a result of and within six (6) months following such
separation from service until the earlier of (i) the first business day of the
seventh month following Burns’ separation from service, or (ii) ten (10) days
after the Company receives written notification of Burns’ death. Any such
delayed payments shall be made without interest. In addition, to the extent
required by 409A, any expense reimbursement payments to Burns must be made by no
later than the end of Burns’ taxable year following the taxable year in which
the expense is incurred. Such reimbursement or in-kind benefit rights may not be
subject to liquidation or exchange for another benefit. The Company (nor any of
its directors, employees or agents) shall not be liable to Burns or other
persons as to any unexpected or adverse tax consequence realized by Burns or
other person as a result of this Agreement or any payment or benefit provided
under this Agreement.
Section 4. Indemnification Claims Not Released. Burns retains, and does not
release in this Agreement any rights to indemnification in accordance with the
terms of HealthSport’s articles of incorporation or bylaws.
Section 5. General Release. Except for the claims set forth in Section 4 above,
Burns for himself, his heirs, executors, administrators, assigns and successors,
fully and forever releases and discharges HealthSport and its current, former
and future parents, subsidiaries, related entities, employee benefit plans and
their fiduciaries, predecessors, successors, officers, directors, shareholders,
agents, employees and assigns (collectively, “Releases”), with respect to any
and all claims, liabilities and causes of action, of every nature, kind and
description, in law, equity or otherwise, which have arisen, occurred or existed
at any time prior to the signing of this Agreement, including, without
limitation, any and all claims, liabilities and causes of action arising out of
or relating to Burns’s employment relationship with HealthSport prior to the
date of this Agreement.

 

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Section 6. Knowing Waiver of Employment-Related Claims. Burns understands and
agrees that, with the exception of potential employment-related claims
identified below, he is waiving any and all rights he may have had, now has, or
in the future may have, to pursue against any of the Releases any and all
remedies available to him under any employment-related causes of action,
including without limitation, claims of wrongful discharge, breach of contract,
breach of the covenant of good faith and fair dealing, fraud, violation of
public policy, defamation, discrimination, personal injury, physical injury,
emotional distress, claims under Title VII of the Civil Rights Act of 1964, as
amended, the Americans With Disabilities Act, the Federal Rehabilitation Act,
the California Fair Employment and Housing Act, the California Family Rights
Act, the Equal Pay Act of 1963, the provisions of the California Labor Code and
any other federal, state or local laws and regulations relating to employment,
conditions of employment (including wage and hour laws), perquisites of
employment (including but not limited to claims relating to stock and/or stock
options) and/or employment discrimination. Claims not covered by the release
provisions of this Agreement are (i) claims for unemployment insurance benefits,
(ii) claims under the California Workers’ Compensation Act, and (iii) claims for
indemnity under the California Labor Code, (iv) claims arising from
HealthSport’s nonperformance under this Agreement and (v) any challenge to the
validity of Burns’s release of claims under the Age Discrimination in Employment
Act of 1967, as amended, (“ADEA”) as set forth in Section 6 below. Burns
expressly waives any right to recovery of any type, including damages and
reinstatement, in any administrative or court action, whether state or federal,
and whether brought by him or on his behalf, related in any way to the matters
released herein.
Section 7. Knowing Waiver of ADEA Claims. Burns acknowledges that he is
knowingly and voluntarily waiving and releasing any rights he may have under the
federal Age Discrimination in Employment Act of 1967, as amended. He also
acknowledges that the consideration given for this waiver and release is in
addition to anything of value to which he was already was entitled. Burns
further acknowledges that he has been advised by this writing, as required by
law, that: (i) his waiver and release specified in this paragraph do not apply
to any rights or claims that may arise after the date he signs this Agreement or
to any challenge to the validity of this waiver of ADEA claims; (ii) he has been
advised hereby that he has the right to consult with an attorney prior to
executing this Agreement; (iii) he has twenty one (21) days to consider this
Agreement (although he may choose to voluntarily execute this Agreement
earlier); (iv) he has seven (7) days following his execution of this Agreement
to revoke the Agreement (in writing); and (v) this Agreement will not be
effective until the date upon which the revocation period has expired, which
will be the eighth (8th) day after this Agreement is executed by Burns.
Section 8. Waiver of Civil Code § 1542. Burns expressly waives any and all
rights and benefits conferred upon him by Section 1542 of the Civil Code of the
State of California, which states as follows:
“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”
Burns expressly agrees and understands that the release given by him pursuant to
this Agreement applies to all unknown, unsuspected and unanticipated claims,
liabilities and causes of action which he may have against any of the other
Releases.
Section 9. Severability of Release Provisions. Burns agrees that if any
provision of the release given by him under this Agreement is found to be
unenforceable, it will not affect the enforceability of the remaining provisions
and the courts may enforce all remaining provisions to the extent permitted by
law.

