Exhibit 10.2

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.

SETTLEMENT AGREEMENT

This Settlement Agreement (“Agreement”), effective as of the 11 ^th day of March, 2008 (“the Effective Date”), is made and entered into by and between Heeling Sports Limited, a Texas limited partnership having its principal place of business at 3200 Belmeade Drive, Suite 100, Carrollton, Texas 75006 (hereinafter “Heeling”), and Elan-Polo, Inc., a Missouri corporation having its principal place of business at 2005 Walton Road, Saint Louis, Missouri 63114, (hereinafter “Elan-Polo”) (Heeling and Elan-Polo are each sometimes referred to hereinafter as a “Party” and collectively sometimes referred to hereinafter as the “Parties”).

WITNESSETH:

WHEREAS, Heeling is the owner of record of U.S. Patent Nos.: 6,698,769 B2; 6,406,038 B2; 6,450,509 B2; 6,739,602 B2; 6,746,026 B2; 6,979,003 B2; 7,165,773 B2; 7,063,336 B2; and 7,165,774 B2 (all of which patents, published patent applications, and all parents, continuations, continuations-in-part, divisionals and reissues of any of the foregoing, including without limitation all foreign patents and foreign patent applications corresponding to any of the foregoing, are referred to hereinafter collectively as the “Heeling Patents”);

WHEREAS, Heeling is the owner of various US and foreign trademark registrations and common law trademarks that include, among others, the HEELYS trademark and the Heelys logo, such as that illustrated in US Trademark Reg. No. 3339689 (all of which are collectively referred to as “Heeling Trademarks”);

WHEREAS, Heeling sells or licenses wheeled footwear branded with the Heeling Trademarks and that contain one or more wheels in the sole of the heel (“HEELYS Skates”);

WHEREAS, Elan-Polo manufactured 1,210,000 pairs of wheeled skates that contained a wheel configuration on the bottom of the sole as shown in the photographs of Exhibit A (“Shoe Skates”) and that displayed the brand name “Spinners” as well as a spiral design element (“Spinners Logo”);

WHEREAS, the Shoe Skates are covered by one or more claims of one or more of the Heeling Patents;

WHEREAS, Heeling agrees that Elan-Polo has acted at all times in good faith and without malice, bad faith, or willful disregard of the Heeling Patents;

WHEREAS, a lawsuit is presently pending between Heeling and Elan-Polo that is styled as Heeling Sports Limited v. Wal-Mart Stores, Inc., and Elan-Polo, Inc. , Civil Action No. 3:07-CV-1695 in the United States District Court for the Northern District of Texas, Dallas Division (the “Lawsuit”); and

WHEREAS, the Parties desire to settle the Lawsuit on the terms and conditions stated herein, and including all Exhibits hereto.

NOW, THEREFORE, in consideration of the mutual covenants, promises and conditions set forth above and herein, the Parties further agree as follows:

1.              Upon the execution of this Agreement, the attorneys for the Parties will execute a Final Judgment in the form attached hereto as Exhibit B (the “Final Judgment”) and will promptly cause the Final Judgment to be entered in the Lawsuit after the Initial Payment, which is defined below, is fully received by Heeling.

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2.              Elan-Polo, including its affiliates, officers and representatives, agrees that the issues of patent validity and enforceability of U.S. Patent Nos. 6,698,769 B2; 6,406,038 B2; 6,450,509 B2; 6,739,602 B2; 6,746,026 B2; 6,979,003 B2; 7,165,773 B2; 7,063,336 B2; and 7,165,774 B2 are hereby fully and finally concluded and disposed of, and that all such patents are valid and enforceable.  Accordingly, Elan-Polo, including its affiliates, officers and representatives, shall not directly or indirectly, unless required by a court order, participate, sponsor or assist in any action or assist others, either directly or indirectly, in contesting the validity or enforceability of any of the patents referenced above, either now or in the future.  While the Technology Agreement, which is defined below, is still in force between the parties, and for a period of five years thereafter, Elan-Polo shall inform Heeling in writing within a reasonably timely manner of any inquires or requests made to or through an officer or senior executive of Elan-Polo or its affiliates, either directly or indirectly, in connection with the development, sales or importation of wheeled footwear or skates.  During this same period, Elan Polo shall notify Heeling in a reasonably timely manner of any third party infringers to which Elan-Polo becomes aware and shall supply all supporting evidence in the possession or control of Elan-Polo.

