EXHIBIT 10.3


 


January 24, 2005


 


 


Pratap S. Khanwilkar, MS, MBA

1651 E. Shadow Cove

Salt Lake City, Utah 84121


 


Dear Pratap:


 


Further to recent discussions, we are please to
confirm our offer of employment with World Heart Corporation’s (the “Company”
or “WorldHeart”) subsidiary World Heart Inc. for the position of Vice
President, Rotary Systems and Business Development, reporting to Jal S.
Jassawalla, the Company’s President and Chief Executive Officer.


 


As an officer of the Company, you will serve as the senior
executive at the Salt Lake City location of the Company and oversee and enable
successful development and commercialization of the adult HeartQuest LVAD.  An additional key responsibility will be to
evaluate and recommend business development opportunities that would result in
expanding the applicability of existing product lines and the acquisition of
new products and services that meet the Company’s objectives.


 


The following is designed to serve as a record of the
essential terms of employment, which we trust, are in accordance with our
discussions.


 


	
  COMMENCEMENT OF EMPLOYMENT:

  	
   

  	
  On the closing of the transactions (the
  “Closing Date”) contemplated by the Asset Purchase Agreement, made on or
  about January 25, 2005 (“Signing Date”), between World Heart Corporation
  and MedQuest Products, Inc. (“MedQuest”). This offer is contingent on
  the closing of the above transaction, which is expected to occur in
  March 2005.

  
	
   

  	
   

  	
   

  
	
  REMUNERATION:

  	
   

  	
  Your initial gross base salary will be
  $165,000 per annum payable bi-weekly. Your base salary will be reviewed in
  January 2006, in accordance with the Company’s compensation policy.

  
	
   

  	
   

  	
   

  
	
  OPTIONS:

  	
   

  	
  On the Closing Date and upon joining the
  Company, you will receive a grant of options to purchase 425,000 common
  shares of the Company (“Date of Grant”), subject to shareholders’ approval
  and regulatory approval. The options shall be exercisable at a price per
  share based on the closing price of the common shares of the Company on the
  Toronto Stock Exchange on the day immediately prior to the Signing Date. The
  options will vest as to one-third on each of the first, second and third
  anniversary dates of the

  



 





















 


	
   

  	
   

  	
  Date of Grant. In the event that your
  employment is terminated by the Company without cause (as determined in good
  faith by the Company), your unvested options would continue to vest over the
  three year vesting period. Except as set out in this letter, the options
  shall otherwise be subject to the terms of the Company’s Employee Stock
  Option Plan and any option grant documents. At the discretion of the
  Company’s Board of Directors, you will also be eligible to receive future
  grants of options in the Company.

  
	
   

  	
   

  	
   

  
	
  BENEFITS:

  	
   

  	
  You will be eligible to participate in
  the WorldHeart medical, vision and dental benefit program the first day of
  the month following your date of hire. We will arrange medical insurance
  coverage such that there is no gap in your coverage in the transition from
  MedQuest to WorldHeart. You will be covered under the group life insurance
  program effective your date of hire. You will be eligible to participate in
  the WorldHeart 401(k) Savings & Investment Plan on the first of the
  month following thirty (30) days of employment. The Company’s Employee
  Handbook outlines other WorldHeart benefits for which you might be eligible,
  and other applicable corporate policies that you are expected to follow, if
  not superseded by the terms in this offer of employment.

  
	
   

  	
   

  	
   

  
	
  YEARS OF SERVICE:

  	
   

  	
  As a result of WorldHeart’s purchase of
  certain assets of MedQuest, WorldHeart and MedQuest agreed that your years of
  service with MedQuest will be recognized by the Company to determine your
  eligibility to participate in our employee benefit plans and programs,
  including vacation policies, severance, and vesting of 401K matched
  contributions, as in effect from time to time. In accordance with our
  vacation policy for 2005, you will accrue vacation in 2005 based on four
  (4) weeks of annual vacation. You will also be allowed to carry forward
  a maximum of 20 days of accrued vacation from MedQuest to WorldHeart.

  
	
   

  	
   

  	
   

  
	
  OFFICE HOURS:

  	
   

  	
  Your normal workweek will consist of
  forty (40) hours to be usually worked over a five-day workweek. Due to the
  nature of the Company’s business and the executive status of your position,
  it may be necessary from time to time to adjust your schedule and work 

  



 


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  additional hours.

