Document:

RESEARCH CAPITAL CORPORATION

                                AGENCY AGREEMENT

September 22, 2003

World Heart Corporation
1 Laser Street
Ottawa, Ontario
K2E 7V1

Attention:  Mr. Roderick Bryden, President and Chief Executive Officer

Dear Sirs:

Re:  Private  Placement of Units (One Common Share and One Common Share Purchase
     Warrant) (individually a "Unit" and collectively the "Units") at a price of
     $0.85 per Unit)

     Research  Capital  Corporation  (the "Agent")  understands that World Heart
Corporation  (the  "Corporation")  desires to issue and sell to  Purchasers  (as
defined below) in the Designated Provinces (as defined below) up to a minimum of
US$5,000,000  and a maximum of  US$22,500,000  worth of Units (the  "Offering"),
each Unit  consisting  of one common  share in the  capital  of the  Corporation
(individually a "Unit Share" and  collectively the "Unit Shares") and one common
share  purchase  warrant of the  Corporation (a "Warrant" and  collectively  the
"Warrants").  Each  Warrant will entitle the holder to purchase one common share
in the capital of the Corporation (a "Warrant  Share"),  at a price of $1.15 per
common share for a period of sixty months from the Closing Date.

     The form of agreement between the Corporation and each Purchaser  providing
for the subscription by each Purchaser of Units (the  "Subscription  Agreement")
is attached as Exhibit  "A".

1.   Interpretation

1.1  Unless expressly  provided  otherwise,  where used in this Agreement or any
schedule  hereto,  the  following  terms  shall  have  the  following  meanings,
respectively:

     "Advance"  has  the  meaning  ascribed  thereto  in  Section  11.2  of this
     Agreement;

     "Agent" shall have the meaning  ascribed  thereto in the first paragraph of
     this Agreement;

     "Agent's  Counsel"  means  Fraser  Milner  Casgrain LLP or such other legal
     counsel as the Agent may appoint;

     "Agent's Expenses" has the meaning ascribed thereto in Section 11.1 of this
     Agreement;
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     "Agent's Fee",  "Agent's  Warrants" and "Agent's  Warrant  Shares" have the
     meaning ascribed to such terms in Section 5.1;

     "Alternative   Transaction"   means  an  issuance  of   securities  of  the
     Corporation or securities  convertible,  exchangeable  or exercisable  into
     such securities in the capital of the Corporation,  in excess of 20% of the
     total value or number of securities currently outstanding in the capital of
     the  Corporation,  but excluding  securities  issuable upon the conversion,
     exchange  or  exercise  of  securities  outstanding  on  the  date  hereof,
     including,  for greater certainty,  the Underlying Securities or securities
     issued  pursuant  to  the  U.S.  Offering,   or  a  merger,   amalgamation,
     arrangement,  reorganization,  joint venture,  sale of all or substantially
     all assets,  exchange of assets  involving the  Corporation or any material
     subsidiary of the Corporation or any similar  transaction other than as set
     out in this Agreement and excluding the U.S. Offering;

     "Applicable Securities Laws" means, collectively, the applicable securities
     laws of each of the Designated  Provinces,  the respective  regulations and
     rules made and forms  prescribed  thereunder  together with all  applicable
     published  policy  statements,  blanket orders,  rulings and notices of the
     Securities Commissions and together with all published policies,  rules and
     regulations of the Stock Exchange;

     "Argosy  Indebtedness"  means the debt financing  transaction led by Argosy
     Bridge Fund L.P. I consisting of a $7 million  senior loan and a $3 million
     subordinated loan;

     "Auditors"   means   PricewaterhouseCoopers   LLP,   the  auditors  of  the
     Corporation;

     "Business Day" means any day other than a Saturday,  Sunday or statutory or
     civic holiday in Toronto, Ontario;

     "Claim" has the meaning ascribed to such term in Section 12.1;

     "Closing"  means the  closing of the  Offering  of the Units on the Closing
     Date;

     "Closing Date(s)" means September 22, 2003 or such earlier or later date as
     the Corporation and the Agent may agree;

     "Common Share" or "Common Shares" means the common shares in the capital of
     the Corporation;

     "Corporation"   means  World  Heart   Corporation   (and  any   predecessor
     corporation);

     "Corporation's Counsel" means McCarthy Tetrault LLP;

     "Designated Provinces" means Ontario and Quebec;

     "Financial Information" means:

(a)  the audited  consolidated  financial  statements of the Corporation for the
     period  ending  December 31, 2002  consisting  of the audited  consolidated
     balance sheets,
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     consolidated  statements of loss,  consolidated statements of shareholders'
     equity, consolidated statements of cash flow together with the notes to the
     consolidated financial statements; and

(b)  the unaudited interim consolidated  financial statements of the Corporation
     for the period  ending June 30, 2003  consisting  of the interim  unaudited
     consolidated three and six months balance sheets,  consolidated  statements
     of loss,  and  consolidated  statements  of cash flow as at such date,  and
     together with the Notes to the interim  consolidated  financial  statements
     for such period;

     "Gross Proceeds" means the aggregate gross proceeds to the Corporation from
     the sale of Units to Purchasers pursuant to the Offering;

     "G.S.T." means taxes,  interest,  penalties and fines imposed under Part IX
     of the Excise Tax Act (Canada) and the regulations made thereunder;

     "including" means including without limitation;

     "Indemnified Party" has the meaning giving to is in Section 12.1;

     "Intellectual  Property  Rights"  means  all  patent  rights,   trademarks,
     copyrights,  industrial  designs and technical  information  (including any
     claims or rights to sue for past  infringement  of same),  relating  to the
     business of the Corporation owned by or licensed to the Corporation;

     "knowledge"  and  "to  the  knowledge  of"  mean,  when  referring  to  the
     Corporation,  the actual knowledge of the directors and executive  officers
     of the  Corporation  and of its  Subsidiaries  and,  when  referring  to an
     individual,  the actual  knowledge of such  individual and, in either case,
     the actual  knowledge that any such person shall have acquired upon due and
     reasonable inquiry in the circumstances;

     "Legal Costs" has the meaning ascribed to such term in Section 11.1;

     "material  adverse  effect" means an effect which is materially  adverse to
     the business, assets or properties,  condition, (financial or otherwise) or
     results of operations of the Corporation or any of its Subsidiaries,  taken
     as a whole;

     "material  change" means a change in the business,  results of  operations,
     assets,  prospects,  condition  (financial  or otherwise) or capital of the
     Corporation or any of its Subsidiaries that would reasonably be expected to
     have a  significant  effect  on the  market  price  or  value of any of the
     Corporation's securities and includes a decision to implement such a change
     made by the Corporation's board of directors or by senior management of the
     Corporation  who believe that  confirmation of the decision by the board of
     directors is probable;

     "material  fact"  means  a  fact  that  significantly   affects,  or  would
     reasonably be expected to have a significant  effect on the market price or
     value of any of the Corporation's securities;
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     "misrepresentation"  means (i) an untrue  statement of a material  fact, or
     (ii) an omission to state a material  fact that is required to be stated or
     that is necessary to make a statement  not  misleading  in the light of the
     circumstances in which it was made;

     "Net  Proceeds"  means the Gross Proceeds minus the Agent's Fee and Agent's
     Expenses including the Legal Costs;

     "Offered Securities" shall mean,  collectively,  the Unit Shares, Warrants,
     Warrant, Shares, Agent's Warrants and the Agent's Warrant Shares;

     "Offering" has the meaning  ascribed to such term in the first paragraph of
     this Agreement;

     "Outstanding  Convertible Securities" means all options,  including options
     granted or  proposed to be granted to  officers,  directors,  employees  or
     consultants,  warrants,  other  rights  to  acquire  securities  and  other
     convertible  securities  outstanding  as at the  date  of  this  Agreement,
     whether issued pursuant to an established plan or otherwise,  and including
     any agreement or understanding  with respect to the issuance or granting of
     the same, particulars of which are set out in Schedule 7.1(j);

     "person" includes any individual, corporation, limited partnership, general
     partnership, joint stock company or association, joint venture association,
     company,  trust, bank, trust company, land trust, investment trust, society
     or other  entity,  organization,  syndicate  whether  incorporated  or not,
     trustee,   estate   trustee,   executor   or  other   legal   or   personal
     representative,  and  governments  and agencies and political  subdivisions
     thereof;

     "Private  Placement  Exemptions"  means  the  registration  and  prospectus
     exemptions  pursuant to which the Units are to be issued in the  Designated
     Provinces;

     "Public Record" means any prospectus,  annual  information form,  financial
     statements,   material  change  report  and  press  release  filed  by  the
     Corporation or its Subsidiaries  with the Stock Exchange and any applicable
     Canadian or United States securities  regulatory authority on or during the
     18 months preceding the date hereof;

     "Purchasers" means, collectively,  each of the purchasers of Units pursuant
     to the Offering;

     "Quebec Decision" means Decision  #2003-C-0016 issued by the Commission des
     valeurs mobilieres du Quebec;

     "SEC" means the United States Securities and Exchange Commission;

     "Securities Commissions" means, collectively, the securities commissions or
     similar regulatory authorities in each of the Designated Provinces;

     "Selling Group" has the meaning ascribed to such term in Section 2.2;
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     "Significant  Interest  Companies"  means  those  companies  in  which  the
     Corporation  holds  20% or more of the  outstanding  voting  securities  or
     securities convertible into voting securities;

     "Stock Exchange" means the Toronto Stock Exchange;

     "Subscription Agreements" means, collectively,  the subscription agreements
     entered into between the Purchasers  and the  Corporation in respect of the
     purchase of Units, a form of which is attached as Exhibit "A";

     "Subsidiary" or "Subsidiaries"  has the meaning as ascribed to such term in
     the Business Corporations Act (Ontario);

     "Time of Closing" means the Closing Date;

     "Trading  Day"  means a day  during  which the Stock  Exchange  is open for
     trading  and at least one board lot of the Common  Shares has traded on the
     Stock Exchange;

     "Transaction  Documents"  has the meaning  ascribed to such term in Section
     7.1(gg);

     "Trustee" means CIBC Mellon Trust Company or such other person appointed to
     act as trustee under the Warrant Indenture;

     "Underlying  Securities"  means the Warrant Shares issuable on the exercise
     of the Warrants and the Agent's  Warrant Shares issuable on the exercisable
     of the Agent's Warrants;

     "U.S.  Offering"  means  the  United  States  offering  concurrently  being
     conducted  pursuant to the terms of an engagement  letter dated May 7, 2003
     pursuant  to which the  Corporation  appointed  Roth  Capital  Partners  as
     exclusive   placement   agent  for  a  United  States  offering  of  up  to
     US$25,000,000;

     "U.S.  Securities  Laws" means,  collectively,  all applicable  federal and
     state securities laws in the United States,  including all "Blue Sky" laws,
     and all  regulations  and forms  prescribed  thereunder,  together with all
     applicable published policy statements, releases and rulings of the SEC and
     any applicable state securities regulatory authorities;

     "Warrant  Indenture"  means the  indenture  to be entered into prior to the
     Closing  Date  between  the  Corporation  and the Trustee in respect of the
     Warrants;

     "Warrants"  means the Common  Share  purchase  warrants of the  Corporation
     entitling  the holder to purchase one Common Share at $1.15 for a period of
     sixty  months from the date of issue,  in the form  attached to the Warrant
     Indenture;

     "Warrant  Shares"  means the Common  Shares  issuable  upon exercise of the
     Warrants.

