Document:

Prepared by R.R. Donnelley Financial -- 1996 Stock Plan and form of agreements thereunder

 EXHIBIT 10.3 
  
 SUNPOWER CORPORATION 
  
 1996 STOCK PLAN 
  
 1. Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to
provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as
determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Stock Purchase Rights may also be granted under the Plan. 

 
 2. Definitions. As used herein, the following definitions shall apply: 

 
 (a) “Administrator” means the Board or any of its
Committees appointed pursuant to Section 4 of the Plan. 
  
 (b)
“Applicable Laws” means the legal requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code and the applicable laws of any foreign country or
jurisdiction where Options or Stock Purchase Rights are, or will be, granted under the Plan. 
  
 (c) “Board” means the Board of Directors of the Company. 
  
 (d) “Code” means the Internal Revenue Code of 1986, as amended. 
  
 (e) “Committee” means a Committee appointed by the Board of Directors in accordance with Section 4 of the
Plan. 
  
 (f) “Common Stock” means the Common
Stock of the Company. 
  
 (g) “Company” means
SunPower Corporation, a California corporation. 
  
 (h)
“Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services and is compensated for such services, and any Director of the Company whether compensated for such
services or not. If the Company registers any class of any equity security pursuant to the Exchange Act, the term Consultant shall thereafter not include Directors who are not compensated for their services or are paid only a Director’s fee by
the Company. 
  
 (i) “Continuous Status as an Employee or
Consultant” means that the employment or consulting relationship with the Company, any Parent or Subsidiary is not interrupted or terminated. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of
(i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of the Company. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon 
  

 - 1 - 

 expiration of such leave is guaranteed by statute or contract, including Company policies. If reemployment upon
expiration of a leave of absence approved by the Company is not so guaranteed, on the 91st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes
as a Nonstatutory Stock Option. 
  
 (j)
“Director” means a member of the Board of Directors of the Company. 
  
 (k) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a Director’s fee by the Company shall not be
sufficient to constitute “employment” by the Company. 
  
 (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 (m) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 (i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid; if no sales were
reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (ii) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or 
  
 (iii) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Administrator. 
  
 (n) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. 
  
 (o) “Nonstatutory Stock Option” means an Option not intended
to qualify as an Incentive Stock Option. 
  
 (p)
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
  
 (q) “Option” means a stock option granted pursuant to the Plan. 
  
 (r) “Optioned Stock” means the Common Stock subject to an
Option or a Stock Purchase Right. 
  
 (s)
“Optionee” means an Employee or Consultant who receives an Option or Stock Purchase Right. 
  

 - 2 - 

 (t) “Parent” means a “parent corporation,” whether now or hereafter existing,
as defined in Section 424(e) of the Code. 
  
 (u)
“Plan” means this 1996 Stock Plan. 
  
 (v)
“Restricted Stock” means shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11 below. 
  
 (w) “Section 16(h)” means Section 16(b) of the Securities Exchange Act of 1934, as amended. 
  
 (x) “Share” means a share of the Common Stock, as adjusted
in accordance with Section 12 below. 
  
 (y) “Stock
Purchase Right” means a right to purchase Common Stock pursuant to Section 11 below. 
  
 (z) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate. number of Shares which may
be subject to option and sold under the Plan is 1,800,000 Shares. The Shares maybe authorized but unissued, or reacquired Common Stock. 
  
 If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an option
exchange program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of
either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase
price, and the original purchaser of such Shares did not receive any benefits of ownership of such Shares, such Shares shall become available for future grant under the Plan. For purposes of the preceding sentence, voting rights shall not be
considered a benefit of Share ownership. 
  
 4. Administration of the Plan.

  
 (a) Initial Plan Procedure. Prior to the date, if any,
upon which the Company becomes subject to the Exchange Act, the Plan shall be administered by the Board or a Committee appointed by the Board. 
  
 (b) Plan Procedure After the Date, if any, upon Which the Company becomes Subject to the Exchange. 
  
 (i) Multiple Administrative Bodies. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to Directors, Officers and Employees who are neither Directors nor Officers. 
  

 - 3 - 

 (ii) Administration With Respect to Directors and Officers. With respect to grants of Options and
Stock Purchase Rights to Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board if the Board may administer the Plan in compliance with the rules under Rule 16b-3 promulgated under the Exchange
Act or any successor thereto (“Rule 16b-3”) relating to the disinterested administration of employee benefit plans under which Section 16(b) exempt discretionary grants and awards of equity securities are to be made, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be constituted to comply with the rules under Rule 16b-3 relating to the disinterested administration of employee benefit plans under which Section 16(b) exempt discretionary
grants and awards of equity securities are to be made. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and thereafter directly administer the Plan, all to
the extent permitted by the rules under Rule 16b-3 relating to the disinterested administration of employee benefit plans under which Section 16(b) exempt discretionary grants and awards of equity securities are to be made. 
  
 (iii) Administration With Respect to Other Employees and Consultants.
With respect to grants of Options and Stock Purchase Rights to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which
committee shall be constituted in such a manner as to satisfy Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size
of the Committee and appoint additional members thereof remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws. 
  
 (c) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon which the Common Stock is listed, the Administrator shall have the authority in its discretion: 
  
 (i) to determine the Fair Market Value of the Common Stock, in accordance with Section 2(m) of the Plan; 
  
 (ii) to select the Consultants and Employees to whom Options and Stock
Purchase Rights may from time to time be granted hereunder; 
  
 (iii) to determine whether and to what extent Options and Stock Purchase Rights or any combination thereof are granted hereunder; 
  
 (iv) to determine the number of Shares to be covered by each such award granted hereunder; 
  

 - 4 - 

 (v) to approve forms of agreement for use under the Plan; 
  
 (vi) to determine the terms and conditions of any award granted hereunder,

  
 (vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock; 
  
 (viii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted; and

  
 (ix) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan. 
  
 (d) Effect of
Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees and any other holders of any Options or Stock Purchase Rights. 
  
 5. Eligibility. 
  
 (a) Nonstatutory Stock Options and Stock Purchase Rights may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees. An Employee or Consultant who has been granted an Option or Stock Purchase Right may, if otherwise eligible, be granted additional Options or Stock Purchase Rights. 
  
 (b) Each Option shall be designated in the written option agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by
the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 
  
 (c) Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any tight with respect to
continuation of his or her employment or consulting relationship with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate his or her employment or consulting relationship at any time, with or
without cause. 
  
 (d) Upon the Company or a successor corporation
issuing any class of common equity securities required to be registered under Section 12 of the Exchange Act or upon the Plan being assumed by a corporation having a class of common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Options to Employees: 
  
 (i) No employee shall be granted, in any fiscal year of the Company, Options to purchase more than 100,000 Shares. 
  

 - 5 - 

 (ii) In connection with his or her initial employment, an Employee may be granted Options to purchase up
to an additional 100,000 Shares which shall not count against the limit set forth in subsection (i) above. 
  
 (iii) The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in
Section 12. 
  
 (iv) If an Option is canceled in the same fiscal
year of the Company in which it was granted (other than in connection with a transaction described in Section 12), the canceled Option shall be counted against the limit set forth in subsection (i) above. For this purpose, if the exercise price of
an Option is reduced, such reduction will be treated as a cancellation of the Option and the grant of a new Option. 
  
 6. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by the shareholders of the
Company, as described in Section 18 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan. 
  

7. Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided, however, that the term shall be no more than ten (10)
years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. 
  
 8. Option Exercise Price and Consideration. 
  

(a) The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but
shall be subject to the following: 
  
 (i) In the case of an
Incentive Stock Option 
  
 (A) granted to an Employee who, at
the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant. 
  

 - 6 - 

 (B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant. 
  
 (ii) In the case
of a Nonstatutory Stock Option 
  
 (A) granted to a person who,
at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of the grant. 
  
 (B) granted
to any other person, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant. 
  
