Exhibit
10.46





SECOND
AMENDED AND RESTATED


EXECUTIVE
SEVERANCE BENEFITS AGREEMENT





This
Second
Amended and
Restated Executive Severance Benefits Agreement (the “Agreement”)
is entered into this 23rd day of
December, 2008 (the “Effective
Date”), betweenJames W.
Young(“Executive”)
and Sunesis
Pharmaceuticals, Inc. (the “Company”).
This Agreement is intended to provide Executive with the compensation and
benefits described herein upon the occurrence of specific
events.  Certain capitalized terms used in this Agreement are defined
in Article 6.





Whereas,
the Company and the Executive previously entered into an Executive Severance
Benefits Agreement, dated August 5, 2005, which agreement was amended and
restated by that certain Amended and Restated Executive Severance Benefits
Agreement, dated May 26, 2008 (collectively, the “Prior Benefits
Agreement”); and





Whereas,
the Company and the Executive wish to amend and restate the Prior Benefits
Agreement by entering into this Second Amended and Restated Executive Severance
Benefits Agreement to clarify certain matters previously agreed to by the
parties and to comply with the parties’ original intent that the Prior Benefits
Agreement be interpreted, construed and administered in a manner that satisfies
Section 409A of the Internal Revenue Code of 1986, as amended from time to time,
among other things.





Now,
Therefore, in consideration of the foregoing, the Company and the
Executive, intending to be legally bound, hereby amend and restate the Prior
Benefits Agreement and agree as follows:





ARTICLE
1





SCOPE
OF AND CONSIDERATION FOR THIS AGREEMENT





1.1Position and
Duties.  Executive is currently employed by the Company as
Executive Chairman of the Board.  Executive reports directly to the
Board.





1.2Restrictions.  During
his employment by the Company, Executive agrees to the best of his ability and
experience that he will at all times loyally and conscientiously perform all of
the duties and obligations required of and from him as Executive Chairman of the
Board.  During the term of his employment, Executive further agrees
that he will devote approximately fifty
percent (50%) of his business time and
attention to the business of the Company, the Company will be entitled to all of
the benefits and profits arising from or incident to all such work, services and
advice, Executive will not render commercial or professional services of any
nature to any person or organization, whether or not for compensation, without
the prior written consent of the Board, and Executive will not directly or
indirectly engage or participate in any business that is competitive in any
manner with the business of the Company.  Nothing in this Agreement
will prevent Executive from accepting speaking or presentation engagements in
exchange for honoraria or from service on boards of charitable organizations or
otherwise participating in civic, charitable or fraternal organizations, or from
owning no more than one percent (1%) of the outstanding equity securities of a
corporation whose stock is listed on a national stock exchange.  It is
contemplated that Executive may serve as an advisor to or an affiliate of
certain life science venture organizations and/or on boards of directors of
other, non-competitive companies and the Board will not unreasonably withhold
its consent from such participation.  Such participation shall be
limited only by approval of the Board.









1.3Confidential Information and
Invention Assignment Agreement.  Executive acknowledges that he
has previously executed and delivered to an officer of the Company the Company’s
Confidential Information and Invention Assignment Agreement (the “Confidentiality
Agreement”) and that the Confidentiality Agreement remains in full force
and effect.





1.4Confidentiality of
Terms.  Executive agrees to follow the Company’s strict policy
that employees must not disclose, either directly or indirectly, any
information, including any of the terms of this Agreement, regarding salary,
bonuses, or stock purchase or option allocations to any person, including other
employees of the Company; provided, however, that Executive may
discuss such terms with members of his immediate family and any legal, tax or
accounting specialists who provide Executive with individual legal, tax or
accounting advice, with third parties as needed to
enforce the terms of this Agreement, with other employees of the Company
on a need to know basis if required to carry out Executive’s duties as the
Executive Chairman of the Board or at the request of the Board.





1.5Benefits Upon Change of
Control.  The Company and Executive wish to set forth the
compensation and benefits which Executive shall be entitled to receive in the
event of a Change of Control or if Executive’s employment with the Company is
terminated under the circumstances described herein.





1.6Consideration.  The
duties and obligations of the Company to Executive under this Agreement shall be
in consideration for Executive’s past services to the Company, Executive’s
continued employment with the Company, and Executive’s execution of a release in
accordance with Section 4.1.





1.7Prior
Agreement.  This Agreement shall supersede any other agreement
relating to severance benefits in the event of Executive’s severance from
employment, including, without limitation the Employment Agreements between
Executive and the Company dated as of December 1, 2003 and April 9,
2000.





ARTICLE
2





OPTION
ACCELERATION





2.1Change of Control Option
Acceleration.  In the event of a Change of Control, the vesting
and/or exercisability of fifty percent (50%) of Executive’s then-outstanding Stock Awards shall be
automatically accelerated immediately prior to the effective date of such Change
of Control.