1.2  The division of this Agreement into sections,  subsections,  paragraphs and
other  subdivisions  and  the  insertion  of  headings  are for  convenience  of
reference only and shall not
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affect the construction or interpretation of this Agreement. Unless something in
the subject matter or context is inconsistent  therewith,  references  herein to
sections,  subsections,  paragraphs  and  other  subdivisions  are to  sections,
subsections, paragraphs and other subdivisions of this Agreement.

1.3  This  Agreement  shall be governed by and construed in accordance  with the
laws of the  Province  of  Ontario  and the  federal  laws of Canada  applicable
therein and time shall be of the essence hereof.

1.4  Unless  otherwise stated herein,  all amounts  expressed herein in terms of
money refer to lawful  currency of Canada and all payments to be made  hereunder
shall be made in such currency.  All references to U.S.  dollars for the purpose
of  determining  the Canadian  dollar  equivalent  are fixed as at September 11,
2003,  namely,  US$1.00 will  purchase  CDN$1.3709  and CDN$1.00  will  purchase
US$0.7294.

1.5  The following are the  Schedules and Exhibits  attached to this  Agreement,
which  schedules and exhibits  (including  the  representations,  warranties and
covenants  set out  therein)  are  deemed  to be a part  hereof  and are  hereby
incorporated by reference herein:

     Schedule 7.1(g)   -     Non-Compliance of Corporation in Filing Obligations
     Schedule 7.1(h)   -     Subsidiaries and Significant Interest Companies
     Schedule 7.1(k)   -     Outstanding Convertible Securities
     Schedule 7.1(n)   -     Material Changes
     Schedule 7.1(o)   -     Contingent Liabilities
     Schedule 7.1(q)   -     Insurance Deficiencies
     Schedule 7.1(aa)  -     Taxes
     Schedule 7.1(mm)  -     Trade-Mark Issues
     Schedule 7.1(nn)  -     Encumbrances
     Exhibit "A"       -     Subscription Agreement
     Exhibit "B"       -     Legal Opinion

2.   General Terms and Conditions

2.1  Subject to the terms and  conditions  of this  Agreement,  the  Corporation
hereby  appoints the Agent as, and the Agent  hereby  agrees to act as, the sole
and  exclusive  agent of the  Corporation  to offer  for sale on  behalf  of the
Corporation a minimum of US$5,000,000  and a maximum of  US$22,500,000  worth of
Units at a price of $0.85 per Unit, and to use its commercially  reasonable best
efforts  to  solicit  and  procure  Purchasers  of the  Units on  behalf  of the
Corporation.  Each Unit will consist of one Common  Share and one Warrant.  Each
Warrant will  entitle the Warrant  holder to acquire one Common Share at a price
of $1.15 per Common Share at any time prior to sixty months after Closing of the
Offering  (subject to  adjustments  in accordance  with the terms of the Warrant
Indenture).  In the event that the closing  price of the Common Shares as traded
on the Stock  Exchange  (or such  other  exchange  or stock  market on which the
Common   Shares  may  then  be  listed  or  quoted)   equals  or  exceeds  $2.50
(appropriately adjusted for any stock split, reverse stock split, stock dividend
or other  reclassification  or combination of the Common Shares  occurring after
the date hereof) for 20 consecutive  Trading Days, the  Corporation,  subject to
the terms and conditions set out in the Warrant Indenture, may
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demand that the holders of Warrants (including the holders of Warrants under the
U.S. Offering)  exercise a portion of their rights under the Warrants,  provided
that  in any  three-month  period  no more  than  the  lesser  of (i) 20% of the
aggregate amount of Warrants  initially issued to a holder of Warrants,  or (ii)
the  number of  Warrants  held by the holder of  Warrants,  may be called by the
Corporation in any three-month period.

The Agent acknowledges that the Offering shall be done concurrently, or within a
short time thereafter, with the U.S. Offering.

2.2  It is  understood  and agreed by the  parties  that the Agent  shall act as
agentonly  and at no time  shall the Agent  have any  obligation  whatsoever  to
purchase any Units.  The Agent shall have the right to form a selling group (the
"Selling  Group")  consisting of other registered  securities  dealers acting as
sub-agents upon the terms and conditions set out in a selling group agreement to
be entered into  between the Agent and the members of the Selling  Group and the
Agent shall have the right to determine such terms and conditions, provided that
they are not inconsistent  with the terms and conditions of this Agreement,  and
that any fee charged by any such member shall not exceed the Agent's Fee set out
in  Section  5.1 and shall be payable  by the  Agent.  The Agent  shall have the
exclusive right to control all compensation  arrangements between the members of
the Selling Group.

2.3  The Agent  acknowledges  and agrees that any offer to purchase Units may be
     accepted  or  rejected,  in  whole or in part,  by the  Corporation  acting
     reasonably.

2.4  The  Corporation  agrees  that the Units  shall be offered  for sale solely
through the Agent in accordance with this Agreement,  except those Units offered
for sale in a Designated Province through members of the Selling Group acting as
sub-agents  qualified  to  trade  in Units  under  the  laws of such  Designated
Province appointed or authorized by the Agent as provided herein.

2.5  The Agent  agrees not to solicit  offers to  purchase  or sell the Units in
such a manner  as to  require  registration  of the  Units,  or the  filing of a
prospectus with respect to the Units, under the laws of any jurisdiction outside
the Designated Provinces including,  without limitation,  the United States, and
not to  solicit  offers to  purchase  or sell the Units in Canada  except in the
Designated Provinces and only in accordance with all Applicable Securities Laws.
The  Agent  will  ensure  that any  agreements  between  the Agent and any other
investment  dealers or  brokers,  including  without  limitation  members of the
Selling  Group,  contain  equivalent  restrictions  to those  contained  in this
section.

3.   Nature of Transaction

3.1  Each Purchaser  resident in the Designated  Provinces  shall purchase Units
under one or more  Private  Placement  Exemptions  so that the  purchases of the
Units  will  be  exempt  from  the  prospectus  requirements  of the  Applicable
Securities Laws. The Corporation hereby agrees to use all reasonable  commercial
efforts to secure  compliance with all securities  regulatory  requirements on a
timely basis in connection with the distribution of the Units to the Purchasers,
including,  without  limitation,  by filing within the periods  stipulated under
Applicable  Securities  Laws,  and at the  Corporation's  expense,  all  private
placement  forms  required to be filed by the  Corporation  and the  Purchasers,
respectively, in connection with the Offering and paying all
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filing fees required to be paid in connection therewith so that the distribution
of the Units may lawfully  occur without the necessity of filing a prospectus or
any  similar  document  under the  Applicable  Securities  Laws,  including,  an
offering memorandum as defined in Ontario Securities Commission Rule 14-501. The
Agent  agrees to assist the  Corporation  in all  reasonable  respects to secure
compliance with all regulatory requirements in connection with the Offering. The
Agent will notify the Corporation with respect to the identity of each Purchaser
as soon as practicable  and with a view to leaving  sufficient time to allow the
Corporation to secure compliance with all relevant regulatory requirements under
Applicable Securities Laws relating to the sale of the Units.

4.   Covenants and Representations of the Agent

4.1  The Agent  covenants  with the  Corporation  that it will (and will use its
reasonable efforts to cause the members of the Selling Group to ensure that they
will):  (i) conduct its activities in connection  with arranging for the sale of
the Units in compliance with the Applicable Securities Laws; (ii) not deliver to
any  prospective  Purchaser any document or material  without the consent of the
Corporation;  (iii) not  solicit  offers to  purchase or sell the Units so as to
require  registration  thereof or filing of a prospectus  with  respect  thereto
under the laws of any  jurisdiction  outside of Canada where the solicitation or
sale of the Units would result in any ongoing  disclosure  requirements  in such
jurisdiction,  or in any registration  requirements in such jurisdiction  except
for the filing of a notice or report of the  solicitation  or sale;  (iv) obtain
from each  Purchaser an executed  Subscription  Agreement  in the form  attached
hereto as Appendix "A",  together with all  documentation as may be necessary in
connection with subscriptions for Units; and (v) not make any representations or
warranties with respect to the Corporation or the Units, other than as set forth
in  the  Subscription  Agreement,   this  Agreement  or  in  publicly  available
information filed by the Corporation.

5.   Agent's Compensation

5.1  In  consideration of the Agent's services to be rendered to the Corporation
in connection  herewith,  including,  without  limitation,  soliciting offers to
purchase the Units, acting as financial advisor to the Corporation in respect of
the sale of the Units,  preparation  of the  Transaction  Documents,  performing
administrative  work in  connection  with such matters,  and all other  services
arising out of this Agreement,  the Corporation agrees,  subject to and upon the
terms and  conditions  set out herein,  to pay or cause to be paid (and issue or
cause to be  issued)  to the Agent at the Time of  Closing:  (a) a cash fee (the
"Agent's Fee") equal to 8.5% of the amount of the Gross Proceeds, excluding that
amount of the Gross Proceeds  associated  with purchases made by each of Sherfam
Inc. and YMG Private Wealth  Opportunities  Funds; and (b) Common Share purchase
warrants (the "Agent's  Warrants") to purchase the number of Common Shares as is
equal to 10% of the  number of Units  sold under the  Offering,  excluding  that
number of Units  associated  with purchases made by Sherfam Inc. and YMG Private
Wealth  Opportunities  Funds.  Each Agent's  Warrant  shall entitle the Agent to
purchase one Common Share  (collectively,  the  "Agent's  Warrant  Shares") at a
price of $1.15 per Agent's Warrant Share for a period of sixty months  following
the Closing Date.  The issuance of Agent's  Warrants shall be subject to receipt
of the necessary regulatory approvals.
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5.2  The parties  confirm that in the event the Agent appoints other  registered
dealers as sub-agents to assist in the Offering,  then such sub-agents  shall be
entitled  in place of the Agent to  receive  Agent's  Warrants  as part of their
compensation  directly registered in such sub-agent's names on the same basis as
the Agent is entitled to receive Agent's Warrants.

5.3  It is the  understanding  of both the Corporation and the Agent that G.S.T.
is not  exigible  on any  portion  of the  Agent's  Fee.  However,  should it be
determined by the Canada Customs and Revenue Agency that G.S.T. should have been
charged on all or any part of the Agent's Fee, the Corporation  shall pay to the
Agent an amount equal to the G.S.T. determined to be exigible.

6.   Election of Director

6.1  As soon as practicable  after the Closing of the Offering and in accordance
with the  Business  Corporations  Act  (Ontario),  the board of directors of the
Corporation shall appoint Alex Glasenberg a director of the Corporation.  In the
event that Alex  Glasenberg is unable or unwilling to serve as a director of the
Corporation  for any  reason  whatsoever,  then the  board of  directors  of the
Corporation  shall  appoint  some  alternative   individual,   who  is  mutually
acceptable  by both the  Agent and the  Corporation  which  acceptance  shall be
evidenced  in  writing,  as a director  of the  Corporation.  In addition to the
foregoing, the Corporation shall include Alex Glasenberg's,  or such alternative
individual's,  name on the list of management nominees to be elected as director
at the next annual meeting of shareholders of the Corporation.