 (b) The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) delivery of a properly executed exercise notice together with such other documentation as the Administrator and a broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan
proceeds required to pay the exercise price, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may
be reasonably expected to benefit the Company. 
  
 9. Exercise of Option.

  
 (a) Procedure for Exercise; Rights as a Shareholder.
Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan, but in no case at a rate of less than 20% per year over five (5) years from the date the Option is granted. 
  
 An Option may not be exercised for a fraction of a Share. 
  
 An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by
the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Administrator, consist of any consideration and method
of payment allowable under Section 8(b) hereof. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to
vote, receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of
the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 12 hereof. 
  

 - 7 - 

 Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter
may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 
  
 (b) Termination of Employment or Consulting Relationship. In the event of termination of an Optionee’s Continuous Status as an Employee or
Consultant (but not in the event of an Optionee’s change of status from Employee to Consultant (in which case an Employee’s Incentive Stock Option shall automatically convert to a Nonstatutory Stock Option on the date three (3) months and
one day following such change of status) or from Consultant to Employee), such Optionee may, but only within such period of time as is determined by the Administrator, of at least thirty (30) days, with such determination in the case of an Incentive
Stock Option not exceeding three (3) months after the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise his or her Option to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the extent that the Optionee was not entitled to exercise the Option at the date of such termination, or if the Optionee does not exercise such Option to the extent so entitled
within the time specified herein, the Option shall terminate. 
  
 (c) Disability of Optionee. In the event of termination of an Optionee’s Continuous Status as an Employee or Consultant as a result of his or her disability, the Optionee may, but only within twelve (12) months from the date of
such termination (and in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination. If such
disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive Stock Option shall automatically cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option on the day three months and one day following such termination. To the extent that the Optionee was not entitled to exercise the Option at the date of termination, or if the Optionee does
not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (d) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised at any time within
twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant) by the Optionee’s estate or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option on the date of death. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If, after the Optionee’s death, the Optionee’s estate or a person who acquires the right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  

 - 8 - 

 (e) Rule 16b-3. Options granted to persons subject to Section 16(b) of the Exchange Act must
comply with Rule 16b-3 and shall contain such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions. 
  
 (f) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 
  
 10. Non-Transferability of Options and Stock Purchase Rights. Options and Stock
Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

  
 11. Stock Purchase Rights. 
  
 (a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer, which shall in
no event exceed [thirty (30)] days from the date upon which the Administrator makes the determination to grant the Stock Purchase Right. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right shall be referred to herein as “Restricted Stock.” 
  
 (b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the purchaser’s employment with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock purchase
agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine, but in no case at a
rate of less than 20% per year over five years from the date of purchase. 
  
 (c) Other Provisions. The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole
discretion. In addition, the provisions of Restricted Stock purchase agreements need not be the same with respect to each purchaser. 
  
 (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and
shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in Section 12 of the Plan. 
  

 - 9 - 

 12. Adjustments Upon Changes in Capitalization or Merger. 
  
 (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option or Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options
or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per share of Common Stock covered by each such outstanding Option or
Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or
Stock Purchase Right. 
  
 (b) Dissolution or Liquidation.
In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for
an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action. 
  
 (c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or
substitute for the Option, the Optionee shall have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be exercisable. If an Option is exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee that the Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option confers the right to purchase or receive, for each Share of Optioned Stock subject to the
Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, 
  

 - 10 - 

 or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the
merger or sale of assets was not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for
each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

  
 13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant. 
  
 14. Amendment and Termination of the Plan. 
  

Amendment and Termination. The Board may at any time amend, alter, suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without his or her consent. In addition, to the extent necessary and desirable to comply with Rule 16b-3 under the Exchange Act or with
Section 422 of the Code (or any other applicable law or regulation, including the requirements of the NASD or an established stock exchange), the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree
as required. 
  
 (a) Effect of Amendment or Termination.
Any such amendment or termination of the Plan shall not affect Options or Stock Purchase Rights already granted, and such Options and Stock Purchase Rights shall remain in full force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. 
  
 15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
  
 As a condition to the exercise of an Option or Stock Purchase Right, the
Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law. 
  

 - 11 - 

 16. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 
  
 The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 
  
 17. Agreements. Options and Stock Purchase Rights shall be evidenced by written
agreements in such form as the Administrator shall approve from time to time. 
  
 18. Shareholder Approval. Continuance of the Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such shareholder approval shall be obtained in
the degree and manner required under Applicable Laws and the rules of any stock exchange upon which the Common Stock is listed. 
  
 19. Information to Optionees and Purchasers. The Company shall provide to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less
frequently than annually during the period such Optionee or purchaser has one or more Options or Stock Purchase Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information. 
  

 - 12 - 

 SUNPOWER CORPORATION 
  
 1996 STOCK PLAN 
  
 STOCK OPTION AGREEMENT 
  
 Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. 
  
 NOTICE OF STOCK OPTION GRANT 
  
 [Optionee’s Name and Address] 
  
 You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as follows: 
  

			
	 Grant Number
	 	_________________________________________
		
	 Date of Grant
	 	_________________________________________
		
	 Vesting Commencement Date
	 	_________________________________________
		
	 Exercise Price per Share
	 	$________________________________________
		
	 Total Number of Shares Granted
	 	_________________________________________
		
	 Total Exercise Price
	 	$________________________________________
		
	 Type of Option:
	 	______  Incentive Stock Option
		
	 	 	______  Nonstatutory Stock Option
		
	 Term/Expiration Date:
	 	_________________________________________

  
 Vesting
Schedule: 
  
 You may exercise this Option, in whole or in
part, according to the following vesting schedule: 
  
 20% of the
Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/60 of the Shares subject to the Option shall vest each month thereafter. 
  
 Termination Period: 
  
 You may exercise this Option for three months after your employment or consulting relationship with the Company terminates, or for such longer period upon
your death or 

 disability as provided in the Plan. If your status changes from Employee to Consultant or Consultant to Employee, this
Option Agreement shall remain in effect. In no case may you exercise this Option after the Term/Expiration Date as provided above. 
  
 2. AGREEMENT 
  
 (a) Grant of Option. SunPower Corporation, a California corporation (the “Company”), hereby grants to the Optionee named in the Notice of
Grant (the “Optionee”), an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant
(the “Exercise Price”) subject to the terms, definitions and provisions of the 1996 Stock Plan (the “Plan”) adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in
the Plan shall have the same defined meanings in this Option Agreement. 
  
 If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”). 
  
 (b) Exercise of Option. 
  
 (i) Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement. In the event of Optionee’s death, disability or other termination of the employment or consulting relationship, this Option shall be exercisable in accordance with the
applicable provisions of the Plan and this Option Agreement. 
  
 (ii) Method of Exercise. This Option shall be exercisable by written notice (in the form attached as Exhibit A) which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being
exercised, and such other representations and agreements as to the holder’s investment intent with respect to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised upon receipt by the
Company of such written notice accompanied by the Exercise Price. 
  
 No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 
  
 (c) Joinder Agreement. The (1) Company, (2) Cypress Semiconductor Corporation and TJ Rodgers (collectively
“Cypress”), and (3) the holders of shares, or of securities exercisable for or convertible into shares, of the Company’s common stock (the “Common Stock”) and the holders of Amended and Restated Subordinated Convertible
Promissory Notes 
  

 - 14 - 

 (the “Notes”) convertible into shares of the Company’s Series One Preferred Stock (the “Series One
Preferred Stock”), (collectively the “Non-Cypress Shareholders) have entered into (1) a Put/Call Option Agreement (the “Put/Call Option Agreement”), (2) a Co-Sale Agreement (the “Co-Sale Agreement”), (3) a Voting
Agreement (the “Voting Agreement”), and (4) a Shareholder Agreement (the “Shareholder Agreement”), all dated as of May 30, 2002, (collectively, the “Shareholder Transaction Documents”). 
  
