exv10w36






Exhibit 10.36


DISTRIBUTION AGREEMENT



This DISTRIBUTION AGREEMENT (it, together with any Schedules thereto, (the
“Agreement”), between Kips Bay Medical, Inc. (“Manufacturer”) with an address
at 3405 Annapolis Lane, Suite 200, Minneapolis, MN 55447 and Systemed A.E.,
(“Distributor”) having a place of business at 307 Gr.
Lampraki Str. 184 51
Nikaia Athens, Greece (“Distributor”).




RECITALS




WITNESSETH:




     WHEREAS, Manufacturer is engaged in the design, development,
production and sale of the Products listed on Schedule 1; and



     WHEREAS, Distributor is in the business of selling medical products within
the Territory listed in Section 2 and desires to distribute the Products within
the Territory and to perform all necessary and appropriate marketing and customer
service functions in the Territory; and



     WHEREAS, Company and Representative wish to provide in writing for the terms
and conditions under which Distributor shall sell and market the Products in the
Territory.



NOW, THEREFORE, the parties hereto do hereby agree as follows:




1. DEFINITIONS



For purposes of this Agreement, the following words, terms and phrases, where
written with an initial capital letter, shall have the meanings assigned to them
in this Section 1 unless the context otherwise requires:




     1.1. “Change of Control” means (i) as to distributor, a change
in the ownership directly or indirectly of fifty percent (50%) or more of the
voting rights in Distributor and (ii) as to Manufacturer, the occurrence of the
following: any person (within the meaning of the Securities Exchange Act of 1934
as amended) is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) directly or indirectly of securities
of Manufacturer (not including in the securities beneficially owned by such
person, any securities acquired directly from Manufacturer or its affiliates other
than in connection with the acquisition by Manufacturer or its affiliates of a
business) representing fifty percent (50%) or more of the combined voting power of
Manufacturer’s then outstanding securities.



     1.2. “Customer” means those individual or entities licensed to
provide or prescribe medical devices in the Territory and that purchase Products
through Distributor.



     1.3. “Effective Date” has the meaning ascribed to it in Section 2 herein.



					
	 	 	 	 	 
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     1.4. “Ex Works (Incoterms 2000)” means the Manufacturer’s delivers
when the Products are placed at the disposal of the buyer at the Manufacturer’s premises,
which is currently located in Minneapolis, MN, USA.



     1.5. “Field of Use” means surgery.



     1.6. “Products” means collectively, those products that are available to
Distributor under this Agreement and are listed under the heading “Products” in Schedule
1 hereto, as such schedule may be revised from time to time upon the mutual written
agreement of the Parties or in accordance with the Section 4.1 herein.



     1.7. “Purchase Order” has the meaning ascribed to it in Section 3.3 herein.



     1.8. “Technical Documentation” means all documents prepared by Manufacturer
in the ordinary course of business that define the Product in terms of its intended use
and Product claims. Such documents may take the form of User Instruction, System Manuals,
Product Updates, Technical Bulletins but are not limited to such.



     1.9. “Territory” shall mean the geographic area specifically described in
Section 2 herein, as may be amended from time to time by written agreement of the parties
or in accordance with the Section 4.1 herein.



     1.10. “Warranty” has the meaning ascribed to it in
Section 9.2 herein.



TERMS OF AGREEMENT



2. APPOINTMENT AND TERRITORY



2.1. Effective as of November 1, 2010 (the Effective Date), subject to the
terms and conditions of this Agreement, Manufacturer hereby appoints Distributor as its
sole distributor within Greece (the Territory) to resell the Products to Customers in the
Field and the Territory, and Distributor accepts such appointment. Distributor shall not
solicit customers for the Products outside of the Territory or the Field, or otherwise
actively distribute, market or sell any Products outside of the Territory or the Field
without written permission from the CEO of the Manufacturer. Subject to Distributor’s
compliance with the terms and conditions hereof and during the Term, Manufacturer shall
not appoint another distributor for the resale of the Products to Customers in the Field
and the Territory.




     2.2. Manufacturer reserves the right to modify any of the Products and their
specification and to discontinue sale of any Product in accordance with Section 4.1
herein.



     2.3. Recognizing the end use of the Products in healthcare, Distributor agrees to
resell the Products only to Customers who have the technical skills and resources to use
the Product in accordance with applicable laws in the Territory and the standard of care
that could be reasonably expected in the healthcare industry.



     Distributor shall be an independent contractor, and no agency relationship, joint
venture or partnership between the parties is created or shall be implied hereby.
Distributor shall have no authority



					
	 	 	 	 	 
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to, and agrees not to, bind Manufacturer to any obligation whatsoever.
Distributor represents that it is competent under the laws of Territory to enter
in to the Agreement and to act hereunder.




