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EXHIBIT 10.17.2
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AMENDMENT TO TAX SHARING AGREEMENT
THIS AMENDMENT TO TAX SHARING AGREEMENT (this "Amendment") is made and
entered into as of August 6, 2001, by and among DELTA WOODSIDE INDUSTRIES,
INC., a South Carolina corporation (together with its successors, "Delta
Woodside"), DELTA APPAREL, INC., a Georgia corporation (together with its
successors, "Delta Apparel"), and DUCK HEAD APPAREL COMPANY, INC., a Georgia
corporation (together with its successors, "Duck Head").
Delta Woodside, Delta Apparel, and Duck Head entered into a Tax Sharing
Agreement, dated as of June 30, 2000 (the "Original Agreement," and as amended,
the "Agreement"). The Original Agreement set forth the rights and obligations of
such parties with respect to the handling and allocation of certain Taxes and of
certain Tax matters. The parties to this Amendment have determined that it would
be in the best interest of each of them to amend the Original Agreement, and to
clarify and otherwise amend certain portions of the Original Agreement.
Capitalized terms not otherwise defined in this Amendment shall have the
definitions given such terms in the Original Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Pre-Distribution and Post-Distribution Tax Assets.
1.1. Delta Woodside Controls Pre-Distribution Tax Assets.
Delta Woodside shall have complete authority, in its discretion, to take all
actions and make all decisions respecting any Tax Assets of the Delta Woodside
Consolidated Group, or of any member of such group, that arise with respect to
any Pre-Distribution Period, provided that Delta Woodside shall not take any
action or make any decision affecting any Tax Asset of the Duck Head Tax Group
or the Delta Apparel Tax Group without first obtaining the consent of Duck Head
or Delta Apparel, respectively, which consent shall not be unreasonably
withheld. The proviso in the preceding sentence shall not apply to any action or
decision reasonably taken or made by Delta Woodside in resolving a Tax
Proceeding, and Delta Woodside shall have no obligation to obtain consent of
Duck Head or Delta Apparel before taking any such action or making any such
decision. Subject to the foregoing, neither Duck Head nor Delta Apparel shall
have any authority with respect to Tax Assets of the Delta Woodside Consolidated
Group, or of any member of such group.
1.2. Duck Head Controls Its Post-Distribution Tax Assets. Duck
Head shall have complete authority, in its discretion, to take all actions and
make all decisions respecting any Tax Assets of the Duck Head Tax Group, or of
any member of such group, that arise with respect to any Post-Distribution
Period. Delta Woodside shall not have any authority with respect to such Tax
Assets of the Duck Head Tax Group, or of any member of such group.
1.3. Delta Apparel Controls Its Post-Distribution Tax Assets.
Delta Apparel shall have complete authority, in its discretion, to take all
actions and make all decisions respecting any Tax Assets of the Delta Apparel
Tax Group, or of any member of such group, that arise with respect to any
Post-Distribution Period. Delta Woodside shall not have any authority with
respect to such Tax Assets of the Delta Apparel Tax Group, or of any member of
such group.
2. Mutual Covenants.
2.1. Delta Woodside Covenants. Except as otherwise provided in
Section 1.1 of this Amendment, Delta Woodside and each other member of the Delta
Woodside Tax Group covenants to each member of the Duck Head Tax Group and the
Delta Apparel Tax Group that on or after the Distribution Date, Delta Woodside
shall not, nor shall it permit any member of the Delta Woodside Tax Group to,
make or change any tax election, change any accounting method, amend any Return,
take any Tax position on any Return, take any action,
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omit to take any action or enter into any transaction that results in an
increased tax liability or reduction of any Tax Asset of the Duck Head Tax Group
or the Delta Apparel Tax Group.
2.2. Duck Head Covenants. Except as otherwise provided in
Section 1.2 of this Agreement, Duck Head and each other member of the Duck Head
Tax Group covenants to each member of the Delta Woodside Tax Group and the Delta
Apparel Tax Group that on or after the Distribution Date, Duck Head shall not,
nor shall it permit any member of the Duck Head Tax Group to, make or change any
tax election, change any accounting method, amend any Return, take any Tax
position on any Return, take any action, omit to take any action or enter into
any transaction that results in an increased tax liability or reduction of any
Tax Asset of the Delta Woodside Tax Group or the Delta Apparel Tax Group. These
covenants are in lieu of the covenants made to each member of the Delta Woodside
Tax Group and each member of the Delta Apparel Tax Group in the first sentence
of Section 4.02 of the Original Agreement.
2.3. Delta Apparel Covenants. Except as otherwise provided in
Section 1.3 of this Amendment, Delta Apparel and each other member of the Delta
Apparel Tax Group covenants to each member of the Delta Woodside Tax Group and
the Duck Head Tax Group that on or after the Distribution Date, Delta Apparel
shall not, nor shall it permit any member of the Delta Apparel Tax Group to,
make or change any tax election, change any accounting method, amend any Return,
take any Tax position on any Return, take any action, omit to take any action or
enter into any transaction that results in an increased tax liability or
reduction of any Tax Asset of the Delta Woodside Tax Group or the Duck Head Tax
Group. These covenants are in lieu of the covenants made to each member of the
Delta Woodside Tax Group and each member of the Duck Head Tax Group in the first
sentence of Section 4.01 of the Original Agreement.
