Document:

Exhibit 10.9

 

EXECUTIVE SEVERANCE BENEFITS
AGREEMENT

 

This EXECUTIVE
SEVERANCE BENEFITS AGREEMENT (the “Agreement”)
is entered into this 8th day of August, 2005 (the “Effective Date”), between
DANIEL C. ADELMAN, M.D. (“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 Executive 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, Drug Discovery
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, Drug Discovery 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          Clinical
Medical Practice. 
Executive is encouraged to continue his clinical medical practice at a
rate of up to one (1) day every two (2) weeks.

 

1.4          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.

 

1.5          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, and Executive may discuss such terms 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, Drug Discovery and Development, or at
the request of the Board or any other superior officer of the Company.

 

1.6          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.

 

1.7          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.

 

1.8          Prior
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 Agreement between Executive and the Company dated as of April 18,
2003.

 

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 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 outstanding Stock Awards shall be automatically accelerated
on the date of termination as to the number of Stock Awards that would vest
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 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 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

 

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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

 

3.1          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 over the nine (9) month
period commencing on the date of termination in equal monthly installments 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 (“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; provided, however, that the Company shall
pay premiums for Executive’s eligible dependents only for coverage for which
those eligible dependents were enrolled immediately prior to the Covered
Termination.  It being understood that it
shall be Executive’s sole responsibility to elect continuation of coverage
pursuant to COBRA in the first instance. 
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
is entitled to coverage under federal COBRA law, if any, Executive shall be
entitled to maintain such coverage at Executive’s own expense.

 

3.2          Change
of Control Severance Benefits.  A Covered Termination of Executive’s
employment 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 lump sum within thirty (30) days following the Covered
Termination 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.  Such
severance amount shall be paid in cash in a lump sum within thirty (30) days
following the Covered Termination and shall be subject to all required tax
withholding.

 

(c)           Health
Benefits.  Provided
that Executive elects continued coverage under federal COBRA law, the Company
shall pay the premiums of Executive’s group health insurance coverage, including
coverage for Executive’s eligible dependents, for a maximum

 

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period of fourteen
(14) months following such Covered Termination; provided, however, that the Company shall pay premiums for
Executive’s eligible dependents only for coverage for which those eligible
dependents were enrolled immediately prior to the Covered Termination.  It being understood that it shall be
Executive’s sole responsibility to elect continuation of coverage pursuant to
COBRA in the first instance.  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 is entitled to coverage
under federal COBRA law, if any, Executive shall be entitled to maintain such
coverage at Executive’s own expense.

 

(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 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 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 continuation of benefits
required by federal COBRA law or applicable law.  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 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

 

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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 ON
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.

 

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.

 

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 (with cash payments being reduced before stock
option compensation) 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.

 

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

 

5

 

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.

 

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:

 

6

 

(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

 

(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

 

7

 

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 after any of the following are undertaken without Executive’s
express written consent:

 

(a)           the
removal of or a material reduction in the nature or scope of Executive’s
responsibilities, or the assignment to Executive of duties that are materially
inconsistent with Executive’s position other than a change in reporting
relationship;

 

 (b)          a reduction in Executive’s base
salary, unless the base salaries of all other executives are similarly reduced;

 

(c)           a
reduction in Executive’s target bonus within twelve (12) months following the
effective date of a Change of Control, unless the target bonuses of all other
executives are similarly reduced; or

 

(d)           a
relocation of Executive’s place of employment by more than thirty (30) miles
from such Executive’s place of employment on the Effective Date.

 

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.

 

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.

 

8

 

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.

 

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.

 

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 §§ 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 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

 

9

 

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.

 

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 this subject matter,
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.

 

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.

 

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.

 

10

 

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.

 

7.14        Code
Section 409A. 
This Agreement shall be interpreted, construed and administered in a
manner that satisfies the requirements of Sections 409A of the Code, and any
payment scheduled to be made hereunder that would otherwise violate Section 409A
of the Code shall be delayed to the extent necessary for this Agreement and
such payment to comply with Section 409A of the Code.

 

(Signature Page Follows)

 

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

 

 

	
  SUNESIS
  PHARMACEUTICALS, INC.