 As a condition of receiving this grant, Optionee must become a party to the
Shareholder Transaction Documents; and by executing the Joinder Agreement (the “Joinder Agreement”) attached hereby as Exhibit B, the Optionee shall become a party to each of the Shareholder Transaction Documents.. 
  
 Additionally, if the Optionee is married, the Spousal Consent to the Put/Call
Option Agreement and Co-Sale Agreement, must be signed by the Optionee’s spouse. 
  
 (d) Optionee’s Representations. In the event the Shares purchasable pursuant to the exercise of this Option have not been registered under the Securities Act of 1933, as amended, at the time this Option is
exercised, Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit C, and shall
read the applicable rules of the Commissioner of Corporations attached to such Investment Representation Statement. 
  
 (e) Lock Up Period. Optionee hereby agrees that if so requested by the Company or any representative of the underwriters (the “Managing
Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180 day period
(or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under
the Securities Act; provided, however, that such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. The Company may impose stop transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. 
  
 (f) Method of Payment. Payment of the Exercise Price shall be by any
of the following, or a combination thereof, at the election of the Optionee: 
  
 (i) cash; 
  
 (ii) check;

  
 (iii) surrender of other shares of Common Stock of the Company
which (A) in the case of Shares acquired pursuant to the exercise of a Company option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the
Exercise Price of the Shares as to which the Option is being exercised; or 
  

 - 15 - 

 (iv) delivery of a properly executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the Exercise Price. 
  
 (g) Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the
shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or other law or regulation,
including any rule under Part 207 of Title 12 of the Code of Federal Regulations (“Regulation G”) as promulgated by the Federal Reserve Board. 
  
 (h) Termination of Relationship. In the event an Optionee’s Continuous Status as an Employee or Consultant terminates, Optionee may, to the
extent otherwise so entitled at the date of such termination (the “Termination Date”), exercise this Option during the Termination Period set out in the Notice of Grant. To the extent that Optionee was not entitled to exercise this Option
at the date of such termination, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate. 
  
 (i) Disability of Optionee. Notwithstanding the provisions of Section 6 above, in the event of termination of an Optionee’s consulting
relationship or Continuous Status as an Employee as a result of his or her disability, Optionee may, but only within twelve (12) months from the date of such termination (and in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), exercise the Option to the extent otherwise entitled to exercise it at the date of such termination; provided, however, that if such disability is not a “disability” as such term is defined in Section
22(e)(3) of the Code, in the case of an Incentive Stock Option such incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option on the day three months and one
day following such termination. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (j) Death of Optionee. In the event of termination of Optionee’s Continuous Status as an Employee or Consultant as a result of the death of Optionee, the Option may be exercised at any time within twelve
(12) months following the date of death (but in no event later than the date of expiration of the term of this Option as set forth in Section 10 below), by Optionee’s estate or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent the Optionee could exercise the Option at the date of death. 
  
 (k) Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 
  
 (l) Term of Option . This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and 
  

 - 16 - 

 the terms of this Option. The limitations set out in Section 7 of the Plan regarding Options designated as Incentive
Stock Options and Options granted to more than ten percent (10%) shareholders shall apply to this Option. 
  
 (m) Tax Consequences. Set forth below is a brief summary as of the date of this Option of some of the federal and California tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

  
 (i) Exercise of ISO. If this Option qualifies as an
ISO, there will be no regular federal income tax liability or California income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will
be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise. 
  
 (ii) Exercise of ISO Following Disability. If the Optionee’s Continuous Status as an Employee or Consultant
terminates as a result of disability that is not total and permanent disability as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Optionee must exercise an ISO within three months of such termination
for the ISO to be qualified as an ISO. 
  
 (iii) Exercise of
Nonstatutory Stock Option. There may be a regular federal income tax liability and California income tax liability upon the exercise of a Nonstatutory Stock Option. The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Optionee is an Employee or a former Employee, the Company will be required to withhold from
Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of exercise. 
  
 (iv) Disposition of Shares. In the case of an NSO, if Shares are held for at least one year, any gain realized on disposition of the Shares will be treated as long term capital gain for federal and California
income tax purposes. In the case of an ISO, if Shares transferred pursuant to the Option are held for at least one year after exercise and are disposed of at least two years after the Date of Grant, any gain realized on disposition of the Shares
will also be treated as long term capital gain for federal and income tax purposes. If Shares purchased under an ISO are disposed of within such one year period or within two years after the Date of Grant, any gain realized on such disposition will
be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (1) the Fair Market Value of the Shares on the date of exercise, or (2) the sale price of the Shares.

  
 (v) Notice of Disqualifying Disposition of ISO Shares.
If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares 
  

 - 17 - 

 acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date
one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the
Optionee. 
  

 - 18 - 

 (n) Entire Agreement: Governing Law. The Plan is incorporated herein by reference. The Plan and
this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by California law except for that body of law pertaining to conflict of laws.

  

			
	SUNPOWER CORPORATION,
	a California corporation
		
	By:	 	  

  

 - 19 - 

 OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY
BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
COMPANY’S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT
OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE. 
  
 Optionee acknowledges receipt of a copy of the Plan and represents that he is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions
of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any
change in the residence address indicated below. 
  

			
	Dated:	 	  

		
	Optionee	 	  

		
	Residence Address:	 	  

		
	 	 	  

		
	 	 	  

  

 - 20 -Prepared by R.R. Donnelley Financial -- Form of 2005 Stock Incentive Plan

 EXHIBIT 10.4 
  
 SUNPOWER CORPORATION 
  
 2005 STOCK INCENTIVE PLAN 
  
 (Adopted by the Board on August 12, 2005) 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 

  
 Table of Contents

  

