EXECUTIVE
        SEVERANCE BENEFITS AGREEMENT

       

      This
        EXECUTIVE SEVERANCE BENEFITS AGREEMENT (the
        “Agreement”)
        is
        entered into this second
        day
        of
        June,
        2008
        (the
“Effective
        Date”),
        between STEVE KETCHUM (“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.

       

      The
        Company and the
        Executive,
        intending to be legally bound, hereby agree
        as
        follows:

       

      ARTICLE
        1


       

      SCOPE
        OF AND CONSIDERATION FOR THIS AGREEMENT

       

      1.1 Position
        and Duties.
        Executive is currently employed by the Company as Senior
        Vice President, Research and Development. Executive initially reports directly
        to the Chief Executive Officer.

       

      1.2 Restrictions.
        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 Senior
        Vice President, Research and Development. During the term of his employment,
        Executive further agrees that he will devote all 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.

       

      1.3 Confidential
        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.

       

      1.4 Confidentiality
        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 Company’s
        Senior
        Vice President, Research and Development, or at the request of the Board
        or any
        other superior officer of the Company.

       

      
        
          
          

        

        
          1.

          
            

          

        

        
          
          

        

      

       

      1.5 Benefits
        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.

       

      1.6 Consideration.
        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.

       

      ARTICLE
        2


       

      OPTION
        ACCELERATION

       

      2.1 Change
        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 Constructive
        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 course over
        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 or within 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.

       

      2.3 Outstanding
        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.

       

      
        
          
          

        

        
          2.

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        3


       

      SEVERANCE
        BENEFITS

       

      3.1 Severance
        Benefits.
        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 nine (9) months’ Base Salary.
        Such severance amount shall be paid in
        cash
        in a single lump sum within thirty (30) days following the Covered Termination,
        subject to Sections 4.1 and 4.3 below,
        and
        shall be subject to all required tax withholding.

       

      (b) Health
        Benefits.
        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
        nine (9) months following such Covered Termination
        or 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 Executive
        and
        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.

       

      3.2 Change
        of Control Severance Benefits.
        A
        Covered Termination of Executive’s employment on
        or
within
        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 fourteen (14) months’ Base
        Salary. Such severance amount shall be paid in cash in a single
        lump
        sum
        within thirty (30) 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 fourteen twelfths (14/12ths)
        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 attained
        at
        target levels.
        Such
        severance amount shall be paid in cash in a single
        lump
        sum
        within thirty (30) days following the Covered Termination,
        subject
        to Sections 4.1 and 4.3 below,
        and
        shall be subject to all required tax withholding.

       

      (c) Health
        Benefits.
        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
        fourteen (14) months following such Covered Termination
        or 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 Executive
        and
        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.

          
            

          

        

        
          
          

        

      

       

      (d) No
        Duplication of Benefits.
        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
        or
within
        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 Change
        of
        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.

       

      3.3 Other
        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
        for continuation
        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 cease
        as 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.

       

      3.4 Mitigation.
        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.

       

      3.5 Exclusive
        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.

       

      
        
          
          

        

        
          4.

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        4


       

      LIMITATIONS
        AND CONDITIONS UPON BENEFITS

       

      4.1 Release
        Prior to Payment of Benefits.
        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
        (or
        such earlier day after the effective date of the Release in the Company’s sole
        discretion), 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.

       

      4.2 Termination
        of Benefits.
        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.

       

      4.3 Compliance
        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 the payments 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”),
        then,
        solely
        to the
        extent necessary to
        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.

       

      
        
          
          

        

        
          5.

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        5


       

      PARACHUTE
        PAYMENTS

       

      5.1 Best
        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.

       

      5.2 Determinations.
        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.

          
            

          

        

        
          
          

        

      

       

      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;

       

      (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 or the appropriate individual
        to whom Executive reports; 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

       

      
        
          
          

        

        
          7.

          
            

          

        

        
          
          

        

      

       

      (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

       

      (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.

       

      
        
          
          

        

        
          8.

          
            

          

        

        
          
          

        

      

       

      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 taken
        without
        Executive’s express written consent:

       

      (i) there
        is
        a
        material diminution
        in the
authority,
        duties or
        responsibilities
        of
        Executive,
        or the
        assignment to Executive of duties that are materially inconsistent with
and
        materially adverse to Executive’s
        position other than a change in reporting relationship;

       

      (ii) 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);

       

      (iii) there
        is
a
        material
        reduction
        in Executive’s target bonus
        on
        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);
        

       

      (iv) Executive
        is required to relocate
        Executive’s
        principal
        place of
        employment
        to 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;

       

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

       

      (vi) 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.

       

      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.

       

      
        
          
          

        

        
          9.

          
            

          

        

        
          
          

        

      

       

      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.

       

      6.11 A
        “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).

       

      ARTICLE
        7


       

      GENERAL
        PROVISIONS

       

      7.1 Employment
        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.

       

      7.2 Notices.
        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.

       

      7.3 Severability.
        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.

       

      7.4 Waiver.
        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.

       

      
        
          
          

        

        
          10.

          
            

          

        

        
          
          

        

      

       

      7.5 Arbitration.
        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
        Sec.Sec. 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 Sec. 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.

       

      7.6 Complete
        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.

       

      7.7 Amendment
        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
        or
        committee thereof.

       

      7.8 Counterparts.
        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.

       

      7.9 Headings.
        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.

       

      
        
          
          

        

        
          11.

          
            

          

        

        
          
          

        

      

       

      7.10 Successors
        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.

       

      7.11 Choice
        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.

       

      7.12 Non-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).

       

      7.13 Construction
        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)

       

      
        
          
          

        

        
          12.

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the
        parties have executed this Agreement on the Effective Date written
        above.

       

       

      
        	SUNESIS PHARMACEUTICALS,
                INC. 	 	 STEVE
                KETCHUM
	 	 	 	 
	By:
                	/s/
                Valerie Pierce	 	/s/
                Steve Ketchum    June 2,
                2008
	 	 	 	 
	Name:	Valerie
                Pierce	 	 
	 	 	 	 
	Title: 	General
                Counsel	 	 


      

       

      Exhibit
        A: Release (Individual Termination)

      Exhibit
        B: Release (Group Termination)

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A

       

      RELEASE

      (INDIVIDUAL
        TERMINATION)

       

      I
        understand that this Release, together with the 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 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
        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.

       

       

      
        	 	STEVE
                KETCHUM
	 	 	 
	 	 
	 	 
	 	Date: 	 


      

       

      
        
          
          

        

        
          2.

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        B

       

      RELEASE

      (GROUP
        TERMINATION)

       

      I
        understand that this Release, together with the 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 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
        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.

       

      
        
          
          

        

        
          2.

          
            

          

        

        
          
          

        

      



      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.

      


      
        
          	 	STEVE
                  KETCHUM
	 	 	 
	 	 
	 	 
	 	Date: 	 


        

      

    

     

    
      
        
        

      

      
        3.