EXHIBIT 10.2


 


SECURITIES PURCHASE AGREEMENT


 


THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of October 13,
2010, by and among World Heart Corporation, a Delaware corporation (the “Company”), and each purchaser identified on
the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).


 


RECITALS


 


A.            The Company and
each Purchaser is executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by Section 4(2) of
the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of
Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission (the “Commission”)
under the Securities Act.


 


B.            Each Purchaser,
severally and not jointly, wishes to purchase, and the Company wishes to sell,
upon the terms and conditions stated in this Agreement, (i) that aggregate
number of shares of the common stock (the “Common
Stock”) of the Company, set forth below such Purchaser’s name on
the signature page of this Agreement (which aggregate amount for all
Purchasers together shall be 11,850,118 shares of Common Stock and shall be
collectively referred to herein as the “Shares”)
and (ii) warrants, in substantially the form attached hereto as Exhibit A (the “Warrants”),
to acquire up to that number of additional shares of Common Stock equal to 100%
of the number of shares purchased by such Purchaser on the Closing Date, set
forth below such Purchaser’s name on the signature page of this Agreement
(the shares of Common Stock issuable upon exercise of or otherwise pursuant to
the Warrants collectively are referred to herein as the “Warrant Shares”).


 


C.            The Shares, the
Warrants and the Warrant Shares collectively are referred to herein as the “Securities”.


 


D.            Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in the
form attached hereto as Exhibit B
(the “Registration Rights Agreement”),
pursuant to which, among other things, the Company will agree to provide
certain registration rights with respect to the Shares and the Warrant Shares
under the Securities Act and the rules and regulations promulgated
thereunder and applicable state securities laws.


 


NOW, THEREFORE, in consideration  of
the mutual covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Company and the Purchasers hereby agree as follows:


 

















 


ARTICLE 1


 


DEFINITIONS


 


1.1          Definitions. In addition
to the terms defined elsewhere in this Agreement, for all purposes of this
Agreement, the following terms shall have the meanings indicated in this
Section 1.1:


 


“Action” means any action, suit, inquiry,
notice of violation, proceeding (including any partial proceeding such as a
deposition) or investigation pending or, to the Company’s Knowledge, threatened
in writing (or otherwise) against the Company or any of their respective
properties or any officer, director or employee of the Company acting in his or
her capacity as an officer, director or employee before or by any federal,
state, county, local or foreign court, arbitrator, governmental or
administrative agency, regulatory authority, stock market, stock exchange or
trading facility.


 


“Affiliate” means,
with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under
common control with such Person, as such terms are used in and construed under
Rule 144. With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.


 


“Agreement” shall
have the meaning ascribed to such term in the Preamble.


 


“Business Day”
means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business.


 


“Closing” means
the closing of the purchase by the Purchasers listed on Annex A hereto and sale
by the Company of Shares and Warrants to such Purchasers pursuant to this
Agreement on the Closing Date as provided in Section 2.1(a) hereof.


 


“Closing
Bid Price” means, for any security as of any date, the
last closing price for such security on the Principal Trading Market, as
reported by Bloomberg.


 


“Closing
Date” means the third (3rd) Trading Day after the date on
which this Agreement has been executed and delivered by all parties hereto,
unless on such date the conditions set forth in Sections 2.1, 2.2, 5.1 and
5.2 (other than those to be satisfied at the Closing) shall not have been
satisfied or waived, in which case the Closing Date shall be on the third (3rd)
Trading Day after the date on which the last to be satisfied or waived of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 (other than those
to be satisfied at the Closing) shall have been satisfied or waived.


 


“Common Stock” has
the meaning set forth in the Recitals, and also includes any securities into
which the Common Stock may hereafter be reclassified or changed.


 


“Common Stock Equivalents”
means any securities of the Company which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt,


 

















 


preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder thereof
to receive, Common Stock or other securities that entitle the holder to
receive, directly or indirectly, Common Stock.


 


“Company Counsel”
means Cooley LLP.


 


“Company Deliverables”
has the meaning set forth in Section 2.2(a).


 


“Company’s Knowledge”
means the actual knowledge of the executive officers (as defined in Rule 405
under the Securities Act) of the Company, after due inquiry.


 


“Control”
(including the terms “controlling”,
“controlled” by or “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.


 


“Disclosure Materials”
has the meaning set forth in Section 3.1(h).


 


“Effective Date”
means the date on which the initial Registration Statement required by Section 2(a) of
the Registration Rights Agreement is first declared effective by the
Commission.


 


“Effectiveness Deadline”
means the date on which the initial Registration Statement is required to be
declared effective by the Commission under the terms of the Registration Rights
Agreement.


 


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


 


“GAAP” means U.S.
generally accepted accounting principles, as applied by the Company.


 


“Intellectual Property”
means all of the following: (i) patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade
names, corporate names, logos, slogans and Internet domain names, together with
all goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any
of the foregoing; and (v) proprietary computer software (including but not
limited to data, data bases and documentation).


 


“Irrevocable Transfer Agent
Instructions” means, with respect to the Company, the Irrevocable
Transfer Agent Instructions, in the form of Exhibit D,
executed by the Company and delivered to and acknowledged in writing by the
Transfer Agent.


 


“Lien” means any
lien, charge, claim, encumbrance, security interest, right of first refusal,
preemptive right or other restrictions of any kind.


 


“Material Adverse Effect”
means a material adverse effect on (a) the results of operations, assets,
liabilities, business, or financial condition of the Company and its


 

















 


Subsidiaries,
taken as a whole, or (b) the ability of the Company to perform its
obligations under the Transaction Documents, except that any of the following,
either alone or in combination, shall not be deemed a Material Adverse
Effect:   (i) effects caused by
changes or circumstances affecting general market conditions in the U.S.
economy or which are generally applicable to the industry in which the Company
operates, (ii) effects resulting from or relating to the announcement or
disclosure of the sale of the Securities or other transactions contemplated by
this Agreement, or (iii) effects caused by any event, occurrence or
condition resulting from or relating to the taking of any action in accordance
with this Agreement.


 


“Material Contract”
means any contract of the Company or any of its Subsidiaries that has been
filed or was required to have been filed as an exhibit to the SEC Reports
pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.


 


“New York Courts”
means the state and federal courts sitting in the City of New York, Borough of
Manhattan.


 


“Officer’s Certificate”
has the meaning set forth in Section 2.2(a)(vi).


 


“Outside Date”
means November 13, 2010.


 


“Person” means an
individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.


 


“Principal Trading Market”
means the Trading Market on which the Common Stock is primarily listed on and
quoted for trading, which, as of the date of this Agreement and the Closing
Date, shall be the Nasdaq Capital Market.


 


“Proceeding” means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.


 


“Purchase Price”
means $2.135 per unit.


 


“Purchaser Deliverables”
has the meaning set forth in Section 2.2(b).


 


“Registration Rights Agreement”
has the meaning set forth in the Recitals.


 


“Registration Statement”
means a registration statement meeting the requirements set forth in the
Registration Rights Agreement and covering the resale by the Purchasers of the
Registrable Securities (as defined in the Registration Rights Agreement).


 


“Required Approvals”
has the meaning set forth in Section 3.1(e).


 


“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.


 

















 


“SEC Reports” has
the meaning set forth in Section 3.1(h).


 


“Securities Act”
means the Securities Act of 1933, as amended.


 


“Short Sales”
include, without limitation, (i) all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act,
whether or not against the box, and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put
equivalent positions” (as defined in Rule 16a-1(h) under the Exchange
Act) and similar arrangements (including on a total return basis), and
(ii) sales and other transactions through non-U.S. broker dealers or
foreign regulated brokers.