2





2.2  Covered
Termination Option Acceleration.





(a)In the event of
a Covered Termination of Executive’s employment prior to or more than twelve
(12) months following the effective date of a Change of Control, the vesting
and/or exercisability of each of Executive’s then-outstanding Stock Awards shall be
automatically accelerated on the date of termination as to the number of Stock
Awards that would vest in the ordinary courseover the twelve (12) month period following the date of termination had
Executive remained continuously employed by the Company during such
period.





(b)In the event of
a Covered Termination of Executive’s employment on
orwithin twelve (12) months following the effective date of a Change of
Control, the vesting and/or exercisability of one hundred percent (100%) of
Executive’s then-outstanding Stock Awards
shall be automatically accelerated on the date of termination.





2.3Outstanding Stock
Awards.  For the avoidance of doubt, the fifty percent (50%),
twelve (12) month and one hundred percent (100%) accelerated vesting described
in Sections 2.1 and 2.2 shall apply toward that portion of Executive’s
outstanding Stock Awards that are unvested as of the date of accelerated
vesting.





ARTICLE
3





SEVERANCE
BENEFITS





3.1SeveranceBenefits.  A Covered
Termination of Executive’s employment prior to or more than twelve (12) months
following the effective date of a Change of Control entitles Executive to
receive the benefits set forth in this Section 3.1.





(a)Base Salary.  The
Company shall pay to Executive an amount equal to twelve (12) months’ Base
Salary.  Such severance amount shall be paid in cash in a single lump sum withinsixty (60) days
following the Covered Termination, subject to Sections 4.1 and 4.3 below,
and shall be subject to all required tax withholding.





(b)HealthBenefits.  Provided
that Executive elects continued coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (together
with any state or local laws of similar effect,“COBRA”),
the Company shall pay the premiums of Executive’s group health insurance
coverage, including coverage for Executive’s eligible dependents, for a maximum
period of the first twelve (12) months following such Covered Terminationor such lesser number of months as Executive and
Executive’s eligible dependents are eligible for such coverage; provided, however, that the
Company shall pay premiums for Executiveand
Executive’s eligible dependents only for coverage for which they were enrolled immediately prior to the
Covered Termination.Executive(and Executive’s eligible dependents, as
applicable) shall be solely responsible for making a timely and accurate election for
continuation of coverage pursuant to COBRA.  No premium payments will
be made following the effective date of Executive’s coverage by a health
insurance plan of a subsequent employer.  For the balance of the
period that Executive and Executive’s eligible
dependents are entitled to coverage under COBRA, if any, Executive shall
maintain such coverage at Executive’s own expense.




3




3.2Change of Control SeveranceBenefits.  A Covered
Termination of Executive’s employment on orwithin twelve (12) months following the effective date of a Change of
Control entitles Executive to receive the benefits set forth in this Section
3.2.





(a)Base Salary.  The
Company shall pay to Executive an amount equal to eighteen (18) months’ Base
Salary.  Such severance amount shall be paid in cash in a singlelump sum within sixty (60) days following
the Covered Termination, subject to Sections 4.1
and 4.3 below, and shall be subject to all required tax
withholding.





(b)Bonus.  The Company
shall pay to Executive an amount equal to eighteen twelfths (18/12ths) of
Executive’s target annual bonus for the fiscal year during which the Covered
Termination occurs, with such bonus determined assuming that all of the
performance objectives for such fiscal year have been attainedat target levels.  Such severance
amount shall be paid in cash in a singlelump sum within sixty (60) days following the Covered Termination, subject to Sections 4.1 and 4.3 below, and
shall be subject to all required tax withholding.





(c)HealthBenefits.  Provided
that Executive elects continued coverage under COBRA, the Company shall pay the
premiums of Executive’s group health insurance coverage, including coverage for
Executive’s eligible dependents, for a maximum period of the first eighteen (18)
months following such Covered Terminationor such
lesser number of months as Executive and Executive’s eligible dependents are
eligible for such coverage; provided, however, that the
Company shall pay premiums for Executiveand
Executive’s eligible dependents only for coverage for which they were enrolled immediately prior to the
Covered Termination.  Executive (and
Executive’s eligible dependents, as applicable) shall be solely responsible for
making a timely and accurate election for continuation of coverage
pursuant to COBRA.  No premium payments will be made following the
effective date of Executive’s coverage by a health insurance plan of a
subsequent employer.  For the balance of the period that Executive
and Executive’s eligible dependents are
entitled to coverage under COBRA, if any, Executive shall maintain such coverage
at Executive’s own expense.





(d)No Duplication ofBenefits.  The payments
and benefits provided for in this Section 3.2 shall only be payable in the event
of a Covered Termination of Executive’s employment on orwithin twelve (12) months following the
effective date of a Change of Control.  In the event of a Covered
Termination of Executive’s employment prior to or more than twelve (12) months
following a Changeof Control, then
Executive shall receive the payments and benefits described in Section 3.1 and
shall not be eligible to receive any of the payments and benefits described in
this Section 3.2.





