Exhibit 10.1


 


SEVERANCE AND GENERAL RELEASE AGREEMENT


 


This Severance and General Release Agreement (“Agreement”) is
made and entered into effective as of February 10, 2009 (the “Effective
Date”) by and between Heeling Sports Limited, a Texas limited partnership
(the “Company”) and Don Carroll (the “Employee”) (the Company and
the Employee are collectively referred to herein as the “Parties”).


 


WHEREAS, beginning on or about January 1, 2008, the Employee
became employed as the Company’s Senior Vice President of Marketing and on or
about May 20, 2008 was named the Company’s President and Chief Executive
Officer;


 


WHEREAS, effective as of July 17, 2008, the Employee and the
Company entered into an EXECUTIVE EMPLOYMENT AGREEMENT, a true and correct
conformed copy of which is attached as Exhibit A (the “Employment
Agreement”);


 


WHEREAS, as of the Effective Date, the Employee’s employment with the
Company ended due to Employee’s resignation; and


 


WHEREAS, the Employee and the Company desire to compromise and settle
fully and finally, by the execution of this Agreement, all claims and causes of
action of any kind whatsoever, whether known or unknown, which have arisen
prior to or at the time of the execution of this Agreement, for any matter,
including, but in no way limited to, any and all claims, controversies and
causes of action arising out of or related to the Employee’s employment with
and/or departure from the Company.


 


NOW, THEREFORE, in full compromise, release and settlement, accord and
satisfaction, and discharge of all claims and causes of action, known or
unknown, possessed by or belonging to the Employee for and in consideration of
the above recitals and the mutual promises, covenants and agreements set forth
herein, the adequacy of which the Parties hereby acknowledge for all purposes,
the Parties to this Agreement covenant and agree as follows:


 


1.                                       Severance
Proceeds:  Subject to the terms of Sections 6 and 12 herein, the Parties
agree to the following terms of severance compensation:


 


a.                                       The
Company shall pay Employee or his estate six (6) months severance
amounting to the total sum of ONE HUNDRED AND FIFTY THOUSAND DOLLARS
($150,000.00), minus tax-related deductions (the “Severance Proceeds”),
in full compromise and settlement.  The
Severance Proceeds will be paid over a six (6) month period in equal
installments in accordance with the Company’s normal payroll practices and
policies beginning on the first payroll date following the Revocation Period
described in Section 6 herein;


 


b.                                      If
Employee elects continuation coverage (with respect to Employee’s coverage
and/or any eligible dependent coverage) under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA Continuation Coverage”) with respect
to the Company’s group health insurance plan, Employee will be responsible for
payment of the monthly cost of COBRA Continuation Coverage, provided,


 


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however, the Company will reimburse Employee
for the monthly cost of all COBRA Continuation Coverage net of all co-pay
amounts (if any) for the six (6) month period following the Effective
Date. Nothing herein will affect Employee’s rights to COBRA Continuation
Coverage, at Employee’s expense, following the Effective Date.


 


2.                                       Payment
of Expenses and Accrued Leave:


 


a.                                       Subject
to Employee’s compliance with all applicable expense policies and procedures,
the Company will reimburse Employee for all reasonable accrued but unpaid
travel, lodging, long distance telephone and other business costs and expenses reasonably
incurred by Employee while rendering Services pursuant to Exhibit A,
through and including the Effective Date.


 


b.                                      The
Company will pay Employee an amount equal to all accrued and unused vacation
and personal day pay through and including the Effective Date, calculated in
accordance with the Company’s vacation and personal day policies, practices,
and procedures.


 


3.                                       General
Release:


 


a.                                       Employee,
individually, and on behalf of, as applicable, Employee’s current, former, and
successor attorneys, representatives, guardians, heirs, assigns, successors,
executors, administrators, insurers, servants, agents, employees, affiliates,
and entities does hereby GENERALLY RELEASE, ACQUIT, AND DISCHARGE the Company,
and as applicable, its respective current, former, and successor officers,
employees, agents, attorneys, assigns, representatives, directors,
shareholders, owners, servants, administrators, insurers, parents,
subsidiaries, affiliates, and related corporations, firms, associations,
partnerships, and entities, specifically including all affiliates of the
Company and all of their respective officers and directors, from any and all
claims, debts, damages, demands, liabilities, benefits, suits in equity,
complaints, grievances, obligations, promises, agreements, rights,
controversies, costs, losses, remedies, attorneys’ fees and expenses, back pay,
front pay, severance pay, percentage recovery, injunctive relief, lost profits,
emotional distress, mental anguish, personal injuries, liquidated damages, punitive
damages, disability benefits, fraud, interest, expert fees and expenses,
reinstatement, other compensation, suits, appeals, actions, and causes of
action, of whatever kind or character, including, but not limited to, any
dispute, claim, charge, or cause of action arising under the Civil Rights Act
of 1964, Title VII, 42 U.S.C. §§ 2000e et
seq., as amended (including the Civil Rights Act of 1991), the Civil
Rights Act of 1866, 42 U.S.C. §§ 1981 et
seq., as amended, the Equal Pay Act, 29 U.S.C. §§ 201 et seq., as amended, the Americans with
Disabilities Act of 1990, 42 U.S.C. §§ 12101 et
seq., as amended, the Age
Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq., as amended, the Employee Retirement
Income Security Act of 1974, 29 U.S.C. §§ 1001 et
seq., as amended, the Fair Labor Standards Act of 1938, 29 U.S.C. §§
201 et seq., as amended, the
Family and Medical Leave Act, 29 U.S.C. §§ 2601 et


