EX-2.3 Consulting Agreement
EX-2.3 5 c78295exv2w3.txt EX-2.3 CONSULTING AGREEMENT EXHIBIT 2.3 FILSPORT ASSISTANCE S.R.L. Mr. Riccardo Castelnuovo Via Matteotti 40 21010 GOLASECCA (VA) ITALY July 3, 2003 Dear Mr. Castelnuovo, We, Filsport Assistance S.r.l., are writing to you in our capacity of sole direct or indirect quotaholder of Filsport Assistance S.r.l. (the "Company"). The following sets our consultant agreement with you (the "Consultant Agreement" or the "Agreement"), in order to govern your relations with the Company as a Consultant (collaboratore coordinato e continuativo) of the Company. 1. DEFINITIONS "Business Day" shall mean any day other than Saturday or Sunday on which banks are open for business in Milan, Italy and Lausanne, Switzerland. "Compex EBIT" shall be the Company's earnings before interest and taxes from Compex branded sales and shall be calculated according to the following form, which corresponds to the EBIT for the year ended December 31, 2002: Compex Revenue EUR 16,686,139 Compex Cost of sales EUR 10,367,987 ---------- Compex Gross profit EUR 6,318,152 Operating expenses EUR 4,759,542 Depreciation & amortization EUR 251,184 ---------- Compex EBIT EUR 1,307,426 ==========
2. APPOINTMENT We undertake to have you appointed as an independent Consultant, with the responsibility for assisting with and transitioning the day-to-day management of the overall activities of the Company to the new management. With reference to the performance of your duties as a Consultant, you will report to the Board itself directly and through the Chairman, and in any event you will keep them promptly informed of your activities. In this respect, it is understood that you will not be subject to the hierarchical and/or disciplinary powers of the Company and its bodies. You shall provide, when requested, your advice with regard to the measures to be taken in order to ensure that the Company's activities are pursued in conformity with the Laws of Italy, the Company's Articles of Association and By-laws, as well as the current directives of business issued by the Board. This Agreement is a professional appointment and does not contain any element of a subordinate employment relationship. The Consultant, accordingly, will carry out his services in a fully independent way without any restrictions as his presence and/or working hours and/or contactability at any place and is free to select the ways and criteria and to organise his services at his own and sole discretion through the providing of autonomous services. 3. FEE We will grant you an annual fee as Consultant of the Company of EUR 260,400, gross of any withholding tax and other deductions required by law, reduced as appropriate for fractions of a year. Your fee will be payable in 12 equal monthly instalments. You may also receive performance bonuses, pursuant to the terms attached hereto as Annex A. A sample performance bonus calculation is attached as Annex B. 4. DURATION You will remain in office for a period of 12 months as of the date of signature of this Consultant Agreement. If you or the Company should cause any material breach of their respective duties according to this Consultant Agreement or the relevant conditions under which it is entered, the opposite part may terminate it at an arbitrary date. 5. USE OF THE CAR It is agreed that you will use your car for your professional needs. All the costs inherent to such business use of your car shall be reimbursed from the Company in accordance with the ACI tariffs in force. Any reasonable travel and other expenses that you incur in carrying out your duties, which are properly documented, shall be indemnified by the Company. 6. CONFIDENTIALITY It is a condition of your appointment that you keep confidential all information relating to the business activities, customers, agents, technical processes and product developments of the Company and its associated companies known by you. This obligation of confidentiality will continue for a period of 2 (two) years after the termination of your appointment. The fee set forth above has been established taking into account these obligations. 7. NON-COMPETITION DURING YOUR TERM OF OFFICE It is a further condition of your appointment that you shall refrain, during the entire period you are a Consultant of the Company, from carrying out, either directly or indirectly, any activity which is in competition with the activity carried out by the Company or by its associated companies. It is understood that the fee set forth above has been established taking into account these obligations. 