3.3Other
Terminations.  If Executive’s employment is terminated by the
Company for Cause, by Executive other than pursuant to a Constructive
Termination or as a result of Executive’s death or disability, the Company shall
not have any other or further obligations to Executive under this Agreement
(including any financial obligations) except that Executive shall be entitled to
receive (a) Executive’s fully earned but unpaid base salary, through the date of
termination at the rate then in effect, and (b) all other amounts or benefits to
which Executive is entitled under any compensation, retirement or benefit plan
or practice of the Company at the time of termination in accordance with the
terms of such plans or practices, including, without limitation, any eligibility forcontinuation of benefits required
by COBRA.  In addition, subject to the provisions of the Company’s
equity compensation plans and the terms of Executive’s Stock Awards, if
Executive’s employment is terminated by the Company for Cause, by Executive
other than pursuant to a Constructive Termination or as a result of Executive’s
death or disability, all vesting of Executive’s unvested Stock Awards previously
granted to him by the Company shall ceaseas of
the date of termination and none of such unvested Stock Awards shall be
exercisable following the date of such termination.  The foregoing
shall be in addition to, and not in lieu of, any and all other rights and
remedies which may be available to the Company under the circumstances, whether
at law or in equity.




4




3.4Mitigation.  Except
as otherwise specifically provided herein, Executive shall not be required to
mitigate damages or the amount of any payment provided under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by
Executive as a result of employment by another employer or by any retirement
benefits received by Executive after the date of the Covered
Termination.





3.5Exclusive
Remedy.  Except as otherwise expressly required by law (e.g.,
COBRA) or as specifically provided herein, all of Executive’s rights to salary,
severance, benefits, bonuses and other amounts hereunder (if any) accruing after
the termination of Executive’s employment shall cease upon such
termination.  In the event of a termination of Executive’s employment
with the Company, Executive’s sole remedy shall be to receive the payments and
benefits described in this Agreement.





ARTICLE
4





LIMITATIONS
AND CONDITIONS UPON BENEFITS





4.1Release Prior to Payment ofBenefits.  Upon the
occurrence of a Covered Termination of Executive’s employment, and prior to the
payment of any benefits under this Agreement on account of such Covered
Termination, Executive shall execute a release (the “Release”)
in the form attached hereto and incorporated herein as Exhibit A or Exhibit B,
as applicable.  Such Release shall specifically relate to all of
Executive’s rights and claims in existence at the time of such execution and
shall confirm Executive’s obligations under the Confidentiality
Agreement.  It is understood that, as specified in the applicable
Release, Executive has a certain number of calendar days to consider whether to
execute such Release, and Executive may revoke such Release within seven (7)
calendar days after execution.  In the event Executive does not
execute such Release within the applicable period, or if Executive revokes such
Release within the subsequent seven (7) day period, no benefits shall be payable
under this Agreement.Notwithstanding
the payment schedules set forth in Article 3 above, no payments or benefits will
be made prior to the effective date of the Release. On the first regular payroll
pay day following the effective date of the Release (but in no event
later than the 60th day
after the Covered Termination date), the Company
will pay the Executive the payments and benefits the Executive would otherwise
have received on or prior to such date but for the delay in payment related to
the effectiveness of the Release, with the balance of the payments and benefits
being paid as originally scheduled.




5




4.2Termination ofBenefits.  Benefits
under this Agreement shall terminate immediately if the Executive, at any time,
violates any proprietary information or confidentiality obligation to the
Company, including, without limitation, the Confidentiality Agreement.





4.3Compliance with Section
409A.  It is intended that each
installment of the payments and benefits provided for in Articles 2 and 3 is a
separate “payment” for  purposes of Treasury Regulation Section
1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended that
payments of the amounts set forth in Articles 2 and 3 satisfy, to the greatest
extent possible, the exemptions from the application of Section 409A of the Code
(together, with any state law of similar effect, “Section
409A”) provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the Company (or,
if applicable, the successor entity thereto) determines that theseparationpayments
and benefits provided under this Agreement (the “Agreement
Payments”) constitute “deferred
compensation” under Section 409A and Executive is a “specified employee” of the
Company or any successor entity thereto, as such term is defined in Section
409A(a)(2)(B)(i) of the Code (a “Specified
Employee”)on his “separation from service” (as
defined under Treasury Regulation Section 1.409A-1(h)), then, solelyto
the extent necessaryto avoid the
incurrence of the adverse personal tax consequences under Section 409A, the
timing of the Agreement Payments shall be delayed as follows:  on the
earlier to occur of (i) the date that is six months and one day after
Executive’s “separation from service” (as defined under Section 409A) or (ii)
the date of Executive’s death (such earlier date, the “Delayed Initial
Payment Date”), the Company (or the
successor entity thereto, as applicable) shall (A) pay to the Executive a lump
sum amount equal to the sum of the Agreement Payments that the Executive would
otherwise have received through the Delayed Initial Payment Date if the
commencement of the payment of the Agreement Payments had not been so delayed
and (B) commence paying the balance of the Agreement Payments in accordance with
the applicable payment schedules set forth in this
Agreement.