  
	
   

  	
   

  	
   

  
	
  PROPRIETARY RIGHTS AGREEMENT:

  	
   

  	
  As a condition of employment you must
  sign the attached agreement regarding confidential information and proprietary
  rights (Proprietary Rights Agreement). Due to the nature of the transaction
  between WorldHeart and MedQuest and your resulting transition from employment
  at MedQuest to employment at WorldHeart, it is understood that you will apply
  the knowledge, know-how, and information acquired as the result of employment
  at MedQuest to your employment and job responsibilities at WorldHeart.

  
	
   

  	
   

  	
   

  
	
  ELIGIBILITY TO WORK:

  	
   

  	
  In order to comply with federal
  regulations relative to “right to work” authorization (Immigration Reform Act
  of 1986), you will be required to present forms and documentation which
  establish your eligibility to work in the United States. Please complete
  Section I of the enclosed Form I-9, and bring it with you on your
  first day of employment with either: One document from List A; or two
  documents, one from List B and one from List C. Documents presented must
  be originals.

  



 


Please bring your employment eligibility documents
with you on your start date.  If you have
any further questions, do not hesitate to call Monica Lippis at (510) 563-4737.


 


This agreement may be terminated by either the Company
or yourself at any time upon delivery of two weeks prior written notice, or any
applicable minimum notice period prescribed by statutory or regulatory law.


 


This offer does not constitute an agreement of
guaranteed employment for any specific term or any other type of employment
contract.  As with all Company employees,
your employment with the Company is “at will” and may be terminated by your or
the Company at any time and with or without cause.


 


Without in any way limiting the foregoing, the Company
and MedQuest agreed that, as a part of the asset purchase transaction, you
would be entitled to receive severance as follows:


 


(i)                  If your employment is terminated by the Company without cause (as
determined in good faith by the Company) during the period from the date you
commence employment with the Company through the first anniversary of your
employment with the Company, you will be paid severance (in accordance with the
Company’s normal payroll policies) in the amount equal to your base salary that
would be payable for a period of 24 months less the number of months you were
employed by the Company.


 


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(ii)               After the first anniversary of the commencement of your employment
with the Company, you will be eligible to receive severance consistent with any
severance plan in effect at that time for similarly executives of the Company.


 


Notwithstanding the foregoing provisions, to the
extent required to comply with Section 409A of the U.S. Internal Revenue
Code, as amended, no severance payments will be made to you until after the
expiration of six (6) months following your separation from service with
the Company.  This six-month delay in
payment, if applicable, will not reduce the aggregate amount of any severance
that you may receive under the provisions stated above, and any period during
which you may be eligible to receive severance as stated in paragraph (i) immediately
above will be extended by the period of such delay.


 


This offer letter states the entire agreement of the
parties with respect to your employment with the Company and supersedes and
replaces all prior and contemporaneous agreements, understandings, negotiations
and discussions whether oral or written of the parties.  Also, beyond this letter there are no
warranties, representations, understandings or other agreements between the
parties in connection with the subject matter except as specifically set forth
in this offer letter and none has been relied on.


 


I am certain that you will find working at the Company
to be both challenging and rewarding and we look forward to you joining us.


 


	
  Sincerely,

  
	
   

  
	
  /s/ Jal S. Jassawalla

  	
   

  
	
   

  
	
  Jal S. Jassawalla

  
	
  President and CEO

  



 


 


I have been given a copy of this letter and have read
and understand its terms.  I hereby
accept the terms and conditions of employment outlined above.


 


 


	
  ACCEPTED

  	
  Date:

  	
  /s/ Pratap Khanwilkar

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
  1/24/05

  	
   

  
					



 


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PROPRIETARY RIGHTS
AGREEMENT


 


I, Pratap Khanwilkar, recognize that World Heart Inc.
(the Corporation) is engaged in the commercialization of circulatory support
medical devices, and that the Corporation will also provide technical support,
consultation and training services relating to those products.  I also recognize the importance of protecting
the Corporations Confidential Information and related rights acquired through
the Corporations expenditure of time, effort and money.


 


Therefore, because I wish to provide services to the
Corporation on the terms and conditions of my offer of employment letter dated
as of January 24, 2005, between the Corporation and me in the capacity in
which I will receive and/or contribute to the Corporation’s Confidential
Information, and in consideration of the salary and other amounts that I will
receive from the Corporation for my services, I agree to be bound by the
following terms and conditions:


 


1.0                                 For the purposes of this agreement:


 


1)                                      Confidential Information includes any of the following:


 


(i)                                     any and all versions of the products, and related documentation
owned or marketed by the Corporation;


 


(ii)                                  all developments (as defined below);


 


(iii)                               information regarding the Corporation business operations, methods
and practices, including marketing strategies, product pricing, margins, staff
remuneration and information regarding the financial affairs of the
Corporation;


 


(iv)                              the names of the Corporations clients and the names of the suppliers
to the Corporation, and the nature of the Corporation relationships with these
clients and suppliers;


 


(v)                                 technical and business information of or regarding the clients of
the Corporation obtained in order for the Corporation to provide such clients with
the Corporations products and services, including information regarding product
requirements and the business operations, methods and practices and product
plans of such clients; and


 


(vi)                              any other Trade Secrets (as defined below) or proprietary information
in the possession or control of the Corporation, but Confidential Information
does not include information that I can demonstrate was in my possession in
written or other tangible form prior to any disclosure from the Corporation;
information that I can demonstrate was received from a third party; from the
time it becomes known to the trade; or any invention, device, discovery,
concept, idea, algorithm, formulae, know-how, process,


 





















 


technique, system or improvement, whether
patentable or not, that is not a Development.


 


2)                                      Developments include
all inventions, devices, discoveries, concepts, ideas, algorithms, formulae,
know-how, process, techniques, systems and improvements, whether patentable or
not, developed, created, generated or reduced to practice by me alone or
jointly with others, which directly relates to the activities of the
Corporation during the engagement by the Corporation of my services or which
result from tasks assigned to me by the Corporation or which result from the
use of the premises or property (including equipment, supplies, or Confidential
Information) owned, leased or licensed by the Corporation.


 


3)                                      Trade Secrets shall
include, but not be limited to, all information encompassed in all
Developments, and in all concepts or ideas, to the extent that such information
has not been released publicly by duly authorized representatives of World
Heart Corporation.


 


2.0                                 Non-Disclosure of Confidential Information


 


At all
times during and subsequent to the engagement of my services by the
Corporation, I shall keep in strictest confidence and trust the Confidential
Information, I shall take all reasonable precautions against unauthorized
disclosure of the Confidential Information, and I shall not directly or
indirectly disclose, knowingly allow access to, transmit or transfer the
Confidential Information to a third party, nor shall I copy or reproduce the
Confidential Information except as may be reasonably required for me to perform
my duties for the Corporation.


 


3.0                                 Restricted Use of Confidential Information


 


1)                                      At all times during and subsequent to the termination of the
engagement of my services by the Corporation, I shall not use the Confidential
Information in any manner except as reasonably required for me to perform my
duties for the Corporation.


 


2)                                      Without limiting my obligations under subsection 3(a), I agree
that at all times during and subsequent to the termination of my employment
with the Corporation, I shall not use, or take advantage of, the Confidential
Information for creating, maintaining, marketing, patenting or otherwise
protecting, or aiding in the creation, maintenance, marketing, patenting or
otherwise protecting any product which is competitive with any product owner or
marketed by the Corporation.


 


3)                                      Upon the request of the Corporation, and in any event the
termination of my employment with the Corporation, I shall immediately return
to the Corporation all materials, including all copies in whatever form,
containing the Confidential Information which are in my possession or under my
control.


 





















 


4.0                                 Ownership of Confidential Information


 


1)                                      I acknowledge and agree that I shall not acquire any right, title or
interest in or to the Confidential Information.


 


2)                                      I agree to make full disclosure to the Corporation of each
Development promptly after its creation. 
I hereby assign and transfer to the Corporation, and agree that the
Corporation shall be the exclusive owner of, all of my right, title, and
interest to each Development throughout the world, including all Trade Secrets,
patent rights, copyrights and all other intellectual property rights
therein.  I further agree to cooperate
fully at all times during and subsequent to my employment with respect signing
further documents and doing such acts and other things reasonably requested by
the Corporation to confirm such transfer of ownership of rights, including
intellectual property rights, effective at or after the time the Development is
created and to obtain patents or copyrights or the like covering the Developments.  I agree that the obligations in this clause (b) shall
continue beyond the termination of the engagement of my services by the
Corporation with respect to Developments created during such period.


 


3)                                      I hereby waive in whole my right to the integrity of the
Developments, including, without limitation, the rights to restrain or claim
damages for any distortion, mutilation or other modification of the
Developments in any context and in connection with any product, service, cause
or institution.


 


5.0                                 Non-Competition


 


1)                                      In this Section 5.0, any covenant of the Employee not to
compete shall mean that the Employee, either individually or in partnership or
jointly or in connection with any person as principal, agent, employee,
shareholder (other than a holding of shares of a corporation listed on a
Canadian or United States stock exchange, which shareholders do not exceed 2%
of the outstanding shares of such corporation) or in any other manner
whatsoever, shall not carry on or be engaged in or be concerned with or
interested in or advise, lend money to, guarantee the debts or obligations of
or permit his/her name or any part thereof to be used or employed by any person
engaged in or concerned with or interested in, within North America, the
business of developing and marketing cardiovascular medical devices except with
the prior consent of the Corporation.


 


2)                                      Subject to the provisions of this Section 5.0, the employee
agrees not to compete for the term of the Employee’s employment with the
Corporation.


 


3)                                      The Employee confirms that all restrictions in this Section 5.0
are reasonable and valid and all defences to the strict enforcement thereof by
the Corporation are waived by the Employee.


 


6.0                                 No Conflicting Obligations


 


1)                                      I acknowledge and represent to the Corporation that the performance
of my duties for the Corporation shall not breach any agreement or other
obligations to keep confidential the proprietary information of any prior
employer of mine or any


 





















 


other
third party.  I further acknowledge and
represent that I am not bound by any obligation with any third party which
conflicts with any of my obligations under this Agreement.


 


2)                                      I represent and agree that I will not bring to the Corporation, and
shall not use in the performance of my work with the Corporation, and Trade
Secrets, confidential information and other proprietary information of any
employer of mine or any other third party. 
I represent and agree that in my work creating Developments I will not
knowingly infringe the intellectual property rights, including copyright of any
third party.


 


7.0                                 Enforcement


 


I
acknowledge and agree that damages may not be an adequate remedy to compensate
the Corporation for any breach of my obligations contained in this Agreement,
and accordingly I agree that in addition to any and all other remedies
available, the Corporation shall be entitled to obtain relief by way of
temporary or permanent injunction to enforce the obligations contained in the
Agreement.


 


8.0                                 General


 


1)                                      This Agreement shall be governed by the laws in force by the State
of California.  If any provision of this
Agreement is wholly or partially unenforceable for any reason, such
unenforceable provision or part thereof shall be deemed to be omitted from this
Agreement without any way of invalidating or impairing the other provisions of
this Agreement.  In this Agreement any
reference to a termination of the engagement of my services shall include
termination for any reason whatsoever and with our without cause.


 


2)                                      Except as stated in Section 5 above, the rights and obligations
under this Agreement shall survive the termination of the engagement of my
services by the Corporation and shall adapt to the benefit of and shall be
binding upon (i) my heirs and personal representatives and (ii) the
successors and assigns of the Corporation.


 


I HAVE READ THIS AGREEMENT, UNDERSTAND IT, HAD THE
OPPORTUNITY TO OBTAIN INDEPENDENT LEGAL ADVICE IN RESPECT OF IT AND I AGREE TO
ITS TERMS.  I acknowledge having received
a fully executed copy of this Agreement (and the Offer of Employment dated as
of January 24, 2005 between the Corporation and me).


 


 


	
  Signed, sealed and delivered

  	
   )

  	
   

  	
   

  
	
  in the presence of:

  	
   )

  	
   

  	
   

  
	
   

  	
   )

  	
   

  	
   

  
	
  /s/ Barbara Madsen

  	
   )

  	
  /s/ Pratap Khanwilkar

  	
   

  
	
  Witness

  	
   

  	
  Signature

  	
   

  



 





















 


	
  Barbara Madsen

  	
   

  	
   

  	
   

  
	
  (Name of Witness-printed)

  	
   

  	
  Pratap Khanwilkar

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1/24/05

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  World Heart Inc.

  	
   

  	
   

  	
   

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Jal S. Jassawalla