 


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seq., as amended,
RICO, 18 U.S.C. §§ 1961 et seq.,
as amended, the Texas discrimination,
retaliation, and wrongful discharge laws, including without limitation Tex.
Lab. Code §§ 21.001 et seq.,
451.001, and 411.082, as amended, Tex. Civ. Prac. & Rem. Code §
122.001, as amended, the Texas pay day laws, including without limitation Tex.
Lab. Code §§ 61.001 et seq. and
62.001 et seq., as amended, and
all other constitutional, federal, state, local, and municipal law claims,
whether statutory, regulatory, common law or otherwise, arising out of or
relating to any and all disputes now existing between Employee and the Company,
whether related to or in any way growing out of, resulting from, or to result
from the Employee’s employment with the Company, including without limitation,
any and all obligations under the Employment Agreement, Employee’s termination
or resignation from employment with the Company, for or because of any matter
or thing done, omitted, or allowed to be done by, the Employee, the Company for
any incidents, including those past and present, which existed at any time
prior to and/or contemporaneously with the Effective Date of this Agreement,
including all past, present, and future damages, injuries, costs, expenses,
fees, effects, and results in any way related to or connected with such incidents.
Nothing in this Agreement will be considered a release of Employee’s claims, if
any, for vested employment benefits pursuant to the Employee Retirement Income
Security Act of 1974 as amended, worker’s compensation insurance coverage,
and/or unemployment insurance coverage, or the Company’s breach of this
Agreement.


 


b.                                      Notwithstanding
anything to the contrary herein, the Company or Heelys, Inc.’s obligations
to Employee under that certain Indemnification Agreement, effective January 2,
2008 (the “Indemnification Agreement”), and this Agreement are not
released, are not affected, and expressly survive the release herein in all
respects.  Similarly, the Company or
Heelys, Inc.’s indemnification obligations to Employee under Heelys, Inc.’s
Certificate of Incorporation and ByLaws or at law are not released, are not
affected, and expressly survive the release herein.


 


4.                                       No
Admission of Liability:  The Parties
stipulate that by discussing and/or entering into this Agreement, the Parties
do not admit, and they specifically deny, any violation of any constitutional,
federal, state, local, or municipal law, whether, statutory, regulatory, common
law, or otherwise.  Neither the proposal
of this Agreement nor the Parties’ execution of it shall in any way be
construed as an admission of liability in any legal, arbitral, or
administrative proceeding.


 


5.                                       Statement of Understanding:  By
executing this Agreement, Employee acknowledges that (a) Employee has been
given at least twenty-one (21) days to consider the terms of this Agreement,
and has either considered it for that period of time or knowingly and
voluntarily waived the right to do so; (b) Employee has been advised by
virtue of this part of the Agreement to consult with an attorney regarding the
terms of this Agreement; (c) Employee has consulted with, or had
sufficient opportunity to consult with, an attorney of Employee’s own choosing
regarding the terms of this Agreement; (d) Employee has read this
Agreement and fully understands the terms of this Agreement and their import; (e) except
as provided by this Agreement, Employee has no


 


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contractual right or claim to the payments and benefits described
herein; (f) the consideration provided for herein is good and valuable;
and (g) Employee is entering into this Agreement voluntarily, of
Employee’s own free will, and without any coercion, undue influence, threat, or
intimidation of any kind.


 


6.                                       Revocation: Within the seven (7) consecutive calendar days following
Employee’s execution of this Agreement (the “Revocation Period”),
Employee may revoke this Agreement by written notice sent by BOTH fax and first
class mail to the Company in care of its attorney, Robert Sarfatis, Gardere
Wynne Sewell LLP, 1601 Elm Street, Suite 3000, Dallas, Texas  75201-4761, fax number (214) 999-3626.  If Employee
revokes this Agreement, the Employee shall have no right or entitlement to
receive (as applicable) any of the Severance Proceeds or reimbursement for
COBRA Continuation Coverage described in Section 1 of this Agreement.  Employee understands that if the Company does
not receive notice of revocation prior to the expiration of the Revocation
Period, Employee shall have forever waived the right to revoke this Agreement,
and this Agreement and all of its terms shall have full force and effect.