ARTICLE
5





PARACHUTE
PAYMENTS





5.1Best Pay
Provision.  Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any Payment under this
Agreement would, when combined with all other Payments Executive receives from
the Company or any successor or parent or subsidiary thereof, but for this
Article 5, be subject to the Excise Tax, then such Payments shall be either (a)
the full amount of such Payments or (b) such lesser amount  as would
result in no portion of the Payments being subject to the Excise Tax, whichever
of the foregoing amounts, taking into account the applicable federal, state and
local employment taxes, income taxes and the Excise Tax, results in Executive’s
receipt, on an after-tax basis, of the greater amount of the Payments
notwithstanding that all or some portion of the Payments may be subject to the
Excise Tax.  If a reduced amount is to
be paid, (i) the Executive shall have no rights to any additional payments
and/or benefits constituting the Payments, and (ii) reduction in payments and/or
benefits shall occur in the following order: (1) reduction of other cash
payments (if any); (2) cancellation of accelerated vesting of equity awards
other than stock options; (3) cancellation of accelerated vesting of stock
options; and (4) reduction of other benefits (if any) paid to the
Executive.  In the event that acceleration of compensation from the
Executive’s equity awards is to be reduced, such acceleration of vesting shall
be canceled in the reverse order of the date of grant.




6




5.2Determinations.  All
determinations required to be made under this Article 5, including whether and
to what extent the Payments shall be reduced and the assumptions to be utilized
in arriving at such determination, shall be made by the nationally recognized
certified public accounting firm used by the Company immediately prior to the
Change of Control or, if such firm declines to serve, such other nationally
recognized certified public accounting firm as may be designated by the
Executive (the “Accounting
Firm”).  The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive at such time as is requested
by the Company.  All fees and expenses of the Accounting Firm shall be
borne solely by the Company.  Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.  For purposes of
making the calculations required by this Article 5, the Accounting Firm may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good-faith interpretations concerning the application of
Sections 280G and 4999 of the Code.





ARTICLE
6





DEFINITIONS





For
purposes of the Agreement, the following terms are defined as
follows:





6.1“Base Salary” means Executive’s
annual base salary as in effect during the last regularly scheduled payroll
period immediately preceding the Covered Termination(or, in the case of a Covered Termination arising from
Constructive Termination, the annual base salary as in effect immediately prior
to the event that gives rise to a right to resign as a Constructive
Termination).





6.2“Board” means the Board of
Directors of the Company.





6.3“Cause” means that, in the
reasonable determination of the Company, Executive:





(a)has committed
an act of fraud or embezzlement or has intentionally committed some other
illegal act that has a material adverse impact on the Company or any successor
or parent or subsidiary thereof;





(b)has been
convicted of, or entered a plea of “guilty” or “no contest” to, a felony which
causes or may reasonably be expected to cause substantial economic injury to or
substantial injury to the reputation of the Company or any subsidiary or
affiliate of the Company;





(c)has made any
unauthorized use or disclosure of confidential information or trade secrets of
the Company or any successor or parent or subsidiary thereof that has a material
adverse impact on any such entity;




7




(d)has committed
any other intentional misconduct that has a material adverse impact on the
Company or any successor or parent or subsidiary thereof, or





(e)has
intentionally refused or intentionally failed to act in accordance with any
lawful and proper direction or order of the Board; provided such direction is
not materially inconsistent with the Executive’s customary duties and
responsibilities.





6.4“Change of Control” means and
includes each of the following:





(a)the
acquisition, directly or indirectly, by any “person” or “group” (as those terms
are defined in Sections 3(a)(9), 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended, and the rules thereunder) of “beneficial ownership” (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of securities entitled to vote generally in the election of directors
(“voting
securities”) of the Company that represent fifty percent (50%) or more of
the combined voting power of the Company’s then outstanding voting securities,
other than:





(i)an acquisition
by a trustee or other fiduciary holding securities under any employee benefit
plan (or related trust) sponsored or maintained by the Company or any person
controlled by the Company or by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any person controlled by the Company,
or





(ii)an acquisition
of voting securities by the Company or a corporation owned, directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the stock of the Company;





Notwithstanding
the foregoing, the following event shall not constitute an “acquisition” by any
person or group for purposes of this Section: an acquisition of the Company’s
securities by the Company that causes the Company’s voting securities
beneficially owned by a person or group to represent fifty percent (50%) or more
of the combined voting power of the Company’s then outstanding voting
securities; provided,
however, that if a person or group shall become the beneficial owner of
fifty percent (50%) or more of the combined voting power of the Company’s then
outstanding voting securities by reason of share acquisitions by the Company as
described above and shall, after such share acquisitions by the Company, become
the beneficial owner of any additional voting securities of the Company, then
such acquisition shall constitute a Change of Control; or





