Exhibit 4.3


THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.


WARRANT TO PURCHASE


A NUMBER OF SHARES OF SERIES C PREFERRED STOCK OF


VASCULAR INNOVATIONS, INC.


(Void after July 5, 2008)


This certifies that VENTURE
LENDING & LEASING II, INC., a
Maryland corporation, or its assignee(s) as set forth herein (the “Holder”),
for value received, is entitled to purchase from Vascular Innovations, Inc., a
Delaware corporation (the
“Company”), Twenty One Thousand Four Hundred Twenty-Nine (21,429) fully paid
and nonassessable shares (“Warrant
Shares”) of the Company’s Series C Preferred Stock (“Preferred Stock”) for cash
at a price of $2.80 per share (the “Stock Purchase Price”). In the event that
the aggregate, original principal amount of Term Loans advanced by Holder to Company under that certain Loan and
Security Agreement (“Loan Agreement”), dated
of even date herewith, between the Company and the Holder, exceeds $600,000
(such amount being hereafter referred
to as the “Excess Amount”) then, in such event, the Warrant Shares shall
increase automatically from time to time by such number of shares as shall be
equal to (x) the product of 10% multiplied by the Excess Amount, divided by
(ii) the Stock Purchase Price. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Loan Agreement.


This warrant may be exercised at
any time or from time to time up to and including the earlier of (i) 5:00 p.m. (Pacific time) on July 5, 2008 (the “Expiration
Date”), or (ii) the date of a Qualified Corporate Event as described in Section 4.3, upon surrender to the Company at its
principal office at 171 Jefferson Drive, Menlo Park, California 94025, (or at
such other location as the Company may advise Holder in writing) of this
Warrant properly endorsed with the Form of Subscription attached hereto duly
filled in and signed and upon payment in cash or by check of the aggregate
Stock Purchase Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Stock
Purchase Price and the number of shares purchasable hereunder are subject to
adjustment as provided in Section 4 of this Warrant.


As soon as reasonably practicable
after the occurrence or non-occurrence of the latest event or condition
necessary to determine the actual number of shares of the Company’s stock
issuable upon exercise of this Warrant, the Company shall execute and deliver a
supplement to this Warrant in substantially the form of Exhibit “A”
attached hereto, completed with such quantity and price terms and other
information as have been determined as a result of the occurrence or non-occurrence of such events
or conditions. The provisions of such supplement, once completed and executed, shall control the interpretation and
exercise of this Warrant.


This Warrant is subject to the
following terms and conditions:


          1.       Exercise;
Issuance of Certificates; Payment for Shares.


                    (a)        Unless
an election is made pursuant to clause (b) of this Section 1, this Warrant
shall be exercisable at the option of the
Holder, at any time or from time to time, on or before the Expiration Date for
all or any portion of the shares of Preferred Stock (but not for a fraction
of a share) which may be purchased hereunder









for the Stock Purchase Price
multiplied by the number of shares to be purchased. In the event, however, that
pursuant to the Company’s Certificate of Incorporation, as amended, an event
causing automatic conversion of the Company’s Preferred Stock shall have
occurred prior to the exercise of this Warrant, in whole or in part, then this Warrant shall be exercisable for the number of
shares of Common Stock of the Company into which the Preferred Stock not purchased upon any prior exercise of the
Warrant would have been so converted (and, where the context requires, reference to “Preferred Stock” shall be
deemed to include such Common Stock). The Company agrees that the shares of
Preferred Stock purchased under this Warrant shall be and are deemed to be
issued to the holder hereof as the record owner of such shares as of the close
of business on the date on which the form of subscription shall have been delivered and payment made for such
shares. Subject to the provisions of Section 2, certificates for the shares of
Preferred Stock so purchased, together with any other securities or property to
which the Holder hereof is entitled upon such exercise, shall be delivered to
the Holder hereof by the Company at the Company’s expense within a reasonable time after the rights
represented by this Warrant have been so exercised. Except as provided in
clause (b) of this Section 1, in case of a purchase of less than all the shares
which may be purchased under this Warrant, the Company shall cancel this
Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under
the Warrant surrendered upon such purchase to the Holder hereof within a reasonable time. Each stock certificate
so delivered shall be in such denominations of Preferred Stock as may be requested by the Holder hereof and shall be
registered in the name of such Holder or such other name as shall be designated
by such Holder, subject to the limitations contained in Section 2.
Notwithstanding anything contained herein to the contrary, this Warrant may not
be exercised during the twenty (20) day period immediately prior to the closing
of the Company’s initial public offering of its Common Stock.