					
	 	  	 	  	Page

	 SECTION 1.
	  	ESTABLISHMENT AND PURPOSE	  	1
			
	 SECTION 2.
	  	DEFINITIONS	  	1
			
	 (a)
	  	“Affiliate”	  	1
			
	 (b)
	  	“Award”	  	1
			
	 (c)
	  	“Board of Directors”	  	1
			
	 (d)
	  	“Change in Control”	  	1
			
	 (e)
	  	“Code”	  	2
			
	 (f)
	  	“Committee”	  	2
			
	 (g)
	  	“Company”	  	2
			
	 (h)
	  	“Consultant”	  	2
			
	 (i)
	  	“Employee”	  	2
			
	 (j)
	  	“Exchange Act”	  	2
			
	 (k)
	  	“Exercise Price”	  	3
			
	 (l)
	  	“Fair Market Value”	  	3
			
	 (m)
	  	“ISO”	  	3
			
	 (n)
	  	“Nonstatutory Option” or “NSO”	  	3
			
	 (o)
	  	“Offeree”	  	3
			
	 (p)
	  	“Option”	  	3
			
	 (q)
	  	“Optionee”	  	3
			
	 (r)
	  	“Outside Director”	  	3
			
	 (s)
	  	“Parent”	  	4
			
	 (t)
	  	“Participant”	  	4
			
	 (u)
	  	“Plan”	  	4
			
	 (v)
	  	“Purchase Price”	  	4
			
	 (w)
	  	“Restricted Share”	  	4
			
	 (x)
	  	“Restricted Share Agreement”	  	4
			
	 (y)
	  	“SAR”	  	4
			
	 (z)
	  	“SAR Agreement”	  	4
			
	 (aa)
	  	“Service”	  	4
			
	 (bb)
	  	“Share”	  	4
			
	 (cc)
	  	“Stock”	  	5
			
	 (dd)
	  	“Stock Option Agreement”	  	5
			
	 (ee)
	  	“Stock Unit”	  	5
			
	 (ff)
	  	“Stock Unit Agreement”	  	5

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - i - 

					
	 (gg)
	  	“Subsidiary”	  	5
			
	 SECTION 3.
	  	ADMINISTRATION	  	5
			
	 (a)
	  	Committee Composition	  	5
			
	 (b)
	  	Committee for Non-Officer Grants	  	5
			
	 (c)
	  	Committee Procedures	  	5
			
	 (d)
	  	Committee Responsibilities	  	6
			
	 SECTION 4.
	  	ELIGIBILITY	  	7
			
	 (a)
	  	General Rule	  	7
			
	 (b)
	  	Automatic Grants to Outside Directors	  	7
			
	 (c)
	  	Ten-Percent Stockholders	  	8
			
	 (d)
	  	Attribution Rules	  	8
			
	 (e)
	  	Outstanding Stock	  	8
			
	 SECTION 5.
	  	STOCK SUBJECT TO PLAN	  	8
			
	 (a)
	  	Basic Limitation	  	8
			
	 (b)
	  	Award Limitation	  	9
			
	 (c)
	  	Additional Shares	  	9
			
	 SECTION 6.
	  	RESTRICTED SHARES	  	9
			
	 (a)
	  	Restricted Stock Agreement	  	9
			
	 (b)
	  	Payment for Awards	  	9
			
	 (c)
	  	Vesting	  	9
			
	 (d)
	  	Voting and Dividend Rights	  	9
			
	 (e)
	  	Restrictions on Transfer of Shares	  	10
			
	 SECTION 7.
	  	TERMS AND CONDITIONS OF OPTIONS	  	10
			
	 (a)
	  	Stock Option Agreement	  	10
			
	 (b)
	  	Number of Shares	  	10
			
	 (c)
	  	Exercise Price	  	10
			
	 (d)
	  	Withholding Taxes	  	10
			
	 (e)
	  	Exercisability and Term	  	10
			
	 (f)
	  	Exercise of Options	  	11
			
	 (g)
	  	Effect of Change in Control	  	11
			
	 (h)
	  	No Rights as a Stockholder	  	11
			
	 (i)
	  	Modification, Extension and Renewal of Options	  	11
			
	 (j)
	  	Restrictions on Transfer of Shares	  	11
			
	 (k)
	  	Buyout Provisions	  	11
			
	 SECTION 8.
	  	PAYMENT FOR SHARES	  	11
			
	 (a)
	  	General Rule	  	11
			
	 (b)
	  	Surrender of Stock	  	11

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - ii - 

					
	 (c)
	  	Services Rendered	  	12
			
	 (d)
	  	Cashless Exercise	  	12
			
	 (e)
	  	Exercise/Pledge	  	12
			
	 (f)
	  	Other Forms of Payment	  	12
			
	 (g)
	  	Limitations under Applicable Law	  	12
			
	 SECTION 9.
	  	STOCK APPRECIATION RIGHTS	  	12
			
	 (a)
	  	SAR Agreement	  	12
			
	 (b)
	  	Number of Shares	  	12
			
	 (c)
	  	Exercise Price	  	13
			
	 (d)
	  	Exercisability and Term	  	13
			
	 (e)
	  	Effect of Change in Control	  	13
			
	 (f)
	  	Exercise of SARs	  	13
			
	 (g)
	  	Modification or Assumption of SARs	  	13
			
	 SECTION 10.
	  	STOCK UNITS	  	13
			
	 (a)
	  	Stock Unit Agreement	  	13
			
	 (b)
	  	Payment for Awards	  	14
			
	 (c)
	  	Vesting Conditions	  	14
			
	 (d)
	  	Voting and Dividend Rights	  	14
			
	 (e)
	  	Form and Time of Settlement of Stock Units	  	14
			
	 (f)
	  	Death of Recipient	  	14
			
	 (g)
	  	Creditors’ Rights	  	14
			
	 SECTION 11.
	  	ADJUSTMENT OF SHARES	  	15
			
	 (a)
	  	Adjustments	  	15
			
	 (b)
	  	Dissolution or Liquidation	  	15
			
	 (c)
	  	Reorganizations	  	15
			
	 (d)
	  	Reservation of Rights	  	16
			
	 SECTION 12.
	  	DEFERRAL OF AWARDS	  	16
			
	 (a)
	  	Committee Powers	  	16
			
	 (b)
	  	General Rules	  	16
			
	 SECTION 13.
	  	AWARDS UNDER OTHER PLANS	  	17
			
	 SECTION 14.
	  	PAYMENT OF DIRECTOR’S FEES IN SECURITIES	  	17
			
	 (a)
	  	Effective Date	  	17
			
	 (b)
	  	Elections to Receive NSOs, Restricted Shares or Stock Units	  	17
			
	 (c)
	  	Number and Terms of NSOs, Restricted Shares or Stock Units	  	17
			
	 SECTION 15.
	  	LEGAL AND REGULATORY REQUIREMENTS	  	17
			
	 SECTION 16.
	  	WITHHOLDING TAXES	  	17
			
	 (a)
	  	General	  	17

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - iii - 

					
	 (b)
	  	Share Withholding	  	18
			
	 SECTION 17.
	  	OTHER PROVISIONS APPLICABLE TO AWARDS	  	18
			
	 (a)
	  	Transferability	  	18
			
	 (b)
	  	Qualifying Performance Criteria	  	18
			
	 SECTION 18.
	  	NO EMPLOYMENT RIGHTS	  	19
			
	 SECTION 19.
	  	DURATION AND AMENDMENTS	  	19
			
	 (a)
	  	Term of the Plan	  	19
			
	 (b)
	  	Right to Amend or Terminate the Plan	  	19
			
	 (c)
	  	Effect of Termination	  	19
			
	 SECTION 20.
	  	EXECUTION	  	20

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - iv - 

  
 SUNPOWER CORPORATION

  
 2005 STOCK INCENTIVE PLAN 
  
 SECTION 1. ESTABLISHMENT AND PURPOSE. 
  
 The Plan was adopted by the Board of Directors on August 12, 2005, and
approved by the shareholders of the Company on                              , 2005, to be
effective as of the date of the initial offering of Stock to the public pursuant to a registration statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”). The purpose of the Plan is to promote the
long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside
Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for
Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options) or stock appreciation rights. 
  
 SECTION 2. DEFINITIONS. 
  
 (a) “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one of more Subsidiaries own not less than
50% of such entity. 
  
 (b) “Award” shall
mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan. 
  
 (c) “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time. 
  
 (d) “Change in Control” shall mean the occurrence of any of the following events: 
  
 (i) Any “person” (as defined below) other than
Cypress Semiconductor Corporation who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base
Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease
thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 1 - 

 (ii) The consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or
more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or 
  
 (iii) The sale, transfer or other disposition of all or
substantially all of the Company’s assets. 
  
 For purposes
of subsection (d)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan
maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock. 
  
 Any other provision of this Section 2(d) notwithstanding, a transaction shall
not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial offering of Stock to the
public or if there is a spin off of the Company by a Parent resulting in a dividend or distribution payable in Stock to the Parent’s stockholders. 
  
 (e) “Code” shall mean the Internal Revenue Code of 1986, as amended. 
  
 (f) “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which
is authorized to administer the Plan, as described in Section 3 hereof. 
  
 (g) “Company” shall mean SunPower Corporation, a California corporation, until it reincorporates in Delaware prior to Effective Date, by merging into SunPower Corporation, a Delaware corporation, and after such
reincorporation and merger the “Company” shall mean SunPower Corporation, a Delaware corporation. 
  
 (h) “Consultant” shall mean (i) a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or
an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee, or (ii) a common-law employee of an
Affiliate. 
  
 (i) “Employee” shall mean
any individual who is a common-law employee of the Company, a Parent or a Subsidiary. 
  
 (j) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 2 - 

 (k) “Exercise Price” shall mean, in the case of an Option, the amount for which one
Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted
from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR. 
  
 (l) “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:

  
 (i) If the Stock was traded over-the-counter
on the date in question but was not traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between
the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Sheets LLC; 

 
 (ii) If the Stock was traded on The Nasdaq Stock Market,
then the Fair Market Value shall be equal to the last reported sale price quoted for such date by The Nasdaq Stock Market; 
  
 (iii) If the Stock was traded on a United States stock exchange on the date in question, then the Fair Market Value shall be equal to the
closing price reported for such date by the applicable composite-transactions report; and 
  
 (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate. 
  