7.   Representations, Warranties and Covenants of the Corporation

7.1  The Corporation hereby  represents,  warrants and covenants to and with the
Agent and the Purchasers and acknowledges  that the Agent and the Purchasers are
relying upon such  representations  and  warranties in completing the Closing as
follows:

     (a)  the proceeds of the sale of the Units shall be used by the Corporation
          to repay the Argosy  Indebtedness  as well as other  bridge  financing
          indebtedness and for working capital and general corporate purposes;

     (b)  it will as soon as  practicable  after the  Closing  Date and,  in any
          event, within applicable time periods under the Applicable  Securities
          Laws,  file such  documents  as may be required  under the  Applicable
          Securities  Laws  relating  to the private  placement  of the Units as
          prescribed by OSC Rule 45-501 and the equivalent provisions thereto in
          the other  Designated  Provinces and as prescribed by CSA Multilateral
          Instrument  45-102  Resale  of  Securities,  and pay all  filing  fees
          required to be paid in connection therewith;

     (c)  the Corporation will use its  commercially  reasonable best efforts to
          obtain the necessary  regulatory  consents from the Stock  Exchange to
          the  transactions  contemplated  herein  on  such  conditions  as  are
          acceptable to the Agent and the Corporation, acting reasonably;

     (d)  it will use its  commercially  reasonable  best efforts to ensure that
          the Unit Shares,  the Warrant  Shares  issuable on the exercise of the
          Warrants and the Agent's
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          Warrant Shares issuable on the exercise of the Agent's Warrants,  will
          be listed  and posted for  trading  on the Stock  Exchange  upon their
          issue;

     (e)  it will promptly comply with all filing and other  requirements  under
          Applicable Securities Laws in connection with the Offering;

     (f)  the  Corporation  and  each  of  its   Subsidiaries:   (i)  have  been
          incorporated  and organized and are validly  subsisting under the laws
          of their respective jurisdictions of incorporation;  and (ii) have all
          requisite   corporate  power  and  authority  and  are  qualified  and
          authorized  to carry on their  respective  businesses as now conducted
          and to own, lease and operate their respective  properties and assets,
          in all  jurisdictions  where such  qualification  or  authorization is
          required;

     (g)  except as set forth in Schedule  7.1(g),  the  Corporation and each of
          its  Subsidiaries are current and up-to-date with all filings required
          to be made by each of them  respectively  under the applicable laws of
          Canada and the United States, as applicable;

     (h)  except as set forth in Schedule  7.1(h),  (i) the  Corporation  is the
          beneficial  holder  and  holder  of record  of all of the  issued  and
          outstanding  securities of the  Subsidiaries and which securities have
          been issued as fully paid and  non-assessable;  (ii) all shares in the
          capital of the  Subsidiaries  held by the Corporation are owned by the
          Corporation  as the  beneficial  owner and  holder of record  free and
          clear of all mortgages,  liens,  charges,  pledges,  security interest
          encumbrances,  claims or demands whatsoever; and (iii) no person holds
          any securities  convertible  into shares of any of the Subsidiaries or
          has  any  agreement,  warrant,  option,  right  or  privilege  whether
          pre-emptive or contractual) being or capable of becoming an agreement,
          warrant,  option or right for the  purchase of any  unissued or issued
          securities of any of the Subsidiaries;

     (i)  the  Corporation  and each of the  Subsidiaries  are, in all  material
          respects,  conducting their  respective  businesses in compliance with
          all applicable  laws,  rules and regulations  and, in particular,  all
          applicable  licensing,  food,  drug and  environmental  legislation or
          other lawful  requirement  of any  governmental  or regulatory  bodies
          applicable to the Corporation or its Subsidiaries of each jurisdiction
          in which its business is carried on and is duly  licensed,  registered
          or qualified in all jurisdictions in which it owns, leases or operates
          its  property  or carries on  business  to enable its  business  to be
          carried on as now  conducted  and its property and assets to be owned,
          leased  and  operated  and  all  such  licences,   registrations   and
          qualifications  are  and  will  at  the  Time  of  Closing  be  valid,
          subsisting  and in good  standing,  except where such failure to be so
          qualified  or  the  absence  of  any  such  licence,  registration  or
          qualification does not and will not have a material adverse effect;

     (j)  the Corporation and each of the Subsidiaries possess all certificates,
          authority,  permits  or  licences  issued  by the  appropriate  state,
          provincial,   municipal  or  federal  regulatory  agencies  or  bodies
          necessary to conduct the business now
<PAGE>

                                      -11-

          owned or operated by each of them and neither the  Corporation nor any
          of its Subsidiaries has received any notice of proceedings relating to
          the revocation or  modification  of any such  certificate,  authority,
          permit or licence which, if the subject of an  unfavourable  decision,
          ruling or finding would have a material adverse effect ;

     (k)  except as set forth in Schedule 7.1(k),  the Corporation does not have
          any Outstanding Convertible Securities;

     (l)  the  Corporation is authorized to issue an unlimited  number of Common
          Shares or an unlimited  number of preferred shares issuable in series,
          of  which,  as of  the  date  hereof,  21,950,877  Common  Shares  and
          1,374,570  Series  A  convertible  preferred  shares  are  issued  and
          outstanding as fully paid and non-assessable;

     (m)  the minute books of the Corporation, which have been made available to
          the Agent or their counsel,  are complete and accurate in all material
          respects  and the  excerpts  of the  corporate  records of each of the
          Subsidiaries  which  have  been made  available  to the Agent or their
          counsel are accurate in all material respects;

     (n)  except as set forth in Schedule 7.1(n), since December 30, 2002:

          (i)    has not been any material change in the assets,  liabilities or
                 obligations (absolute, accrued, contingent or otherwise) of the
                 Corporation,  on  a  consolidated  basis,  that  has  not  been
                 publicly   disclosed  in  the  manner  required  by  Applicable
                 Securities Laws;

          (ii)   there has not been any material  change in the capital stock or
                 long-term  debt of the  Corporation  that has not been publicly
                 disclosed in the manner required by Applicable Securities Laws;

          (iii)  therehas  not  been  any  material  change  that  has not  been
                 publicly   disclosed  in  the  manner  required  by  Applicable
                 Securities Laws; and

          (iv)   except as has been publicly disclosed in the manner required by
                 Applicable  Securities Laws since its last fiscal year end, the
                 Corporation  and each of its  Subsidiaries  has  carried on its
                 respective business in the ordinary course;

     (o)  except as disclosed in the  Financial  Information  or as set forth in
          Schedule 7.1(o),  the Corporation and its Subsidiaries do not have any
          liabilities,  contingent  or otherwise,  except those  included in the
          ordinary course of business, consistent (as to amount and nature) with
          past practices since June 30, 2003, none of which,  individually or in
          the  aggregate,  have had or could  reasonably  be  expected to have a
          material adverse effect;

     (p)  the Financial  Information  fairly presents,  in all material respects
          and to the  knowledge  of the  Corporation  and  its  Subsidiaries  in
          accordance  with generally  accepted  accounting  principles in Canada
          consistently applied, the financial
<PAGE>

                                      -12-

          position and condition of the Corporation  and the  Subsidiaries as at
          their dates and the results of the operations of the  Corporation  and
          the   Subsidiaries   for  the  periods  then  ended  and  reflect  all
          liabilities  (absolute,  accrued,  contingent  or  otherwise)  of  the
          Corporation  and the  Subsidiaries as at their dates,  except,  in the
          case of  unaudited  interim  statements,  to the extent  that they may
          exclude footnotes or may be condensed or summary statements;

     (q)  the Corporation and each Subsidiary maintains in full force and effect
          insurance coverage that is customary for comparably situated companies
          for the business being conducted and properties owned or leased by the
          Corporation  and  each  Subsidiary,  and  the  Corporation  reasonably
          believes  such   insurance   coverage  to  be  adequate   against  all
          liabilities,  claims and risks which it is  customary  for  comparably
          situated  companies  to insure,  and,  except as set forth in Schedule
          7.1(q),  there are no deficiencies as to the insurance  coverage as of
          the date hereof;

     (r)  there  is no  action,  proceeding  or  investigation  (whether  or not
          purportedly  by  or on  behalf  of  the  Corporation  or  any  of  its
          Subsidiaries)  pending or, to the knowledge of the  Corporation or any
          of its Subsidiaries,  threatened  against or affecting the Corporation
          or any of its Subsidiaries, at law or in equity (whether in any court,
          arbitration  or  similar  tribunal)  or  before  or  by  any  federal,
          provincial,   state,  municipal  or  other  governmental   department,
          commission,  board or agency,  domestic or  foreign,  which in any way
          will have a material  adverse effect,  or which questions the validity
          of the Units, the Agent's  Warrants,  the Underlying  Securities or of
          the issuance  thereof as fully paid and  non-assessable  securities or
          any action taken or to be taken by the  Corporation  pursuant to or in
          connection  with  this  Agreement.  There are no  judgements,  awards,
          orders,  decrees or executions  outstanding against the Corporation or
          any of its Subsidiaries,  its or their business or any of its or their
          property or assets;

     (s)  the  execution  and  delivery  of  this  Agreement,  the  Subscription
          Agreements, the certificates representing the Warrants and the Agent's
          Warrants by the  Corporation,  the performance and compliance with the
          terms of this Agreement, the Subscription Agreements, the Warrants and
          the Agent's Warrants, the offer and sale of the Units and the issuance
          of  the  Agent's  Warrants  and  the  Underlying   Securities  by  the
          Corporation,  will not  result  in any  material  breach  of, or be in
          conflict  with or  constitute  a default  under,  or create a state of
          facts which,  after notice or lapse of time, or both, would constitute
          a default under any term or provision of the  constating  documents or
          resolutions  of the  Corporation  or any  mortgage,  note,  indenture,
          contract, agreement,  instrument, lease or other document to which the
          Corporation  is a party  or by  which  it is  bound  or any  judgment,
          decree,   order,   statute,  rule  or  regulation  applicable  to  the
          Corporation;

     (t)  the  Corporation  is and will at the Time of Closing  be a  "reporting
          issuer" (or its  equivalent),  not in default of any  requirements  in
          relation to that designation, under the securities laws of each of the
          provinces of Canada,  and will use its  commercially  reasonable  best
          efforts to maintain its  "reporting  issuer" status for a period of at
          least 12 months from the expiry date of the Warrants.  In  particular,
<PAGE>

                                      -13-

          without  limiting  the  foregoing,  the  Corporation  has at all times
          complied  with  its  obligations  to  make  timely  disclosure  of all
          material  changes  relating to it and no such disclosure has been made
          on a confidential  basis and there is no material  change  relating to
          the  Corporation  which has  occurred  and with  respect  to which the
          requisite material change report has not been filed;

     (u)  the  Corporation  will,  at the  Time  of  Closing,  be a  "qualifying
          issuer", as such term is defined in CSA Multilateral Instrument 45-102
          Resale of Securities and will comply with the conditions  contained in
          paragraph 1 of the Quebec Decision;

     (v)  the issued  and  outstanding  Common  Shares are listed and posted for
          trading on the Stock  Exchange,  the  Corporation is not in default or
          breach of any of the rules, policies or by-laws of the Stock Exchange,
          no order  ceasing  or  suspending  trading  in any  securities  of the
          Corporation or prohibiting the sale of the Units,  the issuance of the
          Agent's Warrants or the Underlying Securities or the trading of any of
          the Corporation's issued securities has been issued and no proceedings
          for such purpose are pending or, to the knowledge of the  Corporation,
          threatened;

