exv10w34





Exhibit 10.34







AMENDED AND RESTATED EMPLOYMENT AGREEMENT




          This Employment Agreement (this “Agreement”) is made as of December 29, 2008, by and between
First Solar, Inc., a Delaware corporation having its principal office at 350 West Washington
Street, Suite 600, Tempe, Arizona 85281 (hereinafter, “Employer”) and John T. Gaffney (hereinafter
“Employee”).


WITNESSETH:


          WHEREAS, Employer and Employee wish to amend and restate the Employment Agreement dated
December 17, 2007 between Employer and Employee (the “Prior Employment Agreement”) and enter into
this Agreement relating to the employment of Employee by Employer.


          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 Term; At-Will Nature of Employment. The term of this Agreement (the “Term”) shall
commence as of January 15, 2008 (the “Start Date”). As of such date, Employer shall employ
Employee as a full-time, at-will employee, and Employee shall accept employment with Employer as a
full-time, at-will 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 as an Executive Vice
President of Employer 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 Employer’s Chief
Executive Officer or Employer’s Board of Directors (the “Board”), consistent with Employee’s
position with Employer. 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
applicable law or as otherwise specified in this Agreement or the Change in Control Severance
Agreement between Employer and Employee dated December 17, 2007, and amended as of the date hereof,
or as may be amended from time to time (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 of
the parties under the provisions of this Agreement, including Sections 1.5, this Article IV and
Article V, shall survive and remain binding and enforceable, notwithstanding the termination of
Employee’s employment for any reason, to the extent necessary to preserve the intended benefits of
such provisions. In addition, during the Term, Employer shall pay for all professional fees, dues
and taxes, including attorney occupation and similar taxes required to maintain Employee’s license
to practice law, continuing legal education requirements and costs of membership in professional
organizations reasonably requested by Employee for the purpose of Employee’s professional growth
required to serve Employer’s needs. Any such non-tax payments provided in any calendar year shall
not affect the amount of any such non-tax payments provided in any other calendar year, and any
reimbursements for any such non-tax payments made by Employee shall be made prior to the end of the
calendar year following the calendar year in which Employee makes the applicable payment. Any such
tax payments made by Employer shall occur prior to the end of the calendar year following the
calendar year in which Employee remits the underlying taxes to the applicable taxing authority.



1.4 Termination of Employment. Employee’s employment with Employer shall terminate upon
the earliest of: (a) Employee’s death; (b) unless waived by Employer, Employee’s “Disability”,
(which for purposes of this Agreement, shall mean either a physical or mental condition (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); (c) the termination of
Employee’s employment by Employer for Cause (as hereinafter defined); (d) Employee’s resignation;
and (e) the termination of Employee’s employment by Employer without Cause. As used herein,
“Cause” shall mean Employer’s good faith determination of: (i) Employee’s dishonest, fraudulent or
illegal conduct relating to the business of Employer; (ii) Employee’s willful breach or habitual
neglect of Employee’s duties or obligations in connection with Employee’s employment; (iii)
Employee’s misappropriation of Employer funds; (iv) 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; (v) Employee’s excessive use of alcohol; (vi) Employee’s
unlawful use of controlled substances or other addictive behavior; (vii) Employee’s unethical
business conduct; (viii) Employee’s breach of any statutory or common law duty of loyalty to
Employer; or (ix) Employee’s material breach of this Agreement, the Non-Competition and
Non-Solicitation Agreement between Employer and Employee, entered into January 15, 2008, or as
amended from time to time (the “Non-Competition Agreement”), the Confidentiality and Intellectual
Property Agreement between Employer and Employee in effect on the date hereof, or as amended from
time to time (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. In the event of the
termination of Employee’s employment with Employer for any reason, Employee shall be entitled to
receive, in addition to the severance payment described in Section 1.5(b) below, if any, the dollar
value of any earned but unused (and unforfeited) vacation. Such dollar value shall be paid to
Employee within fifteen (15) days following the date of termination of employment.




