Exhibit 10.1
(FIRST SOLAR LOGO) [p74582p7458201.gif]
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
          This Agreement is made as of August 27, 2007, (this “Agreement”) by
and between First Solar, Inc., a Delaware corporation having its principal
office at 4050 East Cotton Center Boulevard, Building 6, Suite 68, Phoenix,
Arizona 85040 (hereinafter “Employer”) and Kenneth Michael Schultz (hereinafter
“Employee”).
WITNESSETH:
          WHEREAS, Employer and Employee wish to enter into an agreement
relating to the employment of Employee by Employer.
          WHEREAS, Employer and Employee entered into an employment agreement
dated as of November 1, 2002 (the “Original Employment Agreement”), and the
parties intend to amend and restate in its entirety the Original Employment
Agreement with this Agreement,
          WHEREAS, Employer and Employee wish to irrevocably waive certain
provisions contained in the Unit Option Agreement entered into between Employer
and Employee dated December 8, 2003, pursuant to which Employee received stock
options under the First Solar Holdings, LLC 2003 Unit Option Plan (the “Option
Agreement”);
          WHEREAS Employer and Employee shall enter into a change in control
agreement (the “Change in Control Agreement”) that the parties intend to replace
and supersede in its entirety the original change in control agreement (the
“Original Change in Control Agreement”) dated as of December 8, 2003, a
confidentiality and intellectual property agreement (the “Confidentiality
Agreement”) and a non-compete and solicitation agreement (the “Non-Competition
and Non-Solicitation Agreement”) between the Employer and Employee concurrently
with this Agreement; and
          WHEREAS, Employer and Employee have also entered into an
Indemnification Agreement (the “Indemnification Agreement”) dated as of
October 30, 2006 and the parties intend that the Indemnification Agreement
continues to remain in full force and effect.
          NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual covenants, terms and conditions set forth herein, and intending to be
legally bound hereby, Employer and Employee hereby agree as follows:
ARTICLE I. Employment
1.1 At-Will Nature of Employment. Employer hereby employs Employee as a
full-time, at-will employee, and Employee hereby accepts employment with
Employer as a full-time, at-will

 

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employee. Employer or Employee may terminate this Agreement at any time and for
any reason, with or without cause and with or without notice, subject to the
provisions of this Agreement.
1.2 Position and Duties of Employee. Employer hereby employs Employee in the
initial capacity of Executive Vice President and Employee hereby accepts such
position. Employee agrees to diligently and faithfully perform such duties as
may from time to time be assigned to Employee by the Chief Executive Officer.
Employee recognizes the necessity for established policies and procedures
pertaining to Employer’s business operations, and Employer’s right to change,
revoke or supplement such policies and procedures at any time, in Employer’s
sole discretion. Employee agrees to comply with such policies and procedures,
including those contained in any manuals or handbooks, as may be amended from
time to time in the sole discretion of Employer.
1.3 No Salary or Benefits Continuation Beyond Termination. Except as may be
required by law or as otherwise specified in this Agreement or the Change in
Control Agreement, Employer shall not be liable to Employee for any salary or
benefits continuation beyond the date of Employee’s cessation of employment with
Employer. The rights and obligations set forth in Sections 1.3, 1.5 and 4.1 of
this Agreement shall survive termination of Employee’s employment and
termination of this Agreement.
1.4 Termination of Employment. Employee’s employment with Employer shall
terminate upon the earliest of: (i) Employee’s death; (ii) unless waived by
Employer, Employee’s disability, either physical or mental (as determined by a
qualified physician mutually agreeable to Employer and Employee) which renders
Employee unable, for a period of at least six (6) months, effectively to perform
the obligations, duties and responsibilities of Employee’s employment with
Employer; (iii) the termination of Employee’s employment by Employer for cause
(as hereinafter defined); (iv) Employee’s resignation; and (v) the termination
of Employee’s employment by Employer without cause. As used herein, “cause”
shall mean the Employer’s good faith determination of: (a) Employee’s dishonest,
fraudulent or illegal conduct relating to the business of Employer; (b)
Employee’s willful breach or habitual neglect of Employee’s duties or
obligations in connection with Employee’s employment; (c) Employee’s
misappropriation of Employer funds; (d) Employee’s conviction of a felony or any
other criminal offense involving fraud or dishonesty, whether or not relating to
the business of Employer or Employee’s employment with Employer; (e) Employee’s
excessive use of alcohol; (f) Employee’s use of controlled substances or other
addictive behavior; (g) Employee’s unethical business conduct; (h) Employee’s
breach of any statutory or common law duty of loyalty to Employer; or
(i) Employee’s material breach of this Agreement, the Non-Competition and
Non-Solicitation Agreement, or the Confidentiality Agreement, or the Change in
Control Agreement. Upon termination of Employee’s employment with Employer for
any reason, Employee will promptly return to Employer all materials in any form
acquired by Employee as a result of such employment with Employer and all
property of Employer.
1.5 Severance Payments and Vacation Pay.
     (a) Vacation Pay in the Event of a Termination of Employment. Employee
shall be entitled to receive, in addition to the severance payments described in
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Sections 1.5(a) above, the dollar value of any earned but unused (and
unforfeited) vacation for the year of termination.
     (b) Severance Payments in the Case of a Termination Without Cause Pursuant
to Clause 1.4(v). If Employee’s employment is terminated by Employer pursuant to
clause (v) of Section 1.4 (termination without cause), then, subject to the
Change in Control Agreement, Employee shall be entitled to a lump sum cash
severance payment, payable within 10 business days following the Release
Effective Date (as defined below) equal to 1.5 times the Base Salary (as
hereinafter defined) in effect as of the date of termination of employment.
Severance payments shall be subject to any applicable tax withholding.
Notwithstanding anything to the contrary herein, no severance payments shall be
made unless Employee executes a general release in favor of Employer and its
affiliates substantially in the form attached as Exhibit A satisfactory to
Employer and such release is effective and irrevocable on or prior to the tenth
business day prior to March 15 of the year following the year of termination
(the Date such release is effective and irrevocable, the “Release Effective
Date”).
     (c) Medical Insurance. In the event of the termination of Employee’s
employment with Employer without cause under Section 1.4(v) above, Employer will
provide or pay for Employee’s COBRA payments for continued medical coverage
during the shorter of (a) the 18 month period following such termination and
(b) the maximum COBRA period permitted under applicable law.
     (d) Vesting. In the event of the termination of Employee’s employment with
Employer due to a termination by Employer without cause under Section 1.4(v)
above, Employee’s stock options, restricted stock or any other equity
compensation subject to vesting shall continue to vest for another twelve
(12) months after such termination. After such twelve-month period, Employee
will have a 90 day period in which to exercise any vested stock options or other
equity based compensation, provided that if during such 90 day period, Employee
is under any trading restriction due to a lockup agreement or closed trading
window, such 90 day period shall be tolled during the period of such trading
restriction. Notwithstanding anything to the contrary herein, in no event shall
any option or stock appreciation right continue to be exercisable after the
original expiration date of such option or stock appreciation right (without
regard to any earlier expiration resulting from a termination of employment).
ARTICLE II. Compensation
2.1 Base Salary. Employee shall be compensated at an annual base salary of
$360,000 (the “Base Salary”) while Employee is employed by Employer under this
Agreement, subject to such annual increases that Employer may in its sole
discretion determine to be appropriate. Such Base Salary shall be paid in
accordance with Employer’s standard policies and shall be subject to applicable
tax withholding.
2.2 Annual Bonus Eligibility. Employee shall be eligible to receive an annual
bonus of up to sixty percent (60%) of Employee’s Base Salary (without pro-ration
for the current fiscal year with Employees previous Base Salary) based upon
individual and company performance, as
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determined by Employer in its sole discretion. The specific bonus eligibility
and the standards for earning a bonus will be developed by Employer and
communicated to Employee as soon as practicable after the beginning of each year
and shall otherwise be conditional on your continued employment through the
payment date.
2.3 Benefits. Employee also shall be eligible to receive all benefits as are
available to similarly situated employees of Employer generally, and any other
benefits which Employer may in its sole discretion elect to grant to Employee.
In addition, Employee shall be entitled to four weeks paid vacation per year,
which shall be accrued in accordance with Employer’s policies applicable to
similarly situated employees of the Employer.
2.4 Reimbursement of Business Expenses. Employee may incur reasonable expenses
in the course of employment hereunder for which Employee shall be eligible for
reimbursement or advances in accordance with Employer’s standard policy
therefore.
2.5 Grant of Equity. Employee will be eligible to participate in the Employer’s
equity participation programs to acquire options or equity incentive
compensation units in the common stock of First Solar, Inc., subject to and in
accordance with the following contingencies: (1) additional terms contained in
Employer’s equity grant documentation, (2) approval if required of the
Employer’s equity incentive plan by Employer’s Board of Directors (the “Board”)
and shareholders of Employer, (3) approval of the grants by the Board,
(4) Employee’s execution of documents requested by Employer at the time of grant
(5) Employee’s continued employment through the grant date, (6) in accordance
with the 2006 Omnibus Equity Incentive Compensation Plan and (7) in accordance
with the policies, procedures and practices from time to time of the Employer
for granting such options or equity incentive compensation units.
2.7 Location. The position will be based in Phoenix, Arizona.
ARTICLE III. Absence of Restrictions
3.1 Employee hereby represents and warrants that Employee has full power,
authority and legal right to enter into this Agreement and to carry out all
obligations and duties hereunder and that the execution, delivery and
performance by Employee of this Agreement will not violate or conflict with, or
constitute a default under, any agreements or other understandings to which
Employee is a party or by which Employee may be bound or affected, including any
order, judgment or decree of any court or governmental agency.
First Solar, Inc.
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ARTICLE IV. Miscellaneous
4.1 Option Agreement. Employer and Employee acknowledge that by operation of the
conversion of the Employer to a corporation formed under the laws of Delaware
and becoming a public company with common stock listed on the NASDAQ stock
exchange, certain provisions of the Option Agreement are no longer applicable
and mutually agree to irrevocably waive their respective rights under Sections
12, 13, 14 and 15 of the Option Agreement.
4.2 Withholding. Any payments made under this Agreement shall be subject to
applicable federal, state and local tax reporting and withholding requirements.
4.3 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without reference
to the principles of conflicts of laws. Any judicial action commenced relating
in any way to this Agreement including, the enforcement, interpretation, or
performance of this Agreement, shall be commenced and maintained in a court of
competent jurisdiction located in Maricopa County, Arizona. The parties hereby
waive and relinquish any right to a jury trial and agree that any dispute shall
be heard and resolved by a court and without a jury. The parties further agree
that the dispute resolution, including any discovery, shall be accelerated and
expedited to the extent possible. Each party’s agreements in this Section 4.3
are made in consideration of the other party’s agreements in this Section 4.3,
as well as in other portions of this Agreement.
4.4 No Waiver. The failure of Employer or Employee to insist in any one or more
instances upon performance of any of terms, covenants and conditions of this
Agreement shall not be construed as a waiver or relinquishment of any rights
granted hereunder or of the future performance of any such terms, covenants or
conditions.
4.5 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered, delivered by facsimile transmission or by courier or mailed,
registered or certified mail, postage prepaid as follows:

