EXHIBIT 2.21
TAX SHARING AGREEMENT
AGREEMENT made as of August 13, 1999, by and among Intersil Holding
Corporation, a Delaware corporation ("Holding"), Intersil Corporation, a
Delaware corporation, and Choice Microsystems, Inc., a Kansas corporation (each
corporation other than Holding, a "Subsidiary"; and the Subsidiaries together,
the "Subsidiaries").
WHEREAS, Holding and the Subsidiaries join in the filing of a consolidated
federal income tax return for a group of affiliated companies of which Holding
is the common parent (the "Consolidated Group"); and
WHEREAS, the Consolidated Group wishes to establish a policy for the
sharing of federal income and certain state taxes; and
WHEREAS, the Consolidated Group wishes to establish procedures for making
payments or remitting funds due under this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound, each of the members of the Consolidated Group
agrees as follows:
I. SHARING OF CONSOLIDATED FEDERAL INCOME TAX
A. Liability. For each taxable period in which a Subsidiary is a member of
the Consolidated Group, such Subsidiary agrees to pay to Holding, for each
taxable year during the term of this Agreement, an amount equal to the greater
of:
1. the Separate Taxable Income (as defined below) of such Subsidiary
(but not less than 0) multiplied by the effective income tax rate under Section
11 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor provision, applicable to the Separate Taxable Income of such
Subsidiary on a stand-alone basis, or
2. the Alternative Minimum Tax Liability (as defined below) of such
Subsidiary.
B. Loss Carryback. Holding agrees to pay a Subsidiary (or credit a
Subsidiary against other payments due from such Subsidiary hereunder) without
interest an amount equal to the reduction of such Subsidiary's payment
obligation for a taxable year under paragraph I. A. that results from the
application of a loss carryback to such taxable year in reduction of such
Subsidiary's Separate Taxable Income for such year.
C. Separate Taxable Income. For purposes of this Agreement, the Separate
Taxable Income of a Subsidiary for a taxable year shall be its taxable income
for such year determined as
if such Subsidiary were not a member of the Consolidated Group and after
applying any loss carryback or carryforward to that year as provided in
paragraph I.F.
D. Alternative Minimum Tax Liability. For purposes of this Agreement, the
Alternative Minimum Tax Liability of a Subsidiary for a taxable year shall equal
the sum of the amount of tax imposed by Section 55(a) of the Code, or any
successor provision, and such Subsidiary's "regular tax" liability, as that term
is used in Section 55(a) of the Code. All determinations under this paragraph
I.D. shall be made as if such Subsidiary were not a member of the Consolidated
Group.
E. Subsequent Adjustments. In the event that the Separate Taxable Income or
Alternative Minimum Tax Liability of a Subsidiary is adjusted by reason of an
amended return, claim for refund, or examination by the Internal Revenue
Service, the amount due from such Subsidiary under paragraph I.A. shall be
recomputed using the adjusted Separate Taxable Income or Alternative Minimum Tax
Liability. Each Subsidiary agrees to pay to Holding any additional amount owed
including statutory interest at the rate applicable to underpayments of the
Consolidated Group, and Holding agrees to pay to each Subsidiary any overpayment
made by such Subsidiary including statutory interest at the rate applicable to
overpayments of the Consolidated Group.
F. Loss Year. In the event that a Subsidiary's Separate Taxable Income for
a taxable year is negative (the "Loss"), the Loss shall be carried back and
carried forward to prior and subsequent taxable years in the manner provided
under and subject to the limits contained in Section 172(b) of the Code, or any
successor provision (as in effect in the year in which the Loss arises). Such
loss carrybacks or carryforwards shall reduce, dollar for dollar, such
Subsidiary's Separate Taxable Income in the taxable year to which the Loss is
carried back or forward.
II. PAYMENT PROCEDURE
A. Current Year Tax Liability of Subsidiary. Payments to be made by a
Subsidiary to Holding pursuant to paragraph I.A. with respect to any taxable
year shall be made in installments, as set forth in this paragraph.
