exv4w3






Exhibit 4.3



THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE
PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN
THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.




WARRANT TO PURCHASE STOCK




	 	 	 
	Company:

	 	ARDEA BIOSCIENCES, INC., a Delaware corporation
	Number of Shares:

	 	[Oxford: $300,000/Warrant Price]
	 

	 	[Silicon Valley Bank: $180,000/Warrant Price]
	Class of Stock:

	 	Common
	Warrant Price:

	 	lower of (i) the average closing price of the Company’s common stock for the ten
(10) trading days ending on the date immediately prior to Issue Date; or (ii) the closing price of
the Company’s common stock on the date immediately prior to Issue Date
	Issue Date:

	 	November ___, 2008
	Expiration Date:

	 	The 7th anniversary after the Issue Date, unless terminated earlier in accordance with the provisions contained herein
	Credit Facility:

	 	This Warrant is issued in connection with the Loan and Security
Agreement between Company and Silicon Valley Bank and Oxford
Finance Corporation dated as of November ___, 2008, as amended from time to time (the “Loan Agreement”).






     THIS WARRANT CERTIFIES THAT, for good and valuable consideration, including without limitation
the mutual promises contained in the Loan Agreement [SILICON VALLEY BANK][OXFORD FINANCE
CORPORATION] ([Silicon Valley Bank,] together with any successor or permitted assignee or
transferee of this Warrant, “Holder”) is entitled to purchase the number of fully paid and
nonassessable shares of the class of securities (the “Shares”) of the Company at the Warrant Price,
all as set forth above and as adjusted pursuant to Article 2 of this Warrant, subject to the
provisions and upon the terms and conditions set forth in this Warrant.



ARTICLE 1. EXERCISE.




          1.1 Method of Exercise. Holder may exercise this Warrant by delivering the original
of this Warrant together with a duly executed Notice of Exercise in substantially the form attached
as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion
right set forth in Article 1.2, Holder shall also deliver to the Company a check, wire transfer (to
an account designated by the Company), or other form of payment acceptable to the Company for the
aggregate Warrant Price for the Shares being purchased.




          1.2 Conversion Right. In lieu of exercising this Warrant as specified in Article 1.1,
Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares
determined by dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price
of such Shares by (b) the fair market value of one Share. The fair market value of the Shares
shall be determined pursuant to Article 1.3.





 









 








          1.3 Fair Market Value. The fair market value of each Share shall be the closing price
of a Share reported for the business day immediately before Holder delivers this Warrant together
with its Notice of Exercise to the Company.




          1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this Warrant and, if applicable, the Company receives payment of the aggregate Warrant
Price, the Company shall deliver to Holder certificates for the Shares acquired and, if this
Warrant has not been fully exercised or converted and has not expired, a new Warrant representing
the Shares not so acquired.




          1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and
amount to the Company or, in the case of mutilation on surrender and cancellation of this Warrant,
the Company shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.




          1.6 Treatment of Warrant Upon Acquisition of Company.




               1.6.1 “Acquisition”. For the purpose of this Warrant, “Acquisition” means any sale,
license, or other disposition of all or substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the holders of the Company’s
securities before the transaction beneficially own less than 50% of the outstanding voting
securities of the surviving entity after the transaction.



               1.6.2 Treatment of Warrant at Acquisition.


A) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is not an asset sale and in which the sole consideration is cash, either (a) Holder shall exercise
its conversion or purchase right under this Warrant and such exercise will be deemed effective
immediately prior to the consummation of such Acquisition or (b) if Holder elects not to exercise
the Warrant, this Warrant will expire upon the consummation of such Acquisition. The Company shall
provide the Holder with written notice of its request relating to the foregoing (together with such
reasonable information as the Holder may request in connection with such contemplated Acquisition
giving rise to such notice), which is to be delivered to Holder not less than ten (10) days prior
to the closing of the proposed Acquisition.



B) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is an “arms length” sale of all or substantially all of the Company’s assets (and only its assets)
to a third party that is not an Affiliate (as defined below) of the Company (a “True Asset Sale”),
either (a) Holder shall exercise its conversion or purchase right under this Warrant and such
exercise will be deemed effective immediately prior to the consummation of such Acquisition or (b)
if Holder elects not to exercise the Warrant, this Warrant will continue until the Expiration Date
if the Company continues as a going concern following the closing of any such True Asset Sale. The
Company shall provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in connection with such
contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less
than ten (10) days prior to the closing of the proposed Acquisition.