                    (b)        The
Holder, in lieu of exercising this Warrant by
the payment of the Stock Purchase Price
pursuant to clause (a) of this Section 1, may elect, at any time on or before
the Expiration Date, to receive that number
of shares of Preferred Stock equal to the quotient of: (i) the difference
between (A) the Per Share Price (as hereinafter defined) of the Preferred
Stock, less (B) the Stock Purchase Price then in effect, multiplied by the number of shares of Preferred Stock the Holder
would otherwise have been entitled to purchase hereunder pursuant to clause (a)
of this Section 1 (or such lesser number of shares as the Holder may designate
in the case of a partial exercise of
this Warrant); over (ii) the Per Share Price. Election to exercise under this
section (b) may be made by delivering a signed form of subscription to the
Company via facsimile, to be followed by delivery of the warrant.


                    (c)        For
purposes of clause (b) of this Section 1, “Per
Share Price” means the product of: (i)
the greater of (A) the closing price of the Company’s Common Stock as quoted by
NASDAQ or listed on any exchange, whichever is applicable, as published in the
Western Edition of The Wall Street Journal for the trading day
immediately prior to the date of the Holder’s election hereunder or, (B) if
applicable at the time of or in connection with the exercise under clause (b)
of this Section 1, the gross sales price of one share of the Company’s Common
Stock pursuant to a registered public offering or that amount which
stockholders of the Company will receive
for each share of Common Stock pursuant to a merger, reorganization or sale of
assets (“Merger Payment”) and in the
event that such Merger Payment includes any earn-outs, deferred payments or
similar future contingent payments (“Future Payments”), the value of such
Future Payments for the purpose of calculating the Merger Payment shall be
determined in good faith by the Company’s Board of Directors; and (ii) that
number of shares of Common Stock
into which each share of Preferred Stock is convertible. If the Company’s
Common Stock is not quoted by NASDAQ or
listed on an exchange and none of the above clauses apply, the Per Share Price
of the Preferred Stock (or the
equivalent number of shares of Common Stock into which such Preferred Stock is
convertible) shall be the price per share which the Company would obtain from
a willing buyer for shares sold by the
Company from authorized but unissued shares as such price shall be determined
in good faith by the Company’s Board
of Directors.


          2.       Limitation
on Transfer.


                    (a)        The
Warrant and the Preferred Stock shall not be transferable except upon the conditions
specified in this Section 2, which
conditions are intended to insure compliance with the provisions of the
Securities Act. Each holder of this
Warrant or the Preferred Stock issuable hereunder will cause any proposed
transferee of the Warrant or
Preferred Stock to agree to take and hold such securities subject to the
provisions and upon the conditions
specified in this Section 2.


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                    (b)        Each
certificate representing (i) this Warrant, (ii) the Preferred Stock, (iii) shares
of the Company’s Common Stock issued upon conversion of the Preferred Stock and
(iv) any other securities issued in respect
to the Preferred Stock or Common Stock issued upon conversion of the Preferred
Stock upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions
of this Section 2 or unless such securities have been registered under the
Securities Act or sold under Rule
144) be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend
required under applicable state securities laws):


THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


                    (c)        The
Holder of this Warrant and each person to whom this Warrant is subsequently transferred
represents and warrants to the Company (by acceptance of such transfer) that it
will not transfer the Warrant (or securities issuable upon exercise hereof
unless a registration statement under the Securities Act was in effect with
respect to such securities at the time of issuance thereof) except pursuant to
(i) an effective registration statement
under the Securities Act, (ii) Rule 144 under the Securities Act (or any other
rule under the Securities Act relating
to the disposition of securities); or (iii) an opinion of counsel, reasonably
satisfactory to counsel for the Company, that an exemption from such
registration is available. Notwithstanding the foregoing provisions of this paragraph, no such registration statement or
opinion of counsel shall be necessary for a transfer by the Holder to any
person and or entity deemed an affiliate of Holder within the meaning of Rule
144 promulgated under the Securities Act,
provided that such affiliate is an “accredited investor” within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.


