Document:

Exhibit 10.8

Interest Rate Swap Transaction

The purpose of this letter
agreement is to confirm the terms and conditions of the Transaction
entered into between:

JPMORGAN CHASE BANK, N.A.

(“JPMorgan”)

and

HARLEY-DAVIDSON
MOTORCYCLE TRUST 2007-3

(the
“Counterparty”)

on the Trade Date and
identified by the JPMorgan Deal Number specified below (the
“Transaction”). This letter agreement constitutes a “Confirmation” as referred
to in the Master Agreement specified below, and supersedes any previous
confirmation or other writing with respect to the transaction described below.

The definitions and
provisions contained in the 2006 ISDA Definitions (as published by the
International Swaps and Derivatives Association, Inc., the “Definitions”) are
incorporated into this Confirmation.  In
the event of any inconsistency between the Definitions and this Confirmation,
this Confirmation will govern.

Terms not otherwise defined
herein shall have the respective meaning set forth in the Indenture, dated as
of 15 August 2007 (the “Indenture”), between the Counterparty, as issuer, and
The Bank of New York Trust Company, N.A., not in its individual capacity but
solely in its capacity, as indenture trustee (the “Indenture Trustee”).

This Confirmation
supplements, forms part of, and is subject to, the ISDA Master
Agreement dated as of 30 August 2007, as amended and
supplemented from time to time (the “Agreement”), between JPMORGAN CHASE
BANK N.A. (“JPMorgan”) and HARLEY-DAVIDSON MOTORCYCLE TRUST
2007-3 (the “Counterparty”). All provisions contained in the
Agreement govern this Confirmation except as expressly modified below.

 1
 

The terms of the
particular Interest Rate Swap Transaction to which this Confirmation
relates are as follows:

	
  A. TRANSACTION DETAILS

  	
   

  
	
   

  	
   

  
	
  JPMorgan Deal
  Number(s):

  	
   

  
	
   

  	
   

  
	
  Notional Amount:

  	
  For each Calculation Period, the Outstanding Amount
  of the Class A-3 Notes as of the close of business on the Payment Date that is the first day
  of each Calculation Period, as stated
  in Servicer’s monthly investor report relating to such Payment Date (“Monthly
  Report”), or for the first Calculation Period, USD 230,000,000.00. The Counterparty will cause the Monthly
  Report relating to such calculation period to be delivered to JPMorgan on or
  prior to the date such monthly report is required to be delivered pursuant to
  the Basic Documents.

  
	
   

  	
   

  
	
  Trade Date:

  	
  23 August 2007

  
	
   

  	
   

  
	
  Effective Date:

  	
  30 August 2007

  
	
   

  	
   

  
	
  Termination
  Date:

  	
  The earliest of (i) 15 June 2012 or (ii) the date on
  which the Notional Amount hereunder has been reduced to zero, subject to
  adjustment in accordance with the Modified Following Business Day Convention
  and subject to Early Termination in accordance with the terms of the
  Agreement.

  
	
   

  	
   

  
	
  Fixed
  Amounts:

  	
   

  
	
   

  	
   

  
	
  Fixed Rate
  Payer:

  	
  Counterparty

  
	
   

  	
   

  
	
  Fixed Rate
  Payer Payment Dates:

  	
  The 15th of each month in each year, from and
  including 15 September 2007 to and including the Termination
  Date, subject to adjustment in accordance with the Modified Following
  Business Day Convention and there will be no adjustment to the
  Calculation Period.

  
	
   

  	
   

  
	
  Fixed Rate:

  	
  4.9800 percent

  
	
   

  	
   

  
	
  Fixed Rate Day
  Count Fraction:

  	
  30/360

  
	
   

  	
   

  
	
  Business Days:

  	
  New York

  

 

 2
 

 

	
  Floating Amounts:

  	
   

  
	
   

  	
   

  
	
  Floating Rate
  Payer:

  	
  JPMorgan

  
	
   

  	
   

  
	
  Floating Rate
  Payer Payment Dates:

  	
  The 15th of each month in each year, from and
  including 15 September 2007 to and including the Termination
  Date, subject to adjustment in accordance with the Modified Following
  Business Day Convention and there will be an adjustment to the
  Calculation Period.

  
	
   

  	
   

  
	
  Floating Rate
  for initial Calculation Period:

  	
  5.5075%

  
	
   

  	
   

  
	
  Floating Rate
  Option:

  	
  USD-LIBOR-BBA

  
	
   

  	
   

  
	
  Reset Dates:

  	
  The first day of each Calculation Period.

  
	
   

  	
   

  
	
  Spread:

  	
  None

  
	
   

  	
   

  
	
  Compounding:

  	
  Inapplicable

  
	
   

  	
   

  
	
  Floating Rate
  Day Count Fraction:

  	
  Actual/360

  
	
   

  	
   

  
	
  Designated
  Maturity:

  	
  1 Month

  
	
   

  	
   

  
	
  Business Days:

  	
  New York, London

  
	
   

  	
   

  
	
  Calculation
  Agent:

  	
  JPMorgan, unless otherwise stated in the Agreement.

  
	
   

  	
   

  
	
  B. ACCOUNT
  DETAILS

  	
   

  
	
   

  	
   

  
	
  Payments
  to JPMorgan in USD:

  	
  JPMORGAN CHASE NEW YORK

  
	
   

  	
  JPMORGAN CHASE BANK N.A.

  
	
   

  	
  BIC: CHASUS33XXX

  
	
   

  	
  AC No: 099997979

  
	
   

  	
   

  
	
  Payments
  to Counterparty in USD:

  	
  As per your standard settlement instructions.

  
	
   

  	
   

  
	
  C. OFFICES

  	
   

  
	
   

  	
   

  
	
  JPMorgan:

  	
  NEW YORK

  
	
   

  	
   

  
	
  Counterparty:

  	
  CHICAGO

  

 

 3
 

D. DOCUMENTS
TO BE DELIVERED

Each party shall deliver to
the other, at the time of its execution of this Confirmation, evidence of
the incumbency and specimen signature of the person(s) executing this
Confirmation, unless such evidence has been previously supplied and
remains true and in effect.

