SUNESIS
      PHARMACEUTICALS, INC.

     

    2008
      Executive Bonus Program

     

    
      	I.	
              Overview

            


    

     

    The
      2008
      Executive Bonus Program (the “Program”)
      of
      Sunesis Pharmaceuticals, Inc. (the “Company”),
      effective as of August 6, 2008, is designed to motivate, retain and reward
      eligible executive-level employees through a combination of corporate and
      individual performance-based incentive compensation components for performance
      during the second half of 2008 (the “First
      Performance Period”)
      and
      the first half of 2009 (the “Second
      Performance Period”
and
      collectively with the First Performance Period, the “Performance
      Period”).
      The
      Program supersedes and replaces in its entirety, as to the Eligible Executives
      (defined below), the Amended and Restated 2008 Bonus Program that was originally
      adopted by the Company’s Board of Directors on March 5, 2008 and that was
      amended by the Compensation Committee of the Company’s Board of Directors (the
“Committee”)
      on
      June 3, 2008. 

    


    “Eligible
      Executives”
are
      the
      Company’s Vice President level employees and above who have been notified in
      writing of their eligibility to participate in the Program and who timely sign
      and return their “Bonus
      Opportunity Notice”
(in
      substantially the form attached hereto). The Program is administered by the
      Committee and the Company’s Outside Directors (defined below), and any
      determination made by the Committee and/or the Outside Directors in good faith
      shall be final and binding on all parties. 

     

    Under
      the
      Program, each Eligible Executive receives the opportunity to earn an aggregate
      bonus (the “Bonus
      Opportunity”)
      based
      on (i) the level of achievement by the Company of certain corporate objectives
      (the “Corporate
      Objectives”)
      in
      each of the First Performance Period and the Second Performance Period, and
      (ii)
      the Eligible Executive’s level of achievement of certain individual performance
      objectives, which may take into consideration certain department, group and/or
      team objectives applicable to such Eligible Executive (the “Individual
      Objectives”)
      in
      each of the First Performance Period and the Second Performance Period.


     

    
      	II.	
              Program
                Objectives

            


    

     

    The
      Program is intended to encourage and incentivize individual and group
      contributions and efforts, including:

     

    
      	 	
              ·

            	
              the
                achievement of Corporate Objectives during the Performance Period;
                

            


    

    
      	 	
              ·

            	
              the
                achievement of Individual Objectives during the Performance Period;
                and

            


    

    
      	 	
              ·

            	
              the
                achievement of increased value for our shareholders during and following
                the Performance Period.

            


    

     

    
      	III.	
              Determination
                of the Performance Period
                Objectives

            


    

     

    The
      Corporate Objectives for the First Performance Period and Second Performance
      Period, respectively, shall be approved by the Committee, with input from
      management, and generally relate to the achievement of certain clinical
      development, business development, financial, business and similar
      milestones.  Each Corporate Objective shall be assigned a relative
      weighting from the Committee, reflecting its importance to the achievement
      of
      the Company’s key results for the First Performance Period and Second
      Performance Period, respectively.

     

    
      
        Approved
          August 6, 2008

         

      

      
        1

        
          

        

      

      
         

      

    

     

    The
      Individual Objectives for the First Performance Period and Second Performance
      Period, respectively, shall be set as follows:

     

    
      	 	
              ·

            	
              For
                the Chief Executive Officer and the Executive Chairman, the Individual
                Objectives shall be set by the Committee, subject to approval by
                the
                Company’s “outside directors” (as such term is defined under Section
                162(m) of the Internal Revenue Code of 1986, as amended (the “Outside
                Directors”));

            


    

    
      	 	
              ·

            	
              For
                the Eligible Executives who are executive officers (as that term
                is
                defined under Section 16 of the Securities Exchange Act of 1934,
                as
                amended, and Rule 16a-1 thereunder), other than the Chief Executive
                Officer and the Executive Chairman (collectively, the “Section
                16
                Participants”),
                the Individual Objectives shall be set by the Committee based upon
                recommendations made by the Chief Executive Officer;
                and

            


    

    
      	 	
              ·

            	
              For
                all other Eligible Executives, the Individual Objectives shall be
                set by
                the Chief Executive Officer. 

            


    

     

    The
      Bonus
      Opportunity Notice sent to each Eligible Executive will state the Corporate
      Objectives and that employee’s Individual Objectives for the Performance
      Period.

     

    
      	IV.	
              Size
                of the Bonus Opportunity

            


    

     

    For
      the
      Performance Period, the target Bonus Opportunity (the “Bonus
      Target”)
      for
      each Eligible Executive, expressed as a specified percentage of his or her
      2008
      annual base salary and based upon the position such Eligible Executive holds
      with the Company, is determined as follows:

     

    
      	 	
              ·

            	
              For
                the Chief Executive Officer and the Executive Chairman, the Bonus
                Target
                shall be set by the Committee, subject to approval by the Outside
                Directors; and 

            


    

    
      	 	
              ·

            	
              For
                all other Eligible Executives, the Bonus Target shall be set by the
                Committee based upon recommendations made by the Chief Executive
                Officer.