 In all cases, the determination of Fair
Market Value by the Committee shall be conclusive and binding on all persons. 
  
 (m) “ISO” shall mean an employee incentive stock option described in Section 422 of the Code. 
  
 (n) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO. 
  
 (o) “Offeree” shall mean an individual to whom the
Committee has offered the right to acquire Shares under the Plan (other than upon exercise of an Option). 
  
 (p) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

  
 (q) “Optionee” shall mean an
individual or estate who holds an Option or SAR. 
  
 (r)
“Outside Director” shall mean a member of the Board of Directors who is also an “independent director” as defined in (i) if the Stock is listed on The Nasdaq Stock 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 3 - 

 
Market, Rule 4200(a)(15) of the National Association of Securities Dealers, as such rule may be amended from time to time, which governs the independence
determination with respect to directors serving on the board of directors for companies listed on The Nasdaq Stock Market or (ii) if the Stock is listed on the New York Stock Exchange, Section 303A.02 of the New York Stock Exchange Listed Company
Manual, as such rule may be amended from time to time, which governs the independence determination with respect to directors serving on the board of directors for companies listed on the New York Stock Exchange. 
  
 (s) “Parent” shall mean any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date. 
  
 (t) “Participant” shall mean an individual or estate who holds an Award. 
  
 (u) “Plan” shall mean this 2005 Stock Incentive Plan
of SunPower Corporation, as amended from time to time. 
  
 (v)
“Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee. 
  
 (w) “Restricted Share” shall mean a Share awarded
under the Plan. 
  
 (x) “Restricted Share
Agreement” shall mean the agreement between the Company and the recipient of a Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Shares. 
  
 (y) “SAR” shall mean a stock appreciation right
granted under the Plan. 
  
 (z) “SAR
Agreement” shall mean the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her SAR. 
  
 (aa) “Service” shall mean service as an Employee, Consultant or Outside Director. Service does not
terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law.
However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating 90 days after such Employee went on leave, unless such Employee’s right to return to active work is
guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leaves count toward Service, and when Service terminates for all
purposes under the Plan. 
  
 (bb) “Share”
shall mean one share of Stock, as adjusted in accordance with Section 8 (if applicable). 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 4 - 

 (cc) “Stock” shall mean the Class A Common Stock of the Company. 
  
 (dd) “Stock Option Agreement” shall mean the
agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his Option. 
  
 (ee) “Stock Unit” shall mean a bookkeeping entry representing the equivalent of one Share, as awarded under the Plan. 

 
 (ff) “Stock Unit Agreement” shall mean the
agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit. 
  
 (gg) “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the
total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

  
 (hh) “Total and Permanent Disability” shall
mean permanent and total disability as defined by section 22(e)(3) of the Code. 
  
 SECTION 3. ADMINISTRATION. 
  
 (a)
Committee Composition. The Plan shall be administered by the Committee. The Committee shall consist of two or more directors of the Company, who shall be appointed by the Board. In addition, the composition of the Committee shall satisfy
(i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the
Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m)(4)(C) of the Code. 
  
 (b) Committee for Non-Officer Grants. The Board may also appoint one or more separate committees of the Board, each composed of one or more
directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards
under the Plan to such Employees and may determine all terms of such grants. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding
sentence. The Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received
by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award. 
  
 (c) Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold
meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 5 - 

 
meetings at which a quorum exists, or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee. 
  
 (d) Committee Responsibilities. Subject to the provisions of
the Plan, the Committee shall have full authority and discretion to take the following actions: 
  
 (i) To interpret the Plan and to apply its provisions; 
  
 (ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws; 
  
 (iii) To authorize any person to execute, on behalf of the Company, any instrument required to carry out the
purposes of the Plan; 
  
 (iv) To determine when
Awards are to be granted under the Plan; 
  
 (v)
To select the Offerees and Optionees; 
  
 (vi) To
determine the number of Shares to be made subject to each Award; 
  
 (vii) To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards,
either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

  
 (viii) To amend any outstanding Award
agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired; 
  
 (ix) To prescribe the consideration for the grant of each Award or other right under the Plan and to
determine the sufficiency of such consideration; 
  
 (x) To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage; 
  

(xi) To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation
plan of an acquired business; 
  
 (xii) To
correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement; 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 6 - 

 (xiii) To establish or verify the extent of satisfaction of any performance goals or
other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and 
  
 (xiv) To take any other actions deemed necessary or advisable for the administration of the Plan. 
  
 Subject to the requirements of applicable law, the Committee may designate persons other than
members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or
the granting of Options or other rights under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all persons
deriving their rights from an Offeree or Optionee. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan, any Option, or any right to acquire Shares under the Plan.

  
 SECTION 4. ELIGIBILITY. 
  
 (a) General Rule. Only Employees shall be eligible for the
grant of ISOs. Only Employees, Consultants and Outside Directors shall be eligible for the grant of Restricted Shares, Stock Units, Nonstatutory Options or SARs. 
  
 (b) Automatic Grants to Outside Directors. 
  
 (i) Each Outside Director who first joins the Board of Directors on or after the Effective Date, and who was
not previously an Employee, shall receive a Nonstatutory Option, subject to approval of the Plan by the Company’s stockholders, to purchase fifty thousand (50,000) Shares (subject to adjustment under Section 11) on the date of his or her
election to the Board of Directors. Twenty percent (20%) of the Shares subject to each Option granted under this Section 4(b)(i) shall vest and become exercisable on the first anniversary of the date of grant. The balance of the Shares subject to
such Option (i.e. the remaining eighty percent (80%)) shall vest and become exercisable monthly over a four-year period beginning on the day which is one month after the first anniversary of the date of grant, at a monthly rate of 1 2/3% of the
total number of Shares subject to such Options. Notwithstanding the foregoing, each such Option shall become vested if a Change in Control occurs with respect to the Company during the Optionee’s Service. 
  
 (ii) On the first business day following the conclusion of
each regular annual meeting of the Company’s stockholders, commencing with the annual meeting occurring after the Effective Date, each Outside Director who was not elected to the Board for the first time at such meeting and who will continue
serving as a member of the Board of Directors thereafter shall receive an Option to purchase ten thousand (10,000) Shares (subject to adjustment under Section 11), provided that such Outside Director has served on the Board of Directors for at least
six months. Each Option granted under this Section 4(b)(ii) shall vest and become exercisable on the first anniversary of the date of grant; 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 7 - 

 
provided, however, that each such Option shall become exercisable in full immediately prior to the next regular annual meeting of the Company’s
stockholders following such date of grant in the event such meeting occurs prior to such first anniversary date. Notwithstanding the foregoing, each Option granted under this Section 4(b)(ii) shall become vested if a Change in Control occurs with
respect to the Company during the Optionee’s Service. 
  
 (iii) The Exercise Price of all Nonstatutory Options granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the date of grant, payable in one of the forms
described in Section 8(a), (b) or (d). 
  
 (iv)
All Nonstatutory Options granted to an Outside Director under this Section 4(b) shall terminate on the earlier of (A) the day before the tenth anniversary of the date of grant of such Options or (B) the date twelve months after the termination of
such Outside Director’s Service for any reason; provided, however, that any such Options that are not vested upon the termination of the Outside Director’s service as a member of the Board of Directors for any reason shall terminate
immediately and may not be exercised. 
  
 (c)
Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant
satisfies the requirements of Section 422(c)(5) of the Code. 
  
 (d) Attribution Rules. For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries. 
  
 (e) Outstanding Stock. For purposes of Section 4(c) above,
“outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by
any other person. 
  
 SECTION 5. STOCK SUBJECT TO PLAN. 
  