         
 
  If to Employer:   First Solar, Inc.
4050 East Cotton Center Boulevard
Building 6
Suite 68
Phoenix, AZ 85040
Attention: Chief Executive Officer with a copy to the General Counsel
 
       
 
  If to Employee:   To Employee’s then current address on file with Employer

or at such other address or addresses as any such party may have furnished to
the other party in writing in a manner provided in this Section 4.5.
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4.6 Assignability and Binding Effect. This Agreement is for personal services
and is therefore not assignable unless both parties agree in writing.
Notwithstanding the foregoing, this Agreement may be assigned by Employer to any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Employer
(the “Successor”). As used in this Agreement, (a) the term “Employer” shall mean
Employer as hereinbefore defined and any Successor and any permitted assignee to
which this Agreement is assigned and (b) the term “Board” shall mean the Board
as hereinbefore defined and the board of directors or equivalent governing body
of any Successor and any permitted assignee to which this Agreement is assigned.
This Agreement shall be binding upon and inure to the benefit of the parties,
their successors, assigns, heirs, executors and legal representatives.
4.7 Entire Agreement. This Agreement, the Indemnity Agreement, the Change in
Control Agreement, the Non-Competition and Non-Solicitation Agreement and the
Confidentiality Agreement set forth the entire agreement between Employer and
Employee regarding the terms of Employee’s employment and supersedes all prior
agreements between Employer and Employee covering the terms of Employee’s
employment. This Agreement may not be amended or modified except in a written
instrument signed by Employer and Employee identifying this Agreement and
stating the intention to amend or modify it. The Original Employment Agreement
is agreed to be of no further force or effect and is superseded and replaced in
its entirety by this Agreement.
4.8 Severability. If it is determined by a court of competent jurisdiction that
any of the restrictions or language in this Agreement are for any reason invalid
or unenforceable, the parties desire and agree that the court revise any such
restrictions or language, including reducing any time or geographic area, so as
to render them valid and enforceable to the fullest extent allowed by law. If
any restriction or language in this Agreement is for any reason invalid or
unenforceable and cannot by law be revised so as to render it valid and
enforceable, then the parties desire and agree that the court strike only the
invalid and unenforceable language and enforce the balance of this Agreement to
the fullest extent allowed by law. Employer and Employee agree that the
invalidity or unenforceability of any provision of this Agreement shall not
affect the remainder of this Agreement.
4.9 Construction. As used in this Agreement, words such as “herein,”
“hereinafter,” “hereby” and “hereunder,” and the words of like import refer to
this Agreement, unless the context requires otherwise. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”.
     IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by
one of its duly authorized officers and Employee has individually executed this
Agreement, each intending to be legally bound, as of the date first above
written.

            EMPLOYEE:      
  /s/ KENNETH MICHAEL SCHULTZ           Kenneth Michael Schultz    

First Solar, Inc.
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            EMPLOYER:

FIRST SOLAR, INC.
      By:   /s/ MICHAEL J. AHEARN       Name Printed:  Michael J. Ahearn       
Title:  CEO      

First Solar, Inc.
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Exhibit A
SEPARATION AGREEMENT AND RELEASE
I. Release. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the undersigned, with the intention of binding
himself/herself, his/her heirs, executors, administrators and assigns, does
hereby release and forever discharge First Solar, Inc., a Delaware corporation
(the “Company”), and its present and former officers, directors, executives,
agents, employees, affiliated companies, subsidiaries, successors, predecessors
and assigns (collectively, the “Released Parties”), from any and all claims,
actions, causes of action, demands, rights, damages, debts, accounts, suits,
expenses, attorneys’ fees and liabilities of whatever kind or nature in law,
equity, or otherwise, whether now known or unknown (collectively, the “Claims”),
which the undersigned now has, owns or holds, or has at any time heretofore had,
owned or held against any Released Party, arising out of or in any way connected
with the undersigned’s employment relationship with the Company, its
subsidiaries, predecessors or affiliated entities, or the termination thereof,
under any Federal, state or local statute, rule, or regulation, or principle of
common, tort or contract law, including but not limited to, the Fair Labor
Standards Act of 1938, as amended, 29 U.S.C. §§ 201 et seq., the Family and
Medical Leave Act of 1993, as amended (the “FMLA”), 29 U.S.C. §§ 2601 et seq.,
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et
seq., the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §§
621 et seq., the Americans with Disabilities Act of 1990, as amended, 42 U.S.C.
§§ 12101 et seq., the Worker Adjustment and Retraining Notification Act of 1988,
as amended, 29 U.S.C. §§ 2101 et seq., the Employee Retirement Income Security
Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq., and any other equivalent or
similar Federal, state, or local statute; provided, however, that nothing herein
shall release the Company (a) of its obligations under that certain Change in
Control Severance Agreement in which the undersigned participates and pursuant
to which this Separation Agreement and Release is being executed and delivered,
(b) from any claims by the undersigned arising out of any director and officer
indemnification or insurance obligations in favor of the undersigned and (c) any
director and officer indemnification obligations under the Company’s by-laws.
The undersigned understands that, as a result of executing this Separation
Agreement and Release, he/she will not have the right to assert that the Company
or any other Released Party unlawfully terminated his/her employment or violated
any of his/her rights in connection with his/her employment or otherwise.
The undersigned affirms that he/she has not filed, caused to be filed, or
presently is a party to any Claim, complaint or action against any Release Party
in any forum or form and that he/she knows of no facts which may lead to any
Claim, complaint or action being filed against any Release Party in any forum by
the undersigned or by any agency, group, or class persons. The undersigned
further affirms that he/she has been paid and/or has received all leave (paid or
unpaid), compensation, wages, bonuses, commissions, and/or benefits to which
he/she may be entitled and that no other leave (paid or unpaid), compensation,
wages, bonuses, commissions and/or benefits are due to him/her from the Company
and its subsidiaries, except as specifically provided in this Separation
Agreement and Release. The undersigned furthermore affirms that he/she has no
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workplace injuries or occupational diseases and has been provided and/or has not
been denied any leave requested under the FMLA. If any agency or court assumes
jurisdiction of any such Claim, complaint or action against any Released Party
on behalf of the undersigned, the undersigned will request such agency or court
to withdraw the matter.
The undersigned further declares and represents that he/she has carefully read
and fully understands the terms of this Separation Agreement and Release and
that he/she has been advised and had the opportunity to seek the advice and
assistance of counsel with regard to this Separation Agreement and Release, that
he/she may take up to and including 21 days from receipt of this Separation
Agreement and Release, to consider whether to sign this Separation Agreement and
Release, that he/she may revoke this Separation Agreement and Release within
seven calendar days after signing it by delivering to the Company written
notification of revocation, and that he/she knowingly and voluntarily, of
his/her own free will, without any duress, being fully informed and after due
deliberate action, accepts the terms of and signs the same as his own free act.
[To effect a full and complete general release as described above, the
undersigned expressly waives and relinquishes all rights and benefits of
Section 1542 of the Civil Code of the State of California, and the undersigned
does so understanding and acknowledging the significance and consequence of
specifically waiving Section 1542. Section 1542 of the Civil Code of the State
of California states as follows:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.
Thus, notwithstanding the provisions of Section 1542, and to implement a full
and complete release and discharge of the Released Parties, the undersigned
expressly acknowledges this Separation Agreement and Release is intended to
include in its effect, without limitation, all Claims the undersigned does not
know or suspect to exist in the undersigned’s favor at the time of signing this
Separation Agreement and Release, and that this Separation Agreement and Release
contemplates the extinguishment of any such Claim or Claims.]1
II. Protected Rights. The Company and the undersigned agree that nothing in this
Separation Agreement and Release is intended to or shall be construed to affect,
limit or otherwise interfere with any non-waivable right of the undersigned
under any Federal, state or local law, including the right to file a charge or
participate in an investigation or proceeding conducted by the Equal Employment
Opportunity Commission (“EEOC”) or to exercise any other right that cannot be
waived under applicable law. The undersigned is releasing, however, his/her
right to any monetary recovery or relief should the EEOC
 

1   Only include for employees who were employed by the Company or its
subsidiaries in California.

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or any other agency pursue Claims on his/her behalf. Further, should the EEOC or
any other agency obtain monetary relief on his/her behalf, the undersigned
assigns to the Company all rights to such relief.
III. Equitable Remedies. The undersigned acknowledges that a violation by the
undersigned of any of the covenants contained in this Agreement would cause
irreparable damage to the Company and its subsidiaries in an amount that would
be material but not readily ascertainable, and that any remedy at law (including
the payment of damages) would be inadequate. Accordingly, the undersigned agrees
that, notwithstanding any provision of this Separation Agreement and Release to
the contrary, the Company shall be entitled (without the necessity of showing
economic loss or other actual damage) to injunctive relief (including temporary
restraining orders, preliminary injunctions and/or permanent injunctions) in any
court of competent jurisdiction for any actual or threatened breach of any of
the covenants set forth in this Agreement in addition to any other legal or
equitable remedies it may have.
IV. Return of Property. The undersigned shall return to the Company on or before
[10 DAYS AFTER TERMINATION DATE], all property of the Company in the
undersigned’s possession or subject to the undersigned’s control, including
without limitation any laptop computers, keys, credit cards, cellular telephones
and files. The undersigned shall not alter any of the Company’s records or
computer files in any way after [TERMINATION DATE].
V. Severability. If any term or provision of this Separation Agreement and
Release is invalid, illegal or incapable of being enforced by any applicable law
or public policy, all other conditions and provisions of this Separation
Agreement and Release shall nonetheless remain in full force and effect so long
as the economic and legal substance of the transactions contemplated by this
Separation Agreement and Release is not affected in any manner materially
adverse to any party.
VI. GOVERNING LAW. THIS SEPARATION AGREEMENT AND RELEASE SHALL BE DEEMED TO BE
MADE IN THE STATE OF DELAWARE, AND THE VALIDITY, INTERPRETATION, CONSTRUCTION
AND PERFORMANCE OF THIS AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.

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Effective on the eighth calendar day following the date set forth below.