  	
   

  	
  DANIEL
  C. ADELMAN, M.D.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Anthony B.
  Evnin

  	
   

  	
  /s/ Daniel C. Adelman,
  M.D.

  
	
  Name: 

  	
  Anthony B. Evnin

  	
   

  	
   

  
	
  Title: 

  	
  Chairman of the
  Compensation

  	
   

  	
   

  
	
  Committee of the
  Board of Directors

  	
   

  	
   

  
						

 

 

Exhibit A:  Release (Individual Termination)

Exhibit B:  Release (Group Termination)

 

12

 

EXHIBIT A

 

RELEASE

(INDIVIDUAL TERMINATION)

 

Certain capitalized terms used in this Release are
defined in the Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of
which this Release is a part.

 

I hereby confirm my obligations under the Company’s
proprietary information and inventions agreement.

 

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.

 

Except as otherwise set forth in this Release, I
hereby release, acquit and forever discharge the Company, its parents and
subsidiaries, and their officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a
result of any third party action against me based on my employment with the
Company), arising out of or in any way related to agreements, events, acts or
conduct at any time prior to the date I execute this Release, including, but
not limited to:  all such claims and demands
directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of disputed compensation;
claims pursuant to any federal, state or local law or cause of action
including, but not limited to, the federal Civil Rights Act of 1964, as
amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with
Disabilities Act of 1990; the California Fair Employment and Housing Act, as
amended; tort law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the
implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company’s indemnification obligation pursuant to agreement or
applicable law.

 

1

 

I acknowledge that I am knowingly and voluntarily
waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration
given under the Agreement for the waiver and release in the preceding paragraph
hereof 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) my waiver and release do not apply to
any rights or claims that may arise on or after the date I execute this
Release; (B) I have the right to consult with an attorney prior to
executing this Release; (C) I have twenty-one (21) days to consider this Release
(although I may choose to voluntarily execute this Release earlier); (D) I
have seven (7) days following the execution of this Release by the parties
to revoke the Release; and (E) this Release shall not be effective until
the date upon which the revocation period has expired, which shall be the
eighth day after this Release is executed by me.

 

	
   

  	
  DANIEL
  C. ADELMAN, M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
				

 

2

 

EXHIBIT B

 

RELEASE

(GROUP TERMINATION)

 

Certain capitalized terms used in this Release are
defined in the Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of
which this Release is a part.

 

I hereby confirm my obligations under the Company’s
proprietary information and inventions agreement.

 

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.

 

Except as otherwise set forth in this Release, I
hereby release, acquit and forever discharge the Company, its parents and
subsidiaries, and their officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a
result of any third party action against me based on my employment with the
Company), arising out of or in any way related to agreements, events, acts or
conduct at any time prior to the date I execute this Release, including, but
not limited to:  all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of disputed compensation;
claims pursuant to any federal, state or local law or cause of action
including, but not limited to, the federal Civil Rights Act of 1964, as
amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the
implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company’s indemnification obligation pursuant to agreement or
applicable law.

 

1

 

I acknowledge that I am knowingly and voluntarily
waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration
given under the Agreement for the waiver and release in the preceding paragraph
hereof 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) my waiver and release do not apply
to any rights or claims that may arise on or after the date I execute this
Release; (B) I have the right to consult with an attorney prior to
executing this Release; (C) I have forty-five (45) days to consider this
Release (although I may choose to voluntarily execute this Release earlier); (D) I
have seven (7) days following the execution of this Release by the parties
to revoke the Release; (E) this Release shall not be effective until the
date upon which the revocation period has expired, which shall be the eighth
day after this Release is executed by me; and (F) I have received with
this Release 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.

 

	
   

  	
  DANIEL
  C. ADELMAN, M.D.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
				

 

2Exhibit 10.10

 

EXECUTIVE SEVERANCE BENEFITS
AGREEMENT

 

This EXECUTIVE
SEVERANCE BENEFITS AGREEMENT (the “Agreement”)
is entered into this 12th day of August, 2005 (the “Effective Date”), between
ERIC H. BJERKHOLT (“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 Executive 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, Chief Financial
Officer.  Executive 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, Chief Financial
Officer.  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. It is contemplated that
Executive may serve on boards of directors of other, non-competitive companies
and the Board will not unreasonably withhold its consent from such
participation.  Such participation shall
not exceed the greater of eight (8) days per year or such number of days
as is required for Executive to serve on the board of directors of two (2) such
companies.