3.              Elan-Polo, including its affiliates, officers and representatives, admits that all of the claims of the issued Heeling Patents are valid, enforceable and patentably distinct from the cited references and other available art.  Elan-Polo, including its affiliates, officers and representatives, further covenants and agrees to waive and relinquish, and does hereby waive and relinquish, now and forever, the right to assert or claim that any of the claims of the Heeling Patents are invalid or unenforceable for any reason, regardless of whether any such assertions or claims would be made or initiated in any court, any arbitration, the U.S. Patent and Trademark

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Office (“PTO”), or other judicial or administrative proceeding, such as the U.S. International Trade Commission, and regardless of whether any such assertions or claims would be made or initiated directly or indirectly, including by way of claim, defense, counterclaim, offset, interference, reexamination, protest, reissue or the like.  It is the intent of the Parties and the provisions of this paragraph that, to the fullest and broadest extent permitted by law, Elan-Polo, including its affiliates, officers and representatives, shall never challenge the validity or enforceability of the Heeling Patents or any of the claims thereof, and Elan-Polo, including its affiliates, officers and representatives, will never assist any third party, either directly or indirectly, in a challenge to the validity or enforceability of the Heeling Patents, or assist others with wheeled footwear that would be covered by any claims of the Heeling Patents.  Elan-Polo, including its affiliates, officers and representatives, acknowledges and agrees that such preclusion is intended to be broader than the prohibition on such challenges arising from the doctrines of res judicata and collateral estoppel.

4.              Elan-Polo, including its affiliates and officers, represents and warrants the following:

4.1            Elan-Polo, including its affiliates, officers and agents, had a total of 1,210,000 pairs of Shoe Skates manufactured in 2007 by two factories in **, identified by name, address/location as detailed below.  Elan-Polo shall also provide Heeling with contact information for each such factory upon request.

First Factory:         **

**

**

TEL **

FAX **

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Second Factory:    **

**

Tel: **

Fax: **

Vice General Manager: **

M-Phone: **

4.2            The 1,210,000 pairs of Shoe Skates made in the two just identified ** factories are the only Shoe Skates or wheeled footwear of any kind that Elan-Polo, including its affiliates, officers and agents, has ever manufactured, had manufactured, sold, marketed or distributed.

4.3            As of March 10, 2008, Elan-Polo had delivered 1,200,000 pairs of Shoe Skates to Wal-Mart Stores, Inc. (“Wal-Mart”) in the United States and had provided 10,000 pairs of Shoe Skates to Wal-Mart Canada, and had not provided or delivered Shoe Skates to any other third party.  **.

4.4            Elan-Polo, including its affiliates, officers and representatives, represents that no more Shoe Skates will be made, sourced or acquired anywhere in the world without the prior written permission of Heeling.

4.5            Based on sell through projections and past experience in dealing with Wal-Mart, Elan-Polo estimates that by June 30, 2008, no more of the Shoe Skates shall be available for purchase at Wal-Mart.  Any returns or refusals of the Shoe Skates by

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Wal-Mart shall be promptly reported to Heeling, and Elan-Polo and Heeling shall mutually agree on a disposal plan for such Shoe Skates, which may include either the agreed upon destruction or other sales of the returned Shoe Skates.

4.6            Elan-Polo, including its affiliates, officers and agents, has not filed and will not file for any patent protection or other invention protection in connection with any aspect of the Shoe Skates.  Elan-Polo, including its affiliates, officers and agents, hereby assigns to Heeling any and all intellectual property rights, including, for example, any patent, copyright, or trade secret rights, Elan-Polo, including its affiliates, officers and agents, has in any invention or innovation related to (i) the Shoe Skates, and (ii) any rights in any improvements to wheeled footwear, and wheeled footwear that include one or more wheels in the heel that are made now or in the future, and whether documented in tangible or intangible form.  Elan-Polo shall not retain any “shop-right,” right to practice, or any other use or other rights in such assigned rights.  As to Elan-Polo’s obligations to assign improvements or innovations in wheeled footwear based solely on Elan-Polo’s developments, Elan-Polo’s obligations shall continue until the later of (i) March 10, 2013, or (ii) two years after the termination or expiration of this Technology Agreement, but in no event shall Elan-Polo be entitled to use or disclose any intellectual property rights owned, assigned to or licensed by Heeling.  Elan-Polo, including its affiliates, officers and agents, agrees to sign necessary documents requested by Heeling to effect the transfer of such rights to Heeling, and Elan-Polo, including its affiliates, officers and agents, agrees to testify as necessary in legal and administrative proceedings as to such transfer of rights.  Elan-Polo shall not use or reveal any such improvements or innovations in wheeled footwear to any third party without the prior written consent of