E.  RELATIONSHIP BETWEEN PARTIES

Each
party will be deemed to represent to the other party on the date on which it
enters into a Rate Swap Transaction that (absent a written agreement between
the parties that expressly imposes affirmative obligations to the contrary for
that Rate Swap Transaction):

(a)           Non-Reliance.  It is acting for its own account, and it has
made its own independent decision to enter into that Rate Swap Transaction and
as to whether that Rate Swap Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisers as it has deemed
necessary. It is not relying on any communication (written or oral) of the
other party as investment advice or as a recommendation to enter into that Rate
Swap Transaction; it being understood that information and explanations related
to the terms and conditions of a Rate Swap Transaction shall not be considered
investment advice or a recommendation to enter into that Rate Swap
Transaction.  No communication (written
or oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Rate Swap Transaction.

(b)           Assessment and
Understanding.  It is capable
of assessing the merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts, the terms,
conditions and risks of that Rate Swap Transaction.  It is capable of assuming, and assumes the
risks of that Rate Swap Transaction.

(c)           Status of Parties.   The other party is not acting as a fiduciary
for or an adviser to it in respect of that Rate Swap Transaction.

 4
 

Please confirm that the
foregoing correctly sets forth the terms of our agreement by executing a copy
of this Confirmation and returning it to us or by sending to us a letter, telex
or facsimile substantially similar to this letter, which letter, telex or
facsimile sets forth the material terms of the Transaction to which this
Confirmation relates and indicates agreement to those terms. When referring to
this Confirmation, please indicate: JPMorgan Deal
Number(s): 6900043624748

	
  JPMorgan Chase Bank N.A.

  
	
   

  
	
   

  
	
  /s/ Carmine
  Pilla

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Carmine Pilla

  	
   

  
	
   

  
	
  Title:

  	
  Vice President

  	
   

  

 

	
  Accepted and confirmed as of
  the date

  
	
  first written:

  
	
  HARLEY-DAVIDSON

  
	
  MOTORCYCLE TRUST
  2007-3

  
	
   

  
	
  By: Wilmington
  Trust Company, not

  
	
  in its
  Individual capacity but solely as

  
	
  Owner Trustee on
  behalf of the Trust

  

 

	
  /s/ J. Christopher Murphy

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  J. Christopher
  Murphy

  	
   

  
	
   

  
	
  Title:

  	
  Financial
  Services Officer

  	
   

  
	
   

  
	
  Your reference
  number:

  	
   

  	
   

  
				

 

 5
 

Client Service Group

All queries regarding confirmations should be sent to:

JPMorgan Chase Bank, N.A.

	
  Contacts

  	
   

  
	
  JPMorgan
  Contact

  	
  Telephone
  Number

  
	
   

  	
   

  
	
  Client Service
  Group

  	
  (001) 3026344960

  
	
   

  	
   

  
	
  Group
  E-mail address:

  	
   

  
	
  Facsimile:

  	
  (001) 8888033606

  
	
  Telex:

  	
   

  
	
  Cable:

  	
   

  

 

Please
quote the JPMorgan deal number(s): 6900043624748

 6Exhibit
10.1

Application for
confidential treatment for a portion of this document has been submitted to the
Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934.  This document omits
the information subject to the confidentiality request.  Omissions are designated by the symbol
“**”.  A complete version of this
document has been filed separately with the Securities and Exchange Commission.

EMPLOYMENT AGREEMENT, INCLUDING
AGREEMENT TO

ARBITRATE, NONCOMPETITION AGREEMENT
AND

NONDISCLOSURE
AGREEMENT

This Agreement is
made and entered into on April 12, 2007 (effective as of January 1, 2007), by
and between William D. Albers (“Employee”) and Heeling Sports Limited, a Texas
limited partnership (the “Company”).

R E C I T
A L S

A.            Employee is currently serving as Vice
President – Sourcing of  the
Company.

B.            In the course of Employee’s employment with
the Company, Employee has and will continue to gain access to Confidential
Information, as hereinafter defined, relating to the business of the Company.

C.            Company and Employee desire a speedy,
economical and impartial dispute resolution procedure.

D.            Employee’s performance of services to the
Company may result in Discoveries, as hereinafter defined.

E.             The parties hereto desire to enter into
this Agreement in order to set forth the respective rights, limitations and
obligations of both the Company and Employee with respect to Employee’s
employment with the Company, the Confidential Information, the Discoveries,
arbitration and the other matters set forth herein.

NOW, THEREFORE, in
consideration of the employment of Employee by the Company, the compensation
paid to Employee, and the Company continuing to provide Confidential
Information to Employee, as well as the other mutual promises hereinafter
contained, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1.             EMPLOYMENT.  The Company agrees to continue to employ
Employee and Employee hereby accepts such continued employment from the Company
upon the terms and conditions set forth in this Agreement for the period
beginning on the date Employee became employed by the Company and continuing
through December 31, 2007 (“Employment Period”) which shall be automatically
renewable in one year increments at the end of such period and each anniversary
date thereafter, unless terminated by either party in writing at least 90 days
prior to the end of such term or terminated earlier in accordance with Section
5 hereof.

2.             SERVICES.  During the Employment Period, Employee will
render the services to the Company as Vice President – Sourcing, and/or such 

 1
 

other position
as agreed to by the Board of Directors and Employee.  Employee covenants that he will devote his
best efforts, knowledge, skill and entire productive time and attention (except
for vacation or other leave periods) to the business of the Company and will
faithfully and diligently carry out such duties and have such responsibilities
as are customary for persons employed in a substantially similar capacity for
similar companies.  Employee shall also
use his best efforts to initiate, preserve and maintain the favorable
relationships of the Company with its customers, suppliers and stockholders.  During the Employment Period, Employee shall
not render services of a business, professional or commercial nature to any
other entity or person without the written consent of the board of directors
(the “Board of Directors”) of Heelys, Inc., successor by merger to Heeling,
Inc. and the owner of all of the equity interests of the Company (the “Parent”),
which consent may be withheld in the Board of Director’s sole discretion.  Employee will report to the Board of
Directors and shall faithfully and diligently comply with all reasonable and
lawful directives.

3.             ADHERENCE TO COMPANY
RULES.  Employee, at all times during
the performance of this Agreement, shall adhere to and obey all of the Company’s
rules, regulations and policies which are now in effect, or as subsequently
adopted or modified by the Company which govern the operation of the Company’s
business and the conduct of employees of the Company.

