ex10_1.htm


    
      


       

      
        

        

      

      AMENDED
STRATEGIC INVESTMENT PROGRAM CONTRACT

       

      


       

      


       

      BETWEEN

       

      


       

      


       

      MULTNOMAH
COUNTY, OREGON,

       

      


       

      CITY OF
GRESHAM, OREGON,

       

      


       

      AND

       

      


       

      MICROCHIP
TECHNOLOGY INCORPORATED

       

      


       

      


       

      June 8,
2009

       

       

       

      
         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE OF
CONTENTS

       

      


      
        	
                I.

              	 
      	
                RECITALS.

                 

              	
                1

              
	
                II.

              	 
      	
                LIMITATIONS
      ON QUALIFICATION OF PROJECT FOR EXEMPTION; FUTURE EXEMPTIONS.

                 

              	
                2

              
	 
      	
                A.

              	
                Limitations.

                 

              	
                2

              
	 
      	
                B.

              	
                Schedule
      Shows Maximum Benefits; Exemption Approved under Extraordinary
      Circumstances, Future Exemptions.

                 

              	
                3

              
	 
      	
                C.

              	
                Verification
      of Factual Assumptions.

                 

              	
                3

              
	
                III.

              	 
      	
                STATUTORY
      OBLIGATIONS OF MCHP.

                 

              	
                3

              
	 
      	
                A.

              	
                Payment
      of CSF.

                 

              	
                3

              
	 
      	
                B.

              	
                First
      Source Agreement.

                 

              	
                4

              
	
                IV.

              	 
      	
                ADDITIONAL
      OBLIGATIONS OF MCHP TO MEET COUNTY SIP STANDARDS AND GOALS.

                 

              	
                5

              
	 
      	
                A.

              	
                Hiring,
      Wages, Benefits,
      Training and Retention.

                 

              	
                5

              
	 
      	
                B.

              	
                Transportation.

                 

              	
                10

              
	 
      	
                C.

              	
                Infrastructure
      and Public Services.

                 

              	
                10

              
	 
      	
                D.

              	
                Environmental
      Protection.

                 

              	
                10

              
	 
      	
                E.

              	
                Job
      Training.

                 

              	
                11

              
	 
      	
                F.

              	
                Procure
      Locally Produced or Sold Goods and Services.

                 

              	
                12

              
	
                V.

              	 
      	
                MCHP
      REPORTING REQUIREMENTS.

                 

              	
                13

              
	 
      	
                A.

              	
                MCHP
      to Report Contract Compliance to County.

                 

              	
                13

              
	 
      	
                B.

              	
                Cooperation
      With Oregon Department of Revenue.

                 

              	
                15

              
	
                VI.

              	 
      	
                OBLIGATIONS
      OF COUNTY AND CITY.

                 

              	
                16

              
	 
      	
                A.

              	
                Findings.

                 

              	
                16

              
	 
      	
                B.

              	
                The
      County and City Agree as Follows:

                 

              	
                16

              


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                VII.

              	 
      	
                BREACH;
      DEFAULT; REMEDIES OF THE COUNTY.

                 

              	
                16

              
	 
      	
                A.

              	
                Dispute
      Resolution Procedure.

                 

              	
                16

              
	 
      	
                B.

              	
                Force
      Majeure.

                 

              	
                19

              
	 
      	
                C.

              	
                Failure
      to Comply with Numerically Ascertainable Terms.

                 

              	
                19

              
	 
      	
                D.

              	
                Sanctions.

                 

              	
                19

              
	 
      	
                E.

              	
                Limitations.

                 

              	
                21

              
	 
      	
                F.

              	
                Allocation
      of Funds Paid by MCHP for Failure to Comply with Agreement.

                 

              	
                21

              
	
                VIII.

              	 
      	
                REMEDIES
      OF MCHP.

                 

              	
                21

              
	
                IX.

              	 
      	
                TERM
      OF AGREEMENT.

                 

              	
                21

              
	
                X.

              	 
      	
                MISCELLANEOUS
      TERMS.

                 

              	
                22

              
	 
      	
                A.

              	
                Discrimination.

                 

              	
                22

              
	 
      	
                B.

              	
                Public
      Contracts.

                 

              	
                22

              
	 
      	
                C.

              	
                Governing
      Law.

                 

              	
                22

              
	 
      	
                D.

              	
                Complete
      Agreement.

                 

              	
                22

              
	 
      	
                E.

              	
                CSF
      Payments Not Property Taxes.

                 

              	
                22

              
	 
      	
                F.

              	
                Compliance
      Relevant to Future Approvals.

                 

              	
                23

              
	 
      	
                G.

              	
                Lease
      or Sublease of the Premises.

                 

              	
                23

              
	 
      	
                H.

              	
                Successors
      and Assigns.

                 

              	
                23

              
	 
      	
                I.

              	
                Good
      Faith Contests Permitted.

                 

              	
                23

              
	 
      	
                J.

              	
                Validity
      of County Obligations.

                 

              	
                23

              
	 
      	
                K.

              	
                Counterparts.

                 

              	
                23

              


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      City of Gresham Contract No. 1909

      Amendment No. 1

       

      AMENDED
AGREEMENT

       

      This
Amended Agreement is by and between Multnomah County (the
“County”), the City of Gresham (the “City”) and Microchip Technology
Incorporated (“MCHP”), 2355 West Chandler Blvd., Chandler, Arizona
85224-6199.

       

      I.     RECITALS.

       

      
        	
                 
      

              	
                A.

              	
                MCHP
      has requested that the County approve an extension of the term of the
      August 15, 2002, Strategic Investment Program Agreement, providing a
      partial property tax exemption for its facility in Gresham, Oregon, from
      seven (7) years to fifteen (15)
years.

              


      

       

      
        	
                 
      

              	
                B.

              	
                ORS
      285B.380 to 285B.392 (2001) describes the process in place in 2002 for
      obtaining the Strategic Investment Program (“SIP”) partial tax exemption
      which is described in ORS 307.123.  The Strategic Investment
      Program exemption requires the owner to pay property tax on the first one
      hundred million dollars ($100,000,000) of value of the facilities which
      receives the exemption; that taxable base increases each year by three
      percent.  The exemption is temporary, lasting no longer than 15
      years.

              


      

       

      
        	
                 
      

              	
                C.

              	
                On,
      August 23, 2002, by Resolution (attached as Exhibit 1), the Oregon
      Economic and Community Development Commission, at the request of the
      Multnomah Board of County Commissioners, approved the MCHP facilities as
      an “eligible project.”

              


      

       

      
        	
                 
      

              	
                D.

              	
                MCHP
      seeks an extension of the original seven (7) year term of the Agreement to
      fifteen (15) years because it is contemplating additional investment in
      equipment at the facilities.  The partial tax exemption of ORS
      307.123 would provide an economic benefit to the company, which would
      allow it to retain employees and, perhaps, hire additional
      employees.  The capped total assessed value of the Project would
      remain at $490 million.  Without an extension of the SIP partial
      tax exemption, MCHP would not be able to make the additional investments
      in improvements at the Gresham, OR Project, and it is in danger of
      becoming an obsolete facility.

              


      

       

      
        	
                 
      

              	
                E.

              	
                The
      County and the City have approved the terms of this Agreement, which
      contains the amended provisions relating to the SIP and the partial tax
      exemption for the Project.

              


      

       

      
        	
                 
      

              	
                F.

              	
                MCHP
      intends to remain an exemplary corporate citizen.  The County
      and City understand that, to be an exemplary corporate citizen, MCHP must
      be able to operate the Project in a competitive manner responsive to
      semiconductor industry conditions.  This Agreement therefore
      adjusts or conditions certain of MCHP’s obligations upon conditions in the
      semiconductor industry, demand for product produced at the Project, and
      other factors which are beyond MCHP’s control.  The parties
      acknowledge that, if doubt arises about the nature or extent of MCHP’s
      obligations under this Agreement, this Agreement should be interpreted in
      a manner that allows MCHP to operate the Project competitively while
      meeting the County’s goals.

              


      

       

       

      
        
          
          

        

        
          Amended Strategic Investment
Program Contract - 1 of 24

          
            

          

        

        
          
          

        

      

       

      
        Now
therefore, in consideration of the following mutual promises, the parties agree
as follows:

         

      

      
        
        

      

      II.           LIMITATIONS
ON QUALIFICATION OF PROJECT FOR EXEMPTION; FUTURE EXEMPTIONS.

       

      A.           Limitations.

       

      The
Project consists of the purchase, improvement and equipping of FMI’s facilities
in Gresham, Oregon.  Only $490 million of assessed value of the
Project will be eligible for the exemption, and any assessed value at the
Project during the term of this Agreement which exceeds $490 million shall not
be eligible for the SIP exemption.  The Project shall receive the SIP
exemption for fifteen fiscal years, commencing with County fiscal year 2003-04,
and this Agreement and MCHP’s SIP partial tax exemption shall terminate on June
30, 2018.