          3.       Shares
to be Fully Paid; Reservation of Shares. The Company covenants and agrees
that all shares of Preferred Stock
which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any shareholder and free
of all taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized and reserved, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of authorized but unissued Preferred Stock, or other
securities and property, when and as required to provide for the exercise of
the rights represented by this
Warrant. The Company will take all such action as may be necessary to assure
that such shares of Preferred Stock
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements
of any domestic securities exchange upon which the Preferred Stock may be
listed. The Company will not take any
action which would result in any adjustment of the Stock Purchase Price (as
defined in Section 4 hereof) (i) if
the total number of shares of Preferred Stock issuable after such action upon
exercise of all outstanding warrants, together with all shares of Preferred
Stock then outstanding and all shares of Preferred Stock then issuable upon
exercise of all options and upon the conversion of all convertible securities
then outstanding, would exceed the total
number of shares of Preferred Stock then authorized by the Company’s
Certificate of Incorporation, or (ii) if the total number of shares of Common Stock issuable after such action
upon the conversion of all such shares of Preferred Stock together with all shares of Common Stock then
outstanding and then issuable upon exercise of all options and upon the
conversion of all convertible securities then outstanding would exceed the
total number of shares of Common Stock then authorized by the Company’s
Articles of Incorporation.


          4.       Adjustment
of Stock Purchase Price Number of
Shares. The Stock Purchase Price
and the number of shares purchasable
upon the exercise of this Warrant shall be subject to adjustment from time to
time upon the occurrence of certain events described in this Section 4. Upon
each adjustment of the Stock Purchase Price, the Holder of this Warrant shall
thereafter be entitled to purchase, at the Stock Purchase Price resulting from
such adjustment, the number of shares obtained by multiplying the Stock
Purchase Price in effect immediately prior to


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such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase
Price resulting from such adjustment.


                4.1           Subdivision
or Combination of Stock. In case the Company shall at any time subdivide its outstanding shares of Preferred Stock into a
greater number of shares, the Stock Purchase Price in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Preferred
Stock of the Company shall be combined into a smaller number of shares, the
Stock Purchase Price in effect immediately prior to such combination shall be
proportionately increased.


                4.2           Dividends in
Preferred Stock, Other Stock, Property, Reclassification. If at any time or
from time
to time the holders of Preferred Stock (or any shares of stock or other
securities at the time receivable upon the exercise of this Warrant) shall have
received or become entitled to receive, without payment therefor,


                                   (a)       Preferred
Stock, or any
shares of stock or other securities whether or not such securities are at any time directly or indirectly
convertible into or exchangeable for Preferred Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution, or


                                   (b)       any
cash paid or payable otherwise than as a cash dividend, or


                                   (c)       Preferred
Stock or other or additional stock or other securities or property (including
cash) by way of spinoff, split-up, reclassification, combination of shares or
similar corporate rearrangement,
(other than shares of Preferred Stock issued as a stock split, adjustments in
respect of which shall be covered by
the terms of Section 4.1 above), 


Then
and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of
Preferred Stock receivable thereupon, and without payment of any additional consideration therefore, the amount of stock and
other securities and property (including cash in the cases referred to in
clauses (b) and (c) above) which such Holder would hold on the date of such
exercise had he been the holder of record of such Preferred Stock as of the
date on which holders of Preferred Stock received or became entitled to receive such shares and/or all other additional
stock and other securities and property.


                  4.3           Reorganization,
Reclassification, Consolidation,
Merger or Sale. If any capital reorganization of the capital stock of the Company,
or any consolidation or merger of the Company with another corporation, or the
sale of all or substantially all of its assets to another corporation shall be
effected in such a way that holders of Preferred Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for
Preferred Stock (such capital reorganization, merger, consolidation, or sale
being a “Corporate Event”), then, as a condition of such Corporate Event,
lawful and adequate provisions shall be made whereby the holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Preferred Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby) such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding shares of
such Preferred Stock equal to the number of shares of such stock immediately
theretofore purchasable and receivable
upon the exercise of the rights represented hereby; provided, however,
in the event that 1) the consideration
to be received pursuant to such Corporate Event for each share of Preferred
Stock is in excess of the Stock
Purchase Price effective at the time of the Corporate Event, 2) the
consideration to be received in such Corporate
Event is cash or shares that are of a publicly traded company listed on a
national market or exchange, which,
after the ninetieth (90) day following the close of such Corporate Event, may
be sold freely without any restrictions other than those of Rule 144 or 145,
and 3) the Company’s shareholders own less than 50% of the voting securities of the surviving entity
(collectively, a “Qualified Corporate Event”), then this Warrant shall be deemed exercised in accordance with the provisions
of section l (b) upon the closing of the Qualified Corporate Event. In any such
case, appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Stock
Purchase Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, as nearly as may be
possible, in relation to any shares of stock, securities or assets


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thereafter deliverable upon the
exercise hereof. The Company will not effect any such consolidation, merger or
sale unless, prior to the consummation thereof, the successor corporation (if
other than the Company) resulting from such
consolidation or the corporation purchasing such assets shall assume by written
instrument, executed and mailed or
delivered to the registered Holder hereof at the last address of such Holder
appearing on the books of the Company,
the obligation to deliver to such Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such Holder may be
entitled to purchase.