(b)the
consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of the Company’s assets or (z) the
acquisition of assets or stock of another entity, in each case other than a
transaction:





(i)which results
in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being
converted into voting securities of the Company or the person that, as a result
of the transaction, controls, directly or indirectly, the Company or owns,
directly or indirectly, all or substantially all of the Company’s assets or
otherwise succeeds to the business of the Company (the Company or such person,
the “Successor
Entity”)) directly or indirectly, at least a majority of the combined
voting power of the Successor Entity’s outstanding voting securities immediately
after the transaction, and




8




(ii)after which no
person or group beneficially owns voting securities representing fifty percent
(50%) or more of the combined voting power of the Successor Entity; provided, however, that no
person or group shall be treated for purposes of this clause (ii) as
beneficially owning fifty percent (50%) or more of combined voting power of the
Successor Entity solely as a result of the voting power held in the Company
prior to the consummation of the transaction; or





(c)the Company’s
stockholders approve a liquidation or dissolution of the Company.





Notwithstanding
the foregoing, a transaction shall not constitute a Change of Control if: (i) it
constitutes the Company’s initial public offering of its securities; or (ii) it
is a transaction effected primarily for the purpose of financing the Company
with cash (as determined by the Board in its discretion and without regard to
whether such transaction is effectuated by a merger, equity financing or
otherwise).  The Board shall have full and final authority, which
shall be exercised in its discretion, to determine conclusively whether a Change
of Control of the Company has occurred pursuant to the above definition, and the
date of the occurrence of such Change of Control and any incidental matters
relating thereto.





6.5“Code” means the Internal
Revenue Code of 1986, as amended from time to time and the Treasury Regulations
thereunder.





6.6“Company” means Sunesis
Pharmaceuticals, Inc. or, following a Change of Control, the surviving entity
resulting from such transaction.





6.7“Constructive
Termination”
means that Executive voluntarily terminates employment with the Company (or any successor thereto) if and only
if:





(a)one of the following actions have been takenwithout Executive’s express written
consent:





(i)there is a material diminution in the authority, duties or responsibilitiesof Executive, or the assignment to Executive of
duties that are materially inconsistent with and
materially adverse toExecutive’s position;





(ii)a change in the
Executive’s direct reporting relationship so that Executive no longer reports
directly to the Board;





(iii)there is a material reduction in Executive’s
Base Salary (which the parties agree is a
reduction of 5% or more), unless the base salaries of all other
executives are similarly reduced(but in no event
by an amount more than 10% each);





(iv)there isa materialreduction in Executive’s target bonuson
or within twelve (12) months following the effective date of a Change of
Control(which the parties agree is a reduction of
20% or more of the target bonus, and which the parties agree is a material
breach of the terms of Executive’s employment with the Company), unless
the target bonuses of all other executives are similarly reduced(but in no event by an amount more than 40%
each);




9




(v)Executive is required to relocate
Executive’sprincipal place of
employmentto a facility or location that would
increase Executive’s one way commute distance by more than thirty (30)
miles from such Executive’s place of employment immediately prior to such change;





(vi)the Company materially breaches its obligations under
this Agreement or any then-effective written employment agreement with
Executive; or





(vii)any acquirer, successor or assignee of the Company
materially fails to assume and perform, in all material respects, the
obligations of the Company hereunder; and





(b)Executive provides written notice to the Company’s
General Counsel within the ninety (90)-day period immediately following such
action; and





(c)such action is not remedied by the Company within thirty
(30) days following the Company’s receipt of such written notice; and





(d)Executive’s resignation is effective not later than
sixty (60) days after the expiration of such thirty (30) day cure
period.





The
termination of Executive’s employment as a result of Executive’s death or
disability will not be deemed to be a Constructive Termination.





6.8“Covered Termination” means an
Involuntary Termination Without Cause or a Constructive Termination, in either
case, provided such termination constitutes a “separation from service” under
Treasury Regulation Section 1.409A-1(h).





6.9“Excise Tax” means the excise
tax imposed by Section 4999 of the Code, together with any interest or penalties
imposed with respect to such excise tax.





6.10“Involuntary Termination Without
Cause” means Executive’s dismissal or discharge other than for
Cause.  The termination of Executive’s employment as a result of
Executive’s death or disability will not be deemed to be an Involuntary
Termination Without Cause.





6.11A “Payment” shall mean any
payment or distribution in the nature of compensation (within the meaning of
Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether
paid or payable pursuant to this Agreement or otherwise.





6.12“Stock Awards” means all stock
options, restricted stock and such other awards granted pursuant to the
Company’s stock option and equity incentive award plans or agreements and any
shares of stock issued upon exercise thereof, and any awards into which such
awards are converted by reason of a Change of Control (e.g., by reason of
assumption, substitution or conversion by the successor entity or acquiring
corporation).