 

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, and Executive may discuss such terms 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, Chief Financial
Officer, or at the request of the Board or any other superior officer of the
Company.

 

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.

 

1.7          Prior
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 Agreement between Executive and the Company dated as
of December 1, 2003.

 

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 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 outstanding Stock Awards shall be automatically accelerated
on the date of termination as to the number of Stock Awards that would vest
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 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 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 over the nine (9) month
period commencing on the date of termination in equal monthly installments 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 (“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; provided, however, that the Company shall
pay premiums for Executive’s eligible dependents only for coverage for which
those eligible dependents were enrolled immediately prior to the Covered
Termination.  It being understood that it
shall be Executive’s sole responsibility to elect continuation of coverage
pursuant to COBRA in the first instance. 
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
is entitled to coverage under federal COBRA law, if any, Executive shall be
entitled to maintain such coverage at Executive’s own expense.

 

3.2          Change
of Control Severance Benefits.  A Covered Termination of Executive’s
employment 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 lump sum within thirty (30) days following the Covered
Termination 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.  Such
severance amount shall be paid in cash in a lump sum within thirty (30) days
following the Covered Termination and shall be subject to all required tax
withholding.

 

(c)           Health
Benefits.  Provided
that Executive elects continued coverage under federal COBRA law, 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; provided, however, that the Company shall
pay premiums for Executive’s eligible dependents only for coverage for which

 

3

 

those eligible
dependents were enrolled immediately prior to the Covered Termination.  It being understood that it shall be
Executive’s sole responsibility to elect continuation of coverage pursuant to
COBRA in the first instance.  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 is entitled to coverage
under federal COBRA law, if any, Executive shall be entitled to maintain such
coverage at Executive’s own expense.

 

(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 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 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 continuation of benefits
required by federal COBRA law or applicable law.  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 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 ON
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.

 

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.

 

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 (with cash payments being reduced
before stock option compensation) 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.

 

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

 

5

 

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.

 

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

 

6

 

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

 

(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,

 

7

 

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 after any of the following are undertaken without Executive’s
express written consent:

 

(a)           the
removal of or a material reduction in the nature or scope of Executive’s
responsibilities, or the assignment to Executive of duties that are materially
inconsistent with Executive’s position other than a change in reporting
relationship;

 

(b)           a
change in the Executive’s direct reporting relationship so that Executive no
longer reports directly to the Company’s (or its successor’s) most senior
executive officer;

 

(c)           a
reduction in Executive’s base salary, unless the base salaries of all other
executives are similarly reduced;

 

(d)           a
reduction in Executive’s target bonus within twelve (12) months following the
effective date of a Change of Control, unless the target bonuses of all other
executives are similarly reduced; or

 

(e)           a
relocation of Executive’s place of employment by more than thirty (30) miles
from such Executive’s place of employment on the Effective Date.

 

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.

 

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.

 

8

 

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.

 

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.

 

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 §§ 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

 

9

 

with presenting
its case; however, Executive and
the Company agree that, to the extent permitted by law, the arbitrator may, in
his 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.

 

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 this subject matter,
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.

 

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.

 

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.

 

10

 

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.

 

7.14        Code
Section 409A. 
This Agreement shall be interpreted, construed and administered in a
manner that satisfies the requirements of Sections 409A of the Code, and any
payment scheduled to be made hereunder that would otherwise violate Section 409A
of the Code shall be delayed to the extent necessary for this Agreement and
such payment to comply with Section 409A of the Code.

 

(Signature Page Follows)

 

11

 

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

 

 

	
  SUNESIS PHARMACEUTICALS, INC.

