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
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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
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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