 (a) Basic Limitation. Shares offered under the Plan shall be
authorized but unissued Shares or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 793,470 Shares (i) minus the aggregate number of Shares subject to options granted under the
Company’s 1988 Incentive Stock Plan and 1996 Stock Plan (the “Prior Plans”) between August 12, 2005 and the Effective Date, (ii) plus any Shares subject to options granted under the Prior Plans which lapse or otherwise
terminate prior to being exercised subsequent to August 12, 2005, and (iii) plus any of the 210,000 Shares subject to non-plan options granted during 2004 that lapse or otherwise terminate prior to being exercised subsequent to August 12, 2005. The
limitations of this Section 5(a) shall be subject to 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 8 - 

 
adjustment pursuant to Section 11. The number of Shares that are subject to Options or other Awards outstanding at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. 
  
 (b) Award Limitation. Subject to the provisions of Section 11,
no Participant may receive Options, SARs, Restricted Shares or Stock Units under the Plan in any calendar year that relate to more than one million (1,000,000) Shares. 
  
 (c) Additional Shares. If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then
such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any other reason before being exercised, then the corresponding Shares shall become available for Awards under the
Plan. If Stock Units are settled, then only the number of Shares (if any) actually issued in settlement of such Stock Units shall reduce the number available under Section 5(a) and the balance shall again become available for Awards under the Plan.
If SARs are exercised, then only the number of Shares (if any) actually issued in settlement of such SARs shall reduce the number available in Section 5(a) and the balance shall again become available for Awards under the Plan. 
  
 SECTION 6. RESTRICTED SHARES. 
  
 (a) Restricted Stock Agreement. Each grant of Restricted Shares
under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with
the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical. 
  
 (b) Payment for Awards. Subject to the following sentence, Restricted Shares may be sold or awarded under the Plan for such consideration as
the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services. 
  
 (c) Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may
determine, at the time of granting Restricted Shares of thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company. 
  
 (d) Voting and Dividend Rights. The holders of Restricted
Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted Stock Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received
in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 9 - 

 (e) Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of
repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Stock Agreement and shall apply in addition to any general restrictions that may apply to all
holders of Shares. 
  
 SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

  
 (a) Stock Option Agreement. Each grant of
an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which
are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee’s other compensation. 
  

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for
the adjustment of such number in accordance with Section 11. 
  
 (c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided
in 4(c), and the Exercise Price of an NSO shall not be less 85% of the Fair Market Value of a Share on the date of grant. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee at its
sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8. 
  
 (d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Committee may require
for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option. 
  
 (e) Exercisability and Term. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for Employees described in Section 4(c)). A Stock Option
Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the
Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee at
its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire. 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 10 - 

 (f) Exercise of Options. Each Stock Option Agreement shall set forth the extent to which the
Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Optionee’s estate or
any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of Service. 
  
 (g) Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that
a Change in Control occurs with respect to the Company. 
  
 (h)
No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No
adjustments shall be made, except as provided in Section 11. 
  
 (i) Modification, Extension and Renewal of Options. Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not
previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different exercise price, or in return for the grant of the same or a different number
of Shares. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, materially impair his or her rights or obligations under such Option. 
  
 (j) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such
special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to
any general restrictions that may apply to all holders of Shares. 
  
 (k) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted,
in either case at such time and based upon such terms and conditions as the Committee shall establish. 
  
 SECTION 8. PAYMENT FOR SHARES. 
  
 (a) General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in
Section 8(b) through Section 8(g) below. 
  
 (b)
Surrender of Stock. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 11 - 

 
which have already been owned by the Optionee or his representative. Such Shares shall be valued at their Fair Market Value on the date when the new Shares
are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes. 
  
 (c)
Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary prior to the award. If Shares are awarded without the payment of a Purchase
Price in cash, the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 6(b). 
  
 (d) Cashless Exercise. To the extent that a Stock Option
Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment
of the aggregate Exercise Price. 
  
 (e)
Exercise/Pledge. To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge
Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price. 
  
 (f) Other Forms of Payment. To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made in
any other form that is consistent with applicable laws, regulations and rules. 
  
 (g) Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Agreement or Restricted Stock Agreement to the contrary, payment may not be made in any form that is unlawful,
as determined by the Committee in its sole discretion. 
  
 SECTION 9. STOCK
APPRECIATION RIGHTS. 
  
 (a) SAR Agreement.
Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the
Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee’s other compensation. 
  
 (b) Number of Shares. Each SAR Agreement shall specify the
number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 11. 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 12 - 

 (c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may
specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding. 
  
 (d) Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The
SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee’s service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be
included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control. 
  
 (e) Effect of Change in Control. The Committee may determine,
at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company. 
  
 (f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or
any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of
Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price. 
  
 (g) Modification or Assumption of SARs. Within the limitations
of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number
of shares and at the same or a different exercise price. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR. 
  
 (h) Buyout Provisions. The Committee may at any time (a) offer
to buy out for a payment in cash or cash equivalents a SAR previously granted or (b) authorize an Optionee to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall
establish. 
  
 SECTION 10. STOCK UNITS. 
  
 (a) Stock Unit Agreement. Each grant of Stock Units under the
Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the recipient’s other compensation. 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 13 - 

 (b) Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash
consideration shall be required of the Award recipients. 
  
 (c) Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. A Stock Unit
Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock
Units shall become vested in the event that a Change in Control occurs with respect to the Company. 
  
 (d) Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit
awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Prior to distribution, any dividend equivalents
which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach. 
  
 (e) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of
(a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance
factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The
distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or
by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 11. 
  
 (f) Death of Recipient. Any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the
recipient’s beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed
by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after
the recipient’s death shall be distributed to the recipient’s estate. 
  
 (g) Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company,
subject to the terms and conditions of the applicable Stock Unit Agreement. 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 14 - 

 SECTION 11. ADJUSTMENT OF SHARES. 
  
 (a) Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable
in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser
number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of: 
  
 (i) The number of Options, SARs, Restricted Shares and Stock Units available for future Awards under Section
5; 
  
 (ii) The limitations set forth in Sections
5(a) and (b); 
  
 (iii) The number of NSOs to be
granted to Outside Directors under Section 4(b); 
  
 (iv) The number of Shares covered by each outstanding Option and SAR; 
  
 (v) The Exercise Price under each outstanding Option and SAR; or 
  
 (vi) The number of Stock Units included in any prior Award which has not yet been settled. 
  
 Except as provided in this Section 11, a Participant shall have no rights by reason of any
issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class. 
  
 (b) Dissolution or
Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company. 
  
 (c) Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding
Awards shall be subject to the agreement of merger or reorganization. Such agreement shall provide for: 
  
 (i) The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation; 
  
 (ii) The assumption of the outstanding Awards by the
surviving corporation or its parent or subsidiary; 
  
 (iii) The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards; 
  
 (iv) Acceleration of the expiration date of the outstanding unexercised Awards to a date not earlier than thirty (30) days after notice to
the Participant; or 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 15 - 

 (v) Settlement of the value of the outstanding Awards which have vested as of the
consummation of such merger or other reorganization in cash or cash equivalents; in the sole discretion of the Company, settlement of the value of some or all of the outstanding Awards which have not vested as of the consummation of such merger or
other reorganization in cash or cash equivalents on a deferred basis pending vesting; and the cancellation of all vested and unvested Awards as of the consummation of such merger or other reorganization. 
  
 (d) Reservation of Rights. Except as provided in this Section
11, an Optionee or Offeree shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class. Any issue by
the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an
Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or assets. 
  
 SECTION 12. DEFERRAL OF AWARDS. 
  
 (a)
Committee Powers. The Committee (in its sole discretion) may permit or require a Participant to: 
  
 (i) Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units
credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books; 
  
 (ii) Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an
equal number of Stock Units; or 
  
 (iii) Have
Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the
Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant. 
  