          (b) Severance Payment in the Case of a Termination Without Cause. If Employee’s
employment is terminated by Employer without Cause, then, subject to the Change in Control
Agreement, Employee shall be entitled to a lump sum cash severance payment, payable within ten (10)
business days following the Release Effective Date (as defined below) equal to 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 requirements. Notwithstanding anything to the
contrary herein, no severance payment shall be due or made to Employee hereunder unless, on or
prior to the tenth (10th) business day prior to March 15 of the year following the year in which
the termination of employment occurs, (i) Employee shall have executed and delivered a general
release in favor of Employer and its affiliates, which shall be substantially in the form of the
Separation Agreement and Release attached hereto as Exhibit A and otherwise satisfactory to
Employer and (ii) such general release has become effective and irrevocable (the date such release
is effective and irrevocable, the “Release Effective Date”).




          (c) Medical Insurance. If Employee’s employment is terminated by Employer without
Cause, Employer will provide or pay the cost of continuing the medical coverage provided by
Employer to Employee during his employment at the same or a comparable coverage level, for a period
beginning on the date of termination and ending on the earlier of (i) the date that is twelve (12)
months following such termination and (ii) the date that Employee is covered under a medical
benefits plan of a subsequent employer. Employee agrees to make a timely COBRA election, to the
extent requested by Employer, to facilitate Employer’s provision of continuation coverage. Except
as permitted by Section 409A (as defined below), the continued benefits provided to Employee
pursuant to this Section 1.5(c) during any calendar year will not affect the continued benefits to
be provided to Employee pursuant to this Section 1.5(c) in any other calendar year.




          (d) Equity Award Vesting.




               (i) Hiring Grant. If Employee’s employment is terminated by Employer without Cause,
the restricted stock units and stock options granted to Employee pursuant to Section 2.6(b)
(“Initial Equity Award”) shall become fully vested and exercisable as of the effective date
of such termination.


 








 





               (ii) Other Equity Awards. In the event of (A) the termination of Employee’s
employment with Employer due to Employee’s death, (B) the termination of Employee’s employment with
Employer due to Disability, or (C) the termination of Employee’s employment by Employer without
Cause, then, except with respect to the Initial Equity Award, Employee shall on the date of such
termination of employment immediately receive an additional twelve (12) months’ vesting credit with
respect to the stock options, stock appreciation rights, restricted stock and other equity or
equity-based compensation of Employer granted to Employee in the course of his employment with
Employer.



               (iii) Effect of Vesting. The shares of Employer underlying any restricted stock units
that become vested pursuant to this Section 1.5(d) shall be payable on the vesting date. Any of
Employee’s stock options and stock appreciation rights that become vested pursuant to this Section
1.5(d) shall be exercisable immediately upon vesting. Employee will have one (1) year and ninety
(90) days after termination of employment without Cause, death or Disability to exercise any vested
stock options or other equity compensation other than options granted as part of the Initial Equity
Award (and ninety (90) days following termination of employment without Cause to exercise the
Initial Equity Award options), provided, that, if during such period Employee is under any trading
restriction due to a lockup agreement or closed trading window such period shall be tolled during
the period of such trading restriction, and provided, further, that in no event shall any stock
option or stock appreciation right continue to be exercisable after the original expiration date of
such stock option or stock appreciation right.


               (iv) Conflict with Award Agreement. In the event the terms of this Agreement are
contrary to or conflict with the terms of any document or agreement addressing Employee’s stock
options, restricted stock, restricted stock units or any other equity compensation, the terms of
this Agreement shall govern and control.


ARTICLE II. Compensation


2.1 Sign on Bonus. Subject to applicable tax withholding requirements, Employee shall
receive a Seven Million and 00/100 Dollar ($7,000,000) sign on bonus payable in twenty (20) equal
quarterly installments, commencing on March 31, 2008. Each installment shall be payable on the
last business day of the applicable calendar quarter. Any undistributed portion of the bonus shall
be forfeited if Employee’s employment terminates prior to the payment date for such portion for any
reason other than a termination by Employer without Cause.