  	
  ERIC H. BJERKHOLT

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Anthony B. Evnin

  	
   

  	
  /s/ Eric H. Bjerkholt

  	
   

  
	
  Name:

  	
  Anthony B. Evnin

  	
   

  	
   

  
	
  Title:

  	
  Chairman of the Compensation

  	
   

  	
   

  
	
  Committee of the Board of Directors

  	
   

  	
   

  
							

 

 

Exhibit A:  Release (Individual Termination)

Exhibit B:  Release (Group Termination)

 

12

 

EXHIBIT A

 

RELEASE

(INDIVIDUAL TERMINATION)

 

Certain capitalized terms used in this Release are
defined in the Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of
which this Release is a part.

 

I hereby confirm my obligations under the Company’s
proprietary information and inventions agreement.

 

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.

 

Except as otherwise set forth in this Release, I
hereby release, acquit and forever discharge the Company, its parents and
subsidiaries, and their officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a
result of any third party action against me based on my employment with the
Company), arising out of or in any way related to agreements, events, acts or
conduct at any time prior to the date I execute this Release, including, but
not limited to:  all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of disputed compensation; claims pursuant to
any federal, state or local law or cause of action including, but not limited
to, the federal Civil Rights Act of 1964, as amended; the federal Age
Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with
Disabilities Act of 1990; the California Fair Employment and Housing Act, as
amended; tort law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the
implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company’s indemnification obligation pursuant to agreement or
applicable law.

 

1

 

I acknowledge that I am knowingly and voluntarily waiving
and releasing any rights I may have under ADEA. 
I also acknowledge that the consideration given under the Agreement for
the waiver and release in the preceding paragraph hereof 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) my waiver and release do not apply
to any rights or claims that may arise on or after the date I execute this
Release; (B) I have the right to consult with an attorney prior to
executing this Release; (C) I have twenty-one (21) days to consider this
Release (although I may choose to voluntarily execute this Release earlier); (D) I
have seven (7) days following the execution of this Release by the parties
to revoke the Release; and (E) this Release shall not be effective until
the date upon which the revocation period has expired, which shall be the
eighth day after this Release is executed by me.

 

	
   

  	
  ERIC
  H. BJERKHOLT

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
				

 

2

 

EXHIBIT B

 

RELEASE

(GROUP TERMINATION)

 

Certain capitalized terms used in this Release are
defined in the Executive Severance Benefits Agreement (the “Agreement”) which I have executed and of
which this Release is a part.

 

I hereby confirm my obligations under the Company’s
proprietary information and inventions agreement.

 

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.

 

Except as otherwise set forth in this Release, I
hereby release, acquit and forever discharge the Company, its parents and
subsidiaries, and their officers, directors, agents, servants, employees,
shareholders, successors, assigns and affiliates, of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys
fees, damages, indemnities and obligations of every kind and nature, in law,
equity, or otherwise, known and unknown, suspected and unsuspected, disclosed
and undisclosed (other than any claim for indemnification I may have as a
result of any third party action against me based on my employment with the
Company), arising out of or in any way related to agreements, events, acts or
conduct at any time prior to the date I execute this Release, including, but
not limited to:  all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands
related to salary, bonuses, commissions, stock, stock options, or any other
ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of disputed compensation; claims
pursuant to any federal, state or local law or cause of action including, but
not limited to, the federal Civil Rights Act of 1964, as amended; the federal
Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with
Disabilities Act of 1990; the California Fair Employment and Housing Act, as
amended; tort law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the
implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify me
pursuant to the Company’s indemnification obligation pursuant to agreement or
applicable law.

 

1

 

I acknowledge that I am knowingly and voluntarily
waiving and releasing any rights I may have under ADEA.  I also acknowledge that the consideration
given under the Agreement for the waiver and release in the preceding paragraph
hereof 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) my waiver and release do not apply
to any rights or claims that may arise on or after the date I execute this
Release; (B) I have the right to consult with an attorney prior to
executing this Release; (C) I have forty-five (45) days to consider this
Release (although I may choose to voluntarily execute this Release earlier); (D) I
have seven (7) days following the execution of this Release by the parties
to revoke the Release; (E) this Release shall not be effective until the
date upon which the revocation period has expired, which shall be the eighth
day after this Release is executed by me; and (F) I have  received with this Release 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.

 

	
   

  	
  ERIC
  H. BJERKHOLT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
				

 

2

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