10




ARTICLE
7





GENERAL
PROVISIONS





7.1Employment
Status.  This Agreement does not constitute a contract of
employment or impose upon Executive any obligation to remain as an employee, or
impose on the Company any obligation (a) to retain Executive as an employee, (b)
to change the status of Executive as an at-will employee, or (c) to change the
Company’s policies regarding termination of employment.





7.2Notices.  Any
notices provided hereunder must be in writing, and such notices or any other
written communication shall be deemed effective upon the earlier of personal
delivery (including personal delivery by facsimile) or the third day after
mailing by first class mail to the Company at its primary office location and to
Executive at Executive’s address as listed in the Company’s payroll
records.  Any payments made by the Company to Executive under the
terms of this Agreement shall be delivered to Executive either in person or at
the address as listed in the Company’s payroll records.





7.3Severability.  Whenever
possible, each provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provisions had never been contained
herein.





7.4Waiver.  If either
party should waive any breach of any provisions of this Agreement, he or it
shall not thereby be deemed to have waived any preceding or succeeding breach of
the same or any other provision of this Agreement.





7.5Arbitration.  Any
dispute, claim or controversy based on, arising out of or relating to
Executive’s employment or this Agreement shall be settled by final and binding
arbitration in San Mateo County, California, before a single neutral arbitrator
in accordance with the National Rules for the Resolution of Employment Disputes
(the “Rules”) of
the American Arbitration Association, and judgment on the award rendered by the
arbitrator may be entered in any court having
jurisdiction.  Arbitration may be compelled pursuant to the California
Arbitration Act (Code of Civil Procedure §§ 1280 et seq.).  If
the parties are unable to agree upon an arbitrator, one shall be appointed by
the AAA in accordance with its Rules.  Each party shall pay the fees
of its own attorneys, the expenses of its witnesses and all other expenses
connected with presenting its case; however, Executive and the
Company agree that, to the extent permitted by law, the arbitrator may, in his
or her discretion, award reasonable attorneys’ fees to the prevailing
party.  Other costs of the arbitration, including the cost of any
record or transcripts of the arbitration, AAA’s administrative fees, the fee of
the arbitrator, and all other fees and costs, shall be borne by the
Company.  This Section 7.5 is intended to be the exclusive method for
resolving any and all claims by the parties against each other for payment of
damages under this Agreement or relating to Executive’s employment; provided, however, that neither this
Agreement nor the submission to arbitration shall limit the parties’ right to
seek provisional relief, including, without limitation, injunctive relief, in
any court of competent jurisdiction pursuant to California Code of Civil
Procedure § 1281.8 or any similar statute of an applicable
jurisdiction.  Seeking any such relief shall not be deemed to be a
waiver of such party’s right to compel arbitration.  Both Executive
and the Company expressly waive their right to a jury trial. Pursuant to
California Civil Code Section 1717, each party warrants that it was represented
by counsel in the negotiation and execution of this Agreement, including the
attorneys’ fees provision herein.




11





7.6Complete
Agreement.  This Agreement, including Exhibit A and Exhibit B,
constitutes the entire agreement between Executive and the Company, and is the
complete, final, and exclusive embodiment of their agreement with regard to
severance benefits to Executive in the event of employment termination, wholly
superseding all written and oral agreements with respect to severance benefits
to Executive in the event of employment termination.  It is entered
into without reliance on any promise or representation other than those
expressly contained herein.  Notwithstanding anything herein to the
contrary, this Agreement shall not supersede any indemnification agreement
between Executive and the Company.





7.7Amendment or Termination of
Agreement.  This Agreement may be changed or terminated only
upon the mutual written consent of the Company and Executive.  The
written consent of the Company to a change or termination of this Agreement must
be signed by an executive officer of the Company after such change or
termination has been approved by the Board.





7.8Counterparts.  This
Agreement may be executed in separate counterparts, any one of which need not
contain signatures of more than one party, but all of which taken together will
constitute one and the same Agreement.





7.9Headings.  The
headings of the Articles and Sections hereof are inserted for convenience only
and shall not be deemed to constitute a part hereof nor to affect the meaning
thereof.





7.10Successors and
Assigns.  This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive, and the Company, and any surviving
entity resulting from a Change of Control and upon any other person who is a
successor by merger, acquisition, consolidation or otherwise to the business
formerly carried on by the Company, and their respective successors, assigns,
heirs, executors and administrators, without regard to whether or not such
person actively assumes any rights or duties hereunder; provided, however, that
Executive may not assign any duties hereunder and may not assign any rights
hereunder without the written consent of the Company, which consent shall not be
withheld unreasonably.





7.11Choice of Law.  All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by the law of the State of California, without regard
to such state’s conflict of laws rules.





