AMENDED AND RESTATED
INTERCOMPANY SERVICES AGREEMENT
This Amended and Restated Intercompany Services Agreement ("Agreement"),
dated as of November 1, 1995, between Harcourt General, Inc., a Delaware
corporation ("Harcourt"), and GC Companies, Inc., a Delaware corporation (the
"Company").
WHEREAS, Harcourt has provided corporate services to the Company
pursuant to the Intercompany Services Agreement between Harcourt General and
the Company dated December 14, 1993 (the "Original Agreement");
WHEREAS, Harcourt and the Company wish to terminate the Original
Agreement and provide for the ongoing provision of a reduced and flexible
level of Corporate Services (as defined in paragraph 1 below) by Harcourt to
the Company; and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, Harcourt and the Company hereby agree
as follows:
1. Corporate Services To Be Made Available. For the period provided
for under paragraph 6 hereof, Harcourt agrees to make available to the Company
the services of Xxxxxxx X. Xxxxx, the Company's Chairman and Chief Executive
Officer, and Xxxxxx X. Xxxxx, the Company's President and Chief Operating
Officer, together with such other services as to which the respective Chief
Executive Officers of Harcourt and the Company may from time to time agree
(collectively the "Corporate Services"), on the terms provided herein.
Harcourt and the Company will cooperate in planning the scope and timing
of the Corporate Services provided by Harcourt under this Agreement in order
to minimize or eliminate interference with the conduct of Harcourt's business
activities. If such interference is unavoidable, Harcourt will apportion, in
its sole discretion, the available services in a fair and reasonable manner.
2. Standard of Conduct. In providing Corporate Services to the
Company, Harcourt's officers and employees shall conduct themselves in
accordance with the Company's written policies and procedures. Harcourt will
use reasonable efforts in providing the Corporate Services to the Company and
will perform such services with the same degree of care, skill and prudence
customarily exercised for its own operations. Notwithstanding the foregoing,
in providing such Corporate Services Harcourt and its directors, officers and
employees will not be responsible for and shall have no liability for the
accuracy, completeness or timeliness of any advice or service or any return,
report, filing or other document which it or any of them provides, prepares or
assists in preparing, except to the extent that any inaccuracy, incompleteness
or untimeliness arises from the gross negligence or willful misconduct of
Harcourt or its directors, officers or employees. The Company shall
indemnify, defend and hold harmless Harcourt and its directors, officers and
[page]
employees from and against any and all damage, cost, loss, liability and
expense (including reasonable attorneys' fees) in connection with any and all
actions or threatened actions arising out of the performance of the Corporate
Services hereunder, except in circumstances where the party that would
otherwise be indemnified hereunder is found by a court of competent
jurisdiction to have not met the standard of care described in the preceding
sentence. In no event will Harcourt or its directors, officers or employees
be liable for any indirect, special or consequential damages in connection
with or arising out of the performance of Corporate Services under this
Agreement.
3. Cost of Services.
(a) Promptly following the commencement of the term of this Agreement
Harcourt and the Company shall estimate the probable level of
Corporate Services to be provided under this Agreement and shall
agree upon the amount of the fee to be paid to Harcourt by the
Company for the Company's fiscal year ending October 31, 1996, on
the assumption that such estimated level of Corporate Services
will actually be provided. In determining the fee to be paid,
Harcourt and the Company shall value Corporate Services based on
Harcourt's direct and indirect costs allocable thereto, calculated
in accordance with Harcourt's usual accounting practices.
(b) The Company agrees to pay to Harcourt on the first business day of
each fiscal quarter (except that the payment for the fiscal
quarter beginning November 1, 1995 shall be made promptly after
the initial determination of the fee in accordance with
subparagraph (a)) that portion of the fee, determined initially as
set forth in subparagraph (a) and subject to adjustment in
accordance with subparagraph (c), attributable to the Corporate
Services to be provided by Harcourt during such quarter.
(c) As soon as practicable after the end of fiscal 1996, but in no
event later than January 31, 1997, Harcourt and the Company shall,
based on a detailed review, determine the actual level of
Corporate Services rendered by Harcourt during fiscal 1996 and
make such adjustments in the fee as is necessary to reflect such
level. Harcourt shall cause its employees to keep records of the
time they devote in providing Corporate Services to the Company,
in order to facilitate such review and determination and to permit
a proper adjustment to be made. With the benefit of experience,
Harcourt and the Company shall estimate the level of Corporate
Services to be provided for the Company's fiscal years subsequent
to fiscal 1996, and shall follow the same procedures for payment,
review and adjustment.