      


      The
maximum investments which MCHP expects to make, and the tax years in which those
investments will appear on the tax rolls, are estimated to be:

      


      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              
                                                                                                                                
                                                                                                                                  
                                                                                                                                    
                                                                                                                                      
                                                                                                                                        
                                                                                                                                          	
                                                                                                                                                  County
      Tax Year

                                                                                                                                                	 	
                                                                                                                                                  7/1/10-6/30/11

                                                                                                                                                	 	 	
                                                                                                                                                  7/1/11-6/30/12

                                                                                                                                                	 	 	
                                                                                                                                                  7/1/12-6/30/13

                                                                                                                                                	 	 	
                                                                                                                                                  7/1/13-6/30/14

                                                                                                                                                	 
	
                                                                                                                                                  Lien
      Date

                                                                                                                                                	 	
                                                                                                                                                  1/1/2010

                                                                                                                                                	 	 	
                                                                                                                                                  1/1/2011

                                                                                                                                                	 	 	
                                                                                                                                                  1/1/2012

                                                                                                                                                	 	 	
                                                                                                                                                  1/1/2013

                                                                                                                                                	 
	
                                                                                                                                                   

                                                                                                                                                  Initial
      Investment

                                                                                                                                                	 	 	180,000,000	 	 	 	180,000,000	 	 	 	180,000,000	 	 	 	180,000,000	 
	
                                                                                                                                                  Facilities/Site
      Work

                                                                                                                                                	 	 	8,421,593	 	 	 	11,421,593	 	 	 	14,421,593	 	 	 	17,421,593	 
	
                                                                                                                                                  Manufacturing
      Equipment

                                                                                                                                                	 	 	52,529,557	 	 	 	65,529,557	 	 	 	78,529,557	 	 	 	91,529,557	 
	
                                                                                                                                                  Total
      Value of Assets

                                                                                                                                                	 	 	240,951,150	 	 	 	256,951,150	 	 	 	272,951,150	 	 	 	288,845,444	 
	
                                                                                                                                                  Estimated
      Accumulated

                                                                                                                                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                                                                  Depreciation

                                                                                                                                                	 	 	(11,857,711	)	 	 	(19,762,281	)	 	 	(30,178,279	)	 	 	(43,105,706	)
	
                                                                                                                                                  Total
      Assessed Value

                                                                                                                                                	 	 	229,093,439	 	 	 	237,188,869	 	 	 	242,772,871	 	 	 	245,845,444	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                                                                   

                                                                                                                                                  SIP
      Floor

                                                                                                                                                	 	 	122,987,387	 	 	 	126,677,008	 	 	 	130,477,318	 	 	 	134,391,638	 
	
                                                                                                                                                  Property
      Taxes

                                                                                                                                                	 	 	1,952,585	 	 	 	2,011,162	 	 	 	2,071,497	 	 	 	2,133,642	 
	
                                                                                                                                                  CSF

                                                                                                                                                	 	 	421,143	 	 	 	438,630	 	 	 	445,709	 	 	 	442,369	 
	
                                                                                                                                                  Total
      Payments by MCHP

                                                                                                                                                	 	 	2,373,728	 	 	 	2,449,792	 	 	 	2,517,207	 	 	 	2,576,010	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                                                                  SIP
      Benefits to MCHP

                                                                                                                                                	 	 	1,263,429	 	 	 	1,315,890	 	 	 	1,337,128	 	 	 	1,327,106	 
	
                                                                                                                                                   
      

                                                                                                                                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                                                                  County
      Tax Year

                                                                                                                                                	 	
                                                                                                                                                  7/1/14-6/30/15

                                                                                                                                                	 	 	
                                                                                                                                                  7/1/15-6/30/16

                                                                                                                                                	 	 	
                                                                                                                                                  7/1/16-6/30/17

                                                                                                                                                	 	 	
                                                                                                                                                  7/1/17-6/30/18

                                                                                                                                                	 
	
                                                                                                                                                  Lien
      Date

                                                                                                                                                	 	
                                                                                                                                                  1/1/2014

                                                                                                                                                	 	 	
                                                                                                                                                  1/1/2015

                                                                                                                                                	 	 	
                                                                                                                                                  1/1/2016

                                                                                                                                                	 	 	
                                                                                                                                                  1/1/2017

                                                                                                                                                	 
	
                                                                                                                                                   

                                                                                                                                                  Initial
      Investment

                                                                                                                                                	 	 	180,000,000	 	 	 	180,000,000	 	 	 	180,000,000	 	 	 	180,000,000	 
	
                                                                                                                                                  Facilities/Site
      Work

                                                                                                                                                	 	 	20,521,593	 	 	 	23,421,593	 	 	 	26,421,593	 	 	 	29,421,593	 
	
                                                                                                                                                  Manufacturing
      Equipment

                                                                                                                                                	 	 	104,529,557	 	 	 	117,529,557	 	 	 	130,529,557	 	 	 	143,529,557	 
	
                                                                                                                                                  Total
      Value of Assets

                                                                                                                                                	 	 	304,951,150	 	 	 	320,951,150	 	 	 	336,951,150	 	 	 	352,951,150	 
	
                                                                                                                                                  Estimated
      Accumulated

                                                                                                                                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                                                                  Depreciation

                                                                                                                                                	 	 	(58,544,562	)	 	 	(75,234,846	)	 	 	(93,176,558	)	 	 	(106,019,416	)
	
                                                                                                                                                  Total
      Assessed Value

                                                                                                                                                	 	 	246,406,588	 	 	 	245,716,304	 	 	 	243,774,592	 	 	 	246,931,734	 
	
                                                                                                                                                   

                                                                                                                                                  SIP
      Floor

                                                                                                                                                	 	 	138,423,387	 	 	 	142,576,089	 	 	 	146,853,371	 	 	 	151,258,972	 
	
                                                                                                                                                  Property
      Taxes

                                                                                                                                                	 	 	2,197,651	 	 	 	2,263,581	 	 	 	2,331,488	 	 	 	2,401,433	 
	
                                                                                                                                                  CSF

                                                                                                                                                	 	 	428,593	 	 	 	409,371	 	 	 	384,688	 	 	 	379,732	 
	
                                                                                                                                                  Total
      Payments by MCHP

                                                                                                                                                	 	 	2,626,245	 	 	 	2,672,952	 	 	 	2,716,176	 	 	 	2,781,165	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                                                                  SIP
      Benefits to MCHP

                                                                                                                                                	 	 	1,285,780	 	 	 	1,228,114	 	 	 	1,154,063	 	 	 	1,139,197	 


                                                                                                                                        

                                                                                                                                      

                                                                                                                                    

                                                                                                                                  

                                                                                                                                

                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
 

      
        
          
          

        

        
          Amended Strategic Investment
Program Contract - 2 of 24

          
            

          

        

        
          
          

        

      

       

      
        	
                B.

              	
                Schedule
      Shows Maximum Benefits; Exemption Approved under Extraordinary
      Circumstances, Future Exemptions.

              


      

       

      
        	
                 
      

              	
                1.

              	
                This
      schedule of investments is an estimate of the maximum level of investment
      which MCHP currently expects it will make at the
      Project.  Actual investments at the Project may be substantially
      less, reducing the associated SIP benefit to MCHP.
  

              


      

       

      
        	
                 
      

              	
                2.

              	
                This
      SIP exemption for MCHP is being approved under extraordinary
      circumstances: the economy has been in recession, jobs have been lost.
      MCHP is asking for an extension of the SIP agreement to meet its eight
      year planning horizon.  MCHP may make significant improvements
      at the Project site which would qualify for the SIP partial tax
      exemption.

              


      

       

      C.           Verification
of Factual Assumptions.

       

      
        	
                 
      

              	
                1.

              	
                MCHP
      has agreed to pay the County a SIP processing fee which is equal to the
      County’s costs for contract preparation, but does not exceed
      $5000.

              


      

       

      This sum
shall be paid to the County within six months following the approval of the
Amended SIP Agreement by the Board of County Commissioners.

       

      III.           STATUTORY
OBLIGATIONS OF MCHP.

       

      A.           Payment
of CSF.

       

      1.         Amount.

       

      For each
year in which MCHP receives the Property Tax Abatement, MCHP shall pay to the
County a Community Service Fee (CSF), as provided by ORS 285C.609(4)(b)(B),
equal to 25 percent of the property taxes abated in such tax year, but not
exceeding $2 million.