 


“Subscription Amount”
means with respect to each Purchaser, the aggregate amount to be paid for the
Shares and the related Warrants purchased hereunder as indicated opposite such
Purchaser’s name on Annex A to this Agreement under the heading “Aggregate
Purchase Price (Subscription Amount)”.


 


“Subsidiary” means
another Person, an amount of the voting securities, other voting ownership or
voting partnership interests of which is sufficient to elect at least a
majority of its board of directors or other governing body or, if there are no
such voting interests, 50% or more of the equity interests of which is owned
directly or indirectly by the Company.


 


“Trading Affiliate”
has the meaning set forth in Section 3.2(h).


 


“Trading Day”
means a day on which the Common Stock is listed or quoted and traded on its
Principal Trading Market.


 


“Trading Market”
means whichever of the New York Stock Exchange, the American Stock Exchange,
the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market or the OTC Bulletin Board on which the Common Stock is listed or quoted
for trading on the date in question.


 


“Transaction Documents”
means this Agreement, the schedules and exhibits attached hereto, the Warrants,
the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions
and any other documents or agreements executed in connection with the
transactions contemplated hereunder.


 


“Transfer Agent”
means BNY Mellon Shareowner Services, or any successor transfer agent for the
Company.


 


“Warrants” has the
meaning set forth in the Recitals to this Agreement.


 

















 


ARTICLE 2


 


PURCHASE AND SALE


 


2.1          Closing.


 


(a)         Amount. Subject to
the terms and conditions set forth in this Agreement, at the Closing, the
Company shall issue and sell to each Purchaser listed on Annex A hereto, and
each Purchaser listed on Annex A hereto shall, severally and not jointly,
purchase from the Company, such number of Shares of Common Stock equal to the
quotient resulting from dividing (i) the Subscription Amount for such
Purchaser by (ii) the Purchase Price. In addition, each Purchaser listed
on Annex A hereto shall receive a Warrant to purchase a number of Warrant
Shares equal to 100% of the number of Shares purchased by such Purchaser on the
Closing Date, as indicated opposite such Purchaser’s name on Annex A to this
Agreement. The Warrants shall have an exercise price equal to $2.31 per Warrant
Share.


 


(b)         Closing. The Closing
of the purchase and sale of the Shares and Warrants shall take place at the
offices of Company Counsel, 3175 Hanover Street, Palo Alto, California on the
Closing Date or at such other locations or remotely by facsimile transmission
or other electronic means as the parties may mutually agree.


 


(c)         Form of Payment. Unless
alternative arrangements are agreed to with a particular Purchaser, on the
Closing Date, (i) each Purchaser listed on Annex A hereto shall wire its
Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Aggregate Purchase Price (Subscription
Amount)” indicated opposite such Purchaser’s name on Annex A hereto by wire
transfer to the Company’s account, as set forth in instructions previously
provided to the Purchasers, (ii) the Company shall irrevocably instruct
the Transfer Agent to deliver to each Purchaser listed on Annex A hereto one or
more stock certificates, free and clear of all restrictive and other legends
except as expressly provided in Section 4.1(b) hereof, evidencing the
number of Shares such Purchaser is purchasing as is set forth opposite such
Purchaser’s name on Annex A to this Agreement under the heading “Number of
Shares to be Acquired”, within three (3) Business Days after the Closing
and (iii) the Company shall issue to each Purchaser listed on Annex A
hereto a Warrant pursuant to which such Purchaser shall have the right to
acquire such number of Warrant Shares as is set forth opposite such Purchaser’s
name on Annex A to this Agreement under the heading “Underlying Shares Subject
to Warrant”, in the case of clauses (ii) and (iii), duly executed on
behalf of the Company and registered in the name of such Purchaser.


 


2.2          Closing Deliveries. (a) On
or prior to the Closing with respect to the Purchasers listed on Annex A hereto
the Company shall issue, deliver or cause to be delivered to each such
Purchaser the following (the “Company
Deliverables”):


 


(i)            this Agreement, duly
executed by the Company;


 


(ii)           unless alternative
arrangements are agreed to with a particular Purchaser, facsimile copies
of one or more stock certificates, free and clear of all restrictive and other
legends except as provided in Section 4.1(b) hereof, evidencing the
Shares subscribed for by such Purchaser hereunder, registered in the name of
such Purchaser as set forth on the Stock Certificate Questionnaire included as Exhibit C-2 hereto (the “Stock Certificates”), with the original Stock
Certificates delivered within three (3) Business Days of Closing;


 

















 


(iii)         a Warrant, executed by the
Company and registered in the name of such Purchaser as set forth on the Stock
Certificate Questionnaire included as Exhibit C-2 hereto,
pursuant to which such Purchaser shall have the right to acquire such number of
Warrant Shares equal to 100% of the number of Shares purchased by such
Purchaser on the Closing Date, on the terms set forth therein;


 


(iv)          the Registration Rights
Agreement, duly executed by the Company;


 


(v)            duly executed Irrevocable
Transfer Agent Instructions acknowledged in writing by the Transfer Agent;


 


(vi)          a certificate of the Company
(the “Officer’s Certificate”),
dated as of the Closing Date, (a) certifying the resolutions adopted by
the Board of Directors of the Company or a duly authorized committee thereof
approving the transactions contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities and the reservation
for issuance of the Warrant Shares, (b) certifying the current versions of
the Certificate of Incorporation, as amended, and bylaws of the Company
(c) certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company, in the
form attached hereto as Exhibit E and
(d) certifying good standing certificates with respect to the Company and
its Subsidiary World Hearts Inc. from the Secretary of State of the State of
Delaware, dated a recent date before the Closing Date;


 


(vii)         the Compliance Certificate
referred to in Section 5.1(g).


 


(b)         On or prior to the Closing
with respect to the Purchasers listed on Annex A hereto each such Purchaser
shall deliver or cause to be delivered to the Company the following (the “Purchaser Deliverables”):


 


(i)            this Agreement, duly
executed by such Purchaser;


 


(ii)           its Subscription Amount, in
United States dollars and in immediately available funds, in the amount set
forth as the “Aggregate Purchase Price (Subscription Amount)” indicated below
such Purchaser’s name on the applicable signature page hereto by wire
transfer to the Company’s account as previously provided to the Purchasers;


 


(iii)         the Registration Rights
Agreement, duly executed by such Purchaser;


 


(iv)          a fully completed and duly
executed Selling Stockholder Questionnaire in the form attached as Annex B to
the Registration Rights Agreement; and


 


(v)            a fully completed and duly
executed Accredited Investor Questionnaire and Stock Certificate Questionnaire
in the forms attached hereto as Exhibits C-1
and C-2, respectively.


 

















 


ARTICLE 3


 


REPRESENTATIONS AND
WARRANTIES


 


3.1          Representations and Warranties of
the Company. The Company hereby represents and warrants as of
the date hereof and the Closing Date (except for the representations and
warranties that speak as of a specific date, which shall be made as of such
date), to each of the Purchasers that, except as set forth in the Schedules
delivered herewith or disclosed in the SEC Reports:


 


(a)         Subsidiaries. Except as
disclosed in the SEC Reports, the Company does not have any direct and indirect
Subsidiaries.


 


(b)         Organization and Qualification. The Company
and each Subsidiary is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
respective incorporation, with the requisite corporate power and authority to
own or lease and use its properties and assets and to carry on its business as
currently conducted. Neither the Company nor any of its Subsidiaries is in
violation of any of the provisions of its respective Certificate of
Incorporation or bylaws, or other organizational documents, as applicable. The
Company and each Subsidiary is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have a Material Adverse Effect.