 (b) General Rules. A deferred compensation account established
under this Section 12 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the
Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of
Awards is permitted or required, the Committee (in its sole discretion) may establish rules, 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 16 - 

 
procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this
Section 12. 
  
 SECTION 13. AWARDS UNDER OTHER PLANS. 
  
 The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

  
 SECTION 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES. 

 
 (a) Effective Date. No provision of this Section 14 shall
be effective unless and until the Board has determined to implement such provision. 
  
 (b) Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash,
NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 14 shall be filed with the Company on the
prescribed form. 
  
 (c) Number and Terms of NSOs,
Restricted Shares or Stock Units. The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner
determined by the Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be determined by the Board. 
  
 SECTION 15. LEGAL AND REGULATORY REQUIREMENTS. 
  
 Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may
then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the
non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the
Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan. 
  
 SECTION 16. WITHHOLDING TAXES. 
  
 (a) General. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 17 - 

 
Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied. 
  
 (b) Share Withholding. The Committee may permit a Participant
to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she
previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the
number necessary to satisfy the legally required minimum tax withholding. 
  
 SECTION 17. OTHER PROVISIONS APPLICABLE TO AWARDS. 
  
 (a) Transferability. Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold,
assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and
distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 17(a) shall be void and
unenforceable against the Company. 
  
 (b) Qualifying
Performance Criteria. The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals for a specified period of time relating to one or more of the
following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee in the Award: (a)
cash flow, (b) earnings per share, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j)
income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) return on invested capital, or (p) market segment shares
(“Qualifying Performance Criteria”). The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset
write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs
and (v) any extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual
report to stockholders for the applicable year. If applicable, the Committee shall determine the Qualifying Performance Criteria not later than the 90th day of the performance period, and shall determine and certify, for each Participant, the extent to which the Qualifying Performance Criteria have been met. The 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 18 - 

 
Committee may not in any event increase the amount of compensation payable under the Plan upon the attainment of a Qualifying Performance Goal to a
Participant who is a “covered employee” within the meaning of Section 162(m) of the Code. 
  
 SECTION 18. NO EMPLOYMENT RIGHTS. 
  
 No provision of the Plan, nor any right or Option granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Company and its Subsidiaries reserve
the right to terminate any person’s Service at any time and for any reason, with or without notice. 
  
 SECTION 19. DURATION AND AMENDMENTS. 
  
 (a) Term of the Plan. The Plan, as set forth herein, shall terminate automatically on August 12, 2015 and may be terminated on any earlier date pursuant to Subsection (b) below. 
  
 (b) Right to Amend or Terminate the Plan. The Board of
Directors may amend the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of
the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. 
  
 (c) Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not
affect Awards previously granted under the Plan. 
  
 [Remainder of
this page intentionally left blank] 
  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 19 - 

 SECTION 20. EXECUTION. 
  

To record the adoption of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same. 
  

			
	SUNPOWER CORPORATION
		
	 By
	 	 
		
	 Name 
	 	 
		
	 Title
	 	 

  

 SUNPOWER CORPORATION 
 2005 STOCK INCENTIVE PLAN 
 - 20 - 

  
 SUNPOWER CORPORATION

  
 2005 STOCK INCENTIVE PLAN 
  
 NOTICE OF STOCK OPTION GRANT 
  
 You have been granted the following Option to purchase Class A Common Stock
of SUNPOWER CORPORATION (the “Company”) under the Company’s 2005 Stock Incentive Plan (the “Plan”): 
  

			
	Name of Optionee:	  	[Name of Optionee]
		
	Total Number of Option Shares Granted:	  	[Total Number of Shares]
		
	Type of Option:	  	 ̈  Incentive Stock Option
		
	 	  	 ̈  Nonstatutory Stock Option
		
	Exercise Price Per Share:	  	$                    
		
	Grant Date:	  	[Date of Grant]
		
	Vesting Commencement Date:	  	[Vesting Commencement Date]
		
	Vesting Schedule:	  	This Option becomes exercisable with respect to the first 1/5th of the shares subject to this Option when you complete 12 months of continuous service as an Employee or a Consultant from the Vesting Commencement Date. Thereafter, this Option becomes exercisable with respect to an additional
1/60th of the shares subject to this Option when you complete each additional month of service.
		
	Expiration Date:	  	[Expiration Date] This Option expires earlier if your Service terminates earlier, as described in the Stock Option Agreement.

  
 By your signature and
the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the term and conditions of the Plan and the Stock Option Agreement, both of which are attached to and made a part
of this document. 
  
 By signing this document you further agree
that the Company may deliver by e-mail all documents relating to the Plan or this award (including without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver
to its security holders (including without limitation, annual reports and proxy statements). You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with
the Company. If the Company posts these documents on a website, it will notify you by e-mail. 
  

 SUNPOWER CORPORATION 
 NOTICE OF STOCK OPTION GRANT 
 - 1 - 

									
	OPTIONEE:	 	 	 	SUNPOWER CORPORATION
				
	 	 	 	 	By:	 	 
	 Optionee’s Signature
	 	 	 	 	 	 
				
	 	 	 	 	Title: 	 	 
	 Optionee’s Printed Name
	 	 	 	 	 	 

  

 SUNPOWER CORPORATION 
 NOTICE OF STOCK OPTION GRANT 
 - 2 - 

  
 SUNPOWER CORPORATION

  
 2005 STOCK INCENTIVE PLAN 
  
 STOCK OPTION AGREEMENT 
  

			
	Tax Treatment	  	This Option is intended to be an incentive stock option under Section 422 of the Internal Revenue Code or a nonstatutory option, as provided in the Notice of Stock Option Grant. Even if this
Option is designated as an incentive stock option, it shall be deemed to be a nonstatutory option to the extent required by the $100,000 annual limitation under Section 422(d) of the Internal Revenue Code.
		
	Vesting	  	This Option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. This Option will in no event become exercisable for additional shares after your service as an
Employee or a Consultant has terminated for any reason.
		
	Term	  	This Option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the Notice of Stock Option Grant (fifth
anniversary for a more than 10% stockholder as provided under the Plan if this is an incentive stock option). This Option may expire earlier if your Service terminates, as described below.
		
	Regular Termination	  	If your Service terminates for any reason except death or “Total and Permanent Disability” (as defined in the Plan), then this Option will expire at the close of business at Company
headquarters on the date three (3) months after the date your Service terminates (or, if earlier, the Expiration Date). The Company has discretion to determine when your Service terminates for all purposes of the Plan and its determinations are
conclusive and binding on all persons.
		
	Death	  	If your Service terminates because of death, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date your Service terminates (or, if
earlier, the Expiration Date). During that period of up to 12 months, your estate or heirs may exercise the Option.
		
	Disability	  	If your Service terminates because of your Total and Permanent Disability, then this Option will expire at the close of business at Company headquarters on the date 12 months after the date
your Service terminates (or, if earlier, the Expiration Date).
		
	Leaves of Absence	  	For purposes of this Option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the
Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work.

  

 SUNPOWER CORPORATION 
 STOCK OPTION AGREEMENT 
 - 1 - 

			
	 	  	If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the
terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement
between you and the Company pertaining to your part-time schedule.
		
	Restrictions on Exercise	  	The Company will not permit you to exercise this Option if the issuance of shares at that time would violate any law or regulation. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of the Company stock pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Company
stock as to which such approval shall not have been obtained. However, the Company shall use its best efforts to obtain such approval.
		
	Notice of Exercise	  	When you wish to exercise this Option you must notify the Company by completing the attached “Notice of Exercise of Stock Option” form and filing it with the Human Resources
Department of the Company. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when it is received by the Company. If someone else wants to
exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so.
		
	Form of Payment	  	When you submit your notice of exercise, you must include payment of the Option exercise price for the shares you are purchasing. Payment may be made in the following
form(s):
		
	 	  	 •       Your personal check, a cashier’s check or a money order.