          FIRST SOLAR, INC.,                 By          Name:          Title: 
                 

          EMPLOYEE,                     [NAME]          

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(FIRST SOLAR LOGO) [p74582p7458201.gif]
NON-COMPETITION AND NON-SOLICITATION AGREEMENT
     In consideration of Employee’s (as defined below) ongoing at-will
employment with Employer (as defined below) or one of its subsidiary companies,
the compensation and benefits provided to me including those set forth in a
separate Employment Agreement, Confidentiality and Intellectual Property
Agreement (the “Confidentiality Agreement”), Change in Control Agreement (the
“Change in Control Agreement”) and Employer’s agreement to provide Employee with
access to Employer’s confidential information, intellectual property and trade
secrets, access to its customers and other promises made below, Employee enters
into the following non-competition and non-solicitation agreement:
     This Non-Competition and Non-Solicitation Agreement (“Agreement”) is
effective by and between Kenneth Michael Schultz (“Employee”) and First Solar,
Inc. (“Employer”) as of August 27, 2007.
     Whereas, Employee desires to be employed by Employer and Employer has
agreed to employ Employee in the Employees current position with the Employer,
or such other position as Employer may from time to time determine;
     Whereas, because of the nature of Employee’s duties, in the performance of
such duties, Employee will have access to and will necessarily utilize
sensitive, secret and proprietary data and information, the value of which
derives from its secrecy from Employer’s competitors, which, like Employer, sell
products and services throughout the world;
     Whereas, Employee and Employer acknowledge and agree that Employee’s
conduct in the manner prohibited by this Agreement during, or for the period
specified in this Agreement following the termination of Employee’s employment
with Employer, would jeopardize Employer’s Confidential Information (as defined
in the Confidentiality Agreement) and the goodwill the Employer has developed
and generated over a period of years, and would cause Employer to experience
unfair competition and immediate, irreparable harm; and
     Whereas, in consideration of Employer’s hiring Employee, Employee therefore
has agreed to the terms of This Agreement, the Employment Agreement, the
Confidentiality Agreement, the Change in Control Agreement, the Indemnification
Agreement and specifically to the restrictions contained herein.
     Therefore, Employee and Employer hereby agree as follows (THE FOLLOWING ARE
IMPORTANT RESTRICTIONS TO WHICH EMPLOYEE AGREES IN ORDER TO INDUCE EMPLOYER TO
RETAIN EMPLOYEE AND WHICH, ONCE EMPLOYEE SIGNS THIS AGREEMENT, ARE BINDING ON
EMPLOYEE. BY SIGNING THIS AGREEMENT, EMPLOYEE SIGNIFIES THAT EMPLOYEE HAS READ
THESE RESTRICTIONS CAREFULLY BEFORE SIGNING THIS AGREEMENT, UNDERSTANDS THE
AGREEMENT’S TERMS, AND ASSENTS TO ABIDE BY THESE RESTRICTIONS.):

 

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     1. Nature and Period of Restriction. At all times during Employee’s
employment and for a period of eighteen months after the termination of
employment (for any reason, including discharge or resignation) with Employer
(the “Restricted Period”), Employee agrees as follows:
     1.1. Employee agrees not to engage or assist, in any way or in any
capacity, anywhere in the Territory (as defined below), either directly or
indirectly, (a) in the business of the development, sale, marketing, manufacture
or installation that would be in direct competition with of any type of product
sold, developed, marketed, manufactured or installed by Employer during
Employee’s employment with Employer, including photovoltaic modules, or (b) in
any other activity in direct competition or that would be in direct competition
with the business of Employer as that business exists and is conducted during
the Employee’s employment with Employer. In addition and in particular, Employee
agrees not to sell, market, provide or distribute, or endeavor to sell, market,
provide or distribute, in any way, directly or indirectly, on behalf of Employee
or any other person or entity, any products or services competitive with those
of Employer to any person or entity which is or was an actual or prospective
customer of Employer at any time during Employee’s employment by Employer.
     1.2. “Territory” for purposes of this Agreement means North America.
     1.3. Employee agrees not to solicit, recruit, hire, employ or attempt to
hire or employ, or assist any other person or entity in the recruitment or
hiring of, any person who is an employee of Employer, and agrees not to
otherwise urge, induce or seek to induce any person to terminate his or her
employment with Employer.
     1.4. The parties understand and agree that the restrictions set forth in
the paragraphs in this Section 1 also extend to Employee’s recommending or
directing any such actual or prospective customers to any other competitive
concerns, or assisting in any way any competitive concerns in soliciting or
providing products or services to such customers, whether or not Employee
personally provides any products or services directly to such customers. For
purposes of this Agreement, a prospective customer is one that Employer
solicited or with which Employer otherwise sought to engage in a business
transaction during the time that Employee is or was employed by Employer.
     1.5. Employee and Employer acknowledge and agree that Employer has expended
substantial amounts of time, money and effort to develop business strategies,
customer relationships, employee relationships, trade secrets and goodwill and
to build an effective organization and that Employer has a legitimate business
interest and right in protecting those assets as well as any similar assets that
Employer may develop or obtain. Employee and Employer acknowledge that Employer
is entitled to protect and preserve the going concern value of Employer and its
business and trade secrets to the extent permitted by law. Employee acknowledges
and agrees the restrictions imposed upon Employee under this Agreement are
reasonable and necessary for the protection of Employer’s legitimate interests,
including Employer’s Confidential Information, intellectual property, trade
secrets and goodwill. Employee and Employer acknowledge that Employer is engaged
in a highly competitive

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business, that Employee is expected to serve a key role with Employer, that
Employee will have access to Employer’s Confidential Information, that
Employer’s business and customers and prospective customers are located around
the world, and that Employee could compete with Employer from virtually any
location in the world. Employee acknowledges and agrees that the restrictions
set forth in this Agreement do not impose any substantial hardship on Employee
and that Employee will reasonably be able to earn a livelihood without violating
any provision of this Agreement. Employee acknowledges and agrees that part of
the consideration for the restrictions in this Section 1 consists of Employer’s
agreement to make severance payments as set forth in the separate Employment
Agreement between Employer and Employee.
     1.6. Employee agrees to comply with each of the restrictive covenants
contained in this Agreement in accordance with its terms, and Employee shall
not, and hereby agrees to waive and release any right or claim to, challenge the
reasonableness, validity or enforceability of any of the restrictive covenants
contained in this Agreement.
     2. Notice by Employee to Employer. During the Restricted Period, prior to
engaging in any activities prohibited by the above paragraphs, or prior to
accepting any position or employment which would be so prohibited, Employee
agrees to provide at least thirty (30) days’ prior written notice (by certified
mail) to Employer in accordance with Section 6, stating the description of the
activities or position sought to be undertaken by Employee, and to provide such
further information as Employer may reasonably request in connection therewith
(including the location where the services would be performed and the present or
former customers or employees of Employer anticipated to receive such products
or services). Employer shall be free to object or not to object in its
unfettered discretion, and the parties agree that any actions taken or not taken
by Employer with respect to any other employees or former employees shall have
no bearing whatsoever on Employer’s decision or on any questions regarding the
enforceability of any of these restraints with respect to Employee.
     3. Notice to Subsequent Employer. Prior to accepting employment with any
other person or entity during the Restricted Period, Employee shall provide such
prospective employer with written notice of the provisions of this Agreement,
with a copy of such notice delivered promptly to Employer in accordance with
Section 6.
     4. Extension of Non-Competition Period in the Event of Breach. It is agreed
that the Restricted Period shall be extended by an amount of time equal to the
amount of time during which Employee is in breach of any of the restrictive
covenants set forth above.
     5. Judicial Reformation to Render Agreement Enforceable. If it is
determined by a court of competent jurisdiction that any of the restrictions or
language in this Agreement are for any reason invalid or unenforceable, the
parties desire and agree that the court revise any such restrictions or
language, including reducing any time or geographic area, so as to render them
valid and enforceable to the fullest extent allowed by law. If any restriction
or language in this Agreement is for any reason invalid or unenforceable and
cannot by law be revised so as to render it valid and enforceable, then the
parties desire and agree that the court strike only the invalid and
unenforceable language and enforce the balance of this Agreement to the fullest

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extent allowed by law. Employer and Employee agree that the invalidity or
unenforceability of any provision of this Agreement shall not affect the
remainder of this Agreement.
     6. Notice. All documents, notices or other communications that are required
or permitted to be delivered or given under this Agreement shall be in writing
and shall be deemed to be duly delivered or given when received.

                      If to Employer:   C/O First Solar, Inc.             4050
East Cotton Center Boulevard             Building 6, Suite 68            
Phoenix, Arizona 85040             Attention: Chief Executive Officer with a
copy to the             General Counsel             Fax: (602) 414-9400    
 
  If to Employee:                          
 
                             
 
                             
 
      Fax:        
 
             
 
                             

     7. Enforcement. Except as expressly stated herein, the covenants contained
in this Agreement shall be construed as independent of any other provision or
covenants of any other agreement between Employer and Employee, and the
existence of any claim or cause of action of Employee against Employer, whether
predicated on this Agreement or otherwise, or the actions of Employer with
respect to enforcement of similar restrictions as to other employees, shall not
constitute a defense to the enforcement by Employer of such covenants. Employee
acknowledges and agrees that Employer has invested great time, effort and
expense in its business and reputation, that the products and information of the
Employer are unique and valuable, and that the services performed by Employee
are unique and extraordinary, and Employee agrees that the Employer will suffer
immediate, irreparable harm and shall be entitled, upon a breach or a threatened
breach of this Agreement, to emergency, preliminary, and permanent injunctive
relief against such activities, without having to post any bond or other
security, and in addition to any other remedies available to Employer at law or
equity. Any specific right or remedy set forth in this Agreement, legal,
equitable or otherwise, shall not be exclusive but shall be cumulative upon all
other rights and remedies allowed or by law, including the recovery of money
damages. The failure of Employer to enforce any of the provisions of this
Agreement, or the provisions of any agreement with any other Employee, shall not
constitute a waiver or limit any of Employer’s rights.
     8. At-Will Employment; Termination. This Agreement does not alter the
at-will nature of Employee’s employment by Employer, and Employee’s employment
may be terminated by either party, with or without notice and with or without
cause, at any time. In addition to the foregoing provisions of this Agreement,
upon Employee’s termination, Employee shall cease all identification of Employee
with Employer and/or the business, products or services of Employer, and the use
of Employer’s name, trademarks, trade name or fictitious

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name. All provisions, obligations, and restrictions in this Agreement shall
survive termination of Employee’s employment with Employer.
     9. Choice of Law, Choice of Forum. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without reference to the principles of conflicts of laws. Any judicial action
commenced relating in any way to this Agreement including the enforcement,
interpretation, or performance of this Agreement, shall be commenced and
maintained in a court of competent jurisdiction located in Maricopa County,
Arizona. In any action to enforce this Agreement, the prevailing party shall be
entitled to recover its litigation costs, including its attorneys’ fees. The
parties hereby waive and relinquish any right to a jury trial and agree that any
dispute shall be heard and resolved by a court and without a jury. The parties
further agree that the dispute resolution, including any discovery, shall be
accelerated and expedited to the extent possible. Each party’s agreements in
this Section 9 are made in consideration of the other party’s agreements in this
Section 9, as well as in other portions of this Agreement.
     10. Entire Agreement, Modification and Assignment.
     10.1. This Agreement, the Employment Agreement, the Confidentiality
Agreement, the Change in Control Agreement and the Indemnification Agreement
comprise the entire agreement relating to the subject matter hereof between the
parties and supersedes, cancels, and annuls any and all prior agreements or
understandings between the parties concerning the subject matter of the
Agreement.
     10.2. This Agreement may not be modified orally but may only be modified in
a writing executed by both Employer and Employee.
     10.3. This Agreement shall inure to the benefit of Employer, its successors
and assigns, and may be assigned by Employer. Employee’s rights and obligations
under this Agreement may not be assigned by Employee.
     11. Construction. As used in this Agreement, words such as “herein,”
“hereinafter,” “hereby” and “hereunder,” and the words of like import refer to
this Agreement, unless the context requires otherwise. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”.

