SUNPOWER CORPORATION
QUARTERLY KEY INITIATIVE BONUS PLAN
(Changes effective January 31, 2008)

Article 1 - KI Plan Objective

 
1.1 The objective of this  Quarterly Key Initiative Bonus Plan (“KI Plan”) is to
provide incentives to employees of SunPower Corporation and its subsidiaries
(collectively, the “Company”) based on the Company’s quarterly corporate
milestones and an individual's performance against set individual key
initiatives (KIs).  The KI Plan shall be administered by the Compensation
Committee appointed by the Board of Directors of SunPower Corporation.

Article 2 - Effective Date

 
2.1 This quarterly program will be effective as of January 1, 2008.  ”Plan
Periods” under the KI Plan will correspond to the fiscal quarters of the
Company.

Article 3 - Eligibility for KI Plan Participation

      3.1 All executive officers of the Company, as well as any other employees
approved by the Chief Executive Officer of the Company, shall participate in the
KI Plan, except those on a sales compensation or project compensation plan.

Article 4 - Target Bonus Percentages and Calculations

4.1 
KI Target Bonus Percentages.  Each KI Plan participant will be allocated a KI
target bonus expressed as a percentage of his or her base salary. The
Compensation Committee may, in its discretion, set maximum caps on the payout
amount for KI bonuses.  The Compensation Committee may delegate establishing KI
target bonus percentages to officers of the Company; provided that executive
officer KI target bonus percentages must be approved by the Compensation
Committee.

4.2 
KI Plan Components.

4.2.1
Quarterly KI Score.  At the start of each quarter the participant will formulate
with his or her supervisor a list of key initiatives for such quarter.  Each
initiative will be allocated a certain number of points, and the quarterly
scorecard shall total 100 points. Following each quarter the participant’s
supervisor will score the participant’s achievement of key initiatives
(expressed as a percentage).

4.2.2 
Company Milestone Score.  With respect to each quarter the Board of Directors
will establish quarterly corporate milestones for such quarter.  Each company
milestone will be allocated a certain number of points.  Following each quarter,
the executive officers of the Company will score the achievement of company
milestones (expressed as a percentage).

4.2.3 
PBT Score.  At the start of each quarter the executive officers will establish
an internal profit before tax financial target for the Company (“Plan
PBT”).  Following each quarter the actual profit before tax of the Company for
such quarter will be determined (“Actual PBT”).

4.3 
Quarterly bonuses under this KI Plan are based on a combination of (a) the
participant’s number of points achieved on his or her key initiative scorecard
for the quarter (expressed as a percentage), (b) the percentage of company
milestones achieved for the quarter, and (c) the Actual PBT for such
quarter.  In particular, the bonus payout is calculated as follows:

(i)  
If the Actual PBT is less than 100% of the Plan PBT, no KI bonus payout will be
made for the quarter.

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(ii)  
If the Actual PBT is equal to or greater than 100% of the Plan PBT, but the
company milestone score is equal to or less than 60%, no KI bonus payout will be
made for the quarter.

(iii)  
If both the Actual PBT is equal to or greater than 100% AND the company
milestone score is greater than 60%, the quarterly KI bonus will be paid as
follows:

a. Corporate Milestone Score greater than 80%:  Full KI score payout.  For
example, if an individual has a $20,000 quarterly base salary, 10% KI target
bonus and a KI score of 80%, s/he would receive a quarterly bonus of 20,000 x
.10 x .80 = $1,600.

b. Company Milestone Score less than or equal to 80%:   One-half KI score
payout.  In the above example, the individual would receive a quarterly bonus of
$800.

(iv)  
If both the Actual PBT is equal to or greater than 80% and the company milestone
score is greater than 100%, the quarterly KI bonus may be paid above 100%,
subject to any maximum cap established by the Compensation Committee. For 2008,
the maximum cap is 110%.

Article 5 - Effect of Base Salary on Target Bonus Adjustments.

5.1 
Payout calculations under the KI Plan will be based on the plan participant's
base salary at the end of the quarter being measured and not the base salary at
the time the milestone and KI portion of the bonus is paid.

5.2 
In the event a participant’s KI target bonus percentage is changed during the
quarter, the new KI target bonus will be effective at the beginning of the
immediately following quarter.  The participant’s KI payout for the current
quarter shall be based on the KI target bonus in effect at the beginning of that
quarter.