 


7.                                       Return
of Property: The Employee shall return all Company property within Employee’s
possession, custody, or control, including without limitation, all originals
and copies of all materials and documents, all equipment, and all hardcopy
and/or computer-based documents, books, records, videos, disks, data files,
audio and video recordings, and other things pertaining to the Company or
containing its information, whether obtained directly or indirectly from the
Company and with or without its knowledge or consent (collectively, “the
Company Information”). The Employee warrants and represents that he will
not directly or indirectly duplicate, replicate, or otherwise retain any copies
of any Company Information in any form or fashion.  Within three (3) business days of
executing this Agreement, the Employee will return the Company Information by
hand delivery to Robert Sarfatis, Gardere Wynne Sewell LLP, 1601 Elm Street, Suite 3000,
Dallas, Texas  75201-4761.  Notwithstanding the foregoing provisions in
this Section 7, Employee’s attorney(s) may retain information and
documents provided to them by Employee in connection with seeking legal advice
relating to this Agreement and his employment with the Company.


 


8.                                       Survival
of Employment Terms; Restrictive Covenants: The contractual terms stated in
Exhibit A that apply post-employment, including without limitation such
terms stated in Sections 8 and 9 of Exhibit A (including subparts)
pertaining to confidential Company information, non-competition,
non-solicitation, media statements and non-disparagement (“Restrictive
Covenants”), shall survive the execution of this Agreement and continue in
full force and effect, subject to any modifications stated in this Agreement.


 


9.                                       Payment
Termination; Liquidated Damages:  In
the event that Employee commits a material breach of the Restrictive Covenants,
the Company may forever terminate payment of all remaining Severance Proceeds
payments, and the Employee shall become immediately liable to the Company for
liquidated damages in the amount of ninety percent (90%) of all Severance
Proceeds paid to Employee by the Company. 
The Parties stipulate that such liquidated damages are reasonable considering
that this Agreement has


 


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intrinsic value for the Company because of
its complete confidentiality and other protections, and further considering
that in the event of such a breach, the Company’s actual damages will be
difficult and impractical to ascertain, so that the stated liquidated damages
will be just and proper compensation for any damages caused by any breach for
which this Section applies; provided, however, that the Company may
make an election of remedies for actual damages, to the extent that it can
prove recoverable actual damages in excess of the liquidated damages stated in
this Section of the Agreement. 
Notwithstanding any requirement that the Employee pay damages as
provided in this Section, the remaining provisions of this Agreement will
remain in full force and effect.


 


10.                                 Resignation;
Securities Filings:  As of the
Effective Date, the Employee resigns from his employment with the Company and
all Company affiliates and subsidiaries, as applicable, and from any and all
positions as an officer or director, or both, of the Company and all Company
affiliates and subsidiaries.  This
Agreement will be disclosed in an 8-K filing and/or other required securities
filings with the Securities and Exchange Commission, as applicable.


 


11.                                 Waiver
of Re-employment:  The Employee
waives and releases forever any right or rights he might have to employment,
reemployment, or reinstatement with the Company for now and any time in the
future, and agrees not to seek or make application for employment with the
Company.


 


12.                                 Section 409A
Compliance:  This Agreement shall be
construed and interpreted to the maximum extent possible in a manner to avoid
any adverse tax consequences to Employee under Section 409A.  If the Company or Employee reasonably
determines that any compensation or benefits payable under this Agreement may
be subject to Section 409A, the Company and Employee shall work together
to adopt such amendments to this Agreement or adopt other policies or
procedures (including amendments, policies and procedures with retroactive
effect), or take any other commercially reasonable actions necessary or
appropriate to:  (a) exempt the
compensation and benefits payable under this Agreement from Section 409A
and/or to preserve the intended tax treatment of the compensation and benefits
provided with respect to this Agreement or (b) comply with the
requirements of Section 409A.


 


13.                                 Entire
Agreement:  This Agreement
constitutes the entire Agreement of the Parties with regard to the subject
matter of this Agreement, and supersedes all prior and contemporaneous
negotiations and agreements, oral or written, with regard to the same subject matter, except for the Restrictive
Covenants.  All prior and
contemporaneous negotiations and agreements regarding the subject matter of
this Agreement are deemed incorporated and merged into this Agreement and are
deemed to have been abandoned if not so incorporated, subject to the
exceptions stated in this Section.  In
the event of an irreconcilable conflict between the surviving provisions of Exhibit A
and the provisions of this Agreement, this Agreement shall govern.  No representations, oral or written, are
being relied upon by either Party in executing this Agreement other than the
express representations set forth in this Agreement.  The Parties have each entered into this
Agreement based on their own independent judgment.  This Agreement cannot be changed or
terminated without the express written consent of the Parties.