2.2 Base Salary. Employee shall be compensated at an annual base salary of Five Hundred
Thousand and 00/100 Dollars ($500,000) (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 requirements.


 








 







2.3 Annual Bonus Eligibility. Employee shall be eligible to receive an annual bonus of up
to eighty percent (80%) of Employee’s Base Salary based upon individual and company performance, as
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.



2.4 Benefits; Vacation. Employee shall be eligible to receive all benefits as are
available to similarly situated employees of Employer generally, and any other benefits that
Employer may, in its sole discretion, elect to grant to Employee from time to time. In addition,
Employee shall be entitled to four (4) weeks paid vacation per year, which shall be accrued in
accordance with Employer’s policies applicable to similarly situated employees of Employer.



2.5 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 therefor.



2.6 Grant of Equity.




          (a) Eligibility. Employee will be eligible to participate in Employer’s equity
participation programs to acquire options or equity incentive compensation units in the common
stock of Employer, subject to and/or in accordance with the following: (i) the additional terms
contained in Employer’s equity grant documentation; (ii) approval, if required, of Employer’s
equity incentive plan by the Board and the shareholders of Employer; (iii) approval of the grants
by the Board; (iv) Employee’s execution of documents requested by Employer at the time of grant;
(v) Employee’s continued employment through the grant date; (vi) the terms of the 2006 Omnibus
Equity Incentive Compensation Plan or the successor thereto; and (vii) the policies, procedures and
practices that may be adopted from time to time by Employer in its sole discretion for granting
such options or equity incentive compensation units.




          (b) Hiring Grant. Promptly following the Start Date, Employee will receive
restricted stock units valued at Seven Million and 00/100 Dollars ($7,000,000) on the date of
grant, as determined by the Board, which shall vest, contingent on continued employment, in twenty
(20) equal quarterly installments commencing on March 31, 2008, and One Hundred Thousand (100,000)
stock options, exercisable at fair market value on the date of grant, as determined by the Board,
which shall vest, contingent on continued employment, in five (5) equal annual installments
commencing on December 31, 2008, in each case subject to Section 1.5(d).



2.7 Location. Employee’s position will be based in New York, New York.



 








 




ARTICLE III. Absence of Restrictions


3.1 Employee hereby represents and warrants to Employer 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. Employee further represents and warrants to Employer
that Employee is free to accept employment with Employer as contemplated herein and that Employee
has no prior or other obligations or commitments of any kind to any person, firm, partnership,
association, corporation, entity or business organization that would in any way hinder or interfere
with Employee’s acceptance of, or the full performance of, Employee’s duties hereunder.


ARTICLE IV. Miscellaneous


4.1 Withholding. Any payments made under this Agreement shall be subject to applicable
federal, state and local tax reporting and withholding requirements.


4.2 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. 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 4.2 are made in consideration of the
other party’s agreements in this Section 4.2, as well as in other portions of this Agreement.


4.3 No Waiver. The failure of Employer or Employee to insist in any one or more instances
upon performance of any 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.



4.4 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.
	 
	 	 	 	350 West Washington Street
	 
	 	 	 	Suite 600
	 
	 	 	 	Tempe, Arizona  85281
	 
	 	 	 	Attention:  Chief Executive Officer
	 
	 	 	 	 
	 
	 	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 4.4.



4.5 Assignability and Binding Effect. This Agreement is for personal services and is
therefore not assignable by Employee. 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. This Agreement shall be binding upon and
inure to the benefit of the parties, their successors, assigns, heirs, executors and legal
representatives. If there shall be a successor to Employer or Employer shall assign this
Agreement, then as used in this Agreement, (a) the term “Employer” shall mean Employer as
hereinbefore defined and any successor or any permitted assignee, as applicable, 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 or any permitted assignee, as
applicable, to which this Agreement is assigned.