3. TERMS AND CONDITIONS




     3.1. Prices. Manufacturer shall sell the Products to Distributor at
the prices set forth on Schedule 1. Manufacturer has the right to modify prices for
any Products on sixty (60) days prior written notice to Distributor but no more than
once a year for the same Product. Within thirty (30) days of receipt of this notice,
Distributor may order, at the pre-notice price, up to no more than the balance of the
current year’s sales forecast as indicated in Schedule 3.



     3.2. Payment and Terms and Conditions. Prices quoted by Manufacturer
shall be paid in U.S. Dollars and are Ex Works (Incoterms 2000) Manufacturer’s
production facility in the United States. Distributor shall ensure that Products
shipped are stored and handled in accordance with the specifications Manufacturer
shall from time to time provide. Additional payment terms and conditions are set forth
in Schedule 2 and may be modified by Manufacturer with a ninety (90) day prior notice.
Manufacturer reserves the right at any time to undertake legal proceedings to recover
overdue payments due from Distributor.



     3.3. Placement of Orders. Distributor shall place all orders with
Manufacturer at Manufacturer’s Principal Office by facsimile or e-mail. Manufacturer
shall promptly notify Distributor of any Purchase Orders (or parts of Purchaser
Orders) accepted, rejected or delayed. No Purchase Order shall be binding upon
Manufacturer until accepted by Manufacturer. Distributor may not modify any Purchase
Orders after acceptance by Manufacturer of such Purchase Order without Manufacturer’s
prior consent. The terms of this agreement supersede any terms appearing on
Distributors purchase order form.



4. RESPONSIBILITIES OF MANUFACTURER




     4.1. Manufacture of Products. Manufacturer shall use commercially
reasonable efforts to maintain the necessary manufacturing capability to fill all
orders for Products received from Distributor and accepted pursuant to the provisions
of this Agreement. In the event of a Product shortage for any reason, Manufacturer
shall have the right to allocate or apportion available Products among its customers
as Manufacturer, in the exercise of its discretion, and upon prior consultation with
Distributor, deems appropriate, without incurring any liability to Distributor.
Manufacturer may discontinue the manufacture or sale of any Products upon twelve (12)
months’ prior written notice to Distributor. Manufacturer may materially alter the
performance of any or all of the Products upon ninety (90) days prior notice to
Distributor. Notwithstanding the foregoing, Manufacturer may discontinue the
manufacture and sale of any Product at anytime and without notice to Distributor, if
such discontinuance is required, directly or indirectly, by any regulatory agency.



     4.2. Brochures, Bulletins, Etc. Manufacturer shall, without charge,
furnish to Distributor reasonable quantities of sales brochures and Technical
Documents adequate to describe the products in the English language, which quantities
will be agreed upon by the Parties.



     4.3. Training. Manufacturer shall provide initial, comprehensive training
to qualified personnel of Distributor at the Manufacturer’s facilities, or at a
location selected by Manufacturer. There will be no charge for this training, or the
training material, the contents of which will be determined by



					
	 	 	 	 	 
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Manufacturer and Distributor. In connection with such initial, comprehensive
training, Distributor shall pay for its employees’ salaries and their travel and
travel-related expenses, including meals, lodging and other living expenses. In
addition Manufacturer shall provide additional, follow-up training, as mutually
agreed by the Parties, at Distributor’s facility. In connection with such follow-up
training, Manufacturer shall pay for its own employees’ salaries and their travel and
travel-related expenses, including meals, lodging and other living expenses. For
training situations not covered by the above, both Parties agree to discuss how to
equitably share the travel and related expenses.




     4.4. Technical and Labeling for Regulatory Filings. Without prejudice
to Section 5.9, as appropriate, Manufacturer shall provide all technical and labeling
information it maintains in the ordinary course of business that is necessary for
regulatory filings in the Territory. Manufacturer will provide updates as and when
modifications are made to Products



5. RESPONSIBILITIES OF DISTRIBUTOR




     5.1. Opening Order. Distributor agrees to purchase, on or before the
effective date a minimum level of inventory to fulfill orders within the territory.
The minimum order shall consist of no less than 10 units and shall include all 3
catalog order numbers listed in Schedule 1. The opening order shall be subject to all
terms outlined in Schedule 2 of this agreement.



     5.2. Best Efforts. Distributor shall devote its best efforts to the
promotion, sale and servicing of the Products to Customers in the Territory.
Distributor shall, at its expense: (a) include the Products in its appropriate
catalogs, promotional mailings and like publications; (b) develop, prepare and place
advertising concerning the Products in appropriate media or through direct mail; (c)
exhibit the Products at appropriate trade shows and inform Manufacturer at least 30
days in advance of trade shows; (d) conduct appropriate market research as it deems
necessary or desirable, and (e) render other services customarily rendered by a
distributor of medical products or as reasonably requested by Manufacturer.
Manufacturer shall have the right to prior review and to approve (or not approve) any
and all copy, layout or other advertising, promotional or other distributed material,
which shall not be used by Distributor prior to Manufacturer’s approval. Distributor
shall discuss strategy and Product positioning with Manufacturer and shall use its
best efforts to market and position the Products in accordance with the
recommendations of Manufacturer.



     5.3. Modified and New Products. Distributor shall provide timely
comprehensive information to its Customers with respect to newly available Products,
discontinuance of Products and changes in existing Products, including, but not
limited to, performance specification changes.



     5.4. Competitive Products. In furtherance of its best efforts duties, and
in recognition of the unique healthcare and related responsibilities in connection
with the distribution of the Products, during the Term of this Agreement and for six
(6) months thereafter, Distributor shall not anywhere in the Territory market or sell
any product or material that performs substantially the same function as, or competes
with, the Products as defined in Schedule 1. During the Term and for five (5) years
thereafter, Distributor shall not manufacture or reproduce, or cause to be
manufactured or reproduced, anywhere in the Territory any product or material that
performs substantially the same function as, or competes with, the Products, without
limitation on the exercise by Manufacturer of its industrial and intellectual property
rights.



					
	 	 	 	 	 
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	 	CONFIDENTIAL
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     5.5. Competence of Personnel. Distributor shall have an
adequate number of technically competent personnel for sales and after-sales
service of the Products. Distributor shall designate one person among its
personnel who will be Manufacturer’s primary contact person within Distributor’s
organization. Distributor shall allocate the necessary resources to the
distribution of the Products, in consideration of the market size, the market
penetration over time and the Product sales agreed upon by Distributor and
Manufacturer in Schedule 3.



     5.6. Translation of Technical Documents. As required by local
regulatory and for marketing purposes, Distributor shall translate Technical
Documents into the local language(s) of Customers and shall revise such
translation in accordance with the changes to the Technical Documents that may
be made from to time by Manufacturer. Such translation shall at a minimum meet
all regulatory requirements of the Territory (and any jurisdiction therein), be
a literal translation of documents provided in English, and be of a standard
deemed appropriate for medical products and comparable with that provided for
other products sold into the health care market in the Territory. Distributor
will provide any documents translated into the local language to Manufacturer
for review and shall revise such translation according to Manufacturer’s
comments.



     5.7. Training of Customers. Distributor shall, prior to shipment,
provide to each Customer, Product storage and use instructions, and shall
provide its Customers with adequate training and support within the first 15
days after delivery to a Customer of the first batch of Products. Full use will
be made of training material and Technical Documentation supplied by
Manufacturer.



     5.8. Inventory. Distributor shall maintain inventory at levels
which will ensure product availability to support sales targets as defined in
Schedule 3. Distributor agrees to exercise care over inventory while under its
control. If any inventory is lost, damaged, or otherwise found to be unsuitable
for use, it’s disposal shall be reported back to Manufacturer and records are
maintained.



     5.9. Additional Labeling. Distributor is responsible for applying
any additional required label information to Product received from Manufacturer.



     5.10. Product Registration in Territory. Distributor shall be
responsible for registering the Products in the Territory (and any jurisdiction
within the Territory, where applicable) and bear all costs. At any time, the
Manufacturer may hold the Product registration in the Territory, in which case
Manufacturer will reimburse Distributor for reasonable, out-of-pocket costs
incurred in obtaining the registration.



     5.11. Compliance Audit. Distributor may be subjected to quality and
compliance audit by mutual agreement with Manufacturer one time per year with
minimum of 60 day notification by letter, facsimile, or electronic mail.
Manufacturer will provide an audit agenda at least 30 days in advance of the
audit activity. Distributor will have written procedures and specifications that
include assignments of responsibility for managing customer complaints, handling
adverse events or post market surveillance, and storage handling and shipping
manufacturer’s products.



     5.12. Regulatory Compliance. Distributor shall advise Manufacturer
promptly of all government regulations affecting the importation, use, sale,
record maintenance and disposal of the Products and shall be responsible for
compliance therewith. Without limiting the foregoing and without prejudice to
Section



					
	 	 	 	 	 
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5.13 herein, Distributor shall obtain from competent governmental authorities such
import permits, licenses, exemptions from customs duties and governmental approvals and
consents required in connection with the execution and performance of this Agreement.
[Note- exemption to this clause is explained in 5.9]. Distributor shall comply with all
applicable Territory laws, rules and regulations and shall neither cause nor permit any
activity that is illegal under, or would cause Manufacturer to be in violation of any law,
decree, rule or regulation in the Territory or in the United States of America.



     5.13. Customer Complaints, Inquiries/Technical Support. Distributor will be
responsible as the first point of contact for technical support with the Customer.
Distributor will further provide technical support on the usage of Products by the Customers
based upon information supplied by Manufacturer, at no cost to Manufacturer or to the
Customers. Customer feedback, the occurrence of incidents and/or serious public health
threats will be reported, in writing, by Distributor to Manufacturer with three (3) business
days. Without prejudice to the preceding sentence, if Distributor is obligated by Territory
laws to report such occurrence to regulatory authorities in the Territory, Distributor shall
report the occurrence first or simultaneously to Manufacturer. Distributor will also provide
a direct line of communication with Manufacturer for matters of vigilance and post-market
surveillance (early warning) in accordance with the local regulatory requirements of the
Territory. Distributor shall provide Manufacturer with any desirable assistance in relation
to the suspension or withdrawal of a Product, which may be decided by Manufacturer in its
sole discretion or required by any competent authorities in the Territory. In this respect,
in accordance with Manufacturer’s instructions, Distributor shall, without limitation, (i)
recall any batch of products, (ii) reimburse its Customers for the price of the Products
recalled; (iii) hold, destroy or send back to Manufacturer the Products recalled; and (iv)
provide Manufacturer with a certificate of destruction or the Products recalled where
applicable. Manufacturer shall reimburse Distributor for Distributor’s reasonable,
out-of-pockets costs arising from a Product recall.



     5.14. Insurance. Distributor shall subscribe and maintain throughout the Term
insurance covering public liabilities that may arise out of the distribution of the Products
in the Territory. The extent and level of such insurance shall conform to local industry
practice in the medical device industry. Distributor shall provide Manufacturer, at any time
upon Manufacturer’s request, a copy of such insurance policy as well as an updated
certificate of payment of the insurance fee.



     5.15. Books and Records. On a permanent basis, Distributor shall keep at its
principal place of business, complete and accurate books, records and computerized data
bases (with backup copies to be made daily) in which shall be entered the name and address
of each purchasing Customer, the date and price of each such purchase, the lot number (and
serial number) of such Product and the expiration date of such Product as well as any other
records required by Territory laws from a distributor of the Products in the Territory.
During business hours and upon reasonable notice these books and records, and any other
documents, reports or other records which relate to Manufacturer’s business shall be open to
examination, including inspection and copying, by Manufacturer, in each case at
Manufacturer’s request and expense.



     5.16. Proprietary Information and Trade Secrets. Distributor shall not use or
disclose any information provided to it by Manufacturer concerning the Products, technology,
proposed new products, marketing plans of Manufacturer that Manufacturer shall designate as
“Confidential’ or “Proprietary,” except as specifically contemplated by this Agreement. For
purpose of this Agreement, all information that Manufacturer communicates to Distributor
that is not intended to be communicated to Customers,



					
	 	 	 	 	 
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shall be deemed to be “Confidential” and “Proprietary.” Distributor shall notify
Manufacturer of any actual or suspected infringement or misappropriation of any of
Manufacturer’s patents, copyrights, proprietary information or trade and service marks and
shall fully cooperate with and assist Manufacturer in any legal action that Manufacturer
elects to bring to prevent or redress such violations of its rights.




     5.17. Catalog and Product Labels. Distributor may affix its label on catalogs
and products being distributed by Distributor in the Territory during the Term, provided
that Manufacturer shall have been provided with a catalog and product with Distributor’s
label affixed in the same manner in which the products will be
distributed. In no way may
these labels remove or alter the identity of Manufacturer and relevant product information
required by Government Regulations. If Manufacturer shall reasonably object to the manner
in which such label is affixed, Distributor shall promptly cease any such use and change
its use to comply with Manufacturer’s requirements.



     5.18. Review of Practices. Periodically, and at least quarterly, Manufacturer
and Distributor shall review Distributor’s marketing and selling strategy, sales growth,
training of Customers, inventory, computer interfacing activities and other practices with
a view toward maximizing Customer use of and satisfaction with the Products. Distributor
shall make all relevant documents and records available to Manufacturer or its designee at
Manufacturer’s request.



6. RIGHTS TO PROPERTY OF MANUFACTURER




     6.1. Marks. Manufacturer hereby authorizes Distributor to use, on a
nonexclusive basis for the Term, without cost to Distributor other than payment for the
Products, the trademark “eSVS Mesh” and any other trademarks, service marks or trade names
(The Mesh) used by Manufacturer to identify the Products, solely for Distributor’s
distribution of Products and related performance under this Agreement. The Marks and the
goodwill associated with the Marks are the exclusive property of Manufacturer. Distributor
shall not (a) use the Marks as part of any composite mark including any elements not
approved in advance in writing by Manufacturer, (b) challenge the validity or
enforceability of the Marks during the Term or (c) acquire any proprietary right in the
Marks by reason of any activities under this Agreement or otherwise. All uses of the Marks
by Distributor and any additional goodwill created thereby shall inure to the exclusive
benefit of Manufacturer. Manufacturer shall, at all times during the Term on reasonable
notice, have the right to inspect the materials and services on or in connection with which
the Marks are used in order to assure Manufacturer that Manufacturer’s quality standards
relating to the Products and distributor’s servicing and other mark-pertinent provisions of
this Agreement are being observed. If Manufacturer shall at any time reasonably object to
any use to which the Marks are put, Distributor shall promptly cease any such use.



7. WARRRANTY AGAINST CORRUPT PRACTICES




     7.1. Distributor shall be bound by, abide by and strictly comply with both the
letter and spirit of the United States Foreign Corrupt Practices Act of 1977 and any
amendments to that Act. Distributor shall not make, or permit to be made, any payment to
any official or employee of the Government of their Territory, of any territory thereof or
of any department or instrumentality thereof to affect or influence any act or decision of
any federal, state or local government or any department, agency or instrumentality.



8. DURATION AND TERMINATION




					
	 	 	 	 	 
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     8.1. Term of Agreement. The initial term of this Agreement (the
“Term”) shall commence on the Effective Date noted in Section 2.1 and will continue for a
period of three years thereafter, unless sooner terminated pursuant to Section 8.2. This
Agreement will automatically be renewed and extended for an additional three year term
provided that Distributor has met the sales forecast indicated in Schedule 3, as amended
each year, and has maintained compliance with the terms and conditions of this agreement
throughout the initial term. Distributor will be deemed to have met the sales forecast
each year if Distributor attains sales levels agreed to in Schedule 3 and at least 75% of
Product purchased by Distributor has been sold to Customers during that year. In the
event of any extension, the Parties agree that new Products Sales Forecasts will be
established for periods after the current Term expires. If there shall be any delay in
shipment due to the fault of Manufacturer, the periods in which the Forecasted Sales must
be met shall be extended for a corresponding amount of time and the Parties shall amend
Schedule 3 accordingly.



     8.2. Immediate termination. Either Party may terminate this Agreement
immediately upon occurrence of any one or more of the events contemplated in this
Section 8.2.




     8.2.1. Failure to cure a default under this Agreement within thirty (30) days
after the other Party has given written notice of such default,




     8.2.2. Failure by Distributor to meet its Sales for the Territory as set forth in
Schedule 3 (except if such failure is the result of Distributor’s not having received
its supply of Products from Manufacturer), and failure by Distributor to cure such
default within sixty (60) days following written notice from Manufacturer of such
default.




     8.2.3. Immediately upon written notice by one Party to the other of such Party’s
election to terminate this Agreement as a result of the bankruptcy of insolvency of
the other Party or the appointment of a receiver or trustee for assets of the other
Party.




     8.2.4. On the 30th day following written notice by Manufacturer to
Distributor of Distributor’s unauthorized assignments or transfer of this
Agreement or unauthorized sales to customers outside Distributor’s Territory.




     8.2.5. In the event of Manufacturer’s Change of Control, and Manufacturer’s
beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) desires to terminate this Agreement, Manufacturer may terminate this
Agreement upon ninety (90) days prior notice and shall, within thirty (30) days
following completion of all obligations of Distributor in Section 8.3 pay to
Distributor an amount equal to fifty (50%) of all accepted Product order amounts by
Distributor to Manufacturer during the final twelve (12) months of the term of the
Agreement.



     8.3. Actions Upon Termination. Upon the termination of this
Agreement, Distributor and Manufacturer, as indicated, shall comply with the
requirements of this Section 8.3.




     8.3.1. Distributor shall pay in full any amounts due to Manufacturer.




     8.3.2. Distributor shall destroy any unsalable Product inventory and provide
Manufacturer with a certificate of destruction.



					
	 	 	 	 	 
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     8.3.3. Distributor shall also promptly discontinue Product sales
and return to Manufacturer or its nominee any and all (i) sales, use, safety
and efficacy data (in such form as it shall then exist); (ii) promotional,
labeling and sales training material and (iii) Technical Documents, then in
Distributor’s possession.




     8.3.4. Distributor shall assign to Manufacturer and deliver to
Manufacturer any product registrations (as discussed in Section 5.9), import
permits, health registrations, licenses, exemptions from customs duties and
governmental consents of any nature which Distributor may have or retain
directly or indirectly in connection with the Products imported, sold and/or
distributed under this Agreement. Manufacturer will pay any reasonable,
out-of-pocket costs incurred by Distributor in conjunction with these
assignments.




     8.3.5. Distributor shall immediately cease to use the Marks and
any confidential, proprietary or secret information.



     8.4. Continuing Obligation. Following any termination of this
Agreement, Distributor shall provide such assistance to Manufacturer and any
subsequent distributor as Manufacturer may reasonably request in order to ensure
the prompt and complete satisfaction of any Customer requirements, preservation
of books and records as discussed in Section 5.14 and compliance with regulatory
requirements.



     8.5. No Indemnity. Distributor shall not be entitled to any
indemnity of any kind whatsoever upon termination or expiration of this Agreement
in accordance with its terms.



9. INDEMNIFICATION; WARRANTY; LIMITATION OF LIABILITY




     9.1. Indemnification. Manufacturer and Distributor shall each
at all times indemnify and hold the other Party and its stockholders, directors,
officers, employees and agents harmless from and against all liabilities, losses,
claims, damages and expenses, including reasonable attorneys’ fees and
disbursements, arising out of or in connection with the breach of any covenant,
agreement, warranty or representation made by it herein. The other Party shall
have the right to participate in the defense, at its own expense, with counsel of
its own choosing. In addition and without prejudice to the preceding paragraph,
absent a material breach by Manufacturer of its obligation hereunder, Distributor
shall indemnify Manufacturer and its stockholders, directors, officers, employees
and agents against, and hold them harmless from, all claims, losses, damages,
liabilities and expenses, including reasonable attorneys’ fees and disbursements
incurred by Manufacturer arising out of or in connection with any resale by
Distributor of Products including, without limitation, any representations, oral
or written, made by Distributor or its stockholders, directors, officers,
employees or agents relating to the Products.



     9.2. Warranty. Manufacturer agrees to extend to Distributor and to
Distributor’s Customers Manufacturer’s standard Product warranties, as modified
from time to time by Manufacturer, the current version of which is attached as
Schedule 4.



     9.3. Limitation of Liability. EXCEPT FOR THE WARRANTY PROVIDED FOR
IN SECTION 9.2, MANUFACTURER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND
AND THE WARRANTIES OF MANUFACTURER ARE IN LIEU OF ALL OTHER WARRANTIES, INCLUDING
BUT NOT LIMITED TO ANY IMPLIED WARRANTY. EXCEPT FOR



					
	 	 	 	 	 
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THE WARRANTY PROVIDED FOR IN SECTION 9.2, MANUFACTURER MAKES NO WARRANTY OF
ANY KIND TO CUSTOMERS OF DISTRIBUTOR HEREUNDER. UNDER NO CIRCUMSTANCES SHALL
MANUFACTURER BE RESPONSIBLE FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE PRODUCT.




10. MISCELLANEOUS.




     10.1. No implied Waivers. A failure by one of the Parties to
assert its rights for or upon any breach of this Agreement shall not be deemed
to be a waiver of such rights, nor shall such waiver be implied from the
acceptance of any payment.



     10.2. Force Majeure. Neither Part shall be liable to the Party or in
default hereunder by reason of any delay or omission caused by epidemic, fire, labor
disputes, governmental law or regulations, executive or court order, act of God or
public enemy, war, civil commotion, earthquake, flood, accident or explosion.



     10.3.
Notices. All notices given pursuant to this Agreement shall be in
writing in the English language and shall be deemed effective on the day they are
received by certified air mail or confirmed facsimile addressed to the other Party at
the address or facsimile number stated below.



	 	 	 	 	 

	If to Distributor

	 	 
	 	Systemed A.E.
	 

	 	 	 	307 Gr. Lampraki Str.
	 

	 	 	 	184 51 Nikaia
	 

	 	 	 	Atens, Greece
	 
	 	 	 	 
	If to Manufacturer

	 	
	 	Kips Bay Medical, Inc.
	 

	 	 	 	Attn: Chief Executive Officer
	 

	 	 	 	3405 Annapolis Lane, Suite 200
	 

	 	 	 	Minneapolis, MN 55447






     10.4.
Severability. If and for so long as any provision of this Agreement
is deemed to be judged invalid for any reason whatsoever, such invalidity shall not
affect the validity or operation of any other provision of Agreement except only so
far as shall be necessary to give effect to the construction of such invalidity, and
any such invalid provision shall be deemed severed from this Agreement without
affecting the validity of the balance of this Agreement.



     10.5. Government Law and Consent to Jurisdiction. THIS AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND
NOT THE LAWS OF CONFLICTS) OF THE STATE OF MINNESOTA, USA. Distributor hereby
irrevocably agrees that the United States District Court for the District of Minnesota
has exclusive jurisdiction to the fullest extent permitted by law to hear all claims
and disputes which may arise out of or in connection with this Agreement.



					
	 	 	 	 	 
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	 	CONFIDENTIAL
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     10.6.
Entire Agreement; Amendments. Except as
otherwise expressly provided, no agreement varying or extending the
terms of this Agreement shall be binding on either Party unless covered
by an addendum signed by an authorized representative of each Party.



     10.7. Assignability. Distributor shall not assign or
transfer this Agreement in whole or in part without the prior written
consent of Manufacturer. Upon occurrence of a Change of Control of
Distributor, Manufacturer may immediately terminate this Agreement.
Manufacturer may assign this Agreement to an affiliate or any successor
in interest of all or substantially all of its business, or a business
division, whether by merger, operation of law, assignment, purchase or
otherwise.



     10.8. Survival. All provisions needed to implement
performance of duties owed prior to termination of this Agreement, such
as payment, maintenance of data and confidentiality, shall survive the
Term.



EXECUTION



The
Parties have duly executed this Agreement through their duly
authorized representatives on the 22 date of November 2010, whereupon
it enters into full force and effect in accordance with its terms.




	 	 	 	 	 	 	 

	Kips Bay Medical, Inc.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date: 22 November 2010

	 	By
	 	/s/ Manny Villafana
 

	 	 
	Place of execution:

	 	Name:
	 	Manny Villafana	 	 
	 

	 	Title:
	 	Chairman & CEO	 	 
	 
	 	 	 	 	 	 
	[Name of Distributor]
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date 15/11/2010

	 	By:
	 	/s/ Tzerefos Spyridon
 

	 	 
	Place of Execution

	 	Name:
	 	Tzerefos Spyridon	 	 
	 

	 	Title:
	 	CEO	 	 






	 	 	 

	* SYSTEMED * S.A.

	 	 
	MEDICAL SUPPLIES
	 	 
	GRIG, LAMBRAKI 307 NIKAIA
	 	 
	18451 ATHENS GREECE
	 	 
	TEL./FAX +30 2104001725
	 	 






					
	 	 	 	 	 
	Kips Bay Medical, Inc.
	 	CONFIDENTIAL
	 	page. 11






 









 






SCHEDULE 1

PRODUCTS DEFINITION



The eSVS Mesh is a highly flexible, kink-resistant tubular prosthesis made of
knitted nitinol wire. It fits externally over the saphenous vein and is designed to
provide strength and support for improving graft patency.



Indications for Use:



The eSVS Mesh is indicated for improving saphenous vein bypass graft patency in
patients undergoing coronary artery bypass graft procedures utilizing autologous
saphenous vein grafts with external diameters from 3.6 mm to 7.0 mm and double wall
thicknesses less than 1.4 mm.




Ordering Information:




	 	 	 	 	 	 	 	 	 
	 	 	Fits Saphenous Vein	 	 	 	 
	eSVS Mesh	 	Grafts Between:	 	Catalog Order	 	 
	Diameter	 	Minimum	 	Maximum	 	Number	 	Pricing
	3.5 mm
	 	3.6 mm
	 	4.1 mm
	 	eSVS 3.5
	 	USD $2,000
	4.0 mm
	 	4.2 mm
	 	5.4 mm
	 	eSVS 4.0
	 	USD $2,000
	4.5 mm
	 	5.5 mm
	 	7.0 mm
	 	eSVS 4.5
	 	USD $2,000






     Company Contact Information:



	 	 	 	 	 

	 

	 	Kips Bay Medical, Inc.
	 	Phone: +1.763.235.3540
	 

	 	3405 Annapolis Lane, Suite 200
	 	Fax: +1.763.235.3545
	 

	 	Minneapolis, MN 55447 USA
	 	www.kipsbaymedical.com






					
	 	 	 	 	 
	Kips Bay Medical, Inc.
	 	CONFIDENTIAL
	 	page. 12






 









 






SCHEDULE 2

PAYMENT TERMS


Payments



During the
first twelve (12) months of the initial term of this agreement,
payments are due with each order or remitted by irrevocable
documentary letter of credit issued per instructions provided by the
Manufacturer, confirmed by Manufacturer’s bank, currently US Bank
National Association, and payable sixty (60) days from the ship date. Thereafter, payments
are due net sixty (60) days from the date of Manufacturer’s invoice.




	 	 	 	 	 	 	 
	Payments by Draft:	 	Payments by Wire:
	Payee:

	 	Kips Bay Medical, Inc.
	 	To the Account of:
	 	Kips Bay Medical, Inc.
	Address:

	 	3405 Annapolis Lane
	 	Account:	 	 
	 

	 	Suite 200
	 	Bank name:
	 	US Bank National Association
	 

	 	Minneapolis, MN 55447 USA
	 	SWIFT Number	 	 
	 

	 	 	 	ABA Routing Number	 	 
	 

	 	 	 	Bank Address:
	 	800 Nicollet Mall
	 

	 	 	 	 	 	Minneapolis, MN 55402





Manufacturer will not invoice prior to the actual shipment of the product. Any
overdue amount may result in termination of this Agreement per Section 8.2.




Shipping Terms



Products are shipped Ex Works (Incoterms 2000) Manufacturer’s shipping point in
the United States. Legal title, control of, right of possession and risk of loss of
Products shall pass to Distributor upon shipment from Manufacturer’s shipping point in
the United States. Distributor shall pay for each order the price of the Products,
export packing and such shipping costs as may be directly incurred by Manufacturer for
such order. Distributor shall ensure that Products shipped are stored and handled in
accordance with the specifications Manufacturer shall from time to time provide.



Returning Products



Authorization must be obtained from Manufacturer before the return of any product.
A Returned Material Authorization (RMA) number will be given to you. Any returned
product packaging must be clearly labeled with the RMA number.



Any Product delivered to the Distributor in a damaged, defective, or nonconforming
condition may be returned for full credit or replacement, upon approval of
Manufacturer, within thirty (30) calendar days from the date of receipt by the
Distributor. Any product that has been opened or has broken package seals becomes the
property of the Distributor and may not be returned for credit or replacement.



Contact Manufacturer for information about credit for or replacement of any purchased
and unexpired products that are still in the original packaging (unopened and
undamaged). A restocking charge may also apply.




					
	 	 	 	 	 
	Kips Bay Medical, Inc.
	 	CONFIDENTIAL
	 	page. 13






 









 






SCHEDULE 3

SALES FORECAST



The following table lists the sales forecast levels for the eSVS MESH devices
which must be achieved by Distributor as of the end of the first six (6) months and
second six (6) months of this agreement. The sales forecast for the second and third
years of this agreement shall be mutually agreed upon no later than the
360th day from the effective date of this agreement and shall be added to
schedule 3 by mutual consent.




	 	 	 	 	 	 	 	 	 
	 	 	Sales Forecast
	Geographic Region	 	1st 6 months	 	2nd 6 months	 	Year 2	 	Year 3
	Greece
	 	10	 	15	 	 	 	 






SCHEDULE 4

PRODUCT WARRANTY




LIMITED WARRANTY AND DISCLAIMER



KIPS BAY MEDICAL, Inc. warrants that reasonable care has been used in the design and
manufacture of this instrument. This warranty is in lieu of and excludes all other
warranties not expressly set forth herein, whether express or implied by operation of
law or otherwise, including, but not limited to, any implied warranties of
merchantability of fitness for a particular purpose. Handling, storage, cleaning and
sterilization of this instrument as well as other factors relating to the patient,
diagnosis, treatment, surgical procedures, and other matters beyond KIPS BAY
MEDICAL’s control directly affect the instrument and the results obtained from its
use. KIPS BAY MEDICAL’s obligation under this warranty is limited to the repair or
replacement of this instrument and KIPS BAY MEDICAL shall not be liable for any
incidental or consequential loss, damage, or expense directly or indirectly from the
use of this instrument. KIPS BAY MEDICAL neither assumes, nor authorizes any other
person to assume for it, any other or additional liability or responsibility in
connection with this instrument. KIPS BAY MEDICAL assumes no liability with respect
to instruments reused, reprocessed or resterilized and makes no warranties, express
or implied, including but not limited to merchantability or fitness for a particular
purpose, with respect to the instrument.




					
	 	 	 	 	 
	Kips Bay Medical, Inc.
	 	CONFIDENTIAL
	 	page. 14