     (w)  no  consent,   approval,   authorization,   order,   registration   or
          qualification  of or with any court or governmental  agency or body is
          required for the sale and  delivery of the Units,  the issuance of the
          Agent's  Warrants or the Underlying  Securities or the consummation by
          the  Corporation of its obligations  under this Agreement,  except for
          the consent and  conditional  approval of the Stock Exchange  (subject
          only to the usual  filing  requirements),  which  consent and approval
          shall have been obtained prior to the Time of Closing;

     (x)  the auditors of the Corporation  who audited the financial  statements
          of the Corporation most recently  delivered to the  securityholders of
          the  Corporation  and who delivered  their report with respect thereto
          are  independent  public  accountants  as required  by the  Applicable
          Securities Laws;

     (y)  there has never been any  "reportable  event"  (within  the meaning of
          National   Policy   Statement  No.  31  of  the  Canadian   Securities
          Administrators)  with  the  present  or  any  former  auditor  of  the
          Corporation to the knowledge of the Corporation's current management;

     (z)  the Corporation and each of its  Subsidiaries  have established on its
          books and records  reserves  that are  adequate for the payment of all
          taxes not yet due and  payable and there are no liens for taxes on the
          assets  of the  Corporation  or any of its  Subsidiaries  and,  to the
          knowledge of the  Corporation,  there are no audits pending of the tax
          returns  of  the  Corporation  or any  of  its  Subsidiaries  (whether
          federal, state, provincial,  local or foreign) and there are no claims
          which have been or may be asserted  relating to any such tax  returns,
          which audits and claims, if determined adversely,  would result in the
          assertion by any  governmental  agency of any deficiency that does not
          and will not have a material adverse effect;
<PAGE>

                                      -14-

     (aa) except as set out in Schedule  7.1(aa)  hereto,  all taxes  (including
          income tax,  capital tax, goods and services tax,  sales tax,  payroll
          taxes, employer health tax, workers' compensation payments, custom and
          land transfer taxes, duties, royalties, levies, imposts,  assessments,
          deductions,  charges or withholdings  and all liabilities with respect
          thereto  including  any  penalty and  interest  payable  with  respect
          thereto (collectively, "Taxes") due and payable by the Corporation and
          each of its  Subsidiaries  have been  paid,  other  than  those  being
          contested  in good  faith and for which  adequate  reserves  have been
          provided or where the failure to pay such tax or assessment would not,
          individually or in the aggregate have a material  adverse effect.  All
          tax  returns,  declarations,  remittances  and filings  required to be
          filed by the Corporation and each of its Subsidiaries  have been filed
          with all  appropriate  governmental  authorities and all such returns,
          declarations, remittances and filings are complete and accurate in all
          material  respects.  No domestic  or foreign  taxation  authority  has
          asserted or, to the Corporation's knowledge,  threatened to assert any
          assessment,  claim or  liability  for taxes  due or to  become  due in
          connection  with any review or  examination  of the tax returns of the
          Corporation or any of its Subsidiaries (including, without limitation,
          any  predecessor  companies)  filed for any year  which  would  have a
          material adverse effect;

     (bb) neither  the  Corporation,   any  of  its  Subsidiaries  nor,  to  the
          Corporation's  knowledge,  any  other  party,  is in  default  in  the
          observance or performance of any term or obligation to be performed by
          it under any material contract,  joint venture  agreement,  license or
          other  instrument and no event has occurred which with notice or lapse
          of time or both would  constitute  such a  default,  in any such case,
          which default or event would have a material adverse effect;

     (cc) all  information  and  statements  contained in the Public  Record and
          other  materials  filed by or on  behalf of the  Corporation  with the
          Securities  Commissions and the Stock Exchange and all other documents
          or materials  contained in the Public  Record were true and correct in
          all material respects as of the date of such issuance or filing,  and,
          to the extent  required,  provided full, true and plain  disclosure of
          all material facts relevant to the  Corporation  and did not contain a
          misrepresentation;

     (dd) all necessary  corporate  action has been taken to authorize the issue
          and sale of, and the delivery of certificates  representing  the Units
          to the Purchasers and upon receipt by the  Corporation of the purchase
          price as consideration  for the issue of the Units, such Units will be
          validly issued as fully paid and non-assessable;

     (ee) by the  Closing  Time,  the Units  and the  Agent's  Warrants  will be
          created  and issued and the  Warrant  Shares and the  Agent's  Warrant
          Shares will be allotted  and  reserved  for issue upon the exercise of
          the Warrants and Agent's  Warrants  and,  when issued upon exercise of
          the  Warrants  and the  Agent's  Warrants  in  accordance  with  their
          respective terms, will be fully paid and non-assessable  Common Shares
          of the Corporation;
<PAGE>

                                      -15-

     (ff) the offering and sale of the Units,  the compliance by the Corporation
          with the  provisions  of this  Agreement and the  consummation  of the
          transactions  contemplated  herein  do not (i)  require  the  consent,
          approval or authorization  of, or registration or  qualification  with
          any governmental  authority,  securities regulatory authority or other
          person,  except (A) such as have been obtained,  or (B) such as may be
          required (and shall be obtained as provided in this  Agreement)  under
          the Applicable  Securities Laws of the Designated  Provinces,  or (ii)
          conflict  with or result  in any  breach  or  violation  of any of the
          provisions of, or constitute a default under, any indenture, mortgage,
          deed of trust,  lease or other  agreement or  instrument  to which the
          Corporation  or any of the  Subsidiaries  or any of  their  respective
          properties  is bound,  or the articles or by-laws or other  applicable
          incorporating documents of the Corporation or any of the Subsidiaries,
          or any statute or any judgment,  decree,  order, rule or regulation of
          any court or other  governmental  authority or any  arbitrator,  stock
          exchange  or  securities   regulatory   authority  applicable  to  the
          Corporation  or any of the  Subsidiaries  or any of  their  respective
          properties or assets which could have a material adverse effect on the
          condition (financial or otherwise), business, properties or results of
          operations of the Corporation or any of the Subsidiaries;

     (gg) this Agreement,  the Subscription  Agreements,  the Warrant Indenture,
          the  Warrants,  the  Agent's  Warrants,  and all other  contracts  and
          instruments  required in connection with the issue and distribution of
          the Units  (collectively,  the "Transaction  Documents")  shall comply
          with the provisions of the laws of the  Corporation's  jurisdiction of
          incorporation,  as  applicable,  and  the  regulations  of  the  Stock
          Exchange,  and,  on or  prior  to the  Closing  Date,  shall  be  duly
          authorized,  executed and  delivered by the  Corporation  and shall be
          valid  and  binding  obligations  of the  Corporation  enforceable  in
          accordance  with their  respective  terms,  subject to any  applicable
          bankruptcy,  reorganization,  winding-up,  insolvency,  moratorium  or
          other laws of general application, the unavailability of any equitable
          remedies,   and  that  the  enforcement  of  any  rights  against  the
          Corporation   under  this  Agreement  with  respect  to  indemnity  or
          contribution  may be limited by  applicable  law and may or may not be
          ordered by a court on grounds of public policy.  The  Corporation  has
          the  corporate  power  and  authority  to enter  into the  Transaction
          Documents and to perform its obligations thereunder;

     (hh) the Corporation has the power and authority to issue the Units, and at
          the Time of Closing,

          (i)   the Unit Shares will be duly and  validly  authorized,  allotted
                and  reserved  for  issuance  and,  upon receipt of the purchase
                price  for the  Units,  will  be duly  and  validly  issued  and
                outstanding;

          (ii)  the  Warrants  will be duly and validly  created and  authorized
                and, upon receipt of the purchase  price for the Units,  will be
                duly and  validly  issued and  outstanding  and will  constitute
                valid and binding  obligations of the  Corporation in accordance
                with their terms; and
<PAGE>

                                      -16-

          (iii) the Warrant Shares will be duly and validly authorized, allotted
                and reserved for issuance  and, upon exercise of the Warrants in
                accordance  with their  terms,  will be issued as fully paid and
                non-assessable shares;

     (ii) the  Corporation  has the  corporate  power and authority to issue the
          Agent's Warrants to the Agent, and at the Time of Closing,

          (i)   the  Agent's  Warrants  will be duly  and  validly  created  and
                authorized and will be duly and validly  issued and  outstanding
                and  will  constitute  valid  and  binding  obligations  of  the
                Corporation in accordance with their terms; and

          (ii)  the Agent's Warrant Shares will be duly and validly  authorized,
                allotted and reserved for  issuance  and,  upon  exercise of the
                Agent's Warrants in accordance with their terms,  will be issued
                as fully paid and non-assessable shares;

     (jj) there is no person  acting or  purporting to act at the request of the
          Corporation,  who is entitled to any brokerage, agency or other fiscal
          advisory  or  similar  fee  in   connection   with  the   transactions
          contemplated herein;

     (kk) the  Corporation  will  promptly  notify the Agent in writing if there
          shall  occur any  material  change or  change in a  material  fact (in
          either case, whether actual,  anticipated,  contemplated or threatened
          and  other  than a change or  change  in fact  relating  solely to the
          Agent) or any event or  development  involving a prospective  material
          change or a change in a  material  fact or any other  change in any or
          all  of  the  business,   affairs,   operations,   assets   (including
          information  or data relating to the estimated  value or book value of
          assets),  liabilities (contingent or otherwise),  capital,  ownership,
          control or management of the Corporation, on a consolidated basis. The
          Corporation  will  promptly  notify  the  Agent in  writing  with full
          particulars of any such actual, anticipated, threatened or prospective
          change referred to in this paragraph;

     (ll) neither the  Corporation  nor any Subsidiary is aware of any licensing
          or environmental legislation, regulation, by-law or lawful requirement
          presently in force or, to their collective  knowledge,  proposed to be
          brought into force which the Corporation anticipates that it or any of
          its  Subsidiaries  will be unable to comply  with,  to the extent that
          compliance is necessary, which would reasonably be likely to result in
          a material adverse effect;

     (mm) except as set forth in Schedule 7.1(mm):

          (i)    with respect to  Intellectual  Property Rights not owned by the
                 Corporation,  to the  knowledge  of the  Corporation,  no  such
                 Intellectual  Property Rights are used by the Corporation other
                 than with the  consent of or licence  from the  rightful  owner
                 thereof;
<PAGE>

                                      -17-

          (ii)   the  Intellectual  Property Rights owned by the Corporation are
                 in full force and effect,  all required  registration  or other
                 fees have  been  paid to  maintain  the  Intellectual  Property
                 Rights  in good  standing  in  those  jurisdictions  where  the
                 Intellectual Property Rights are used;

          (iii)  with  respect  to  Intellectual   Property  Rights  created  or
                 developed  by  the   Corporation,   to  the  knowledge  of  the
                 Corporation,  such  Intellectual  Property  Rights  are new and
                 original  to the  Corporation,  use of  such  rights  does  not
                 infringe any third party rights, and such rights have only been
                 created  by  persons  who have an  obligation  to assign all of
                 their  rights  therein  to  the   Corporation;   and

