Item 1.01 Entry Into a Material Definitive Agreement

On February 26, 2013, Kips Bay Medical, Inc. (the "Company") executed a confidentiality agreement (the "Confidentiality Agreement") with Nasser Kazeminy and two of his associates as part of an agreement between the Company and Mr. Kazeminy which allows Mr. Kazeminy to name two individuals to serve as advisors to the Company's Board of Directors. Mr. Kazeminy is the principal owner of Kips Bay Investments, LLC, which holds a greater than 5% ownership interest in the Company.

The purpose of this agreement is to enable full exchange of information between the Company and Mr. Kazeminy's associates in order for the Company to take advantage of their experience and expertise with early stage, high growth companies. As advisors to the Board, they will be invited to participate in all meetings of the Company's Board of Directors and its committees. The advisors will be subject to the same trading policies and restrictions as are members of the Board and will further be subject to certain standstill restrictions, as further set forth in the Confidentiality Agreement. There will be no cash compensation to either individual.

The foregoing description of the Confidentiality Agreement is not a complete description of all the terms of such Confidentiality Agreement, which will be filed as an exhibit to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2012.

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