Summary of SUNESIS PHARMACEUTICALS INC

Item 1.01. Entry into Material Definitive Agreement.

Securities Purchase Agreement

On March 31, 2009, the Company entered into a securities purchase agreement with accredited investors, including certain members of management, providing for a private placement of Company securities of up to $43.5 million (the "Private Placement"). The Private Placement contemplates the sale of up to $15.0 million of units consisting of Series A Preferred Stock and warrants to purchase common stock in two closings. $10.0 million of units would be sold in the initial closing, which is expected to occur in the near term, subject to the satisfaction of customary closing conditions. Subject to the approval of the Company's stockholders, an additional $5.0 million of units may be sold in the second closing, which closing may occur at the Company's election or at the election of the investors in the Private Placement. The Company may elect to hold the second closing if the achievement of a specified milestone with respect to voreloxin has occurred and the Company's common stock is trading above a specified floor price. If the Company has not delivered notice to the investors in the Private Placement of the Company's election to complete the second closing, or if the conditions for the second closing have not been met, the investors may elect to purchase the units in the second closing by delivering a notice to the Company of their election to purchase the units. Notice of an election to complete the second closing, either by the Company or the investors in the Private Placement, must be delivered on or before the earliest to occur of December 31, 2009, the common equity closing described below or the occurrence of a qualifying alternative common stock financing. If the second closing occurs, it will be subject to the satisfaction of customary closing conditions. Subject to the approval of the Company's stockholders, the remaining tranche of $28.5 million of common stock may be sold in the common equity closing. The common equity closing may be completed at the Company's election prior to the earlier of December 31, 2010 and a qualifying alternative common stock financing, or upon the election of the holders of a majority of the Series A Preferred Stock issued in the Private Placement prior to a date determined with reference to the Company's cash balance dropping below $4.0 million at certain future dates. If the Company elects to hold the common equity closing, it will be subject to the approval of the purchasers holding a majority of the Series A Preferred Stock issued in the Private Placement and subject to a condition that the Company sell at least $28.5 million of common stock in the common equity closing.

In the initial closing for $10.0 million of units, the Company would issue approximately 2.9 million shares of Series A Preferred Stock, which would initially be convertible into approximately 29.0 million shares of common stock, and warrants to purchase approximately 29.0 million shares of common stock. In the second closing for an additional $5.0 million of units, if completed, the Company would issue approximately 14.5 million shares of Series A Preferred Stock, which would initially be convertible into approximately 14.5 million shares of common stock, and warrants to purchase approximately 14.5 million shares of common stock. The per unit purchase price for a share of Series A Preferred Stock and a warrant to purchase 10 shares of common stock would be $3.45 for both the first and second closings. The warrants issuable at the first and second closings would have an exercise price of $0.22 per share and a term of seven years from issuance. In the common equity closing, if completed, the Company would issue approximately 103.6 million shares of common stock at a purchase price of $0.275 per share.

The Company anticipates raising gross proceeds of approximately $10.0 million in connection with the initial closing of the Private Placement. The net proceeds, after deducting placement agent fees and other estimated offering expenses payable by the Company, are expected to be approximately $8.8 million. The Company anticipates that the gross proceeds of the second closing and the common equity closing, if they are completed, would equal approximately $5.0 million and $28.5 million, respectively, before placement agent fees and offering expenses for such closings. The Company expects any and all net proceeds received from the Private Placement to be used for working capital and other general corporate purposes.

The securities purchase agreement contains customary representations, warranties, covenants and closing conditions by, among and for the benefit of the parties. The securities purchase agreement also provides for indemnification of the investors in the event that any investor incurs losses, liabilities, costs and expenses related to a breach of the representations and warranties by the Company under the securities purchase agreement or the other transaction documents or any action instituted against an investor or its affiliates due to the transactions contemplated by the securities purchase agreement or other transaction documents, subject to certain limitations.

The securities purchase agreement provides that, in connection with the initial closing of the Private Placement, the Company would adopt a retention plan pursuant to which 10.5-12.0% of the proceeds of a change of control transaction of the Company would be allocated to employees. Further, with respect to the Company's executives, the Company's existing executive severance benefits agreements would be modified to provide that the executive will receive the greater of the amount currently provided for a covered termination not in connection with a change of control under his or her existing executive severance benefits agreement and the proceeds due each individual executive based on overall net transaction value and individual allocation percentage pursuant to the retention plan.

Investor Rights Agreement

It is a condition to the initial closing of the Private Placement that the Company enter into an investor rights agreement with the investors, pursuant to which the Company would grant to the investors certain registration rights with respect to the securities issued and sold pursuant to the securities purchase agreement. The Company would grant to the investors certain rights of first refusal with respect to certain future issuances of the Company's securities, including as part of a future equity financing, subject to customary exclusions.

The investor rights agreement also includes an agreement between the parties with respect to the size and composition of the Company's board of directors. Specifically, upon the initial closing, the size of the Company's board of directors would be set at eight members, and the holders of a majority of the Series A Preferred Stock would be entitled to designate, and the Company would be required to nominate, three members to the Company's board of directors. Alta . . .