Document:

exv10w8

Exhibit 10.8

ASSIGNMENT AND LICENSE AGREEMENT

     This Agreement (this “Agreement”) is made as of October 9, 2007, among Medtronic,
Inc., a Minnesota corporation, or one or more of its Affiliates or assignees (“Medtronic”)
and Kips Bay Medical, Inc., a Delaware corporation, or one or more of its Affiliates (“Kips
Bay”).

WITNESSETH:

     WHEREAS, Kips Bay wishes to have Medtronic assign its interest in certain patents relating to
the brushed ePTFE vascular graft (the “Brushed Graft Product”) to Kips Bay.

     WHEREAS, Kips Bay wishes to have Medtronic grant to it an exclusive license to Medtronic’s
interest in certain patents relating to the external Saphenous Vein Stent vascular graft (the
“Mesh Graft Product”).

     WHEREAS, as soon as commercially possible after the completion of the assignment of the Mesh
Graft Patent Rights (as defined below) to Medtronic, Medtronic shall execute an Assignment of the
Mesh Graft Patent Rights to Kips Bay.

     WHEREAS, Kips Bay also desires to have Medtronic grant to it a non-exclusive license to the
necessary patents to allow Kips Bay to use platelet-poor plasma produced by the MagellanTM System to
manufacture the Brushed Graft Products.

     WHEREAS, Kips Bay and Medtronic are parties to a Services Agreement dated as of the date
hereof (the “Services Agreement”), whereby Medtronic agrees to provide services of its
technical personnel to Kips Bay in order to assist Kips Bay in the transfer of such patents and
related know-how to the Brushed Graft Product and the Mesh Graft Product.

     WHEREAS, Medtronic will transfer to Kips Bay certain assets in connection with the Brushed
Graft Product and the Mesh Graft Product, as further set forth in this Agreement.

     WHEREAS, following the date of this Agreement, Kips Bay will use its reasonable best efforts,
to develop and commercialize both the Brushed Graft Product and the Mesh Graft Product, and,
subject to the provisions of this Agreement, may cease to commercialize either or both of the
Brushed Graft Product and the Mesh Graft Product.

     WHEREAS, Kips Bay understands, and by signing this Agreement, expressly acknowledges that
Medtronic is currently pursuing confidential discussions regarding a sale of the MagellanTM System
to a third party.

     NOW THEREFORE, in consideration of the foregoing and the covenant and premises contained in
this Agreement, the parties agree as follows:

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ARTICLE 1

DEFINITIONS

1.1 Specific Definitions. As used in this Agreement, the following terms shall have the
meanings set forth or as referenced below:

     “Affiliate” of a specified person (natural or juridical) means a person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, the person specified. “Control” shall mean the ownership of at least 50% of the
shares of stock entitled to vote for the election of directors in the case of a corporation, and at
least 50% of the voting power in the case of a business entity other than a corporation.

     “CE Mark Approval” means approval for the marketing of either the Brushed Graft
Product or the Mesh Graft Product to allow for their full commercial distribution within the
European marketplace.

     “Commercial Sale” means after either CE Mark Approval or FDA Approval of either the
Brushed Graft Product or the Mesh Graft Product, all direct or indirect sales of either the Brushed
Graft Product or the Mesh Graft Product by Kips Bay to any third party other than its Affiliates,
Medtronic or Medtronic’s Affiliates, and other than clinical samples of either the Brushed Graft
Product or the Mesh Graft Product which are provided in the ordinary course of Kips Bay’s business
both before and after either CE Mark Approval or FDA Approval.

     “Confidential Information” means know-how, trade secrets, and unpublished information
disclosed (whether before or during the term of this Agreement) by one of the parties (the
“Disclosing Party”) to the other party (the “Receiving Party”) or generated under this Agreement,
excluding information which:

     (a) was already in the possession of Receiving Party prior to its receipt from the
Disclosing Party (provided that the receiving party is able to provide the disclosing party
with reasonable documentary proof thereof);

     (b) is or becomes part of the public domain by reason of acts not attributable to the
Receiving Party;

     (c) is or becomes available to the Receiving Party from a source other than the
Disclosing Party which source, to the best of Receiving Party’s knowledge, has rightfully
obtained such information and has no obligation of non-disclosure or confidentiality to the
Disclosing Party with respect thereto;

     (d) is made available by the Disclosing Party to a third party unaffiliated with the
Disclosing Party on an unrestricted basis;

     (e) has been independently developed by the Receiving Party without breach of this
Agreement or use of any Confidential Information of the other party; or

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     (f) has been or must be publicly disclosed by reason of legal, accounting or regulatory
requirements beyond the reasonable control, and despite the reasonable efforts, of the
Receiving Party, provided, however, that the Disclosing Party is given notice of the
disclosure requirement.

     For avoidance of doubt, the parties agree that all know-how assigned to Kips Bay under this
Agreement is Confidential Information of Kips Bay and shall also be deemed Confidential Information
received by Medtronic from Kips Bay under the Services Agreement executed this same date. All
Confidential Information disclosed by one party to the other under this Agreement shall be in
writing and bear a legend “Proprietary,” “Confidential” or words of similar import or, if disclosed
in any manner other than writing, shall be preceded by an oral statement indicating that the
information is proprietary or confidential, and shall be followed by transmittal of a reasonably
detailed written summary of the information provided to the receiving party with identification as
Confidential Information designated as above within thirty (30) days.

     “Expiration” or “Expired” means, with respect to a particular patent, the
patent’s expiration, abandonment, cancellation, disclaimer, award to a third party (other than a
licensor of a party or its Affiliates of a patent controlled by such party or its Affiliates) in an
interference proceeding, or declaration of invalidity or unenforceability by a court or other
authority of competent jurisdiction (including final rejection in a re-examination or re-issue
proceeding).

     “FDA” means the United States Food and Drug Administration or any successor entity
thereto.

     “FDA Approval” means approval by the FDA for marketing of either the Brushed Graft
Product or the Mesh Graft Product to allow for their full commercial distribution within the United
States marketplace.

     “Licensed Patent Rights” means the patents necessary to allow Kips Bay to use
platelet-poor plasma produced by the MagellanTM System to manufacture the Brushed Graft Product.

     “Mesh Graft Patent Rights” means the patents or patent applications set forth on
Exhibit A attached hereto.

     “Net Sales” means gross sales of (i) the Brushed Graft Product, (ii) the Mesh Graft
Product, or (iii) any combination of the Brushed Graft Product and the Mesh Graft Product, by Kips
Bay and its Affiliates and permitted sub-licensees to third parties, less (a) any refunds
(including actual amounts credited for rejects, defects and returned product), credits, and other
customary customer allowances, (b) any discounts and rebates, (c) any sales, use, occupation, or
excise taxes, duties or other governmental charges, (d) any freight, postage, or insurance charges,
and (e) other customary adjustments.

     “Royalty-Bearing Product” means any product that, but for the licenses granted herein,
would infringe in the country where such product is manufactured, used, imported, sold, or offered for sale on a Valid Claim of any Unexpired patent that is included within the
Transferred Patent Rights or the Mesh Graft Patent Rights.

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     “Transferred Patent Rights” means the patents or patent applications set forth on
Exhibit B attached hereto.

     “Transferred Trademarks” means the trademarks set forth on Exhibit C attached hereto
relating to the Brushed Graft Product or the Mesh Graft Product.

     “Unexpired” shall mean a patent that has not Expired.

     “Valid Claim” means a claim of an issued, Unexpired patent, which has not been: (i)
held invalid, unpatentable or unenforceable by a final decision, which was not appealed or is
unappealable, of a court of competent jurisdiction, an administrative agency having authority over
patents, or (ii) admitted to be invalid, unpatentable or unenforceable by the holder by reissue,
disclaimer or otherwise.

     1.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement
and shall have the meaning indicated throughout this Agreement.

     1.3 Definitional Provisions.

     (a) The words “hereof,” “herein,” and “hereunder” and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any particular
provisions of this Agreement.

     (b) Terms defined in the singular shall have a comparable meaning when used in the
plural, and vice-versa.

     (c) References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to
one of the Exhibits or Schedules attached to or referenced in this Agreement, and references
to an “Article” or a “Section” are, unless otherwise specified, to one of the Articles or
Sections of this Agreement.

     (d) The term “person” includes any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency thereof.

     (e) All payments due hereunder shall be paid in U. S. currency and all references to
“$” hereunder shall mean the U.S. dollars.

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ARTICLE 2

ASSIGNMENT AND LICENSE

     2.1 Medtronic agrees, for good and valuable consideration, the sufficiency of which is
acknowledged by the parties, to transfer and hereby transfers, sells and assigns to Kips Bay its
rights in the Transferred Patent Rights and any improvements in such Transferred Patent Rights.

     2.2 Upon execution of this Agreement, Medtronic shall execute an Assignment of the Transferred
Patent Rights in the form set forth in Exhibit D attached hereto. Medtronic shall, at Medtronic’s
expense, for the purpose of conveying all its right, title and interest to the Transferred Patent
Rights, do all necessary things and execute all necessary documents transferring the Transferred
Patent Rights in accordance with the requirements of local law to Kips Bay and cause any of its
employees or agents to do the same.

     2.3 As a material part of the consideration for this Agreement, Kips Bay agrees that Kips Bay
is receiving the Transferred Patent Rights and the Licensed Patent Rights in “AS-IS” condition and
that there is no warranty by Medtronic that the Transferred Patent Rights, the Transferred Patent
Rights and the Licensed Patent Rights are fit for any particular purpose. Kips Bay acknowledges
that except as provided otherwise in this Agreement, it is not relying upon any representation,
statement or other assertion with respect to Transferred Patent Rights and the Licensed Patent
Rights. The provisions of this section shall survive the closing of this transaction.

     2.4 License Grants to Kips Bay.

     (a) Subject to the terms and provisions hereof, Medtronic hereby grants to Kips Bay a
worldwide, non-sublicensable (except as set forth in Section 2.5), non-transferable (except as set
forth in Section 5.3), non-exclusive license to the Licensed Patent Rights to use platelet-poor
plasma produced by the MagellanTM System to manufacture the Brushed Graft Product.

     (b) (i) except as is set forth in Section 3.2 and subject to the terms and provisions hereof,
Medtronic hereby grants to Kips Bay a worldwide, non-sublicensable (except as set forth in Section
2.5), non-transferable (except as set forth in Section 5.3), irrevocable, exclusive license to the
Mesh Graft Patent Rights, and (ii) as soon as commercially possible after the completion of the
assignment of the Mesh Graft Patent Rights to Medtronic by the University of Cape Town, South
Africa and Doctor Peter Zilla, Medtronic shall execute an Assignment of the Mesh Graft Patent
Rights and any improvements in such Mesh Graft Patent Rights in the form set forth in Exhibit D
attached hereto.

     (c) Medtronic is currently exploring the sale of the MagellanTM System. In such proposed
divestiture of the MagellanTM System, Medtronic would use its reasonable efforts to retain patents,
if any, directly related to the use of MagellanTM System-derived platelet-poor plasma for the
manufacture of Brushed Graft Product technology, or secure Kips Bay a license for such patents.
Medtronic would also provide Kips Bay with a non-exclusive license to use platelet-poor plasma
produced by the MagellanTM System to manufacture the Brushed Graft Product technology. The terms of such non-exclusive license would be on terms no less

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favorable than those set forth in Exhibit E, and any costs and expenses of such non-exclusive license would
be the responsibility of Kips Bay. Upon the divestiture of the MagellanTM System, however, any
purchases of the MagellanTM System by Kips Bay would be on such terms as may be determined by Kips
Bay and the purchaser of the MagellanTM System.

     2.5 Sublicense. Kips Bay may not sublicense any of its rights granted under Section
2.4(a), (b) or (c), except that Kips Bay may grant sublicenses to its Affiliates, and distributors
and manufacturers who distribute or manufacture a Royalty Bearing Product for Kips Bay, provided
that (i) Kips Bay shall cause such sublicensee to comply with all of Kips Bay’s obligations
hereunder, and (ii) any such sublicense granted by Kips Bay shall terminate automatically upon the
earlier of such sublicensee ceasing to be an Affiliate of Kips Bay or termination of this
Agreement.

     2.6 Control of Patents.

     (a) As between the parties, Kips Bay shall have the sole and exclusive right, in Kips Bay’s
absolute discretion, to exercise complete control over the Transferred Patent Rights and the Mesh
Graft Patent Rights, including, but not limited to, the right to (i) prosecute or defend any
alleged infringement, misappropriation, misuse or other legal claim regarding the Transferred
Patent Rights and the Mesh Graft Patent Rights, and (ii) apply for, prosecute, or cause the
issuance, amendment, abandonment, maintenance, re-examination or reissue of any patents or patent
applications included within the Transferred Patent Rights and the Mesh Graft Patent Rights.
Medtronic shall cooperate with Kips Bay, including joining into an action (to the extent necessary
for a cause of action to be asserted), as reasonably requested by Kips Bay to provide such
information and assistance to Kips Bay in order for Kips Bay to proceed under (i) and (ii) of this
Section 2.6(a).

     (b) As between the parties, Medtronic shall have the sole and exclusive right, in Medtronic’s
absolute discretion, to exercise complete control over the Licensed Patent Rights, including, but
not limited to, the right to (i) prosecute or defend any alleged infringement, misappropriation,
misuse or other legal claim regarding the Licensed Patent Rights, and (ii) apply for, prosecute, or
cause the issuance, amendment, abandonment, maintenance, re-examination or reissue of any patents
or patent applications included within the Licensed Patent Rights. Kips Bay shall cooperate with
Medtronic as reasonably requested by Medtronic to provide such information and assistance to
Medtronic in order for Medtronic to proceed under (i) and (ii) of this Section 2.6(b). If
Medtronic decides to abandon any of the Licensed Patent Rights, before it does so, it shall give
Kips Bay the first right to purchase such Licensed Patent Rights.

     2.7 Receipt of Assets. In order to assist Kips Bay in developing, manufacturing and
marketing the Brushed Graft Product and the Mesh Graft Product, as soon as practicable after the
date of this Agreement, Medtronic will execute the Bill of Sale set forth in Exhibit F, and will
transfer and assign to Kips Bay the assets as set forth in Exhibit G, excluding any liabilities or
third-party claims relating thereto. In consideration for such assets, Kips Bay will pay
Medtronic, by wire transfer of immediately available funds, on the date hereof, $55,202.50.

     2.8 Transfer of Trademarks. On the date of this Agreement, Medtronic will execute the
Trademark Transfer Assignment set forth in Exhibit H, and will transfer to Kips Bay the

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trademarks set forth in Exhibit H, excluding any liabilities or third-party claims relating thereto. With
respect to any assigned trademarks that are intent-to-use applications where allegations of use
under Sections 1(c) or 1(d) of the Lanham Act have not yet been filed, Medtronic is assigning such
marks as part of the entire business or portion thereof to which the marks pertain as required by
Section 10 of the Lanham Act.

     2.9 Delivery of Patent Documentation. Within five (5) business days of the execution
date of this agreement, Medtronic shall deliver to Kips Bay all documentation pertaining to the
Transferred Patent Rights and the Mesh Graft Patent Rights.

ARTICLE 3

TERM AND TERMINATION

     3.1 Expiration of Licenses. Unless otherwise terminated pursuant to the provisions of
this Article 3, the licenses granted under Section 2.4 shall continue until such time as all
patents within the Licensed Patent Rights and the Mesh Graft Patent Rights, subject to the
provisions of Section 2.4(a) and (b), have Expired.

     3.2 Termination. Notwithstanding the provisions of Section 3.1 above, except as set
forth in Section 5.3, any or all of the licenses granted to Kips Bay in Article 2 may be terminated
and all of the Licensed Patent Rights and the Mesh Graft Patent Rights shall revert to Medtronic
(i) by Medtronic by written notice to Kips Bay (which notice shall be effective upon dispatch), in
the event that Kips Bay becomes insolvent, makes an assignment for the benefit of creditors, goes
into liquidation or receivership or otherwise loses legal control of its business, (ii) by
Medtronic if Kips Bay determines to cease commercializing (other than by an assignment as provided
in section 5.3) either the Brushed Graft Product or the Mesh Graft Product, then Medtronic may
terminate the license to the Licensed Patent Rights or the Mesh Graft Patent Rights, as applicable,
and (iii) by Kips Bay by written notice to Medtronic (which notice shall be effective upon
dispatch).

ARTICLE 4

PAYMENT

     4.1 Payments by Kips Bay. In consideration for the assignment of the patents by
Medtronic and the granting of the licenses by Medtronic as provided in this Agreement, Kips Bay
shall make the following cash payments to Medtronic:

(a) Five Million Dollars ($5,000,000) upon the one year anniversary after the first Commercial Sale of a Royalty
Bearing Product that is a Brushed Graft Product.

(b) Five Million Dollars ($5,000,000) upon the one year anniversary after the first Commercial Sale of a Royalty Bearing
Product that is a Mesh Graft Product.

(c) Five Million Dollars ($5,000,000) upon Kips Bay achieving cumulative aggregate Net Sales of more than Fifteen Million
Dollars ($15,000,000) on
commercialization of any Royalty Bearing Product.

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(d) Five Million Dollars ($5,000,000) upon Kips Bay achieving cumulative aggregate Net Sales of more than Forty Million Dollars ($40,000,000)
on commercialization of any Royalty Bearing Product. .

     4.2 Royalty Payments. Kips Bay shall pay to Medtronic a royalty in the amount of four
percent (4%) of annual Net Sales of any Royalty-Bearing Product. Such royalty payments shall cease
to be paid by Kips Bay to Medtronic (i) upon the Expiration of all of the patents and patent
applications included within the Transferred Patent Rights or Mesh Graft Patent Rights, or (ii) as
soon as such cumulative aggregate royalty payments equal One Hundred Million Dollars
($100,000,000).

     4.3 Reports and Payments. Within sixty (60) days after the end of each of Kips Bay’s
fiscal quarters, Kips Bay shall provide Medtronic with a written report, signed by an executive
officer of Kips Bay indicating the amount of sales of any Royalty Bearing Products during such
preceding fiscal quarter and the amount of the royalties due for such period. Such written report
shall provide reasonable details relating to the calculation of annual Net Sales. Simultaneous
with making such report, Kips Bay shall pay to Medtronic the amount of royalties then due. All
payments due hereunder shall be paid in U. S. currency.

     4.4 Records. Kips Bay agrees to keep accurate written records sufficient in detail to
enable the royalties payable under this Agreement by Kips Bay to be determined and verified for a
period of three (3) years after the delivery of any royalty report.

     4.5 Audit of Records. Upon reasonable notice and during regular business hours, Kips
Bay shall from time to time, but no more frequently than once annually, make available the records
referred to in Section 4.4 for audit by independent representatives selected by Medtronic and
reasonably acceptable to Kips Bay at Medtronic’s expense to verify the accuracy of the reports
provided to Medtronic. Any representatives conducting such audit shall execute a confidentiality
agreement reasonably acceptable to both Medtronic and Kips Bay prior to conducting such audit. No
claim may be asserted by Medtronic against Kips Bay for any errors unless made within six (6)
months following completion of such examination or audit made pursuant to this Section 4.5. The
right to audit shall extend for two (2) years from delivery of any royalty report and thereafter
any royalty report shall be deemed complete and accurate. Each royalty report shall be subject to
only one such examination and audit. Should Medtronic be the party benefiting from any
discrepancy, it will promptly pay the amount of such discrepancy to Kips Bay; should Kips Bay be
the party benefiting from any such discrepancy, Kips Bay shall offset the amount of the discrepancy
against subsequent payments due to Medtronic hereunder.

     4.6 Warranty of Title. Medtronic hereby represents and warrants to Kips Bay that as
of the date hereof it has the right to transfer the Transferred Patent Rights and to license the

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Licensed
Patent Rights and Mesh Graft Patent Rights, and to sell the trademarks other assets set
forth in Exhibit G.

ARTICLE 5

MISCELLANEOUS

     5.1 Non-Disclosure. Except as provided in the last sentence of this paragraph, each
party agrees not to disclose or use (except as permitted or required for performance by the party
receiving such Confidential Information of its rights or duties hereunder or under the Services
Agreement) any Confidential Information of the other party obtained during the during the term of
this Agreement until the expiration of three (3) years after the termination or expiration of this
Agreement. Each party further agrees to take appropriate measures to prevent any such prohibited
disclosure by its present and future employees, officers, agents, subsidiaries, or consultants
during the term of this Agreement and for a period of three (3) years thereafter. Nothing in this
paragraph shall prevent Medtronic’s use of know-how assigned under this Agreement to Kips Bay,
provided that such use is not in violation of the Services Agreement.

     5.2 Relationship of the Parties. The relationship of Kips Bay and Medtronic pursuant
to this Agreement will be that of independent contractors. Neither party has, and will not,
represent that it has any power, right or authority to bind or to incur any charges or expenses on
behalf of the other party or in the other party’s name without the written consent of the other
party. Nothing stated in this Agreement will be construed as constituting Kips Bay and Medtronic,
or their Affiliates, as partners or as creating the relationships of employer/employee,
franchisor/franchisee, or principal/agent between them. Neither party nor its Affiliates nor its
or their employees or agents are, or will act, as employees of the other party within the meaning
or application of any unemployment insurance laws, social security laws, workers’ compensation or
industrial accident laws, social security laws, workers’ compensation or industrial accident laws,
or under any other laws or regulations which may impute any obligations or liability to the other
by reason of an employment relationship.

     5.3 Assignment. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors or assigns of the parties hereto; provided, that (i) the rights
and obligations of Kips Bay herein may be sold or assigned, in whole or in part, with written
notice to Medtronic, and (ii) the rights and obligations of Medtronic herein may not be assigned
except to an Affiliate or any person who succeeds to all or a substantial portion of Medtronic’s
business to which this Agreement relates. Any attempted assignment of this Agreement in violation
of this Section 5.3 shall be null and void.

     5.4 Entire Agreement. This Agreement, along with the Services Agreement, represent
the entire agreements of the parties with respect to the subject matter of such agreements and
supersede all previous proposals or agreements, oral or written, and all negotiations,
conversations or discussions heretofore had between the parties related to the subject matter of
such agreements.

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     5.5 Governing Law. This Agreement will be construed and interpreted under and in
accordance with the substantive laws of the State of Minnesota, without regard to conflicts of law
principles. Any action or proceeding arising under or relating to this Agreement will be brought
only in the courts of the State of Minnesota, County of Hennepin, or, if it has or can acquire
jurisdiction, in the United States District Court, for the Federal courts of Minnesota, and each of
the parties consents to the exclusive jurisdiction of such courts (and the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid therein.

     5.6 Amendment, Waiver, Discharge, etc. This Agreement may not be amended, released,
discharged, abandoned, changed or modified in any manner, except by an instrument in writing signed
on behalf of each of the parties to this Agreement by their duly authorized representatives. The
failure of either party to enforce at any time any of the provisions of this Agreement shall in no
way be construed to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any part of it or the right of either party after any such failure to enforce
each and every such provision. No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.

     5.7 Execution in Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and shall become a
binding agreement when one or more counterparts have been signed by each party and delivered to the
other party.

     5.8 Titles and headings; Construction. The titles and headings to Sections herein are
inserted for the convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. This Agreement shall be construed without regard
to any presumption or other rule requiring construction hereof against the party causing this
Agreement to be drafted.

     5.9 Benefit. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties to this Agreement or their respective successors or permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

     5.10 Notices. All notices or other communications to a party required or permitted
hereunder shall be in writing and shall be delivered personally or by facsimile (receipt confirmed)
to such party (or, in the case of an entity, to an executive officer of such party) or shall be
given by certified mail, postage prepaid with return receipt requested, addressed as follows:

if to Medtronic, to:

Medtronic, Inc.

World Headquarters

710 Medtronic Parkway

Minneapolis, MN 55432-5604

Attention: President, CardioVascular

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with separate copies thereof addressed to

Attention: General Counsel

Telecopier No.: (763) 572-5459

and

Attention: Vice President, Corporate Development

Telecopier No.: (763) 505-2542

if to Kips Bay to:

Kips Bay Medical, Inc.

3405 Annapolis Lane

Minneapolis, MN 55447

Attention: Manuel A. Villafana

with copies to:

Dorsey & Whitney LLP

Suite 1500

50 South Sixth Street

Minneapolis, MN 55402

Attention: Michael A. Lindsay

Fredrikson & Byron, P.A.

200 South Sixth Street

Minneapolis, MN 55402

Attention: Thomas R. King

For purposes of this Section 5.10, any notice sent to Mr. King at Fredrikson & Byron, P.A., will be
for informational purposes only. Mr. King does not represent Kips Bay in connection with this
Agreement or the transactions contemplated hereby.

Kips Bay or Medtronic may change their respective above-specified recipient and/or mailing address
by notice to the other party given in the manner herein prescribed. All notices shall be deemed
given on the day when actually delivered as provided above (if delivered personally or by
facsimile) or on the day shown on the return receipt (if delivered by mail).

     5.11 Severability. In the event that any provision contained herein is held to be
invalid or unenforceable, all other provisions of this Agreement will be deemed severable and will
remain enforceable to the full extent permitted by law.

     5.12 Compliance with Law. The parties shall comply with all applicable international,
national, state, regional, and local laws and regulations, including applicable import and export
control laws, in exercising their rights and performing their duties under this Agreement.

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     5.13 Public Announcements. Neither party shall publicly disclose the terms of this
Agreement without the prior written consent of the non-disclosing party unless required by law.
Copies of press releases or similar written communications containing a party’s name shall be
provided to that party prior to release and shall not be released without such party’s prior
written consent, such consent not to be unreasonably withheld.

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     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in the manner
appropriate to each.

	 	 	 	 	 
	 	KIPS BAY MEDICAL, INC.

 	 
	 	By:  	/s/ Manny Villafaña
 	 
	 	 	Its:      Chairman & CEO 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	MEDTRONIC, INC.

 	 
	 	By:  	/s/ Robert S. White
 	 
	 	 	Its:      Vice President, Corp Dev’t 	 
	 

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EXHIBIT A

Mesh Graft Patent Rights

	 	 	 	 	 	 	 	 	 
	Docket No.	 	Country	 	Status	 	Application No.	 	Date
	P0010899.00

	 	United States
	 	Inactive
	 	60/466,226 
	 	04/28/03
	P0010899.00

	 	United States
	 	Filed
	 	10/834,360 
	 	04/28/04
	P0010899.01

	 	Patent Coop. Treaty
	 	Inactive
	 	US04/012973 
	 	04/28/04
	P0010899.02

	 	United States
	 	Filed
	 	10/987,313 
	 	11/12/04
	P0010899.03

	 	Patent Coop. Treaty
	 	Inactive
	 	US04/037827 
	 	11/12/04
	P0010899.04

	 	Canada
	 	Filed
	 	2,523,812 
	 	04/28/04
	P0010899.05

	 	Japan
	 	Filed
	 	513369/06 
	 	04/28/04
	P0010899.06

	 	European Pat. Conv.
	 	Filed
	 	4760409.5 
	 	04/28/04
	P0010899.07

	 	South Africa
	 	Filed
	 	2005/08920 
	 	04/28/04
	P0010899.09

	 	United States
	 	Filed
	 	11/797,648 
	 	05/04/07
	P0010899.10

	 	European Pat. Conv.
	 	Filed
	 	4810845 
	 	11/12/04
	P0010115.00

	 	United States
	 	Inactive
	 	10/201,498 
	 	07/23/02
	P0010115.00

	 	United States
	 	Inactive
	 	60/308,471 
	 	07/27/01
	P0010115.01

	 	Patent Coop. Treaty
	 	Inactive
	 	US02/23383 
	 	07/23/02
	P0010115.02

	 	European Pat. Conv.
	 	Filed
	 	2752537.7 
	 	07/23/02

- 14 -

 

EXHIBIT B

Transferred Patent Rights

	 	 	 	 	 	 	 	 	 
	Docket No.	 	Country	 	Status	 	Application No.	 	Date
	P0011467.00

	 	United States
	 	Inactive
	 	10/654,583
	 	09/03/03
	P0011467.01

	 	United States
	 	Filed
	 	10/656,855
	 	09/04/03
	P0011467.02

	 	Patent Coop. Treaty
	 	Filed
	 	US04/028925
	 	09/02/04
	P0011467.03

	 	European Pat. Conv.
	 	Filed
	 	4783239.9
	 	09/02/04
	P0011467.04

	 	Canada
	 	Filed
	 	2,537,781
	 	09/02/04
	P0011467.05

	 	Japan
	 	Filed
	 	525495/06
	 	09/02/04
	P0011467.06

	 	United States
	 	Filed
	 	11/402,509
	 	04/12/06
	P0011467.07

	 	Hong Kong
	 	Filed
	 	60105418.7
	 	05/09/06
	P0020805.00

	 	United Stated
	 	Filed
	 	11/071,597
	 	03/02/05
	P0020805.01

	 	United States
	 	Filed
	 	11/367,006
	 	03/02/06
	P0020805.02

	 	Patent Coop. Treaty
	 	Filed
	 	US06/007479
	 	03/02/06
	P0020805.03

	 	United States
	 	Filed
	 	11/515,344
	 	07/23/02

- 15 -

 

EXHIBIT C

Transferred Trademarks

eSVSTM

bePTFETM

ACCSSTM

- 16 -

 

EXHIBIT D

Assignment

     Whereas, Medtronic, Inc., a Minnesota corporation, having its principal place of business at
710 Medtronic Parkway, NE, Minneapolis, MN 55432 (hereinafter “Assignor”), holds certain
rights in the United States and foreign patents and patent applications identified on the attached
Schedule 1; and

     Whereas, Kips Bay Medical, Inc., a Delaware corporation, having its principal place of
business at 3405 Annapolis Lane, Suite 200, Minneapolis, MN 55447 (hereinafter “Assignee”),
desires to acquire the entire right, title and interest in and to the United States and foreign
patents and patent applications identified on the attached Exhibit A and in and to the inventions
described and claimed therein (hereinafter the “Patents”);

     Whereas, Assignor agrees to assign the Patents to Assignee;

     In exchange for good and valuable consideration, the receipt of which is hereby acknowledged,
Assignor hereby irrevocably assigns to Assignee, and its successors and assigns:

	 	(1)	 	The entire right, title and interest to the Patents; and
	 
	 	(2)	 	The right to apply for patents in foreign countries in its own name and to
claim any priority rights to which such foreign applications are entitled under
international conventions, treaties or otherwise; and
	 
	 	(3)	 	The right to enforce patent rights to such Patents, as fully and entirely as
the same would have been held and enjoyed by the Assignor if this assignment had not
been made; together with all claims by Assignor for damages by reason of past
infringement or for provisional rights and including the right to sue for, and collect
the same for its own use and benefit, and for the use and benefit of its successors,
assigns, and other legal representatives.

     Assignor agrees that all Patents shall belong exclusively to Assignee, with Assignee having
the right to obtain and to hold in its own name such patents, or such other perfection,
registration, certification, or protection as may be obtained or applicable to the subject matter,
and any extensions and renewals thereof.

     Assignor hereby authorizes and requests the Commissioner of Patents to issue to Assignee any
patents that may be granted in accordance with this Assignment.

     This Agreement may be executed in one or more counterparts, all of which shall be considered
one and the same agreement. The signatures from each counterpart may be combined with a copy of
the Agreement to constitute the entire Agreement.

- 17 -

 

	 	 	 	 	 
	 	MEDTRONIC, INC.

 	 
	Date:
                                        
	By:  	 
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

     On
this      
day of                          , 2007, before me, a notary public in and for said
county, appeared                                               of Medtronic, Inc., the person who signed this instrument,
who acknowledged that he or she signed it as a free act on behalf of said company with authority to
do so.

- 18 -

 

Schedule
1

- 19 -

 

EXHIBIT E

Form of License

LICENSE AGREEMENT

     THIS LICENSE AGREEMENT (“Agreement”), is made and entered into as of September_____, 2007
(“Effective Date”) by and between Medtronic, Inc., a Minnesota corporation
(“Medtronic”), and [Newco], a Delaware corporation (“[Newco]”). Medtronic and
[Newco] are the “parties.”

RECITALS

     WHEREAS, Medtronic and [Newco] have entered into a certain Asset Purchase Agreement wherein
[Newco] purchased certain assets relating to Medtronic’s MagellanTM System (the “APA”);

     WHEREAS, the assets purchased by [Newco] under the APA included certain intellectual property;
and

     WHEREAS, as provided for in the APA, [Newco] desires to grant, and Medtronic desires to be
granted, a license to the intellectual property purchased by [Newco] under the APA, on the terms
and conditions set forth in this Agreement.

AGREEMENT

     NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto each agree to the terms and conditions in this Agreement intending to be legally
bound by them.

ARTICLE 1

DEFINITIONS

     1.1 Specific Definitions. As used in this Agreement, the following terms shall have
the meanings set forth or as referenced below:

     “Affiliate” has the meaning set forth in the APA.

     “Agreement” means this Agreement and all Exhibits and attachments hereto.

     “Assigned Intellectual Property” has the meaning set forth in the APA.

     “Field” means the field of vascular grafts.

- 20 -

 

     1.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement
and shall have the meaning indicated throughout this Agreement.

     1.3 Definitional Provisions.

     (a) The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provisions of
this Agreement.

     (b) The terms defined in the singular shall have a comparable meaning when used in the plural,
and vice versa.

     Unless the context requires otherwise, references herein (i) to an agreement, instrument or
other document mean such agreement, instrument or other document as amended, supplemented and
modified from time to time to the extent permitted by the provisions thereof and by this Agreement;
and (ii) to a statute, ordinance or regulation mean such statute, ordinance or regulation as
amended from time to time and includes any successor thereto.

     (c) References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of
the Exhibits or Schedules attached to or referenced in this Agreement, and references to an
“Article” or a “Section” are, unless otherwise specified, to one of the Articles or Sections of
this Agreement.

     (d) The term “person” means any natural person, firm, individual, corporation, limited
liability company, partnership, association, joint venture, company, business trust, trust or any
other entity or organization, whether incorporated or unincorporated, including a government or
political subdivision or any agency or instrumentality thereof.

     The terms “including” and “includes” are not limited and have the meanings “including, without
limitation” or “includes, without limitation.”

ARTICLE 2

LICENSE GRANT

     2.1 Grant of License in Field of Use. Subject to the terms and conditions of this
Agreement, [Newco] hereby grants to Medtronic and its Affiliates a worldwide, non-exclusive,
royalty-free, paid-up, perpetual, irrevocable, fully sublicensable license to the Assigned
Intellectual Property to make, have made, use, import, sell, offer to sell and have sold products
in the Field.

     2.2 Sublicensing. Medtronic shall have the unrestricted right to sublicense its
rights under this Agreement to any third party.

ARTICLE 3

- 21 -

 

INTELLECTUAL PROPERTY RIGHTS

     3.1 Right to Grant the License. [Newco] hereby represents and warrants to Medtronic
that as of the date hereof it has the right to grant the license to Medtronic under Section 2.1.

     3.2 Preservation of License in Bankruptcy.

     (a) If either party should file a petition under bankruptcy laws, or if any involuntary
petition shall be filed against such party, Medtronic shall be protected in the continued
enjoyment of its rights as licensee hereunder to the maximum feasible extent including,
without limitation, if it so elects, the protection conferred upon licensees under Section
365(n) of Title 11 of the U.S. Code, or any similar provision of any applicable law.
[Newco] shall give Medtronic reasonable prior notice of the filing of any voluntary
petition, and prompt notice of the filing of any involuntary petition, under any bankruptcy
laws.

     (b) The Assigned Intellectual Property as well as the license granted herein shall be
deemed to be “intellectual property” as that term is defined in 11 U.S.C. Section 101(56) or
any successor provision.

ARTICLE 4

MISCELLANEOUS

     4.1 Assignment. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns.

     4.2 Complete Agreement. This Agreement, along with the APA, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements whether written or oral relating hereto.

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

     4.4 Waiver, Discharge, Amendment, Etc. The failure of any party hereto to enforce at
any time any of the provisions of this Agreement shall not, absent an express written waiver signed
by the party making such waiver specifying the provision being waived, be construed to be a waiver
of any such provision, nor in any way to affect the validity of this Agreement or any part thereof
or the right of the party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of any other or subsequent breach. Any
amendment to this Agreement shall be in writing and signed by the parties hereto.

     4.5 Titles and headings; Construction. The titles and headings to Sections and
Articles herein are inserted for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or

- 22 -

 

other rule requiring the resolution of any ambiguity regarding the interpretation or construction hereof
against the party causing this Agreement to be drafted.

     4.6 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in a mutually acceptable manner in order that the transactions contemplated by this
Agreement be consummated as originally contemplated to the fullest extent possible.

     4.7 Relationship. This Agreement does not make either party the employee, agent or
legal representative of the other for any purpose whatsoever. Neither party is granted any right or
authority to assume or to create any obligation or responsibility, express or implied, on behalf of
or in the name of the other party. In fulfilling its obligations pursuant to this Agreement, each
party shall be acting as an independent contractor.

     4.8 Benefit. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties to this Agreement or their respective successors or permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

     4.9 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute one and the same
instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

- 23 -

 

     The parties hereto have caused this License Agreement to be duly executed by their duly
authorized representatives as of the date indicated.

	 	 	 	 	 	 	 
	MEDTRONIC, INC.	 	[NEWCO]
	 
	 	 	 	 	 	 
	By:  

	 	 	 	By:  	 	 
	 

	 
	 	 	 
	

	Its 	 	 	 	Its 	 
	 

	 	 
	 	 	 	 

- 24 -

 

EXHIBIT F

Bill of Sale

     KNOW ALL MEN BY THESE PRESENTS, THAT: (i) this Bill of Sale is being delivered to document the
transfer of certain assets pursuant to that certain Assignment and License Agreement, dated as of
___, 2007 (the “Assignment Agreement”), by and among Medtronic, Inc., a Minnesota
corporation (“Seller”) and Kips Bay Medical, Inc., a Delaware corporation (the
“Buyer”); and (ii) for good and valuable consideration, the receipt of which is hereby
acknowledged, Seller hereby grants, bargains, sells, conveys, transfers, assigns and delivers unto
Buyer all of Seller’s right, title and interest in and to certain assets, as set forth in the
Assignment Agreement.

     To have and to hold the same unto Buyer, its successors and assigns forever.

     IN WITNESS WHEREOF, this Bill of Sale has been duly signed by the Seller as of the ___ day of
___, 2007.

	 	 	 	 	 	 	 
	 	 	MEDTRONIC, INC.
	 
	 	 	 	 	 	 
	 

	 	By:  	 	 	 
	 

	 	 
	Its  
	 	 
	 

	 	 	 	 

	 	 

- 25 -

 

EXHIBIT G

Listing of Assets

Compliance Tester

Knitter

Centrifuges and Rotors

Axial Centrifuge-parts

Axial Centrifuge-labor

Custom Brushing System

Copies of pages relating to the Brushed Graft Products or the Mesh Graft Products in all lab books,
and other documentation relating to the Brushed Graft Products or the Mesh Graft Products

All know-how relating to Brushed Graft Products or Mesh Graft Products

- 26 -

 

EXHIBIT H

Trademark Transfer Agreement

This Trademark Transfer Agreement (“Transfer Agreement”) is made by and between Medtronic, Inc., a
Minnesota corporation with a principal place of business at 710 Medtronic Parkway, Minneapolis, MN
55432 (“Medtronic”) and Kips Bay Medical, Inc., a Delaware corporation with a principal place of
business at 3405 Annapolis Lane, Minneapolis, MN 55447 (“Kips Bay”).

     WHEREAS, Medtronic is the owner of the trademarks and corresponding registrations and
applications attached as Schedule A hereto (collectively the “Marks”);

     WHEREAS, Kips Bay wishes to acquire ownership of Marks and of ; and

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Medtronic hereby assigns to Kips Bay all right, title and interest in and to
the Marks for the United States and throughout the world, together with the business and goodwill
of the business associated therewith.

     This Transfer Agreement includes all rights in the nature of trademark, service mark, and
trade name rights, as well as the right to sue for past infringement of such rights by any third
party.

     Medtronic agrees to execute any additional documents presented to Medtronic by Kips Bay and to
perform any other acts at Kips Bay’s expense which are or may be reasonably necessary to evidence
or perfect the assignment, including those reasonably necessary to effectuate the recordation of
the assignment.

	 	 	 	 	 	 	 
	 	 	MEDTRONIC, INC.
	 
	 	 	 	 	 	 
	 

	 	By:  	 	 	 	 
	 

	 	 	 	 	 
	 

	 	 	Its  	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	STATE OF MINNESOTA
	 	)	 	 
	 
	 	) ss.	 	 
	COUNTY OF ANOKA
	 	)	 	 

     On this ___ day of                     , 2007, before me appeared                                
          to me known to be the
same person described in and who executed the foregoing instrument, and acknowledged that she
executed the same as a free act and deed with authority to do so.

	 	 	 
	 
	 

	 	 
	 

	 	Notary Public

- 27 -

 

Schedule A

Trademarks and Corresponding Registrations/Applications

- 28 -exv10w32

Exhibit 10.32

AMENDMENT NO. 1 TO LEASE

     THIS AMENDMENT NO. 1 TO LEASE (“Amendment”) is made as of June 14, 2010, by and between ST.
PAUL FIRE AND MARINE INSURANCE COMPANY, a Minnesota corporation (“Landlord”) and KIPS BAY MEDICAL,
INC., a Delaware corporation (“Tenant”).

RECITALS:

     A. St. Paul Properties, Inc., a Delaware corporation (“Properties”) and Tenant were parties to
that certain Lease dated July 26, 2007 (the “Lease”), for premises described therein (the
“Premises”).

     B. On October 9, 2009, Properties merged with and into Landlord, Properties’ only, shareholder
with Landlord being the survivor of the merger; and

     C. Landlord and Tenant wish further to amend the Lease to reflect certain additional
agreements between them,

     NOW, THEREFORE, in consideration of the Premises and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as set forth below.

AGREEMENT:

     1. Defined Terms. Unless otherwise indicated, capitalized terms shall be defined in
the manner set forth in the Lease.

     2. Extension of Term. The Term of the Lease is hereby extended for a period of
thirteen (13) months commencing September 1, 2010 (the “Extension Commencement Date”) and ending on
September 30, 2011 (such period, the “Extension Term”).

     3. Base Rent. During the Extension Term, Tenant shall pay Base Rent for the Premises
in the amount of $56,901.96 per annum ($4,741.83 per month), without deduction or setoff therefrom,
payable at the time and in the manner set forth in the Lease for the payment of Base Rent.

     4. Amendment. The following is added as a new Paragraph 34 of the Lease:

     “34. Additional Offer Space Rights. Notwithstanding the provisions of Paragraph 31 to the
contrary, and provided that Tenant is not in default under this Lease, the parties agree that,
provided Tenant notifies Landlord in writing on or before May 31, 2011, that Tenant wishes to lease
the Offer Space (the “Space Notice”), Landlord will not renew the existing lease between it and
Volkart May & Associates, Inc. (“Volkart May”), whose lease covers the Offer Space, except as
provided in this Paragraph 34.

