Item 1.01
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Entry into a Material Definitive Agreement
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On March 31, 2016 (the Effective Date),
Sunesis Pharmaceuticals, Inc. (the Company) entered into the Loan and Security Agreement (the Loan Agreement) with Western Alliance Bank (Western Bank) and Solar Capital Ltd. (Solar Capital, and
collectively with Western Bank, the Lenders) and Western Alliance, as Collateral Agent (the Collateral Agent).
Pursuant to the
terms of the Loan Agreement, the Lenders provided the Company a loan in the principal amount of $15,000,000, for working capital and to fund its general business requirements in accordance with the Loan Agreement and to repay indebtedness of the
Company to Oxford Finance LLC, Silicon Valley Bank and Horizon Technology Finance Corporation (collectively, the Existing Lenders) pursuant to the Loan and Security Agreement, dated as of October 18, 2011, entered into by and among
the Existing Lenders and the Company (the Oxford Loan Agreement). On March 31, 2016, the Company used approximately $7.2 million to repay the remaining loan under the Oxford Loan Agreement.
The Company will be required to pay interest on the borrowings under the Loan Agreement at a floating per annum rate equal to the LIBOR Rate in effect from
time to time plus 8.54%, with the LIBOR Rate to be determined on the third Business Day prior to the Effective Date and on the first day of each month thereafter. The Company shall make monthly payments of interest only for the first 12-months.
Thereafter, in addition to interest accrued during such period, the monthly payments will include an amount equal to the outstanding principal at, as applicable, divided by 36 months, unless the interest only period is extended by a further six
months, in which case the amortization period will be 30 months. At maturity (or earlier prepayment) the Company is also required to make a final payment equal to 3.75% of the original principal amount of the amounts borrowed.
The Company may elect to prepay all amounts owed under the Loan Agreement prior to the maturity date therefor, subject to a prepayment fee equal to 2.0% of
the amount prepaid if the prepayment occurs on or prior to March 31, 2017, 1.0% of the amount prepaid if the prepayment occurs after March 31, 2017 but on or prior to March 31, 2018 and 0.5% of the amount prepaid if the prepayment
occurs thereafter.
Pursuant to the Loan Agreement, the Company is bound by certain affirmative covenants setting forth actions that are required during
the term of the Loan Agreement, including, without limitation, certain information delivery requirements, obligations to maintain certain insurance and certain notice requirements. Additionally, the Company is bound by certain negative covenants
setting forth actions that are not permitted to be taken during the term of the Loan Agreement without the Lenders consent, including, without limitation, incurring certain additional indebtedness, making certain asset dispositions, entering
into certain mergers, acquisitions or other business combination transactions or incurring any non-permitted lien or other encumbrance on the Companys assets. Upon the occurrence of an event of default under the Loan Agreement (subject to cure
periods for certain events of default), all amounts owed by the Company thereunder would begin to bear interest at a rate that is 5.0% higher than the rate that would otherwise be applicable and may be declared immediately due and payable by the
Collateral Agent. Events of default under the Loan Agreement include, among other things, the following: the occurrence of certain bankruptcy events; the failure to make payments under the Loan Agreement when due; the occurrence of a material
impairment on the Collateral Agents security interest over the collateral, a material adverse change in the business, operations or condition (financial or otherwise) of the Company or material impairment of the prospect of repayment of the
obligations under the Loan Agreement; the occurrence of a default under certain other agreements entered into by the Company; the rendering of certain types of judgments against the Company; the revocation of certain government approvals of the
Company; any breach by the Company of any covenant (subject to cure periods for certain covenants) made in the Loan Agreement; and the failure of any representation or warranty made by the Company in connection with the Loan Agreement to be correct
in all material respects when made.
The Collateral Agent, for the benefit of the Lenders, has a perfected security interest in substantially all of the
Companys property, rights and assets, except for intellectual property, to secure the payment of all amounts owed to the Lenders under the Loan Agreement. Upon marketing approval of vosaroxin, the Collateral Agent, for the benefit of the
Lenders, will also have a perfected security interest in the Companys intellectual property rights relating to vosaroxin.
In connection with the Loan Agreement, the Company issued each Lender a warrant to purchase 624,006 shares of the
Companys common stock at an exercise price of $0.5409 per share (collectively, the Lender Warrants). The Lender Warrants will terminate, if not earlier exercised, on the earlier of March 30, 2021 and the closing of certain
merger or consolidation transactions in which the consideration is cash, stock of a publicly traded acquiror, or a combination thereof.
The foregoing is
only a brief description of the Loan Agreement and the Lender Warrants, does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the Lender Warrants and
the Loan Agreement which will be filed as exhibits to the Companys Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2016.