4.6 Entire Agreement. This Agreement, the Change in Control Agreement, the Non-Competition
Agreement and the Confidentiality Agreement set forth the entire agreement between Employer and
Employee regarding the terms of Employee’s employment and supersede all prior agreements between
Employer and Employee covering the terms of Employee’s employment (including the Prior Agreement).
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.



4.7 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.


 








 




4.8 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”.


ARTICLE V. Section 409A


5.1 In General. It is intended that the provisions of this Agreement comply with Section
409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder as in effect
from time to time (collectively, “Section 409A”), and all provisions of this Agreement shall be
construed and interpreted in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A.



5.2 No Alienation, Set-offs, Etc. Neither Employee nor any creditor or beneficiary of
Employee shall have the right to subject any deferred compensation (within the meaning of Section
409A) payable under this Agreement or under any other plan, policy, arrangement or agreement of or
with Employer or any of its affiliates (this Agreement and such other plans, policies, arrangements
and agreements, the “Employer Plans”) to any anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any
deferred compensation (within the meaning of Section 409A) payable to or for the benefit of
Employee under any Employer Plan may not be reduced by, or offset against, any amount owing by
Employee to Employer or any of its affiliates.



5.3 Possible Six-Month Delay. If, at the time of Employee’s separation from service
(within the meaning of Section 409A), (a) Employee shall be a specified employee (within the
meaning of Section 409A and using the identification methodology selected by Employer from time to
time) and (b) Employer shall make a good faith determination that an amount payable under an
Employer Plan constitutes deferred compensation (within the meaning of Section 409A) the payment of
which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in
order to avoid taxes or penalties under Section 409A, then Employer (or an affiliate thereof, as
applicable) shall not pay such amount on the otherwise scheduled payment date but shall instead
accumulate such amount and pay it, without interest, on the first day of the seventh month
following such separation from service.


 








 








     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/ John T. Gaffney
	 	 	 
	 	 	John T. Gaffney
	 
	 	 	 	 
	 	 	EMPLOYER:
	 	 	First Solar, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Carol Campbell
	 
	 	 	 	 
	 
	 	Title:
	 	Vice President, Human Resources





 








 






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 [Employment Agreement] [Change in Control Severance Agreement] to which the undersigned is
a party 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 (c) from any director and
officer indemnification obligations under the Company’s by-laws, and (d) from any claim for
benefits under the First Solar, Inc. 401(k) Plan. 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 or caused to be filed, and presently is not a
party to, any Claim, complaint or action against any Released 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
Released 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 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.



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 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.




2









 







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.



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




	 	 	 	 	 
	FIRST SOLAR, INC.	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 
	 	
 
	 	 
	 
	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	EMPLOYEE:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	[NAME]	 	 
	 

	 	Date	 	 
	 

	 	Signed:                                        	 	 






3








 






CHANGE IN CONTROL SEVERANCE AGREEMENT




          This CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”), dated as of December
17, 2007, between First Solar, Inc., a Delaware corporation (the “Company”), and John T.
Gaffney (the “Executive”), and amended and restated as of December 29, 2008.




RECITALS:




          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 (as defined below) 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
inherently present 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.




          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.




          (f) “Annual Bonus” shall mean the target annual cash bonus the Executive is eligible
to earn (assuming one hundred percent (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 of the annual cash bonuses payable to the Executive in respect of the
three (3) calendar years immediately preceding the calendar year that includes the Termination Date
or, if the Executive has not been employed for three (3) full calendar years preceding the calendar
year that includes the Termination Date, the average of the annual cash bonuses payable to the
Executive for the number of full calendar years prior to the Termination Date that he has been
employed.