       

      2.         By
November 15.

       

      The CSF
payment shall be made to the County Finance Manager no later than November 15 of
each year, commencing with November 15, 2003.  However, MCHP shall not
be required to pay the CSF before ten business days after MCHP receives the
invoice described in Section III.A.3, below.  

       

       

      
        
          
          

        

        
          Amended Strategic Investment
Program Contract - 3 of 24

          
            

          

        

        
          
          

        

      

       

      Payment
shall be made based on an invoice submitted by the County to MCHP in such form
and according to such method as shall be agreed to by the parties prior to
November
15 of the tax year in which the Project is assessed and taxed. The payment shall
be sent to:

       

      


      
        
          	 
      	
                  Mindy
      Harris

                
	
                  Position
      Title:

                	
                  Chief
      Financial Officer

                
	
                  Address:

                	
                  Multnomah
      County, Oregon

                
	 
      	
                  501
      SE Hawthorne Blvd, 4th
      Floor

                
	 
      	
                  PO
      Box 14700

                
	 
      	
                  Portland,
      Oregon 97293

                


        

      

       

      3.         Statement
30 Days in Advance

       

      The
County shall provide MCHP with a statement of the CSF due no less than 30 days
prior to the due date.

       

      4.         Adjustments

       

      If the
assessed value of the Project is adjusted after November 15 of any tax year in
such a manner that property taxes due from MCHP for that year are reduced, and
the reduction reduces the CSF for that year, the County shall pay the amount of
the reduction to MCHP, together with interest at the rate established by law for
tax refunds (ORS 311.505(2)) from the date of payment of the CSF.  If
the County does not pay the amount by November 10 of the following year, MCHP
may withhold the unpaid amount, plus interest as provided in this Section, from
subsequent CSF payments due from MCHP under this Agreement.  If the
remaining CSF payments due from MCHP are less than the amount owed by the County
to MCHP under this Section, the County shall pay the amount due to MCHP not
later than December 15 of the year following the year in which the reduction
occurs.  An appeal of the assessed value does not defer the payment of
the CSF.  The CSF shall be paid as set out in paragraph 2
above.  Any adjustments based on the outcome of the appeal shall be in
accord with this paragraph.

       

      5.         Nonpayment
of CSF.

       

      In
compliance with ORS 307.123(b)(6), if MCHP fails to pay the CSF fee required by
ORS 285C.609(4)(b)(B), by the end of the tax year in which it is due, the tax
exemption shall be revoked and the property shall be fully taxable for the
following tax year for which the fee remains unpaid.  It is agreed
that MCHP shall pay the CSF for a total of fifteen (15) years.

       

      B.           First
Source Agreement.

       

      To target
the County’s unemployed and underemployed population and comply with the
requirements of ORS 285C.606(5), MCHP entered into an Exclusive Full-Service
First Source Hiring Agreement (FSA), with the Multnomah County or its designated
contact agency(s) as defined
in OAR 123-070-1100.  MCHP will execute the template FSA adopted by the
County and the City for the Gresham Strategic Investment Zone # 1.  An
executed copy of the new FSA is attached to this Agreement as Exhibit
2.  Compliance with the terms of the new FSA is a requirement of this
agreement.

       

       

      
        
          
          

        

        
          Amended Strategic Investment
Program Contract - 4 of 24

          
            

          

        

        
          
          

        

      

       

      
        	
                IV.

              	
                ADDITIONAL
      OBLIGATIONS OF MCHP TO MEET COUNTY SIP STANDARDS AND
  GOALS.

              


      

       

      In
consideration of the County’s and City’s actions to approve a SIP exemption for
the Project, MCHP agrees to fill the role of an exemplary corporate citizen in
Multnomah County as provided in this Agreement.  Such a citizen helps
prepare the unemployed and underemployed, including the emerging workforce from
local high schools, community colleges, and universities, for entry level jobs
which provide career paths, family wages, and excellent benefits, including
childcare referrals and negotiations of group rates, which help assure the
success of the employee in those jobs.  An exemplary corporate citizen
also leads the business community by progressing toward a goal to have no
negative impact on the environment through state-of-the-art transportation and
environmental programs.  And, an exemplary corporate citizen
positively affects the educational and economic well-being of the community in
which it resides by directing its efforts and resources to the benefit of its
community’s citizens and businesses.  By meeting the performance
requirements specified in this Agreement, MCHP will meet its responsibilities as
an exemplary corporate citizen.

       

      A.           Hiring,
Wages, Benefits, Training and Retention.

       

      County
goals:

       

      To create
long term jobs with family wages, benefits and working conditions for County
residents or creation of a full spectrum of jobs for residents of Multnomah
County who are unemployed or underemployed, with a clear career track from
entry-level jobs to family wage jobs.

       

      To
provide educational opportunities to enhance upward mobility for both technical
and management roles.

       

      To
minimize the number of contracted on-site jobs that pay low wages.

       

      MCHP
acknowledges these County goals and agrees to take the following actions in
support of those goals:

       

      1.         Local
Hiring.

       

      MCHP’s
goal is to hire many local candidates.  MCHP will focus on previous
employees who have directly related semiconductor fabrication
experience.  Once MCHP has exhausted those rehiring possibilities,
MCHP will work with WorkSystems, Inc. or other provider appointed by the County,
to find more qualified candidates.

       

       

      
        
          
          

        

        
          Amended Strategic Investment
Program Contract - 5 of 24

          
            

          

        

        
          
          

        

      

       

      2.         Retention
of Existing Jobs and New Hires.

       

      a.         Number
of Jobs.

       

      MCHP
currently projects that, at a minimum, the following jobs will be retained or
created at the Project (totals refer to the total number of jobs at the Project
including jobs retained and jobs created) in the following calendar years:


       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Total

                                        	
                                          Annual
      Salary Range ($K)

                                        	
                                          CY09

                                        	
                                          CY10

                                        	
                                          CY11

                                        	
                                          CY12

                                        	
                                          CY13

                                        
	
                                          Engineering

                                        	
                                          55.3
      – 88.8

                                        	
                                          40

                                        	
                                          40

                                        	
                                          42

                                        	
                                          44

                                        	
                                          46

                                        
	
                                          Eng
      Techs

                                        	
                                          27.2
      – 53.1

                                        	
                                          58

                                        	
                                          58

                                        	
                                          62

                                        	
                                          65

                                        	
                                          67

                                        
	
                                          MFG

                                        	
                                          19.2
      – 33.8

                                        	
                                          148

                                        	
                                          148

                                        	
                                          160

                                        	
                                          171

                                        	
                                          183

                                        
	
                                          Mgmt/Admin

                                        	
                                          54.2
      – 102.0

                                        	
                                          35

                                        	
                                          35

                                        	
                                          35

                                        	
                                          35

                                        	
                                          38

                                        
	
                                          Facilities

                                        	
                                          38.2
      – 69.7

                                        	
                                          34

                                        	
                                          34

                                        	
                                          34

                                        	
                                          34

                                        	
                                          35

                                        
	
                                          Doc
      Control

                                        	
                                          26.4
      – 45.6

                                        	
                                          2

                                        	
                                          2

                                        	
                                          2

                                        	
                                          2

                                        	
                                          2

                                        
	
                                          Materials

                                        	
                                          27.0
      – 36.7

                                        	
                                          13

                                        	
                                          13

                                        	
                                          13

                                        	
                                          14

                                        	
                                          14

                                        
	 	 	 	 	 	 	 
	
                                          TOTAL

                                        	 
      	
                                          330

                                        	
                                          330

                                        	
                                          348

                                        	
                                          365

                                        	
                                          385

                                        
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                          Total

                                        	
                                          Annual
      Salary Range ($K)

                                        	
                                          CY14

                                        	
                                          CY15

                                        	
                                          CY16

                                        	
                                          CY17

                                        	
                                          CY18

                                        
	
                                          Engineering

                                        	
                                          55.3
      – 88.8

                                        	
                                          48

                                        	
                                          48

                                        	
                                          51

                                        	
                                          53

                                        	
                                          53

                                        
	
                                          Eng
      Techs

                                        	
                                          27.2
      – 53.1

                                        	
                                          70

                                        	
                                          72

                                        	
                                          73

                                        	
                                          74

                                        	
                                          77

                                        
	
                                          MFG

                                        	
                                          19.2
      – 33.8

                                        	
                                          193

                                        	
                                          213

                                        	
                                          231

                                        	
                                          249

                                        	
                                          274

                                        
	
                                          Mgmt/Admin

                                        	
                                          54.2
      – 102.0

                                        	
                                          41

                                        	
                                          41

                                        	
                                          41

                                        	
                                          42

                                        	
                                          42

                                        
	
                                          Facilities

                                        	
                                          38.2
      – 69.7

                                        	
                                          36

                                        	
                                          36

                                        	
                                          36

                                        	
                                          36

                                        	
                                          36

                                        
	
                                          Doc
      Control

                                        	
                                          26.4
      – 45.6

                                        	
                                          2

                                        	
                                          3

                                        	
                                          3

                                        	
                                          3

                                        	
                                          3

                                        
	
                                          Materials

                                        	
                                          27.0
      – 36.7

                                        	
                                          15

                                        	
                                          15

                                        	
                                          15

                                        	
                                          15

                                        	
                                          15

                                        
	 	 	 	 	 	 	 
	
                                          TOTAL

                                        	 
      	
                                          405

                                        	
                                          428

                                        	
                                          450

                                        	
                                          472

                                        	
                                          500

                                        


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

            
The
preceding table shows the minimum number of jobs which MCHP expects it will
create at the Project.  If economic conditions support investments in
the Project at the level shown in Section II.A, it is expected that jobs at the
Project will exceed the minimum number of jobs shown in the preceding
table.  MCHP will report all jobs at the Project in accordance with
Section V.