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     IN WITNESS WHEREOF, the parties have executed this Agreement, effective as
of the day and year first written above.

                      EMPLOYER:           EMPLOYEE:    
 
                    First Solar, Inc.              
 
                   
By:
/s/  MICHAEL J. AHEARN       /s/ KENNETH MICHAEL SCHULTZ                    
Its:
CEO       Kenneth Michael Schultz                     Printed Name:  Michael J.
Ahearn            
 
                   

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(FIRST SOLAR LOGO) [p74582p7458201.gif]
First Solar, Inc.
Confidentiality and Intellectual Property Agreement

  Employee:      Kenneth Michael Schultz

  Place of Signing:      Phoenix, Arizona
                                    Date: August 27, 2007

In consideration of my ongoing at-will employment with First Solar, Inc. or one
of its subsidiary companies (collectively, the “Company”), for the compensation
and benefits provided to me, and for the Company’s agreement to provide me with
access to experience, knowledge, and Confidential Information (as defined below)
gained by me in the course of such employment relating to the methods, plans,
and operations of the Company and its suppliers, clients, and customers I enter
into the following Confidentiality and Intellectual Property Agreement (the
“Agreement”) and agree as follows:
     1. Except for any items I have identified and described in a writing given
to the Company and acknowledged in writing by an officer of the Company on or
before the date of this Agreement, which items are specifically excluded from
the operation of the applicable provisions hereof, I do not own, nor have any
interest in, any patents, patent applications, inventions, improvements,
methods, discoveries, designs, trade secrets, copyrights, and/or other
patentable or proprietary rights.
     2. I will promptly and fully disclose to the Company all developments,
inventions, ideas, methods, discoveries, designs, and innovations (collectively
referred to herein as “Developments”), whether patentable or not, relating
wholly or in part to my work for the Company or resulting wholly or in part from
my use of the Company’s materials or facilities, which I may make or conceive,
whether or not during working hours, whether or not using the Company’s
materials, whether or not on the Company facilities, alone or with others, at
any time during my employment or within ninety (90) days after termination
thereof, and I agree that all such Developments shall be the exclusive property
of the Company, and that I shall have no proprietary or shop rights in
connection therewith.
     3. I will assign, and do hereby assign, to the Company or the Company’s
designee, my entire right, title and interest in and to all such Developments
including all

 

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trademarks, copyrights, moral rights and mask work rights in or relating to such
Developments, and any patent applications filed and patents granted thereon
including those in foreign countries; and I agree, both during my employment by
the Company and thereafter, to execute any patent or other papers deemed
necessary or appropriate by the Company for filing with the United States or any
other country covering such Developments as well as any papers that the Company
may consider necessary or helpful in obtaining or maintaining such patents
during the prosecution of patent applications thereon or during the conduct of
any interference, litigation, or any other matter in connection therewith, and
to transfer to the Company any such patents that may be issued in my name. If,
for some reason, I am unable to execute such patent or other papers, I hereby
irrevocably designate and appoint the Company and its designees and their duly
authorized officers and agents, as the case may be, as my agent and attorney in
fact to act for and in my behalf and stead to execute any documents and to do
all other lawfully permitted acts in connection with the foregoing. I agree to
cooperate with and assist the Company as requested by the Company to provide
documentation reflecting the Company’s sole and complete ownership of the
Developments. All expenses incident to the filing of such applications, the
prosecution thereof and the conduct of any such interference, litigation, or
other matter will be borne by the Company. This Section 3 shall survive the
termination of this Agreement.
     4. Subject to Section 5 below, I will not, either during my employment with
the Company or at any time thereafter, use, disclose or authorize, or assist
anyone else to disclose or use or make known for anyone’s benefit, any
information, knowledge or data of the Company or any supplier, client, or
customer of the Company in any way acquired by me during or as a result of my
employment with the Company, whether before or after the date of this Agreement,
(hereinafter the “Confidential Information”). Such Confidential Information
shall include the following:
     (a) Information of a business nature including financial information and
information about sales, marketing, purchasing, prices, costs, suppliers and
customers;
     (b) Information pertaining to future developments including research and
development, new product ideas and developments, strategic plans, and future
marketing and merchandising plans and ideas;
     (c) Information and material that relate to the Company’s manufacturing
methods, machines, articles of manufacture, compositions, inventions,
engineering services, technological developments, “know-how”, purchasing,
accounting, merchandising and licensing;
     (d) Trade secrets of the Company, including information and material with
respect to the design, construction, capacity or method of operation of the
Company’s equipment or products and information regarding the Company’s
customers and sales or marketing efforts and strategies;

2

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     (e) Software in various stages of development (source code, object code,
documentation, diagrams, flow charts), designs, drawings, specifications,
models, data and customer information; and
     (f) Any information of the type described above that the Company obtained
from another party and that the Company treats as proprietary or designates as
confidential, whether or not owned or developed by the Company.
     5. It is understood and agreed that the term “Confidential Information”
shall not include information which is generally available to the public, other
than through any act or omission on the part of Employee in breach of this
Agreement.
     6. I acknowledge (a) that such Confidential Information derives its value
to the Company from the fact that it is maintained as confidential and secret
and is not readily available to the general public or the Company’s competitors;
(b) that the Company undertakes great effort and sufficient measures to maintain
the confidentiality and secrecy of such information; and (c) that such
Confidential Information is protected and covered by this Agreement regardless
of whether or not such Confidential Information is a “trade secret” under
applicable law. I further acknowledge and agree that the obligations and
restrictions herein are reasonable and necessary to protect the Company’s
legitimate business interests, and that this Agreement does not impose an
unreasonable or undue burden on me and will not prevent me from earning a
livelihood subsequent to the termination of my employment. I agree to comply
with each of the restrictive covenants contained in this Agreement in accordance
with its terms, and will not, and I hereby agree to waive and release any right
or claim to, challenge the reasonableness, validity or enforceability of any of
the restrictive covenants contained in this Agreement.
     7. I will deliver to the Company promptly upon request, and, in any event,
on the date of termination of my employment, all documents, copies thereof and
other materials in my possession, including any notes or memoranda prepared by
me, pertaining to the business of the Company, whether or not including any
Confidential Information, and thereafter will promptly deliver to the Company
any documents and copies thereof pertaining to the business of the Company that
come into my possession.
     8. I represent that I have no agreements with or obligations to others with
respect to any innovations, developments, or information that could conflict
with any of the foregoing.
     9. The invalidity or unenforceability of any provision of this Agreement,
whether in whole or in part, shall not in any way affect the validity and/or
enforceability of any of the other provisions of this Agreement. Any invalid or
unenforceable provision or portion thereof shall be deemed severable to the
extent of any such invalidity or unenforceability. The restrictions contained in
this Agreement are reasonable for the purpose of preserving for the Company and
its affiliates the proprietary rights, intangible business value and
Confidential Information of the Company and its affiliates. If it is

3

--------------------------------------------------------------------------------

 

determined by a court of competent jurisdiction that any of the restrictions or
language in this Agreement is for any reason invalid or unenforceable, the
parties desire and agree that the court revise any such restrictions or language
so as to render it valid and enforceable to the fullest extent allowed by law.
If any restriction or language in this Agreement is for any reason invalid or
unenforceable and cannot by law be revised so as to render it valid and
enforceable, then the parties desire and agree that the court strike only the
invalid and unenforceable language and enforce the balance of this Agreement to
the fullest extent allowed by law.
     10. I agree that any breach or threatened breach by me of any of the
provisions in this Agreement cannot be remedied solely by the recovery of
damages. I expressly agree that upon a threatened breach or violation of any of
such provisions, the Company, in addition to all other remedies, shall be
entitled as a matter of right, and without posting a bond or other security, to
emergency, preliminary, and permanent injunctive relief in any court of
competent jurisdiction. Nothing herein, however, shall be construed as
prohibiting the Company from pursuing, in concert with an injunction or
otherwise, any other remedies available at law or in equity for such breach or
threatened breach, including the recovery of damages.
     11. This Agreement is made in consideration of my continued employment by
the Company. I understand that the Company is under no obligation to employ me
for any duration and that my employment with the Company is terminable at the
will of the Company or at my will at any time and for any reason and without
notice.
     12. Upon termination of my employment with the Company, I shall, if
requested by the Company, reaffirm my recognition of the importance of
maintaining the confidentiality of the Company’s Confidential Information and
reaffirm all of my obligations set forth herein. The provisions, obligations,
and restrictions in this Agreement shall survive the termination of my
employment, and will be binding on me whether or not the Company requests a
re-affirmation.
     13. This Agreement, my Employment Agreement with the Company (the
“Employment Agreement”), the Non-competition Agreement (as defined in the
Employment Agreement), the Change in Control Agreement (as defined in the
Employment Agreement) and the Indemnification Agreement (as defined in the
Employment Agreement) represent the full and complete understanding between me
and the Company with respect to the subject matter hereof and supersedes all
prior representations and understandings, whether oral or written regarding such
subject matter. This Agreement may not be changed, modified, released,
discharged, abandoned or otherwise terminated, in whole or in part, except by an
instrument in writing signed by both the Company and Employee. My obligations
under this Agreement shall be binding upon my heirs, executors, administrators,
or other legal representatives or assigns, and this Agreement shall inure to the
benefit of the Company, its successors, and assigns.
     14. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without reference to
principles of conflict

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of laws. Any judicial action commenced relating in any way to this Agreement
including the enforcement, interpretation, or performance of this Agreement,
shall be commenced and maintained in a court of competent jurisdiction located
in Maricopa County, Arizona. In any action to enforce this Agreement, the
prevailing party shall be entitled to recover its litigation costs, including
its attorneys’ fees. The parties hereby waive and relinquish any right to a jury
trial and agree that any dispute shall be heard and resolved by a court and
without a jury. The parties further agree that the dispute resolution, including
any discovery, shall be accelerated and expedited to the extent possible. Each
party’s agreements in this Section 14 are made in consideration of the other
party’s agreements in this Section 14, as well as in other portions of this
Agreement.
     15. As used in this Agreement, words such as “herein,” “hereinafter,”
“hereby” and “hereunder,” and the words of like import refer to this Agreement,
unless the context requires otherwise. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”.