                4.4           Sale
or Issuance Below Purchase Price. The shares of Preferred Stock issuable under this
Warrant shall be subject to the antidilution provisions as described in the
Company’s Certificate of incorporation as currently in effect.


                4.5           Notice
of Adjustment. Upon any adjustment of the Stock Purchase Price,
and/or any increase or decrease in
the number of shares purchasable upon the exercise of this Warrant the Company
shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company. The
notice, which may be substantially in the form of Exhibit “A” attached hereto,
shall be signed by the Company’s chief financial officer and shall state the
Stock Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is
based.


                4.6           Other
Notices. If at any time:


                                 (a)          the
Company shall declare any cash dividend upon
its Preferred Stock;


                                 (b)          the
Company shall declare any dividend upon its
Preferred Stock payable in stock or
make any special dividend or other distribution to the holders of its Preferred
Stock;


                                 (c)          the
Company shall offer for subscription pro rata
to the holders of its Preferred Stock any additional shares of stock of any
class or other rights;


                                 (d)          there
shall be any reclassification of the capital
stock of the Company, or any Corporate
Event;


                                 (e)          there
shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company; or


                                 (f)          the
Company shall take or propose to take any
other action, notice of which is actually provided to holders of the Preferred
Stock;


then, in any one or more of said cases, the Company
shall give, by first class mail, postage prepaid, addressed to the holder of this Warrant at the address of such
holder as shown on the books of the Company, (i) at least 20 day’s prior written notice or, if less, the actual
number of days’ prior written notice of such event given to the Company’s stockholders, but in no event less than 10 days of
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, or other
action and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, or other
action, at least 20 day’s written notice or, if less, the actual number of
days’ prior written notice of such event given to the Company’s
stockholders, but in no event less than 10 days of the date when the same shall take place. Any notice given in
accordance with the foregoing clause (i) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Preferred Stock shall be entitled thereto. Any notice given in
accordance with the foregoing clause (ii) shall also specify the date on which
the holders of Preferred Stock shall be entitled to exchange their Preferred
Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action as the case may be.


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                        4.7          Certain
Events. If any change in the outstanding Preferred Stock of the Company or
any other event occurs as to
which the other provisions of this Section 4 are not strictly applicable or if
strictly applicable would not fairly protect the purchase rights of the Holder
of the Warrant in accordance with the essential intent and principles of such
provisions, then the Board of Directors of the Company shall make an adjustment
in the number and class of shares available under the Warrant, the Stock
Purchase Price and/or the application of such provisions, in accordance with
such essential intent and principles, so as to
protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon
exercise for the same aggregate Stock Purchase Price the total number, class
and kind of shares as he would have owned had the Warrant been exercised prior
to the event and had he continued to hold such shares until after the event
requiring adjustment.


          5.          
Issue Tax. The issuance of certificates for shares of Preferred Stock
upon the exercise of the Warrant shall be made without charge to the Holder of
the Warrant for any issue tax in respect thereof, provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Holder of the Warrant being exercised.


          6.          
Closing of Books. The Company
will at no time close its transfer books against the transfer of any Warrant or
of any shares of Preferred Stock issued or issuable upon the exercise of any
warrant in any manner which interferes with the timely exercise of this Warrant.


          7.          
No Voting or Dividend Rights; Limitation of Liability. Nothing contained
in this Warrant shall be construed as conferring upon the Holder hereof the
right to vote or to consent as a shareholder in respect of meetings of shareholders
for the election of directors of the Company or any other matters or any rights
whatsoever as a shareholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented
hereby or the shares purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised. No provisions hereof, In the absence of
affirmative action by the holder to purchase shares of Preferred Stock, and no
mere enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of such Holder for the Stock Purchase Price or as a
stockholder of the Company, whether such liability is asserted by the Company
or by its creditors.


