exv10w7





Exhibit 10.7


AGREEMENT




     THIS AGREEMENT dated February 12, 2010 (this “Agreement”) is entered into by and between Kips
Bay Medical, Inc., a Delaware corporation (the “Corporation”) and Kips Bay Investments, LLC (the
“LLC”).



     WHEREAS, the Corporation, the LLC and Manny Villafana are parties to that certain Investment
Agreement dated July 19, 2007 (the “Investment Agreement”) whereby the Corporation, the LLC and
Manny Villafana reached certain agreements with respect to the formation, operation and
capitalization of the Corporation, including two loans made by the LLC to the Corporation in
aggregate principal amount of $3,000,000 as evidenced by a First Secured Convertible Promissory
Note and a Second Secured Convertible Promissory Note, each issued by the Corporation in favor of
the LLC dated as of July 19, 2007 (collectively, the “Notes”).



     WHEREAS, the Corporation and the LLC desire to enter into this Agreement in order to clarify
various issues that have taken place and have been further agreed upon relating to the Corporation
and the Notes.



     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the parties agree as follows:



     1. Previous Debt Conversion. The LLC previously converted the $3,000,000 of principal
that was due pursuant to the Notes to 4,800,000 shares of the Corporation’s Common Stock. $217,188
out of $467,188 of accrued interest that was due and owing on the Notes was converted to 347,389
shares of the Corporation’s Common Stock, and the remaining $250,000 of accrued interest was
inadvertently paid to the LLC in cash. Instead of payment of such $250,000 in cash, the LLC and
the Corporation hereby agree that the $250,000 was intended to be, and is hereby converted to
400,000 shares of the Corporation’s Common Stock, at a per share price of $0.625 as is set forth in
the Notes. The parties shall concurrent with this Agreement execute and acknowledge the Conversion
Notice in the form set forth on Exhibit A hereto reflecting such conversion. Upon execution of
this Agreement and such Conversion Notice and receipt of the conversion shares thereunder, the LLC
shall refund the $250,000 inadvertent cash payment.



     2. Entire Agreement. This Agreement together with the Conversion Notice described in
Section 1 constitutes the entire agreement between the parties hereto with respect to the subject
herein and supersedes all prior proposals, discussions, or agreements, whether written or oral,
relating to the subject matter herein. This Agreement may not be assigned by either party hereto
without the prior written consent of the other party.



     3. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without reference to the choice of law principles thereof.



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SIGNATURE PAGES FOLLOW]






 









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.



KIPS BAY MEDICAL, INC.




	 	 	 	 	 
	By:

	 	/s/ Manny Villafana
 

Its: Chairman & CEO
	 	 






KIPS BAY INVESTMENTS, LLC




	 	 	 	 	 
	By:

	 	/s/ Nader C. Kazeminy
 

Its: President
	 	 






 









 






EXHIBIT A



February 12, 2010




Kips Bay Medical, Inc.

3405 Annapolis Lane

Suite 200

Minneapolis, MN 55447




RE: CONVERSION NOTICE



Pursuant to Section 5 of the First and Second Secured Convertible Promissory Notes dated July 19,
2007 as issued by Kips Bay Medical, Inc. to the undersigned, the undersigned hereby elects to
convert the remaining $250,000 of accrued interest on such notes, which was previously
inadvertently paid to the undersigned in cash, to 400,000 shares of common stock of the Corporation
at a price of $0.625 per share.



Please issue a certificate for such common stock in the name of Kips Bay Investments, LLC.



Sincerely,




KIPS BAY INVESTMENTS, LLC




	 	 	 	 	 
	By:

	 	/s/ Nader C. Kazeminy
 

Its: President
	 	 






ACKNOWLEDGED BY:




KIPS BAY MEDICAL, INC.




	 	 	 	 	 
	By:

	 	/s/ Manny Villafana
 

Its: Chairman & CEO