EXHIBIT 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into as
of January 21, 2010, by and among World Heart Corporation, a Delaware
corporation (the “Company”), and the several purchasers signatory hereto (each
an “Investor” and collectively, the “Investors”).

 

This Agreement is made pursuant to the Securities Purchase Agreement, dated as
of January 21, 2010, between the Company and each Purchaser (the “Purchase
Agreement”).

 

The parties hereby agree as follows:

 

1.     CERTAIN DEFINITIONS.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the applicable laws of, or are in
fact closed in, the State of New York.

 

“Common Stock” means the Company’s Common Stock, par value $0.001 per share, and
any securities into which such shares may hereinafter be reclassified.

 

“Filing Deadline” means, with respect to the Registration Statement required to
be filed pursuant to Section 2(a), the 60th calendar day following the Closing
Date, provided, however, that if the Filing Deadline falls on a Saturday, Sunday
or other day that the Commission is closed for business, the Filing Deadline
shall be extended to the next business day on which the Commission is open for
business.

 

“Investors” means, unless the context otherwise indicates, the parties listed on
the signature pages hereto as “Investors” and any Affiliate or permitted
transferee of any of them who is a subsequent holder of the Registrable
Securities.

 

“Liquidated Damages Amount” of each Investor is $.001 multiplied by the number
of Registrable Securities held by such Investor from time to time.

 

“Prospectus” means (i) the prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus, and (ii) any “free writing prospectus” as defined
in Rule 405 under the 1933 Act.

 

“Register,” “registered” and “registration” refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the 1933 Act (as defined

 

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below), and the declaration or ordering of effectiveness of such Registration
Statement or document.

 

“Registrable Securities” means (i) the shares of Common Stock acquired by the
Investors pursuant to the Purchase Agreement and (ii) any other securities
issued or issuable with respect to or in exchange for Registrable Securities;
provided, that, a security shall cease to be a Registrable Security upon
(A) sale pursuant to a Registration Statement or Rule 144 under the 1933 Act, or
(B) such security becoming eligible for sale without notice or restriction
(including without limitation any restriction relating to the availability of
current public information about the Company and any volume restrictions) by the
Investors pursuant to Rule 144.

 

“Registration Statement” means any registration statement of the Company filed
under the 1933 Act that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.

 

“Required Investors” means (i) each Investor holding 20% or more of the
Registrable Securities and (ii) the Investors holding a majority of the
Registrable Securities.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“1933 Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

2.     REGISTRATION.

 

(a)           Registration Statements.

 

(i)            Promptly following the closing of the purchase and sale of the
securities contemplated by the Purchase Agreement (the “Closing Date”) but no
later than Filing Deadline, the Company shall prepare and file with the SEC one
Registration Statement on Form S-3 (or, if the Company is not then eligible to
use Form S-3 to register the resale of the Registrable Securities, on such form
of registration statement as is then available to effect a registration for
resale of the Registrable Securities), covering the resale of the Registrable
Securities.  Subject to any SEC comments, such Registration Statement shall
include the plan of distribution attached hereto as Exhibit A; provided,
however, that no Investor shall be named as an “underwriter” in the Registration
Statement without the Investor’s prior written consent.  Such Registration
Statement also shall cover, to the extent allowable under the 1933 Act and the
rules promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities.  Such
Registration Statement shall not include any shares of Common Stock or other
securities for the account of any holder other than the Investors without the
prior written consent of the Required Investors.  The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided

 

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in accordance with Section 3(c) to the Investors and their counsel prior to its
filing or other submission.  If a Registration Statement covering the
Registrable Securities is not filed with the SEC on or prior to the Filing
Deadline, the Company will make payments to each Investor, as liquidated damages
and not as a penalty, in an amount equal to such Investor’s Liquidated Damages
Amount for each 30-day period (or pro rata for any portion thereof) following
the Filing Deadline for which no Registration Statement is filed with respect to
such Registrable Securities. The amounts payable as liquidated damages pursuant
to this paragraph shall be paid monthly within three (3) Business Days of the
last day of each 30-day period following the Filing Deadline.  Such payments
shall constitute the Investors’ exclusive monetary remedy for such events, but
shall not affect the right of the Investors to seek injunctive relief.  Such
payments shall be made to each Investor in cash.

 

(b)           Expenses.  The Company will pay all expenses associated with each
registration, including filing and printing fees, the Company’s counsel and
accounting fees and expenses, costs associated with clearing the Registrable
Securities for sale under applicable state securities laws, listing fees,
reasonable fees and expenses of counsel to the Investors not to exceed $25,000
in the aggregate, and the Investors’ reasonable expenses in connection with the
registration, but excluding discounts, commissions, fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
with respect to the Registrable Securities being sold.

 

(c)           Effectiveness.

 

(i)            The Company shall use commercially reasonable best efforts to
have the Registration Statement declared effective as soon as practicable.  The
Company shall notify the Investors by facsimile or e-mail as promptly as
practicable, and in any event, within twenty-four (24) hours, after any
Registration Statement is declared effective and shall simultaneously provide
the Investors with copies of any related Prospectus to be used in connection
with the sale or other disposition of the securities covered thereby.  If
(A)(x) a Registration Statement covering the Registrable Securities is not
declared effective by the SEC prior to the earliest of (i) five (5) Business
Days after the SEC shall have informed the Company that no review of the
Registration Statement will be made or that the SEC has no further comments on
the Registration Statement or (ii) the 90th day after the Filing Deadline, or
(B) after a Registration Statement has been declared effective by the SEC, sales
cannot be made pursuant to such Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company’s failure to update
the Registration Statement), but excluding any Allowed Delay (as defined below)
or the inability of any Investor to sell the Registrable Securities covered
thereby due to market conditions, then the Company will make payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to such
Investor’s Liquidated Damages Amount for each 30- day period (or pro rata for
any portion thereof) following the date by which such Registration Statement
should have been effective (the “Blackout Period”).  Such payments shall
constitute the Investors’ exclusive monetary remedy for such events, but shall
not affect the right of the Investors to seek injunctive relief.  The amounts
payable as liquidated damages pursuant to this paragraph shall be paid monthly
within three (3) Business Days of the last day of each 30-day period following
the commencement of the Blackout Period until the termination of the Blackout
Period.  Such payments shall be made to each Investor in cash.

 

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(ii)           For not more than twenty (20) consecutive days, and for not more
than an aggregate of forty-five (45) days in any twelve (12) month period, the
Company may suspend the use of any Prospectus included in any Registration
Statement contemplated by this Section in the event that the Company determines
in good faith that such suspension is necessary (A) to delay the disclosure of
material non-public information concerning the Company, the disclosure of which
at the time would be, in the good faith opinion of the Company, materially
detrimental to the Company or (B) to amend or supplement the affected
Registration Statement or the related Prospectus so that such Registration
Statement or Prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading (an “Allowed Delay”);
provided, that the Company shall promptly (a) notify each Investor in writing of
the commencement of and the reasons for an Allowed Delay, but shall not (without
the prior written consent of an Investor) disclose to such Investor any material
non-public information giving rise to an Allowed Delay, (b) advise the Investors
in writing to cease all sales under the Registration Statement until the end of
the Allowed Delay and (c) use commercially reasonable best efforts to terminate
an Allowed Delay as promptly as practicable.

 

(d)           Rule 415; Cutback  If at any time the SEC takes the position that
the offering of some or all of the Registrable Securities in a Registration
Statement is not eligible to be made on a delayed or continuous basis under the
provisions of Rule 415 under the 1933 Act or requires any Investor to be named
as an “underwriter”, the Company shall use its commercially reasonable best
efforts to persuade the SEC that the offering contemplated by the Registration
Statement is a valid secondary offering and not an offering “by or on behalf of
the issuer” as defined in Rule 415 and that none of the Investors is an
“underwriter”.  The Investors shall have the right to participate or have their
counsel participate in any meetings or discussions with the SEC regarding the
SEC’s position and to comment or have their counsel comment on any written
submission made to the SEC with respect thereto.  No such written submission
shall be made to the SEC to which the Investors’ counsel reasonably objects.  In
the event that, despite the Company’s commercially reasonable best efforts and
compliance with the terms of this Section 2(d), the SEC refuses to alter its
position, the Company shall (i) remove from the Registration Statement such
portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree
to such restrictions and limitations on the registration and resale of the
Registrable Securities as the SEC may require to assure the Company’s compliance
with the requirements of Rule 415 (collectively, the “SEC Restrictions”);
provided, however, that the Company shall not agree to name any Investor as an
“underwriter” in such Registration Statement without the prior written consent
of such Investor.  Any cut-back imposed on the Investors pursuant to this
Section 2(d) shall be allocated among the Investors on a pro rata basis, unless
the SEC Restrictions otherwise require or provide.  No liquidated damages shall
accrue as to any Cut Back Shares until such date as the Company is able to
effect the registration of such Cut Back Shares in accordance with any SEC
Restrictions (such date, the “Restriction Termination Date” of such Cut Back
Shares).  From and after the Restriction Termination Date applicable to any Cut
Back Shares, all of the provisions of this Section 2 (including the liquidated
damages provisions) shall again be applicable to such Cut Back Shares; provided,
however, that (i) the Filing Deadline for the Registration Statement including
such Cut Back Shares shall be ten (10) Business Days after such Restriction
Termination Date, and (ii) the date by which the Company is required to obtain
effectiveness with respect to such Cut Back Shares under Section 2(c) shall

 

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be tolled for a period equal to the number of days elapsed from the date the
Registration Statement initially including such Cut Back Shares was first filed
with the SEC and the Restriction Termination Date applicable to such Cut Back
Shares.

 

(e)           Right to Piggyback Registration.

 

(i)            If at any time following the date of this Agreement that any
Registrable Securities remain outstanding (A) there is not one or more effective
Registration Statements covering all of the Registrable Securities and (B) the
Company proposes for any reason to register any shares of Common Stock under the
1933 Act (other than pursuant to a registration statement on Form S-4 or
Form S-8 (or a similar or successor form)) with respect to an offering of Common
Stock by the Company for its own account or for the account of any of its
stockholders, it shall at each such time promptly give written notice to the
holders of the Registrable Securities of its intention to do so (but in no event
less than thirty (30) days before the anticipated filing date) and, to the
extent permitted under the provisions of Rule 415 under the 1933 Act, include in
such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within fifteen (15) days
after receipt of the Company’s notice (a “Piggyback Registration”).  Such notice
shall offer the holders of the Registrable Securities the opportunity to
register such number of shares of Registrable Securities as each such holder may
request and shall indicate the intended method of distribution of such
Registrable Securities.

 

(ii)           Notwithstanding the foregoing, (A) if such registration involves
an underwritten public offering, the Investors must sell their Registrable
Securities to, if applicable, the underwriter(s) at the same price and subject
to the same underwriting discounts and commissions that apply to the other
securities sold in such offering (it being acknowledged that the Company shall
be responsible for other expenses as set forth in Section 2(b)) and subject to
the Investors entering into customary underwriting documentation for selling
stockholders in an underwritten public offering, and (B) if, at any time after
giving written notice of its intention to register any Registrable Securities
pursuant to Section 2(e)(i) and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to cause such registration statement to become
effective under the 1933 Act, the Company shall deliver written notice to the
Investors and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration; provided, however,
that nothing contained in this Section 2(e)(ii) shall limit the Company’s
liabilities and/or obligations under this Agreement, including, without
limitation, the obligation to pay liquidated damages under this Section 2.

 

3.   COMPANY OBLIGATIONS.  THE COMPANY WILL USE COMMERCIALLY REASONABLE BEST
EFFORTS TO EFFECT THE REGISTRATION OF THE REGISTRABLE SECURITIES IN ACCORDANCE
WITH THE TERMS HEREOF, AND PURSUANT THERETO THE COMPANY WILL, AS EXPEDITIOUSLY
AS POSSIBLE:

 

(a)           use commercially reasonable best efforts to cause such
Registration Statement to become effective and to remain continuously effective
for a period that will terminate upon the earlier of (i) the date on which all
Registrable Securities covered by such Registration Statement as amended from
time to time, have been sold, and (ii) the date on which

 

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all Registrable Securities covered by such Registration Statement may be sold
without notice or restriction pursuant to Rule 144, including, without
limitation, any restriction relating to the availability of current public
information about the Company and any volume restrictions (the “Effectiveness
Period”), and advise the Investors in writing when the Effectiveness Period has
expired;

 

(b)           prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the Effectiveness Period and to
comply with the provisions of the 1933 Act and the 1934 Act with respect to the
distribution of all of the Registrable Securities covered thereby;

 

(c)           provide copies to and permit counsel designated by the Investors
to review each Registration Statement and all amendments and supplements thereto
no fewer than seven (7) days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;

 

(d)           furnish to the Investors and their legal counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days after the
filing date, receipt date or sending date, as the case may be) one (1) copy of
any Registration Statement and any amendment thereto, each preliminary
prospectus and Prospectus and each amendment or supplement thereto, and each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a Prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as each Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor that are
covered by the related Registration Statement;

 

(e)           use commercially reasonable best efforts to (i) prevent the
issuance of any stop order or other suspension of effectiveness and, (ii) if
such order is issued, obtain the withdrawal of any such order at the earliest
possible moment;

 

(f)            prior to any public offering of Registrable Securities, use
commercially reasonable best efforts to register or qualify or cooperate with
the Investors and their counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions requested by the Investors and
do any and all other commercially reasonable acts or things necessary or
advisable to enable the distribution in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (i) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(f), (ii) subject itself to general
taxation in any jurisdiction where it would not otherwise be so subject but for
this Section 3(f), or (iii) file a general consent to service of process in any
such jurisdiction;

 

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(g)           use commercially reasonable best efforts to cause all Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;

 

(h)           immediately notify the Investors, at any time prior to the end of
the Effectiveness Period, upon discovery that, or upon the happening of any
event as a result of which, the Prospectus includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly prepare, file with the SEC and furnish
to such holder a supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and

 

(i)            otherwise use commercially reasonable best efforts to comply with
all applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act, including, without limitation, Rule 172 under the 1933 Act, file any final
Prospectus, including any supplement or amendment thereof, with the SEC pursuant
to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at
any time during the Effectiveness Period, the Company does not satisfy the
conditions specified in Rule 172 and, as a result thereof, the Investors are
required to deliver a Prospectus in connection with any disposition of
Registrable Securities and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder; and make available to its security holders, as soon as reasonably
practicable, but not later than the Availability Date (as defined below), an
earnings statement covering a period of at least twelve (12) months, beginning
after the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act,
including Rule 158 promulgated thereunder (for the purpose of this subsection
3(i), “Availability Date” means the 45th day following the end of the fourth
fiscal quarter that includes the effective date of such Registration Statement,
except that, if such fourth fiscal quarter is the last quarter of the Company’s
fiscal year, “Availability Date” means the 90th day after the end of such fourth
fiscal quarter).

 

(j)            With a view to making available to the Investors the benefits of
Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investors to sell shares of Common Stock to the
public without registration, the Company covenants and agrees to:  (i) make and
keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the
Registrable Securities may be sold without restriction (including without
limitation any restriction relating to the availability of current public
information about the Company) by the holders thereof pursuant to Rule 144 or
any other rule of similar effect or (B) such date as all of the Registrable
Securities shall have been resold; (ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the 1934 Act; and
(iii) furnish to each Investor upon request, as long as such Investor owns any
Registrable Securities, (A) a written statement by the Company that it has
complied with the reporting requirements of the 1934 Act, (B) a copy of the
Company’s most recent Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, and (C) such other information as may be reasonably requested in
order to

 

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avail such Investor of any rule or regulation of the SEC that permits the
selling of any such Registrable Securities without registration.

 

4.             [RESERVED]

 

5.     OBLIGATIONS OF THE INVESTORS.

 

(a)           Each Investor shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request.  At least five (5) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires from such
Investor in connection with the filing of the Registration Statement.  The
Company shall be obligated to include as a selling stockholder in such
Registration Statement each Investor that provides such information to the
Company at least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement and the Company shall not be obligated to
register the Registrable Securities of any Investor that does not provide such
information by such date.

 

(b)           Each Investor, by its acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration
Statement.

 

(c)           Each Investor agrees that, upon receipt of any notice from the
Company of either (i) the commencement of an Allowed Delay pursuant to
Section 2(c)(ii) or (ii) the happening of an event pursuant to
Section 3(h) hereof, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities, until the Investor is advised by the Company that such
dispositions may again be made.

 

6.     INDEMNIFICATION.

 

(a)           Indemnification by the Company.  The Company will indemnify and
hold harmless each Investor and its officers, directors, members, employees and
agents, successors and assigns, and each other person, if any, who controls such
Investor within the meaning of the 1933 Act, against any losses, claims,
damages, liabilities or expenses (including reasonable attorney’s fees), joint
or several, to which they may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities or expenses (or actions
in respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, any preliminary Prospectus or final Prospectus, or any amendment or
supplement thereof, or the omission or alleged omission to state a material fact
required to be stated or necessary to make the statements therein misleading;
(ii) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by the
Company filed

 

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in any state or other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such application,
document or information herein called a “Blue Sky Application”); (iii) the
omission or alleged omission to state in a Blue Sky Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (iv) any violation by the Company or its agents of any rule or
regulation promulgated under the 1933 Act applicable to the Company or its
agents and relating to action or inaction required of the Company in connection
with such registration; or (v) any failure to register or qualify the
Registrable Securities included in any such Registration Statement in any state
where the Company or its agents has affirmatively undertaken or agreed in
writing that the Company will undertake such registration or qualification on an
Investor’s behalf and will reimburse such Investor, and each such officer,
director, member, employee and agent, successors and assigns, and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage, liability
or expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by such Investor or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus.

 

(b)           Indemnification by the Investors.  Each Investor agrees, severally
but not jointly, to indemnify and hold harmless, to the fullest extent permitted
by law, the Company, its directors, officers, employees, stockholders and each
person who controls the Company (within the meaning of the 1933 Act) against any
losses, claims, damages, liabilities and expense (including reasonable
attorneys’ fees) resulting from any untrue statement of a material fact or any
omission of a material fact required to be stated in the Registration Statement
or Prospectus or preliminary Prospectus or amendment or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but only
to the extent that such untrue statement or omission is contained in any
information furnished in writing by such Investor to the Company specifically
for inclusion in such Registration Statement or Prospectus or amendment or
supplement thereto.  In no event shall the liability of an Investor be greater
in amount than the dollar amount of the proceeds (net of all expense paid by
such Investor in connection with any claim relating to this Section 6, the
amount of any damages such Investor has otherwise been required to pay by reason
of such untrue statement or omission and any underwriting discounts and
commissions) received by such Investor upon the sale of the Registrable
Securities included in the Registration Statement giving rise to such
indemnification obligation.

 

(c)           Conduct of Indemnification Proceedings.  Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of

 

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interest exists between such person and the indemnifying party with respect to
such claims (in which case, if the person notifies the indemnifying party in
writing that such person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person); and provided, further, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation.  It is
understood that the indemnifying party shall not, in connection with any single
proceeding in the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys at any time for all indemnified parties.  No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.

 

(d)           Contribution.  If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage, liability or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.  No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. 
In no event shall the contribution obligation of a holder of Registrable
Securities be greater in amount than the dollar amount of the proceeds (net of
all expenses paid by such holder in connection with any claim relating to this
Section 6, the amount of any damages such holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission and any underwriter discounts and commissions) received by it upon the
sale of the Registrable Securities giving rise to such contribution obligation.

 

7.     MISCELLANEOUS.

 

(a)           Amendments and Waivers.  This Agreement may be amended only by a
writing signed by the Company and the Required Investors.  The Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of the Required Investors.

 

(b)           Notices.  All notices and other communications provided for or
permitted hereunder shall be made as set forth in the Purchase Agreement.

 

(c)           Assignments and Transfers by Investors.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the Investors and
their respective successors and assigns.  An Investor may transfer or assign, in
whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Registrable Securities by such Investor to
such person, provided that such Investor complies with all laws

 

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applicable thereto and provides written notice of assignment to the Company
promptly after such assignment is effected.

 

(d)           Assignments and Transfers by the Company.  This Agreement may not
be assigned by the Company (whether by operation of law or otherwise) without
the prior written consent of the Required Investors, provided, however, that the
Company may assign its rights and delegate its duties hereunder to any surviving
or successor corporation in connection with a merger or consolidation of the
Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company’s assets to another corporation, without
the prior written consent of the Required Investors, after notice duly given by
the Company to each Investor.

 

(e)           Benefits of the Agreement.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

 

(f)            Counterparts; Faxes.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement may also
be executed via facsimile, which shall be deemed an original.

 

(g)           Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

 

(h)           Severability.  Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.  To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.

 

(i)            Further Assurances.  The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

 

(j)            Entire Agreement.  This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein.  This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

 

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(k)           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. 
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of New York without regard to the choice of law
principles thereof.  Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby. 
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement.  Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court.  Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.  EACH OF THE PARTIES HERETO WAIVES ANY RIGHT
TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

The Company:

WORLD HEART CORPORATION

 

 

 

 

 

By:

/s/ Morgan R. Brown

 

Name:

Morgan R. Brown

 

Title:

Executive Vice-President and Chief Financial Officer

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

VENROCK ASSOCIATES V. L.P.

 

By: Venrock Management V, LLC

 

Its: General Partner

 

 

 

VENROCK PARTNERS V, L.P.

 

By: Venrock Partners Management V, LLC

 

Its: General Partner

 

 

 

VENROCK ENTREPRENEURS FUND V, L.P.

 

By: VEF Management V, LLC

 

Its: General Partner

 

 

 

 

 

By:

/s/ David L. Stepp

 

 

David L. Stepp

 

 

Authorized Signatory

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

Venrock

 

3340 Hillview Avenue

 

Palo Alto, CA 94304

 

 

 

Attention:

David L. Stepp

 

 

 

Tel: 650-475-3734

 

Fax: 650-561-9180

 

Email: dstepp@venrock.com

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

Special Situations Fund III QP, L.P.

 

 

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Austin Marxe

 

 

Name: Austin Marxe

 

 

Title: Managing Director

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

c/o

 

Street: 527 Madison Avenue, Suite 2600

 

City/State/Zip: New York, NY 10022

 

Attention:

Marianne Kelly / Austin Marxe

 

Tel: 212-319-6670

 

Fax: 212-319-6677

 

Email:

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

Special Situations Cayman Fund, L.P.

 

 

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Austin Marxe

 

 

Name: Austin Marxe

 

 

Title: Managing Director

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

c/o

 

Street: 527 Madison Avenue, Suite 2600

 

City/State/Zip: New York, NY 10022

 

Attention:

Marianne Kelly / Austin Marxe

 

Tel: 212-319-6670

 

Fax: 212-319-6677

 

Email:

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

Special Situations Private Equity Fund, L.P.

 

 

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Austin Marxe

 

 

Name: Austin Marxe

 

 

Title: Managing Director

 

 

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

c/o

 

Street: 527 Madison Avenue, Suite 2600

 

City/State/Zip: New York, NY 10022

 

Attention:

Marianne Kelly / Austin Marxe

 

Tel: 212-319-6670

 

Fax: 212-319-6677

 

Email:

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

Special Situations Life Sciences, L.P.

 

 

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Austin Marxe

 

 

Name: Austin Marxe

 

 

Title: Managing Director

 

 

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

c/o

 

Street: 527 Madison Avenue, Suite 2600

 

City/State/Zip: New York, NY 10022

 

Attention:

Marianne Kelly / Austin Marxe

 

Tel: 212-319-6670

 

Fax: 212-319-6677

 

Email:

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

NEW LEAF VENTURES II, L.P.

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By: New Leaf Venture Associates II, L.P.

 

Its: General Partner

 

 

 

 

By: New Leaf Venture Management II, L.L.C.

 

 

Its: General Partner

 

 

 

By:

/s/ Craig L. Slutzkin

 

 

 

 

By:

Craig L. Slutzkin

 

Title:

Chief Financial Officer

 

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

New Leaf Ventures II, L.P.

 

c/o New Leaf Venture Partners, L.L.C.

 

Street: 7 Times Square, Suite 3502

 

City/State/Zip: New York, NY 10036

 

Attention: Craig Slutzkin

 

Tel: 646-871-6420

 

Fax: 646-871-6450

 

Email: Craig@nlvpartners.com

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

SRB Greenway Opportunity Fund, L.P.

 

 

 

By: SRB Management L.P., General Partner

 

 

 

By: BC Advisors, L.L.C., General Partner

 

 

 

 

 

By:

/s/ Steven R. Becker

 

Name: Steven R. Becker, Member

 

 

 

ADDRESS FOR NOTICE

 

 

 

SRB Greenway Opportunity Fund (QP), L.P.

 

300 Crescent Court,Suite 1111

 

Dallas, TX 75201

 

Tel: 214-756-6016

 

Fax: 214-756-6079

 

Attention: Steve Becker

 

Email: steve@greenwaycapital.com

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

SRB Greenway Opportunity Fund (QP), L.P.

 

 

 

By: SRB Management L.P., General Partner

 

 

 

By: BC Advisors, L.L.C., General Partner

 

 

 

 

 

By:

/s/ Steven R. Becker

 

Name: Steven R. Becker, Member

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

SRB Greenway Opportunity Fund (QP), L.P.

 

300 Crescent Court,Suite 1111

 

Dallas, TX 75201

 

Tel: 214-756-6016

 

Fax: 214-756-6079

 

Attention: Steve Becker

 

Email: steve@greenwaycapital.com

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

IROQUOIS MASTER FUND LTD.

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Joshua Silverman

 

 

 

 

By:

Joshua Silverman

 

 

 

 

Title:

Authorized Signatory

 

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

Street: 641 Lexington Avenue, 26th Floor

 

 

 

City/State/Zip: New York, NY 10022

 

 

 

Attention: Joshua Silverman

 

 

 

Tel: 212-974-3070

 

 

 

Fax: 212-207-3452

 

 

 

Email:JSilverman@icfund.com

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

COUGAR TRADING LLC

 

 

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Emanuel E. Geduld

 

Name:

 Emanuel E. Geduld

 

Title:

Sr. Managing Member

 

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

c/o Carl J. Bennett

 

Cougar Trading LLC

 

Street: 1370 Avenue of the Americas

 

City/State/Zip: New York, NY 10019

 

 

 

Attention: Carl J. Bennet

 

Tel: 212-702-0690

 

Fax: 212-319-8066

 

Email: cbennet@cougartrading.com

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

RICHARD H. & CATHERINE F. OSGOOD

 

TTEES FOR THE OSGOOD FAMILY

 

TRUST UAD 4/14/2000

 

 

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Richard H. Osgood

 

Name:

Richard H. Osgood

 

Title:

Richard H. Osgood, Trustee

 

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

Street: One Bush Street #1700

 

City/State/Zip: San Francisco, CA 94104

 

 

 

Attention: Richard H. Osgood

 

Tel: 415-274-6833

 

Fax: 415-274-6887

 

Email: rick.osgood@wedbush.com

 

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NAME OF INVESTING ENTITY/ INDIVIDUAL

 

 

 

SOLAR GROUP S.A.

 

 

 

AUTHORIZED SIGNATORY

 

 

 

By:

/s/ Evelyn Todd

 

Name:

Evelyn Todd

 

Title:

Secretary

 

 

 

 

 

ADDRESS FOR NOTICE

 

 

 

c/o: Secretary

 

Street: 14 Camden North Road

 

City/State/Zip: Paget, Bermuda DV-03

 

 

 

Attention: Evelyn Todd

 

Tel: 441-234-2326

 

Fax: 419-844-8142

 

Email: jjtod@northrock.bm

 

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Exhibit A

 

Plan of Distribution

 

The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their shares of common stock or interests in shares of common stock on
any stock exchange, market or trading facility on which the shares are traded or
in private transactions.  These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.

 

The selling stockholders may use any one or more of the following methods when
disposing of shares or interests therein:

 

·  ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

·  block trades in which the broker-dealer will attempt to sell the shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction;

 

·  purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

·  an exchange or over-the-counter distribution in accordance with the rules of
the applicable exchange or other market;

 

·  privately negotiated transactions;

 

·  short sales effected after the date the registration statement of which this
Prospectus is a part is declared effective by the SEC;

 

·  through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

 

·  broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;

 

·  a combination of any such methods of sale; and

 

·  any other method permitted by applicable law.

 

The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of

 

1

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common stock, from time to time, under this prospectus, or under an amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.  The selling stockholders also may transfer the shares of common
stock in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.

 

In connection with the sale of our common stock or interests therein, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume.  The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities.  The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

 

The aggregate proceeds to the selling stockholders from the sale of the common
stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any.  Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents.  We will not receive any of the proceeds from this offering. 
Upon any exercise of the warrants by payment of cash, however, we will receive
the exercise price of the warrants.

 

The selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that they meet the criteria and conform to the requirements of that
rule.

 

The selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the common stock or interests therein may be
“underwriters” within the meaning of Section 2(11) of the Securities Act.  Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act. 
Selling stockholders who are “underwriters” within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.

 

To the extent required, the shares of our common stock to be sold, the names of
the selling stockholders, the respective purchase prices and public offering
prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the
common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers.  In

 

2

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addition, in some states the common stock may not be sold unless it has been
registered or qualified for sale or an exemption from registration or
qualification requirements is available and is complied with.

 

We have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates.  In
addition, to the extent applicable we will make copies of this prospectus (as it
may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act.  The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.

 

We have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.

 

We have agreed with the selling stockholders to keep the registration statement
of which this prospectus constitutes a part effective until the earlier of
(1) such time as all of the shares covered by this prospectus have been disposed
of pursuant to and in accordance with the registration statement or (2) the date
on which the shares may be sold without restriction pursuant to Rule 144 of the
Securities Act.

 

3

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