             

          

        

      

      b.           Timing.

       

      MCHP
shall create the total number of jobs at the Project set out in the preceding
chart in each of the years shown in that chart.  Each year’s minimum
number of jobs, as set out in the “Total” row of the chart shown above, shall be
created by December 31 of the relevant year.  A new job is
“created” when someone is hired as a regular full-time employee.  The
number of employees may be deferred or reduced temporarily due to 

       

       

      
        
          Amended
Strategic Investment Program Contract - 6 of 24

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      delays in
commissioning equipment, inability of MCHP to recruit qualified employees, or
economic circumstances, either in general or specific to MCHP, leading to a
requirement for a deferral in recruitment or a reduction in
employment.  If such a deferral or reduction is necessary, MCHP shall
notify the County in writing, specifying the reason for the deferral or
reduction, the amount of the deferral or reduction, and the expected duration of
the circumstances giving rise to the deferral or reduction.  If the
County believes that MCHP has deferred or reduced maintaining and creating jobs
in violation of this Agreement, the County may commence dispute resolution
proceedings under Section VII.A of this Agreement.

       

      c.           Additional
Employment.

       

      Total
Project employees may be greater than those indicated in Section
IV.2.a.  While MCHP cannot commit to increases, the commitment to the
Exclusive Full-Service First Source Hiring Agreement attached as Exhibit 2 of
this Agreement shall apply throughout the term of this Agreement.

       

      3.         Temporary
Employees.

       

      MCHP
anticipates it will use temporary employees in production tasks only to meet
peak production loads and to cover temporary and extended leaves of
absence.  A Category One temporary employee, as defined in paragraph
5, below, shall not hold a position longer than six months unless the employee
is filling a vacancy created by extended medical leave or a statutorily
protected leave.

       

      4.         Retention
of Employees.

       

      MCHP
intends to hire and retain employees for many years, and to provide its
employees with multiple opportunities to move progressively through the MCHP
corporate organization with increasing responsibility.  To carry out
these intentions, MCHP shall maintain during the term of this Agreement a
transfer policy and an internal posting policy which are substantially similar
to the transfer policy and internal posting policy which are attached as Exhibit
3 to this Agreement.

       

      It is the
intent of the parties that employees hired in new jobs be retained either in the
initial position or in progressively more responsible positions within
MCHP.  Beginning with the end of fiscal year 2003-04, MCHP shall
demonstrate that at least 70% of all of its regular full time employees at the
Gresham facilities except those described in the next sentence are retained for
at least two years.  The
following employees will not be counted: (1) those terminated for cause; and (2)
those that voluntarily terminate employment other than for reasons of inadequacy
of child care, transportation or housing.

       

       

      
        
          
          

        

        
          Amended Strategic Investment
Program Contract - 7 of 24

          
            

          

        

        
          
          

        

      

       

       

      5.         Advancement
of Category One Employees.

       

      MCHP will
source as many Category One Employees as practicable for hire into entry-level
production operator jobs.  MCHP currently provides a weeklong training
class for all production operators.  In addition, MCHP continually
offers in-house training and certification levels to improve performance and
employee output.  MCHP shall maintain these programs or substantially
similar programs during the term of this Agreement.  “Category One
Employee” means a person holding a job which requires less than a two year
college degree or certificate and which is not highly technical in
nature.

       

      In addition, MCHP shall:

       

      
        	
                 
      

              	
                a.

              	
                Offer
      supervisors of Category One Employees substantial training in dealing with
      employee issues, including workplace
diversity.

              


      

       

      
        	
                 
      

              	
                b.

              	
                Maintain
      its current, multi–step disciplinary process, or a substantially similar
      process, in place to ensure all employees are given multiple opportunities
      to improve their performance as well as to receive guidance on any
      particular employee issues.  MCHP’s current Employee Performance
      Improvement Plan , which details MCHP’s multi-step process for employee
      discipline, is attached as Exhibit 5 to this
  Agreement.

              


      

       

      
        	
                 
      

              	
                c.

              	
                Maintain
      its current policy of referring employees to multiple avenues for
      guidance, including but not limited to access to an employee assistance
      program which provides counseling.  MCHP’s current open door
      policy, which refers employees to several avenues for guidance, it
      attached as Exhibit 4 to this
Agreement.

              


      

       

      6.         Promotional
Practices.

       

      Microchip’s
practice is to promote approximately 10% of the indirect labor force once per
year to the next grade level responsibility. Approximately 40% of the Gresham
facilities will be direct labor employees.  Once Microchip places an entry
level or category one direct labor employee into grade 90, the following chart
illustrates their path.

       

         
90---92 - First year promotion

      92---94 -
Second year promotion

      94---96 -
Third year promotion 

       

      Once a
Category One employee has reached grade 96 they have had a promotion every year
for three years and they have reached the highest grade available.  To
continue advancement an employee must take on additional responsibilities
such as supervision or follow a technical path toward engineering.
 

       

       

      
        
          
          

        

        
          Amended
Strategic Investment
Program Contract - 8 of 24

          
            

          

        

        
          
          

        

      

       

      Microchip
provides tuition reimbursement as described in Exhibit 5 up to $10,000 a year
for education.  Microchip commits to continue with this level of promotions
per year to the extent economic conditions permit, for all employees whose job
performance justifies promotion.

       

      “Direct
labor” refers to anyone who touches the product or works on the wafer
process.  Direct labor positions are classified as “production
specialists” whose costs are included in MCHP’s cost per wafer
analysis.  “Indirect labor” refers to any labor positions except
“direct labor.”

       

      7.         Wages.

       

      MCHP
represents that its current wage structure, including base pay, bonus and stock
option grants, are competitive with current industry standards. MCHP will
continue to maintain competitive wages, and to compare its wages to the Radford
Benchmark Survey annually, or its equivalent.  A chart showing wages,
benefits, shift differential, and overtime is attached as Exhibit 6.  MCHP
commits to reviewing the Radford Benchmark and making any changes to salary
ranges that apply, provided that economic conditions allow for such increases in
salary ranges.

       

      8.         Employer
Paid Benefits.

       

      a.         In
General.

       

      MCHP
intends to fulfill its role as an exemplary corporate citizen by providing an
attractive and competitive benefits package which enables MCHP to recruit and
retain qualified employees.  MCHP acknowledges that provision of
excellent, competitive benefits is vital, not only to achieving MCHP’s corporate
objectives, but also to achieve the County’s goals.

       

      b.         Specific
Benefits.

       

      MCHP
currently provides all existing US employees at other locations with the
benefits described in Exhibit 7 attached to this Agreement.

       

      During
the period of property tax exemption, MCHP may have to modify its benefits
package in order to maintain costs in response to industry or economic
conditions or to remain competitive.  The cost to MCHP’s employees is
the same for all employees regardless of job title or income
level.  Employees may choose to insure only themselves, employee plus
spouse or employee plus family.  Also included in the attached as
Exhibit 7 is a cost analysis for benefit cost for the benefit plan year of
May 1, 2009 through April 30, 2010. 

       

      MCHP
shall report the benefits it provides for employees at the Project, and, prior
to making any substantial reductions in MCHP’s aggregate benefits package, MCHP
shall provide reasonable notice to the County.

       

       

      
        
          
          

        

        
          Amended
Strategic Investment Program Contract - 9 of 24

          
            

          

        

        
          
          

        

      

       

       

      During
the period of the partial property tax exemption, MCHP shall provide health
insurance at least comparable to that provided under  the Oregon
Health Plan (OHP).

