**EXHIBIT 4.1**

 

**REGISTRATION RIGHTS AGREEMENT**

 

This Registration RightsAgreement (the “Agreement”) is made and entered into as of July 29, 2005 by andamong World Heart Corporation, a corporation incorporated under the laws of theProvince of Ontario, Canada (the “Company”), and Maverick Venture Management,LLC, the Investor named in the Purchase Agreement by and between the Companyand Maverick Venture Management, LLC dated as of January 31, 2005 (the“Purchase Agreement”) and MedQuest Products, Inc., a corporation incorporatedunder the laws of the State of Utah, the Vendor named in the Asset PurchaseAgreement between the Company and MedQuest Products, Inc. made as of January31, 2005 (the “Asset Purchase Agreement”).

 

The parties hereby agree asfollows:

 

##### 1.             Certain Definitions.

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

 

“Affiliate” means,with respect to any person, any other person which directly or indirectlycontrols, is controlled by, or is under common control with, such person.

 

“Business Day” meansa day, other than a Saturday or Sunday, on which banks in Ottawa, Ontario, NewYork City, New York and Salt Lake City, Utah are open for the generaltransaction of business.

 

“Common Stock” shallmean the Company’s Common Shares, and any securities into which such shares mayhereinafter be reclassified.

 

“Investors” shallmean Maverick Venture Management, LLC and MedQuest Products, Inc. and anyAffiliate of either of them.

 

“Prospectus” shallmean the prospectus included in any Registration Statement, as amended orsupplemented by any prospectus supplement, with respect to the terms of theoffering of any portion of the Registrable Securities covered by suchRegistration Statement and by all other amendments and supplements to theprospectus, including post-effective amendments and all material incorporatedby reference in such prospectus.

 

“Register,” “registered”and “registration” refer to a registration made by preparing and filinga Registration Statement or similar document in compliance with the 1933 Act(as defined below), and the declaration or ordering of effectiveness of suchRegistration Statement or document.

 

“Registrable Securities”shall mean (i) the Shares and (ii) any other securities issued or issuable withrespect to or in exchange for Registrable Securities; provided, that, asecurity shall cease to be a Registrable Security upon (A) sale pursuant to aRegistration Statement or Rule 144 under the 1933 Act, or (B) such securitybecoming eligible for sale by the Investors pursuant to Rule 144(k).

 

“Registration Statement”shall mean any registration statement of the Company filed under the 1933 Actthat covers the resale of any of the Registrable Securities pursuant to theprovisions of this Agreement, amendments and supplements to such RegistrationStatement,

 

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including post-effective amendments, all exhibits and all materialincorporated by reference in such Registration Statement.

 

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

 

“Shares” means theshares of Common Stock issued pursuant to the Purchase Agreement and the AssetPurchase Agreement.

 

“1933 Act” means theSecurities Act of 1933, as amended, and the rules and regulations promulgatedthereunder.

 

“1934 Act” means theSecurities Exchange Act of 1934, as amended, and the rules and regulationspromulgated thereunder.

 

##### 2.             Registration.

#####  

(a)           Registration Statements.

 

(i)            No later than one hundred and twenty(120) days, following the closing of the purchase of the securitiescontemplated by the Purchase Agreement (the “Filing Deadline”), the Companyshall prepare and file with the SEC one Registration Statement on Form S-2 (or,if Form S-2 is not then available to the Company, on such form of registrationstatement as is then available to effect a registration for resale of theRegistrable Securities), covering the resale of the Registrable Securities inan amount at least equal to the number of Shares and other Common Stock asdetermined by the Company in it sole discretion.  Such Registration Statement also shall cover,to the extent allowable under the 1933 Act and the rules promulgated thereunder(including Rule 416), such indeterminate number of additional shares of CommonStock resulting from stock splits, stock dividends or similar transactions withrespect to the Registrable Securities. The Registration Statement (and each amendment or supplement thereto,and each request for acceleration of effectiveness thereof) shall be providedin accordance with Section 3(c) to the Investors and their counsel prior to itsfiling or other submission.