2









 







C) Upon the written request of the Company, Holder agrees that, in the event of a stock for stock
(or stock and cash) Acquisition of the Company by a publicly traded acquirer if, on the record date
for the Acquisition, the fair market value of the Shares (or other securities issuable upon
exercise of this Warrant) is equal to or greater than three (3) times the Warrant Price, the
Company may require the Warrant to be deemed converted pursuant to Article 1.2 hereof and the
Holder shall participate in the Acquisition as a holder of the Shares (or other securities issuable
upon exercise of the Warrant) on the same terms as other holders of the same class of securities of
the Company.



D) Upon the closing of any Acquisition other than those particularly described in subsections (A),
(B) and (C) above, the successor entity shall assume the obligations of this Warrant, and this
Warrant shall be exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price
and/or number of Shares shall be adjusted accordingly.



As used herein “Affiliate” shall mean any person or entity that owns or controls directly
or indirectly ten (10) percent or more of the stock of Company, any person or entity that controls
or is controlled by or is under common control with such persons or entities, and each of such
person’s or entity’s officers, directors, joint venturers or partners, as applicable.




ARTICLE 2. ADJUSTMENTS TO THE SHARES.




          2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on the
shares of its common stock payable in common stock, or other securities, then upon exercise of this
Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number
and kind of securities to which Holder would have been entitled had Holder owned the Shares of
record as of the date the dividend occurred. If the Company subdivides the shares of its common
stock by reclassification or otherwise into a greater number of shares or takes any other action
that causes the outstanding shares of its common stock to become converted into a greater number of
shares of common stock, the number of Shares shall be proportionately increased and the Warrant
Price shall be proportionately decreased. If the outstanding shares of the Company’s common stock
are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the
Warrant Price shall be proportionately increased and the number of Shares shall be proportionately
decreased.




          2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall
be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received for the Shares if this Warrant had been
exercised or converted immediately before such reclassification, exchange, substitution, or other
event. The Company or its successor shall promptly issue to Holder an amendment to this Warrant
setting forth the number and kind of such new securities or other property issuable upon exercise
or conversion of this Warrant as a result of such reclassification, exchange, substitution or other
event that results in a change of the number and/or class of securities issuable upon exercise or
conversion of this Warrant and the amended Warrant Price. The amendment to this Warrant shall
provide for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation, adjustments to the
Warrant Price and to the number of securities or property issuable upon
exercise of the new Warrant. The provisions of this Article 2.2 shall similarly apply to
successive reclassifications, exchanges, substitutions, or other events.




3









 








          2.3 Intentionally Omitted.




          2.4 No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this Warrant by the Company,
but shall at all times in good faith assist in carrying out of all the provisions of this Article 2
and in taking all such action as may be necessary or appropriate to protect Holder’s rights under
this Article against impairment.




          2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of this Warrant and the number of Shares to be issued shall be rounded down to the
nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a full Share computed
as set forth in Article 1.3 above.




          2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the
Company shall promptly notify Holder in writing, and, at the Company’s expense, promptly compute
such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date
thereof and the series of adjustments leading to such Warrant Price.




ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.




          3.1 Representations and Warranties. The Company represents and warrants and covenants
to the Holder as follows: all Shares which may be issued upon the exercise of the purchase right
represented by this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable, and free of any liens and encumbrances except for restrictions on transfer
provided for herein or under applicable federal and state securities laws.




          3.2 Notice of Certain Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon any of its stock, whether in cash, property, stock, or other
securities and whether or not a regular cash dividend; (b) to offer for sale to stockholders
generally any shares of the Company’s capital stock (or other securities convertible into such
capital stock), other than (i) pursuant to the Company’s stock option or other compensatory plans,
(ii) in connection with commercial credit arrangements or equipment financings, or (iii) in
connection with strategic transactions for purposes other than capital raising; (c) to effect any
reclassification or recapitalization of any of its stock; (d) to merge or consolidate with or into
any other corporation, or sell, lease, license, or convey all or substantially all of its assets,
or to liquidate, dissolve or wind up, then, in connection with each such event, the Company shall
give Holder: (1) at least 10 days prior written notice of the date on which a record will be taken
for such dividend, distribution, or subscription rights (and specifying the date on which the
holders of common stock will be entitled thereto) or for determining rights to vote, if any, in
respect of the matters referred to in (a) and (b) above; and (2) in the case of the matters
referred to in (c) and (d) above at least 10 days prior written notice of the date when the same
will take place (and specifying the date on which the holders of common stock will be entitled to
exchange their




4









 





common stock for securities or other property deliverable upon the occurrence of such event).
Company will also provide information requested by Holder reasonably necessary to enable the Holder
to comply with the Holder’s accounting or reporting requirements.