 


(c)         Authorization; Enforcement;
Validity. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents to which it is a party and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of each of
the Transaction Documents to which the Company is a party and the consummation by
it of the transactions contemplated hereby and thereby (including, but not
limited to, the sale and delivery of the Shares and the Warrants and the
reservation for issuance and the subsequent issuance of the Warrant Shares upon
exercise of the Warrants) have been duly authorized by all necessary corporate
action on the part of the Company, and no further corporate action is required
by the Company, its Board of Directors or its stockholders in connection
therewith, other than in connection with the Required Approvals to be obtained,
made, filed or given by the Company after the Closing pursuant to Section 4
hereof or the Registration Rights Agreement. Each of the Transaction Documents
to which it is a party has been (or upon delivery will have been) duly executed
by the Company and is, or when delivered in accordance with the terms hereof,
will constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.  Except as disclosed in the SEC Reports, there
are no stockholder agreements, voting agreements, or other similar arrangements
with respect to the Company’s capital stock to which the Company is a party or,
to the Company’s Knowledge, between or among any of the Company’s stockholders.


 

















 


(d)         No Conflicts. The
execution, delivery and performance by the Company of the Transaction Documents
to which it is a party and the consummation by the Company of the transactions
contemplated hereby or thereby (including, without limitation, the issuance of
the Shares and Warrants and the reservation for issuance and issuance of the
Warrant Shares pursuant to the Warrants) do not and will not (i) conflict
with or violate any provisions of the Company’s Certificate of Incorporation or
bylaws or otherwise result in a violation of the organizational documents of
the Company or any Subsidiary, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or any of its Subsidiaries or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any Material Contract or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company
or any of its Subsidiaries is subject (including federal, state and applicable
foreign securities laws and regulations and the rules and regulations,
assuming the correctness of the representations and warranties made by the
Purchasers herein, of any self regulatory organization to which the Company or
its securities are subject, including all applicable Trading Markets), or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except in the case of clause (iii) such as would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.


 


(e)         Filings, Consents and Approvals. The Company
is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including the issuance of the Securities and reservation
for issuance of the Warrant Shares pursuant to the Warrants), other than
(i) the filing with the Commission of one or more Registration Statements
in accordance with the requirements of the Registration Rights Agreement,
(ii) filings required by applicable state securities laws, (iii) the
filing of a Notice of Sale of Securities on Form D with the Commission
under Regulation D of the Securities Act, (iv) the filing of any
requisite notices and/or application(s) to the Principal Trading Market
for the issuance and sale of the Shares and the Warrants, and the issuance of
the Warrant Shares upon exercise of the Warrants, and the listing of the Shares
and the Warrant Shares for trading or quotation, as the case may be, thereon in
the time and manner required thereby and (v) those that have been made or
obtained prior to the date of this Agreement (collectively, the “Required Approvals”).


 


(f)         Issuance of the Securities. The Shares
have been duly authorized and, when issued and paid for in accordance with the
terms of the Transaction Documents, will be duly and validly issued, fully paid
and nonassessable and free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable
securities laws, and shall not be subject to preemptive or similar rights. The
Warrants have been duly authorized and, when issued and paid for in accordance
with the terms of the Transaction Documents, will be duly and validly issued,
free and clear of all Liens, other than restrictions on transfer provided for
in the Transaction Documents or imposed by applicable securities laws, and
shall not be subject to preemptive or similar rights of stockholders. The
Warrant Shares issuable upon exercise of the Warrants have been duly authorized
and, when issued and paid for in accordance with the terms of the Transaction
Documents and the Warrants will be duly and


 

















 


validly issued, fully paid and nonassessable, free
and clear of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not
be subject to preemptive or similar rights of stockholders. Assuming the
accuracy of the representations and warranties of the Purchasers in this
Agreement, the Warrants, the Shares and the Warrant Shares will be issued in
compliance with all applicable federal and state securities laws. As of the
Closing Date, the Company shall have reserved from its duly authorized capital
stock not less than the maximum number of shares of Common Stock issuable upon
exercise of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth in the Warrants). The Company shall, so long
as any of the Warrants are outstanding, take all action necessary to reserve
and keep available out of its authorized and unissued capital stock, solely for
the purpose of effecting the exercise of the Warrants, the number of shares of
Common Stock issuable upon exercise of the Warrants (without taking into
account any limitations on the exercise of the Warrants set forth in the
Warrants).


 


(g)        Capitalization. The number of
shares and type of all authorized, issued and outstanding capital stock,
options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of
the Company) has been set forth in the SEC Reports and has changed since the
date set forth in such SEC Reports only to reflect stock option exercises and
grants and warrant exercises that have not, individually or in the aggregate, had
a material effect on the issued and outstanding capital stock, options and
other securities and have not otherwise been required to be reported by the
Company under the Exchange Act. All of the outstanding shares of capital stock
of the Company are duly authorized, validly issued, fully paid and
non-assessable, have been issued in compliance in all material respects with
all applicable federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase any capital stock of the Company.  Except as set forth in the SEC Reports:
(i) no shares of the Company’s capital stock are subject to preemptive
rights or any other similar rights or any Liens or encumbrances suffered or
permitted by the Company; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the Company;
(iii) there are no outstanding debt securities, notes, credit agreements,
credit facilities or other agreements, documents or instruments evidencing
indebtedness of the Company or by which the Company is or may become bound;
(iv) there are no financing statements securing obligations in any
material amounts, either singly or in the aggregate, filed in connection with
the Company; (v) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of their securities under the
Securities Act (except the Registration Rights Agreement); (vi) there are
no outstanding securities or instruments of the Company or which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
redeem a security of the Company; (vii) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or
any similar plan or agreement; and (ix) the Company has no liabilities or


 
















 


obligations required to be disclosed in the SEC
Reports but not so disclosed in the SEC Reports, other than those incurred in
the ordinary course of the Company’s business and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.


 


(h)        SEC Reports and Disclosure. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for twelve (12) months preceding the date hereof (or
such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC
Reports” and
together with this Agreement and the Schedules to this Agreement (if any), the “Disclosure Materials”),
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.
To the Company’s Knowledge, no event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, operations or financial condition, which,
under applicable law, rule or regulation requires the filing of a Form 8-K
after the Closing, or otherwise requires public disclosure or announcement by
the Company but which has not been so publicly announced or disclosed (other
than the transactions contemplated by the Transaction Documents). As of their
respective filing dates, or to the extent corrected by a subsequent amendment,
the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  None of the
representations, warranties, or covenants in this Agreement, the Warrants or
any other Transaction Documents, or other disclosures made to the Purchasers in
connection with the transactions contemplated by this Agreement, the Warrants
and the other Transaction Documents, when taken together, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.


 


(i)         Financial Statements. The financial statements
of the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries taken as a whole as of and for the dates
thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments. Each of the Material Contracts to which the Company or any of its
Subsidiaries is a party or to which the property or assets of the Company or
any of its Subsidiaries is subject has been filed as an exhibit to the SEC
Reports.


 


(j)         Tax Matters. The Company and its
Subsidiaries (i) have prepared and filed all foreign, federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which they are subject, (ii) have paid all taxes and other
governmental 


 

















 


assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith, with respect to which adequate reserves
have been set aside on the books of the Company and its Subsidiaries and
(iii) have set aside on the books of the Company and its Subsidiaries
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
except, in the case of clauses (i) and (ii) above, where the failure
to so pay or file any such tax, assessment, charge or return would not have a
Material Adverse Effect.