4.             COMPENSATION.

a.             Salary and Bonus.  During the Employment Period, the Company
will pay Employee the compensation set forth in Exhibit 1 hereto.  Employee’s compensation shall be reviewed
annually by the compensation committee of the Board of Directors, but may not
be reduced below the amount set forth in Exhibit 1 hereto.  Employee’s compensation will be payable in
accordance with the Company’s customary payroll practices.

b.             Benefits.  During the Employment Period, Employee shall
be entitled to the Benefits as set forth on Exhibit 1 hereto.  Notwithstanding anything in this Section 4(b)
to the contrary, all Benefit obligations are subject to guidance issued by the
U.S. Department of Treasury under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”).  To the
extent required, the Company may modify the Benefits provided under this
Section 4(b) to comply with such guidance; provided, however, that the
aggregate value of Benefits provided to Employee after such modification shall
not be less than the aggregate value of the Benefits provided to him prior to
the modification.

5.             TERMINATION.  Employee’s employment with the Company will
continue throughout the Employment Period unless earlier terminated pursuant to
any of the following provisions:

 2
 

a.             Termination by the
Company for Cause.  The Company shall
have the right to immediately terminate Employee’s employment at any time for
any of the following reasons (each of which is referred to herein as “Cause”)
by giving Employee written notice of termination (the effective date of which
may be the date of such notice):

(i)            willful
breach by Employee of any provision of this Agreement and failure to cure such
breach (to the extent practicable) within 15 days after the date he is given
written notice thereof by the Company;

(ii)           any
willful act by Employee of fraud or dishonesty, including but not limited to
stealing or falsification of Company records, with respect to any aspect of the
Company’s business;

(iii)          knowing
violation of state, federal or international laws applicable to the Company;

(iv)          drug
or alcohol use of Employee in violation of Company policy or that materially
impedes Employee’s job performance or brings Employee or Employer into
disrepute in the community;

(v)           substantial
failure by Employee to perform any specific directive of the Board of Directors
after 30 days notice of such failure and explanation of such failure of performance;

(vi)          willful
(x) misappropriation of funds or of any corporate opportunity or (y) acts
disloyal to the Company;

(vii)         conviction
of Employee of a felony, or of a crime that the Company, in its sole
discretion, determines involves a subject matter which may reflect negatively
on the Company’s reputation or business (or a plea of nolo contendere thereto);

(viii)        acts
by Employee attempting to secure or securing any personal profit not fully
disclosed to and approved by the Board of Directors of the Company in
connection with any transaction entered into on behalf of the Company;

(ix)           gross,
willful or wanton negligence, or conduct which constitutes a breach of any
fiduciary duty owed to the Company by Employee;

(x)            conduct
on the part of Employee, even if not in connection with the performance of his
duties contemplated under this Agreement, that could result in serious
prejudice to the interests of the Company, and Employee fails to cease such 

 3
 

conduct
immediately within 30 days of receipt of notice to cease such conduct;

(xi)           voluntary
termination initiated by Employee; or

(xii)          acceptance
of employment with any other employer.

If the Company terminates Employee’s employment for
any of the reasons set forth above, the Company shall have no further
obligations hereunder from and after the effective date of termination except
for the payment of Employee’s salary and accrued vacation time earned through
the date of termination promptly after such termination and the Company shall
have all other rights and remedies available under this or any other agreement
and at law or in equity.

b.             Termination Upon
Death or Disability. If Employee shall die or become disabled during the
Employment Period, Employee’s employment hereunder shall terminate (such termination
being treated for purposes of this Agreement as if Employee had not been
terminated for “Cause” pursuant to subsection (a) above) and the Company shall
pay to Employee or his estate, as applicable, (i) any compensation (including
accrued vacation time and a pro-rated bonus under the Company’s Bonus Plan
through the date of death or disability) due that would otherwise have been
payable through the date of death or disability promptly after the death or
disability (but the pro-rated bonus will be paid when otherwise payable had he
continued as an employee of the Company) and (ii) an amount equal to one-half
the Employee’s annual base salary which amount shall be payable in cash in 12
equal monthly payments commencing with the month following the month of his
death or disability and shall be paid when otherwise payable had he continued
as an Employee.  For purposes of this
Agreement, Employee shall become “disabled” if (A) he is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, or (B)
he is, by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident or health
plan covering employees of the Company.

c.             Termination Without
Cause.  The Company shall have the
right to terminate Employee’s employment Without Cause at any time.  Upon termination, the Company shall pay to
Employee (i) any compensation (including accrued vacation time and a pro-rated bonus
under the Company’s Bonus Plan through the date of termination Without 

 4
 

Cause) due
that would otherwise have been payable through the date of termination Without
Cause promptly after the date of termination Without Cause (but the pro-rated
bonus will be paid when otherwise payable had he continued as an employee of
the Company) and (ii) six month’s base salary plus, if Employee has completed
more than five years of service, including service as a member of the Board of
Directors, an additional amount equal to his monthly base salary for each year
of completed service in excess of five years which shall be paid in 12 equal
monthly payments commencing with the month following the month in which his
employment is terminated Without Cause and shall be paid when otherwise payable
had he continued as an Employee and the Company shall have no further
obligations to Employee under this Agreement. 
If Employee is a Specified Employee on the date his employment is
terminated Without Cause, the monthly payments under Section 5(c)(ii) shall not
commence until the first month next following the six-month anniversary of the
date his employment so terminated.  For
purposes of this Agreement, an Employee shall be considered a “Specified
Employee” as provided in Code §409A and the Treasury regulations promulgated
thereunder.  If Employee dies after his
employment is terminated Without Cause and before his receipt of all salary
continuation payments due Employee under this Section 5(c), the balance shall
be paid to his estate in the same manner and at the same time as specified in
this Section 5(c).  During the required
period of continuation coverage within the meaning of Code
§4980B(f)(2)(B)(i)(I), Employee shall be reimbursed by the Company within five
days of each payment by Employee of the monthly premium payable to continue
coverage of Employee and his dependents under the Company’s group health plan
or plans following the date his employment is terminated Without Cause in an
amount equal to the amount of that monthly premium payable by Employee for such
continuation coverage. Termination “Without Cause” means the termination of
Employee’s employment either (i) by the Company for a reason other than for
Cause or (ii) by the Company or Employee resulting from a “Change of Control.”  For purposes of this Agreement, a “Change of
Control” means the occurrence of any of the following events:  (A) any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), other than one or more Permitted Holders, is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Parent representing 25% or more of
the combined voting power of the Parent’s then outstanding securities; (B) any
change or changes in the composition of the Parent’s Board of Directors within
a two-year period as a result of which less than a majority of the directors
are (1) persons who were directors at the beginning of that two-year period or
(2) persons who were elected or nominated for election as directors with the
affirmative vote or consent of at least a majority of the incumbent directors
at the time of that election or nomination, but not 