Article 6 - KI Achievement

  6.1
KI attainment for the completed quarter and proposed KI for the next quarter are
reviewed at the end of each quarter no later than the third Friday of the first
month of the quarter.

6.2 
In setting KIs, a 0% threshold may be defined for each KI.  This threshold,
which could be timing and/or deliverable-based, is a point at which a KI score
starts to be earned.  If a participant does not reach/complete the minimum
threshold, such KI will be scored 0% (zero).  Progress beyond the threshold
earns the participant a pro-rated score up to 110%.  The score for a particular
KI item cannot exceed 110%.  Scoring greater than 100% for a KI item is usually
limited to numeric or quantitative goals.

  6.3
The Chief Executive Officer’s quarterly KI score is the actual corporate
milestone score for such quarter.

Article 7 - Eligibility for Payment

        7.1 Newly hired employees must be employed by the second Monday of the
quarter to be eligible for that quarter’s bonus payout.  Employees hired after
this period must still submit KIs within 10 days of hire and scored KI forms as
normally scheduled.

 
7.2 Employment:  To be eligible for any portion of the bonus payment, the
participant must be employed by the Company at the scheduled payment date.  A
participant who terminates employment prior to the payment date will be
ineligible for any and all bonuses not yet paid, except as otherwise provided in
this article or any separate agreement approved by the Compensation Committee.

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7.3 Disability:  If a participant is unable to perform the essential functions
of his or her job with or without a reasonable accommodation and is eligible to
receive disability benefits under the standards used by the Company's disability
benefit plan, the participant will receive a bonus calculated as follows: the
quarter in which the disability begins will be considered a completed quarter
and the KI bonus for that quarter will be paid as though KI attainment was 100%.

 
7.4 Retirement:  If a participant retires, i.e. permanent termination of
employment with the Company in accordance with the Company's retirement
policies, the participant will receive a bonus calculated as follows: the
quarter in which the retirement begins will be considered a completed quarter
and the KI bonus for that quarter will be paid as though KI attainment was
100%.  Thereafter, quarterly participation ceases.

 
7.5 Death:  If a participant dies, awards will be paid to the beneficiary
designated by the participant or, if no such designation has been made, to the
persons entitled thereto as determined by a court of competent
jurisdiction.  The bonus will be calculated as follows:  the quarter in which
death occurred will be considered a completed quarter and the KI bonus for that
quarter will be paid as though KI attainment was 100%.  Thereafter, quarterly
participation ceases.

 
7.6 Lay-off:  If a participant is terminated by lay-off during a Plan Period,
the quarter in which the lay-off occurred will be considered a completed quarter
and the KI bonus for that quarter will be paid as though KI attainment was
100%.  Thereafter, quarterly participation ceases.

        7.7 No bonus will be paid to employees who are terminated for cause.

 
7.8 All qualified bonus payments including future scheduled payments pursuant to
Section’s 8.2, 8.3, and 8.4 will be paid in lump-sum.

 
7.9 The Chief Executive Officer reserves the right to reduce the bonus award of
a participant on a pro-rata basis to reflect a participant's leave of absence
during the applicable Plan Period.

Article 8 - Miscellaneous

 
8.1 Unless as defined in article 8.4, no right or interest in this KI Plan is
transferable or assignable except by will or laws of descent and distribution.

 
8.2 Participation in this KI Plan does not guarantee any right to continued
employment with the Company.

 
8.3 Participation in the KI Plan in a particular Plan Period is not a guarantee
to participate in subsequent Plan Periods.

 
8.4 Management reserves the right to discontinue participation of any
participant in this KI Plan, at any time, and for whatever reasons.

 
8.5 This KI Plan is unfunded and the Company does not intend to set up a sinking
fund.  Consequently, payments arising out of bonus earned shall be paid out of
the Company's general assets.  Accounts recognized by the Company for book
purposes are not an indication of funds set aside for payment.  KI Plan
participants are considered as general creditors of the Company and the
obligation of the Company is purely contractual and is not secured by any
particular Company asset.

 
8.6 The provision of this KI Plan shall not limit the Compensation Committee (or
its designees) to modify said KI Plan, or adopt such other plans on matters of
compensation, bonus or incentive, which in its own judgment it deems proper, at
any time.

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