            


    

     

    The
      Bonus
      Target for the Performance Period shall range from 50% to 80% of an Eligible
      Executive’s 2008 annual base salary. The Bonus Target for the Performance Period
      shall be weighted 50% to the First Performance Period and 50% to the Second
      Performance Period (each such eligible installment, the “Semi-Annual
      Target”).
      

     

    
      	V.	
              Determination
                of Bonus

            


    

     

    A
      determination of the level of achievement of the Corporate Objectives and the
      Individual Objectives and of the Actual Bonus Opportunity (as defined below)
      will be made as set forth below (a) for the First Performance Period in the
      first quarter of 2009 and (b) for the Second Performance Period in the third
      quarter of 2009. 

     

    
      
        Approved
          August 6, 2008

         

      

      
        2

        
          

        

      

      
         

      

    

     

    Determination
      of Level of Achievement of Corporate Objectives

     

    The
      date
      when the Committee makes a determination as to the achievement of the Corporate
      Objectives is referred to as the “Review
      Date”.
      On the
      applicable Review Date, the Committee shall determine, after receiving and
      considering recommendations from management, the degree to which the Corporate
      Objectives have been met for the First Performance Period and the Second
      Performance Period, respectively, expressed as a percentage of Corporate
      Objectives achieved (the “Corporate
      Achievement Percentage”),
      taking into consideration the weighting assigned to each Corporate
      Objective.  The Corporate Achievement Percentage is not capped at 100%.


    


    Adjustment
      of Bonus Targets based on Level of Achievement of Corporate
      Objectives

     

    The
      Committee will then on such Review Date adjust each Eligible Executive’s
      Semi-Annual Target for the applicable half of the Performance Period so that
      it
      equals the product of (i) the Corporate Achievement Percentage and (ii) the
      Semi-Annual Target. For example, if the Committee determines that only 80%
      of
      the Corporate Objectives have been achieved in the First Performance Period,
      the
      Corporate Achievement Percentage is 80%, and each Eligible Executive’s
      Semi-Annual Target for the First Performance Period shall be decreased by 20%
      (in other words, if an Eligible Executive has a Semi-Annual Target of 30%,
      that
      target will be adjusted to be 24%, or 80% of 30%, for the First Performance
      Period.)  Such adjusted Semi-Annual Target is referred to as the
“Adjusted
      Bonus Target.”

     

    Determination
      of Size and Form of Individual Bonuses 

    Each
      Eligible Executive’s level of achievement of his or her Individual Objectives
      for the applicable half of the Performance Period, as well as his or her
      contribution to the achievement of the Corporate Objectives for the applicable
      half of the Performance Period, shall be determined as follows: 

    


    
      	 	
              ·

            	
              For
                the Chief Executive Officer and the Executive Chairman, by the Committee,
                subject to approval by the Outside
                Directors;

            


    

    
      	 	
              ·

            	
              For
                the Section 16 Participants, by the Committee based upon recommendations
                made by the Chief Executive Officer;
                and

            


    

    
      	 	
              ·

            	
              For
                all other Eligible Executives, by the Chief Executive Officer.
                

            


    

     

    Following
      the Review Date and after assessing each Eligible Executive’s level of
      achievement as described above, the Committee will determine the value of the
      Eligible Executive’s actual Bonus Opportunity for the applicable half of the
      Performance Period as a percentage of such Eligible Executive’s Adjusted Target
      Bonus (the “Actual
      Bonus Opportunity”).
      In
      determining the Actual Bonus Opportunity, the Committee may also consider,
      in
      addition to individual performance, business factors including but not limited
      to (i) the Company’s available cash, (ii) the Company’s stock price, (iii) the
      Company’s available stock plan share reserves, (iv) general business conditions,
      (v) the Company’s achievement of publicly announced targets, clinical
      milestones, and/or strategic goals, (vi) cross-functional teamwork and
      collaboration, and (vii) unforeseen changes in the economy and/or geopolitical
      climate. In addition, the Committee, in its sole discretion, will determine
      whether to pay some or all of the Actual Bonus Opportunity in cash or in
      restricted stock awards, restricted stock units or stock options under the
      Company’s 2005 Equity Incentive Award Plan (collectively, the “Equity
      Awards”)
      and
      the Committee may require such Equity Awards to be subject to time-based vesting
      following the Determination Date (as defined below); provided, however, that
      at
      least 50% of the value of any Actual Bonus Opportunity finally determined by
      the
      Committee will be paid in cash.

     

    
      
        Approved
          August 6, 2008

         

      

      
        3

        
          

        

      

      
         

      

    

     

    In
      the
      case of the Actual Bonus Opportunity determined for the Eligible Executives
      other than the Chief Executive Officer and the Executive Chairman, the Committee
      shall consider the recommendations made by the Chief Executive Officer. In
      the
      case of the Actual Bonus Opportunity determined for the Chief Executive Officer
      and the Executive Chairman, the Committee’s determination is subject to the
      approval by the Outside Directors. 