 5
 

including any
person whose election or nomination was or is in connection with an actual or
threatened proxy contest regarding the election of the Parent’s directors; (C)
the Parent is merged or consolidated with another corporation or other entity
(other than one or more Permitted Holders or any entity controlled by one or
more Permitted Holders) and, as a result of the merger or consolidation, less
than 75% of the outstanding voting securities of the surviving or resulting
corporation or other entity, as the case may be, are “beneficially owned”
(within the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, immediately after the merger or consolidation by persons who or
which beneficially owned the outstanding voting securities of the Parent
immediately before the merger or consolidation; or (D) the Parent transfers,
sells or otherwise disposes of all or substantially all of its assets to
another corporation or other entity which is not an affiliate of the Parent. “Permitted
Holders” means Capital Southwest Venture Corporation and its affiliates and
Roger R. Adams and his affiliates.  For
purposes of this Agreement, any termination of Employee’s employment by the
Company which occurs within 12 months  following
such Change of Control shall be conclusively presumed to have resulted from
such Change of  Control unless the
Company demonstrates to an arbitrator, or Employee agrees, that the termination
was with Cause.  Should the Company fail
to comply in a material respect with this Agreement, and such failure is not
cured (if practicable) within 30 days after the Company is given written notice
of such noncompliance, Employee may resign and receive the benefits of this
Section 5(c).  If, whether before or
after a Change of Control, without Employee’s consent the Company reduces the
Employee’s base salary or “Target” amount for purposes of the Company’s Bonus
Plan, materially changes his title, reduces the scope of the assigned work
responsibilities, or relocates its offices in excess of 50 miles from the
address set forth herein, Employee shall be deemed to have been constructively
terminated Without Cause.

d.             Limitation
on Payments.  If any severance
payment or other benefits received or to be received by Employee under Section
5(c) of this Agreement or any other of the Total Severance Benefits constitute “parachute
payments” within the meaning of Code §280G and would be subject to the excise
tax imposed by Code §4999 (the “Excise Tax”), then Employee’s payments and
benefits under Section 5(c) of this Agreement shall be either

(i)            paid
in full, or

(ii)           paid
as to such lesser extent which would result in no portion of such payments or
benefits being subject to the Excise Tax,

whichever of the foregoing amounts, taking into
account the applicable federal, state and local income and payroll taxes and
the Excise Tax, 

 6
 

results in the receipt by Employee on an after-tax
basis, of the greatest amount of Total Severance Benefits, notwithstanding that
all or some portion of such benefits may be subject to the Excise Tax under
Section 4999 of the Code.  For purposes
of this Agreement, “Total Severance Benefits” means the severance payments and
benefits under Section 5(c) of this Agreement and all other payments and
benefits received or to be received by Employee under this Agreement and all
payments and benefits (if any) to which Employee may be entitled under any
plan, agreement or otherwise upon or as the result of a Change of Control or
the termination of his employment with the Company, or both.  This Section 5(d) is not intended to prevent
and shall not result in the prevention of the acceleration and full vesting of
any outstanding stock option held by Employee. 
Any determination required under this Section 5(d) shall be made in
writing by the Company’s independent public accountants (the “Accountants”),
whose determination shall be conclusive and binding upon Employee and the
Company for all purposes.  For purposes
of making the calculations required by this Section 5(d), the Accountants may
make reasonable assumptions and approximations concerning applicable taxes and
may rely on reasonable, good faith interpretations concerning the application
of Code §§280G and 4999.  The Company and
Employee shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section 5(d).  The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 5(d).

6.             NONDISCLOSURE.  Employee acknowledges that during the course
of his employment by the Company, the Company and its affiliates have provided
and will provide, and the Employee has acquired and will acquire, technical
knowledge with respect to the Company’s and its affiliates’ business operations,
including, by way of illustration, the Company’s and its affiliates’ existing
and contemplated product line, trade secrets, compilations, business and
financial methods or practices, plans, pricing, marketing, merchandising and
selling techniques and information, customer lists, supplier lists and
confidential information relating to the Company’s and its affiliates’ policies
and/or business strategy (all of such information herein referenced to as the “Confidential
Information”).  The protection of the
Confidential Information against unauthorized disclosure or use is of critical
importance to the Company.  Employee
agrees that Employee will not, during the Employment Period, divulge to any
person, directly or indirectly, except to the Company or its officers and
agents or as reasonably required in connection with Employee’s duties on behalf
of the Company, or use, except on behalf of the Company, any Confidential
Information acquired by the Employee during the Employment Period.  Employee agrees that Employee will not, for a
period of three years after the Employment Period has ended, use or divulge to
any person directly or indirectly any 

 7
 

Confidential
Information, or use any Confidential Information in subsequent employment.

7.             RETURN OF DOCUMENTS.  Employee’s relationship with the Company is
terminated (for whatever reason), Employee shall not take with Employee, but
will leave with the Company, all work product, records, files, memoranda,
reports, price lists, customer lists, supplier lists, documents and other
information, in whatever form (including on computer disc), and any copies
thereof, relating to the Confidential Information or if such items are not on
the premises of the Company, Employee agrees to return such items immediately
upon Employee’s termination).  Employee
acknowledges that all such items are and remain the property of the Company.

