EXHIBIT 10.3


 


REGISTRATION RIGHTS AGREEMENT


 


This Registration Rights
Agreement (the “Agreement”) is made and entered into as of October 13, 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 October
13, 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 30th 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 


 

















 


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 


 

















 


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.


 

















 


(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 


 

















 


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 


 

















 


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;


 

















 


(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 


 

















 


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, including but not limited
to the Selling Stockholder Notice and Questionnaire attached hereto as Exhibit
B (the “Questionnaire”).  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
(including the Questionnaire) 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 (including the Questionnaire)
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
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 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 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.


 


(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.


 

















 


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:

  	
   

  
	
   

  	
  Name:
  Morgan R. Brown

  
	
   

  	
  Title:
  Executive Vice-President and Chief Financial Officer

  



 

















 


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

















 


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

















 


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

















 


Exhibit B


 


WORLD HEART CORPORATION


 


SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE


 


The
undersigned holder of shares of the common stock of World Heart Corporation, a
Delaware corporation (the “Company”),
issued pursuant to a certain Securities Purchase Agreement by and among the
Company and the Purchasers named therein, dated as of                       ,
2010 (the “Agreement”),
understands that the Company intends to file with the Securities and Exchange
Commission a registration statement on Form S-3 (the “Resale Registration Statement”) for the
registration and the resale under Rule 415 of the Securities Act of 1933,
as amended (the “Securities
Act”), of the Registrable Securities in accordance with the
terms of the Registration Rights Agreement, dated                       ,
2010, (the “Registration Rights Agreement”),
between the Company and the purchasers signatory thereto. All capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Registration Rights Agreement.


 


In
order to sell or otherwise dispose of any Registrable Securities pursuant to
the Resale Registration Statement, a holder of Registrable Securities generally
will be required to be named as a selling stockholder in the related prospectus
or a supplement thereto (as so supplemented, the “Prospectus”), deliver the Prospectus to
purchasers of Registrable Securities (including pursuant to Rule 172 under
the Securities Act) and be bound by the provisions of the Agreement (including
certain indemnification provisions, as described below). Holders must complete
and deliver this Notice and Questionnaire in order to be named as selling
stockholders in the Prospectus.  Holders of Registrable Securities who do not
complete, execute and return this Notice and Questionnaire will not be named as
selling stockholders in the Resale Registration Statement or the Prospectus and
may not use the Prospectus for resales of Registrable Securities.


 


Certain
legal consequences arise from being named as a selling stockholder in the
Resale Registration Statement and the Prospectus. Holders of Registrable
Securities are advised to consult their own securities law counsel regarding
the consequences of being named or not named as a selling stockholder in the
Resale Registration Statement and the Prospectus.


 


NOTICE


 


The
undersigned holder (the “Selling
Stockholder”) of Registrable Securities hereby gives notice to
the Company of its intention to sell or otherwise dispose of Registrable
Securities owned by it and listed below in Item (3), unless otherwise specified
in Item (3), pursuant to the Resale Registration Statement. The undersigned, by
signing and returning this Notice and Questionnaire, understands and agrees
that it will be bound by the terms and conditions of this Notice and
Questionnaire and the Agreement.


 


The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:


 


1
















 


QUESTIONNAIRE


 


	
  1.

  	
  Name.

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  Full
  Legal Name of Selling Stockholder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Full
  Legal Name of Registered Holder (if not the same as (a) above) through
  which Registrable Securities Listed in Item 3 below are held:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Full
  Legal Name of each natural person who directly or indirectly, alone or with
  others, has power to vote or dispose of the securities covered by the
  questionnaire:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Address
  for Notices to Selling Stockholder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  
	
   

  	
   

  
	
   

  	
  Fax:

  
	
   

  	
   

  
	
   

  	
  Contact
  Person:

  
	
   

  	
   

  
	
   

  	
  E-mail
  address of Contact Person:

  



 


2

















 


	
  3.

  	
  Beneficial
  Ownership of Registrable Securities:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Type
  and Number of Registrable Securities beneficially owned (including shares of
  common stock issuable upon the exercise of warrants):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Number
  of shares of common stock to be registered pursuant to this Notice for
  resale:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Broker-Dealer
  Status:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Are
  you a broker-dealer?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes
  o

  	
  No
  o

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  If
  “yes” to Section 4(a), did you receive your Registrable Securities as
  compensation for investment banking services to the Company?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes
  o

  	
  No
  o

  
	
   

  	
   

  	
   

  
	
   

  	
  Note:

  	
  If
  no, the Commission’s staff has indicated that you should be identified as an
  underwriter in the Registration Statement.