 


(k)        Material Changes. Since the date of the
latest financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports, (i) there have been no events,
occurrences or developments that have had or would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect,
(ii) the Company and its Subsidiaries have not incurred any material
liabilities (contingent or otherwise) other than (A) trade payables,
accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to
be reflected in the Company’s financial statements pursuant to GAAP or to be
disclosed in filings made with the Commission, (iii) the Company has not
materially altered its method of accounting or the manner in which it keeps its
accounting books and records, (iv) the Company has not declared or made
any dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock (other than in connection with repurchases of unvested stock
issued to employees of the Company), (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except Common Stock
issued in the ordinary course as dividends, or pursuant to existing Company
stock option or stock purchase plans or executive and director corporate
arrangements disclosed in the SEC Reports and (vi) there has not been any
material change or amendment to, or any waiver of any material right under, any
Material Contract under which the Company or any of its assets is bound or
subject. Except for the issuance of the Securities contemplated by this
Agreement, no event, liability or development has occurred or exists with
respect to the Company or its business, properties, operations or financial
condition that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not
been publicly disclosed at least one Trading Day prior to the date that this
representation is made.


 


(l)         Litigation. Except as disclosed in the
SEC Reports, there is no Action which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities, (ii) involves a claim of material violation of or material
liability under any federal, state, local or foreign laws governing the Company’s
and its Subsidiaries operations, including without limiting the generality of
the foregoing, laws regulating the protection of human health, including
without limiting the generality of the foregoing, laws relating to the
manufacture, processing, packaging, labeling, marketing, distribution, use,
inspection, treatment, storage, disposal, transport or handling of the Company’s
and its Subsidiaries’ products, and regulated or hazardous substances, as well
as all authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder, all as may be
in effect from time to time and all successors, replacements and expansions
thereof, (iii) involves injury to or death of any person arising from or
relating to any of the Company’s or its Subsidiaries’ products, or (iv) could,
if there were an unfavorable decision, individually or in 


 

















 


the aggregate, have a Material Adverse Effect. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the
Exchange Act or the Securities Act.


 


(m)       Regulatory Matters.


 


(i)            The Company and its Subsidiaries are in
compliance, in all material respects, with all applicable laws administered or
issued by the United States Food and Drug Administration (the “FDA”) or the similar governmental
entity in any applicable jurisdiction (together with the FDA, the “Regulating Authority”).


 


(ii)           The Company and its Subsidiaries have
obtained all necessary and applicable exemptions, approvals, clearances,
authorizations, licenses and registrations required by Regulating Authorities
to permit the development, manufacture, pre-clinical and clinical testing of
its products, if any, as presently conducted in jurisdictions where the Company
and its Subsidiaries currently conduct such activities.   The Company and its Subsidiaries have
properly registered any human clinical trials to the extent required by
applicable law.


 


(iii)         All preclinical and clinical studies conducted by or
(to the Company’s Knowledge) for the Company and its Subsidiaries (i) have
been conducted in accordance with recognized good clinical and good laboratory
practices in all material respects, and (ii) are in compliance with
applicable laws administered or promulgated by the Regulating Authority
regarding preclinical and clinical studies in all material respects.


 


(iv)          There have been no recalls ordered or adverse
regulatory actions taken (or, to the Company’s Knowledge, threatened) by the
FDA or any other Regulating Authority with respect to any of the products of
the Company and its Subsidiaries, if any, including any facilities where any
such products are manufactured, processed, packaged or stored by the Company
and its Subsidiaries.


 


(v)            No false information or significant omission
has been made in any products application or products-related submission to the
Regulating Authority by or, to the Company’s Knowledge, on behalf of the
Company and its Subsidiaries.


 


(n)        Title to Assets. The Company and its
Subsidiaries have good and marketable title in fee simple to all real property
owned by them as set forth in the SEC Reports. The Company and its Subsidiaries
have good and marketable title to all tangible personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such as do
not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and its
Subsidiaries. Any real property and facilities held under lease by the Company
or its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.


 

















 


(o)         Intellectual Property.


 


(i)            All Intellectual Property of the Company and
its Subsidiaries is currently in compliance with all legal requirements
(including timely filings, proofs and payments of fees).  No Intellectual Property of the Company or
its Subsidiaries which is necessary for the conduct of the Company’s and each
of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted has been or is now involved in any
cancellation, dispute or litigation, and, to the Company’s Knowledge, no such
action is threatened.  No patent of the
Company or its Subsidiaries has been or is now involved in any interference,
reissue, re-examination or opposition proceeding.


 


(ii)           All of the licenses and sublicenses and
consent, royalty or other agreements concerning Intellectual Property which are
necessary for the conduct of the Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted to which the Company or any Subsidiary is a party or by which any of
their assets are bound (other than generally commercially available,
non-custom, off-the-shelf software application programs having a retail acquisition
price of less than $10,000 per license) (collectively, “License
Agreements”) are valid and binding obligations of the Company or
its Subsidiaries that are parties thereto and, to the Company’s Knowledge, the
other parties thereto, enforceable in accordance with their terms, except to
the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally, and there exists no
event or condition which will result in a material violation or breach of or
constitute (with or without due notice or lapse of time or both) a default by
the Company or any of its Subsidiaries under any such License Agreement.


 


(iii)         To the Company’s Knowledge, the Company and its
Subsidiaries own or have the valid right to use all of the Intellectual
Property that is necessary for the conduct of the Company’s and each of its
Subsidiaries’ respective businesses as currently conducted or as currently
proposed to be conducted and for the ownership, maintenance and operation of
the Company’s and its Subsidiaries’ properties and assets, free and clear of
all liens, encumbrances, adverse claims or obligations to license all such
owned Intellectual Property, other than licenses entered into in the ordinary
course of the Company’s and its Subsidiaries’ businesses.  To the Company’s Knowledge, the Company and
its Subsidiaries have a valid and enforceable right to use all third party
Intellectual Property used or held for use in the respective businesses of the
Company and its Subsidiaries.


 


(iv)          To the Company’s Knowledge, the conduct of the
Company’s and its Subsidiaries’ businesses as currently conducted does not
infringe or otherwise impair or conflict with (collectively, “Infringe”) any Intellectual Property
rights of any third party or any confidentiality obligation owed to a third
party, and, to the Company’s Knowledge, the Intellectual Property of the
Company and its Subsidiaries which are necessary for the conduct of the Company’s
and each of its Subsidiaries’ respective businesses as currently conducted or
as currently proposed to be conducted are not being Infringed by any third
party.  There is no litigation or order
pending or outstanding or, to the Company’s Knowledge, threatened or imminent,
that seeks to limit or challenge or that concerns the ownership, use, validity
or enforceability of any Intellectual Property of the Company and its
Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual
Property owned by a third party, and, to the Company’s Knowledge, there is no
valid basis for the same.


 

















 


(v)            The consummation of the transactions
contemplated hereby and by the other Transaction Documents will not result in
the alteration, loss, impairment of or restriction on the Company’s or any of
its Subsidiaries’ ownership or right to use any of the Intellectual Property
which is necessary for the conduct of Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted.


 


(vi)          The Company and its Subsidiaries have taken
reasonable steps to protect the Company’s and its Subsidiaries’ rights in their
Intellectual Property.  Each employee,
consultant and contractor who has had access to confidential information which
is necessary for the conduct of Company’s and each of its Subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted has executed an agreement to maintain the confidentiality of such
confidential information and has executed appropriate agreements that are
substantially consistent with the Company’s standard forms thereof.  Except under confidentiality obligations,
there has been no material disclosure of any of the Company’s or its
Subsidiaries’ confidential information to any third party.


 


(p)         Private Placement. Assuming the accuracy of
the Purchasers’ representations and warranties set forth in Section 3.2 of
this Agreement and the accuracy of the information disclosed in the Accredited
Investor Questionnaires, no registration under the Securities Act is required
for the offer and sale of the Securities by the Company to the Purchasers under
the Transaction Documents.


 


(q)         Registration Rights. Other than each of the
Purchasers, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company other
than those securities which are currently registered on an effective
registration statement on file with the Commission.


 


(r)         No Directed Selling Efforts or General Solicitation. Neither the
Company, nor any Person acting on behalf of the Company has conducted any “general
solicitation” or “general advertising” (as those terms are used in
Regulation D) in connection with the offer or sale of any of the
Securities.


 


(s)         No Integrated Offering. Assuming the accuracy of
the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company nor any Person acting on its behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security under circumstances that would (i) eliminate
the availability of the exemption from registration under Regulation D
under the Securities Act in connection with the offer and sale by the Company
of the Securities as contemplated hereby or (ii) cause the offering of the
Securities pursuant to the Transaction Documents to be integrated with prior
offerings by the Company or aggregated with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder approval provisions,
including, without limitation, under the rules and regulations of any
Trading Market on which any of the securities of the Company are listed or
designated.


 


(t)         Listing and Maintenance Requirements. The Company’s
Common Stock is registered pursuant to Section 12(b) of the Exchange
Act, and the Company has taken no action 


 

















 


designed to terminate the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration. Except as set
forth in the SEC Reports, the Company has not, in the 12 months preceding
the date hereof, received written or oral notice from any Trading Market on
which the Common Stock is or has been listed or quoted or from the Financial
Industry Regulatory Authority to the effect that the Company is not in
compliance with the listing or maintenance requirements of any such Trading
Market. Except as set forth in the SEC Reports, the Company is in compliance in
all material respects with the listing and maintenance requirements for
continued trading of the Common Stock on the Principal Trading Market.  The issuance and sale of the Securities under
this Agreement does not contravene the rules and regulations of the
Principal Trading Market, and no approval of the stockholders of the Company
thereunder is required for the Company to issue and deliver the Securities to
the Purchasers.


 


(u)        Investment Company. The Company is not
required to be registered as, and is not an Affiliate of, and immediately
following the Closing will not be required to register as, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.


 


(v)         Transactions with Affiliates.  Except as disclosed in the SEC Reports or as
contemplated by this Agreement, none of the officers or directors of the
Company and, to the Company’s Knowledge, none of the employees of the Company
or any Subsidiary or stockholders of the Company holding 5% or more of the
outstanding voting securities of the Company is presently a party to any
material transaction with the Company or any Subsidiary (other than, in the
case of officers, directors and employees of the Company, as holders of stock
options or warrants in consideration for services as employees, officers or
directors, as applicable), including, without limitation, any material
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or
employee or, to the Company’s Knowledge, any entity in which any officer,
director or any employee has a substantial interest or is an officer, director,
trustee or partner.


 


(w)        Sarbanes-Oxley Act.  The Company is in compliance in all material
respects with applicable requirements of the Sarbanes-Oxley Act of 2002 and
applicable rules and regulations promulgated by the Commission thereunder.


 


(x)         Disclosure Controls and
Procedures.  The Company
has established and maintains disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) that are effective in all
material respects to ensure that material information relating to the Company,
including its Subsidiaries, is made known to its chief executive officer and
chief financial officer by others within those entities.  The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures as of December 31,
2009.  The Company presented in its
Annual Report on Form 10-K for the fiscal year ended December 31,
2009 the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of December 31,
2009.  Since December 31, 2009,
there have been no significant changes in the Company’s internal controls (as
such term is defined in Item 307(b) of Regulation S-K under the Exchange
Act) or, to the Company’s Knowledge, in 


 

















 


other factors that could significantly affect the
Company’s internal controls, except as disclosed in the SEC Reports.


 


3.2          Representations and Warranties of the Purchasers. Each
Purchaser hereby, for itself and for no other Purchaser, represents and
warrants as of the date hereof and as of the Closing Date in the case of the
Purchasers listed on Annex A hereto to the Company as follows:


 


(a)         Organization; Authority. Such Purchaser is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents to which it is a party
and otherwise to carry out its obligations hereunder and thereunder. The
execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or, if such Purchaser is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has
been (or upon delivery will have been) duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.


 


(b)         No Conflicts. The execution, delivery
and performance by such Purchaser of this Agreement and the Registration Rights
Agreement and the consummation by such Purchaser of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of such Purchaser, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Purchaser is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Purchaser, except in the
case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such
Purchaser to perform its obligations hereunder.


 


(c)         Investment Intent. Such Purchaser understands
that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is
acquiring the Securities and, upon exercise of the Warrants, will acquire the
Warrant Shares issuable upon exercise thereof as principal for its own account
and not with a view to, or for distributing or reselling such Securities or any
part thereof in violation of the Securities Act or any applicable state securities
laws, 
provided, however, that by making the representations herein,
such Purchaser does not agree to hold any of the Securities for any minimum
period of time and reserves the right, subject to the provisions of this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities, including, without
limitation, the Warrant Shares, pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Such Purchaser is
acquiring the Securities hereunder in the 


 

















 


ordinary course of its business. Such Purchaser does
not presently have any agreement, plan or understanding, directly or
indirectly, with any Person to distribute or effect any distribution of any of
the Securities (or any securities which are derivatives thereof) to or through
any person or entity; such Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act or an entity engaged in a business that
would require it to be so registered as a broker-dealer.


 


(d)         Purchaser Status. At the time such Purchaser
was offered the Securities, it was, and at the date hereof it is, and on each
date on which it exercises the Warrants it will be, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.


 


(e)         General Solicitation. Such Purchaser is not
purchasing the Securities as a result of any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general advertisement.


 


(f)         Experience of Such Purchaser. Such Purchaser, either
alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.


 


(g)        Access to Information. Such Purchaser
acknowledges that it has had the opportunity to review the Disclosure Materials
and has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (ii) access to
information about the Company and its respective financial condition, results
of operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such Purchaser’s right
to rely on the truth, accuracy and completeness of the Disclosure Materials and
the Company’s representations and warranties contained in the Transaction
Documents. Such Purchaser has sought such accounting, legal and tax advice as
it has considered necessary to make an informed decision with respect to its
acquisition of the Securities.


 


(h)        Certain Trading Activities. Other than with respect to
the transactions contemplated herein, since the time that such Purchaser was
first contacted by the Company or any other Person regarding the transactions
contemplated hereby, neither the Purchaser nor, to the knowledge of such
Purchaser, any Affiliate of such Purchaser which (x) had knowledge of the
transactions contemplated hereby, (y) has knowledge or shares discretion
relating to such Purchaser’s investments or trading or information concerning
such Purchaser’s investments, including in respect of the Securities, and
(z) is subject to such Purchaser’s review or input concerning such
Affiliate’s investments or trading (collectively, “Trading Affiliates”) has directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such 


 

















 


Purchaser or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities).
Notwithstanding the foregoing, in the case of a Purchaser and/or Trading
Affiliate that is, individually or collectively, a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s or Trading Affiliate’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s or Trading Affiliate’s assets, the
representation set forth above shall apply only with respect to the portion of
assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement. Other than to other Persons (a) party
to this Agreement or (b) advising such Purchaser in relation to the
Transaction Documents and the transactions contemplated herein and therein,
such Purchaser has maintained the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this
transaction).


 


(i)         Brokers and Finders. No Person will have, as a
result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or any Purchaser for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Purchaser.


 


(j)         Independent Investment Decision. Such
Purchaser has independently evaluated the merits of its decision to purchase
Securities pursuant to the Transaction Documents, and such Purchaser confirms
that it has not relied on the advice of any other Purchaser’s business and/or
legal counsel in making such decision. Such Purchaser understands that nothing
in this Agreement or any other materials presented by or on behalf of the
Company to the Purchaser in connection with the purchase of the Securities
constitutes legal, tax or investment advice. Such Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the Securities.


 


(k)        Reliance on Exemptions. Such Purchaser understands
that the Securities being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgements and understandings of such Purchaser
set forth herein in order to determine the availability of such exemptions and
the eligibility of such Purchaser to acquire the Securities.


 


(l)         No Governmental Review. Such Purchaser understands
that no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.


 


(m)       Regulation M. Such Purchaser is aware
that the anti-manipulation rules of Regulation M under the Exchange
Act may apply to sales of Common Stock and other activities with respect to the
Common Stock by the Purchasers.


 

















 


(n)        Residency. Such Purchaser’s principal
executive offices are in the jurisdiction set forth immediately below such
Purchaser’s name on the applicable signature page attached hereto.


 


The
Company and each of the Purchasers acknowledge and agree that no party to this
Agreement has made or makes any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in
this Article III and the Transaction Documents.


 


ARTICLE 4


 


OTHER AGREEMENTS OF THE
PARTIES


 


4.1          Transfer Restrictions.


 


(a)         Compliance with Laws. Notwithstanding any other
provision of this Article 4, each Purchaser covenants that the Securities
may be disposed of only pursuant to an effective registration statement under,
and in compliance with the requirements of, the Securities Act, or pursuant to
an available exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, and in compliance with any
applicable state and federal securities laws. In connection with any transfer
of the Securities other than (i) pursuant to an effective registration
statement, (ii) to the Company, (iii) to an Affiliate of a Purchaser,
(iv) pursuant to Rule 144 (provided
that the Purchaser provides the Company with reasonable assurances (in the form
of seller and broker representation letters) that the securities may be sold
pursuant to such rule) or Rule 144A, (v) pursuant to Rule 144
without restriction following the applicable holding period or (vi) in
connection with a bona fide pledge, the Company may require an opinion of
counsel reasonably acceptable to the Company, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that
such transfer does not require registration of such transferred Securities
under the Securities Act (the reasonable fees of such counsel to be borne by
the Company). As a condition of any such transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the
rights of a Purchaser under this Agreement and the Registration Rights
Agreement.


 


(b)         Legends. Certificates evidencing
the Securities shall bear any legend as required by the “blue sky” laws of any
state and a restrictive legend in substantially the following form until such
time as they are not required under Section 4.1(c) (and a stock
transfer order may be placed against transfer of the certificates for the
Securities in violation of this Agreement):


 


THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT AS PROVIDED BY SECTION 4 OF
THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 13, 2010, BY
AND AMONG WORLD HEART CORPORATION AND EACH PURCHASER IDENTIFIED ON THE
SIGNATURE PAGES THERETO.


 






 












 


In
addition, if any Purchaser is an Affiliate of the Company, certificates
evidencing the Securities issued to such Purchaser shall bear a customary “affiliates”
legend.


 


(c)         Removal of Legends. The legend
set forth in Section 4.1(b) above shall be removed and the Company
shall issue a certificate without such legend or any other legend to the holder
of the applicable Securities upon which it is stamped or issue the applicable
Securities without such a legend or any other legend to such holder by electronic
delivery at the applicable balance account at DTC, if (i) such Securities
are sold pursuant to an effective Registration Statement and the Purchaser has
delivered a signed and completed Purchaser’s Certificate of Subsequent Sale in
substantially the form of Exhibit G
attached hereto (the “Certificate
of Sale” ) with respect to such Securities, (ii) such
Securities are sold or transferred pursuant to Rule 144 (if the transferor
is not an Affiliate of the Company), or (iii) such Securities are eligible
for sale under Rule 144 without restriction. Any fees (with respect to the
Transfer Agent, Company Counsel or otherwise) associated with the removal of
such legend shall be borne by the Company. Following such time as a legend is
no longer required for certain Securities, the Company will no later than three
(3) Trading Days following the delivery by a Purchaser to the Company or
the Transfer Agent (with notice to the Company) of a legended certificate
representing such Securities (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect the reissuance
and/or transfer), deliver or cause to be delivered to the transferee of such
Purchaser or such Purchaser, as applicable, a certificate representing such
Securities that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section 4.1.
Certificates for Shares or Warrant Shares subject to legend removal hereunder
may be transmitted by the Transfer Agent to the Purchasers, as applicable, by
crediting the account of the transferee’s Purchaser’s prime broker with
DTC.  If (1) a certificate
representing the Shares or Warrant Shares is not delivered to the Purchaser
within three (3) Trading Days after receipt by the Company or the Transfer
Agent of all documents necessary for the removal of the legend set forth above,
including, but not limited to the signed and completed Certificate of Sale and (2) prior
to the time such certificate is received by the Purchaser, the Purchaser, or
any third party on behalf of the Purchaser or for the Purchaser’s account,
purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Purchaser of shares represented by
such certificate (a “Buy-In”),
then the Company shall pay in cash to the Purchaser (for costs incurred either
directly by such Purchaser or on behalf of a third party) the amount by which
the total purchase price paid for Common Stock as a result of the Buy-In
(including brokerage commissions, if any) exceeds the proceeds received by such
Purchase as a result of the sale to which such Buy-In relates.  The Purchaser shall provide the Company
written notice indicating the amounts payable to the Purchaser in respect of
the Buy-In.


 


(d)         Irrevocable Transfer Agent Instructions. The Company
shall issue irrevocable instructions to its Transfer Agent, and any subsequent
transfer agent, in the form of Exhibit D
attached hereto (the “Irrevocable
Transfer Agent Instructions”). The Company represents and
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions or instructions consistent therewith will be given by the Company
to its transfer agent in connection with this Agreement, and that the
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement, the other
Transaction Documents and applicable law. The Company acknowledges that a
breach by it of its obligations under this Section 4.1(d) will cause
irreparable harm to a Purchaser. Accordingly, the 


 

















 


Company acknowledges that the remedy at law for a
breach of its obligations under this Section 4.1(d) will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 4.1(d), that a Purchaser shall
be entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.


 


(e)         Acknowledgement. Each Purchaser hereunder
acknowledges its primary responsibilities under the Securities Act and
accordingly will not sell or otherwise transfer the Warrants, Shares, the
Warrant Shares or any interest therein without complying with the requirements
of the Securities Act. While the Registration Statement remains effective, each
Purchaser hereunder may sell the Shares and Warrant Shares in accordance with
the plan of distribution contained in the Registration Statement and, if it
does so, it will comply therewith and with the related prospectus delivery
requirements unless an exemption therefrom is available. Each Purchaser,
severally and not jointly with the other Purchasers, agrees that if it is
notified by the Company in writing at any time that the Registration Statement
registering the resale of the Shares or the Warrant Shares is not effective or
that the prospectus included in such Registration Statement no longer complies
with the requirements of Section 10 of the Securities Act, the Purchaser
will refrain from selling such Shares and Warrant Shares until such time as the
Purchaser is notified by the Company that such Registration Statement is
effective or such prospectus is compliant with Section 10 of the
Securities Act, unless such Purchaser is able to, and does, sell such Shares or
Warrant Shares pursuant to an available exemption from the registration
requirements of Section 5 of the Securities Act.


