Document:

Exhibit 10.7

 

EXECUTIVE SEVERANCE BENEFITS AGREEMENT

 

This EXECUTIVE SEVERANCE
BENEFITS AGREEMENT (the “Agreement”)
is entered into this 4th day of August, 2005 (the “Effective Date”), between DARYL B. WINTER, PH.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 and General Counsel.  As the Companies Chief Legal Officer (CLO),
Executive has overall responsibility for the Company’s corporate legal
functions, including but not limited to, service as Secretary of the Board and
Corporate Secretary.  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 and General Counsel.  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 six (6) days
per year or such number of days as is required for Executive to serve on the
board of directors of one (1) such
company.

 

1.3          Professional
Requirements.  The Company shall pay
the costs of Executive’s State Bar dues, his required Continuing Legal Education
courses and those professional education programs reasonably necessary for the
performance of Executive’s duties as the Company’s chief legal officer.  Executive’s participation in such programs
will be considered 

 

 

work time and the travel expenses associated with attendance at such
conferences will be paid according to the Company’s expense reimbursement
policies.

 

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 chief legal officer 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 5, 2000 and the Modified
Employment Agreement between Executive and the Company dated as of April 15,
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 

 

2

 

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.

 

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 

 

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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 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.

 

4

 

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.

 

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 

 

5

 

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 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 

 

6

 

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

 

(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

 

7

 

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

 

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

 

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

 

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

 

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

 

6.7          “Constructive
Termination” means that Executive voluntarily terminates employment 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.

 

8

 

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.

 

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.

 

9

 

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 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.

 

10

 

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.

 

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.

  	
  DARYL B.
  WINTER, PH.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Anthony
  B. Evnin

  	
   

  	
  /s/ Daryl B.
  Winter, Ph.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.

 

	
   

  	
  DARYL WINTER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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.

 

	
   

  	
  DARYL WINTER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
				

 

2Exhibit 10.8

 

EXECUTIVE SEVERANCE BENEFITS AGREEMENT

 

This EXECUTIVE SEVERANCE
BENEFITS AGREEMENT (the “Agreement”)
is entered into this 5th day of August, 2005 (the “Effective Date”), between JAMES W. YOUNG, PH.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 Executive Chairman of the Board.  Executive reports directly to the Board.

 

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 Executive Chairman of the Board.  During the term of his employment, Executive
further agrees that he will devote sixty percent (60%) of his business time and
attention to the business of the Company, the Company will be entitled to all
of the benefits and profits arising from or incident to all such work, services
and advice, Executive will not render commercial or professional services of
any nature to any person or organization, whether or not for compensation,
without the prior written consent of the Board, and Executive will not directly
or indirectly engage or participate in any business that is competitive in any
manner with the business of the Company. 
Nothing in this Agreement will prevent Executive from accepting speaking
or presentation engagements in exchange for honoraria or from service on boards
of charitable organizations or otherwise participating in civic, charitable or
fraternal organizations, or from owning no more than one percent (1%) of the
outstanding equity securities of a corporation whose stock is listed on a
national stock exchange.  It is
contemplated that Executive may serve as an advisor to or an affiliate of
certain life science venture organizations and/or on boards of directors of
other, non-competitive companies and the Board will not unreasonably withhold
its consent from such participation. 
Such participation shall be limited only by approval of the Board.

 

1.3          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 Executive Chairman of the Board or at
the request of the Board.

 

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 Agreements
between Executive and the Company dated as of December 1, 2003 and April 9,
2000.

 

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 twelve (12) months’ Base Salary.  Such severance amount shall be paid over
the twelve (12) 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
twelve (12) 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; provided,
further, that Executive shall be solely
responsible for all matters relating to his continuation of coverage pursuant
to COBRA, including, without limitation, the election of such coverage and the
timely payment of premiums.  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 eighteen (18) 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 eighteen twelfths (18/12ths) of Executive’s target annual bonus for
the fiscal year during which the Covered Termination occurs, with such bonus
determined assuming that all of the performance objectives for such fiscal year
have been 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 eighteen (18) months
following such Covered Termination; provided, however,
that the

 

3

 

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 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; 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 Board;

 

(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.

  	
  JAMES W.
  YOUNG, PH.D.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Anthony
  B. Evnin

  	
   

  	
  /s/ James W.
  Young, Ph.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.

 

	
   

  	
  JAMES W. YOUNG, PH.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.

 

	
   

  	
  JAMES W. YOUNG, PH.D.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
				

 

2

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