             
Signed:
  /s/ KENNETH MICHAEL SCHULTZ                   Employee    
 
            Agreed to by First Solar, Inc.    
 
           
 
  By:   /s/ MICHAEL J. AHEARN    
 
           
 
  Its:   CEO    
 
           

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     CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”) dated as of
August 27, 2007, between First Solar, Inc., a Delaware corporation (the
“Company”), and Kenneth Michael Schultz (the “Executive”).
          WHEREAS the Executive is a skilled and dedicated employee of the
Company who has important management responsibilities and talents that benefit
the Company;
          WHEREAS the Board of Directors of the Company (the “Board”) considers
it essential to the best interests of the Company and its stockholders to assure
that the Company and its subsidiaries will have the continued dedication of the
Executive, notwithstanding the possibility, threat or occurrence of a Change in
Control (as defined below); and
          WHEREAS the Board believes that it is imperative to diminish the
distraction of the Executive by virtue of the uncertainties and risks created by
the circumstances surrounding a Change in Control and to ensure the Executive’s
full attention to the Company and its subsidiaries during such a period of
uncertainty;
          WHEREAS the Executive entered into a change in control agreement (the
“Original Change in Control Agreement”) with the Company dated as of December 8,
2003, and the parties intend to replace in its entirety the Original Change in
Control Agreement with this Agreement;
          NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
          SECTION 1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
          (a) “280G Gross-Up Payment” shall have the meaning set forth in
Section 5(a).
          (b) “Accounting Firm” shall have the meaning set forth in
Section 5(b).
          (c) “Accrued Rights” shall have the meaning set forth in
Section 4(a)(iv).
          (d) “Affiliate(s)” means, with respect to any specified Person, any
other Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
          (e) “Annual Base Salary” shall mean the greater of the Executive’s
annual rate of base salary in effect (i) immediately prior to the Change in
Control Date and (ii) immediately prior to the Termination Date.

 

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          (f) “Annual Bonus” shall mean the target annual cash bonus the
Executive is eligible to earn (assuming 100% fulfillment of all elements of the
formula under which such bonus would have been calculated) for the year in which
the Termination Date occurs.
          (g) “Bonus Amount” means, as of the Termination Date, the greater of
(i) the Annual Bonus and (ii) the average annual cash bonuses payable to the
Executive in respect of any of the three calendar years immediately preceding
the Termination Date.
          (h) “Cause” means the occurrence of any one of the following:
     (i) the Executive is convicted of, or pleads guilty or nolo contendere to,
(A) a misdemeanor involving moral turpitude or misappropriation of the assets of
the Company or a Subsidiary or (B) any felony (or the equivalent of such a
misdemeanor or felony in a jurisdiction outside of the United States);
     (ii) the Executive commits one or more acts or omissions constituting gross
negligence, fraud or other gross misconduct that the Company reasonably and in
good faith determines has a materially detrimental effect on the Company;
     (iii) the Executive continually and willfully fails, for at least 14 days
following written notice from the Company, to perform substantially the
Executive’s employment duties (other than as a result of incapacity due to
physical or mental illness or after delivery by the Executive of a Notice of
Termination for Good Reason); or
     (iv) the Executive commits a gross violation of any of the Company’s
material policies (including the Company’s Code of Business Conduct and Ethics,
as in effect from time to time) that the Company reasonably and in good faith
determines is materially detrimental to the best interests of the Company.
               The termination of employment of the Executive for Cause shall
not be effective unless and until there has been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board (excluding the Executive) at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, the Executive is guilty of the conduct described in clause
(i), (ii), (iii) or (iv) above and specifying the particulars thereof in detail.
     (i) “Change in Control” means the occurrence of any of the following:
     (i) individuals who, as of the date of this Agreement, were members of the
Board (the “Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date of this Agreement whose appointment or election,
or nomination for election, by the Company’s stockholders was approved by a vote
of at least a majority of the Incumbent Directors shall be considered as though

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such individual were an Incumbent Director, but excluding, for purposes of this
proviso, any such individual whose assumption of office after the date of this
Agreement occurs as a result of an actual or threatened proxy contest with
respect to election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of any “person” (as such
term is used in Section 13(d) of the Exchange Act) (each, a “Person”) other than
the Board or any Specified Shareholder;
     (ii) the consummation of (A) a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving (x) the Company or
(y) any of its Subsidiaries, but in the case of this clause (y) only if Company
Voting Securities (as defined below) are issued or issuable in connection with
such transaction (each of the transactions referred to in this clause (A) being
hereinafter referred to as a “Reorganization”) or (B) a sale or other
disposition of all or substantially all the assets of the Company (a “Sale”),
unless, immediately following such Reorganization or Sale, (1) all or
substantially all the individuals and entities who were the “beneficial owners”
(as such term is defined in Rule 13d-3 under the Exchange Act (or a successor
rule thereto)) of shares of the Company’s common stock or other securities
eligible to vote for the election of the Board outstanding immediately prior to
the consummation of such Reorganization or Sale (such securities, the “Company
Voting Securities”) beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding voting securities of the
corporation or other entity resulting from such Reorganization or Sale
(including a corporation or other entity that, as a result of such transaction,
owns the Company or all or substantially all the Company’s assets either
directly or through one or more subsidiaries) (the “Continuing Entity”) in
substantially the same proportions as their ownership, immediately prior to the
consummation of such Reorganization or Sale, of the outstanding Company Voting
Securities (excluding any outstanding voting securities of the Continuing Entity
that such beneficial owners hold immediately following the consummation of such
Reorganization or Sale as a result of their ownership prior to such consummation
of voting securities of any corporation or other entity involved in or forming
part of such Reorganization or Sale other than the Company or a Subsidiary),
(2) no Person (excluding (x) any employee benefit plan (or related trust)
sponsored or maintained by the Continuing Entity or any corporation or other
entity controlled by the Continuing Entity and (y) any Specified Shareholder)
beneficially owns, directly or indirectly, 20% or more of the combined voting
power of the then outstanding voting securities of the Continuing Entity and
(3) at least a majority of the members of the board of directors or other
governing body of the Continuing Entity were Incumbent Directors at the time of
the execution of the definitive agreement providing for such Reorganization or
Sale or, in the absence of such an agreement, at the time at which approval of
the Board was obtained for such Reorganization or Sale;
     (iii) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company, unless such liquidation or
dissolution

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is part of a transaction or series of transactions described in Section 1(i)(ii)
that does not otherwise constitute a Change in Control; or
     (iv) any Person, corporation or other entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than any Specified
Shareholder becomes the beneficial owner, directly or indirectly, of securities
of the Company representing a percentage of the combined voting power of the
Company Voting Securities that is equal to or greater than the greater of
(x) 20% and (y) the percentage of the combined voting power of the Company
Voting Securities beneficially owned directly or indirectly by all the Specified
Shareholders at such time; provided, however, that for purposes of this
Section 1(i)(iv) only (and not for purposes of Sections 1(i)(i) through (iii)),
the following acquisitions shall not constitute a Change in Control: (A) any
acquisition by the Company or any Subsidiary, (B) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary, (C) any acquisition by an underwriter temporarily holding
such Company Voting Securities pursuant to an offering of such securities or
(D) any acquisition pursuant to a Reorganization or Sale that does not
constitute a Change in Control for purposes of Section 1(i)(ii).
          (j) “Change in Control Date” means the date on which a Change in
Control occurs.
          (k) “COBRA” shall have the meaning set forth in Section 4(a)(iii).
          (l) “Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
          (m) “Company Voting Securities” shall have the meaning set forth in
Section 1(i)(ii).
          (n) “Continuing Entity” shall have the meaning set forth in
Section 1(i)(ii).
          (o) “Disability” shall have the meaning set forth in Section 4(b)(ii).
          (p) “Effective Date” shall have the meaning set forth in Section 2.
          (q) “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute thereto.
          (r) “Excise Tax” means the excise tax imposed by Section 4999 of the
Code, together with any interest or penalties imposed with respect to such tax.
          (s) “Good Reason” means, without the Executive’s express written
consent, the occurrence of any one or more of the following:
          (i) any material reduction in the authority, duties or
responsibilities held by the Executive immediately prior to the Change in
Control Date, but excluding for this

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purpose an inadvertent reduction not occurring in bad faith and which is
remedied by the Company within ten business days after receipt of notice thereof
given by the Executive;
          (ii) any material reduction in the annual base salary or annual
incentive opportunity of the Executive as in effect immediately prior to the
Change in Control Date, other than an inadvertent reduction not occurring in bad
faith and which is remedied by the Company within ten business days after
receipt of notice thereof given by the Executive;
          (iii) any change of the Executive’s principal place of employment to a
location more than 50 miles from the Executive’s principal place of employment
immediately prior to the Change in Control Date;
          (iv) any failure of the Company to pay the Executive any compensation
when due (other than an inadvertent failure that is remedied within ten business
days after receipt of written notice thereof given by the Executive);
          (v) delivery by the Company or any Subsidiary of a written notice to
the Executive of the intent to terminate the Executive’s employment for any
reason, other than Cause or Disability, in each case in accordance with this
Agreement, regardless of whether such termination is intended to become
effective during or after the Protection Period; or
          (vi) any failure by the Company to comply with and satisfy the
requirements of Section 10(c).
          The Executive’s right to terminate employment for Good Reason shall
not be affected by the Executive’s incapacity due to physical or mental illness.
A termination of employment by the Executive for Good Reason for purposes of
this Agreement shall be effectuated by giving the Company written notice
(“Notice of Termination for Good Reason”) of the termination setting forth in
reasonable detail the specific conduct of the Company that constitutes Good
Reason and the specific provisions of this Agreement on which the Executive
relied, provided that such notice must be delivered to the Company no later than
90 days after the occurrence of the event or events constituting Good Reason and
the Company is provided with at least 30 days following the delivery of such
Notice of Termination for Good Reason to cure such event or events. Unless the
parties agree otherwise, a termination of employment by the Executive for Good
Reason shall be effective on the 30th day following the date when the Notice of
Termination for Good Reason is given, unless the Company elects to treat such
termination as effective as of an earlier date; provided, however, that so long
as an event that constitutes Good Reason occurs during the Protection Period and
the Executive delivers the Notice of Termination for Good Reason at any time
prior to 90 days following the occurrence of such event and the Company is
provided with at least 30 days following the delivery of such Notice of
Termination for Good Reason to cure such event or events, for purposes of the
payments, benefits and other entitlements set forth herein, the termination of
the Executive’s employment pursuant thereto shall be deemed to occur during the
Protection Period.