          8.          
Intentionally Omitted. 


          9.          
Registration Rights. The Holder hereof shall be entitled, with respect
to the shares of Preferred Stock issued upon exercise hereof or the shares of
Common Stock or other securities issued upon conversion of such Preferred Stock
as the case may be, to all of the piggyback registration rights set forth in
Section 2.3 of the Restated Investor Rights Agreement dated as of August 9,
2000 (“Investor Rights Agreement”) and to be made a party to that agreement.
The company shall take such action as may be reasonably necessary to assure
that the granting of such registration rights to the Holder does not violate
the provisions of such agreement or any of the Company’s charter documents or
rights of prior Grantees of registration rights.


          10.        
Rights and Obligations Survive Exercise of Warrant. The rights and
obligations of the Company, of the Holder of this Warrant and of the holder of
shares of Preferred Stock issued upon exercise of this Warrant, contained in
Sections 6and 9 shall survive
the exercise of this Warrant.


          11.         Modification
and Waiver. This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of the same is sought.


          12.         Notices.
Any notice, request or other document required or permitted to be given or
delivered to the holder hereof or the Company shall be deemed to have been
given (i) upon receipt if delivered personally or by courier (ii) upon
confirmation of receipt if by telecopy or (iii) three business days after
deposit in the US mail, with


6









postage prepaid and certified or registered, to each
such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor in the first paragraph of this Warrant.


          13.          Binding
Effect on Successors. This Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or
substantially all of the Company’s assets. All of the obligations of the
Company relating to the Preferred Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant. All of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assign of the holder hereof.


          14.          Descriptive
Headings and Governing Law. The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. This Warrant shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of California.


          15.          Lost
Warrants or Stock Certificates. The Company represents and warrants to the
Holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of any Warrant or stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stack
certificate, the Company at its expense will make and deliver a new Warrant or
stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.


          16.          Fractional
Shares. No fractional shares shall be issued upon exercise of this Warrant.
The Company shall, in lieu of issuing any fractional share, pay the holder
entitled to such fraction a sum in cash equal to such fraction multiplied by
the then effective Stock Purchase Price.


          17.          Representations
of Holder. With respect to this Warrant, Holder represents and warrants to
the Company as follows:


                         17.1          Experience.
It is experienced in evaluating and investing in companies engaged in businesses
similar to that of the Company; it understands that investment in the Warrant
involves substantial risks; it has made detailed inquiries concerning the
Company, its business and services, its officers and its personnel; the
officers of the Company have made available to Holder any and all written
information it has requested; the officers of the Company have answered to
Holder’s satisfaction all inquiries made by it; in making this investment it
has relied upon information made available to it by the Company; and it has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of investment in the Company and it
is able to bear the economic risk of that investment.


                         17.2          Investment.
It is acquiring the Warrant for investment for its own account and not with a
view to, or for resale in connection with, any distribution thereof. It
understands that the Warrant, the shares of Preferred Stock issuable upon
exercise thereof and the shares of Common Stock issuable upon conversion of the
Preferred Stock, have not been registered under the Securities Act of 1933, as
amended, nor qualified under applicable state securities laws.


                         17.3          Rule
144. It acknowledges that the Warrant, the Preferred Stock and the Common
Stock must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. It has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act.


                         17.4          Access
to Data. It has had an opportunity to discuss the Company’s business,
management and financial affairs with the Company’s management and has had the
opportunity to inspect the Company’s facilities.


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                         17.5          Accredited
Investor. Holder represents that it is an “accredited investor” within the
meaning of Rule 501, Regulation D of the Securities Act of 1933, as amended.


                         17.6          Market
Standoff Agreement. It agrees that in connection with the initial
registration of the Company’s securities that, upon the request of the Company
or the underwriters managing any new written public offering of the Company’s
securities, not to sell, make any short sale of, loan, grant an option for the
purchase of, or otherwise dispose of any Registerable
Securities (as defined in the Investor Rights Agreement) other than those
included in the registration without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time as may be
requested by the Company or such managing underwriters (not to exceed 180 days)
from the effective date of such registration, provided that the Company’s
officers, directors, and its shareholders who own at least five percent (5%) of
the Company’s voting equity are subject to the same restrictions.


          18.          Additional
Representations and Covenants of the Company. The Company hereby
represents, warrants and agrees as follows:


                         18.1          Corporate
Power. The Company has all requisite corporate power and corporate
authority to issue this Warrant and to carry out and perform its obligations
hereunder.