          (iv)   the  Intellectual  Property  Rights are  complete to the extent
                 necessary  to  enable  the  Business  to be  carried  on in all
                 material  respects  in the  manner in which it is carried on by
                 the Corporation at the date hereof;

     (nn) the  Corporation  and the  Subsidiaries  are the  absolute  legal  and
          beneficial  owner of,  and have good and  marketable  title to, all of
          their  respective  interests in their  respective  material  assets as
          described in the Public Record, free of all mortgages, liens, charges,
          pledges,   security   interests,   encumbrances,   claims  or  demands
          whatsoever  except as disclosed in Schedule 7.1 (nn) or which,  to the
          knowledge of the Corporation,  has been incurred by the Corporation or
          its  Subsidiaries  since  July 28,  2003 in their  ordinary  course of
          business,  and no other property  rights are necessary for the conduct
          of the business of the  Corporation  or any of the  Subsidiaries,  the
          Corporation and the Subsidiaries do not know of any claim or basis for
          a claim that might or could adversely affect their  respective  rights
          to use, transfer or otherwise exploit such property rights and none of
          the Corporation or any of the Subsidiaries have any  responsibility or
          obligation  to pay any  commission,  royalty,  licence  fee or similar
          payment to any person with respect to the property rights thereof;

     (oo) any and all agreements pursuant to which the Corporation or any of the
          Subsidiaries  holds their  respective  assets are valid and subsisting
          agreements in full force and effect,  enforceable  in accordance  with
          their  respective  terms,  none  of  the  Corporation  or  any  of the
          Subsidiaries  is in material  default of any of the  provisions of any
          such  agreements  nor has any such  material  default been alleged and
          such assets are in good  standing  under the  applicable  statutes and
          regulations of the jurisdictions in which they are situate, all leases
          and  licences  pursuant  to  which  the  Corporation  or  any  of  the
          Subsidiaries  derives their respective interests in such assets are in
          good  standing and except as disclosed in the Public  Record there has
          been no material  default under any such leases and all taxes required
          to be paid with  respect to such  assets to the date  hereof have been
          paid; and

     (pp) any press  release  relating to the Offering  shall be in the form and
          content agreed to by the Agent acting reasonably and promptly provided
          that  nothing  shall  prevent  the  Corporation  from  complying  with
          Applicable Securities Laws.
<PAGE>

                                      -18-

8.   Conditions to Purchase Obligation

8.1  The following are  conditions of the  Purchasers'  obligations to close the
purchase  of the  Units  from the  Corporation  as  contemplated  hereby,  which
conditions the  Corporation  covenants to exercise its  commercially  reasonable
best  efforts  to have  fulfilled  at or prior  to the  Closing  Date and  which
conditions  may be waived in writing in whole or in part by the Agent on its own
behalf and on behalf of the Purchasers:

     (a)  the Corporation shall have made and/or obtained the necessary filings,
          approvals,  consents and  acceptances  to or from, as the case may be,
          the Securities  Commissions and the Stock Exchange required to be made
          or obtained by the  Corporation in connection with the Offering and in
          order to  complete  the same,  on terms  which are  acceptable  to the
          Corporation  and the Agent,  acting  reasonably,  prior to the Closing
          Date;

     (b)  the Unit Shares,  Warrant Shares and Agent's  Warrant Shares issued in
          connection  with the  Offering  shall  have been  accepted  for and/or
          reserved  for  listing  by the Stock  Exchange,  subject  to the usual
          conditions  and payment of the applicable  additional  listing fees to
          the Stock Exchange;

     (c)  at the Time of Closing,  the Corporation will be a "qualifying issuer"
          as  described  in  CSA  Multilateral   Instrument   45-102  Resale  of
          Securities or Paragraph 1 of the Quebec Decision;

     (d)  the  Corporation's  board  of  directors  shall  have  authorized  and
          approved this  Agreement,  the form of  Subscription  Agreements,  the
          respective  forms of the  Warrants,  Agent's  Warrants  and all  other
          agreements and  instruments  prepared in connection with the Offering,
          the sale of the Units,  the issuance of the Underlying  Securities and
          all matters relating to the foregoing;

     (e)  as at the Closing  Date,  the  Corporation  will deliver a certificate
          addressed  to the  Agent  and to the  Purchasers,  signed by its Chief
          Executive Officer certifying that:

          (i)    there has been no adverse material change (actual,  proposed or
                 prospective,  whether  financial or otherwise) in the business,
                 affairs,   operations,   assets,   liabilities  (contingent  or
                 otherwise)  or capital  of the  Corporation  on a  consolidated
                 basis,  since  June 30,  2003,  which  has not  been  generally
                 disclosed;

          (ii)   since  June  30,  2003,  no  material  change,  except  for the
                 Offering,  has  occurred  with  respect to which the  requisite
                 material  change  statement or report has not been filed and no
                 such disclosure has been made on a confidential basis;

          (iii)  the representations and warranties of the Corporation contained
                 in this  Agreement are true and correct at the Time of Closing,
                 with the same force and effect as if made by the Corporation as
                 at the Time of Closing after giving effect to the  transactions
                 contemplated hereby;
<PAGE>

                                      -19-

          (iv)   the  Corporation  has  complied  with  all  the  covenants  and
                 satisfied all the terms and conditions of this Agreement on its
                 part to be  complied  with or  satisfied  except  as  waived in
                 writing by the Agent at or prior to the Time of Closing;

          (v)    no  order,  ruling  or  determination   having  the  effect  of
                 suspending the sale or ceasing the trading of the securities of
                 the Corporation  (including the Units, Agent's Warrants and the
                 Underlying  Securities)  has been  issued  or made by any stock
                 exchange,  securities  commission or other regulatory authority
                 and is continuing in effect and no proceedings for that purpose
                 have been  instituted or are pending or to the knowledge of the
                 Corporation,  contemplated or threatened by any stock exchange,
                 securities commission or other regulatory authority;

          (vi)   there are no actions, suits,  proceedings or inquiries,  formal
                 or informal  pending or  threatened  against or  affecting  the
                 Corporation  or any of its  Subsidiaries,  at law or in equity,
                 before or by any federal, provincial, state, municipal or other
                 governmental department,  commission,  board, bureau, agency or
                 instrumentality in Canada, the United States or elsewhere which
                 may, in any way, have a material adverse effect;

          (vii)  no failure or  default  on the part of the  Corporation  exists
                 under any applicable law or any under license,  permit or other
                 instrument  granted or issued to the  Corporation  or under any
                 contract,  license,  agreement or other instrument to which the
                 Corporation  is a party or by which the  Corporation  is bound,
                 which may, in any way, have a material  adverse effect and, the
                 execution,  delivery and  performance of this Agreement and the
                 allotment,  issue and sale of the Units,  Agent's  Warrants and
                 Underlying Securities will not result in such default;

          (viii) the  charter   documents,   including  any  amendments  thereto
                 attached  to the  officer's  certificate  are  full,  true  and
                 correct copies and are in full force and effect; and

          (ix)   such other  matters  as the Agent or the  Agent's  Counsel  may
                 reasonably request.

     (f)  the  Corporation  will have caused an opinion to be  delivered  by the
          Corporation's Counsel, addressed to the Agent, Agent's Counsel and the
          Purchasers dated as of the Closing Date,  substantially in the form of
          the legal  opinion  annexed as Exhibit  "B". In giving  such  opinion,
          Corporation's  Counsel  shall  be  entitled  to  rely,  to the  extent
          appropriate  in the  circumstances,  upon local  counsel  and shall be
          entitled as to matters of fact not within its knowledge to rely upon a
          certificate  of fact from  responsible  persons in a position  to have
          knowledge of such facts and their accuracy  including a certificate of
          the  Corporation's  registrar and transfer agent as to the outstanding
          securities of the Corporation;
<PAGE>

                                      -20-

     (g)  the delivery by the Corporation of such other certificates,  statutory
          declarations,   agreements  or   materials,   in  form  and  substance
          satisfactory to the Agent and Agent's Counsel as the Agent and Agent's
          Counsel may reasonably request; and

     (h)  the  Corporation  shall have  complied  with and  fulfilled all of the
          terms,  covenants and  conditions of this  Agreement on its part to be
          complied with or fulfilled up to the Time of Closing.

9.   Closing

9.1  The Offering will be completed on the Closing Date at the offices of Fraser
Milner  Casgrain LLP, 1 First  Canadian  Place,  100 King Street West,  Toronto,
Ontario and McCarthy Tetrault LLP, Suite 1400, 40 Elgin Street,  Ottawa, Ontario
at the Time of  Closing  or such other  place,  date or time as may be  mutually
agreed to; provided that if the Corporation has not been able to comply with any
of the covenants or conditions set out herein, or in any Subscription Agreement,
required to be complied  with by the Time of Closing or such other date and time
as may be mutually  agreed to, the  respective  obligations  of the parties will
terminate  without  further  liability  or  obligation  except  for  payment  of
expenses, indemnity and contribution provided for in this Agreement.

9.2  At the Time of  Closing,  the  Corporation  shall  deliver  to the Agent on
behalf of the Purchaser:

     (a)  certificates  duly  registered as the Agent may in writing  direct and
          not  inconsistent  with  the  terms  hereof  or  of  any  Subscription
          Agreement  representing  the Unit  Shares,  Warrants  and the  Agent's
          Warrants;

     (b)  the  requisite  legal  opinion and  certificates  as  contemplated  in
          Section 8.1 above; and

     (c)  such further documentation as may be contemplated herein or as Agent's
          Counsel  or  the  applicable  regulatory  authorities  may  reasonably
          require.

9.3  At the Time of Closing, the Agent shall deliver to the Corporation:

     (a)  the  Subscription  Agreements and other  documentation  required to be
          provided by or on behalf of the Purchasers  pursuant to this Agreement
          and the Subscription Agreements; and

     (b)  a  certified  cheque,  bank draft or  solicitor's  trust  cheque  made
          payable to the Corporation in the amount of the Net Proceeds  (subject
          to Section 12).