          3.3 No Shareholder Rights. Except as provided in this Warrant, the Holder will not
have any rights as a shareholder of the Company until the exercise of this Warrant.



ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and warrants
to the Company as follows:




          4.1 Purchase for Own Account. This Warrant and the securities to be acquired upon
exercise of this Warrant by the Holder will be acquired for investment for the Holder’s account,
not as a nominee or agent, and not with a view to the public resale or distribution within the
meaning of the Act. Holder also represents that the Holder has not been formed for the specific
purpose of acquiring this Warrant or the Shares.




          4.2 Disclosure of Information. The Holder has received or has had full access to all
the information it considers necessary or appropriate to make an informed investment decision with
respect to the acquisition of this Warrant and its underlying securities. The Holder further has
had an opportunity to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to obtain additional
information (to the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to the Holder or to
which the Holder has access.




          4.3 Investment Experience. The Holder understands that the purchase of this Warrant
and its underlying securities involves substantial risk. The Holder has experience as an investor
in securities of companies in the development stage and acknowledges that the Holder can bear the
economic risk of such Holder’s investment in this Warrant and its underlying securities and has
such knowledge and experience in financial or business matters that the Holder is capable of
evaluating the merits and risks of its investment in this Warrant and its underlying securities
and/or has a preexisting personal or business relationship with the Company and certain of its
officers, directors or controlling persons of a nature and duration that enables the Holder to be
aware of the character, business acumen and financial circumstances of such persons.




          4.4 Accredited Investor Status. The Holder is an “accredited investor” within the
meaning of Regulation D promulgated under the Act.




          4.5 The Act. The Holder understands that this Warrant and the Shares issuable upon
exercise or conversion hereof have not been registered under the Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the
Holder’s investment intent as expressed herein. The Holder understands that this Warrant and the
Shares issued upon any exercise or conversion hereof must be held indefinitely unless subsequently
registered under the Act and qualified under applicable state securities laws, or unless exemption
from such registration and qualification are otherwise available.




5









 







ARTICLE 5. MISCELLANEOUS.




          5.1 Term. This Warrant is exercisable in whole or in part at any time and from time
to time on or before the Expiration Date.




          5.2 Legends. This Warrant and the Shares shall be imprinted with a legend in
substantially the following form:





THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE
AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.



          5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable
upon exercise of this Warrant may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation letters and legal
opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The
Company shall not require [Silicon Valley Bank (“Bank”)][Holder] to provide an opinion of counsel
if the transfer is to [Bank’s parent company, SVB Financial Group (formerly Silicon Valley
Bancshares), or any other affiliate of Bank][any affiliate of Holder]. Additionally, the Company
shall also not require an opinion of counsel if there is no material question as to the
availability of Rule 144, including, without limitation, current information as referenced in Rule
144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the
selling broker represents that it has complied with Rule 144(f), and the Company is provided with a
copy of Holder’s notice of proposed sale.




          5.4 Transfer Procedure. After receipt by Holder of the executed Warrant, [Bank will
transfer all of this Warrant to Holder’s parent company, SVB Financial Group][Holder may transfer
this Warrant to any affiliate of Holder], by execution of an Assignment substantially in the form
of Appendix 2. Subject to the provisions of Article 5.3 and upon providing Company with written
notice, [SVB Financial Group and any subsequent Holder][any subsequent Holder] may transfer all or
part of this Warrant or the Shares issuable upon exercise of this Warrant (or the Shares issuable
directly or indirectly, upon conversion of the Shares, if any) to any transferee, provided,
however, in connection with any such transfer, [SVB Financial Group or any subsequent Holder][any
subsequent Holder] will give the Company notice of the portion of the Warrant being transferred
with the name, address and taxpayer identification number of the transferee and Holder will
surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if
applicable).




          5.5 Notices. All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid, at such address as may have been furnished to the
Company or the Holder, as the case may (or on the first business day after transmission by
facsimile) be, in writing by the Company or such Holder from time to time.