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Heeling.  Elan-Polo, including its affiliates, officers and agents, agrees to timely provide a detailed description of any such improvements or innovations, and all corresponding documentation to Heeling.

4.7            There is no material fact known to Elan-Polo, including its affiliates, officers and agents, that materially and adversely affects the ownership of any of the Heeling Patents.

5.              Elan-Polo shall pay Heeling a non-refundable payment of $1,400,000 according to the following payment terms:  (i) at the execution of this Agreement, electronically transfer $750,000 USD to Heeling in a bank account specified by Heeling in writing (“Initial Payment”); (ii) in April of 2008, electronically transfer $250,000 USD to Heeling in a bank account specified by Heeling; (iii) in February of 2009, electronically transfer $250,000 USD to Heeling in a bank account specified by Heeling, and (iv) in February of 2010, electronically transfer $150,000 USD to Heeling in a bank account specified by Heeling.  In the event Heeling and Elan-Polo agree in writing to extend the Technology Agreement for a Fourth Year (as defined in the Technology Agreement), in February of 2011 Elan-Polo shall electronically transfer $150,000 USD to Heeling in a bank account specified by Heeling.  Elan-Polo acknowledges and agrees that such payments in this Agreement shall be due and payable, without recourse to Heeling, and without respect to any of the Heeling Trademarks or the Heeling Patents.

6.              Upon the execution of this Agreement, the Parties shall execute a Technology License Agreement in the form attached hereto as Exhibit C (the “Technology Agreement”) pursuant to which Elan-Polo will be granted limited, exclusive patent rights and know-how rights of Heeling for the purpose of permitting Elan-Polo to manufacture, import, offer to sell, and sell

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up to 750,000 pairs per year of Shoe Skates configured only as shown in Exhibit A with non-removable wheels secured by fasteners not readily removable to certain mass retailers in the U.S. for the first two years, and up to 150,000 pairs per year of Shoe Skates configured only as shown in Exhibit A with non-removable wheels secured by fasteners not readily removable to certain mass retailers in the U.S. for the third year, all in exchange for the payment of certain amounts, which shall include, among other payment terms outlined in the Technology Agreement, the greater of $** per pair or **% per pair of the wholesale price paid to Elan-Polo for quantities of Shoe Skates that Heeling permits Elan-Polo to sell over the annual limitations.

7.              Elan-Polo, including its affiliates, officers and agents, agrees that it shall not sell, distribute or make available replacement wheels for any of the Shoe Skates or any other wheeled footwear.

8.              DELETED PARAGRAPH/

9.              Except as permitted by this Agreement including Paragraph 6 above, the Parties acknowledge and agree that any sales of Shoe Skates in the future by Elan-Polo, including its affiliates, officers and agents, that are not authorized by Heeling shall result in an agreed upon payment to Heeling by Elan-Polo of at least $** per pair.  The Parties further acknowledge and agree that any sales of wheeled footwear in the future by Elan-Polo, including its affiliates, officers and agents, that are not authorized by Heeling and are not Shoe Skates but include a wheel or wheels in the heel and can be used for walking and rolling on one or more wheels in the heel, shall result in a payment to Heeling by Elan-Polo of at least $15 per pair.  Elan-Polo, including its affiliates, officers and agents, acknowledges and agrees that the designation of these payment amounts represent a fair analysis of damages to Heeling.  The Parties acknowledge and agree that the payment amounts represent the minimum that Heeling will be entitled without

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proving any damages, but that Heeling is expressly permitted to prove additional and enhanced damages, if applicable.  Further, Heeling shall be entitled to full compensation for any attorney fees in enforcing this paragraph, or any other provision of this Agreement or the Technology Agreement.  This paragraph shall not be interpreted as either an express or an implied license to any existing or future intellectual property rights of Heeling, such as the Heeling Patents, the Heeling Trademarks or any other intellectual property rights.