       

       9.        Child
Care.

       

      MCHP will
work in good faith to attempt partnership relationships with local childcare
facilities to provide discounts for MCHP employees.  MCHP will provide
a link to Oregon childcare commission website
(http://findit.emp.state.or.us/occc/) on its internal website to facilitate
employee access to childcare information.  

       

      B.           Transportation.

       

      County
Goal:

       

      To
encourage employees to use transit, carpools, vanpools, or alternative modes of
transportation.

       

      MCHP
acknowledges this County goal and agrees to take the following actions in
support of this goal:

       

      MCHP
shall encourage use of alternative modes of transportation by maintaining its
current Trip Reduction Program, or a substantially similar
program.  MCHP’s current Trip Reduction Program is described in
Exhibit 8 attached to this Agreement.

       

      C.           Infrastructure
and Public Services.

       

      County
goal:

       

      To
eliminate adverse impacts on the level of service provided to existing residents
of Multnomah County and the region.

       

      MCHP
acknowledges this County goal and agrees to take the following actions in
support of that goal:

       

      MCHP
shall comply with all material provisions generally applicable under City,
County and State of Oregon development requirements to mitigate adverse impacts
on the level of services to existing residents of the County and City that
involve transportation and utility infrastructure and public
safety.

       

      D.           Environmental
Protection.

       

      County
Goal:

       

      To
approve tax abatements only for firms that demonstrate a commitment to
environmental protection.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 10 of
24

          
            

          

        

        
          
          

        

      

       

      MCHP
acknowledges this County goal and agrees to take the following actions in
support of that goal:

       

      To
demonstrate its commitment to environmental protection:

       

      
        	
                 
      

              	
                1.

              	
                MCHP
      has identified baseline conditions associated with full production in each
      of the following categories: (1) toxic and hazardous materials; (2) water
      conservation, reuse and waste water discharge; (3) air quality; (4) waste
      reduction and recycling; and (5) energy
      conservation.  Additionally, MCHP has created an evaluation
      matrix to measure its progress toward the County’s goal and shall continue
      to strive to make progress toward that goal as demonstrated in its annual
      report to the County.

              


      

       

      
        	
                 
      

              	
                2.

              	
                MCHP
      has successfully applied for and participated in DEQ’s Green Permits
      program that constitutes achievement of the County
  goal.

              


      

       

      
        	
                 
      

              	
                3.

              	
                If
      any person is determined by the appropriate environmental authority to
      have violated an applicable environmental law, MCHP shall cure or cause to
      be cured the damage in accordance with and as required by applicable laws
      to the reasonable satisfaction of the reviewing environmental
      authority.

              


      

       

      E.           Job
Training.

       

      County
Goals:

       

      To build
a world-class workforce that provides the full range of skills necessary to
attract and sustain competitive, high performance companies.

       

      To
graduate all children from high school with skills enabling them to succeed in
the workforce and/or in post-secondary education, including the fundamental
ability to read, write, communicate and reason.

       

      To
establish stronger educational programs beyond the secondary level to meet the
region’s needs for accessible education, expanded graduate programs,
high-quality research, technology transfer and economic
development.

       

      To
provide educational opportunities to enhance upward mobility for both technical
and management roles.

       

      MCHP
acknowledges these County goals and agrees to take the following actions in
support of those goals:

       

      
        	
                 
      

              	
                1.

              	
                MCHP
      shall work in good faith with the education community to support
      curriculum and career path options for obtaining jobs in the semiconductor
      field.  This good-faith effort includes but is not limited
      to:

              


      

       

      
        	
                 
      

              	
                (a)

              	
                Assisting
      in the successful realization of the Center for Advanced Learning by
      serving on the C.A.L industry advisory committee; providing assistance and
      expertise with curriculum development, instructional assistance,
      development of internships and mentoring opportunities; consideration of
      financial and equipment donations to the
  C.A.L.

              


      

      
         

         

        
          
            
            

          

          
            Amended Strategic Investment Program Contract - 11 of
24

            
              

            

          

          
            
            

          

        

         

      

      
        	
                 
      

              	
                (b)

              	
                Working
      with MHCC and local high schools (Gresham, Sam
      Barlow,  Reynolds, Centennial, Parkrose, David Douglas, and
      Marshall) to explore partnership opportunities including but not limited
      to: internships and mentoring programs, curriculum development,
      instructional assistance, scholarships, financial and equipment
      donations.

              


      

       

      
        	
                 
      

              	
                (c)

              	
                Designating
      a representative to serve on the Board of Directors of the Mt. Hood
      Community College Foundation, when a position becomes
      available.

              


      

       

      
        	
                 
      

              	
                2.

              	
                MCHP’s
      tuition reimbursement policy, which is attached as Exhibit 5, provides up
      to $10,000 per year reimbursement for classes and books to anyone who
      enrolls in classes at a certified university for job related classes or
      degree.

              


      

       

      
        	
                 
      

              	
                3.

              	
                MCHP
      currently provides funds in departmental budgets to cover external
      training needs for employees to improve their
  skills.

              


      

       

      
        	
                 
      

              	
                4.

              	
                MCHP
      currently maintains an extensive in house training department with an
      excellent portfolio of classes, see attached recent recognition from
      Training Magazine.  MCHP offers 15 training classes at the
      Project.

              


      

       

      
        	
                 
      

              	
                5.

              	
                MCHP
      shall continue to provide these educational programs, or substantially
      similar educations benefits for its
employees.

              


      

       

      
        	
                 
      

              	
                6.

              	
                MCHP
      agrees to evaluate the Fujitsu proprietary degree and other equivalent
      training, in good faith and allow its employees appropriate credit
      for having obtained that degree.

              


      

       

      F.           Procure
Locally Produced or Sold Goods and Services.

       

      County
Goal:

       

      To
encourage the purchase of goods and services produced or sold by businesses in
Multnomah County and the region.

       

      MCHP
acknowledges this County goal and agrees to take the following actions in
support of this goal:

       

      
        	
                 
      

              	
                1.

              	
                MCHP
      acknowledges this County goal and agrees to make best effort
      to purchase from local suppliers subject to MCHP’s ability to find local
      suppliers whose products meet MCHP’s specifications and quality standards,
      and whose products cost the same or lower that non-local goods and
      services.

              


      

       

      
        	
                 
      

              	
                2.

              	
                MCHP
      will make good faith and reasonable efforts to procure for construction,
      installation and equipment maintenance services in a manner which
      recognizes and rewards responsible contractors based on the following
      factors: necessary technical
      qualifications (including licensure), past performance record (including
      safety, cost effectiveness, business location (per the local procurement
      goals of this Agreement) and other factors consistent with MCHP’s stated
      mission, values, and record of
  operations.

              


      

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 12 of
24

          
            

          

        

        
          
          

        

      

       

      V.           MCHP
Reporting Requirements.

       

      A.           MCHP
to Report Contract Compliance to County.

       

      
        	
                 
      

              	
                1.

              	
                MCHP
      shall prepare and submit to County SIP Manager the quarterly and annual
      reports described in paragraphs 5 and 6 below.  The annual
      report shall include the quarterly report information on the jobs
      information for the quarter ending June 30.  No separate
      quarterly report is required for the quarter ending June
    30.

              


      

       

      
        	
                 
      

              	
                2.

              	
                MCHP,
      County and the City will work together to determine the form of report
      necessary to track benefits of the “targeted population,” as that term is
      defined in the First Source Agreement.  To the extent possible,
      data compilations generated and used by MCHP in the ordinary conduct of
      its operations will be used for the report to the
  County.

              


      

       

      
        	
                 
      

              	
                3.

              	
                The
      reports are to be sent to the following
address:

              


      

       

      
        	
                SIP
      Manager

              
	
                Multnomah
      County Chair’s Office

              
	
                501
      SE Hawthorne Blvd. 6th floor

              
	
                Portland,
      OR 97293-0700

              


      

       

      
        	
                 
      

              	
                4.

              	
                Confidentiality
      of Reports.

              


      

       

      MCHP
proprietary information contained in the reports and documents submitted by MCHP
to the County in support of the report is, and shall be, submitted in complete
confidence.  County shall treat MCHP’s proprietary information in a
confidential manner.  The parties agree that any such proprietary
information is exempt from public disclosure under, and the County agrees to
assert in connection with any public records request that, such information is
exempt from disclosure under the Public Records Law, ORS
192.502(4).  This Agreement is MCHP’s written request  for
confidentiality and is the County’s assurance that it will treat MCHP’s
documents as confidential.  The County acknowledges that MCHP
documents that contain proprietary information may give competitors an undue
advantage, and, therefore, that such documents are also entitled to
nondisclosure protection under ORS 192.501(2).  Additionally, employee
survey information of a private nature is exempt from disclosure under ORS
192.502(2) and 192.501(5).