(d) The Company also agrees to reimburse Harcourt, within 15 business
days of presentation of invoices therefor, for all reasonable out-
of-pocket expenses incurred by Harcourt in providing Corporate
Services, including expenses for outside professional services
incurred by Harcourt for the benefit of and with the approval of
the Company.
[page] 2
(e) The failure of the Company to make any payment hereunder within 30
days of the date such payment is due shall result in the Company
owing Harcourt interest at the rate of 10% per annum on the amount
due from the date payable to the actual payment date.
4. Requirement of Approval By Independent Directors of the Company.
All determinations on behalf of the Company made pursuant to paragraphs 3 and
6 hereof must be approved by a committee consisting solely of directors of the
Company who are not employed by or otherwise affiliated with Harcourt (the
"Independent Committee"). In carrying out its duties pursuant to this
Agreement, the Independent Committee may retain such independent accountants,
lawyers and other experts as it deems necessary or prudent to retain, and the
expenses of all such professionals shall be reimbursed by the Company.
5. Information and Witnesses. Harcourt shall provide to the Company
and the Company shall provide to Harcourt, upon the other's written request,
at reasonable times, full and complete access to, and duplication rights with
respect to, any and all Information, as defined below, as the other may
reasonably request and require, and Harcourt shall use its best efforts to
make available to the Company, and the Company shall use its best efforts to
make available to Harcourt, upon the other's written request, the officers,
directors, employees and agents of Harcourt and of the Company, respectively,
as witnesses to the extent that such persons may reasonably be required in
connection with any legal, administrative or other proceedings in which the
Company or Harcourt, as the case may be, may from time to time be a party;
provided, however, that neither Harcourt nor the Company need provide any
Information or make available witnesses to the other to the extent that doing
so would (i) unreasonably interfere with the performance by any person of such
person's duties to the party to which a request under this paragraph 5 is made
or otherwise causes unreasonable burden to such party, (ii) result in a waiver
of any attorney-client or work product privilege of such party or its legal
counsel, (iii) require either Harcourt or the Company to provide any
Information which relates to the subject matter of any legal, administrative
or other proceeding in which Harcourt and the Company are adverse parties, or
(iv) result in any breach of any agreement with a third party; and provided,
further, that the party providing Information or making available witnesses
pursuant to this paragraph 5 shall be entitled to receive from the other
party, upon presentation of reasonably detailed invoices therefor, payment of
its reasonable out-of-pocket costs (including reasonable attorneys fees)
incurred in connection with providing Information or making witnesses
available. The term Information as used in this paragraph 5 means any
books, records, contracts, instruments, data, facts and other information in
the possession or under the control of either Harcourt or the Company and
necessary or desirable for use in legal, administrative or other proceedings
or for auditing, accounting or tax purposes.
6. Term of Agreement. This Agreement shall become effective as of
November 1, 1995, shall remain in effect through October 31, 1996, and shall
continue in effect thereafter unless terminated as of the end of a month, with
respect to the performance of Corporate Services in whole or in part, by
either party upon not less than 90 days written notice. Termination of
Corporate Services in part shall not result in the termination of this
[page] 3
Agreement. Termination of Corporate Services in whole shall result in the
termination of this Agreement except that the obligations of the parties under
paragraphs 3, 5 and 9 shall continue after such termination. A final fee
adjustment on the basis described in paragraph 3(c) shall be made within 90
days of the date as of which Corporate Services are terminated in whole. An
appropriate revision of quarterly fees remaining to be paid shall be made
following the date as of which Corporate Services are terminated in part. The
Original Agreement is hereby terminated effective November 1, 1995, provided
that the obligations of Harcourt and the Company in paragraphs 3, 5 and 9 of
the Original Agreement shall continue and shall be subsumed into the
obligations under the same numbered paragraphs of this Agreement.
7. Independence. All employees and representatives of Harcourt
providing the Corporate Services to the Company will be deemed for purposes of
all compensation and employee benefits to be employees or representatives of
Harcourt and not employees or representatives of the Company. In performing
such services such employees and representatives will be under the direction,
control and supervision of Harcourt (and not of the Company) and Harcourt will
have the sole right to exercise all authority with respect to the employment
(including termination of employment), assignment and compensation of such
employees and representatives.