8.             DISCOVERIES.  Employee will promptly and freely disclose to
the Company, in writing, any and all ideas, conceptions, inventions,
improvements and discoveries (collectively, “Discoveries”), whether patentable
or not, that are conceived or made by Employee, solely or jointly with another,
during the Employment Period, and that relate to the business or activities of,
or the products sold by, the Company. 
Employee hereby assigns to the Company all of Employee’s interest in any
such Discoveries.  Upon the request of
the Company, whether during or after the Employment Period, Employee will
execute any and all applications, assignments and other instruments that the
Company shall, in its sole discretion, deem necessary to apply for and obtain
protection, including, without limitation, patent protection, for the
Discoveries in all countries of the world. 
The obligations of the parties under this Section 8 shall survive the
termination of this Agreement.

9.             COPYRIGHT.  If, during the Employment Period, Employee
creates any original work of authorship fixed in any tangible medium of
expression, which is the subject matter of copyright, including, without limitation,
video tapes, written presentations, computer programs, drawings, models,
manuals, brochures and the like, that relate to the Company’s business,
products sold or services, whether such work is created solely by Employee or
jointly with others, the Company shall be deemed to be the author of such work
if the work is prepared by Employee within the scope of Employee’s employment;
or if the work is not prepared by Employee within the scope of Employee’s
employment, but is specially ordered by the Company, including, without
limitation, as a contribution to a collective work, or as a part of an
audio-visual work, as a translation, as a supplementary work, as a compilation,
or as an instructional text, or is created using any resources or property of
the Company, the work shall be considered a work made for hire, and the Company
shall be the author of the work.  If such
work is neither prepared by Employee within the scope of employment, nor as a
work made for hire, Employee hereby assigns to the Company all of Employee’s
world-wide 

 8
 

right, title
and interest in and to such work and all rights of copyright therein.  Employee agrees to, upon the request of the
Company, whether during or after the period of Employee’s employment by the
Company, assist the Company in the protection of the Company’s world-wide
right, title and interest in and to the work and all rights of copyright
therein, including, without limitation, the execution of all formal assignment
documents requested by the Company, and the execution of all lawful oaths and
applications for registration of copyright in the United States and foreign
countries.  The obligations of the
parties under this Section 9 shall survive the termination of this Agreement.

10.          NO EXCLUSIONS.  Employee hereby represents that Employee has
not heretofore made any Discoveries or prepared any work which is the subject
of copyrights that Employee wishes to exclude from the provisions of Sections 8
and 9 above.

11.          NONCOMPETITION. The
business of the Company is relatively unique and Employee acknowledges that he
is being provided and will continue to be provided by the Company with
significant information, trade secrets and opportunities, which are
confidential and proprietary in nature. 
Employee further acknowledges that such information and opportunities
would have significant value to any current or prospective competitor of the
Company.  In recognition of the Company’s
agreement to provide to Employee such information and opportunities, of the
need to fully protect such information and opportunities from unauthorized
disclosure or use, and in consideration of the numerous mutual promises
contained in this Agreement between the Company and the Employee, including,
without limitation, those involving Confidential Information, compensation,
termination and arbitration, and in order to protect the Company’s Confidential
Information and to reduce the likelihood of irreparable damage which would
occur in the event such information is provided to or used by a competitor of
the Company,  during the Employment
Period and for an additional period of one year immediately following the
Employment Period (the “Noncompetition Term”), Employee will not, directly or
indirectly, either through any form of ownership or as a director, officer,
principal, agent, employee, employer, adviser, consultant, shareholder,
partner, or in any other individual or representative capacity whatsoever,
either for his own benefit or for the benefit of any other person, firm,
corporation, governmental or private entity, or any other entity of whatever
kind, without the prior written consent of the Company (which consent may be
withheld in its sole discretion), compete with the Company or its affiliates,
in North and South America, Mexico, Western and Eastern Europe, the Middle
East, and the Far East including Japan, Malaysia, South Korea, China, Taiwan or
Asia (“Noncompetition Territory”) in any business activity of the Company
existing or contemplated as of, or conducted or contemplated by the Company
prior to, the date of this Agreement, and/or during the Employment Period.  Any such acts during the Noncompetition Term
in the Non-competition Territory shall be considered breaches and violations of
this Agreement.  Additionally, during the
Noncompetition Term, Employee shall not directly or indirectly request or
advise any customer or supplier of the Company to withdraw, curtail or cancel
its business activities with the Company.

 9
 

If, during any period
within the Noncompetition Term, Employee is not in compliance with the terms of
this Section 11, the Company shall be entitled to, among other remedies,
seek compliance by Employee with the terms of this Section 11 for an additional
period equal to the period of such noncompliance.  For purposes of this Agreement, the term “Noncompetition
Term” shall also include this additional period.  Employee hereby acknowledges that the
geographic boundaries, scope of prohibited activities and the time duration of
the provisions of this Section 11 are reasonable and are no broader than are
necessary to protect the legitimate business interests of the Company, given
the unique and worldwide nature of the Internet and electronic commerce.

This Section 11 shall
survive the termination of Employee’s employment and can only be revoked or
modified by a writing signed by the parties which specifically states an intent
to revoke or modify this provision.

12.          NO INTERFERENCE WITH
EMPLOYEES.  During the Noncompetition
Term, without the consent of the Board of Directors, neither Employee  nor any individual, partners, limited
partnership, corporation or other entity or business with which Employee is in
any way affiliated, including, without limitation, any partner, limited
partner, director, officer, shareholder or employee of any such entity or
business, will (i) request, induce or attempt to influence, directly or
indirectly, any employee of the Company to terminate his employment with the
Company or (ii) employ any person who as of the date hereof was, or after such
date is or was, an employee of the Company.

13.          REFORMATION OF SECTIONS
11 AND 12.  The Company and Employee
agree and stipulate that the agreements and covenants not to compete contained
in Sections 11 and 12 hereof are fair and reasonable in light of all of the
facts and circumstances of the relationship between Employee and the Company;
however, Employee and the Company are aware that in certain circumstances
courts have refused to enforce certain agreements not to compete.  Therefore, in furtherance of, and not in
derogation of the provisions of Sections 11 and 12, that in the event a court
should decline to enforce the provisions of Sections 11 and/or 12, Sections 11
and/or 12, as applicable, shall be deemed to be modified or reformed to
restrict Employee’s competition with the Company or its affiliates to the
maximum extent, as to time, geography and business scope, which the court shall
find enforceable; provided, however, in no event shall the provisions of
Sections 11 and/or 12, as applicable, be deemed to be more restrictive to
Employee than those contained herein.