		
	 	  	 •       Certificates for shares of Company stock that you own, along with any forms needed to
effect a transfer of those shares to the Company. The value of the shares, determined as of the effective date of the Option exercise, will be applied to the Option exercise price. Instead of surrendering shares of Company stock, you may attest to
the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the Option shares issued to you. However, you may not surrender, or attest to the ownership of shares of Company stock in payment of
the exercise price if your action would cause the Company to recognize a compensation expense (or additional compensation expense) with respect to this Option for financial reporting purposes.

		
	 	  	 •       By delivery on a form approved by the Committee of an irrevocable direction to a securities
broker approved by the Company to sell all or

  

 SUNPOWER CORPORATION 
 STOCK OPTION AGREEMENT 
 - 2 - 

			
	 	  	 part of your Option shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the Option exercise price and any withholding taxes.
The balance of the sale proceeds, if any, will be delivered to you. The directions must be given by signing a special “Notice of Exercise” form provided by the Company.

		
	 	  	 •       By delivery on a form approved by the Committee of an irrevocable direction to a securities
broker or lender approved by the Company to pledge Option shares as security for a loan and to deliver to the Company from the loan proceeds an amount sufficient to pay the Option exercise price and any withholding taxes. The directions must be
given by signing a special “Notice of Exercise” form provided by the Company.

		
	 	  	 •       Any other form permitted by the Committee in its sole discretion.

		
	 	  	Notwithstanding the foregoing, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.
		
	Withholding Taxes and Stock Withholding	  	You will not be allowed to exercise this Option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the Option exercise. These
arrangements may include withholding shares of Company stock that otherwise would be issued to you when you exercise this Option. The value of these shares, determined as of the effective date of the Option exercise, will be applied to the
withholding taxes.
		
	Restrictions on Resale	  	By signing this Agreement, you agree not to sell any Option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale.
This restriction will apply as long as you are an employee, consultant or director of the Company or a subsidiary of the Company.
		
	Transfer of Option	  	In general, only you can exercise this Option prior to your death. You cannot transfer or assign this Option, other than as designated by you by will or by the laws of descent and
distribution, except as provided below. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may in any event dispose of this Option
in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your Option in
any other way.
		
	 	  	However, if this Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to transfer this Option as
a gift to one or more family members. For purposes of this Agreement, “family member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
or

  

 SUNPOWER CORPORATION 
 STOCK OPTION AGREEMENT 
 - 3 - 

			
	 	  	sister-in-law (including adoptive relationships), any individual sharing your household (other than a tenant or employee), a trust in which one or more of these individuals have more than 50%
of the beneficial interest, a foundation in which you or one or more of these persons control the management of assets, and any entity in which you or one or more of these persons own more than 50% of the voting interest.
		
	 	  	In addition, if this Option is designated as a nonstatutory stock option in the Notice of Stock Option Grant, then the Committee may, in its sole discretion, allow you to transfer this option
to your spouse or former spouse pursuant to a domestic relations order in settlement of marital property rights.
		
	 	  	The Committee will allow you to transfer this Option only if both you and the transferee(s) execute the forms prescribed by the Committee, which include the consent of the transferee(s) to be
bound by this Agreement.
		
	Retention Rights	  	Neither your Option nor this Agreement gives you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to
terminate your Service at any time, with or without cause.
		
	Stockholder Rights	  	You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this Option by giving the required notice to the Company and paying the exercise price.
No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this Option, except as described in the Plan.
		
	Adjustments	  	In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this Option and the exercise price per share may be adjusted pursuant to
the Plan.
		
	Applicable Law	  	This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions).
		
	The Plan and Other Agreements	  	The text of the Plan is incorporated in this Agreement by reference. All capitalized terms in the Stock Option Agreement shall have the meanings assigned to them in the Plan. This Agreement
and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded. This Agreement may be amended only by another written
agreement, signed by both parties.

  
 BY SIGNING THE COVER
SHEET OF THIS AGREEMENT, 
 YOU AGREE TO ALL OF THE TERMS AND CONDITIONS 
 DESCRIBED ABOVE AND IN THE PLAN. 
  

 SUNPOWER CORPORATION 
 STOCK OPTION AGREEMENT 
 - 4 - 

  
 SUNPOWER CORPORATION

 2005 STOCK INCENTIVE PLAN 
  
 NOTICE OF EXERCISE OF STOCK OPTION 
  
 You must sign this Notice on the last page before submitting 
 it to the Company 
  

									
	OPTIONEE INFORMATION:	 	 	 	 
					
	Name:	 	 	 	 	 	Social Security Number:	 	 
					
	Address: 	 	 	 	 	 	Employee Number:	 	 

  
 OPTION INFORMATION: 

 

			
	Date of Grant:                     , 200  	  	Type of Stock Option:
	Exercise Price per Share: $                    	  	 
	Total number of shares of Class A Common Stock of SUNPOWER CORPORATION (the “Company”) covered by option:
                    	  	  ̈        Nonstatutory (NSO)
  ̈        Incentive (ISO)

  
 EXERCISE INFORMATION:

  
 Number of shares of Class A Common Stock of the Company for which option
is being exercised now:                     . (These shares are referred to below as the “Purchased Shares.”) 
  
 Total exercise price for the Purchased Shares:
$                     
  
 Form of payment enclosed [check all that apply]: 
  

			
	 ̈	  	Check for $                    , payable to “SUNPOWER
CORPORATION”
		
	 ̈	  	Certificate(s) for                      shares of Class A Common Stock of the
Company that I have owned for at least six months or have purchased in the open market. (These shares will be valued as of the date when the Company receives this notice.)
		
	 ̈	  	Attestation Form covering                      shares of Class A Common Stock of the
Company. (These shares will be valued as of the date when the Company receives this notice.)

  

 SUNPOWER CORPORATION 
 NOTICE OF EXERCISE OF STOCK OPTION 
 - 1 - 

 Name(s) in which the Purchased Shares should be registered [please check one box]:

  

					
	 ̈	  	In my name only	  	 
			
	 ̈	  	In the names of my spouse and myself as community property	  	My spouse’s name (if applicable): ____________________________________________
			
	 ̈	  	In the names of my spouse and myself as joint tenants with the right of survivorship	  	 
			
	 ̈	  	In the name of an eligible revocable trust	  	Full legal name of revocable trust: ____________________________________________ ____________________________________________ ____________________________________________
		
	The certificate for the Purchased Shares should be sent to the following address:	  	____________________________________________ ____________________________________________ ____________________________________________

  
 ACKNOWLEDGMENTS: 
  

	1.	I understand that all sales of Purchased Shares are subject to compliance with the Company’s policy on securities trades. 

  

	2.	I hereby acknowledge that I received and read a copy of the prospectus describing the Company’s 2005 Stock Incentive Plan and the tax consequences of an exercise.

  

	3.	In the case of a nonstatutory option, I understand that I must recognize ordinary income equal to the spread between the fair market value of the Purchased Shares on the date of
exercise and the exercise price. I further understand that I am required to pay withholding taxes at the time of exercising a nonstatutory option. 

  

	4.	In the case of an incentive stock option, I agree to notify the Company if I dispose of the Purchased Shares before I have met both of the tax holding periods applicable to
incentive stock options (that is, if I make a disqualifying disposition). 

  

	5.	I acknowledge that the Company has encouraged me to consult my own adviser to determine the form of ownership that is appropriate for me. In the event that I choose to transfer my
Purchased Shares to a trust that does not satisfy the requirements of the Internal Revenue Service (i.e., a trust that is not an eligible revocable trust), I also acknowledge that the transfer will be treated as a “disposition” for
incentive stock option tax purposes. As a result, the favorable incentive stock option tax treatment will be unavailable and other unfavorable tax consequences may occur. 

  
 SIGNATURE AND DATE: 
  
                                       
                                       
                    , 200   
  

 SUNPOWER CORPORATION 
 NOTICE OF EXERCISE OF STOCK OPTION 
 - 2 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]