          (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 fourteen (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 Effective Date, 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 member of the Board subsequent to
the Effective Date 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 such individual were an Incumbent Director, but excluding, for purposes of
this proviso, any such individual whose assumption of office after the Effective Date 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 (1) the Company or (2) any of its Subsidiaries, but in the
case of this clause (2) only if Company Voting Securities (as defined below) are issued or issuable
in connection with such transaction or (B) a sale or other disposition of all or substantially all
the assets of the Company (each of the events referred to in clause (A) or (B) being hereinafter
referred to as a “Reorganization”), unless, immediately following such Reorganization, (x)
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) 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 (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
(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, 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 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 other than the Company or a Subsidiary), (y) no
Person (excluding (i) 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 (ii)
any Specified Shareholder) beneficially owns, directly or indirectly, twenty percent (20%) or more
of the combined voting power of the then outstanding voting securities of the Continuing Entity and
(z) 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, in the absence of such an agreement, at the time at which
approval of the Board was obtained for such Reorganization;



               (iii) the stockholders of the Company approve a plan of complete liquidation or dissolution
of the Company, unless such liquidation or dissolution 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 (A)
twenty percent (20%) and (B) 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: (1) any acquisition by the Company or any Subsidiary, (2) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by


 








 







the Company or any Subsidiary, (3) any acquisition by an underwriter temporarily holding such
Company Voting Securities pursuant to an offering of such securities and (4) any acquisition
pursuant to a Reorganization 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, or
any successor statute thereto, and the regulations promulgated thereunder as in effect from time to
time.




          (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, and the regulations promulgated thereunder as in effect
from time to time.




          (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) “Executive Tax Year” shall have the meaning set forth in Section 4(a)(iii).




          (t) “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;



               (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;



               (iii) any change of the Executive’s principal place of employment to a location more than
fifty (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;




 








 





               (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, death 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 ninety (90) days after the occurrence of the
event or events constituting Good Reason and the Company must be provided with at least thirty (30)
days following the delivery of such Notice of Termination for Good Reason to cure such event or
events. If such event or events are cured during such period, then the Executive will not be
permitted to terminate employment for Good Reason as the result of such event or events. If the
Company does not cure such event or events in such period, the termination of employment by the
Executive for Good Reason shall be effective on the thirtieth (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 within ninety (90) days following the occurrence
of such event, the Company is provided with at least thirty (30) days following the delivery of
such Notice of Termination for Good Reason to cure such event, and the Executive terminates his
employment as of the thirtieth (30th) day following the date when the Notice of
Termination for Good Reason is given (or as of an earlier date chosen by the Company), then 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.




          (u) “Incumbent Directors” shall have the meaning set forth in Section 1(i)(i).




          (v) “Notice of Termination for Good Reason” shall have the meaning set forth in
Section 1(t).




          (w) “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.




          (x) “Person” shall have the meaning set forth in Section 1(i)(i).



 








 








          (y) “Protection Period” means the period commencing on the Change in Control Date and
ending on the second anniversary thereof.




          (z) “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.




          (aa) “Release” shall have the meaning set forth in Section 4(a)(vi).




          (bb) “Release Effective Date” shall mean the date the Release becomes effective and
irrevocable.




          (cc) “Reorganization” shall have the meaning set forth in Section 1(i)(ii).




          (dd) “Safe Harbor Amount” shall have the meaning set forth in Section 5(a).




          (ee) “Specified Shareholder” shall mean 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.




          (ff) “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 stock.




          (gg) “Successor” shall have the meaning set forth in Section 10(c).




          (hh) “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.




          (ii) “Underpayment” shall have the meaning set forth in Section 5(b).




          SECTION 2. Effectiveness and Term. This Agreement shall become effective as of the
date hereof (the “Effective Date”) and shall remain in effect until the third
(3rd) 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 sixty (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 that 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’s 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 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 (2)
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 cash payment payable on the tenth
(10th) business day after 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 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
or under any agreement between the Company and the Executive and, in the event of a Qualifying
Termination described in clause (iii) of the definition thereof, the severance payment payable
pursuant to this Section 4(a)(i) shall be reduced by the amount of any other such severance
payments previously paid to the Executive.



