SUNESIS PHARMACEUTICALS, INC. 2008 Bonus Program

The 2008 Bonus Program (the “Program”) of Sunesis Pharmaceuticals, Inc. (the “Company”) is designed to motivate, retain and reward its employees through a combination of corporate and individual performance-based incentive compensation components. Employees of the Company employed at the Company during 2008 who are designated by the Compensation Committee of the Company’s Board of Directors (the “Committee”) and who remain employed by the Company as of the Payment Date (as defined below) (each a “Participant”) shall be eligible to participate in the Program unless otherwise determined by the Committee. The Program is administered by the Committee in its sole discretion. 

 

The Program is designed to award a cash bonus payment (each a “Cash Bonus”) for performance in 2008 to  Participants based on the level of achievement by the Company of certain corporate objectives (the “Corporate Objectives”) and, in the case of each Participant, based on such Participant’s level of achievement of certain individual performance objectives, which may take into consideration certain department, group and/or team objectives applicable to such Participant (the “Individual Objectives”).

 

 

The Program is intended to encourage and incentivize the following:

 

 

as well as to recognize individual contributions and effort.

 

 

The Corporate Objectives shall be approved by the Committee, with input from management, and generally relate to the achievement of certain research, clinical development, business development, financial, business and similar milestones.  Each Corporate Objective is also assigned a relative weighting from the Committee, reflecting its importance to the achievement of the Company’s key results for 2008.

 

The Individual Objectives shall be set as follows:

 

 

 

 

For 2008, each Participant is eligible for up to a specified percentage of his or her annual base salary, based upon the position such Participant holds with the Company (the “Bonus Target”).  Under the Program, the Bonus Targets range from 25% to 40% of a Participant’s annual base salary for Vice President level employees and above and a range from 6% to 20% of a Participant’s annual base salary for other Participants. 

 

 

Cash bonuses under the Program are anticipated to be paid out in the first quarter of 2009.  Actual determination of cash bonuses to be paid out under the Program for 2008 shall be made as follows:

 

 

In the first quarter of 2009, the Committee shall determine, after receiving and considering recommendations from management, the degree to which the Corporate Objectives have been met, expressed as a percentage of Corporate Objectives achieved, taking into consideration the weighting assigned to each Corporate Objective.  At this time, the Committee determines the final aggregate bonus pool under the Program for all Participants (the “Bonus Pool”),  depending on the extent to which the Corporate Objectives were met or exceeded. 

 

 

Bonus Target levels for Participants are also adjusted based on level of achievement of Corporate Objectives as determined by the Committee.  For example, if the Committee determines that only 80% of the 2008 Corporate Objectives are achieved, each Participant’s Bonus Target is decreased by 20% (in other words, a Participant with a 10% Bonus Target will have that Bonus Target reduced to 8%, or 80% of 10%.)  Such adjusted Bonus Targets are referred to as the “Adjusted Bonus Targets.”

 

 

Individual bonus payouts to individual Participants are based on their (i) level of contribution to the achievement of the Corporate Objectives; and (ii) level of achievement of such Participant’s Individual Objectives.  The determination of the level of such contribution and achievement shall be made as follows:

 

 

After assessing each such Participant’s achievements as described above, each Participant’s actual cash bonus payout (“Cash Bonus”), as a percentage of such Participant’s Adjusted Target Bonus, will be determined based on the assessment of each such Participant’s 2008 achievements as follows:

 

 

The Committee has final authority with respect to the determination of the Cash Bonus, if any, for each Executive Participant and Non-Executive Participant.

 

 

 

 

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

 

This Program supersedes and replaces all prior cash incentive and bonus plans of the Company.  The Board of Directors or the Committee may amend or terminate this Program at any time, with or without notice. The Committee may likewise terminate an individual’s participation in the Program at any time, with or without notice.  Further, the Board of Directors or the Committee may modify the Corporate Objectives, the Individual Objectives, the Bonus Targets and/or the Cash Bonus amounts at any time.  The Committee may adjust the cash payouts hereunder based on achievement of publicly announced targets, clinical milestones, strategic goals, cross-functional teamwork and collaboration, and unforeseen changes in the economy and/or geopolitical climate.

 

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