10.            Upon the execution of this Agreement, and with the exception of the 1,210,000 pairs of Shoes Skates sold to Wal-Mart in the United States and Canada as set forth above, Elan-Polo, including its affiliates, officers and agents,  shall cease all use of the Spinners Logo on advertising material, websites, and any Shoe Skates manufactured and sold in the future.  Notwithstanding anything else herein to the contrary, Elan-Polo shall cease all use of the Spinners Logo on its website by April 30, 2008.

11.            Elan-Polo, including its affiliates, officers and agents,  represents and warrants that it will not manufacture, sell or distribute any Shoe Skates, other skates or wheeled footwear anywhere in the world in the future without Heeling’s prior written consent or as detailed in the Technology Agreement.  In the event that Elan-Polo is provided written permission by Heeling to manufacture and/or sell Shoe Skates or other wheeled footwear, Elan-Polo, including its affiliates, officers and agents, hereby provides Heeling with the right to conduct quarterly accounting and financial audits related in any manner to the manufacture, importation, shipping, receiving, pricing, inventory, and sales of such products.  Further, Elan-Polo, including its affiliates, officers and agents,  shall provide detailed information on approved manufacturing and shipping facilities related to the manufacture or shipping of any such products, and shall ensure

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that Heeling is provided access to fully inspect such facilities at least once a month as desired by Heeling.

12.                                  Elan-Polo, including its affiliates, officers and agents,  agrees never to use the marks HEELYS, HEELIES, WHEELIES, WHEELYS or any mark that may be confusingly similar to any of the Heeling Trademarks.

13.                                  Elan-Polo, and its officers, directors, shareholders, employees, agents, representatives, attorneys, successors and assigns, hereby release, relinquish, and forever discharge Heeling, and its affiliates, officers, directors, shareholders, employees, agents, representatives, attorneys, vendors, vendees, customers, advertisers, insurers, successors and assigns, from any and all obligations, debts, agreements, promises, demands, liabilities, claims, actions and causes of action of any and every kind or character, whether known or unknown, suspected or unsuspected, now existing or heretofore existing, or which may hereafter exist, that arise out of or relate in any way to the facts or circumstances giving rise to or made the basis of any of the claims or defenses asserted in the Lawsuit, including, but not limited to, any claims and causes of action alleged in the Lawsuit or which by pleading, amendment or supplement, could be or could have been alleged therein; provided, however, that nothing in this paragraph shall be construed to release Heeling from any obligations it has expressly assumed hereunder.

14.                                  Effective upon the timely payment of the Initial Payment, and contingent upon the truth of the representations provided herein, Heeling, and its officers, directors, shareholders, employees, agents, representatives, attorneys, successors and assigns, hereby release, relinquish, and forever discharge Elan-Polo and its officers, directors, shareholders, employees, agents, representatives, attorneys, vendors, vendees, customers, including Wal-Mart as it relates to the Shoe Skates manufactured and sold by Elan-Polo as described herein in Paragraph 4.1,

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advertisers, insurers, successors and assigns, from any and all obligations, debts, agreements, promises, demands, liabilities, claims, actions and causes of action of any and every kind or character, whether known or unknown, suspected or unsuspected, now existing or heretofore existing, or which may hereafter exist, that arise out of or relate in any way to the facts or circumstances giving rise to or made the basis of any of the claims or defenses asserted in the Lawsuit, including, but not limited to, any claims and causes of action alleged in the Lawsuit or which by pleading, amendment or supplement, could be or could have been alleged therein; including, e.g., claims for trademark infringement, trade dress infringement, or unfair trade practices; provided, however, that nothing in this paragraph shall be construed to release Elan-Polo from any obligations under this Agreement, the Exhibits, or from any obligations under the Final Judgment entered in the Lawsuit.

15.                                  Elan-Polo’s representations and warranties provided in this Agreement shall be true and correct on the Effective Date and shall survive the Effective Date.