1. Quarterly Installments. Within two (2) business days before the date
each quarterly payment of the Consolidated Group's estimated tax is due, each
Subsidiary will pay to Holding an amount equal to the greater of (i) the product
of such Subsidiary's estimated Separate Taxable Income for the quarter (but not
less than 0) multiplied by the highest marginal corporate tax rate provided in
Section 11 of the Code, or successor provision, or (ii) one-fourth of such
Subsidiary's estimated Alternative Minimum Tax Liability for the taxable year.
2. Final Installment. Within five (5) business days after a Subsidiary
has received from Holding a final calculation of such Subsidiary's liability
under paragraph I.A., derived from the Consolidated Group's federal income tax
return for the relevant taxable year, such Subsidiary will pay to Holding the
excess, if any, of the Subsidiary's liability pursuant to
2
paragraph I.A. over the sum of all payments with respect to such year made by
such Subsidiary pursuant to paragraph II.A.1. If the sum of the payments with
respect to such year made by such Subsidiary pursuant to paragraph II.A.1.
exceeds such Subsidiary's liability pursuant to paragraph I.A., then Holding
shall refund the difference to such Subsidiary within five (5) days or credit
such amount against any payment owned by such Subsidiary under paragraph II.A.1.
for a later taxable year.
B. Payment of Subsequent Adjustments. Payments to be made by a
Subsidiary to Holding pursuant to paragraph I.E. shall be made within thirty
(30) days after such Subsidiary has received from Holding a copy of the filed
amended return or an agreement in writing with the Internal Revenue Service
reflecting adjustments. Payments made by Holding to a Subsidiary pursuant to
paragraphs I.B. or I.E. shall be made (i) in the case of paragraph I.B. only,
within thirty (30) days after the filing of the consolidated return for the year
that includes a Loss that is carried back pursuant to paragraph I.F. and (ii) in
the case of paragraph I.E. only, within thirty (30) days after receipt by
Holding of a refund, or offset against adjustments of the Consolidated Group,
resulting from the filing of a return, an amended return, Form 1139 Corporation
Application for Tentative Refund, or agreement in writing with the Internal
Revenue Service reflecting adjustments.
III. STATE TAXES
A. To the extent appropriate, rules similar to the provisions of Sections I
and II of this Agreement shall be applied to the payment of state franchise or
income tax liabilities to which the Subsidiaries and Holding, and, if applicable
state law provides, Xxxxxx Semiconductor, LLC, Xxxxxx Semiconductor (Ohio), LLC
and Xxxxxx Semiconductor (Pennsylvania), LLC, are subject and which are required
to be determined on a unitary, combined or consolidated basis. In applying the
principles of Section I, the applicable state rules and limits on the use of
loss carrybacks and loss carryovers shall govern.
IV. TERM
A. This Agreement shall be effective as of the date first set forth above
and shall continue thereafter until the parties hereto terminate this Agreement
by mutual consent.
V. OTHER MATTERS
A. Method of Allocation. This Agreement shall have no effect on, and shall
not be affected by, the method of allocation of tax liability among members of
the Consolidated Group applicable to the Consolidated Group pursuant to Section
1552 of the Code.
B. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be given by hand delivery, facsimile,
commercial courier service with guaranteed one-day delivery, or prepaid first
class mail to the following addresses:
3
If to Holding:
Intersil Holding Corporation
0000 Xxxx Xxx Xxxx XX
Building 53 M/S 53/198
XxxxXxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
If to Intersil Corporation:
Intersil Corporation
0000 Xxxx Xxx Xxxx XX
Building 53 M/S 53/198
XxxxXxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
If to Choice Microsystems, Inc.
Choice Microsystems, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
C. Successors. This Agreement shall be binding on and inure to the benefit
of any successor, by merger, acquisition of assets or otherwise, to any of the
parties hereto (including but not limited to any successor of Holding or any
Subsidiary succeeding to their tax attributes under Section 381 of the Code) to
the same extent as if the successor had been an original party to this
Agreement.
D. Amendments. This Agreement shall not be modified, amended, supplemented
or terminated except in a writing executed by all parties hereto.
4
E. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the state of Delaware.
Intersil Holding Corporation
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxx
Intersil Corporation
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxx
Choice Microsystems, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxx
