GUARANTEE

                               (WORLD HEART INC.)

TO:  Argosy Bridge Fund L.P.I. and Sherfam Inc. (together, the "Lenders")

     WHEREAS the Lenders and World Heart  Corporation  (the  "Debtor") and World
Heart Inc.  (the  "Guarantor")  have entered into a loan  agreement  dated as of
January  28, 2003  (including  as same may be  amended,  supplemented,  revised,
restated or replaced from time to time, the "Loan Agreement").

     IN CONSIDERATION of the Lenders extending loans to the Debtor and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Guarantor,  the Guarantor hereby unconditionally  guarantees
payment to the Lenders of all  obligations,  indebtedness and liabilities of any
kind, present and future, direct or indirect, absolute or contingent, matured or
not, joint or several,  of the Debtor to the Lender under the Loan Agreement and
the Security ("Guaranteed Obligations") whether as principal or surety, together
with all  reasonable  costs  and  expenses  (including  reasonable  legal  fees)
incurred by the Lenders,  any receiver,  receiver  manager,  representatives  or
agent in the  enforcing  or  endeavouring  to collect any of such  indebtedness,
obligations or liabilities,  and interest thereon or enforcing any of its rights
hereunder;   (all  of  which  present  and  future  indebtedness,   obligations,
liabilities,  costs,  expenses and interest arising under the Loan Agreement and
Security  are  herein  collectively  referred  to as the  "Indebtedness"  by the
Debtor).

     AND IT IS AGREED THAT:

1.   The Guarantor  hereby  affirms that the Guarantor is a primary  obligor and
     that this Guarantee is not merely a guaranty of  collection,  is continuing
     in nature and applies to all Guaranteed  Obligations,  whether existing now
     or in the  future,  including  Guaranteed  Obligations  arising or accruing
     before or after  bankruptcy  of Debtor.  The  Guarantor  agrees to make all
     payments under this  Guarantee  upon demand by the Lenders.  Each and every
     default in payment of the  Indebtedness  by the Debtor shall give rise to a
     separate  cause of action  hereunder  and  separate  suits  may be  brought
     hereunder as each cause of action  arises.  In the event of such a default,
     the Lenders shall have the right to proceed first and directly  against the
     Guarantor under this Guarantee without  proceeding against any other person
     or entity or exhausting  any other  remedies which it may have, and without
     resorting  to any  security  of the  Debtor  held by it.  Furthermore,  the
     Guaranteed Obligations are independent of the obligations and duties of the
     Debtor  under the Loan  Agreement  and a separate  action or actions may be
     brought and prosecuted against the Guarantor  hereunder,  whether or not an
     action is brought  against the Debtor under the Loan Agreement or any other
     person,  whether or not the Debtor or the  Guarantor or any other person or
     entity may be joined in any such action or  actions,  and whether or not an
     action or actions may be brought  against the Guarantor or any other person
     or entity.

2.   No change in the name, objects, capital stock or constitution of the Debtor
     or the  Guarantor  shall in any way release,  discharge,  limit,  lessen or
     otherwise  affect the  liability of the  Guarantor,  either with respect to
     transactions  occurring  before or after any such  change,  and the Lenders
     shall not be concerned to see or inquire into the powers of
<PAGE>

                                      -2-

     the Debtor, the Guarantor, or any of their directors or other agents acting
     on behalf of the  Debtor or the  Guarantor,  or any of their  directors  or
     other  agents  acting or  purporting  to act on their  behalf,  and moneys,
     advances, renewals or credits in fact borrowed or obtained from the Lenders
     in  professed  exercise of such powers  shall be deemed to form part of the
     Indebtedness  notwithstanding  that such  borrowing or obtaining of moneys,
     advances,  renewals  or  credits  shall be in excess  of the  powers of the
     Debtor,  the Guarantor or their  directors or other agents  aforesaid,  the
     Debtor  shall not be a legal or  suable  entity  or there  shall  exist any
     irregularity,  defect or  informality in the borrowing or obtaining of such
     moneys,  advances,  renewals or  credits,  the whole  whether  known to the
     Lenders or not.

3.   The  Guarantor  hereby waives  protest,  promptness,  diligence,  notice of
     acceptance,  demand for  payment  and  notice of default or non  payment in
     respect of the Loan Agreement and the Guarantor waives all other notices of
     every  kind  and  description  with  respect  to  any  indebtedness  now or
     hereafter  provided by any  statute or rule of law.  The  Guarantor  hereby
     waives any requirement that the Lenders protect,  secure, perfect or insure
     any security  interest or lien or any property  subject  thereto or exhaust
     any right or take any action  against  the  Debtor,  or  against  any other
     guarantor or any other  person,  entity or any  collateral.  The  Guarantor
     hereby  waives,  to the fullest  extent  permitted by  applicable  law, the
     benefit of any  statute  of  limitations  which may  affect  its  liability
     hereunder  or the  enforcement  hereof.  Any payment by the Debtor or other
     circumstance  that  operates to toll any statute of  limitations  as to the
     Debtor  shall not  operate  to toll the  statute of  limitations  as to the
     Guarantor.

4.   The Lenders  shall not be bound to seek or exhaust their  recourse  against
     the Debtor or any other persons or to realize on any securities it may hold
     in respect of the  Indebtedness  before being  entitled to payment from the
     Guarantor under this Guarantee.

5.   All  monies  received  by a Lender in respect  of the  Indebtedness  may be
     applied on such part or parts of the Indebtedness as the Lender may see fit
     and  the  Lender  shall  at  all  times  and  from  time  to  time,  in any
     circumstance  where the Lender would otherwise be required to return to the
     Guarantor any monies paid to the Lender by the Guarantor, have the right to
     change any  appropriation  of any moneys  received by it and to reapply the
     same on any other part or parts of the  Indebtedness  as the Lender may see
     fit, notwithstanding any previous application by whomsoever made.

6.   All dividends, compositions and moneys received by a Lender from the Debtor
     or the  Guarantor  or from any  other  person or  estate  capable  of being
     applied by the Lender in  reduction of the  Indebtedness  shall be regarded
     for all purposes as payments in gross, and, subject to the aforesaid,  each
     Lender  shall be entitled to prove  against the estate of the Debtor or the
     Guarantor  upon any insolvency or winding-up in respect of the whole of the
     Indebtedness,  and the Guarantor  shall not have any right to be subrogated
     to the Lenders in respect of any such proof  until the  Lenders  shall have
     received from such estate payment in full of their claim with interest.

7.   This  Guarantee will not be diminished or affected on account of any act or
     failure to act on the part of the Lenders which would  prevent  subrogation
     from  operating in favour of the  Guarantor.  The Guarantor  agrees that it
     shall  not have and  hereby  waives  any  rights
<PAGE>

                                      -3-

     of subrogation  under the Guarantee until such time as all  Indebtedness is
     paid in full to the  Lenders.  All monies  received by the  Guarantor  as a
     result of any such  subrogation  shall be received in trust for the Lenders
     until payment and satisfaction of the Indebtedness in full.

8.   The Lenders,  without  exonerating in whole or in part the  Guarantor,  may
     grant time, renewals, extensions,  indulgences, releases and discharges to,
     may take security  from and give the same and any or all existing  security
     up  to,  may  abstain  from  taking  security  from  or  from   perfecting,
     registering,  renewing or realizing upon security of and may otherwise deal
     with the  Debtor or the  Guarantor  and all other  persons  (including  the
     Guarantor and any other guarantor) and security as the Lenders may see fit.

9.   Without  in any  manner  limiting  the  generality  of the  foregoing,  the
     Guarantor  agrees that the Lenders may,  from time to time,  consent to any
     action or non-action of the Debtor or the Guarantor  which,  in the absence
     of such  consent,  violates  or may  violate any  agreement  or  agreements
     between the Debtor or the Guarantor and the Lenders  relating to any of the
     Indebtedness, with or without consideration on such terms and conditions as
     may be  acceptable  to  the  Lenders,  without  in  any  manner  affecting,
     releasing  or  impairing  the  liability or  obligations  of the  Guarantor
     hereunder.

10.  This shall be a continuing,  absolute and unconditional Guarantee and shall
     cover  all  the  Indebtedness,   shall  not  be  subject  to  any  set-off,
     counterclaim,  reduction or diminution of an obligation,  or any defence of
     any kind or nature (other than the payment of the  Indebtedness)  which the
     Guarantor  may have or assert  against  the  Lenders and shall apply to and
     secure any ultimate balance owing to the Lenders,  notwithstanding that any
     other security for the repayment of the Indebtedness or for the obligations
     of the  Guarantor  to the  Lenders  may no longer be  enforceable,  but the
     Lenders shall not be obliged to exhaust its recourse  against the Debtor or
     other  persons or the  securities  they may hold before  being  entitled to
     payment from the  Guarantor  of all of the  Indebtedness.  The  Guarantor's
     liability hereunder shall in no way be limited or impaired by any or all of
     the following: (i) the failure of the Lenders to exercise or to exhaust any
     right or remedy or take any action  against the Debtor;  (ii) any change in
     the time,  manner or place of payment or performance,  of all or any of the
     obligations  of the Debtor under the Loan  Agreement or any  extensions  of
     time for payment or performance,  whether in whole or in part, of the terms
     of the Loan  Agreement on the part of the Lenders to be paid,  performed or
     observed, as applicable;  (iii) any failure or delay of the to exercise, or
     any lack of  diligence in  exercising,  any right or remedy with respect to
     the Loan  Agreement or this  Guarantee;  (iv) any dealings or  transactions
     between the Lenders and the Debtor, whether or not the Guarantor shall be a
     party to or cognizant of the same, other than the payment of the Guaranteed
     Obligations; (v) any financial decline, bankruptcy,  insolvency, assignment
     for the benefit of creditors,  receivership,  trusteeship or dissolution of
     or affecting the Debtor;  (vi) any other guaranty now or hereafter executed
     by the  Guarantor  or any  other  guarantor  or the  release  of any  other
     guarantor  from or failure of any other Person to assume  liability for the
     payment,  performance or observance of the Guaranteed Obligations or any of
     the terms of the Loan Agreement,  or any other agreement on the part of the
     Lenders to be paid,  performed  or observed  whether by operation of law or
     otherwise;  (vii) any rights,  powers or privileges  the Lenders may now or
     hereafter  have  against  any  Person  or  collateral  in  respect  of  the
     Guaranteed Obligations;(viii) the failure
<PAGE>

                                      -4-

     to give the  Guarantor  any notices  whatsoever  (the  Guarantor  expressly
     agreeing  that  upon  the  Debtor's   failure  to  perform  the  Guaranteed
     Obligations,  the  Guarantor  shall  perform  such  Guaranteed  Obligations
     immediately  upon request from the  Lenders);  (ix) any other  circumstance
     which might in any manner or to any extent  constitute a defense  available
     to the  Guarantor,  or vary the risk of the Guarantor,  or might  otherwise
     constitute a legal or equitable  discharge or defense available to a surety
     or guarantor,  whether similar or dissimilar to the foregoing;  (x) any and
     all  notice  of the  creation,  renewal  or  extension  of  the  Guaranteed
     Obligations; (xi) any change, restructuring or termination of the structure
     or  existence  of the Debtor;  and (xii) the  invalidity,  irregularity  or
     unenforceability,  in  whole  or in  part,  of this  Guarantee  or the Loan
     Agreement,  and, in any such case,  whether  with or without  notice to the
     Guarantor and with or without consideration.

11.  Notwithstanding  the provisions of any statute relating to interest payable
     by debtors,  this Guarantee  shall remain in full force and effect whatever
     the rate of interest  received or demanded by the Lenders.  No  invalidity,
     irregularity  or  unenforceability  (by reason of any bankruptcy or similar
     law, any law or order of any  government  or agency  thereof  purporting to
     reduce,  amend or otherwise  affect the  Indebtedness  or any  liability or
     obligation of the Guarantor to the Lenders) of the  Indebtedness  or of any
     liabilities  or  obligations  of the  Guarantor  to the  Lenders  or of any
     security  therefor shall affect,  impair or be a defence to this Guarantee.
     If one or more of the provisions contained herein shall be invalid, illegal
     or unenforceable in any respect, the validity,  legality and enforceability
     of the  remaining  provisions  contained  herein  shall  not in any  way be
     affected or impaired thereby.

12.  The  Guarantor  shall  at all  times  and from  time to time  do,  execute,
     acknowledge  and deliver or cause to be done,  executed,  acknowledged  and
     delivered  all  and  singular  every  such  further  act,  deed,  transfer,
     assignment,   assurance,   document  and  instrument  as  the  Lenders  may
     reasonably  require for the better  accomplishing  and effectuating of this
     Guarantee and the  provisions  contained  herein,  and every officer of the
     Lenders and each of them are irrevocably appointed attorney or attorneys of
     the Guarantor from and after any demand for payment having been made by the
     Lenders upon the Guarantor hereunder which has not been remedied or waived,
     to  execute  in the name and on behalf of the  Guarantor  any  document  or
     instrument for the said purpose.

13.  This Guarantee shall continue to be effective or be reinstated (as the case
     may be) if at any time payment by the Debtor or the Guarantor of all or any
     part of the Indebtedness or the obligations of the Guarantor to the Lenders
     is  rescinded  or must  otherwise  be  returned  by the  Lenders  upon  the
     insolvency,  bankruptcy or reorganization of the Debtor or the Guarantor or
     otherwise, all as though such payment to the Lenders had not been made.

14.  The Lenders  may assign,  transfer  and  deliver to any  transferee  of the
     Indebtedness  or any part  thereof the  liability  and  obligations  of the
     Guarantor  under this  Guarantee and any security  documents or instruments
     held by the  Lenders  in respect of the  Guarantee,  provided  that no such
     assignment,  transfer or delivery  shall  release the  Guarantor  from said
     liability.  Such  transferee  shall be vested with all powers and rights of
     the Lenders hereunder and under such security documents or instruments, but
     the Lenders  shall  retain all rights and powers  with  respect to any such
     security   documents  or  instruments  not  so  assigned,   transferred  or
     delivered.
<PAGE>

                                      -5-

15.  This  Guarantee  shall be binding upon the Guarantor and its successors and
     permitted  assigns  provided  that the  Guarantor may not assign any of its
     rights or obligations  hereunder  without the prior written  consent of the
     Lenders and shall  enure to the  benefit of the Lenders and its  successors
     and assigns.

16.  The Guarantor  acknowledges  that this Guarantee has been delivered free of
     any conditions and that no representations  have been made to the Guarantor
     affecting the liability of the Guarantor  under this  Guarantee save as may
     be  specifically  embodied  herein and  agrees  that this  Guarantee  is in
     addition to and not in  substitution  for any other guarantee held or which
     may  hereafter  be held by the Lenders.  The rights,  remedies and benefits
     herein are  cumulative  and not in  substitution  for or  exclusive  of any
     rights, remedies or benefits which the Lenders may otherwise have.

17.  Any account  settled or stated  between the Debtor and the Lenders shall be
     accepted by the Guarantor as conclusive  evidence,  absent  manifest error,
     that the amount  thereby  appearing  due by the Debtor to the Lenders is so
     due and if no such account has been so settled  immediately  before  demand
     for payment under this  Guarantee,  any account stated by the Lenders shall
     be accepted by the Guarantor as conclusive  evidence of the amount which at
     the date of the  account  so  settled or stated is due by the Debtor to the
     Lenders.

18.  If demand for, or  acceleration  of the time for,  payment by the Debtor of
     any   Indebtedness   is  stayed   upon  the   insolvency,   bankruptcy   or
     reorganization of the Debtor, the Indebtedness  otherwise subject to demand
     for payment or acceleration  shall  nonetheless be payable by the Guarantor
     hereunder forthwith on demand by the Lenders.

19.  This Guarantee shall be construed in accordance with and be governed by the
     laws of the State of New York  applicable  therein  and for the  purpose of
     legal proceedings,  this Guarantee shall be deemed to have been made in the
     State of New York  and to be  performed  there,  and the  state or  federal
     Courts  located in the State of New York shall have  jurisdiction  over all
     disputes  which may arise under this  Guarantee  and the  Guarantor  hereby
     irrevocably and unconditionally  submits to the non-exclusive  jurisdiction
     of such Courts.  The Guarantor and Lenders hereby irrevocably waive, to the
     fullest  extent  possible,   the  defence  of  an  inconvenient  forum  and
     irrevocably  agrees to be bound by any final  judgement of any court of the
     State of New York.  The Guarantor and the Lenders agree that a judgement or
     order of any such  court  may be  enforced  in other  jurisdictions  in any
     manner provided by law.

20.  All  payments  made  by the  Guarantor  to the  Lenders  pursuant  to  this
     Guarantee  shall be made free and  clear of and  without  deduction  for or
     withholding  of any and all  present  and future  taxes,  levies,  imposts,
     deductions,  stamp taxes, charges and withholdings with respect thereto. If
     any such amount is deducted  or withheld  from any payment to the  Lenders,
     then the Guarantor shall promptly remit to the Lenders,  in the currency in
     which such payment is to be made,  the equivalent of the amount so deducted
     or withheld together with relevant receipts addressed to the Lenders.

21.  With  respect  to any  portion  of the  Indebtedness  which is payable in a
     currency other than Canadian currency (the "Foreign Currency  Obligation or
     Foreign Currency"), the following provisions shall apply:
<PAGE>

                                      -6-

     (a)  Payment  hereunder  with  respect to the Foreign  Currency  Obligation
          shall be made in  immediately  available  funds in lawful money of the
          jurisdiction in the currency of which the Foreign Currency  obligation
          is payable (the "Foreign Currency") in such form as shall be customary
          at the time of payment for  settlement  of  international  payments in
          Ottawa,  Ontario without set-off or counterclaim and free and clear of
          and  without  deduction  for any and all  present  and  future  taxes,
          levies,  imposts,  stamp taxes,  reductions,  charges and withholdings
          with respect thereto.

     (b)  The Guarantor  shall hold the Lenders  harmless from any loss incurred
          by the  Lenders  arising  from any  change  in the  value of  Canadian
          currency  in relation  to the  Foreign  Currency  between the date the
          Foreign  Currency  Obligation  becomes  due  and the  date of  Payment
          thereof.

     (c)  If for the purpose of obtaining  judgment in any court it is necessary
          to convert a sum due  hereunder in the Foreign  Currency into Canadian
          funds ("Canadian dollars"), the rate of exchange used shall be that at
          which in accordance  with normal banking  procedures the Lenders could
          purchase the Foreign  Currency with  Canadian  dollars on the business
          day preceding that on which final judgment is given.

     (d)  The  obligation  of the  Guarantor in respect of any Foreign  Currency
          Obligation due by it to the Lenders  hereunder shall,  notwithstanding
          any judgment in Canadian  dollars,  be  discharged  only to the extent
          that on the business day  following  receipt by the Lenders of any sum
          adjudged  to be so  due  in  Canadian  dollars,  the  Lenders  may  in
          accordance  with  normal  banking  procedures   purchase  the  Foreign
          Currency  with the  Canadian  dollars;  if the  amount of the  Foreign
          Currency  so  purchased  is less  than the sum  originally  due to the
          Lenders in the Foreign  Currency,  the Guarantor agrees, as a separate
          obligation and  notwithstanding  any such  judgment,  to indemnify the
          Lenders  against  such  loss  and if the  Foreign  Currency  purchased
          exceeds the sum originally due to the Lenders in the Foreign Currency,
          the  Lenders  agrees  to remit  such  excess to the  Guarantor  as the
          Guarantor may be entitled thereto.

22.  All  notices,  requests and demands  hereunder  shall be in writing and (a)
     made to the Lenders at its address set forth below and to the  Guarantor at
     its office set forth  below,  or to such other  address as either party may
     designate by written notice to the other in accordance with this provision,
     and (b)  deemed  to have  been  given  or made:  if  delivered  in  person,
     immediately upon delivery; if by facsimile  transmission,  immediately upon
     sending and upon confirmation of receipts;  and if by nationally recognized
     overnight  courier service with instructions to deliver within the next two
     (2) business days, on two (2) business days after sending:
<PAGE>

                                      -7-

         For the Guarantor:

                  World Heart Inc.
                  c/o 1 Laser Street
                  Ottawa, Ontario  K2E 7V1

                  Attention:  Vice President
                  Telefax:  (613) 226-4744

         For the Lenders:

                  Argosy Bridge Fund L.P.I.
                  141 Adelaide Street West
                  Suite 760
                  Toronto, Ontario  M5H 3L5

                  Attention:  Mr. Michael Boyd
                  Fax No:  (416) 367-3895

         For the Sherfam:

                  Sherfam Inc.
                  150 Signet Drive
                  Weston, Ontario  M9L 1T9

                  Attention:  Mr. Meyer F. Florence
                  Fax No:  (416) 401-3812

23.  Time shall be of the essence of all provisions of this Guarantee.
<PAGE>

     AS WITNESS the hand and seal of the Guarantor at Ottawa, as of the 28th day
of January, 2003.

                                     WORLD HEART INC.

                                     Per: /s/Ian Malone
                                         ---------------------------------------
                                         Name  Ian W. Malone
                                         Title Vice President