       

      MCHP
understands and agrees that the County may, subject to the foregoing
confidentiality obligations imposed upon the County, send portions of the
reports to other Oregon governmental entities for review to ensure compliance
with this Agreement.  For
example, the portion of the report on compliance with the County’s environmental
goals may be sent to DEQ for review. The
confidentiality of the MCHP documents shall extend to such documents in the
hands of all other governmental agencies and the County shall advise the other
governmental agencies of the confidentiality obligation when submitting MCHP
documents to such other governmental entities.  ORS
192.502(9) contemplates continued
confidentiality for documents transferred by a public body to another public
body.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 13 of
24

          
            

          

        

        
          
          

        

      

       

      Notwithstanding
any other provision of this Agreement, MCHP shall not be required to report
information to the County in a manner which violates the privacy rights of
MCHP’s employees.  If the County discloses any information provided by
MCHP to the County pursuant to this Agreement in any manner which violates the
rights of any person or entity, the County shall indemnify and hold MCHP and its
agents, directors, officers or employees harmless from and against any claim
made against MCHP or its agents, directors, officers or employees based on the
disclosure of that information by the County, including costs of attorneys’ fees
at trial and on appeal.

       

      5.     Quarterly
Reports on Job Creation, Compensation and Retention.

       

      Beginning
with County fiscal year 2003-2004, MCHP shall prepare and deliver within 45 days
of the close of each fiscal quarter (September 30, December 31, March 31 and
June 30), a report containing the following information:

       

      
        	
                 
      

              	
                a.

              	
                Hiring
      activity for the prior quarter for the Project, including day of hire,
      title, level, starting compensation and category of position (using the
      categories shown in the chart in Section
  IV.2.a).

              


      

       

      
        	
                 
      

              	
                b.

              	
                Turnover
      rate for all employees at the Project, calculated in accordance with
      Section IV.4.

              


      

       

      6.     Annual
Reports.

       

      MCHP
shall prepare and deliver by November 15 of the tax year following the tax
abatement year, a report which addresses each of the reporting requirements
listed below:

       

      a.           Wages.

       

      MCHP
shall provide a report of its total payroll and total number of employees, and
shall calculate and report the average payroll for employees at the
Project.

       

      b.           Benefits.

       

      MCHP
shall provide a statement of the benefits it provided during the tax abatement
year to its employees, any changes in the benefits from the prior
year.

       

      c.           Hiring
Outside of FSA.

       

      MCHP
shall provide a statement of the covered employee hires which were not referred
to MCHP by the County pursuant to the FSA during the tax abatement
year.  It shall include the date of hire, job classification, wage
scale and residency (state, county, city) at, or just prior to, time of
hire.  A report form shall be created by County and/or City with
MCHP.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 14 of
24

          
            

          

        

        
          
          

        

      

       

      d.           Transportation.

       

      MCHP
shall provide a statement of its actions under Section IV.B for the tax
abatement year.

       

      e.           Job
Training.

       

      MCHP
shall provide a statement of its actions under Section IV.E for the tax
abatement year period.

       

      f.           Local
Procurement.

       

      MCHP
shall report annually:

       

      (1)           The
amount of MCHP expenditures in Oregon.

       

      (2)           The
amount of MCHP expenditures in Multnomah County.

       

      (3)           The
percent change in expenditures over prior year.

       

      g.           Environmental
Management Plan and Cleanup.

       

      
        	
                 
      

              	
                (1)

              	
                MCHP
      shall report annually on its compliance with the County’s environmental
      protection goals set out in Section
IV.D.

              


      

       

      
        	
                 
      

              	
                (2)

              	
                MCHP
      shall report on any notices of violation of environmental laws at the
      Project which MCHP receives from an environmental authority having
      jurisdiction over the Project that were given in the prior County fiscal
      year (beginning commencing in County fiscal year 2004-05 for any notices
      of violation received in County fiscal year 2003-04) and, if there were
      any, whether the appropriate environmental agency approved the remedial
      measures.

              


      

       

        
 7.       County Report on MCHP
Compliance.

       

       
The County shall also prepare an annual report to the public describing MCHP’s
compliance with the terms of this Agreement.

       

      
        
        

      

      
        B.    Cooperation
With Oregon Department of Revenue.

         

      

      MCHP and
the County shall cooperate with the Oregon Department of Revenue to identify the
property that receives the property tax exemption as described in this
Agreement.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 15 of
24

          
            

          

        

        
          
          

        

      

       

      VI.           OBLIGATIONS OF COUNTY AND CITY.

       

      A.   Findings.

       

      In
consideration of the actions of MCHP as described in this Amended Agreement, the
County and the City find that:

       

      
        	
                 
      

              	
                1.

              	
                Granting
      an SIP exemption for the Project will foster the economic growth and
      legislative policy as set forth in ORS
285.603.

              


      

       

      
        	
                 
      

              	
                2.

              	
                The
      Project will be consistent with all applicable laws and
      regulations.

              


      

       

      
        	
                 
      

              	
                3.

              	
                The
      operation of the Project in the County and the City would be in the best
      interest of the citizens of Multnomah County and the City of
      Gresham.

              


      

       

      B.           The
County and City Agree as follows:

       

      1.       Approval
of Provisions Related to Property Tax Exemption.

       

      The
County and the City approve the provisions of this Amended Agreement related to
the SIP partial tax exemption by execution of this Amended
Agreement.  

       

      2.       Property
Tax Exemption.

       

      On August
23, 2002, the Project was approved, by Resolution, as an “eligible project” by
the Finance Committee for the Oregon Economic and Community Development
Commission.  This approval remains operative as to this Amended
Agreement without further action by OECDC.  The Project shall continue
to be subject to assessment and taxation as provided in ORS 307.123 through June
30, 2018. (See Exhibit # 1)

       

      VII.         BREACH;
DEFAULT; REMEDIES OF THE COUNTY.

       

      A.   Dispute
Resolution Procedure.

       

      
        	
                 
      

              	
                1.

              	
                Multnomah
      County’s designated SIP Manager shall have the duty to monitor compliance
      by MCHP with the terms of this
Agreement.

              


      

       

      
        	
                 
      

              	
                2.

              	
                If
      either County or the City has substantial evidence to believe that MCHP
      has failed materially to comply with any term of this Agreement and that
      such failure is not excused, County and the City shall confer, and shall
      involve persons in their organizations whose job responsibilities relate
      to the noncompliance.  County shall show the evidence of
      noncompliance to these representatives.  If, after they examine
      the evidence, County continues to believe that MCHP has failed materially
      to comply with one or more terms of this Agreement and the failure is not
      excused, County shall notify MCHP of this belief and the basis
      therefor.  In any event, MCHP shall not be deemed to have failed
      to comply with this Agreement if the failure is caused by a force majeure, as
      provided under Section VII.B, below, or if the alleged failure is a
      variance from numerically ascertainable terms which is described in
      Section VII.E.

              


      

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 16 of
24

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                3.

              	
                Notice
      required by Section VII.A.2 shall be in writing and shall be sent to MCHP
      at the following addresses, both of which shall be required for notice to
      be effective:

              


      

      


      
        	
                Microchip
      Technology Incorporated

              
	
                2355
      West Chandler Blvd.

              
	
                Chandler,
      Arizona 85224-6199

              


      

      
         

        Attention:  Steve
Sanghi, President and CEO

      

      
        
          	
                  
                    With
      a copy to:   Jeff Thomas, Director, Site
      Services

                  

                
	
                  
                    With
      a Copy to:  Legal
Department

                  

                


        

      

       

      If MCHP
wishes to change the address(es) to which notice hereunder shall be given, it
may do so by providing written notice to the County at the address indicated in
Section V.A.3.

       

      
        	
                 
      

              	
                4.

              	
                Upon
      receipt of the notice described in Section VII.A.2, MCHP shall have 45
      days to respond in writing.  MCHP’s written response shall be
      delivered to County at the address shown in Section
      V.A.3.  MCHP’s response shall include such supporting
      documentation as is related to the issues raised by the notice described
      in Section VII.A.2 and that is within MCHP’s control to provide for the
      sole purpose of allowing the County to substantiate MCHP’s
      response.  The County shall have 45 days in which to review and
      consider MCHP’s response and to notify MCHP in writing if the County
      believes MCHP is not in compliance, and to state the basis for the
      County’s belief.  If the County does not give MCHP such written
      notice within 45 days, the matter shall be deemed
  closed.