                         18.2          Authorization.
All corporate action on the part of the Company, its directors and shareholders
necessary for the authorization, execution, delivery and performance by the
Company of this has been taken. This Warrant is a valid and binding obligation
of the Company, enforceable in accordance with its terms.


                         18.3          Offering.
Subject in part to the truth and accuracy of Holder’s representations set forth
in Section 17 hereof, the offer, issuance and sale of the Warrant is, and the
issuance of Preferred Stock upon exercise of the Warrant and the issuance of
Common Stock upon conversion of the Preferred Stock will be exempt from the
registration requirements of the Securities Act, and are exempt from the
qualification requirements of any applicable state securities laws; and neither
the Company nor anyone acting on its behalf will take any action hereafter that
would cause the loss of such exemptions.


                         18.4          Stock
Issuance. Upon exercise of the Warrant, the Company will use its best
efforts to cause stock certificates representing the shares of Preferred Stock
purchased pursuant to the exercise to be issued in the individual names of
Holder, its nominees or assignees, as appropriate at the time of such exercise.
Upon conversion of the shares of Preferred Stock to shares of Common Stock, the
Company will issue the Common Stock in the individual names of Holder, its
nominees or assignees, as appropriate.


                         18.5          Certificate
and By-Laws. The Company has provided Holder with true and complete copies
of the Company’s Articles or Certificate of Incorporation, By-Laws, and each
Certificate of Determination or other charter document setting, forth any
rights, preferences and privileges of Company’s capital stock, each as amended
and in effect on the date of issuance of this Warrant.


                         18.6          Conversion
of Preferred Stock. As of the date hereof, each share of the Preferred
Stock is convertible into one share of the Common Stock.


                         18.7          Financial
and Other Reports. From time to time up to the earlier of the Expiration
Date or the complete exercise of this Warrant, the Company shall furnish to
Holder (i) within 90 days after the close of each fiscal year of the Company an
audited balance sheet and statement of changes in financial position at and as
of the end of such fiscal year, together with an audited statement of income
for such fiscal year; (ii) within 45 days after the close of each fiscal
quarter of the Company, an unaudited balance sheet and statement of cash flows
at and as of the end of such quarter, together with an unaudited statement of
income for such quarter; and (iii) promptly after sending, making available, or
filing, copies of all reports, proxy statements, and financial statements that
the Company sends or makes available to its shareholders and all registration
statements and reports that the Company files with the SEC or any other
governmental or regulatory authority.


8









IN WITNESS WHEREOF, the Company has caused this
Warrant to be duly executed by its officers, thereunto duly authorized this 5th
day of July, 2001.


VASCULAR INNOVATIONS, INC.


	
   

  	
   

  	
   

  
	
  By:

  	
  

  	
   

  
	
   

  	
  


  	
   

  
	
  Title: 

  	
  President & CEO

  	
   

  
	
   

  	
  


  	
   

  



9











	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  


Cardica, Inc. • 171 lefferson
  Drive, Menlo Park CA

  
	
   

  	
  


  	
  


  
	
   

  	
   

  	
            Tel
  (650) 326-5600 • Fax (650) 326-5655



  



EXHIBIT D


                    Reference
is hereby made to that certain Warrant dated July 5, 2001 issued by CARDICA, INC., formerly VASCULAR
INNOVATIONS. INC., a Delaware corporation (the “Company”), to VENTURE LENDING
& LEASING II, INC., a Maryland corporation (the “Holder”).


                    Notice
is hereby given pursuant to Section 4.5 of
the Warrant that the following adjustment(s) have been made to the Warrant:
describe adjustments, setting forth details regarding method of calculation and
facts upon which calculation is based.


          This
certifies that the Holder is entitled to purchase from the Company the
following:


          1)     21,429
shares at $2.80 per share


          2)     7,143
shares at $2.80 per share 


          3)     2,679
shares at $2.80 per share


          The Stock Purchase Price and the number of shares
purchasable under the Warrant remain subject to adjustment as provided in
Section 4 of the Warrant.


          Executed
this 27th day of June, 2003


CARDICA, INC.
formerly VASCULAR INNOVATIONS, INC.


  


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	



  
	
   

  	
   

  	
   

  	



  
	
   

  	
   

  	
  Name:

  	
  BERNARD HAUSEN

  
	
   

  	
   

  	
   

  	
  


  
	
   

  	
   

  	
  Title:

  	
  PRESIDENT AND CEO