 

(b)          Expenses.  The Company will pay all expenses associatedwith each registration, including filing and printing fees, its counsel andaccounting fees and expenses, costs associated with clearing the RegistrableSecurities for sale under applicable state securities laws, listing fees, butexcluding discounts, commissions, fees of underwriters, selling brokers, dealermanagers or similar securities industry professionals with respect to theRegistrable Securities being sold.

 

(c)           Effectiveness.

 

TheCompany shall use commercially reasonable efforts to have the RegistrationStatement declared effective as soon as practicable.  The Company shall notify the Investors byfacsimile or e-mail as promptly as practicable, and in any event, withintwenty-four (24) hours, after any Registration Statement is declared effectiveand shall simultaneously provide the Investors with a copy of any relatedProspectus to be used in connection with the sale or other disposition of thesecurities covered thereby.

 

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##### 3.             Company Obligations.  The Company will use commercially reasonableefforts to effect the registration of the Registrable Securities in accordancewith the terms hereof, and pursuant thereto the Company will, as expeditiouslyas possible:

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(a)           use commercially reasonable effortsto cause such Registration Statement to become effective and to remaincontinuously effective for a period that will terminate upon the earlier of (i)the date on which all Registrable Securities covered by such RegistrationStatement as amended from time to time, have been sold, and (ii) the date onwhich all Registrable Securities covered by such Registration Statement may besold pursuant to Rule 144(k);

 

(b)          prepare and file with the SEC suchamendments and post-effective amendments to the Registration Statement and theProspectus as may be necessary to keep the Registration Statement effective forthe period specified in Section 3(a) and to comply with the provisions of the1933 Act and the 1934 Act with respect to the distribution of all of theRegistrable Securities covered thereby; and

 

(c)           furnish to the Investors and theirlegal counsel (i) promptly after the same is prepared and publicly distributed,filed with the SEC, or received by the Company (but not later than fourBusiness Days after the filing date, receipt date or sending date, as the casemay be) one copy of any Registration Statement and any amendment thereto, each preliminaryprospectus and Prospectus and each amendment or supplement thereto, and eachletter written by or on behalf of the Company to the SEC or the staff of theSEC, and each item of correspondence from the SEC or the staff of the SEC, ineach case relating to such Registration Statement (other than any portion ofany thereof which contains information for which the Company has soughtconfidential treatment), and (ii) such number of copies of a Prospectus,including a preliminary prospectus, and all amendments and supplements theretoand such other documents as the Investors may reasonably request in order tofacilitate the disposition of the Registrable Securities owned by the Investorsthat are covered by the related Registration Statement.

 

##### 4.             Due Diligence Review; Information.  The Company shall make available, duringnormal business hours, for inspection and review by the Investors, advisors toand representatives of the Investors (who may or may not be affiliated with theInvestors and who are reasonably acceptable to the Company), any underwriterparticipating in any disposition of shares of Common Stock on behalf of theInvestors pursuant to a Registration Statement or amendments or supplementsthereto or any blue sky, NASD or other filing, all financial and other records,all SEC Filings (as defined in the Purchase Agreement) and other filings withthe SEC, and all other corporate documents and properties of the Company as maybe reasonably necessary for the purpose of such review, and cause the Company’sofficers, directors and employees, within a reasonable time period, to supplyall such information reasonably requested by the Investors or any suchrepresentative, advisor or underwriter in connection with such RegistrationStatement (including, without limitation, in response to all questions andother inquiries reasonably made or submitted by any of them), prior to and fromtime to time after the filing and effectiveness of the Registration Statementfor the sole purpose of enabling the Investors and such representatives,advisors and underwriters and their respective accountants and attorneys toconduct initial and ongoing due diligence with respect to the Company and theaccuracy of such Registration Statement.