 

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Section 10. Representation Regarding Legal Actions. Burns represents that, as of
the date of this Agreement, he has not filed any lawsuits, charges, complaints,
petitions, claims or other accusatory pleadings against the Releases in any
court or any with any governmental agency. Except for claims preserved by law or
expressly by this Agreement, Burns promises never to sue any of the Releases, or
otherwise institute or participate in any legal or administrative proceedings
against any of the Releases, with respect to any claim covered by the release
provisions of this Agreement, unless he is compelled by legal process to do so.
Burns promises and agrees that he shall not advocate or incite the institution
of, or assist or participate in, any suit, complaint, charge or administrative
proceeding by any other person against any of the Releases, unless compelled by
legal process to do so.
Section 11. Promise to Maintain Confidentiality of HealthSport’s Confidential
Information. Burns acknowledges that due to the position he has occupied and the
responsibilities he has had at HealthSport, he has received confidential
information concerning HealthSport’s products, procedures, customers, sales,
prices, contracts, and the like. Burns hereby promises and agrees that, unless
compelled by legal process, he will not disclose to others and will keep
confidential all information he has received while employed by HealthSport
concerning HealthSport’s products and procedures, the confidential purchasing
information relating to HealthSport’s customers, HealthSport’s sales,
HealthSport’s prices, the terms of any of HealthSport’s contracts with third
parties, and the like. Burns agrees that a violation by him of the foregoing
obligation to maintain the confidentiality of HealthSport’s confidential
information will constitute a material breach of this Agreement.
Section 12. Entire Agreement. This Agreement constitutes the sole agreement
between the parties with respect to its subject matter and supersedes all prior
discussions, arrangements or agreements, whether written or oral, with respect
to its subject matter.
Section 13. Waiver, Amendment and Modification of Agreement. The parties agree
that no waiver, amendment or modification of any of the terms of this Agreement
shall be effective unless in writing and signed by all parties affected by the
waiver, amendment or modification. No waiver of any term, condition or default
of any term of this Agreement shall be construed as a waiver of any other term,
condition or default.
Section 14. Representation by Counsel. The parties acknowledge that they have
had the opportunity to be represented in negotiations for the preparation of
this Agreement by counsel of their own choosing, and that they have entered into
this Agreement voluntarily, without coercion. This Agreement shall be construed
in accordance with its plain meaning and not strictly for or against either
party.
Section 15. California Law. The parties agree that this Agreement and its terms
shall be construed under California law, without regard to any choice of law
provisions.
Section 16. Counterparts. This Agreement may be signed in multiple counterparts
and may be delivered by facsimile or electronic mail in portable document format
or other means intended to preserve the original graphical content of a
signature. Each such counterparts shall be an original and all of which, taken
together, shall constitute one and the same instrument.

 

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Section 17. Period to Consider Terms of Agreement. Burns acknowledges that this
Agreement was presented to him on November 4, 2009 and that he is entitled to
have up to twenty-one (21) days’ time in which to consider the terms of this
Agreement. Burns acknowledges that he has obtained the advice and counsel from
the legal representative of his choice and executes this Agreement having had
sufficient time within which to consider its terms. Burns represents that if he
executes this Agreement before 21 days have elapsed, he does so voluntarily,
upon the advice and with the approval of his legal counsel, and that he
voluntarily waives any remaining consideration period.
Section 18. Revocation of Agreement. Burns understands that after executing this
Agreement, he has the right to revoke it within seven (7) days after his
execution of it. Burns understands that this Agreement will not become effective
and enforceable unless the seven-day revocation period passes and Burns does not
revoke the Agreement in writing. Burns understands that this Agreement may not
be revoked after the seven-day revocation period has passed. Burns understands
that any revocation of this Agreement must be made in writing and delivered to
HealthSport’s General Counsel within the seven-day period.
Section 19. Effective Date. This Agreement shall become effective and binding
upon the parties eight (8) days after Burns’s execution thereof, so long as
Burns has not revoked this Agreement within the time period and in the manner
specified in Section 18, above.

 

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

            /s/ Matthew Burns       Matthew Burns            HEALTHSPORT, INC.
      By:   /s/ Robert S. Davidson         Robert S. Davidson        Chairman of
the Board   

 

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