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Are
  you an affiliate of a broker-dealer?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes
  o

  	
  No
  o

  
	
   

  	
   

  	
   

  
	
   

  	
  Note:

  	
  If
  yes, provide a narrative explanation below:

  
	
   

  	
   

  	
   

  



 


3

















 


	
   

  	
  (c)

  	
  If
  you are an affiliate of a broker-dealer, do you certify that you bought the
  Registrable Securities in the ordinary course of business, and at the time of
  the purchase of the Registrable Securities to be resold, you had no
  agreements or understandings, directly or indirectly, with any person to
  distribute the Registrable Securities?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes
  o

  	
  No
  o

  
	
   

  	
   

  	
   

  
	
   

  	
  Note:

  	
  If
  no, the Commission’s staff has indicated that you should be identified as an
  underwriter in the Registration Statement.

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Beneficial
  Ownership of Other Securities of the Company Owned by the Selling
  Stockholder.

  
	
   

  	
   

  
	
   

  	
  Except
  as set forth below in this Item 5, the undersigned is not the beneficial or
  registered owner of any securities of the Company other than the Registrable
  Securities listed above in Item 3.

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Type
  and amount of other securities beneficially owned:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Relationships
  with the Company:

  
	
   

  	
   

  
	
   

  	
  Except
  as set forth below, neither the undersigned nor any of its affiliates,
  officers, directors or principal equity holders (owners of 5% of more of the
  equity securities of the undersigned) has held any position or office or has
  had any other material relationship with the Company (or its predecessors or
  affiliates) during the past three years.

  
	
   

  	
   

  
	
   

  	
  State
  any exceptions here:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Plan
  of Distribution:

  
	
   

  	
   

  
	
  The
  undersigned has reviewed the form of Plan of Distribution attached as Exhibit A
  to the Registration Rights Agreement, and hereby confirms that, except as set
  forth below, the information contained therein regarding the undersigned and
  its plan of distribution is correct and complete.

  



 


4

















 


State
any exceptions here:


 


 


***********


 


The
undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the
date hereof and prior to the effective date of any applicable Resale
Registration Statement. All notices hereunder and pursuant to the Agreement
shall be made in writing, by hand delivery, confirmed or facsimile
transmission, first-class mail or air courier guaranteeing overnight delivery
at the address set forth below. In the absence of any such notification, the
Company shall be entitled to continue to rely on the accuracy of the
information in this Notice and Questionnaire.


 


By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and
the inclusion of such information in the Resale Registration Statement and the
Prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation or amendment of any such
Registration Statement and the Prospectus.


 


By
signing below, the undersigned acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the provisions of the Exchange
Act and the rules and regulations thereunder, particularly Regulation M in
connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection with
Registration Statements filed pursuant to the Registration Rights Agreement and
any amendments or supplements thereto filed with the Commission pursuant to the
Securities Act.


 


The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone
Interpretations regarding short selling:


 


“An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling stockholders wanted
to do a short sale of common stock “against the box” and cover the short sale
with registered shares after the effective date. The issuer was advised that
the short sale could not be made before the registration statement become
effective, because the shares underlying the short sale are deemed to be sold
at the time such sale is made. There would, therefore, be a violation of Section 5
if the shares were effectively sold prior to the effective date.”


 


By
returning this Questionnaire, the undersigned will be deemed to be aware of the
foregoing interpretation.


 


5

















 


I
confirm that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are correct.


 


IN WITNESS WHEREOF the undersigned, by
authority duly given, has caused this Questionnaire to be executed and
delivered either in person or by its duly authorized agent.


 


 


	
  Dated:

  	
   

  	
   

  	
  Beneficial
  Owner:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:


 


Hans Riegels


Cooley LLP


Five Palo Alto Square


3000
El Camino Real


Palo
Alto, CA 94306-2155


 


Tel:   (650) 843-5153


Fax:   (650) 644-3269


Email:   hriegels@cooley.com


 


6