8. Independent Contractor. The relationship of Harcourt to the
Company which is created hereunder is that of an independent contractor. This
Agreement is not intended to create and shall not be construed as creating
between the Company and Harcourt the relationship of affiliate, principal and
agent, joint venture, partnership, or any other similar relationship, the
existence of which is hereby expressly denied.
9. Confidentiality. Any and all information which is not generally
known to the public which is exchanged between the parties in connection with
the performance of this Agreement, whether of a technical or business nature,
shall be considered to be confidential. The parties agree that confidential
information shall not be disclosed to any third party or parties without the
written consent of the other party, except as permitted below. Each party
shall take reasonable measures to protect against disclosure of confidential
information by its officers, employees and agents. Confidential information
shall not include any information (i) which is or becomes part of the public
domain other than as a result of the breach of a party's obligation hereunder,
(ii) which is obtained from third parties who are not bound by confidentiality
obligations or (iii) which is required to be disclosed by law or the rules of
any state or Federal regulatory agency or any securities exchange (including
NASDAQ) on which the Company's or Harcourt's securities might be listed for
trading. The provisions of this section shall survive the termination of this
Agreement.
[page] 4
10. Miscellaneous.
(a) Nonassignability of Agreement. Except by operation of law or in
connection with the sale of all or substantially all the assets of
a party hereto, this Agreement shall not be assignable, in whole
or in part, directly or indirectly, by either party hereto without
the prior written consent of the other, and any attempt to assign
any rights or obligations arising under this Agreement without
such consent shall be void; provided, however, that the provisions
of this Agreement shall be binding upon, inure to the benefit of
and be enforceable by Harcourt and the Company and their
respective successors and permitted assigns.
(b) Further Assurances. Subject to the provisions hereof, each of the
parties hereto shall make, execute, acknowledge and deliver such
other actions and documents as may be reasonably required in order
to effectuate the purposes of this Agreement, and to comply with
all applicable laws, regulations, orders and decrees, and obtain
all required consents and approvals and make all required filings
with any governmental agency, other regulatory or administrative
agency, commission or similar authority, as may be necessary or
desirable in this connection.
(c) Waivers. No failure or delay on the part of Harcourt or the
Company in exercising any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such right, or any abandonment or discontinuance of steps to
enforce such a right, preclude any other or further exercise
thereof or the exercise of any other right. No modification or
waiver of any provision of this Agreement nor consent to any
departure by Harcourt or the Company therefrom shall in any event
be effective unless the same shall be in writing, and then such
waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Any consent or waiver by the
Company under this paragraph 10(c) shall be approved by the
Independent Committee.
(d) Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the transactions
contemplated hereby.
(e) Amendments. Except as provided in paragraph 1 with respect to
changes in the level of Corporate Services which may be agreed by
the respective Chief Executive Officers of Harcourt and the
Company without approval of or authorization by their respective
Boards of Directors, this Agreement may be amended or supplemented
only in writing executed by the parties hereto under authorization
by their respective Boards of Directors (including, in the case of
the Company, the approval of the Independent Committee).
(f) Notices. All notices, approvals and other communications provided
for herein shall be validly given, made or served, if in writing
[page] 5
and delivered personally, by telegram or by telephonic facsimile
transmission, or sent by registered mail, postage prepaid, to:
The Company at: 00 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: President
Harcourt at: 00 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: President
and shall become effective upon receipt.
(g) Governing Law. Despite any different result required by any
conflicts of law provisions, this Agreement shall be governed by
the laws of the Commonwealth of Massachusetts.
(h) Force Majeure. Anything else in this Agreement notwithstanding,
Harcourt shall be excused from performance hereunder while, and to
the extent that, its performance is prevented by fire, drought,
explosion, flood, invasion, rebellion, earthquake, civil
commotion, strike or labor disturbance, governmental or military
authority, act of God, mechanical failure or any other event or
casualty beyond the reasonable control of Harcourt, whether
similar or dissimilar to those enumerated in this paragraph
(hereafter a "Casualty"). In the event of a Casualty, the Company
shall be responsible for making its own alternative arrangements
with respect to the interrupted services.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HARCOURT GENERAL, INC.
/s/ X X Xxxx Xx.
___________________________
Xxxxxx X. Xxxx, Xx.
President and
Chief Executive Officer
GC COMPANIES, INC.
/s/ Xxxxxxx X. Xxxxx
___________________________
Xxxxxxx X. Xxxxx
Chairman and
Chief Executive Officer
[page] 6