10.  Termination of Obligations

10.1 Without limiting any of the foregoing provisions of this Agreement,  and in
addition to any other  remedies  which may be available to it, the Agent (on its
own  behalf  and on behalf of the  Purchasers)  shall be  entitled,  at its sole
discretion acting reasonably,  to terminate and cancel, without any liability on
its  part  (or  on the  part  of  the  Purchasers),  its  obligations  (and  the
<PAGE>

                                      -21-

obligations of the  Purchasers)  under this Agreement to purchase the Units,  by
giving  written  notice to the  Corporation  at any time  through to the Time of
Closing on the Closing Date if:

     (a)  any  order  to cease  or  suspend  trading  in any  securities  of the
          Corporation,  or prohibiting or restricting the distribution of any of
          the Units, the Agent's Warrants or any securities issuable thereunder,
          is made, or proceedings are announced, commenced or threatened for the
          making of any such  order,  by any  Securities  Commission,  the Stock
          Exchange  or by any  other  competent  authority,  and  has  not  been
          rescinded, revoked or withdrawn;

     (b)  any order or ruling is issued,  any  inquiry,  investigation  or other
          proceeding (whether formal or informal) in relation to the Corporation
          or any of the  directors or officers  thereof is made,  threatened  or
          announced  by any  officer  or  official  of the Stock  Exchange,  any
          Securities  Commission  or  other  competent  authority  or any law or
          regulation is promulgated or changed which, in the reasonable  opinion
          of the Agent,  operates to prevent or  restrict  trading in the Common
          Shares of the Corporation or distribution of the Offered Securities;

     (c)  there  should  develop,  occur or come into  effect or  existence  any
          event, including without limiting the generality of the foregoing,  an
          act  of  terrorism,   action,  state,  condition  or  major  financial
          occurrence  of  national  or  international  consequence,  any  law or
          regulation,  or any other occurrence of any nature whatsoever,  which,
          in the Agent's sole reasonable  opinion has a material  adverse effect
          or would  reasonably be likely to have a material  adverse effect,  or
          involve, the financial markets or the business,  operations or affairs
          of the Corporation (on a consolidated  basis),  such that it would not
          be practical  (in the Agent's sole  reasonable  opinion) to market the
          Units or Common Shares;

     (d)  there should occur any  material  change or change in a material  fact
          which,  in the sole opinion of the Agent would be reasonably  expected
          to have a material  adverse effect on the market price or value of the
          Units;

     (e)  the Agent  determines  that the  Corporation  is in  breach  of, or in
          default under or in non-compliance  with any material  representation,
          warranty, term, covenant or condition of this Agreement; or

     (f)  as a result  of  investigations  after  the  date  hereof,  the  Agent
          determines  that there exists any fact or  circumstance  not generally
          disclosed to the public by the Corporation,  at the date hereof, which
          would have in the Agent's opinion,  acting  reasonably,  a significant
          adverse effect on the market price or the value of the Units or Common
          Shares,

the occurrence or non-occurrence of any of the foregoing events or circumstances
to be determined in the sole discretion of the Agent, acting reasonably.

     The Agent shall make  reasonable  efforts to give notice to the Corporation
(in  writing  or by other  means)  of the  occurrence  of any of the  events  or
circumstances referred to in this
<PAGE>

                                      -22-

section,  provided  that  neither the giving nor the failure to give such notice
shall in any way affect the Agent's  entitlement  to exercise  this right at any
time through to the Time of Closing.

     The Agent may  exercise  any or all of the rights  provided for in Sections
10, 12, 13, 14 and 15 of this  Agreement  notwithstanding  any material  change,
event or state of facts and  notwithstanding  any act or thing  taken or done by
the Agent or any  inaction by the Agent (other than acts or things taken or done
or any inaction,  by or on the part of the Agent,  in breach of this  Agreement)
whether before or after the occurrence of any material change, event or state of
facts  including,  without  limitation,  any  act of the  Agent  related  to the
Offering  of the Units for sale and the Agent shall only be  considered  to have
waived or be estopped from exercising or relying upon any of its rights under or
pursuant  to Sections  10, 12, 13, 14 and 15 if such  wavier of estoppel  was in
writing and the Agent specifically waives or estops such exercise or reliance.

     The Agent's rights of termination contained in this section are in addition
to any other  rights or remedies it may have in respect of any  default,  act or
failure to act or  non-compliance  by the  Corporation  in respect of any of the
matters contemplated by this Agreement.

10.2 The  Corporation  may terminate  this Agreement by notice in writing to the
Agent at or prior to the Time of Closing if the Corporation  determines,  acting
reasonably,  that  the  Agent  is  in  breach  of  or  in  default  under  or in
non-compliance with any material representation or warranty, or in default under
or in  non-compliance  with any  material  term,  covenant or  condition of this
Agreement.  No such termination  however shall discharge or otherwise affect any
obligation of the Corporation under Sections 12 and 13 of this Agreement.

10.3 Either the  Corporation  or the Agent may terminate its  obligations  under
this Agreement by notice in writing to the other if Closing does not occur on or
before  September  18,  2003,  unless  the party  seeking  to so  terminate  its
obligations  under this  agreement has delayed the Closing  beyond such date. No
such termination  however shall discharge or otherwise affect any obligations of
the Corporation under Sections 11, 12 and 13 of this Agreement.

11.  Expenses

11.1 The  Corporation  shall pay all costs and expenses  incurred in  connection
with  the  Offering,  including  without  limitation,  the  reasonable  fees and
expenses  of the Agents as set forth in  reasonable  detail in an  invoice,  all
expenses of or incidental to the creation, issuance, sale or distribution of the
Common  Shares,  and the  auditor's,  transfer  agent's  and  filing  fees.  The
Corporation  shall also pay Agents'  Counsel with regard to its reasonable  fees
and  disbursements of Agent's Counsel incurred in respect of the Offering as set
forth in reasonable  detail in an invoice,  together with the applicable  G.S.T.
(the "Legal Costs").  The fees and expenses referred to in this Section 11.1 are
collectively  referred to as the "Agents' Expenses".  The Agents' Expenses shall
be payable by the Corporation at the Time of Closing on the Closing Date or upon
the  Corporation  receiving an invoice or invoices  from the Agent.  The Agents'
Expenses  shall be payable by the  Corporation  whether or not the  Offering  is
completed.

11.2 In the event  that the  Closing  takes  place at a time  subsequent  to the
closing  of the U.S.  Offering,  the  Corporation  will pay the Agent an expense
retainer of $15,000 as an advance  against  expenses (the "Advance") at the time
of closing of the U.S. Offering. Any unused
<PAGE>

                                      -23-

portion of the Advance will be returned to the Corporation  upon the termination
of this Agreement.

12.  Indemnity

12.1 The  Corporation  covenants  and  agrees  to  indemnify  the  Agent and its
directors,  officers,  employees,  partners,  agents,  advisors and shareholders
(each being hereinafter referred to as an "Indemnified Party"),  against, and to
reimburse  the  Agent  promptly  upon  demand  for any  legal or other  expenses
reasonably  incurred by the Agent in connection with investigating or defending,
all losses (excluding loss of profits), claims, actions, damages, liabilities or
expenses  (collectively,  a "Claim")  caused or incurred in connection with this
Offering by reason of:

     (a)  any statement,  other than a statement  relating  solely to the Agent,
          contained  in this  Agreement  or the  Subscription  Agreements  which
          constitutes a misrepresentation;

     (b)  any  statement  contained in the Public  Records  which  constitutes a
          misrepresentation or at the time and in the light of the circumstances
          under which it was made, contained a misrepresentation;

     (c)  the omission or alleged  omission to state on the Public Records or in
          any  certificate of the  Corporation  delivered  hereunder or pursuant
          hereto  any  material  fact  (other  than a material  fact  omitted in
          reliance  upon and in  conformity  with  information  furnished to the
          Corporation  by or on  behalf  of the  Agent)  required  to be  stated
          therein or necessary to make any statement  therein not  misleading in
          light of the circumstances under which it was made;

     (d)  any order made or inquiry,  investigation  or proceeding  commenced or
          threatened by any Securities  Commission or other competent  authority
          based upon any  misrepresentation or alleged  misrepresentation in the
          Public Records  (other than a statement  included in reliance upon and
          in conformity with  information  furnished to the Corporation by or on
          behalf of the Agent  specifically  for use therein)  which prevents or
          restricts the trading in the Units or the  distribution  of the Units,
          in any of the Designated Provinces;

     (e)  the  non-compliance or alleged  non-compliance by the Corporation with
          any Applicable Securities Laws in connection with the Offering; or

     (f)  any  breach  of any  representation  or  warranty  of the  Corporation
          contained  herein or the failure of the Corporation to comply with any
          of its obligations hereunder,

and will  reimburse  each  Indemnified  Party promptly upon demand for any legal
expenses  reasonably  incurred in connection with investigating or defending any
Claims or in enforcing the indemnity.

12.2 The  indemnification  contained  in this  Section  12 does not and will not
apply to the extent that a court of competent  jurisdiction  in a final judgment
that has become non-appealable determines that:
<PAGE>

                                      -24-

     (a)  the Indemnified Party has been negligent or dishonest or has committed
          any fraudulent act or was guilty of wilful misconduct in the course of
          their performance of their obligations or breached  applicable laws or
          materially breached any of the terms of this Agreement; and

     (b)  the  Claim,  as  to  which  indemnification  is  claimed  directly  or
          indirectly, was directly caused by the negligence,  dishonesty,  fraud
          or wilful misconduct referred to in paragraph (a).

12.3 If any Claim shall be asserted  against an Indemnified  Party in respect of
which indemnity may be sought from the Corporation pursuant to the provisions of
Section 12.1 or if any  potential  Claim  contemplated  hereby shall come to the
knowledge of an Indemnified  Party, the Indemnified  Party shall promptly notify
the Corporation in writing;  but the omission to so notify the Corporation  will
not relieve the  Corporation  from any  liability it may  otherwise  have to the
Indemnified  Party pursuant to Section 12.1. The  Corporation  shall be entitled
but not obligated to  participate  in or assume the defence  thereof;  provided,
however,  that the defence  shall be through  legal  counsel  acceptable  to the
Indemnified Party, acting reasonably.  In addition,  the Indemnified Party shall
also  have  the  right  to  employ  separate  counsel  in any  such  action  and
participate  in the defence  thereof and the fees and  expenses of such  counsel
shall be borne by the Indemnified Party unless:

     (a)  the employment thereof has been specifically  authorized in writing by
          the Corporation;

     (b)  the Indemnified Party has been advised by counsel that  representation
          of the Corporation and the Indemnified Party by the same counsel would
          be  inappropriate  due to  actual  or  potential  differing  interests
          between them; or

     (c)  the  Corporation  has failed within a reasonable time after receipt of
          such written notice to assume the defense of such action or claim;

provided  that in no event  shall the  Corporation  be  required  to assume  the
reasonable  fees and  expenses  of more  than one  counsel  for all  Indemnified
Parties. Neither party shall effect any settlement of any such Claim or make any
admission of  liability  without the written  consent of the other  party,  such
consent to be  promptly  considered  and not to be  unreasonably  withheld.  The
indemnity  hereby  provided  for shall remain in full force and effect and shall
not be limited to or affected by any other  indemnity  in respect of any matters
specified herein obtained by the Indemnified Party from any other person.

12.4 To the extent that any Indemnified  Party is not a party to this Agreement,
the  Agent  shall  obtain  and hold  the  right  and  benefit  of the  indemnity
provisions of Section 12.1 in trust for and on behalf of such Indemnified Party.

     If the  Corporation  has  pursuant to Section 12.2 assumed the defence with
respect to a Claim,  the  Corporation  hereby  agrees to take all  necessary and
reasonable  steps  to  ensure  that  no  default   judgement  or  other  default
proceedings  are brought  against an Indemnified  Party in any  jurisdiction  in
respect of any Claim brought or made in connection  with any matter set forth in
Section 12.1 and, where required for that purpose,  will consent to or submit to
the jurisdiction of
<PAGE>

                                      -25-

any court and defend any such  Claim on behalf of any  Indemnified  Party in any
such  jurisdiction,  provided that nothing herein shall limit the  Corporation's
right or ability to contest,  at its expense,  on behalf of an Indemnified Party
the appropriate jurisdiction or forum for the determination of any such Claim so
long as default  judgement or other default  proceedings  are not in the interim
brought by a party making such Claim.