16.                                  Elan-Polo, including its affiliates, officers and agents, acknowledges and agrees that Heeling and its affiliates shall have no liability or responsibility, whatsoever, in connection with the Shoe Skates, including, for example, the Existing Inventory and any future skates or wheeled footwear sold by Elan-Polo, , including its affiliates, officers and agents, whether covered or produced under the Technology Agreement or otherwise.

17.                                  Elan-Polo, including its affiliates, officers and agents, shall fully and completely defend, indemnify and hold harmless Heeling, including its affiliates, officers, directors, shareholders, employees, agents, representatives, attorneys, vendors, vendees, customers, advertisers, insurers, successors and assigns, from and against any and all claims, demands, causes of action, liabilities, damages, losses, costs and expenses of any nature (including

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reasonable attorney fees) arising out of or relating to in any manner whatsoever: (a) any false representation by Elan-Polo or any of its officers, directors, agents, sub-contractors, employees, invitees, or sponsors, (b) any breach of warranty hereunder by Elan-Polo, including its affiliates, officers and agents, or (c) the Shoe Skates, the Existing Inventory, or any skate or wheeled footwear made or sold by Elan-Polo or its affiliates, officers and agents and including any wheeled footwear or other products sold under the Technology Agreement.  Elan-Polo’s, including its affiliates, officers and agents,  obligations to defend, indemnify and hold harmless in this paragraph shall include, without limitation, any claim, demand, cause of action or damages, including personal injury claims and product liability claims related in any manner to the Shoe Skates, the Existing Inventory, or any skate or wheeled footwear made or sold by Elan-Polo, including its affiliates, officers, agents and assignees, and including, for example, related to the sales, use, advertising, and marketing of the Shoe Skates, the Existing Inventory, or any skate or wheeled footwear made or sold by Elan-Polo, including its affiliates, officers and agents, previously or in the future, such as under the Technology Agreement.  In the event any claim or threat is made against Heeling that is related in any manner to any item addressed in this paragraph, Elan-Polo, including its affiliates, officers and agents, agrees to promptly and fully, and on a monthly basis, reimburse Heeling for costs incurred in using legal counsel agreeable to Heeling and Elan-Polo, who should not unreasonably withhold consent of Heeling’s legal counsel of choice, to immediately advise Heeling in defending and settling such claim, threat, or action.  Further, Elan-Polo, including its affiliates, officers and agents, agrees to promptly notify Heeling in writing of any claim by any third party that any wheeled footwear made or sold by Elan-Polo, including the Shoe Skates, are defective or were somehow responsible for any type of personal injury or damage to property.  Heeling agrees to timely notify Elan-Polo of any

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occurrence that might lead to an obligation by Elan-Polo to defend, indemnify and hold harmless Heeling as set forth in this paragraph.

18.                                  Unless barred by the statute of limitations, Elan-Polo shall, throughout the term of this Agreement and the Technology Agreement, and as long as the Shoe Skates or other wheeled footwear or skates made or sold by Elan-Polo are still in use by consumers, obtain and maintain at its own cost and expense from a qualified insurance company licensed to do business in Texas and having both a Moody’s rating of B+ or better and an A.M. Best rating of A-VII or better, product liability insurance for all such wheeled footwear, including the Shoe Skates, with coverage from claims for personal injury (including bodily injury and death) and property damage, and naming Heelys, Inc., Heeling and its affiliates, officers, directors, employees, agents and shareholders, as additional insureds, and shall contain a waiver of subrogation with respect to the additional insureds.  An endorsement listing Heeling, and its affiliates, such as Heelys Inc., as additional insureds shall be provided in the form as shown in the attached Exhibit D .  Such policy shall provide protection against all claims, demands, and causes of action related to or arising out of wheeled footwear, including, for example, any defect, alleged defect or otherwise, of any such products, including the Shoe Skates, the Existing Inventory, or any skate or wheeled footwear made or sold by Elan-Polo or at its direction, including any material used in connection therewith or any use thereof.  The amount of coverage shall not be less than $1,000,000 per occurrence and $2,000,000 in the aggregate.  The policy shall provide for at least 30 days unrestricted notice to Heeling from the insurer by registered or certified mail, return receipt requested, in the event of any modification, cancellation, or termination thereof.  The policy shall be primary and not contributory, and shall be on an occurrence basis.  Elan-Polo shall furnish Heeling at all times (including on the Effective Date) a current copy of such policy,