6









 







Effective upon receipt of the fully executed Warrant and the initial transfer described in
Article 5.4 above, all notices to the Holder shall be addressed as follows until the Company
receives notice of a change of address in connection with a transfer or otherwise:



[SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HA 200

Santa Clara, CA 95054

Telephone: 408-654-7400

Facsimile: 408-496-2405]



[Oxford Finance Corporation

133 N. Fairfax Street

Alexandria, VA 22314

Attn: Tim A. Lex, Chief Operating Officer

Telephone: (703) 519-4900

Facsimile: (703) 519-5225]



Notice to the Company shall be addressed as follows until the Holder receives notice of a change in
address:



ARDEA BIOSCIENCES, INC.

4939 Directors Place

San Diego, CA 92121

Attn: Chief Financial Officer

Tel.: (858) 652-6500

Fax: (858) 625-0760




          5.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.




          5.7 Attorneys’ Fees. In the event of any dispute between the parties concerning the
terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to
collect from the other party all costs incurred in such dispute, including reasonable attorneys’
fees.




          5.8 Automatic Conversion upon Expiration. In the event that, upon the Expiration
Date, the fair market value of one Share as determined in accordance with Article 1.3 above is
greater than the Warrant Price in effect on such date, then this Warrant shall automatically be
deemed on and as of such date to be converted pursuant to Article 1.2 above as to all Shares (or
such other securities) for which it shall not previously have been exercised or converted, and the
Company shall promptly deliver a certificate representing the Shares (or such other securities)
issued upon such conversion to the Holder.




          5.9 Counterparts. This Warrant may be executed in counterparts, all of which together
shall constitute one and the same agreement.




          5.10 Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to its principles regarding
conflicts of law.







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[Balance of Page Intentionally Left Blank]







8









 








	 	 	 
	“COMPANY”
	 
	 	 
	ARDEA BIOSCIENCES, INC.
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Name:
	 	 
	 

	 	 
	 

	 	(Print)
	Title:

	 	President and Chief Executive Officer
	 
	 	 
	 
	 	 
	 
	 	 
	“HOLDER”
	 
	 	 
	[SILICON VALLEY BANK][OXFORD FINANCE CORPORATION]
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Name:
	 	 
	 

	 	 
	 

	 	(Print)
	 
	 	 
	Title:
	 	 
	 

	 	 





 









 






APPENDIX 1




NOTICE OF EXERCISE




          1. Holder
elects to purchase                                         
shares of the Common Stock of ARDEA BIOSCIENCES, INC.
pursuant to the terms of the attached Warrant, and tenders payment of the purchase price of the
shares in full.




          [or]




          1. Holder elects to convert the attached Warrant into Shares/cash [strike one] in the manner
specified in the Warrant. This conversion is exercised for                                          of the Shares
covered by the Warrant.




          [Strike paragraph that does not apply.]




          2. Please issue a certificate or certificates representing the shares in the name specified
below:




	 
	 

	     Holders Name

	 

	 

	 

	 

	 

	     (Address)







          3. By its execution below and for the benefit of the Company, Holder hereby restates each of
the representations and warranties in Article 4 of the Warrant as the date hereof.




	 	 	 
	HOLDER:
	 
	 	 
	 
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Name:
	 	 
	 

	 	 
	 
	 	 
	Title:
	 	 
	 

	 	 
	 
	 	 
	(Date):
	 	 
	 

	 	 






 









 








APPENDIX 2




ASSIGNMENT



For value received, [Silicon Valley Bank][Oxford Finance Corporation] hereby sells, assigns
and transfers unto




	 	 	 
	[Name:

	 	SVB Financial Group
	Address:

	 	3003 Tasman Drive (HA-200)
	 

	 	Santa Clara, CA 95054
	 
	 	 
	Tax ID:

	 	91-1962278]
	 
	 	 
	[Name:
	 	 
	Address:
	 	 
	 
	 	 
	Tax ID:

	 	]





that certain Warrant to Purchase Stock issued by ARDEA BIOSCIENCES, INC. (the “Company”), on
November ___, 2008 (the “Warrant”) together with all rights, title and interest therein.




	 	 	 
	[SILICON VALLEY BANK][OXFORD FINANCE CORPORATION]
	 
	 	 
	By:
	 	 
	 

	 	 
	Name:
	 	 
	 

	 	 
	Title:
	 	 
	 

	 	 





	 	 	 
	Date:
	 	 
	 

	 	 




By its execution below, and for the benefit of the Company, [SVB Financial Group][                                        ] makes each of
the representations and warranties set forth in Article 4 of the Warrant and agrees to all other
provisions of the Warrant as of the date hereof.




	 	 	 
	[SVB FINANCIAL GROUP][                                        ]
	 
	 	 
	By:
	 	 
	 

	 	 
	Name:
	 	 
	 

	 	 
	Title: