SECOND AMENDED AND RESTATED EXECUTIVE SEVERANCE BENEFITS AGREEMENT

This S econd Amended and Restated Executive Severance Benefits Agreement (the “ Agreement ”) is entered into this 24 ^th day of December, 2008 (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.

Whereas , the Company and the Executive previously entered into an Executive Severance Benefits Agreement, dated August 12, 2005, which agreement was amended and restated by that certain Amended and Restated Executive Severance Benefits Agreement, dated May 29 ^th , 2008 (collectively the “ Prior Benefits Agreement ”); and

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

1.1  Position and Duties.   Executive is currently employed by the Company as Senior Vice President, Corporate Development and Finance, and 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, Corporate Development and Finance, and 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, with third parties as needed to enforce the terms of this Agreement, with other employees of the Company on a need to know basis if required to carry out Executive’s duties as the Company’s  Senior Vice President, Corporate Development and Finance, and 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, as amended on June 21, 2004.

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

2.2  Covered Termination Option Acceleration .

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

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

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

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

(a)  Base Salary.   The Company shall pay to Executive an amount equal to nine (9) months’ Base Salary.  Such severance amount shall be paid   in cash in a single lump sum within sixty (60) days following the Covered Termination, subject to Sections 4.1 and 4.3 below, and shall be subject to all required tax withholding.

(b)  Health Benefits .  Provided that Executive elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (together with any state or local laws of similar effect, “ COBRA ”), the Company shall pay the premiums of Executive’s group health insurance coverage, including coverage for Executive’s eligible dependents, for a maximum period of the first nine (9) months following such Covered Termination or such lesser number of months as Executive and Executive’s eligible dependents are eligible for such coverage; provided, however, that the Company shall pay premiums for Executive and Executive’s eligible dependents only for coverage for which they were enrolled immediately prior to the Covered Termination.  Executive (and Executive’s eligible dependents, as applicable) shall be solely responsible for making a timely and accurate election for continuation of coverage pursuant to COBRA.  No premium payments will be made following the effective date of Executive’s coverage by a health insurance plan of a subsequent employer.  For the balance of the period that Executive and Executive’s eligible dependents are entitled to coverage under COBRA, if any, Executive shall maintain such coverage at Executive’s own expense.

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

(a)  Base Salary .  The Company shall pay to Executive an amount equal to fourteen (14) months’ Base Salary.  Such severance amount shall be paid in cash in a single lump sum within sixty (60) days following the Covered Termination, subject to Sections 4.1 and 4.3 below, and shall be subject to all required tax withholding.

(b)  Bonus .  The Company shall pay to Executive an amount equal to fourteen twelfths (14/12ths) of Executive’s target annual bonus for the fiscal year during which the Covered Termination occurs, with such bonus determined assuming that all of the performance objectives for such fiscal year have been attained at target levels.  Such severance amount shall be paid in cash in a single lump sum within sixty (60) days following the Covered Termination, subject to Sections 4.1 and 4.3 below, and shall be subject to all required tax withholding.

(c)  Health Benefits .  Provided that Executive elects continued coverage under COBRA, the Company shall pay the premiums of Executive’s group health insurance coverage, including coverage for Executive’s eligible dependents, for a maximum period of the first fourteen (14) months following such Covered Termination or such lesser number of months as Executive and Executive’s eligible dependents are eligible for such coverage; provided, however, that the Company shall pay premiums for Executive and Executive’s eligible dependents only for coverage for which they were enrolled immediately prior to the Covered Termination.  Executive (and Executive’s eligible dependents, as applicable) shall be solely responsible for making a timely and accurate election for continuation of coverage pursuant to COBRA.  No premium payments will be made following the effective date of Executive’s coverage by a health insurance plan of a subsequent employer.  For the balance of the period that Executive and Executive’s eligible dependents are entitled to coverage under COBRA, if any, Executive shall maintain such coverage at Executive’s own expense.

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

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

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

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

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

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

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

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

5.2  Determinations .  All determinations required to be made under this Article 5, including whether and to what extent the Payments shall be reduced and the assumptions to be utilized in arriving at such determination, shall be made by the nationally recognized certified public accounting firm used by the Company immediately prior to the Change of Control or, if such firm declines to serve, such other nationally recognized certified public accounting firm as may be designated by the Executive (the “ Accounting Firm ”).  The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive at such time as is requested by the Company.  All fees and expenses of the Acc