    


    The
      dates
      on which the Committee (or the Outside Directors, as applicable) makes such
      determinations (or approval, as applicable) are the “Determination
      Dates”.
      An
      Eligible Executive must remain employed by the Company through the relevant
      Determination Date in order to earn an Actual Bonus Opportunity, subject to
      such
      additional vesting conditions that may apply to Equity Awards issued in
      accordance with this Program.  For the avoidance of doubt, no Eligible
      Executive has a legally binding right to any amounts under this Program prior
      to
      the Determination Date. The value of any Equity Awards issued to satisfy the
      Actual Bonus Opportunity will be determined by the Committee in its sole
      discretion.

    


    Except
      as
      expressly set forth above with respect to approval required from the Outside
      Directors of Actual Bonus Opportunities for the Chief Executive Officer and
      the
      Executive Chairman, the Committee has final authority with respect to the
      determination of whether to award any Actual Bonus Opportunity and whether
      such
      Actual Bonus Opportunity will be subject to additional time based vesting
      following the Determination Date. 

     

    
      	VI.	
              Payment
                Dates

            


    

    


    Following
      the Determination Date, the Committee (or the Outside Directors, as applicable)
      will determine the date(s) on which any Actual Bonus Opportunity will be paid
      and/or granted, as applicable, and such dates shall be referred to as
“Payment
      Dates”.
      In all
      cases, a Payment Date will be not later than the fifteenth day of the third
      month following the month in which the relevant Determination Date occurs.
      The
      Company’s intention is that all payments and benefits under the Program shall be
      made in a manner that satisfies, to the greatest extent possible, the exemption
      from the application of Section 409A of the Internal Revenue Code of 1986,
      as
      amended (the “Code”)
      provided under Treasury Regulations 1.409A-1(b)(4). It is intended that each
      installment of the payments and benefits provided for in this Program is a
      separate “payment” for purposes of Treasury Regulation Section
      1.409A-2(b)(2)(i).

     

    
      	VII.	
              Miscellaneous
                Provisions

            


    

     

    Participation
      in the Program shall not alter in any way the at will nature of the Company’s
      employment of an Eligible Executive, and such employment may be terminated
      at
      any time for any reason, with or without cause and with or without prior
      notice.  Nothing in this Program shall be construed to be a guarantee that
      any Eligible Executive will receive all or part of a Bonus Opportunity or Actual
      Bonus Opportunity or to imply a contract between the Company and any Eligible
      Executive. 

     

    This
      Program supersedes and replaces all prior cash incentive and bonus plans of
      the
      Company with respect to Eligible Executives.  The Company may amend or
      terminate this Program at any time, with or without notice and with or without
      the Eligible Executive’s consent. The Committee may likewise terminate an
      individual’s participation in the Program at any time, with or without notice or
      the individual’s consent.  Further, the Company may modify the Corporate
      Objectives, the Individual Objectives, the Bonus Opportunities, the Bonus
      Targets and the Actual Bonus Opportunities at any time.  

     

    The
      Program shall be interpreted in accordance with California law without reference
      to conflicts of law principles.

    

      
        
          Approved
            August 6, 2008

           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    BONUS
      OPPORTUNITY NOTICE

    


    I
      hereby
      accept the designation as an Eligible Executive in the Sunesis Pharmaceuticals,
      Inc. 2008 Executive Bonus Program (the “Program”).
      I
      have read the Program and understand and agree to its terms. I acknowledge
      and
      agree that I have no further rights under the Sunesis Pharmaceuticals, Inc.
      Amended and Restated 2008 Bonus Program that was originally adopted by the
      Company’s Board of Directors on March 5, 2008 and that was amended by the
      Compensation Committee of the Company’s Board of Directors on June 3, 2008.


     

    I
      understand that my Bonus Target is [____]% of my 2008 annual base salary, and
      therefore my Semi-Annual Target is [____]% of my 2008 annual base salary. I
      hereby acknowledge and agree that for purposes of my Executive Severance
      Benefits Agreement with the Company, dated [  ],
      that
      the “target annual bonus” referenced in Section 3.2(b) thereof shall constitute
      and shall mean for purposes of such agreement my Semi-Annual Target under this
      Program and any contrary language in such agreement is hereby
      superceded.

     

    I
      understand that the Corporate Objectives for the First Performance Period are
      as
      follows:

     

    
      	 	
              ·

            	
              _________

            


    

     

    
      	 	
              ·

            	
              _________

            


    

     

    I
      understand that the Corporate Objectives for the Second Performance Period
      are
      as follows: 

     

    
      	 	
              ·

            	
              _________

            


    

     

    
      	 	
              ·

            	
              _________

            


    

     

    I
      understand that my Individual Objectives for the First Performance Period are
      as
      follows:

     

    
      	 	
              ·

            	
              _________

            


    

     

    
      	 	
              ·

            	
              _________

            


    

     

    I
      understand that my Individual Objectives for the Second Performance Period
      are
      as follows:

     

    
      	 	
              ·

            	
              _________

            


    

     

    
      	 	
              ·

            	
              _________

            


    

     

    Acknowledged
      & Agreed:

     

    ___________________________

    [Name]

    ___________________________


    Date: 

     

    
      
        Approved
          August 6, 2008

         

      

      
        5