RELATED PARTY TRAN<strong>SA</strong>CTIONS We have entered into a number of agreements with our controlling shareholder, our subsidiaries and other affiliates. The following is a summary of the main terms of the agreements with such related parties that we believe are material to our business. Acquisition of Gianfranco Ferré S.p.A. On June 24, 2002, we purchased from our controlling shareholder PA Investments 99.99% of the shares in Financière Melpar <strong>Holding</strong> S.A. (“FMH”), a Luxembourg company holding 90% of the share capital of Gianfranco Ferré S.p.A. We paid total consideration of €161.7 million in connection with this transaction, comprising €136.3 million as the purchase price of certain notes issued by FMH to PA Investments with a nominal value of €125.7 million, € 21.5 million as consideration for the assignment to us of a claim of the same from a loan provided by PA Investments to FMH, and € 3.9 million as the purchase price for the transfer of the 99.99% interest in FMH. In addition, we paid PA Investments €2.2 million on account of expenses incurred by it in connection with the acquisition of Gianfranco Ferré S.p.A. On June 26, 2002, PA Investments transferred the remaining 10% it owned of the share capital of Gianfranco Ferré S.p.A. to FMH for €18.0 million, resulting in FMH becoming Gianfranco Ferré S.p.A.’s sole shareholder. On December 23, 2003, FMH was liquidated and all of its assets, including its 100% shareholding in Gianfranco Ferré S.p.A., were transferred to <strong>IT</strong> <strong>Holding</strong> S.p.A. Accordingly, the total consideration paid by <strong>IT</strong> <strong>Holding</strong> S.p.A. for the acquisition of 100% of the shares in Gianfranco Ferré S.p.A. was €181.8 million. Mr. Gian Franco Ferré Put Agreement On May 20, 2002, PA Investments transferred 5,667,000 shares of <strong>IT</strong> <strong>Holding</strong> S.p.A. to Mr. Gian Franco Ferré at a price of €3.00 per share. Under the terms of this agreement, Mr. Gian Franco Ferré is entitled to require PA Investments to re-purchase these shares, in whole or in part, at a price equal to the original purchase price paid by him for such shares, plus an additional €0.277 per share per year (pro-rated) for the period each such share was held. This option was exercisable from January 24, 2004 and will expire on January 24, 2006. Supply Agreements On December 6, 2001, <strong>IT</strong>F S.p.A. (“<strong>IT</strong>F”), a joint venture established in September 2001 by us, Mr. Roberto Martone, and I.C.R. – Industrie Cosmetiche Riunite S.p.A., a company controlled by Mr. Martone (“ICR”), entered into an exclusive agreement for the supply to <strong>IT</strong>F of cosmetics and perfume products under the Roberto Cavalli, Gianfranco Ferré, Romeo Gigli and Extè trademarks for an initial term of eight years expiring on December 31, 2009. Under this agreement, orders are placed on the basis of a 52 weekly rolling forecast plan updated by <strong>IT</strong>F and delivered to ICR by the second week of each month. We sold our interest in <strong>IT</strong>F on March 25, 2004 for a total consideration of €31.5 million. On April 16, 2004, Ittierre Accessories S.p.A. (“Ittierre Accessories”), a company controlled by <strong>IT</strong> <strong>Holding</strong> S.p.A., entered into an agreement with Sergiolin S.p.A. (“Sergiolin”), a minority shareholder in Ittierre Accessories and a manufacturer of leather items and accessories, for the supply of leather goods, models and samples under the Extè trademark for a period of five years, starting with the 2005 Spring-Summer collection. On April 29, 2004, the parties agreed that for the 2005 Spring-Summer collection only, design and development of the collection would be carried out by and the associated costs would be borne by Sergiolin. On July 1, 2003, a contract with the same terms and conditions was entered into by the same parties with regard to the GF Ferré trademark. Sergiolin is controlled by Mr. Sergio Lin, who became managing director of Ittierre Accessories on July 23, 2003. Legal Services We receive legal assistance on a continuing basis from Pavia e Ansaldo – Studio Legale. Antonio Di Pasquale, who serves on the Board of Directors of <strong>IT</strong> <strong>Holding</strong> S.p.A. is a partner of this law firm. The aggregate amount 54
invoiced to us by Pavia e Ansaldo – Studio Legale during 2004 was approximately €0.7 million. In addition, we received legal assistance from Nike – Istituto di Ricerca S.r.l., a company indirectly related to Bruno Assumma, who serves on the Board of Directors of <strong>IT</strong> <strong>Holding</strong> S.p.A. The aggregate amount invoiced to us by Nike S.r.l. during 2004 was approximately €35,000. Loan Agreement On May 31, 2004, GTP <strong>Holding</strong> S.p.A., the holder of a 1.02% interest in our share capital, granted us loans in an aggregate amount of €4.5 million at preferential conditions. We repaid these loans in full by December 31, 2004. 55