3. Mutual Indemnification.
3.1. Indemnification by Delta Woodside. Delta Woodside and
each other member of the Delta Woodside Tax Group shall jointly and severally
indemnify Duck Head, other members of the Duck Head Tax Group, Delta Apparel,
and other members of the Delta Apparel Tax Group, against and hold them harmless
from liability for Taxes with respect to any Pre-Distribution Period, including
without limit liability resulting from the Intercompany Reorganization, the
Distribution, the existence of any excess loss account, or intercompany
transactions. The indemnities in this Section 3.1 are in lieu of the indemnities
made to Duck Head, the other members of the Duck Head Tax Group, Delta Apparel,
and the other members of the Delta Apparel Group, in Section 7.01 of the
Original Agreement. The reference in the Original Agreement to Section 7.01 or
Article 7 of the Original Agreement shall be interpreted to apply also to this
Section 3.1.
3.2. Indemnification by Duck Head. Section 7.03 of the
Original Agreement shall be of no force or effect. Duck Head and each other
member of the Duck Head Tax Group shall jointly and severally indemnify Delta
Woodside, other members of the Delta Woodside Tax Group, Delta Apparel, and
other members of the Delta Apparel Tax Group, against and hold them harmless
from:
(i) Liability for Taxes of Duck Head or any member of the Duck
Head Tax Group with respect to any Post-Distribution Period;
and
(ii) Liability for Taxes with respect to any Pre-Distribution
Period, to the extent that Duck Head or any member of the Duck
Head Tax Group Effectively Realizes a Tax Asset, equal to such
liability, in excess of any Tax Asset allocated to Duck Head
in connection with the Distribution.
The indemnities in this Section 3.2 are in lieu of the indemnities made to Delta
Woodside, the other members of the Delta Woodside Tax Group, Delta Apparel, and
the other members of the Delta Apparel Group, in Section 7.01 of the Original
Agreement. The reference in the Original Agreement to Section 7.01 or Article 7
of the Original Agreement shall be interpreted to apply also to this Section
3.2.
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3.3. Indemnification by Delta Apparel. Section 7.02 of the
Original Agreement shall be of no force or effect. Delta Apparel and each other
member of the Delta Apparel Tax Group shall jointly and severally indemnify
Delta Woodside, other members of the Delta Woodside Tax Group, Duck Head, and
other members of the Duck Head Tax Group, against and hold them harmless from:
(i) Liability for Taxes of Delta Apparel or any member of the
Delta Apparel Tax Group with respect to any Post-Distribution
Period; and
(ii) Liability for Taxes with respect to any Pre-Distribution
Period, to the extent that Delta Apparel or any member of the
Delta Apparel Tax Group Effectively Realizes a Tax Asset,
equal to such liability, in excess of any Tax Asset allocated
to Delta Apparel in connection with the Distribution.
The indemnities in this Section 3.3 are in lieu of the indemnities made to Delta
Woodside, the other members of the Delta Woodside Tax Group, Duck Head, and the
other members of the Duck Head Group, in Section 7.01 of the Original Agreement.
The reference in the Original Agreement to Section 7.01 or Article 7 of the
Original Agreement shall be interpreted to apply also to this Section 3.3.
4. Arbitration. The parties agree that Section 10.02 of the
Original Agreement, which states in part that Delta Woodside shall resolve any
dispute or disagreement relating to the Original Agreement, is of no force or
effect. All disputes arising under the Agreement (other than claims in equity)
shall be resolved by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. Arbitration shall be by a single
arbitrator experienced in the matters at issue and selected by the parties to
such dispute in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The Agreement shall be construed and interpreted
according to the ordinary meaning of the words used so as fairly to accomplish
the purposes and intentions of all parties hereto. The arbitration shall be held
in such place in Greenville, South Carolina as may be specified by the
arbitrator (or any place agreed to by the parties to the dispute). The decision
of the arbitrator shall be final and binding as to any matters submitted
hereunder; provided, however, if necessary, such decision and satisfaction
procedure may be enforced by either party to such dispute in any court of record
having jurisdiction over the subject matter or over any of the parties to the
Agreement. All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys fees) shall be borne by
the party against which the decision is rendered, or, if no decision is
rendered, such costs and expenses shall be borne equally by the parties to such
dispute. If the arbitrator's decision is a compromise, the determination of
which party or parties bears the costs and expenses incurred in connection with
any such arbitration proceeding shall be made by the arbitrator on the basis of
the arbitrator's assessment of the relative merits of the parties' positions.
5. Agreement Limited to Tax Matters. The Agreement shall not be
construed to apply to any matters other than matters related to Taxes.
6. Amendments. This Amendment may be further amended only if such
further amendment is in writing and signed by all parties.
7. Other Provisions of the Original Agreement. All provisions of
the Original Agreement not inconsistent with this Amendment shall continue to
have full force and effect, and shall apply as if separately stated in this
Amendment.
SIGNATURES ON FOLLOWING PAGE
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IN WITNESS WHEREOF the parties hereto have caused this Amendment to Tax
Sharing Agreement to be duly executed as of the date first written above.
DELTA WOODSIDE INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: President and Chief Executive Officer
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DELTA APPAREL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxx
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Title: President and CEO
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DUCK HEAD APPAREL COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: Chairman, President, and CEO
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