Exhibit 10.1
SEVERANCE AND GENERAL RELEASE
AGREEMENT
This Severance and General Release Agreement
(“ Agreement ”) is made and entered into
effective as of February 1, 2008 (the “ Effective
Date ”) by and between the following Parties:
(i) Heeling Sports Limited, a Texas limited partnership (the
“ Company ”) and (ii) Michael G. Staffaroni
(the “ Employee ”). The Company and the
Employee are collectively referred to herein as the “
Parties .”
WHEREAS, beginning on or about July 24,
2000, the Employee was engaged by the Company as Chief Executive
Officer, and then became employed as Chief Executive Officer as of
January 16, 2001 and as President in 2006;
WHEREAS, effective as of May 19, 2006, the
Employee and the Company entered into an AMENDED AND RESTATED
EMPLOYMENT AGREEMENT, INCLUDING AGREEMENT TO ARBITRATE,
NONCOMPETITION AGREEMENT, AND NONDISCLOSURE AGREEMENT, a true and
correct conformed copy of which is attached as Exhibit A to
this Agreement (the “ Employment Agreement
”);
WHEREAS, as of the Effective Date, the
Employee’s employment with the Company ended due to
Employee’s resignation;
WHEREAS, the Employee, on the one hand, and the
Company, on the other hand, 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, and the terms and amount of severance payable to
Employee under the Employment Agreement, and the Parties are
desirous of reducing this Agreement to writing;
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 on the one hand, and the Company on the other hand,
for and in consideration of the above recitals and the mutual
promises, covenants and agreements set forth herein, and the
benefits flowing therefrom, and other good and valuable
consideration, the adequacy of which the Parties hereby acknowledge
for all purposes, including the purpose of enforcing this
Agreement, the Parties to this Agreement covenant and agree as
follows:
1.
Mutual General
Releases :
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,
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subsidiaries, affiliates, and related
corporations, firms, associations, partnerships, and entities,
specifically including the Other Heelys Releasees (as defined
below), from any and all Claims and Controversies (as defined
below), including without limitation, any and all obligations under
the Employment Agreement; provided, however , that 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.
The Company does hereby
GENERALLY RELEASE, ACQUIT, AND DISCHARGE the Employee,
individually, and as applicable, Employee’s current, former,
and successor attorneys, representatives, guardians, heirs,
assigns, successors, executors, administrators, insurers, servants,
agents, employees, affiliates, and entities, from any and all
Claims and Controversies; provided, however , that nothing
in this Agreement will be considered a release of the
Company’s claims, if any, for the Employee’s breach of
this Agreement.
c.
Notwithstanding anything
to the contrary herein, the Company or Heelys, Inc.’s
obligations to Employee under that certain Indemnification
Agreement, effective August 31, 2006 (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 Articles of Incorporation and
ByLaws or at law are not released, are not affected, and expressly
survive the release herein. As of the Effective Date of this
Agreement, to the Company’s knowledge, Employee has fully
complied with the Indemnification Agreement.
2.
Definitions
:
a.
For the purposes of this
Agreement, including without limitation Section 1 of this
Agreement, the term “ Other Heelys Releasees ”
means all affiliates of the Company and all of their respective
officers and directors.
b.
For the purpose of this
Agreement, the term “ Claims and Controversies ”
means the following: 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
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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 seq. , as amended, the Labor Management
Relations Act, 29 U.S.C. §§ 141 et seq. , as
amended, the Employee Polygraph Protection Act, 29 U.S.C.
§§ 2001 et seq ., as amended, RICO, 18 U.S.C.
§§ 1961 et seq ., as amended, the Occupational
Safety and Health Act, 29 U.S.C. §§ 651 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, Tex.
Gov’t. Code §§ 431.005, 431.006, 554.001, and
554.002, as amended, Tex. Elec. Code §§ 253.102, 276.001,
and 276.004, as amended, and Tex. Health & Safety Code
§§ 81.102 and 165.002, 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 and/or 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 or the Other Heelys Releasees, 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.
c.
Notwithstanding anything
to the contrary herein, the Company or Heelys, Inc.’s
obligations to Employee under 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 Articles of Incorporation
and ByLaws or at law are not released, are not affected, and
expressly survive the release herein. As of the Effective
Date of this Agreement, to the Company’s knowledge, Employee
has fully complied with the Indemnification Agreement.
3.
Severance Compensation
Terms : Subject to the terms of Sections 7 and 15
herein , the
Parties agree to the following terms of severance compensation
(“ Severance Compensation ”):
a.
The Company shall pay
Employee or his Estate fourteen (14) months severance amounting to
the total sum of FOUR HUNDRED AND SIXTY-SIX THOUSAND, SIX HUNDRED
AND SIXTY-SIX AND 67/100 DOLLARS ($466,666.67), minus tax-related
deductions (the “ Severance Proceeds ”), in full
compromise and settlement. The Severance Proceeds will be
paid out (i) over a five month period, in ten
(10) semi-monthly installments of SIXTEEN
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THOUSAND, SIX HUNDRED AND SIXTY-SIX AND 67/100
DOLLARS ($16,666.67), in accordance with the normal payroll
practices and policies of the Company, beginning six
(6) months after the Effective Date, followed by (ii) one
lump sum payment of THREE HUNDRED THOUSAND AND 00/100 DOLLARS
($300,000.00), in the month following the completion of the
installment payments, in all cases minus tax-related
deductions. The Severance Proceeds are in addition to any
compensation previously accrued or paid to Employee.
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, however , the Company will reimburse
Employee for the monthly cost of all COBRA Continuation Coverage
net of all co-pay amounts (if any) Employee would have paid had
Employee’s employment continued pursuant to
Exhibit A. Such COBRA Continuation Coverage payments by
the Company will apply to the fourteen (14) month period following
the Effective Date; provided, however , that nothing herein
will affect Employee’s rights to COBRA Continuation Coverage,
at Employee’s expense, following the Effective
Date.
c.
The Company will reimburse
Employee for the cost of the $500,000 life insurance policy from
First Colony Life Insurance Company. Such reimbursement by
the Company will apply to the fourteen (14) month period following
the Effective Date; provided, however , that nothing herein
will affect Employee’s rights to obtain life insurance at
Employee’s expense, following the Effective Date. The
Company will reimburse Employee for the monthly cost of such life
insurance policy on the first regular payroll date of the Company
each month. Notwithstanding the preceding sentence, or any
provision in this Agreement to the contrary, no reimbursement for
the cost of the life insurance policy will be paid within six
(6) months following the Effective Date, in order for this
Agreement to satisfy the requirements with respect to a
“specified employee” as provided under
Section 409A of the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations promulgated thereunder (“
Section 409A ”). A single sum cash payment
will be made on the date that is six (6) months and one
(1) day from the Effective Date. Such single sum cash
payment will include the cumulative amounts that would have
otherwise been paid to Employee during the six (6) month delay
period, without interest. Thereafter, monthly reimbursement
payments will resume as described above.
4.
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
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Exhibit A, through and including the
Effective Date. Notwithstanding the preceding sentence, or
any provision in the applicable expense reimbursement policy or
procedure to the contrary, if an expense reimbursement would
constitute taxable income to Employee: (i) the amount of
expenses eligible for reimbursement during any calendar year shall
not affect the amount of expenses eligible for reimbursement in any
other calendar year; (ii) the reimbursement of an eligible
expense shall be made on or before December 31 of the calendar
year following the calendar year in which the expense was incurred;
and (iii) the right
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