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          (t) “Incumbent Directors” shall have the meaning set forth in
Section 1(i)(i).
          (u) “Notice of Termination for Good Reason” shall have the meaning set
forth in Section 1(s).
          (v) “Payment” means any payment, benefit or distribution (or
combination thereof) by the Company, any of its Affiliates or any trust
established by the Company or its Affiliates, to or for the benefit of the
Executive, whether paid, payable, distributed, distributable or provided
pursuant to this Agreement or otherwise, including any payment, benefit or other
right that constitutes a “parachute payment” within the meaning of Section 280G
of the Code.
          (w) “Person” shall have the meaning set forth in Section 1(i)(i).
          (x) “Protection Period” means the period commencing on the Change in
Control Date and ending on the second anniversary thereof.
          (y) “Qualifying Termination” means any termination of the Executive’s
employment (i) by the Company, other than for Cause, death or Disability, that
is effective (or with respect to which the Executive is given written notice)
during the Protection Period, (ii) by the Executive for Good Reason during the
Protection Period or (iii) by the Company that is effective prior to the Change
in Control Date, other than for Cause, death or Disability, at the request or
direction of a third party who took action that caused, or is involved in or a
party to, a Change in Control.
          (z) “Release” shall have the meaning set forth in Section 4(a)(v).
          (aa) “Release Effective Date” shall have the meaning set forth in
Section 4(a)(i).
          (bb) “Reorganization” shall have the meaning set forth in
Section 1(i)(ii).
          (cc) “Safe Harbor Amount” shall have the meaning set forth in
Section 5(a).
          (dd) “Sale” shall have the meaning set forth in Section 1(i)(ii).
          (ee) “Section 409A Tax” shall have the meaning set forth in Section 6.
          (ff) “Specified Shareholder” shall mean JWMA Partners, LLC and,
following the dissolution of JWMA Partners, LLC, any of (i) the Estate of John
T. Walton and its beneficiaries, (ii) JCL Holdings, LLC and its beneficiaries,
(iii) Michael J. Ahearn and any of his immediate family, (iv) any Person
directly or indirectly controlled by any of the foregoing and (v) any trust for
the direct or indirect benefit of any of the foregoing.

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          (gg) “Subsidiary” means any entity in which the Company, directly or
indirectly, possesses 50% or more of the total combined voting power of all
classes of its stock.
          (hh) “Successor” shall have the meaning set forth in Section 10(c).
          (ii) “Termination Date” means the date on which the termination of the
Executive’s employment, in accordance with the terms of this Agreement, is
effective, provided that in the event of a Qualifying Termination described in
clause (iii) of the definition thereof, the Termination Date shall be deemed to
be the Change in Control Date.
          (jj) “Underpayment” shall have the meaning set forth in Section 5(b).
          SECTION 2. Effectiveness and Term. This Agreement shall become
effective immediately after the consummation of the Company’s initial public
offering (the “Effective Date”), and the consummation of such offering shall not
constitute a Change in Control, provided that if such consummation does not
occur prior to the first anniversary of the date hereof, this Agreement shall
expire and terminate and neither party to this Agreement shall have any
obligations hereunder. This Agreement shall remain in effect until the third
anniversary of the Effective Date, except that, beginning on the second
anniversary of the Effective Date and on each anniversary thereafter, the term
of this Agreement shall be automatically extended for an additional one-year
period, unless the Company or the Executive provides the other party with 60
days’ prior written notice before the applicable anniversary that the term of
this Agreement shall not be so extended. Notwithstanding the foregoing, in the
event of a Change in Control during the term of this Agreement (whether the
original term or the term as extended), this Agreement shall not thereafter
terminate, and the term hereof shall be extended, until the Company and its
Subsidiaries have performed all their obligations hereunder with no future
performance being possible; provided, however, that this Agreement shall only be
effective with respect to the first Change in Control that occurs during the
term of this Agreement.
          SECTION 3. Impact of a Change in Control on Equity Compensation
Awards. Effective as of the Change in Control Date, notwithstanding any
provision to the contrary, other than any such provision which expressly
provides that this Section 3 of this Agreement does not apply (which provision
shall be given full force and effect), in any of the Company’s equity-based,
equity-related or other long-term incentive compensation plans, practices,
policies and programs (including the Company’s 2003 Unit Option Plan and the
Company 2006 Omnibus Incentive Compensation Plan) or any award agreements
thereunder, (a) all outstanding stock options, stock appreciation rights and
similar rights and awards then held by the Executive that are unexercisable or
otherwise unvested shall automatically become fully vested and immediately
exercisable, as the case may be, (b) all outstanding equity-based,
equity-related and other long-term incentive awards then held by the Executive
that are subject to performance-based vesting criteria shall automatically
become fully vested and earned at a deemed performance level equal to the
maximum performance level with respect to such awards

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and (c) all other outstanding equity-based, equity-related and long-term
incentive awards, to the extent not covered by the foregoing clause (a) or (b),
then held by the Executive that are unvested or subject to restrictions or
forfeiture shall automatically become fully vested and all restrictions and
forfeiture provisions related thereto shall lapse.
          SECTION 4. Termination of Employment. (a) Qualifying Termination. In
the event of a Qualifying Termination, the Executive shall be entitled, subject
to Section 4(a)(vi), to the following payments and benefits:
          (i) Severance Pay. The Company shall pay the Executive an amount equal
to two times the sum of (A) the Executive’s Annual Base Salary (without regard
to any reduction giving rise to Good Reason) and (B) the Bonus Amount, in a
lump-sum payment payable on the tenth business day after the Release described
in Section 4(a)(v) becomes effective and irrevocable (the “Release Effective
Date”); provided, however, that such amount shall be paid in lieu of, and the
Executive hereby waives the right to receive, any other cash severance payment
relating to salary or bonus continuation the Executive is otherwise eligible to
receive upon termination of employment under any severance plan, practice,
policy or program of the Company or any Subsidiary.
          (ii) Prorated Annual Bonus. The Company shall pay the Executive an
amount equal to the product of (A) the Executive’s Annual Bonus and (B) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Termination Date, and the denominator of which is 365, in a
lump-sum payment on the tenth business day after the Release Effective Date.
          (iii) Continued Welfare Benefits. The Company shall, at its option,
either (A) continue to provide medical, life insurance, accident insurance and
disability benefits to the Executive and the Executive’s spouse and dependents
at least equal to the benefits provided by the Company and its Subsidiaries
generally to other active peer executives of the Company and its Subsidiaries or
(B) pay for the Executive’s continued group health plan coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), in
the case of each of clauses (A) and (B), for a period of time commencing on the
Release Effective Date and ending on the earlier of (1) two years after the
Release Effective Date and (2) 18 months after the Termination Date; provided,
however, that if the Executive becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility. Any provision of benefits pursuant to
Section 4(a)(iii)(A) of this Agreement (such benefits, the “Post-Termination
In-Kind Benefits”) in one Executive Tax Year shall not affect the
Post-Termination In-Kind Benefits to be provided in any other Executive Tax
Year. The right to such Post-Termination In-Kind Benefits shall not be subject
to liquidation or exchange for any other benefit.
          (iv) Accrued Rights. The Executive shall be entitled to (A) payments
of any unpaid annual base salary, annual bonus or other amount earned or accrued
through the Termination Date and for reimbursement of any unreimbursed business
expenses

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incurred through the Termination Date, (B) any payments explicitly set forth in
any other benefit plans, practices, policies and programs in which the Executive
participates, and (C) any payments the Company is or becomes obligated to make
pursuant to Sections 5, 7 and 12 (the rights to such payments, the “Accrued
Rights”).
          (v) Outplacement. The Company shall reimburse the Executive for
individual outplacement services to be provided by a firm of the Executive’s
choice or, at the Executive’s election, provide the Executive with the use of
office space, office supplies, and secretarial assistance satisfactory to the
Executive. The aggregate expenditures of the Company pursuant to this paragraph
shall not exceed $20,000. Notwithstanding anything to the contrary in this
Agreement, the outplacement benefits under this Section 4(a)(v) shall be
provided to you for no longer than the one-year period following termination of
employment.
          (vi) Release of Claims; Non-Competition. Notwithstanding any provision
of this Agreement to the contrary, the Company shall not be obligated to make
any payments or provide any benefits described in this Section 4, other than
payments or benefits with respect to the Accrued Rights, unless and until such
time as the Executive has executed and delivered a Separation Agreement and
Release (the “Release”) substantially in the form of Exhibit A hereto and such
Release has become effective and irrevocable in accordance with its terms.
Notwithstanding anything to the contrary in this Agreement, if the Release is
not executed and effective on or prior to the tenth business days prior to
March 15 of the year following the occurrence of a Qualifying Termination, the
Executive shall forfeit the Executive’s rights to any payments or benefits under
Section 4.
          (b) Termination on Account of Death or Disability; Non-Qualifying
Termination. (i) The Executive’s employment shall terminate automatically upon
the Executive’s death or Disability. In the event of any termination of
Executive’s employment other than a Qualifying Termination, the Executive shall
not be entitled to any additional payments or benefits from the Company under
this Agreement, other than payments or benefits with respect to the Accrued
Rights.
          (ii) For purposes of this Agreement, the Executive shall be deemed to
have a “Disability” in the event of the Executive’s absence for a period of 180
consecutive business days as a result of incapacity due to a physical or mental
condition, illness or injury which is determined to be total and permanent by a
physician mutually acceptable to the Company and the Executive or the
Executive’s legal representative (such acceptance not to be unreasonably
withheld) after such physician has completed an examination of the Executive.
The Executive agrees to make himself available for such examination upon the
reasonable request of the Company, and the Company shall be responsible for the
cost of such examination.
          SECTION 5. Certain Additional Payments by the Company.
(a) Notwithstanding anything in this Agreement to the contrary and except as set
forth below, in the event it shall be determined that any Payment that is paid
or payable during the term of this Agreement would be subject to the Excise Tax,
the Executive shall be