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as well as a certificate of insurance evidencing same.  In no event shall Elan-Polo manufacture, have made, distribute, or sell any Shoe Skates or other skates or wheeled footwear under this Agreement or the Technology Agreement prior to receipt and acceptance by Heeling of such evidence of insurance.  Elan-Polo acknowledges and agrees that its obligations set forth in this Agreement, including, for example, Elan-Polo’s obligations to indemnify, defend and hold harmless of Paragraph 17 or elsewhere in this Agreement, shall not be limited by the insurance requirements of this  paragraph.

19.                                  Each of the Parties agree, immediately upon request therefor, to prepare, execute, acknowledge, deliver, or file such other and further papers, forms, instruments, and documents, and to take such other and further action, as may be necessary or convenient to evidence, perfect, or enforce any of the rights and obligations arising under or in connection herewith or with any document or agreement referred to herein or otherwise to consummate or carry out the intent of this Agreement.

20.                                  Elan-Polo, including its affiliates, officers and agents, will not provide or disclose to any third party the terms or provisions of this Agreement or the Technology Agreement; provided, however, that Elan-Polo is not precluded from providing or disclosing the terms or provisions of this Agreement (a) in connection with federal or state income tax matters, (b) in connection with financial statements or reports prepared in the usual course of business, including without limitation such statements or reports prepared for submission to its banks, lenders, lending institutions, insurers or prospective insurers, or (c) in connection with any court proceeding, provided that Elan-Polo shall first make reasonable efforts to contact Heeling before disclosing and to obtain issuance of a protective order to maintain the confidentiality of these

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documents.  Within ten days of the Effective Date of this Agreement, Elan-Polo and Heeling shall mutually agree on a joint press release communicating the settlement of the Lawsuit.

21.                                  Heeling shall not disclose this Agreement or the Technology Agreement to third parties except where noted herein.  Heeling and its affiliates shall be free to disclose the Agreement and the Technology Agreement in connection with any regulatory filings it deems appropriate, such as for example, filings to any governmental patent office, in connection with any lawsuit or court proceeding, or in connection with any US Securities and Exchange Commission filing or foreign equivalent, and shall issue any press releases it deems appropriate not inconsistent with the content disclosed in any such regulatory filing.  Heeling and its affiliates shall be free to disclose the Agreement and the Technology Agreement in connection with any discussions, communications or conferences reporting financial results or performance, or in connection with any communications with a stock analyst.  Heeling and its affiliates shall be free to disclose the Agreement and the Technology Agreement in connection with any negotiations with third parties to license technology or to settle a dispute with Heeling or any of its affiliates, in connection with any potential acquisition, sale of assets, or in connection with any potential purchase or sale of securities.  Finally, Heeling and its affiliates shall be free to disclose the Agreement and the Technology Agreement (a) in connection with federal or state income tax matters, (b) in connection with financial statements or reports prepared in the usual course of business, including, without limitation, such statements or reports prepared for submission to any of the Parties’ banks, lenders, lending institutions, insurers or prospective insurers.  To the extent all or a portion of this Agreement or the Technology Agreement becomes publicly available by the lawful disclosure by a Party, the other Party is free to disclose such portion that is now publicly available.

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22.                                  The provisions of this Agreement are severable and, in the event any paragraph or provision hereof is declared illegal or unenforceable by a court of competent jurisdiction, the Agreement shall be construed, interpreted and enforced as if such paragraph or provision were never a part hereof and the remainder of the Agreement shall be effective and binding on the Parties.

23.                                  This Agreement, together with the Exhibits hereto, contain the entire agreement of the Parties and all prior negotiations and agreements pertaining to the subject matter hereof are merged in this Agreement.  Each Party expressly disclaims reliance upon any facts, promises, undertakings or representations made by any other Party, or the agents or attorneys of any other Party, prior to the execution hereof and not included in this Agreement.

24.                                  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.  Elan-Polo, including its affiliates, officers and agents, acknowledges and agrees that that this Agreement and the Technology Agreement are personal.