              


      

       

      
        	
                 
      

              	
                5.

              	
                If
      the County notifies MCHP pursuant to Section VI.A.4 that the County
      continues to believe that a failure of performance by MCHP has occurred,
      the parties will meet as soon as possible and confer with the objective
      that the issues upon which there is dispute are clearly defined and
      understood and that any misunderstanding of the essential factors of the
      dispute may be resolved.  The County may retain an outside
      consultant, or the County Auditor may be used to verify MCHP’s
      compliance.  In the course of this process, if physical access
      to the Project premises is required, MCHP will allow the County or its
      designated consultant or Auditor such access at reasonable times and under
      conditions that will comply with MCHP’s customary rules and procedures
      pertaining to safety, property security, confidentiality, engineering, and
      intellectual property protection and so as to not interfere with MCHP’s
      operations of the Project.  The parties shall also exercise
      their respective best efforts to resolve all disputed issues, in a manner
      and result that is consistent with the provisions of this
      Agreement.  A resolution so reached shall be documented in a
      written Compliance Agreement to the parties’ mutual
      satisfaction.

              


      

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 17 of
24

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                6.

              	
                If,
      following such efforts by the parties to amicably resolve their
      differences, a mutually satisfactory outcome is not achieved, the
      procedures in the order set forth below shall be
  followed:

              


      

       

      
        	
                 
      

              	
                a.

              	
                Subject
      to subsection b, below, senior management of both parties shall first
      mutually negotiate in good faith to resolve any dispute that arises
      between them.  If such negotiations are unsuccessful the parties
      agree that, before any litigation can be initiated, except as provided in
      b, below, the dispute shall be submitted to non-binding mediation in front
      of a mediator who is an attorney who is both knowledgeable in the laws
      which govern this agreement and who has substantial experience in the
      semiconductor or electronics manufacturing industries, or a mutually
      acceptable person of comparable expertise and competence.  Such
      mediation shall take place within 90 days’ of a party’s receipt of a
      request therefore, in a neutral location mutually acceptable to both
      parties.  Each party shall be responsible for paying its own
      costs and expenses (including legal fees, if necessary) for the mediation.
       In the event
      that the mediation is unsuccessful, either party may initiate litigation
      to address the dispute.

              


      

       

      
        	
                 
      

              	
                b.

              	
                Notwithstanding
      the foregoing, any dispute in which specific performance or injunctive
      relief is sought need not be submitted to mediation, but may instead be
      immediately brought by the aggrieved party to an appropriate
      court.

              


      

       

      
        	
                 
      

              	
                c.

              	
                The
      prevailing party in any litigation proceeding arising out of or related to
      this Agreement shall be entitled, in addition to any other rights and
      remedies it may have, to reimbursement for its expenses incurred in such
      action, including court costs and reasonable attorneys’ fees and other
      legal fees and costs.

              


      

       

      7.    Breach.

       

       
 d.          A “Breach”
shall be deemed to have occurred if:

       

      
        	
                 (1)  

              	
                before
      or after mediation, MCHP acknowledges that is has failed to comply with
      its obligations under this Agreement (unless the parties have agreed that
      the failure to comply is not a Breach);
or

              


      

       

      
        	
                 
      (2)  

              	
                a
      court of competent jurisdiction in a final nonappealable judgment
      determines that MCHP has failed to comply with it obligations under this
      Agreement.

              


      

       

      
        	
                 
      

              	
                e.

              	
                MCHP
      shall not be deemed to have failed to comply with this Agreement if the
      failure is caused by a force majeure, as
      provided under Section VII.B, or if the alleged failure is a variance from
      numerically ascertainable terms which is described in Section
      VII.E

              


      

       

      
        	
                 
      

              	
                f.

              	
                Where
      this Agreement imposes an obligation on MCHP to act “in good faith,” no
      Breach shall be deemed to occur unless the parties agree or a court
      determines in a final nonappealable judgment that MCHP failed to
      take
      any reasonable action to comply with that obligation, or that MCHP acted
      in bad faith.

              


      

       

      


      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 18 of
24

          
            

          

        

        
          
          

        

      

       

      B.           Force
Majeure.

       

      If by
reason of force
majeure, MCHP is unable in whole or in part to carry out any of its
obligations in this Agreement, other than obligations for the payment of money,
a Breach shall not be deemed to occur during the continuance of such
inability.  The term “force majeure” as used herein
shall mean, without limitation, any of the following: acts of God; strikes,
lockouts or other industrial disturbances; acts of the public enemy; orders or
restraints of any kind of the government of the United States of America or of
the state wherein the County is located or any of their departments, agencies or
officials, or any civil or military authority; insurrections; riots; landslides;
earthquakes; volcanic eruption; fires; storms; droughts; floods; explosions;
breakage or accident to machinery, transmission pipes or canals; or any similar
or different cause or event not reasonably within the control of the
MCHP.  Force
Majeure also includes any significant reduction in market demand for the
products that are produced at the Project which makes it economically infeasible
for MCHP to operate the Project in compliance with this Agreement.  To
excuse performance of any obligation of MCHP due to a force majeure, MCHP must
notify the County as soon as reasonably possible after the force majeure has occurred
and MCHP has had an opportunity to determine the effect of the force majeure upon MCHP’s
business and its obligations hereunder.  The notice shall state the
nature of the occurrence, the anticipated effect of the occurrence on MCHP’s
obligations, and when MCHP will be able to resume compliance with this
Agreement.  If the County, following consultation with the City, does
not agree that MCHP shall be excused from performance in the manner stated in
MCHP’s notice, the County shall notify MCHP within 90 days and the parties shall
commence dispute resolution procedures pursuant to Section VII.A.

       

      C.           Failure
to Comply with Numerically Ascertainable Terms.

       

      It is the
intent of the parties that good faith efforts will be made to comply with all
the terms of this Agreement.  However, in such a large Project, it is
difficult to anticipate all contingencies with accuracy.  In a spirit
of fairness and recognizing the cyclical vagaries of business, the County and
City agree that variance from numerically ascertainable terms of this Agreement
by a plus or minus 5% will not constitute a failure of MCHP to comply with this
Agreement. However, the variance is not cumulative.

       

      D.           Sanctions.

       

      The
following sanctions shall apply if a Breach occurs:

       

      1.           
 Failure to Pay.

       

      If the
Breach relates to a failure of  MCHP to pay the CSF or any other fee
MCHP is required to pay to the County under this Agreement, the County shall be
entitled to the amount of the delinquency, plus the following penalties (subject
to the following paragraph): (1) if the payment is made more than ten (10)
business days


       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 19 of
24

          
            

          

        

        
          
          

        

      

       

      after the
payment is due and written demand has been made to MCHP for payment, the County
shall be entitled to receive a penalty of ten percent (10%) of the
delinquent amount; and, (2) if the payment is made more than 45 business days
after the payment is due and written demand has been made to MCHP for payment,
the County shall be entitled to receive a penalty of one hundred percent (100%)
of the delinquent amount.  If MCHP reasonably disputes the amount or
timing of any payment which is alleged by the County to be due to the County
under this Agreement, MCHP may tender the amount which is alleged to be due and
thereby prevent any penalties from accruing, and may continue its
dispute.  Payment by MCHP shall not constitute a waiver by MCHP of any
matter in dispute.  If the dispute is resolved in favor of MCHP, the
County shall refund the amount of overpayment to MCHP, with interest, within 30
days after the dispute is resolved.

       

      2.           
 Failure to Create and Retain Jobs.

       

      If the
Breach relates to a failure of MCHP to meet the job creation or job retention
requirements of Section IV.2.a of this Agreement, MCHP shall pay an amount equal
to twice the average gross annual salary plus benefits for operators and
technicians in the year of the breach for every job not created or job not
retained.

       

      3.           
 Failure to Use FSA.

       

      If the
Breach relates to a failure of MCHP to notify the County in accordance with the
FSA of MCHP hiring needs for covered positions, or to hire qualified applicants
for covered positions in accordance with the FSA, MCHP shall pay to the County
an amount equal to twice the average gross annual salary plus benefits for
operators and technicians in the year of the breach for every person who would
have been hired though the FSA, but was not so hired because of MCHP’s
failure.

       

      If MCHP
fails to act in good faith to meet its obligations under the FSA, and the
failure results in effective abandonment of the FSA by MCHP, MCHP shall pay 75
percent of the Property Tax Abatement for each year the abandonment
continues.  It shall not constitute an abandonment if MCHP’s failure
is due to nonperformance by the County of its obligations under the
FSA.

       

      4.           
 Failure to Meet Reporting Requirements.

       

      If MCHP
fails to meet reporting requirements of Section V of this Agreement, MCHP shall
pay twice the amount necessary to have an auditor investigate and prepare the
report, or any portion thereof which has been omitted.