 


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14.                                 Non-Waiver:  One or more waivers of a breach of any
covenant, term, or provision of this Agreement by any Party shall not be
construed as a waiver of a subsequent breach of the same covenant, term or
provision; nor shall it be considered a waiver of any other then existing,
preceding, or subsequent breach of a different covenant, term, or provision.


 


15.                                 Authority:  The Employee hereby acknowledges and
expressly warrants and represents for himself, and for his predecessors,
successors, assigns, heirs, executors, administrators, and legal
representatives, as applicable, that he (a) is legally competent and
authorized to execute this Agreement; (b) has not assigned, pledged, or
otherwise in any manner, sold or transferred, either by instrument in writing
or otherwise, any right, title, interest, or claim that he may have by reason
of any matter described in this Agreement; (c) has the full right and
authority to enter into this Agreement and to consummate the covenants
contemplated herein; and (d) will execute and deliver such further
documents and undertake such further actions as may reasonably be required to
effect any of the agreements and covenants in this Agreement.  The Company hereby represents that this
Agreement has been duly authorized by the Company and that the person executing
this Agreement on behalf of the Company is authorized to execute this
Agreement.


 


16.                                 Severability:  If any provision or term of this Agreement is
held to be illegal, invalid, or unenforceable, such provision or term shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised part of this
Agreement; and the remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement.  Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision or term there shall be added automatically
as a part of this Agreement another provision or term as similar to the
illegal, invalid, or unenforceable provision as may be possible and that is
legal, valid, and enforceable.


 


17.                                 Attorneys’
Fees in the Event of Breach:  The
Parties agree that should a Party to this Agreement make a claim against
another Party to this Agreement for a breach of any provision of this
Agreement, the prevailing Party shall be entitled to recover its attorneys’
fees, expenses, and costs.  The Parties
hereby agree that each Party shall have the right to seek specific performance
of this Agreement, and declaratory and injunctive relief.


 


18.                                 Governing
Law; Exclusive Venue:  All questions
concerning the construction, validity and interpretation of this Agreement and
its exhibits will be governed by and construed in accordance with the laws of
the State of Texas without giving effect to any choice of law or conflict of
law provision or rule (whether of Texas or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than Texas,
unless preempted by federal law or otherwise stated in this Agreement.  The Parties consent, stipulate and agree that
the exclusive venue of any lawsuit, arbitration, or other proceeding referenced
in, arising from, or related to this Agreement shall be Dallas, Texas.


 


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19.           No Assignment:  The
Employee shall not assign any of his rights under this Agreement, or delegate
the performance of any of his duties hereunder, without the prior written
consent of the Company.


 


20.           Successors and Assigns: All of the provisions of this Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective heirs, if any, successors, and permitted assigns.  The merger or consolidation of the Company
into or with any other entity shall not terminate this Agreement.


 


21.           Counterparts:  It is understood and agreed that this
Agreement may be executed in multiple originals and/or counterparts, each of
which shall be deemed an original for all purposes, but all such counterparts
together shall constitute one and the same instrument.


 


22.           Headings:  The headings of this Agreement are for
purposes of reference only and shall not limit or define the meaning of the provisions
of this Agreement.


 


{THE REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK}


 


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IN WITNESS WHEREOF, THE PARTIES, INTENDING TO BE LEGALLY BOUND BY THIS
AGREEMENT, HAVE DULY EXECUTED THIS AGREEMENT, AS OF THE DATES INDICATED BELOW:


 


	
  COMPANY:

  	
  HEELING SPORTS LIMITED, A TEXAS LIMITED PARTNERSHIP

  
	
  Address:

  	
  By:

  	
  Heeling
  Management Corp.,

  
	
   

  	
   

  	
  Its
  sole general partner

  
	
  3200
  Belmeade Drive

  	
   

  
	
  Suite 100

  	
  By:

  	
  /s/
  Lisa Peterson

  
	
  Carrollton
  TX 75006

  	
  Name:

  	
  Lisa
  Peterson

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
   

  	
  Date:
  February 9, 2009

  
	
   

  	
   

  
	
  EMPLOYEE:

  	
  DON
  CARROLL

  
	
  Address:

  	
   

  
	
   

  	
  /s/
  Don Carroll

  
	
  209
  W. 2nd St.
  #365

  	
   

  
	
  Fort
  Worth, TX 76102

  	
  Date:
  February 10, 2009

  



 


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