7.12Non-Publication.  The
parties mutually agree not to disclose publicly the terms of this Agreement
except to the extent that disclosure is mandated by applicable law or regulation
or to their respective advisors (e.g., attorneys,
accountants).




12




7.13Construction of
Agreement.  In the event of a conflict between the text of the
Agreement and any summary, description or other information regarding the
Agreement, the text of the Agreement shall control.





(Signature
Page Follows)





13





In Witness
Whereof,the parties have executed this Agreement on the Effective Date
written above.






Sunesis
      Pharmaceuticals, Inc.
            
            James
      W. Young, Ph.D.By:
            /s/ Valerie
      L. Pierce
            
            /s/ James W. YoungName:
            Valerie
      L. PierceTitle:
            Senior
      Vice President, General Counsel, and Corporate
      Secretary








Exhibit
A:  Release (Individual Termination)


Exhibit
B:  Release (Group Termination)











EXHIBIT
A





RELEASE


(INDIVIDUAL
TERMINATION)





I
understand that this Release, together with the Amended and Restated Executive
Severance Benefits Agreement, constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company, affiliates of the
Company and me with regard to the subject matter hereof.  I am not
relying on any promise or representation by the Company that is not expressly
stated therein.  Certain capitalized terms used in this Release are
defined in the Amended and Restated Executive Severance Benefits Agreement,
which I have executed and of which this Release is a part.





1.  Proprietary Information
Obligations.I hereby confirm my obligations under my
Confidentiality Agreement with the Company.





2.  General
Release. In exchange for severance benefits and other consideration
provided to me by the Amended and Restated Executive Severance Benefits
Agreement that I am not otherwise entitled to receive, I hereby generally and
completely release the Company and its current and former directors, officers,
employees, stockholders, shareholders, partners, agents, attorneys,
predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns (collectively, the “Released
Parties”) from any and all claims, liabilities and obligations, both
known and unknown, that arise out of or are in any way related to events, acts,
conduct, or omissions occurring prior to my signing this Release (collectively,
the “Released
Claims”).  The Released Claims include, but are not limited
to:  (1) all claims arising out of or in any way related to my
employment with the Company or its affiliates, or the termination of that
employment; (2) all claims related to my compensation or benefits,
including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company or its affiliates; (3) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith
and fair dealing; (4) all tort claims, including claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and
(5) all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”),
the federal Employee Retirement Income Security Act of 1974 (as amended), and
the California Fair Employment and Housing Act (as
amended).  Notwithstanding the foregoing, the following are not
included in the Released Claims (the “Excluded
Claims”): (1) any rights or claims for indemnification I may have
pursuant to any written indemnification agreement with the Company to which I am
a party, the charter, bylaws, or operating agreements of the Company, or under
applicable law; or (2) any rights which are not waiveable as a matter of
law.  In addition, nothing in this Release prevents me from filing,
cooperating with, or participating in any proceeding before the Equal Employment
Opportunity Commission, the Department of Labor, or the California Department of
Fair Employment and Housing, except that I hereby waive my right to any monetary
benefits in connection with any such claim, charge or proceeding.  I
hereby represent and warrant that, other than the Excluded Claims, I am not
aware of any claims I have or might have against any of the Released Parties
that are not included in the Released Claims.




1




3.  ADEA
Waiver.  I acknowledge that I am knowingly and voluntarily
waiving and releasing any rights I may have under the ADEA.  I also
acknowledge that the consideration given for the Released Claims is in addition
to anything of value to which I was already entitled.  I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) the Released Claims do not apply to any rights or claims that arise
after the date I sign this Release; (b) I should consult with an attorney prior
to signing this Release (although I may choose voluntarily not to do so); (c) I
have twenty-one (21) days to consider this Release (although I may choose to
voluntarily sign it sooner); (d) I have seven (7) days following the date I sign
this Release to revoke the Release by providing written notice to an officer of
the Company; and (e) the Release will not be effective until the date upon which
the revocation period has expired unexercised, which will be the eighth day
after I sign this Release (“Effective
Date”).





4.  Section 1542
Waiver.  I acknowledge that I have read and understand Section
1542 of the California Civil Code which reads as follows: “A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.”  I
hereby expressly waive and relinquish all rights and benefits under that section
and any law of any jurisdiction of similar effect with respect to my release of
any claims I may have against the Company.





5.Representations. I hereby
represent that I have been paid all compensation owed and for all hours worked,
I have received all the leave and leave benefits and protections for which I am
eligible, and I have not suffered any on-the-job injury for which I have not
already filed a workers’ compensation claim.





6.  Non-Disparagement.  I
hereby agree not to disparage the Company, or its officers, directors,
employees, shareholders or agents, in any manner likely to be harmful to its or
their business, business reputation, or personal reputation; provided, however, that I
will respond accurately and fully to any question, inquiry or request for
information when required by legal process.





I
acknowledge that to become effective, I must sign and return this Release to the
Company on or after ____________________, so that it is received not later than
twenty-one (21) days following the date it is provided to me, and I must not
revoke it thereafter.