13.  Contribution

13.1 In the event  that the  indemnity  provided  for in  Section 12 is, for any
reason, illegal, unenforceable or otherwise unavailable, in whole or in part, as
being  contrary  to public  policy or for any  other  reason,  the Agent and the
Corporation  shall contribute to the aggregate of all losses,  claims,  actions,
costs, damages,  expenses or liabilities  (including any legal or other costs or
expenses  reasonably  incurred  by the  Indemnified  Party  in  connection  with
investigating  or  defending  any Claim which is the subject of this section but
excluding loss of profits or  consequential  damages) of the nature provided for
above such that the Agent shall be responsible  for that portion  represented by
the  percentage  that the Agent's Fee  payable by the  Corporation  to the Agent
bears to the Gross Proceeds and the  Corporation  shall be  responsible  for the
balance,  provided  that, in no event,  shall the Agent be  responsible  for any
amount in excess of the amount of the  Agent's Fee  actually  received by it. In
the event that the Corporation  may be held to be entitled to contribution  from
the Agent under the provisions of any statute or law, the Corporation  shall, in
respect of the Agent,  be limited to contribution in an amount not exceeding the
lesser of: (i) the portion of the full amount of losses, claims' costs, damages,
expenses and liabilities,  giving rise to such  contribution for which the Agent
is  responsible,  as  determined  above,  and (ii) the amount of the Agent's Fee
actually received by the Agent. Notwithstanding the foregoing, a party guilty of
fraud, fraudulent misrepresentation,  or gross negligence, shall not be entitled
to contribution  from the other party. Any party entitled to contribution  will,
promptly after receiving  notice of commencement of any claim,  action,  suit or
proceeding  against such party in respect of which a claim for  contribution may
be made against the other party under this section,  notify such party from whom
contribution may be sought.  In no case shall such party from whom  contribution
may be sought  be liable  under  this  Agreement  unless  such  notice  has been
provided  but the  omission  to so notify such party shall not relieve the party
from whom  contribution  may be sought  from any  other  obligation  it may have
otherwise than under this section.  The right to  contribution  provided in this
section  shall  be in  addition  and not in  derogation  of any  other  right to
contribution which the Agent or the Corporation may have by statute or otherwise
by law.

13.2 If any of the provisions of Section 13.1 is determined to be void, voidable
or unenforceable,  in whole or in part, such  determination  shall not affect or
impair or be deemed to affect or impair the  validity of any other  provision of
this  Agreement  and such void,  voidable or  unenforceable  provision  shall be
severable from this Agreement.

14.  Survival of Warranties, Representations, Covenants and Agreements

14.1 All   warranties,   representations,   covenants  and   agreements  of  the
Corporation herein contained, or contained in documents submitted or required to
be  submitted  pursuant to this  Agreement,  shall  survive the  purchase by the
Purchasers  of the Units and shall  continue  in full  force and  effect for the
benefit of the Purchasers for a period of two years following the Closing
<PAGE>

                                      -26-

Date.  Notwithstanding the foregoing, the provisions contained in this Agreement
in any way related to the  indemnification  of the Agent by the Corporation,  or
the  contribution  obligations of the Agent or those of the  Corporation,  shall
survive  and  continue  in  full  force  and  effect,  until  liability  to  the
Indemnified  Parties  arising  out  of the  transactions  contemplated  by  this
Agreement has been extinguished by operation of law.

15.  Alternative Transaction

15.1 If the Offering is not consummated and during the six months  following the
termination  of this  Agreement,  any person which the Agent  introduced  to the
Corporation or with which the Agent had discussions or negotiations on behalf of
the  Corporation,  purchases  securities from the  Corporation,  the Corporation
agrees to pay the Agent upon  closing of such sale a cash fee in the amount that
would  otherwise  have been payable to the Agent had such  transaction  occurred
under this offering.  Additionally,  if the Offering is not  consummated and the
Corporation  enters into an agreement with respect to or otherwise  completes an
Alternative  Transaction  without the Agent acting as lead Canadian agent of the
transaction if the transaction  occurs in Canada and/or Europe, or in such other
capacity at the Agent may agree, prior to the Closing Date or at any time within
six months thereafter,  the Corporation shall pay to the Agent, as a commission,
an aggregate  amount equal to the lesser of US$425,000  or 3% of the  enterprise
value of the Alternative  Transaction by bank draft or certified funds forthwith
upon the completion of the Alternative Transaction.  The parties agree that this
payment will  constitute a payment of  liquidated  damages and not a penalty and
shall be accepted by the Agent in full  satisfaction  of all claims  against the
Corporation  which  the  Agent  may  have in  connection  with  the  Alternative
Transaction  and the  failure  to  complete  the  Offering,  except a claim  for
indemnity or contribution pursuant to Section 12 or Section 13, as applicable of
this Agreement.

16.  Restrictions on Offerings

16.1 Other than in  connection  with the  Offering  and the U.S.  Offering,  the
Corporation  agrees that for a period ending 120 days after the Closing Date, it
shall not sell or issue,  or  negotiate  or enter into any  agreement to sell or
issue or announce an  intention  to do so, any Common  Shares or any  securities
exchangeable,  convertible or exercisable into Common Shares without the consent
of the Agent,  such consent not to be unreasonably  withheld;  provided that the
foregoing will not restrict the Corporation  from granting  options  pursuant to
the  Corporation's  incentive stock option plan or the issuance of Common Shares
on the  exercise  of such  options or the  issuance of Common  Shares  under any
Outstanding Convertible Securities.

17.  General  Contract  Provisions

17.1 Any notice or other communication to be given hereunder shall be in writing
and shall be given by delivery or by telecopier, as follows:

          if to the Corporation:

          World Heart Corporation
          1 Laser Street
          Ottawa, Ontario
          K2E 7V1
<PAGE>

                                      -27-

          Attention:  Roderick Bryden
          Fax:  (613) 226-1008

          with a copy to:

          McCarthy Tetrault
          Suite 1400
          40 Elgin Street
          Ottawa, Ontario
          K1P 5K6

          Attention: Virginia Schweitzer
          Fax:  (613) 563-9386

          or if to the Agent:

          Research Capital Corp.
          222 Bay Street
          Suite 1500, Box 265
          Toronto, ON
          M5K 1J5

          Attention: Steve D. Ottaway
          Fax:  (416) 860-7674

          with a copy to:

          Fraser Milner Casgrain LLP
          Suite 4100
          1 First Canadian Place
          100 King Street West
          Toronto, ON M5X 1B2

          Attention: Rubin Rapuch
          Fax:  (416) 863-4592

     and if so  given,  shall be deemed to have  been  given and  received  upon
     receipt by the  addressee  or a  responsible  officer of the  addressee  if
     delivered,  or four hours after  being  telecopied  and  receipt  confirmed
     during normal business hours at the location of the recipient,  as the case
     may be. Any party may, at any time, give notice in writing to the others in
     the  manner  provided  for above of any  change of  address  or  telecopier
     number.

17.2 This Agreement and the other  documents  herein  referred to (including the
Subscription  Agreements)  constitute the entire agreement between the Agent and
the  Corporation  relating to the subject  matter hereof and supersede all prior
agreements,  understandings,  negotiations and  discussions,  whether written or
oral,  between the Agent and the  Corporation  with respect to their  respective
rights  and  obligations  in  respect  of the  Offering,  including  the  Letter
Agreement dated August 28, 2003.
<PAGE>

                                      -28-

18.  Successors

18.1 This  Agreement  shall  enure to the  benefit  of,  be  binding  upon,  the
Corporation and the Agent and their respective  successors (including successors
by reason of  amalgamation,  merger,  business  combination or arrangement)  and
legal  representatives  and nothing  expressed or mentioned in this Agreement is
intended  and shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement,  or any provisions
herein contained,  this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive  benefit of such persons and
for the benefit of no other person.

19.  Counterparts

19.1 This  Agreement  may be  executed by any one or more of the parties to this
Agreement in any number of counterparts,  including by facsimile  transmissions,
each of  which  shall be  deemed  to be an  original,  including  those  sent by
facsimile transmission,  but all such counterparts shall together constitute one
and the same instrument.

                           [Signatures on next page]
<PAGE>

                                      -29-

If this Agreement  accurately reflects the terms of the transaction which we are
to  enter  into and if such  terms  are  agreed  to by the  Corporation,  please
communicate your acceptance by executing where indicated below and returning one
originally executed copy to the Agent.

Yours very truly,

RESEARCH CAPITAL CORPORATION

By:    /s/ Steve D. Ottaway
   ---------------------------------------------
   Name:   Steve D. Ottaway
   Title:  Managing Director, Investment Banking

     The foregoing accurately reflects the terms of the transaction which we are
to enter  into and such  terms are  agreed to with  effect as of the date  first
above written.

WORLD HEART CORPORATION

By:   /s/  Roderick Bryden
   ---------------------------------------------
   Name:   Roderick Bryden
   Title:  President and Chief Executive Officer<PAGE>

                                                                   Exhibit 10.38
                           LOWRANCE ELECTRONICS, INC.

                              AMENDED AND RESTATED
                             2001 STOCK OPTION PLAN

1.       PURPOSE

         This Amended and Restated Stock Option Plan (this "Plan") is intended
as an incentive and to encourage stock ownership by officers and other key
employees of Lowrance Electronics, Inc. (the "Corporation") or of its parent
corporation or its subsidiary corporations (collectively, the "Affiliates") as
such terms are defined in Section 425 of the Internal Revenue Code of 1986, as
amended (the "Code") so that they may acquire or increase their proprietary
interest in the success of the Corporation and its Affiliates, and to encourage
them to remain in the employ of the Corporation or of its Affiliates. It is
further intended that options issued pursuant to this plan may constitute
incentive stock options within the meaning of Section 422 of the Code, to the
extent such options are embodied in an incentive stock option agreement
containing such provisions as are required by this Plan with respect to such
options.

2.       ADMINISTRATION

         This Plan shall be administered by the Compensation Committee appointed
by the Board of Directors of the Corporation (the "Committee"). The Committee
shall consist solely of three or more Outside Directors. The Board of Directors
may from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, howsoever caused, shall be filled by the Board of
Directors. The Committee shall select one of its members as Chairman, and shall
hold meetings at such times and places as it may determine. Acts approved by a
majority of the Committee at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be the
valid acts of the Committee. The Committee shall from time to time at its
discretion select the key employees who shall be granted options or stock
appreciation rights and determine the amount of stock to be optioned to each.

         The Committee shall have the power, subject to and within the limits of
the express provisions of this Plan:

         (a)      To determine from time to time which of the eligible persons
                  shall be granted options or stock appreciation rights under
                  this Plan, and the time or times when, and the number of
                  shares for which, an option or options or stock appreciation
                  rights shall be granted to such persons;

         (b)      To prescribe the other terms and provisions (which need not be
                  identical) of each option granted under this Plan to eligible
                  persons;

         (c)      To construe and interpret this Plan and options granted under
                  it and to establish, amend and revoke rules and regulations
                  for administration. The Committee, in the exercise of this
                  power, may correct any defect or supply any omission, or
                  reconcile any inconsistency in this Plan, or in any option
                  agreement, in the

<PAGE>

                  manner and to the extent it shall deem necessary or expedient
                  to make this Plan fully effective. In exercising this power,
                  the Committee may retain counsel at the expense of the
                  Corporation. All decisions and determinations by the Committee
                  in exercising this power shall be final and binding upon the
                  Corporation and the optionees;

         (d)      To determine the duration and purposes of leaves of absence
                  which may be granted to an optionee without constituting a
                  termination of his or her employment for purposes of this
                  Plan; and

         (e)      Generally, to exercise such powers and to perform such acts as
                  are deemed necessary or expedient to promote the best
                  interests of the Corporation with respect to this Plan.