 

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The Company shall not disclose material nonpublicinformation to the Investors, or to advisors to or representatives of theInvestors, unless prior to disclosure of such information the Companyidentifies such information as being material nonpublic information andprovides the Investors and such advisors and representatives with theopportunity to accept or refuse to accept such material nonpublic informationfor review and any Investor and such advisers and representatives wishing to obtainsuch information, enter into an appropriate confidentiality agreement with theCompany with respect thereto.

 

##### 5.             Obligations of the Investors.

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(a)           Each Investor shall furnish inwriting to the Company such information regarding itself, the Registrable Securitiesheld by it and the intended method of disposition of the Registrable Securitiesheld by it, as shall be reasonably required to effect the registration of suchRegistrable Securities and shall execute such documents in connection with suchregistration as the Company may reasonably request.  At least five (5) Business Days prior to thefirst anticipated filing date of any Registration Statement, the Company shallnotify each Investor of the information the Company requires from suchInvestor.  An Investor shall provide suchinformation to the Company at least two (2) Business Days prior to the firstanticipated filing date of such Registration Statement.

 

(b)          Each Investor, by its acceptance ofthe Registrable Securities agrees to cooperate with the Company as reasonablyrequested by the Company in connection with the preparation and filing of aRegistration Statement hereunder.

 

##### 6.             Indemnification.

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(a)           Indemnification by the Company.  The Company will indemnify and hold harmlesseach Investor and its officers, directors, members, employees and agents,successors and assigns, and each other person, if any, who controls suchInvestor within the meaning of the 1933 Act, against any losses, claims,damages or liabilities, joint or several, to which they may become subjectunder the 1933 Act or otherwise, insofar as such losses, claims, damages orliabilities (or actions in respect thereof) arise out of or are based upon: (i)any untrue statement or alleged untrue statement of any material fact containedin any Registration Statement, any preliminary prospectus or final prospectuscontained therein, or any amendment or supplement thereof; (ii) any blue skyapplication or other document executed by the Company specifically for thatpurpose or based upon written information furnished by the Company filed in anystate or other jurisdiction in order to qualify any or all of the RegistrableSecurities under the securities laws thereof (any such application, document orinformation herein called a **“**Blue Sky Application**”**); (iii) the omission or alleged omission to state thereina material fact required to be stated therein or necessary to make thestatements therein not misleading; (iv) any violation by the Company or itsagents of any rule or regulation promulgated under the 1933 Act applicable tothe Company or its agents and relating to action or inaction required of theCompany in connection with such registration; or (v) any failure to register orqualify the Registrable Securities included in any such Registration in anystate where the Company or its agents has affirmatively undertaken or agreed inwriting that the Company will undertake such registration or qualification onan Investor’s behalf (the undertaking of any underwriter chosen by the Companybeing attributed to the Company) and will reimburse such Investor, and eachsuch officer, director or member and each such controlling person for any legalor other expenses reasonably incurred by them in connection with investigating

 

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ordefending any such loss, claim, damage, liability or action; provided, however,that the Company will not be liable in any such case if and to the extent thatany such loss, claim, damage or liability arises out of or is based upon anuntrue statement or alleged untrue statement or omission or alleged omission somade in conformity with information furnished by such Investor or any suchcontrolling person in writing specifically for use in such RegistrationStatement or Prospectus.

 

(b)          Indemnification by the Investors.  In connection with any registration pursuantto the terms of this Agreement, each Investor will furnish to the Company inwriting such information as the Company reasonably requests concerning theholders of Registrable Securities or the proposed manner of distribution foruse in connection with any Registration Statement or Prospectus and agrees toindemnify and hold harmless, to the fullest extent permitted by law, theCompany, its directors, officers, employees, stockholders and each person whocontrols the Company (within the meaning of the 1933 Act) against any losses,claims, damages, liabilities and expense (including reasonable attorney fees)resulting from any untrue statement of a material fact or any omission of amaterial fact required to be stated in the Registration Statement or Prospectusor preliminary prospectus or amendment or supplement thereto or necessary tomake the statements therein not misleading, to the extent, but only to theextent that such untrue statement or omission is contained in any informationfurnished in writing by such Investor to the Company specifically for inclusionin such Registration Statement or Prospectus or amendment or supplementthereto.  In no event shall the liabilityof an Investor be greater in amount than the dollar amount of the proceeds (netof all expense paid by such Investor in connection with any claim relating tothis Section 6 and the amount of any damages such holder has otherwise beenrequired to pay by reason of such untrue statement or omission) received bysuch Investor upon the sale of the Registrable Securities included in theRegistration Statement giving rise to such indemnification obligation.

 

(c)           Conduct of IndemnificationProceedings.  Any person entitled toindemnification hereunder shall (i) give prompt notice to the indemnifyingparty of any claim with respect to which it seeks indemnification and (ii)permit such indemnifying party to assume the defense of such claim with counselreasonably satisfactory to the indemnified party; provided that anyperson entitled to indemnification hereunder shall have the right to employseparate counsel and to participate in the defense of such claim, but the feesand expenses of such counsel shall be at the expense of such person unless (a)the indemnifying party has agreed to pay such fees or expenses, or (b) theindemnifying party shall have failed to assume the defense of such claim andemploy counsel reasonably satisfactory to such person or (c) in the reasonablejudgment of any such person, based upon written advice of its counsel, aconflict of interest exists between such person and the indemnifying party withrespect to such claims (in which case, if the person notifies the indemnifyingparty in writing that such person elects to employ separate counsel at theexpense of the indemnifying party, the indemnifying party shall not have theright to assume the defense of such claim on behalf of such person); and provided,further, that the failure of any indemnified party to give notice asprovided herein shall not relieve the indemnifying party of its obligationshereunder, except to the extent that such failure to give notice shallmaterially adversely affect the indemnifying party in the defense of any suchclaim or litigation.  It is understoodthat the indemnifying party shall not, in connection with any proceeding in thesame jurisdiction, be liable for fees or expenses of more than one separatefirm of attorneys at any time for all such indemnified parties.  No indemnifying party will, except with theconsent of the indemnified party, consent to entry of any judgment or enterinto any settlement that does not include as an unconditional term

 

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thereofthe giving by the claimant or plaintiff to such indemnified party of a releasefrom all liability in respect of such claim or litigation.

 

(d)          Contribution.  If for any reason the indemnificationprovided for in the preceding paragraphs (a) and (b) is unavailable to anindemnified party or insufficient to hold it harmless, other than as expresslyspecified therein, then the indemnifying party shall contribute to the amountpaid or payable by the indemnified party as a result of such loss, claim,damage or liability in such proportion as is appropriate to reflect therelative fault of the indemnified party and the indemnifying party, as well asany other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning ofSection 11(f) of the 1933 Act shall be entitled to contribution from any personnot guilty of such fraudulent misrepresentation.  In no event shall the contribution obligationof a holder of Registrable Securities be greater in amount than the dollaramount of the proceeds (net of all expenses paid by such holder in connectionwith any claim relating to this Section 6 and the amount of any damages suchholder has otherwise been required to pay by reason of such untrue or allegeduntrue statement or omission or alleged omission) received by it upon the saleof the Registrable Securities giving rise to such contribution obligation.

 

##### 7.             Miscellaneous.

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

 

(b)          Notices.  Unless otherwise provided, any noticerequired or permitted under this Agreement shall be given in writing and shallbe deemed effectively given as hereinafter described (i) if given by personaldelivery, then such notice shall be deemed given upon such delivery, (ii) ifgiven by telecopier, then such notice shall be deemed given upon receipt ofconfirmation of complete transmittal, (iii) if given by mail, then such noticeshall be deemed given upon the earlier of (A) receipt of such notice by the recipientor (B) three days after such notice is deposited in first class mail, postageprepaid, and (iv) if given by an internationally recognized overnight aircourier, then such notice shall be deemed given one day after delivery to suchcarrier.  All notices shall be addressedto the party to be notified at the address as follows, or at such other addressas such party may designate by ten days’ advance written notice to the otherparty:

 

Ifto the Company:

 

WorldHeart Corporation

7799Pardee Lane

Oakland,California 94621

Attention:  Chief Financial Officer

Fax:  (510) 563-4800

 

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Witha copy to:

 

McCarthyTétrault LLP

Suite1400, 40 Elgin Street

Ottawa,Ontario

K1P5K6

Attention:  Virginia K. Schweitzer

Fax:  (613) 563-9386

 

Ifto the Investor:

 

MaverickVenture Management, LLC14950 Gypsy Hill Road

Saratoga,California 95070

 

Attention:  Kevin R. Compton, ManagerFax: (650) 233-0300

 

and

 

MedQuestProducts, Inc.4570 Wiley Post Way, Suite 120Salt Lake City, Utah 84116

 

Attention:  PresidentFax: (801) 355-7622

 

andwith a copy to:

 

Holland& Hart LLP

60East South Temple, Suite 2000Salt Lake City, Utah 84111

 

Attention:Gregory E. Lindley

Fax:(801) 364-9124

 

(c)           Assignments and Transfers byInvestors.  The provisions of thisAgreement shall be binding upon and inure to the benefit of the Investors andtheir respective successors and assigns. No Investor may transfer or assign its rights hereunder in connectionwith the transfer of Registrable Securities without the prior written consentof the Company.

 

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

 

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

 

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

 

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

 

(h)          Severability.  Any provision of this Agreement that isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof but shall be interpreted as if itwere written so as to be enforceable to the maximum extent permitted byapplicable law, and any such prohibition or unenforceability in anyjurisdiction shall not invalidate or render unenforceable such provision in anyother jurisdiction.  To the extentpermitted by applicable law, the parties hereby waive any provision of lawwhich renders any provisions hereof prohibited or unenforceable in any respect.

 

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

 

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

 

(k)           Governing Law; Consent toJurisdiction.  This Agreement shallbe governed by, and construed in accordance with, the internal laws of theState of New York without regard to the choice of law principles thereof.  Each of the parties hereto irrevocablysubmits to the exclusive jurisdiction of the courts of the State of New Yorklocated in New York County and the United States District Court for theSouthern District of New York for the purpose of any suit, action, proceedingor judgment relating to or arising out of this Agreement and the transactionscontemplated hereby.  Service of processin connection with any such suit, action or proceeding may be served on eachparty hereto anywhere in the world by the same methods as are specified for thegiving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction ofany such court in any such suit, action or proceeding and to the laying ofvenue in such court.  Each party heretoirrevocably waives any objection to the laying of venue of any such

 

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suit,action or proceeding brought in such courts and irrevocably waives any claimthat any such suit, action or proceeding brought in any such court has beenbrought in an inconvenient forum.

 

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

 

 
| The  Company:   | WORLD  HEART CORPORATION                           |
|-----------------|----------------------------------------------------|
|            |                                               |
|            |                                               |
|            | By:                                                | /s/ Jal S. Jassawalla |   |
|            | Name: Jal S. Jassawalla                            |
|            | Title: President and Chief Executive Officer       |
|            |                                               |
|            |                                               |
| The  Investors: | MAVERICK  VENTURE MANAGEMENT, LLC                  |
|            |                                               |
|            |                                               |
|            | By:                                                | /s/ Kevin Compton |   |
|            | Name: Kevin Compton                                |
|            | Title: Manager                                     |
|            |                                               |
|            |                                               |
|            | MEDQUEST  PRODUCTS, INC.                           |
|            |                                               |
|            |                                               |
|            | By:                                                | /s/ Barbara Madsen |   |
|            | Name:  Barbara Madsen                              |
|            | Title:  Vice President and Chief Financial Officer |
|                 |                                                    |  |  |  |  |  |

 

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