JAMES
      W. YOUNG, PH.D.Date:





2





EXHIBIT
B





RELEASE


(GROUP
TERMINATION)





I
understand that this Release, together with the Amended and Restated Executive
Severance Benefits Agreement, constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company, affiliates of the
Company and me with regard to the subject matter hereof.  I am not
relying on any promise or representation by the Company that is not expressly
stated therein.  Certain capitalized terms used in this Release are
defined in the Amended and Restated Executive Severance Benefits Agreement,
which I have executed and of which this Release is a part.





1.  Proprietary Information
Obligations.I hereby confirm my obligations under my
Confidentiality Agreement with the Company.





2.  General
Release. In exchange for severance benefits and other consideration
provided to me by the Amended and Restated Executive Severance Benefits
Agreement that I am not otherwise entitled to receive, I hereby generally and
completely release the Company and its current and former directors, officers,
employees, stockholders, shareholders, partners, agents, attorneys,
predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns (collectively, the “Released
Parties”) from any and all claims, liabilities and obligations, both
known and unknown, that arise out of or are in any way related to events, acts,
conduct, or omissions occurring prior to my signing this Release (collectively,
the “Released
Claims”).  The Released Claims include, but are not limited
to:  (1) all claims arising out of or in any way related to my
employment with the Company or its affiliates, or the termination of that
employment; (2) all claims related to my compensation or benefits,
including salary, bonuses, commissions, vacation pay, expense reimbursements,
severance pay, fringe benefits, stock, stock options, or any other ownership
interests in the Company or its affiliates; (3) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith
and fair dealing; (4) all tort claims, including claims for fraud,
defamation, emotional distress, and discharge in violation of public policy; and
(5) all federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”),
the federal Employee Retirement Income Security Act of 1974 (as amended), and
the California Fair Employment and Housing Act (as
amended).  Notwithstanding the foregoing, the following are not
included in the Released Claims (the “Excluded
Claims”): (1) any rights or claims for indemnification I may have
pursuant to any written indemnification agreement with the Company to which I am
a party, the charter, bylaws, or operating agreements of the Company, or under
applicable law; or (2) any rights which are not waiveable as a matter of
law.  In addition, nothing in this Release prevents me from filing,
cooperating with, or participating in any proceeding before the Equal Employment
Opportunity Commission, the Department of Labor, or the California Department of
Fair Employment and Housing, except that I hereby waive my right to any monetary
benefits in connection with any such claim, charge or proceeding.  I
hereby represent and warrant that, other than the Excluded Claims, I am not
aware of any claims I have or might have against any of the Released Parties
that are not included in the Released Claims.




1




3.  ADEA
Waiver.  I acknowledge that I am knowingly and voluntarily
waiving and releasing any rights I may have under the ADEA.  I also
acknowledge that the consideration given for the Released Claims is in addition
to anything of value to which I was already entitled.  I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) the Released Claims do not apply to any rights or claims that arise
after the date I sign this Release; (b) I should consult with an attorney prior
to signing this Release (although I may choose voluntarily not to do so); (c) I
have forty-five (45) days to consider this Release (although I may choose to
voluntarily sign it sooner); (d) I have seven (7) days following the date I sign
this Release to revoke the Release by providing written notice to an officer of
the Company; and (e) the Release will not be effective until the date upon which
the revocation period has expired unexercised, which will be the eighth day
after I sign this Release (“Effective
Date”).  I have received with this Release all of the
information required by the ADEA, including without limitation a detailed list
of the job titles and ages of all employees who were terminated in this group
termination and the ages of all employees of the Company in the same job
classification or organizational unit who were not terminated, along with
information on the eligibility factors used to select employees for the group
termination and any time limits applicable to this group termination
program.





4.  Section 1542
Waiver.  I acknowledge that I have read and understand Section
1542 of the California Civil Code which reads as follows: “A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.”  I
hereby expressly waive and relinquish all rights and benefits under that section
and any law of any jurisdiction of similar effect with respect to my release of
any claims I may have against the Company.





5.Representations. I hereby
represent that I have been paid all compensation owed and for all hours worked,
I have received all the leave and leave benefits and protections for which I am
eligible, and I have not suffered any on-the-job injury for which I have not
already filed a workers’ compensation claim.





6.  Non-Disparagement.  I
hereby agree not to disparage the Company, or its officers, directors,
employees, shareholders or agents, in any manner likely to be harmful to its or
their business, business reputation, or personal reputation; provided, however, that I
will respond accurately and fully to any question, inquiry or request for
information when required by legal process.





I
acknowledge that to become effective, I must sign and return this Release to the
Company on or after ____________________, so that it is received not later than
forty-five (45) days following the date it is provided to me, and I must not
revoke it thereafter.








(Signature
Page Follows)





2


JAMES
      W. YOUNG, PH.D.Date:




3