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entitled to receive an additional payment (a “280G Gross-Up Payment”) in an
amount such that, after payment by the Executive of all taxes (and any interest
or penalties imposed with respect to such taxes), including any income and
employment taxes and Excise Taxes imposed upon the 280G Gross-Up Payment, the
Executive retains an amount of the 280G Gross-Up Payment equal to the Excise Tax
imposed upon such Payments. The Company’s obligation to make 280G Gross-Up
Payments under this Section 5 shall not be conditioned upon the Executive’s
termination of employment and shall survive and apply after the Executive’s
termination of employment. Notwithstanding the foregoing provisions of this
Section 5(a), if it shall be determined that the Executive is entitled to a 280G
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount that could be paid to the Executive without giving rise to any Excise Tax
(the “Safe Harbor Amount”), then no 280G Gross-Up Payment shall be made to the
Executive and the amounts payable under this Agreement shall be reduced so that
the Payments, in the aggregate, are reduced to the Safe Harbor Amount. The
reduction of the amounts payable hereunder shall be made by first reducing the
payments under Section 4(a), unless an alternative method of reduction is
elected by the Executive.
          (b) Subject to the provisions of Section 5(c), all determinations
required to be made under this Section 5, including whether and when a 280G
Gross-Up Payment is required, the amount of such 280G Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made in
accordance with the terms of this Section 5 by a nationally recognized certified
public accounting firm that shall be designated by the Executive (the
“Accounting Firm”). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment or such
earlier time as is requested by the Company. For purposes of determining the
amount of any 280G Gross-Up Payment, the Executive shall be deemed to pay
Federal income tax at the highest marginal rate applicable to individuals in the
calendar year in which any such 280G Gross-Up Payment is to be made and deemed
to pay state and local income taxes at the highest marginal rates applicable to
individuals in the state or locality of the Executive’s residence or place of
employment in the calendar year in which any such 280G Gross-Up Payment is to be
made, net of the maximum reduction in Federal income taxes that can be obtained
from deduction of state and local taxes, taking into account limitations
applicable to individuals subject to Federal income tax at the highest marginal
rate. All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section 5, shall
be paid by the Company to the Executive within five business days of the receipt
of the Accounting Firm’s determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall so indicate to the Executive
in writing. Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
the Excise Tax, at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the amount of the 280G Gross-Up Payment
determined by the Accounting Firm to be due to the Executive, consistent with
the calculations required to be made hereunder, will be lower than the amount
actually due (an “Underpayment”). In the event the Company exhausts its remedies
pursuant to Section 5(c) and the Executive thereafter is required to

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make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be paid by
the Company to the Executive within five business days of the receipt of the
Accounting Firm’s determination.
          (c) The Executive shall notify the Company in writing of any written
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a 280G Gross-Up Payment. Such notification shall be
given as soon as practicable, but no later than ten business days after the
Executive is informed in writing of such claim. Failure to give timely notice
shall not prejudice the Executive’s right to 280G Gross-Up Payments and rights
of indemnity under this Section 5. The Executive shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Executive shall (i) give the Company any information
reasonably requested by the Company relating to such claim, (ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest
such claim and (iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional income taxes, interest and
penalties) incurred in connection with such contest, and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest or penalties) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 5(c), the Company shall control all proceedings taken
in connection with such contest, and, at its sole discretion, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the applicable taxing authority in respect of such claim and may, at its
sole discretion, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that (A) if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties) imposed with respect to such advance or with respect to any imputed
income in connection with such advance and (B) if such contest results in any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due, such extension must be limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which the 280G Gross-Up Payment would be payable
hereunder, and the Executive shall be entitled to settle or contest, as the

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case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
          (d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company’s complying with the requirements of Section 5(c)) promptly pay to the
Company the amount of such refund received (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of the 30-day period after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of 280G Gross-Up Payment
required to be paid.
          (e) Notwithstanding anything to the contrary in this Agreement, (i) in
no event shall any tax gross-up payments be made by the Company to the Executive
under Section 5 after the end of the tax year of the Executive (the “Executive
Tax Year”) following the Executive Tax Year in which the Executive remits the
taxes for which such tax gross-up payment is required to be made under Section 5
and (ii) no other payments will be made by the Company to the Executive under
Section 5 with respect to any audit or litigation relating to any 280G Gross-up
payment or Exercise Tax or other taxes after the Executive Tax Year following
the Executive Tax Year in which the taxes that are the subject of the audit or
litigation referred to in Section 5 are remitted to the taxing authority, or
where as a result of such audit or litigation no taxes are remitted, the end of
the Executive Tax Year following the Executive Tax Year in which the audit is
completed or there is a final and nonappealable settlement or other resolution
of the litigation.
          SECTION 6. Section 409A. It is the intention of the Company and the
Executive that the provisions of this Agreement comply with Section 409A of the
Code, and all provisions of this Agreement shall be construed and interpreted in
a manner consistent with Section 409A of the Code. To the extent necessary to
avoid imposition of any additional tax or interest penalties under Section 409A
(such tax and interest penalties, a “Section 409A Tax”), notwithstanding the
timing of payment provided in any other Section of this Agreement, the timing of
any payment, distribution or benefit pursuant to this Agreement shall be subject
to a six-month delay in a manner consistent with Section 409A(a)(2)(B)(i) of the
Code.
          SECTION 7. No Mitigation or Offset; Enforcement of this Agreement.
(a) The Company’s obligation to make the payments provided for in this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as

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otherwise expressly provided for in this Agreement, such amounts shall not be
reduced whether or not the Executive obtains other employment. Notwithstanding
anything to the contrary in this Agreement, any reimbursement under this
Section 7 shall be made promptly and no later than the end of your tax year (the
“Executive Tax Year”) following the Executive Tax Year in which the expense is
incurred. The amount of expenses eligible for reimbursement under this Section 7
during an Executive Tax Year shall not affect the expenses eligible for
reimbursement in another Executive Tax Year. No right to reimbursement under
this Section 7 shall be subject to liquidation or exchange for any other payment
or benefit.
          (b) The Company shall reimburse, upon the Executive’s demand, any and
all reasonable legal fees and expenses that the Executive may incur in good
faith as a result of any contest, dispute or proceeding (regardless of whether
formal legal proceedings are ever commenced and regardless of the outcome
thereof and including all stages of any contest, dispute or proceeding) by the
Company, the Executive or any other Person with respect to the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive regarding the amount of any payment owed pursuant to this Agreement),
and shall indemnify and hold the Executive harmless, on an after-tax basis, for
any tax (including Excise Tax) imposed on the Executive as a result of payment
by the Company of such legal fees and expenses. Notwithstanding anything to the
contrary in this Agreement, no tax gross up payments shall be made by the
Company under this Section 7 following the end of the Executive Tax Year
following the Executive Tax Year in which the related taxes are remitted
          SECTION 8. Non-Exclusivity of Rights. Except as specifically provided
in Section 4(a)(i), nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, practice, policy or
program provided by the Company or a Subsidiary for which the Executive may
qualify, nor shall anything in this Agreement limit or otherwise affect any
rights the Executive may have under any contract or agreement with the Company
or a Subsidiary. Vested benefits and other amounts that the Executive is
otherwise entitled to receive under any incentive compensation (including any
equity award agreement), deferred compensation retirement, pension or other
plan, practice, policy or program of, or any contract or agreement with, the
Company or a Subsidiary shall be payable in accordance with the terms of each
such plan, practice, policy, program, contract or agreement, as the case may be,
except as explicitly modified by this Agreement.
          SECTION 9. Withholding. The Company may deduct and withhold from any
amounts payable under this Agreement such Federal, state, local, foreign or
other taxes as are required to be withheld pursuant to any applicable law or
regulation.
          SECTION 10. Assignment. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution, and any assignment in violation of this Agreement shall be void.

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          (b) Notwithstanding the foregoing Section 10(a), this Agreement and
all rights of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to him or her
hereunder if he or she had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive’s devisee, legatee or other designee or, should there be no such
designee, to the Executive’s estate.
          (c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company (a “Successor”) to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, (i) the term “Company”
shall mean the Company as hereinbefore defined and any Successor and any
permitted assignee to which this Agreement is assigned and (ii) the term “Board”
shall mean the Board as hereinbefore defined and the board of directors or
equivalent governing body of any Successor and any permitted assignee to which
this Agreement is assigned.
          SECTION 11. Dispute Resolution. (a) Except as otherwise specifically
provided herein, the Executive and the Company each hereby irrevocably submit to
the exclusive jurisdiction of the United States District Court of Delaware (or,
if subject matter jurisdiction in that court is not available, in any state
court located within the city of Wilmington, Delaware) over any dispute arising
out of or relating to this Agreement. Except as otherwise specifically provided
in this Agreement, the parties undertake not to commence any suit, action or
proceeding arising out of or relating to this Agreement in a forum other than a
forum described in this Section 11(a); provided, however, that nothing herein
shall preclude the Company or the Executive from bringing any suit, action or
proceeding in any other court for the purposes of enforcing the provisions of
this Section 11 or enforcing any judgment obtained by the Company or the
Executive.
          (b) The agreement of the parties to the forum described in Section
11(a) is independent of the law that may be applied in any suit, action or
proceeding and the parties agree to such forum even if such forum may under
applicable law choose to apply non-forum law. The parties hereby waive, to the
fullest extent permitted by applicable law, any objection that they now or
hereafter have to personal jurisdiction or to the laying of venue of any such
suit, action or proceeding brought in an applicable court described in
Section 11(a), and the parties agree that they shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court. The parties agree that, to the fullest extent permitted by
applicable law, a final and non-appealable judgment in any suit, action or
proceeding brought in any applicable court described in Section 11(a) shall be
conclusive and binding upon the parties and may be enforced in any other
jurisdiction.
          (c) The parties hereto irrevocably consent to the service of any and
all process in any suit, action or proceeding arising out of or relating to this
Agreement by