               (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 Company’s fiscal year containing the Termination Date that the Executive was
employed by the Company or any Affiliate, and the denominator of which is three hundred sixty-five
(365), in a lump-sum payment payable on the tenth (10th) 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 Executive the cost of obtaining equivalent coverage, in the case of each
of clauses (A) and (B), for a period of time commencing on the Termination Date and ending on the
date that is eighteen (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 this Section 4(a)(iii) in one (1) tax
year of the Executive (the “Executive Tax Year”) shall not affect the amount of such
benefits to be provided in any other Executive Tax Year. The right to such benefits shall not be
subject to liquidation or exchange for any other benefit. Executive agrees to make (and to cause
his dependents to make) a timely election under the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended (“COBRA”) to the extent requested by Employer, to facilitate Employer’s
provision of continuation coverage.



               (iv) Accrued Rights. The Executive shall be entitled to (A) payments of any unpaid
salary, bonuses or other amount earned or accrued through the Termination Date and reimbursement of
any unreimbursed business expenses 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”). The Accrued
Rights payable pursuant to Section 4(a)(iv)(A) and Section 4(a)(iv)(B) shall be payable on their
respective otherwise scheduled payment dates, provided that any amounts payable in respect
of accrued but unused vacation shall be paid in a lump sum within 15 days following the Termination
Date. The Accrued Rights payable pursuant to Section 4(a)(iv)(C) shall be payable at the times set
forth in the applicable Section hereof.



               (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 Twenty Thousand and 00/100 Dollars ($20,000). Notwithstanding
anything to the contrary in this Agreement, the outplacement benefits under this Section 4(a)(v)
shall be provided to the Executive for no longer than the one-year period following the Termination
Date, and the amount of any outplacement benefits or office space, office supplies and secretarial
assistance provided to the Executive in any Executive Tax Year shall not affect the amount of any
such outplacement benefits or office space, office supplies and secretarial assistance provided to
the Executive in any other Executive Tax Year.



               (vi) Release of Claims. Notwithstanding any provision of this Agreement to the
contrary, unless on or prior to the tenth (10th) business day prior to March 15 of the
year following the year in which the Termination Date occurs, the Executive has executed and



 








 




delivered a Separation Agreement and Release (the “Release”) substantially in the form
of Exhibit A to the employment agreement between the Executive and the Company and the Release
Effective Date shall have occurred, (A) no payments shall be paid or made available to the
Executive under Section 4(a)(i) or 4(a)(ii), (B) the Company shall be relieved of all obligations
to provide or make available any further benefits to the Executive pursuant to Section 4(a)(iii)
and 4(a)(v) and (C) the Executive shall be required to repay the Company, in cash, within five
business days after written demand is made therefor by the Company, an amount equal to the value of
any benefits received by the Executive pursuant to Section 4(a)(iii) and 4(a)(v) prior to such
date.




          (b) Termination on Account of Death or Disability; Non-Qualifying Termination.




               (i) 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
that 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 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 one hundred ten percent (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. If such a reduction is necessary, the Payments shall be reduced in the
following order: (i) the Payments payable under Section 4(a)(i) (severance), (ii) the Payments
payable under Section 4(a)(ii)


 








 







(prorated annual bonus), (iii) any other cash Payments, (iv) the Payments payable under
Section 4(a)(iii) (welfare benefit continuation) and (v) the accelerated vesting under Section 3.




          (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 fifteen (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 280G Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by the Company to the Executive within five (5) 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 Section 4999 of the Code, at the time of the
initial determination by the Accounting Firm hereunder, it is possible that 280G Gross-Up Payments
that will not have been made by the Company should have been made (an “Underpayment”),
consistent with the calculations required to be made hereunder. In the event the Company exhausts
its remedies pursuant to Section 5(c) and the Executive thereafter is required to 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 (5)
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 (10)
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 thirty (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 pay the tax claim on behalf of the Executive and direct the Executive to 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 (1) or more appellate courts, as the Company shall determine; provided,
however, that (A) if the Company pays the tax claim on behalf of the Executive and directs
the Executive to sue for a refund, the Company 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 payment 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 case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.