 


4.2          Reservation of Common Stock. The Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance from and after the Closing Date, no less than the maximum number of
shares of Common Stock issuable upon exercise of the Warrants issued at the
Closing.  On the Closing Date, the
Company will notify the Transfer Agent of the reservation of the Warrant Shares
as required by this Section 4.2.


 


4.3          Furnishing of Information. In order to enable the
Purchasers to sell the Securities under Rule 144 of the Securities Act,
for a period of one (1) year from the Closing Date, the Company shall use
its commercially reasonable efforts to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. During such one (1) year period, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Securities under
Rule 144.


 


4.4          Form D and Blue Sky. The Company agrees to
timely file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof to each Purchaser who requests
a copy in writing promptly after such filing. The Company, on or before the
Closing Date, shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Securities
for sale to the Purchasers at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Purchasers who request in writing such evidence
on 


 

















 


or prior to the Closing Date. The Company shall make
all filings and reports relating to the offer and sale of the Securities
required under applicable securities or “Blue Sky” laws of the states of the
United States following the Closing Date.


 


4.5          No Integration. The Company shall not, and
shall use its commercially reasonable efforts to ensure that no Affiliate of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that will be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers, or that will be integrated
or aggregated with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market such that it would require stockholder
approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.


 


4.6          Listing of Securities. In the time and manner
required by the Principal Trading Market, the Company shall prepare and file
with such Trading Market an additional shares listing application covering all
of the Shares and Warrant Shares and shall use its commercially reasonable
efforts to take all steps necessary to maintain, so long as any other shares of
Common Stock shall be so listed, such listing.


 


4.7          Use of Proceeds. The Company intends to use
the net proceeds from the sale of the Securities hereunder for working capital
and general corporate purposes.


 


4.8          Dispositions and Confidentiality After The Date Hereof. Each
Purchaser covenants that neither it nor any Person acting on its behalf or
pursuant to any understanding with it will engage in any transactions in the
Company’s securities (including, without limitation, any Short Sales involving
the Company’s securities) during the period from the date hereof until the
earlier of such time as (i) the transactions contemplated by this
Agreement are first publicly announced or (ii) this Agreement is
terminated in full pursuant to Section 6.17. Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above shall apply only
with respect to the portion of assets managed by the portfolio managers that
have knowledge about the financing transaction contemplated by this Agreement.
Each Purchaser understands and acknowledges, severally and not jointly with any
other Purchaser, that the Commission currently takes the position that covering
a short position established prior to effectiveness of a resale registration
statement with shares included in such registration statement would be a
violation of Section 5 of the Securities Act, as set forth in
Item 65, Section 5 under Section A, of the Manual of Publicly
Available Telephone Interpretations, dated July 1997, compiled by the
Office of Chief Counsel, Division of Corporation Finance.


 

















 


ARTICLE 5


 


CONDITIONS PRECEDENT TO
CLOSING


 


5.1          Conditions Precedent to the Obligations of the Purchasers
to Purchase Securities at the Closing. The obligation of each
Purchaser listed on Annex A hereto to acquire Securities at the Closing is
subject to the fulfillment to such Purchaser’s satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which may be waived
by such Purchaser (as to itself only):


 


(a)         Representations and Warranties. The
representations and warranties of the Company contained herein shall be true
and correct in all material respects (except for those representations and
warranties which are qualified as to materiality, in which case such
representations and warranties shall be true and correct in all respects) as of
the date of this Agreement and as of the Closing Date, as though made on and as
of the Closing Date, except for such representations and warranties that speak
as of a specific date.


 


(b)         Performance. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing.


 


(c)         No Injunction. No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction Documents.


 


(d)         Consents. The Company shall have
obtained in a timely fashion any and all consents, permits, approvals,
registrations and waivers necessary for consummation of the purchase, sale and
issuance of the Securities at the Closing (including all Required Approvals),
all of which shall be and remain so long as necessary in full force and
effect.  The Company shall have filed
with the Principal Trading Market an additional shares listing application
covering all of the Shares and the Warrants Shares.


 


(e)         No Suspensions of Trading in Common Stock; Listing. The Common
Stock (i) shall be designated for quotation or listed on the Principal
Trading Market and (ii) shall not have been suspended, as of the Closing
Date, by the Commission or the Principal Trading Market from trading on the
Principal Trading Market.


 


(f)         Company Deliverables. The Company shall have
delivered the Company Deliverables in accordance with Section 2.2(a).


 


(g)        Compliance Certificate. The Company shall have
delivered to each Purchaser a certificate, dated as of the Closing Date and signed
by its Chief Executive Officer or its Chief Financial Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1(a), (b) and (d) in the form attached hereto as Exhibit F.


 


(h)        Termination. This Agreement shall not
have been terminated as to any Purchaser in accordance with Section 6.17
herein, and the Company shall have received aggregate proceeds at the Closing
of not less than Twenty-Five Million Dollars ($25,000,000).


 


(i)         Legal Opinion. The Purchasers shall have
received an opinion of Company Counsel to the Company in a customary form
reasonably acceptable to the Purchasers.


 

















 


5.2          Conditions Precedent to the Obligations of the Company to
sell Securities at the Closing. The Company’s obligation to
sell and issue the Securities to each Purchaser listed on Annex A hereto at the
Closing is subject to the fulfillment to the satisfaction of the Company on or
prior to the Closing Date of the following conditions, any of which may be
waived by the Company:


 


(a)         Representations and Warranties. The
representations and warranties made by such Purchaser in Section 3.2
hereof shall be true and correct in all material respects as of the date of
this Agreement, and as of the Closing Date as though made on and as of the
Closing Date, except for representations and warranties that speak as of a
specific date.


 


(b)         Performance. Such Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by such Purchaser at or prior to the
Closing Date.


 


(c)         No Injunction. No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of
the transactions contemplated by the Transaction Documents.


 


(d)         Consents. The Company shall have
obtained in a timely fashion any and all consents, permits, approvals,
registrations and waivers necessary for consummation of the purchase and sale
of the Securities, all of which shall be and remain so long as necessary in
full force and effect, provided that the Company shall use best efforts to
obtain in a timely fashion any and all such consents, permits, approvals,
registrations and waivers.


 


(e)         Purchasers Deliverables. Such Purchaser shall have
delivered its Purchaser Deliverables in accordance with Section 2.2(b).


 


(f)         Termination. This Agreement shall not
have been terminated as to such Purchaser in accordance with Section 6.17
herein.


 


ARTICLE 6


 


MISCELLANEOUS


 


6.1          Fees and Expenses. Except as set forth in
this Section 6.1, the Company and the Purchasers shall each pay the fees
and expenses of their respective advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other
taxes and duties levied.


 


6.2          Entire Agreement. The Transaction Documents,
together with the Exhibits and Schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without 


 

















 


further consideration, the Company and the
Purchasers will execute and deliver to the other such further documents as may
be reasonably requested in order to give practical effect to the intention of
the parties under the Transaction Documents.