14.          INJUNCTIVE RELIEF.  Employee acknowledges that breach of any of
the agreements contained herein, including, without limitation, any of the
noncompetition and confidentiality covenants specified in Sections 6 through
12, will give rise to irreparable injury to the Company, inadequately
compensable in damages.  Accordingly,
notwithstanding Section 15 below, the Company shall be entitled, without the
posting of any bond, to injunctive relief to prevent or cure breaches or
threatened breaches of the provisions of this Agreement and to

 10

enforce
specific performance of the terms and provisions hereof in any court of
competent jurisdiction, in addition to any other legal or equitable remedies
which may be available.  Employee further
acknowledges and agrees that in the event of the termination of this Agreement,
his experience and capabilities are such that he can obtain employment in
business activities which are of a different or noncompeting nature with his
activities as an employee of the Company; and that the enforcement of a remedy
hereunder by way of injunction shall not prevent Employee from earning a
reasonable livelihood.  Employee further
acknowledges and agrees that the covenants contained herein are necessary for
the protection of the Company’s legitimate business interests and are
reasonable in scope and content.

15.          MUTUAL AGREEMENT TO
ARBITRATE.  COMPANY AND EMPLOYEE
RECOGNIZE THAT DIFFERENCES MAY ARISE BETWEEN THEM.  THROUGH THIS SECTION 15, BOTH PARTIES EXPECT
TO GAIN THE BENEFITS OF A SPEEDY, ECONOMICAL, IMPARTIAL DISPUTE-RESOLUTION
PROCEDURE.  THEREFORE, THE PARTIES AGREE
AS FOLLOWS:

a.             THIS SECTION 15
SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES, WHETHER OR NOT ARISING OUT OF
EMPLOYEE’S EMPLOYMENT (OR TERMINATION OF THAT EMPLOYMENT), THAT COMPANY MAY
HAVE AGAINST EMPLOYEE, OR THAT EMPLOYEE MAY HAVE AGAINST COMPANY OR AGAINST (AS
APPLICABLE) ITS PAST OR PRESENT OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS,
EMPLOYEES, ADVISORS OR AGENTS (COLLECTIVELY, “CLAIMS”), EXCEPT FOR INJUNCTIVE
RELIEF TO BE PURSUED BY COMPANY PURSUANT TO SECTION (b) BELOW.  THE CLAIMS INCLUDE, BUT ARE NOT LIMITED TO,
CONTROVERSIES RELATING TO: COMPENSATION OR BENEFITS, BREACH OF ANY CONTRACT,
TORTS, DISCRIMINATION UNDER STATE, FEDERAL OR LOCAL LAW, AND VIOLATION OF ANY
FEDERAL, STATE, OR OTHER GOVERNMENTAL LAW, STATUTE, REGULATION, OR
ORDINANCE.  HOWEVER, THIS SECTION 15
SHALL NOT APPLY TO ANY CLAIM: (I) FOR WORKERS’ COMPENSATION OR UNEMPLOYMENT
BENEFITS; OR (II) BY COMPANY FOR INJUNCTIVE AND/OR OTHER EQUITABLE RELIEF FOR
UNFAIR COMPETITION AND/OR THE USE AND/OR UNAUTHORIZED DISCLOSURE OF TRADE
SECRETS OR CONFIDENTIAL INFORMATION, INCLUDING BUT NOT LIMITED TO, MATTERS
DESCRIBED IN SECTIONS 6 AND 11 ABOVE. 
WITH RESPECT TO MATTERS REFERRED TO IN THE FOREGOING SUB-PARAGRAPH (II),
COMPANY MAY SEEK AND OBTAIN INJUNCTIVE RELIEF IN COURT, AND THEN PROCEED WITH
ARBITRATION UNDER THIS SECTION 15.

 11
 

b.             EXCEPT AS SET
FORTH IN THIS AGREEMENT, THE SOLE AND EXCLUSIVE METHOD TO RESOLVE ANY CLAIM IS
ARBITRATION AS PROVIDED IN THIS SECTION 15 AND THE PARTIES EACH WAIVE THEIR RIGHT
TO COMMENCE AN ACTION IN ANY COURT TO RESOLVE A CLAIM.  EXCEPT WITH RESPECT TO INJUNCTIVE RELIEF
SPECIFICALLY PROVIDED FOR IN THIS AGREEMENT, NEITHER PARTY SHALL INITIATE OR
PROSECUTE ANY LAWSUIT IN ANY WAY RELATED TO ANY CLAIM COVERED BY THIS SECTION
15.

c.             A CLAIM MUST BE
PROCESSED IN THE MANNER SET FORTH BELOW.

(i)            WRITTEN NOTICE OF DESIRE TO ARBITRATE SHALL
DESCRIBE THE FACTUAL BASIS OF ALL CLAIMS ASSERTED, AND SHALL BE SENT TO THE
OTHER PARTY BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.  WRITTEN NOTICE TO EMPLOYEE WILL BE MAILED TO
EMPLOYEE’S ADDRESS AS IT APPEARS IN COMPANY’S RECORDS.  WRITTEN NOTICE TO COMPANY, OR ITS OFFICERS,
DIRECTORS, EMPLOYEES OR AGENTS, SHALL BE SENT TO THE COMPANY AT COMPANY’S
PRINCIPAL EXECUTIVE OFFICE.  IF WRITTEN
NOTICE OF INTENTION TO ARBITRATE IS NOT GIVEN WITHIN THE APPLICABLE TIME
PERIOD, THE PARTY WHO FAILED TO GIVE NOTICE WILL BE DEEMED TO HAVE WAIVED THE
RIGHT TO FURTHER CONTEST THE MATTER, AND WILL BE DEEMED TO HAVE ACCEPTED THE
OTHER PARTY’S LAST STATED POSITION ON THE CLAIM.

(ii)           THE ARBITRATION SHALL BE CONDUCTED IN
ACCORDANCE WITH THE THEN-CURRENT MODEL EMPLOYMENT ARBITRATION PROCEDURES OF THE
AMERICAN ARBITRATION ASSOCIATION (“AAA”) BEFORE A SINGLE ARBITRATOR.  THE ARBITRATION SHALL TAKE PLACE IN OR NEAR
THE CITY IN WHICH EMPLOYEE IS OR WAS LAST WORKING WITH COMPANY.