          (d) If, after the payment by the Company of any tax claim 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 payment by the Company of any tax claim 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 thirty (30) day period after such
determination, then the amount the Company paid in respect of such claim 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
280G Gross-up Payments be made by the Company to the Executive under this Section 5 after the end
of the Executive Tax Year following the Executive Tax Year in which the Executive remits the taxes
for which such 280G Gross-up Payment is required to be made under this Section 5, and (ii) no other
payments will be made by the Company to the Executive under


 








 




this Section 5 with respect to any audit or litigation relating to any 280G Gross-Up Payment
or Excise 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 this 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.




          (a) It is intended that the provisions of this Agreement comply with Section 409A of the
Code, as amended, and the regulations thereunder as in effect from time to time (collectively,
“Section 409A”), and all provisions of this Agreement shall be construed and interpreted
either to (i) exempt any compensation from the application of Section 409A, or (ii) comply with the
requirements for avoiding taxes or penalties under Section 409A.




          (b) Neither the Executive nor any creditor or beneficiary of the Executive shall have the
right to subject any deferred compensation (within the meaning of Section 409A) payable under this
Agreement or under any other plan, policy, arrangement or agreement of or with the Company or any
of its Affiliates (this Agreement and such other plans, policies, arrangements and agreements, the
“Company Plans”) to any anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred
compensation (within the meaning of Section 409A) payable to or for the benefit of the Executive
under any Company Plan may not be reduced by, or offset against, any amount owing by the Executive
to the Company or any of its Affiliates.




          (c) If, at the time of the Executive’s separation from service (within the meaning of Section
409A), (i) the Executive shall be a specified employee (within the meaning of Section 409A and
using the identification methodology selected by the Company from time to time) and (ii) the
Company shall make a good faith determination that an amount payable under a Company Plan
constitutes deferred compensation (within the meaning of Section 409A) the payment of which is
required to be delayed pursuant to the six-month delay rule set forth in Section 409A to avoid
taxes or penalties under Section 409A, then the Company (or an Affiliate thereof, as applicable)
shall not pay such amount on the otherwise scheduled payment date but shall instead accumulate such
amount and pay it, without interest, on the first day of the seventh month following such
separation from service.


          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 that 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 otherwise expressly provided for in this Agreement, such amounts
shall not be reduced whether or not the Executive obtains other employment.


 








 








          (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 prior to the second anniversary of the
expiration of the term of this Agreement 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, (i) any
reimbursement for any fees and expenses under this Section 7 shall be made promptly and no later
than the end of the Executive Tax Year following the Executive Tax Year in which the fees or
expenses are incurred, (ii) the amount of fees and expenses eligible for reimbursement under this
Section 7 during any Executive Tax Year shall not affect the fees and expenses eligible for
reimbursement in another Executive Tax Year, (iii) no right to reimbursement under this Section 7
shall be subject to liquidation or exchange for any other payment or benefit, and (iv) no tax gross
up payments shall be made by the Company under this Section 7 after 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.




          (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
hereunder if he 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. If there shall be a Successor, (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 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 (10) 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. Such interest shall be payable at the same time as the corresponding payment is payable.




          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. Except as provided in Section 1(t), 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 that 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 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 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, 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, 11, 12 and 13, 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, 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.
	 
	 	 	 	     350 West Washington Street
	 
	 	 	 	     Suite 600
	 
	 	 	 	     Tempe, AZ 85281
	 
	 	 	 	     Attention: Chief Executive Officer
	 
	 	 	 	 
	 
	 	If to the Executive:	 	To the Executive’s then current address on file with the Company





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.




          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/ John T. Gaffney	 	 
	 
	 	 

     John T. Gaffney