       

      5.            
Environmental Crimes.

       

      If MCHP
is found to be responsible by a competent court in a final nonappealable
judgment for conduct at the Project which constitutes felony criminal conduct
under federal, state or local environmental law, MCHP shall pay seventy five
percent
of the tax abatement for the tax year in which the conduct is found to have
occurred.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 20 of
24

          
            

          

        

        
          
          

        

      

       

      6.           
 Failure to meet Other Requirements.

       

      In the
event a sanction for a Breach is not specified in the preceding paragraphs of
this Section VII.D, MCHP shall pay to the County an amount equal to any benefit
MCHP realized from the Breach, plus a 100% penalty (i.e. the total payment due
is two times what MCHP should have spent to comply with the
agreement).

       

      E.           Limitations.

       

      
        	
                 
      

              	
                1.

              	
                No
      Breach shall be deemed to occur and no sanction shall be imposed in
      connection with any action taken by MCHP during any tax year in which MCHP
      has paid ad valorem property taxes on the full market value of the
      Project.

              


      

       

      
        	
                 
      

              	
                2.

              	
                No
      sanction or combination of sanctions shall exceed 75% of the total tax
      abatement for any single tax year.  A tax year begins on July 1
      and ends on the following June 30.

              


      

       

      F.           Allocation
of Funds Paid by MCHP for Failure to Comply with Agreement.

       

      Any funds
collected under Sections VII.D above, shall be paid to the County Finance
Manager and held in a segregated fund.  The funds shall be distributed
by the Board of County Commissioners to a program or project in the area of
public policy most directly related to the failure to comply.

       

      VIII.        REMEDIES
OF MCHP.

       

      If the
City or County breaches this Agreement, MCHP shall be entitled to exercise any
of its legal or equitable remedies, either through the dispute resolution
process set forth in Section VI A or through administrative or judicial
processes.

       

      IX.           TERM
OF AGREEMENT.

       

      This
Agreement shall take effect on the date the Oregon Economic and Community
Development Commission formally determines that the Project is an “eligible
project” which will receive the partial property tax exemption described in ORS
307.123 and a deed is recorded conveying the existing FMI facilities to MCHP,
and shall remain in effect until terminated as provided in this Section
IX.

       

      This
Agreement shall terminate on June 30, 2018.  However, termination of
this Agreement shall not affect the obligation of any party to pay amounts which
were due under this Agreement for the period prior to its date of
termination.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 21 of
24

          
            

          

        

        
          
          

        

      

       

      X.           MISCELLANEOUS
TERMS.

       

      A.           Discrimination.

       

      No
persons shall be denied or subject to discrimination in receipt of the benefits
of any services or activities made possible by or resulting from the Agreement
on the grounds of sex, sexual orientation, gender identity, race, color, creed,
marital status, age, national origin, mental health or physical handicap,
disabled or Vietnam era veteran status (except where
there are bona fide occupational qualifications).  Any violation of
this provision shall be considered a material violation of the
Agreement.

       

      B.           Public
Contracts.

       

      All
applicable requirements of the Oregon Revised Statutes Nos. 279.120 through
279.333 are incorporated herein by reference.  This provision is
intended to incorporate only those provisions which are required for all public
contracts.  The parties acknowledge that: other portions of ORS
Chapter 279 do not apply; this Agreement is not one for a public improvement or
public work; and the wages and other compensation paid by MCHP to its employees
is not subject to ORS 279.348 through 279.365.

       

      C.           Governing
Law.

       

      This
Agreement shall be governed by the law of the State of Oregon. Any actions or
suits commenced in connection with this Agreement shall be in Circuit Court of
Multnomah County or Federal District Court for Oregon.

       

      D.           Complete
Agreement.

       

      This
Agreement and its attached exhibits are the complete and exclusive statement of
the Agreement between the parties relevant to the purpose described above and
supersedes all prior agreements or proposals, oral or written, and all other
communication between the parties relating to the subject matter of this
Agreement.  No modifications of the Agreement will be binding on any
party except as a written addendum signed by authorized agents of each
party.  MCHP’s policies, some of which are exhibits to this Agreement,
may be changed by MCHP at any time without consent of, or notice to, the County
or the City, and changes to those policies shall not be deemed an amendment of
this Agreement.

       

      All
rights and remedies of each party shall be cumulative and may be exercised
successively or concurrently.  The foregoing is without limitation to
or waiver of any other rights or remedies of either party according to
law.

       

      E.           CSF
Payments Not Property Taxes.

       

      The
parties acknowledge that any payments required under this Agreement do not
constitute property taxes and are not subject to the limits under Section 11b,
Article XI of the Oregon Constitution.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 22 of
24

          
            

          

        

        
          
          

        

      

       

      F.           Compliance
Relevant to Future Approvals.

       

      MCHP
acknowledges that its compliance with this Agreement will be an important
consideration for local government approval of any future applications MCHP may
make seeking property tax exemptions for other Projects.

       

      G.           Lease
or Sublease of the Premises.

       

      While it
is not contemplated that MCHP will lease or sublease the premises, if that were
to occur, the property tax exemption may transfer under the provisions of ORS
285B.383(4) and ORS 307.123.

       

      H.           Successors
and Assigns.

       

      This
Agreement shall inure to the benefit of and bind the successors and assigns of
the parties.

       

      I.           Good
Faith Contests Permitted.

       

      Nothing
in this Agreement shall be construed as: (1) preventing MCHP from contesting in
good faith any tax, assessment or other fee imposed by the County or any other
governmental entity; or (2) granting rights to any employee of
MCHP.  The obligations of MCHP in this Agreement are for the benefit
of the County and the City, and for the general benefit of their citizens; no
individual or entity not a party to this Agreement shall be treated as a third
party beneficiary of this Agreement.

       

      J.           Validity
of County Obligations.

       

      The
County represents that this Agreement and its attached exhibits are valid and
binding obligations of the County, and the County agrees to be bound by their
terms. The County agrees that its obligation to indemnify and hold MCHP harmless
is a contractual obligation of the County.

       

      K.           Counterparts.

       

      This
Agreement may be signed in counterparts; when each party has signed a
counterpart all parties shall be bound by this Agreement.

       

       

      
        
          
          

        

        
          Amended Strategic Investment Program Contract - 23 of
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            DATED this 8 day of June 2009.

             

             

          

        

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                	
                                                                        MULTNOMAH
      COUNTY

                                                                         

                                                                         

                                                                         

                                                                        By:  /s/  Ted
      Wheeler

                                                                      	 
      	
                                                                        MICROCHIP
      TECHNOLOGY

                                                                        INCORPORATED
      (MCHP)

                                                                         

                                                                         

                                                                        By:  /s/  Steve
      Sanghi 

                                                                      	 
      
	
                                                                        Chairperson,

                                                                        Board
      of Commissioners

                                                                         

                                                                      	 
      	
                                                                        Authorized
      Officer

                                                                      	 
      
	
                                                                        Date: June
      8, 2009

                                                                      	 
      	
                                                                        Date: June
      1, 2009

                                                                         

                                                                         

                                                                      	 
      
	
                                                                        REVIEWED:

                                                                         

                                                                         

                                                                        By:  /s/  Sandra
      Duffy 

                                                                      	 
      	 
      	 
      
	
                                                                        Assistant
      County Counsel

                                                                         

                                                                      	 
      	 
      	 
      
	
                                                                        Date: June
      5, 2009

                                                                         

                                                                         

                                                                         

                                                                      	 
      	 
      	 
      
	
                                                                        CITY
      OF GRESHAM

                                                                         

                                                                         

                                                                         

                                                                        By:  /s/  Shane
      Bemis 

                                                                      	 
      	
                                                                         

                                                                         

                                                                         

                                                                         

                                                                        By:  /s/ 
      Eric Kvarsten 

                                                                      	 
      
	
                                                                        Mayor

                                                                      	 
      	
                                                                        City
      Manager

                                                                         

                                                                      	 
      
	
                                                                        Date:
      May 19, 2009

                                                                      	 
      	
                                                                        Date:
      May 19, 2009

                                                                         

                                                                         

                                                                      	 
      
	
                                                                        REVIEWED:

                                                                         

                                                                         

                                                                        By:  /s/  Richard
      Faus

                                                                      	 
      	 
      	 
      
	
                                                                        City
      Attorney

                                                                         

                                                                      	 
      	 
      	 
      
	
                                                                        Date:
      May 19, 2009

                                                                      	 
      	 
      	 
      


                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

       

       

      Amended Strategic Investment Program Contract - 24 of
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