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the mailing of copies of such process to such party at such party’s address
specified in Section 18.
          (d) Each party hereto hereby waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding arising out of or relating to this Agreement. Each
party hereto (i) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such party would not,
in the event of any suit, action or proceeding, seek to enforce the foregoing
waiver and (ii) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the mutual waiver
and certifications in this Section 11(d).
          SECTION 12. Default in Payment. Any payment not made within ten
business days after it is due in accordance with this Agreement shall thereafter
bear interest, compounded annually, at the prime rate in effect from time to
time at Citibank, N.A., or any successor thereto.
          SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE MADE
IN THE STATE OF DELAWARE, AND THE VALIDITY, INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF DELAWARE WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
          SECTION 14. Amendment; No Waiver. No provision of this Agreement may
be amended, modified, waived or discharged except by a written document signed
by the Executive and a duly authorized officer of the Company. The failure of a
party to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver of such party’s rights or deprive such
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. No failure or delay by either party in
exercising any right or power hereunder will operate as a waiver thereof, nor
will any single or partial exercise of any such right or power, or any
abandonment of any steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party, which are
not set forth expressly in this Agreement.
          SECTION 15. Severability. If any term or provision of this Agreement
is invalid, illegal or incapable of being enforced by any applicable law or
public policy, all other conditions and provisions of this Agreement shall
nonetheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to any party. Upon any such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually

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acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
          SECTION 16. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements (including the Original Change in
Control Agreement and any other prior change in control agreement), promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto,
and any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled. None of the parties shall be
liable or bound to any other party in any manner by any representations and
warranties or covenants relating to such subject matter except as specifically
set forth herein.
          SECTION 17. Survival. The rights and obligations of the parties under
the provisions of this Agreement, including Sections 5, 7 and 12, shall survive
and remain binding and enforceable, notwithstanding the expiration of the
Protection Period or the term of this Agreement, the termination of the
Executive’s employment with the Company for any reason or any settlement of the
financial rights and obligations arising from the Executive’s employment
hereunder, to the extent necessary to preserve the intended benefits of such
provisions.
          SECTION 18. Notices. All notices or other communications required or
permitted by this Agreement will be made in writing and all such notices or
communications will be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:

             
 
  If to the Company:   First Solar, Inc.    
 
      4050 East Cotton Center Boulevard    
 
      Building 6, Suite 68    
 
      Phoenix, Arizona 85040    
 
           
 
      Attention: Chief Executive Officer with a copy to the    
 
      General Counsel    
 
           
 
      Fax: 602-414-9400    
 
  If to the Executive:                                               
 
                                                  
 
                                                    
 
      Fax:    

or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

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          SECTION 19. Headings and References. The headings of this Agreement
are inserted for convenience only and neither constitute a part of this
Agreement nor affect in any way the meaning or interpretation of this Agreement.
When a reference in this Agreement is made to a Section, such reference shall be
to a Section of this Agreement unless otherwise indicated.
          SECTION 20. Counterparts. This Agreement may be executed in one or
more counterparts (including via facsimile), each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
          SECTION 21. Interpretation. For purposes of this Agreement, the words
“include” and “including”, and variations thereof, shall not be deemed to be
terms of limitation but rather shall be deemed to be followed by the words
“without limitation”. The term “or” is not exclusive. The word “extent” in the
phrase “to the extent” shall mean the degree to which a subject or other thing
extends, and such phrase shall not mean simply “if”.
          SECTION 22. Time of the Essence. The parties hereto acknowledge and
agree that time is of the essence in the performance of the obligations of this
Agreement and that the parties shall strictly adhere to any timelines herein.
          IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first written above.

          FIRST SOLAR, INC.,
      By   /s/ MICHAEL J. AHEARN         Name:   Michael J. Ahearn       
Title:   Chief Executive Officer and Chairman        EXECUTIVE,
        /s/ KENNETH MICHAEL SCHULTZ         Kenneth Michael Schultz             

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(FIRST SOLAR LOGO) [p74582p7458201.gif]
  SEPARATION AGREEMENT AND RELEASE

I. Release. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the undersigned, with the intention of binding
himself/herself, his/her heirs, executors, administrators and assigns, does
hereby release and forever discharge First Solar, Inc., a Delaware corporation
(the “Company”), and its present and former officers, directors, executives,
agents, employees, affiliated companies, subsidiaries, successors, predecessors
and assigns (collectively, the “Released Parties”), from any and all claims,
actions, causes of action, demands, rights, damages, debts, accounts, suits,
expenses, attorneys’ fees and liabilities of whatever kind or nature in law,
equity, or otherwise, whether now known or unknown (collectively, the “Claims”),
which the undersigned now has, owns or holds, or has at any time heretofore had,
owned or held against any Released Party, arising out of or in any way connected
with the undersigned’s employment relationship with the Company, its
subsidiaries, predecessors or affiliated entities, or the termination thereof,
under any Federal, state or local statute, rule, or regulation, or principle of
common, tort or contract law, including but not limited to, the Fair Labor
Standards Act of 1938, as amended, 29 U.S.C. §§ 201 et seq., the Family and
Medical Leave Act of 1993, as amended (the “FMLA”), 29 U.S.C. §§ 2601 et seq.,
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et
seq., the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §§
621 et seq., the Americans with Disabilities Act of 1990, as amended, 42 U.S.C.
§§ 12101 et seq., the Worker Adjustment and Retraining Notification Act of 1988,
as amended, 29 U.S.C. §§ 2101 et seq., the Employee Retirement Income Security
Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq., and any other equivalent or
similar Federal, state, or local statute; provided, however, that nothing herein
shall release the Company (a) of its obligations under that certain Change in
Control Severance Agreement in which the undersigned participates and pursuant
to which this Separation Agreement and Release is being executed and delivered,
(b) from any claims by the undersigned arising out of any director and officer
indemnification or insurance obligations in favor of the undersigned and (c) any
director and officer indemnification obligations under the Company’s by-laws.
The undersigned understands that, as a result of executing this Separation
Agreement and Release, he/she will not have the right to assert that the Company
or any other Released Party unlawfully terminated his/her employment or violated
any of his/her rights in connection with his/her employment or otherwise.
The undersigned affirms that he/she has not filed, caused to be filed, or
presently is a party to any Claim, complaint or action against any Release Party
in any forum or form and that he/she knows of no facts which may lead to any
Claim, complaint or action being filed against any Release Party in any forum by
the undersigned or by any agency, group, or class persons. The undersigned
further affirms that he/she has been paid and/or has received all leave (paid or
unpaid), compensation, wages, bonuses, commissions, and/or benefits to which
he/she may be entitled and that no other leave (paid or unpaid), compensation,
wages, bonuses, commissions and/or benefits are due to him/her from the Company
and its subsidiaries, except as specifically provided in this Separation
Agreement and Release. The undersigned furthermore affirms that he/she has no
known workplace injuries or occupational diseases and has been provided and/or
has not been denied any leave requested under the FMLA. If any agency or court
assumes jurisdiction

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of any such Claim, complaint or action against any Released Party on behalf of
the undersigned, the undersigned will request such agency or court to withdraw
the matter.
The undersigned further declares and represents that he/she has carefully read
and fully understands the terms of this Separation Agreement and Release and
that he/she has been advised and had the opportunity to seek the advice and
assistance of counsel with regard to this Separation Agreement and Release, that
he/she may take up to and including 21 days from receipt of this Separation
Agreement and Release, to consider whether to sign this Separation Agreement and
Release, that he/she may revoke this Separation Agreement and Release within
seven calendar days after signing it by delivering to the Company written
notification of revocation, and that he/she knowingly and voluntarily, of
his/her own free will, without any duress, being fully informed and after due
deliberate action, accepts the terms of and signs the same as his own free act.
[To effect a full and complete general release as described above, the
undersigned expressly waives and relinquishes all rights and benefits of
Section 1542 of the Civil Code of the State of California, and the undersigned
does so understanding and acknowledging the significance and consequence of
specifically waiving Section 1542. Section 1542 of the Civil Code of the State
of California states as follows:
A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.
Thus, notwithstanding the provisions of Section 1542, and to implement a full
and complete release and discharge of the Released Parties, the undersigned
expressly acknowledges this Separation Agreement and Release is intended to
include in its effect, without limitation, all Claims the undersigned does not
know or suspect to exist in the undersigned’s favor at the time of signing this
Separation Agreement and Release, and that this Separation Agreement and Release
contemplates the extinguishment of any such Claim or Claims.]1
II. Protected Rights. The Company and the undersigned agree that nothing in this
Separation Agreement and Release is intended to or shall be construed to affect,
limit or otherwise interfere with any non-waivable right of the undersigned
under any Federal, state or local law, including the right to file a charge or
participate in an investigation or proceeding conducted by the Equal Employment
Opportunity Commission (“EEOC”) or to exercise any other right that cannot be
waived under applicable law. The undersigned is releasing, however, his/her
right to any monetary recovery or relief should the EEOC or any other agency
pursue Claims on his/her behalf. Further, should the EEOC or any
 

1   Only include for employees who were employed by the Company or its
subsidiaries in California.

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other agency obtain monetary relief on his/her behalf, the undersigned assigns
to the Company all rights to such relief.
III. Equitable Remedies. The undersigned acknowledges that a violation by the
undersigned of any of the covenants contained in this Agreement would cause
irreparable damage to the Company and its subsidiaries in an amount that would
be material but not readily ascertainable, and that any remedy at law (including
the payment of damages) would be inadequate. Accordingly, the undersigned agrees
that, notwithstanding any provision of this Separation Agreement and Release to
the contrary, the Company shall be entitled (without the necessity of showing
economic loss or other actual damage) to injunctive relief (including temporary
restraining orders, preliminary injunctions and/or permanent injunctions) in any
court of competent jurisdiction for any actual or threatened breach of any of
the covenants set forth in this Agreement in addition to any other legal or
equitable remedies it may have.
IV. Return of Property. The undersigned shall return to the Company on or before
[10 DAYS AFTER TERMINATION DATE], all property of the Company in the
undersigned’s possession or subject to the undersigned’s control, including
without limitation any laptop computers, keys, credit cards, cellular telephones
and files. The undersigned shall not alter any of the Company’s records or
computer files in any way after [TERMINATION DATE].
V. Severability. If any term or provision of this Separation Agreement and
Release is invalid, illegal or incapable of being enforced by any applicable law
or public policy, all other conditions and provisions of this Separation
Agreement and Release shall nonetheless remain in full force and effect so long
as the economic and legal substance of the transactions contemplated by this
Separation Agreement and Release is not affected in any manner materially
adverse to any party.
VI. GOVERNING LAW. THIS SEPARATION AGREEMENT AND RELEASE SHALL BE DEEMED TO BE
MADE IN THE STATE OF DELAWARE, AND THE VALIDITY, INTERPRETATION, CONSTRUCTION
AND PERFORMANCE OF THIS AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.

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Effective on the eighth calendar day following the date set forth below.

          FIRST SOLAR, INC.,
      By           Name:           Title:           EMPLOYEE,         [NAME]   
  Date      Signed:         

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