(A)          THE
ARBITRATOR SHALL BE SELECTED IN THE FOLLOWING MANNER.  THE AAA SHALL GIVE EACH PARTY A LIST OF AT
LEAST SIX ARBITRATORS DRAWN FROM ITS PANEL OF LABOR AND EMPLOYMENT ARBITRATORS.  EACH SIDE MAY STRIKE ALL NAMES ON THE LIST IT
DEEMS UNACCEPTABLE.  IF ONLY ONE COMMON
NAME REMAINS ON THE 

 12
 

LISTS OF ALL
PARTIES, THAT INDIVIDUAL SHALL BE THE ARBITRATOR.  IF MORE THAN ONE COMMON NAME REMAINS ON THE
LISTS OF ALL PARTIES, THE PARTIES SHALL STRIKE NAMES ALTERNATELY UNTIL ONLY ONE
REMAINS.  IF NO COMMON NAME REMAINS ON
THE LISTS OF ALL PARTIES, THE AAA SHALL FURNISH ONE ADDITIONAL LIST, AND THE
ABOVE PROCEDURE WILL BE UTILIZED.  IF NO
ARBITRATOR IS DESIGNATED FROM THE SECOND LIST, THE PROCEDURE OF THE AAA RULES
WILL BE UTILIZED TO SELECT THE ARBITRATOR. 
IN NO EVENT WILL THE ARBITRATOR BE THEN AFFILIATED IN ANY MANNER WITH A
COMPETITOR OF THE COMPANY.

(B)           ANY
PARTY MAY BE REPRESENTED BY AN ATTORNEY OR OTHER REPRESENTATIVE SELECTED BY THE
PARTY.

(C)           EACH
PARTY SHALL HAVE THE RIGHT TO TAKE DEPOSITIONS OF INDIVIDUALS AND ANY EXPERT
WITNESSES DESIGNATED BY ANOTHER PARTY. 
EACH PARTY ALSO SHALL HAVE THE RIGHT TO MAKE REQUESTS FOR PRODUCTION OF
DOCUMENTS TO ANY PARTY.  ADDITIONAL
DISCOVERY MAY BE HAD ONLY WHERE THE ARBITRATOR SO ORDERS, UPON A SHOWING OF
SUBSTANTIAL NEED.  ALL ISSUES RELATED TO
DISCOVERY WILL BE RESOLVED BY THE ARBITRATOR.

(D)          AT
LEAST 14 DAYS BEFORE THE ARBITRATION, THE PARTIES MUST EXCHANGE LISTS OF
WITNESSES, INCLUDING ANY EXPERT, AND COPIES OF ALL EXHIBITS INTENDED TO BE USED
AT THE ARBITRATION.

(iii)          THE
ARBITRATOR WILL HAVE NO AUTHORITY TO: 
ADOPT NEW COMPANY POLICIES OR PROCEDURES,  MODIFY THIS SECTION 15 OR EXISTING COMPANY
POLICIES, PROCEDURES, WAGES OR BENEFITS, OR IN THE ABSENCE OF A WRITTEN WAIVER
PURSUANT TO PARAGRAPH (ix) BELOW, HEAR OR DECIDE ANY MATTER THAT WAS NOT
PROCESSED IN ACCORDANCE WITH THIS SECTION 15. 
THE ARBITRATOR SHALL HAVE EXCLUSIVE AUTHORITY TO 

 13
 

RESOLVE ANY
CLAIM, INCLUDING, BUT NOT LIMITED TO, A DISPUTE RELATING TO THE INTERPRETATION,
APPLICABILITY, ENFORCEABILITY OR FORMATION OF THIS SECTION 15, OR ANY
CONTENTION THAT ALL OR ANY PART OF THIS SECTION 15 IS VOID OR VOIDABLE.  THE ARBITRATOR WILL HAVE THE AUTHORITY TO
AWARD ANY FORM OF REMEDY OR DAMAGES THAT WOULD BE AVAILABLE IN A COURT.

(iv)          COMPANY
SHALL PAY REASONABLE AND NECESSARY FEES OF THE AAA AND THE ARBITRATOR.  THE PARTIES WILL PAY THEIR OWN ATTORNEYS’
FEES AND EXPENSES ASSOCIATED WITH THE ARBITRATION.

(v)           EITHER PARTY, IN ITS SOLE DISCRETION, MAY,
IN WRITING, WAIVE, IN WHOLE OR IN PART, THE OTHER’S FAILURE TO FOLLOW ANY TIME
LIMIT OR OTHER REQUIREMENT SET FORTH IN THIS SECTION 15.

(vi)          TO THE EXTENT PERMITTED BY LAW, EMPLOYEE
AGREES NOT TO INITIATE OR PROSECUTE AGAINST COMPANY ANY ADMINISTRATIVE ACTION
(OTHER THAN AN ADMINISTRATIVE CHARGE OF DISCRIMINATION) IN ANY WAY RELATED TO
ANY CLAIM COVERED BY THIS SECTION 15.

(vii)         THE ARBITRATION WILL BE CONDUCTED IN PRIVATE,
AND WILL NOT BE OPEN TO THE PUBLIC OR THE MEDIA.  THE TESTIMONY AND OTHER EVIDENCE PRESENTED,
AND THE RESULTS OF THE ARBITRATION, UNLESS OTHERWISE AGREED TO BY BOTH PARTIES,
ARE CONFIDENTIAL AND MAY NOT BE MADE PUBLIC OR REPORTED BY ANY NEWS AGENCY OR
LEGAL PUBLISHER OR SERVICE.

(viii)        THE ARBITRATOR SHALL RENDER A WRITTEN DECISION
AND AWARD (THE “AWARD”), WHICH SHALL SET FORTH THE FACTS AND REASONS THAT
SUPPORT THE AWARD.  THE AWARD SHALL BE
FINAL AND BINDING ON COMPANY AND EMPLOYEE AND SHALL BE ENTERED IN A COURT OF
COMPETENT JURISDICTION.

16.          SEVERABILITY AND
REFORMATION.  Subject to the
reformation provision in Section 13, if any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of Employee or the Company under this Agreement would

 14
 

not be
materially and adversely affected thereby, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
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 herefrom, and in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the Company
and Employee hereby request the court or any arbitrator to whom disputes relating
to this Agreement are submitted to reform the otherwise unenforceable covenant
in accordance with this Section 16.

17.          HEADINGS, GENDER, ETC.  The headings used in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. 
Unless the context of this Agreement otherwise requires, (i) words of
any gender shall be deemed to include each other gender; (ii) words using the
singular or plural number shall also include the plural or singular number,
respectively; and (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” and
derivative or similar words shall refer to this entire Agreement.

18.          GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO ANY PRINCIPLE OF CONFLICT OF LAWS THAT WOULD REQUIRE THE APPLICATION
OF THE LAW OF ANY OTHER JURISDICTION.

19.          SURVIVAL.  Employee’s termination from employment, for
whatever reason, shall not reduce or terminate Employee’s or the Company’s
covenants and agreements set forth herein.

20.          NOTICES.  Any notice necessary under this Agreement
shall be in writing and shall be considered delivered three days after mailing
if sent certified mail, return receipt requested, or when received, if sent by
telecopy, prepaid courier, express mail or personal delivery to the following
addresses:

	
  If to the Company:

  	
  Heelys, Inc.

  
	
   

  	
  3200 Belmeade Dr., Suite 100

  
	
   

  	
  Carrollton, Texas 75006

  
	
   

  	
  Telecopy: (214) 390-1661

  
	
   

  	
  Attention: 
  Chairman of the Board

  

 

	
  If to the Employee:

  	
  William D. Albers

  
	
   

  	
  3200 Belmeade Dr., Suite 100

  
	
   

  	
  Carrollton, Texas 75006

  
	
   

  	
  Telecopy: 214-390-1661

  

 

 15
 

21.          ATTORNEYS’ FEES.  The prevailing party in any legal proceedings
brought by or against the other party to enforce any provision of this
Agreement shall be entitled to recover against the non-prevailing party the
reasonable attorneys’ fees, court costs, arbitration fees and other expenses
incurred by the prevailing party.  This
Section shall not apply to arbitration, which is governed by Section
15(c)(viii).

22.          ENTIRE AGREEMENT.  This Agreement, including the Recitals and
introductions and all Exhibits referred to, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and supersedes all prior conflicting or inconsistent agreements,
consents and understandings relating to such subject matter.  Employee acknowledges and agrees that there
is no oral or other agreement between the Company and Employee relating to the
employment relationship which has not been incorporated in this Agreement.

23.            NO WAIVER. 
The forebearance or failure of one of the parties hereto to insist upon
strict compliance by the other with any provisions of this Agreement, whether
continuing or not, shall not be construed as a waiver of any rights or
privileges hereunder.  No waiver of any
right or privilege of a party arising from any default or failure hereunder of
performance by the other shall affect such party’s rights or privileges in the
event of a further default or failure of performance.

24.          ASSIGNMENT.  This Agreement may not be assigned by the
Company without the Employee’s approval, but no approval shall be required for
the Company to assign this Agreement to any affiliate or successor in interest
to the Company’s business or in connection with a Change of Control.  This Agreement may not be assigned by
Employee.  Any assignment made by either
party in contravention of this Section shall be null and void for all purposes.

25.          BINDING EFFECT.  This Agreement shall be binding on and inure
to the benefit of the parties and their respective successors and permitted
assigns.

26.          MODIFICATION.  This Agreement may be modified only by a
written agreement signed by both parties. 
Any such written modification must be authorized  by the Board of Directors of the Company.

27.          COUNTERPARTS.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original instrument,
and all of which together shall constitute one and the same Agreement.

28.          CODE §409A COMPLIANCE.   It is the intention of the Company and
Employee that this Agreement not result in unfavorable tax 

 16
 

consequences
to Employee under Code §409A.  The Company and Employee acknowledge that
only limited guidance has been issued by the Internal Revenue Service with
respect to the application of Code §409A to certain arrangements, such as this
Agreement.  It is expected by the Company
and Employee that the Internal Revenue Service will provide further guidance
regarding the interpretation and application of Code §409A in connection with
finalizing its current proposed regulations. 
The Company and Employee acknowledge further that the full effect
of Code §409A on potential payments pursuant to this Agreement cannot be
determined at the time that the Company and Employee are entering into this
Agreement.  The Company and Employee
agree to work together in good faith in an effort to comply with Code §409A
including, if necessary, amending the Agreement based on further guidance
issued by the Internal Revenue Service from time to time, provided that neither
party shall be required to assume an economic burden beyond what is already required
by this Agreement.

IN WITNESS WHEREOF, the
parties hereto have executed this Employment Agreement as of the day and year
first above written.

 

	
  HEELING SPORTS LIMITED 

  	
  EMPLOYEE 

  
	
   

  	
   

  
	
  By: HEELING MANAGEMENT CORP., 

  	
  /s/ William D. Albers 

  	
   

  
	
  its sole general
  partner 

  	
  William D. Albers

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/
  Michael G. Staffaroni

  	
   

  	
   

  
	
   

  	
  Michael G.
  Staffaroni 

  	
   

  
	
   

  	
  Chief Executive
  Officer

  	
   

  
					

 

 17
 

Exhibit 1

Salary
and Benefits

Reference
Section 4, part a.

1.               Base Salary to be $** per month - $**
per year.

2.               Bonus Plan:    Beginning
with the calendar year 2007, an Annual Bonus amount as determined by the
Company’s Compensation Committee and for purposes of such Bonus Plan, Employee’s
“Target” amount is 25% of Employee’s then current base salary.

Reference
Section 4, part b.

1.               Employee to receive three weeks paid
vacation each calendar year.

2.               Employee to receive life, medical and
dental insurance through the plan adopted by the Company for its full time
employees.

3.               Employee shall be entitled to
participate in a 401(k) plan adopted by the Company for its full time
employees, including any matching arrangements in effect from time to time.

4.               Pursuant to that certain Consulting
Agreement between the Company and Boss Technical Services (“Boss”), the Company
shall cause Boss to pay certain expenses incurred by Employee in performing his
duties in Asia.

** Confidential treatment
has been requested for certain portions of this document pursuant to an
application for confidential treatment sent to the Securities and Exchange
Commission. Such portions are omitted from this filing and filed separately
with the Securities and Exchange Commission.

 18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]