     The Space Notice shall specify the proposed commencement date for the Offer Space, which date
shall be not earlier than the earlier of (a) one hundred eighty (180) days after the

 

 

effective date (as effective date is described in Paragraph 23 of this Lease) of the Space
Notice; or (b) December 1, 2011; provided however that Landlord shall notify Tenant within ninety
(90) days after the effective date of the Space Notice whether Landlord can make the Offer Space
available as of such proposed commencement date (the “Space Availability Notice”). It is
understood and agreed that the lease between Landlord and Volkart May & Associates, Inc. (“Volkart
May”) expires on September 30, 2011 and, while, under the terms thereof, Landlord has the right to
relocate Volkart May, Landlord must comply with the requirements of the relocation provision of the
Volkart May lease. If, in the Space Availability Notice, Landlord notifies Tenant that Landlord
cannot make the Offer Space available by the proposed commencement date, and Tenant wishes to
terminate this Lease, Tenant shall give Landlord written notice thereof (the “Termination Notice”)
not later than the thirtieth (30th) day after the effective date of the Space Availability Notice
(as effective date is described in Paragraph 23 hereof) and this Lease will be terminated as of the
date specified by Tenant in the Termination Notice (the “Termination Date”), which Termination Date
shall be not earlier than the ninetieth (90th) day after the effective date of the Termination
Notice and not later than the two hundred seventieth (270th) day after the effective date of the
Termination Notice, but in no event later than September 30, 2011, subject to the conditions
precedent thereto set forth in the next succeeding sentence. It is understood and agreed that if
Tenant does not deliver a Termination Notice by the thirtieth (30th) day after the effective date
of the Space Availability Notice, Tenant’s right to terminate this Lease will be deemed waived,
this Lease will continue in full force and effect (without any right of termination) and the
parties will continue to be bound thereby. In addition to the foregoing, the following shall be
conditions precedent to Tenant’s right to terminate this Lease as a result of the Space
Availability Notice: (p) Tenant shall not be in default under any of the terms and conditions of
this Lease as of the date of the Space Notice, the Space Availability Notice, the Termination
Notice or the Termination Date; and (q) not later than the Termination Date, Tenant shall have
provided Landlord with evidence reasonably satisfactory to Landlord that Tenant has leased space
elsewhere in at least the amount of 12,000 rentable square feet (which evidence may be in the form
of a fully executed letter of intent signed by Tenant and the prospective landlord), it being
understood and agreed that if Tenant does not comply with the provisions of this subparagraph (q),
this Lease shall not be terminated and Tenant shall remain bound and shall comply with all of the
terms and conditions hereof, including, without limitation, the payment of Rent through the
expiration of the Term, but nothing in the preceding clause shall be deemed an exclusive remedy of
Landlord or preclude Landlord from declaring an Event of Default under this Lease as a result of
Tenant’s failure to provide evidence that Tenant has leased the square footage referenced above and
proceeding to exercise Landlord’s rights and remedies under this Lease.

     If the Space Availability Notice specifies that Landlord can make the Offer Space available on
the proposed commencement date, then Landlord and Tenant shall negotiate in good faith for (i) an
extension of the Extension Term and the lease by Tenant of the Offer Space, it being understood and
agreed that (i) base rent for the Premises and the Offer Space shall be the then-current Market
Rent (as defined in Paragraph 33 of this Lease); and (ii) the extended term of the lease of the
Premises and the Offer Space shall be at least five (5) years (the “Additional Space Term”), and
shall end co-terminously. If the Space Availability Notice indicates that Landlord can make the
Offer Space available on the proposed commencement date, then not later than July 31, 2011, the
parties shall cooperate in the execution of an agreement modifying the terms hereof to include the
Offer Space as part of the Premises.

- 2 -

 

     If the parties have not entered into such agreement on or before July 31, 2011, or if Tenant
has not given the Space Notice on or before May 31, 2011, then Tenant’s right to the Offer Space
pursuant to this Paragraph shall be deemed waived, null and void and of no further force or effect,
and Landlord may renew the Volkart May lease or lease the Offer Space to any party upon any terms.

     It is understood and agreed that (x) if Tenant does not deliver the Space Notice on or before
May 31, 2011, the right of first offer granted to Tenant pursuant to Paragraph 31 of this Lease
shall remain in full force and effect; provided however that Landlord shall not be obligated to
deliver a Notice From Landlord until the Offer Space becomes available for lease (as defined in
Paragraph 31) after the expiration or earlier termination of (i) the renewal term for the Volkart
May lease, as the same may be further renewed; or (ii) the term of the lease to the third party who
has leased the Offer Space (and any renewal thereof) if Volkart May does not renew; and (y)
Tenant’s exercise of its rights under this Paragraph 34 shall be deemed an exercise of the renewal
rights granted to Tenant pursuant to Paragraph 32 of this Lease.”

     5. Additional Agreements.

          (a) As-Is Condition. Landlord and Tenant agree that on the Extension
Commencement Date, Tenant shall accept the Premises in their then AS-IS, WITH ALL FAULTS
CONDITION. Tenant acknowledges that neither Landlord nor any agent or employee of Landlord
has made any representation or warranty with respect to the Premises or any other portion of
the Building, including, without limitation, any representation or warranty with respect to
the suitability or fitness of the Premises or any other portion of the Building for the
conduct of Tenant’s business in the Premises.

          (b) Brokerage. Each of the parties agrees that it has had no dealings with any
broker other than NorthMarq Realty Services (Jason Meyer) as to Landlord and Wayzata
Properties, Inc. (Chris Hickok) as to Tenant, and each party hereby agrees to defend,
indemnify and hold the other harmless from and against all costs, expenses, attorneys’ fees
or other liability for commissions or other compensation or charges claimed by any broker or
agent other than the brokers listed above claiming by or through Landlord or Tenant,
respectively, with respect to this Amendment.

     6. Reference to and Effect on the Lease.

          (a) Upon the effectiveness of this Amendment, each reference in the Lease to “this
Lease,” “hereunder,” “hereof,” “herein” or words of like import referring to the Lease shall
mean and be a reference to the Lease as amended hereby.

          (b) Except as specifically set forth above, the Lease remains in full force and effect
and is hereby ratified and confirmed.

          (c) Wherever there exists a conflict between this Amendment and the Lease, the
provisions of this Amendment shall control.

     7. Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the State of Minnesota.

- 3 -

 

     8. Counterparts. This Amendment may be executed in counterparts, all of which, when
taken together, shall constitute one and the same original.

     9. Headings. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any other purpose.

     10. Time of Essence. Time shall be of the essence as to each and every provision of
this amendment.

SIGNATURE PAGE FOLLOWS

- 4 -

 

     IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above.

	 	 	 	 	 	 	 	 	 	 	 

	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ST. PAUL FIRE AND MARINE

INSURANCE COMPANY	 	KIPS BAY MEDICAL, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Michael D. Elnicky	 	By:	 	/s/ Scott Kellen
	 	 	 	 	 	 	 
	 

	 	Name:
	 	Michael D. Elnicky
	 	 	 	Name: Scott Kellen	 	 
	 

	 	Its:
	 	Asset Manager
	 	 	 	Its: CFO	 	 

- 5 -

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