8. NON-COMPETITION AFTER TERMINATION For the longer of a period of 2 (two) years following the termination for any reason of this Consultant Agreement or three years from the date of execution of this Consultant Agreement, you undertake not to carry on in Italy any activity concerning the development, marketing, sale, distribution, service, repair and rental distribution of electrostimulation and ultrasound products (the "Activity"). In particular, you undertake for such 2-year period and in the Italian territory: a) not to form or manage, whether directly or indirectly, in your own name or under the name of a third party, any firm competing with the Company or its associated companies in relation to the Activity, nor to enter into business dealings falling within the ambit of those dealt with by the Company or its associated companies in relation to the Activity; b) not to carry on the Activity, whether as employee, manager, director, consultant or external collaborator, on behalf of or in the interests of competing companies of the Company or its associated companies; c) not to take holdings, whether directly or indirectly, in competing concerns of the Company or its associated companies and not to assist them in any form in relation to the Activity. It is understood that 20% of the fee set forth above has been established taking into account these obligations. 9. PROHIBITION OF ENTICEMENT During the continuance of your office hereunder (and during a period of (2) two years after its expiration for whatever reason), you shall not at any time either on your own account or for any firm or company, solicit, interfere with, or endeavour to entice away from the Company any person, firm or company, who at any time during such period is or has been an employee or retailer of the Company or any associated company. 10. LIQUIDATED DAMAGES In the event of proven violation by you of the non-competition undertaking under Articles 7, 8 or 9 above, you shall pay to the Company liquidated damages of EUR 100'000 per event without prejudice for the Company to be compensated for any further damage. Said liquidated damages will be due for the violation alone of the non-competition undertaking and independent of any obligation on the Company to prove the damages. It is agreed by the parties that these liquidated damages shall be the maximum amount of liquidated damages which the company can request to you under any kind of relationship existing between you and any company of the Compex group (including any employment contract). Such liquidated damages do not duplicate any similar damages paid pursuant to the purchase agreement entered into by the Consultant and Compex Italia Srl. 11. GOVERNING LAW This Consultant Agreement shall be governed by and construed in accordance with the laws of Italy. *** ** *** Please return a copy of this letter to us signed by you by way of acceptance. Yours sincerely, For and on behalf of Filsport Assistance S.r.l. For acceptance: Mr. Riccardo Castelnuovo Date: July 3, 2003 ANNEX A PERFORMANCE BONUSES QUARTERLY COMPEX BONUSES If from the date of the Agreement to September 30, 2003, the Compex EBIT, including the bonus accrual, is greater than EUR 150,000.00, a bonus equal to EUR 9,000.00 shall be payable within 30 Business Days. If from October 1st ,2003 to December 31, 2003, the Compex EBIT, including the bonus accrual, is greater than EUR 250,000.00, a bonus equal to EUR 9,000.00 shall be payable within 30 Business Days. If from January 1st, 2004 to March 31, 2004, the Compex EBIT, including the bonus accrual, is greater than EUR 250,000.00, a bonus equal to EUR 9,000.00 shall be payable within 30 Business Days. If from April 1st, 2004 to June 30, 2004, the Compex EBIT, including the bonus accrual, is greater than EUR 250,000.00, a bonus equal to EUR 9,000.00 shall be payable within 30 Business Days. ANNUAL COMPEX BONUS If from the date of the Agreement to June 30, 2004, the Compex EBIT, including the bonus accrual, is greater that EUR 900,000.00 and EUR1,200,000.00, bonuses equal to EUR 18,000.00 and EUR 9,000.00, respectively, shall be payable within 60 Business Days. ANNUAL NON-COMPEX BONUS If from the date of the Agreement to June 30, 2004, new product line sales (not considered Compex sales) exceed EUR1,5 million and EUR 2 million, bonuses of EUR 18,000.00 and EUR 9,000.00, respectively, shall be payable within 60 Business Days. ANNEX B SAMPLE PERFORMANCE BONUS CALCULATION QUARTERLY COMPEX PRODUCT BONUSES IF COMPEX EBIT QUARTERLY BONUS EQUAL TO: AMOUNT -------------- --------------- July 4-September 30, 2003 EUR 200,000 EUR 9,000 October 1-December 31, EUR 225,000 EUR 0 2003 January 1-March 31, 2004 EUR 275,000 EUR 9,000 April 1-June 30, 2004 EUR 325,000 EUR 9,000 -------------- ----------- TOTAL EUR 1,025,000 EUR 27,000 ============== ===========
ANNUAL COMPEX PRODUCT BONUS COMPEX EBIT BONUS AMOUNT ----------- ------------ July 4, 2003 to June 30, 2004 EUR 1'025'000 EUR 18'000
ANNUAL NON-COMPEX PRODUCT BONUS NON-COMPEX SALES BONUS AMOUNT ---------------- ------------ July 4, 2003 to June 30, 2004 EUR 2,100,000 EUR 27'000
TOTAL PERFORMANCE BONUSES PER ABOVE EXAMPLE EUR 72,000