 


6.3          Notices. Any and all notices or
other communications or deliveries required or permitted to be provided
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified in
this Section prior to 5:00 p.m., New York City time, on a Trading
Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than
5:00 p.m., New York City time, on any Trading Day, (c) the Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service with next day delivery specified, or (d) upon
actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as follows:


 


	
  If
  to the Company:

  	
  World
  Heart Corporation

  4750
  Wiley Post Way, Suite 120

  Salt
  Lake City, UT  84116

  Telephone
  No.:   (801) 303-4361

  Facsimile
  No.:   (801) 355-7622

  Attention:   Morgan R. Brown

  
	
   

  	
   

  
	
  With
  a copy to:

  	
  Cooley
  LLP

  3175 Hanover Street

  Palo Alto, California 94304-1130

  Telephone No.:  
  (650) 843-5180

  Facsimile No.:  
  (650) 849-7400

  Attention:  
  Mark Weeks

  
	
   

  	
   

  
	
  If
  to a Purchaser:

  	
  To
  the address set forth under such Purchaser’s name on the signature page hereof;

  
	
   

  	
   

  
	
   

  	
  or
  such other address as may be designated in writing hereafter, in the same
  manner, by such Person.

  



 


With a copy to:


 


6.4          Amendments; Waivers; No Additional Consideration. No provision
of this Agreement may be waived or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Purchasers holding
or having the right to acquire a majority of the Shares and the Warrant Shares
on a fully-diluted basis at the time of such amendment or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought. No
waiver of any default with respect to any provision, condition or 


 

















 


requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. No consideration shall be offered or paid
to any Purchaser to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also
offered to all Purchasers who then hold Securities.


 


6.5          Construction. The headings herein are
for convenience only, do not constitute a part of this Agreement and shall not
be deemed to limit or affect any of the provisions hereof. The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be
applied against any party. This Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement or any of the Transaction Documents.


 


6.6          Successors and Assigns. The provisions of this
Agreement shall inure to the benefit of and be binding upon the parties and
their successors and permitted assigns. This Agreement, or any rights or
obligations hereunder, may not be assigned by the Company without the prior
written consent of the Purchasers. Any Purchaser may assign its rights
hereunder in whole or in part to any Person to whom such Purchaser assigns or
transfers any Securities in compliance with the Transaction Documents and
applicable law, provided such transferee shall agree in writing to be bound,
with respect to the transferred Securities, by the terms and conditions of this
Agreement that apply to the “Purchasers”.


 


6.7          No Third-Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision hereof
be enforced by, any other Person.


 


6.8          Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective Affiliates, employees or agents) shall be
commenced exclusively in the New York Courts. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any 


 

















 


right to serve process in any manner permitted by
law. 
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.


 


6.9          Survival. The representations and
warranties contained herein shall survive the Closing and the delivery of the
Securities for a period of one (1) year from the Closing Date. The
agreements and covenants contained herein shall survive for the applicable
statute of limitations.


 


6.10        Execution. This Agreement may be
executed in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party,
it being understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission, or by
e-mail delivery of a “.pdf”
format data file, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile signature page were an original
thereof.


 


6.11        Severability. If any provision of this
Agreement is held to be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement
shall not in any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision that is a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.


 


6.12        Replacement of Securities. If any certificate or
instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company and the Transfer Agent of such loss, theft or
destruction and the execution by the holder thereof of a customary lost
certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection
therewith or, if required by the Transfer Agent, a bond in such form and amount
as is required by the Transfer Agent. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities. If a
replacement certificate or instrument evidencing any Securities is requested
due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.


 


6.13        Remedies. In addition to being
entitled to exercise all rights provided herein or granted by law, including
recovery of damages, each of the Purchasers and the Company will be entitled to
specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agree to waive in any action for specific performance of any such
obligation (other than in connection with any action for a temporary
restraining order) the defense that a remedy at law would be adequate.


 
















 


6.14        Payment Set Aside. To the extent that the
Company makes a payment or payments to any Purchaser pursuant to any
Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, by a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.


 


6.15        Adjustments in Share Numbers and Prices. In the event
of any stock split, subdivision, dividend or distribution payable in shares of
Common Stock (or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly shares of Common Stock),
combination or other similar recapitalization or event occurring after the date
hereof, each reference in any Transaction Document to a number of shares or a
price per share shall be deemed to be amended to appropriately account for such
event.


 


6.16        Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to the Transaction Documents has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made
or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statement or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
the Transaction Documents. Each Purchaser acknowledges that no other Purchaser
has acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. The Company acknowledges
that each of the Purchasers has been provided with the same Transaction
Documents for the purpose of closing a transaction with multiple Purchasers and
not because it was required or requested to do so by any Purchaser. The Company’s
obligations to each Purchaser under this Agreement are identical to its
obligations to each other Purchaser other than such differences resulting
solely from the number of Securities purchased by such Purchaser, but
regardless of whether such 


 

















 


obligations are memorialized herein or in another
agreement between the Company and a Purchaser.


 


6.17        Termination. This Agreement may be
terminated and the sale and purchase of the Shares and the Warrants abandoned
at any time prior to the Closing by either the Company or any Purchaser listed
on Annex A hereto (with respect to itself only), upon written notice to the
other, if the Closing has not been consummated on or prior to 5:00 p.m.,
New York City time, on the Outside Date;  provided, however, that the right
to terminate this Agreement under this Section 6.17 shall not be available
to any Person whose failure to comply with its obligations under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on or
before such time. Nothing in this Section 6.17 shall be deemed to release
any party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. In the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section, the Company and the terminating Purchaser(s) shall not have
any further obligation or liability (including arising from such termination)
to the other, and no Purchaser will have any liability to any other Purchaser
under the Transaction Documents as a result therefrom.


 


6.18        Rescission and Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
owed to such Purchaser by the Company under a Transaction Document and the
Company does not timely perform its related obligations within the periods
therein provided, then, prior to the performance by the Company of the Company’s
related obligation, such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.


 


6.19        Conflict Waiver.  Each party to
this Agreement acknowledges that Cooley LLP (“Cooley”),
outside general counsel to the Company, has in the past performed and is or may
now or in the future represent one or more Purchasers or their affiliates in
matters unrelated to the transactions contemplated by this Agreement (the “Financing”), including
representation of such Purchasers or their affiliates in matters of a similar
nature to the Financing.  The applicable rules of
professional conduct require that Cooley inform the parties hereunder of this
representation and obtain their consent. 
Cooley has served as outside general counsel to the Company and has
negotiated the terms of the Financing solely on behalf of the Company.  The Company and each Purchaser hereby
(a) acknowledge that they have had an opportunity to ask for and have
obtained information relevant to such representation, including disclosure of
the reasonably foreseeable adverse consequences of such representation;
(b) acknowledge that with respect to the Financing, Cooley has represented
solely the Company, and not any Purchaser or any stockholder, director or
employee of the Company or any Purchaser; and (c) gives its informed
consent to Cooley’s representation of the Company in the Financing.


 

















 


IN WITNESS WHEREOF, the parties hereto have
caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.


 


	
   

  	
  WORLD
  HEART CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Morgan
  R. Brown

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  



 

















 


EXHIBITS:


 


	
  A:

  	
  Form of
  Warrant

  
	
  B:

  	
  Form of
  Registration Rights Agreement

  
	
  C-1:

  	
  Accredited
  Investor Questionnaire

  
	
  C-2:

  	
  Stock
  Certificate Questionnaire

  
	
  D:

  	
  Irrevocable
  Transfer Agent Instructions

  
	
  E:

  	
  Form of
  Officer’s Certificate

  
	
  F:

  	
  Form of
  Compliance Certificate

  
	
  G:

  	
  Purchaser’s
  Certificate of Subsequent Sale

  



 


1

















 


EXHIBIT A


 


FORM OF WARRANT


 


1

















 


EXHIBIT B


 


FORM OF REGISTRATION RIGHTS AGREEMENT


 


1