         No member of the Board of Directors or the Committee shall be liable
for any action or determination made in good faith with respect to this Plan or
any option granted under it.

3.       ELIGIBILITY TO RECEIVE INCENTIVE STOCK OPTIONS

         The persons who shall be eligible to receive incentive stock options
shall be such key employees (including officers, whether or not they are
directors) of the Corporation or its Affiliates existing from time to time as
the Committee shall select from time to time. An optionee may hold more than one
incentive stock option, but only on the terms and subject to the restrictions
hereafter set forth. No person shall be eligible to receive an incentive stock
option for a larger number of shares than is recommended for him or her by the
Committee.

4.       ELIGIBILITY TO RECEIVE NON-QUALIFIED STOCK OPTIONS

         The persons who shall be eligible to receive non-qualified stock
options shall be such key employees (including officers, whether or not they are
directors) and directors of the Corporation or its Affiliates existing from time
to time as the Committee shall select from time to time. An optionee may hold
more than one non-qualified stock option, but only on the terms and subject to
the restrictions hereafter set forth. No person shall be eligible to receive a
non-qualified stock option for a larger number of shares than is recommended for
him or her by the Committee, and no person shall be eligible to receive more
than 120,000 non-qualified stock options.

5.       STOCK SUBJECT TO OPTIONS AND STOCK APPRECIATION RIGHTS

         The stock subject to the options and any stock appreciation rights
shall be shares of the Corporation's authorized but unissued or reacquired $0.10
par value common stock (the "Common Stock"). The aggregate number of shares
which may be issued under options pursuant to this Plan shall not exceed 300,000
shares of the Common Stock in the aggregate, subject to adjustment as provided
in Section 10 hereof.

6.       LIMITATIONS ON INCENTIVE STOCK OPTIONS

         The aggregate fair market value (determined at the time the option is
granted) of the Common Stock with respect to which incentive stock options are
exercisable for the first time by

                                      -2-
<PAGE>

an individual during any calendar year (under this Plan and under all other
incentive stock option plans of the Corporation and its Affiliates) shall not
exceed $100,000.

7.       STOCK UNDER EXPIRED OPTION OR STOCK APPRECIATION RIGHTS

         In the event that any outstanding option and any associated stock
appreciation right under this Plan for any reason expire or are terminated, the
shares of Common Stock allocable to the unexercised portion of such option and
any associated stock appreciation right may again be subjected to an option
under this Plan. The provisions hereof shall not apply in the case of an option
which expires or is terminated due to the exercise of an associated stock
appreciation right, nor shall the provisions hereof apply in the case of a stock
appreciation right which expires or is terminated due to the exercise of an
associated option.

8.       TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS

         Incentive stock options granted pursuant to this Plan shall be
authorized and granted by the Committee and shall be evidenced by agreements in
such form as the Committee shall from time to time deem appropriate. Incentive
stock option agreements need not be identical, but each incentive stock option
agreement shall comply with and be subject to the following terms and
conditions:

         (a)      Number of Shares. Each incentive stock option shall state the
                  number of shares to which it pertains.

         (b)      Option Price. Each incentive stock option shall state the
                  option price, which shall be not less than 100% (110% in the
                  case of an optionee who, at the time the option is granted, is
                  considered for the purposes of Section 422(b)(6) of the Code
                  to own more than 10% of the total combined voting power of all
                  classes of Stock of the Corporation or its Affiliates as
                  determined under Section 425 of the Code (herein referred to
                  as a "10% Shareholder")) of the fair market value of the
                  shares of Common Stock of the Corporation on the date of the
                  granting of the option.

         (c)      Method of Exercise and Payment. An incentive stock option may
                  be exercised by the optionee delivering to the Committee on
                  any business day a written notice specifying the number of
                  shares of Common Stock the optionee then desires to purchase.
                  The option price shall be payable (i) in cash in United States
                  dollars upon the exercise of the incentive stock option, or
                  (ii) if the incentive stock option agreement so permits, in
                  stock of the Corporation, or (iii) if the incentive stock
                  option agreement so permits, by reducing the number of whole
                  shares of Common Stock otherwise issuable to the optionee as a
                  result of the exercise, or (iv) to the extent permitted by the
                  incentive stock option agreement, by a combination of such
                  methods.

         (d)      Terms and Exercise of Incentive Stock Options. Except as
                  otherwise expressly provided in this Plan, each incentive
                  stock option granted pursuant to this Plan shall contain
                  provisions established by the Committee setting forth the
                  manner of exercise of such incentive stock option, and may, at
                  the sole discretion of the

                                      -3-
<PAGE>

                  Committee, provide such restrictions on exercise as the
                  Committee may deem appropriate.

                  Each incentive stock option granted under this Plan shall
                  terminate as set forth therein; provided, that no incentive
                  stock shall be exercisable after the expiration of ten years
                  from the date of the granting of the option (five years in the
                  case of an optionee who, at the time the option is granted, is
                  a 10% Shareholder). Each incentive stock option granted under
                  this Plan shall contain provisions making such option
                  nontransferable by the optionee, except upon death, and
                  exercisable during the optionee's lifetime only by the
                  optionee.

9.       TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTIONS

         Non-qualified stock options granted pursuant to this Plan shall be
authorized and granted by the Committee and shall be evidenced by agreements in
such form as the Committee shall from time to time deem appropriate.
Non-qualified stock option agreements need not be identical, but each
non-qualified stock option agreement shall comply with and be subject to the
following terms and conditions:

         (a)      Number of Shares. Each non-qualified stock option shall state
                  the number of shares to which it pertains.

         (b)      Option Price. Each non-qualified stock option shall state the
                  option price, which shall be determined by the Committee and
                  which may be less than the fair market value of the shares of
                  Common Stock of the Corporation on the date of the granting of
                  the non-qualified stock option. The Committee, in fixing the
                  option price, shall have full authority and discretion and
                  shall be fully protected in doing so.

         (c)      Method of Exercise and Payment. A non-qualified stock option
                  may be exercised by the optionee delivering to the Committee
                  on any business day a written notice specifying the number of
                  shares of Common Stock the optionee then desires to purchase.
                  The option price shall be payable (i) in cash upon the
                  exercise of the non-qualified stock option, or (ii) if the
                  non-qualified stock option agreement so permits, in stock of
                  the Corporation, or (iii) if the non-qualified stock option
                  agreement so permits, by reducing the number of whole shares
                  of Common Stock otherwise issuable to the optionee as a result
                  of the exercise, or (iv) to the extent permitted by the
                  non-qualified stock option agreement, by a combination of such
                  methods.

         (d)      Terms and Exercise of Non-Qualified Stock Options. Except as
                  otherwise expressly provided in this Plan, each non-qualified
                  stock option granted pursuant to this Plan shall contain
                  provisions established by the Committee setting forth the
                  manner of exercise of such non-qualified stock option, and
                  may, at the sole discretion of the Committee, provide such
                  restrictions on exercise as the Committee may deem
                  appropriate. Each non-qualified stock option granted under
                  this Plan shall terminate as set forth therein; provided, that
                  no non-qualified stock

                                      -4-
<PAGE>

                  option shall be exercisable after the expiration of 10 years
                  and six months from the date of the granting of the
                  non-qualified stock option. Each non-qualified stock option
                  granted under this Plan shall contain provisions making such
                  non-qualified stock option nontransferable by the optionee,
                  except upon death, and exercisable during the optionee's
                  lifetime only by the optionee.

         (e)      Notice in Agreement. Each non-qualified stock option shall
                  specifically state that it is not intended as an incentive
                  stock option.

10.      TERMS AND CONDITIONS OF INCENTIVE AND NON-QUALIFIED STOCK OPTIONS

         (a)      Recapitalization. If the shares of Common Stock as a whole are
                  increased, decreased or changed into, or exchanged for a
                  different number or kind of shares or securities of the
                  Corporation, whether through merger, consolidation,
                  reorganization, recapitalization, reclassification, stock
                  dividend, stock split, combination of shares, exchange of
                  shares, change in corporate structure or the like, an
                  appropriate and proportionate adjustment may be made by the
                  Committee in the number and kinds of shares subject to this
                  Plan, and the number, kinds and per share exercise price of
                  shares subject to unexercised options or portions thereof
                  granted prior to any such change. Any such adjustment in an
                  outstanding option, however, shall be made without a change in
                  the total price applicable to the unexercised portion of the
                  option, but with a corresponding adjustment in the price for
                  each share of Common Stock covered by the option.

         (b)      Reorganization or Liquidation. Each option agreement may
                  contain such provisions relating to the dissolution,
                  liquidation, reorganization, consolidation or merger of the
                  Corporation, or the sale or disposition by the Corporation of
                  substantially all of its assets, as the Committee may deem
                  appropriate.

         (c)      Adjustments. To the extent that the adjustments described in
                  (a) above relate to stock or securities of the Corporation,
                  such adjustments shall be made by the Committee, whose
                  determination in that respect shall be final, binding and
                  conclusive; provided that each incentive stock option granted
                  pursuant to this Plan shall not be adjusted in a manner that
                  causes the incentive stock option to fail to continue to
                  qualify as an incentive stock option within the meaning of
                  Section 422 of the Code.

11.      STOCK APPRECIATION RIGHTS

         (a)      Grant. Stock appreciation rights may be granted by the
                  Committee under this Plan upon such terms and conditions as
                  the Committee may prescribe. A stock appreciation right may be
                  granted only in connection with an option right previously
                  granted or to be granted under this Plan. Each stock
                  appreciation right shall contain a provision that it shall
                  become non-exercisable and be forfeited if and to the extent
                  the related option right is exercised, cancelled, forfeited,
                  terminated or otherwise lapses. "Stock appreciation right" as
                  used in this Plan

                                      -5-
<PAGE>

                  means a right to receive the excess of the fair market value
                  of a share of the Corporation's Common Stock on the date on
                  which an appreciation right is exercised over the option price
                  provided for in the related option agreement and is issued in
                  consideration of services performed for the Corporation or for
                  its benefit by the optionee. Such excess is hereafter called
                  the "differential." "Option right" means the right to purchase
                  shares of the Corporation's Common Stock under an incentive
                  stock option or non-qualified stock option granted under this
                  Plan.

         (b)      Exercise of Stock Appreciation Rights: Stock appreciation
                  rights shall be exercisable and be payable in the following
                  manner:

                  (1)      A stock appreciation right shall be exercisable at
                           any time and to the extent the option to which it
                           relates could be exercised; provided, however, that a
                           stock appreciation right may be exercised only when
                           the market price of the Common Stock subject to the
                           related option exceeds the exercise price established
                           under such option. Any person wishing to exercise a
                           stock appreciation right shall give written notice of
                           such exercise to the Committee addressed to the
                           Committee's Chairman. Upon receipt of such notice,
                           the Committee shall determine whether the stock
                           appreciation rights shall be paid in cash or shares
                           of Common Stock or any combination of cash and shares
                           and shall instruct the Corporation accordingly. Upon
                           receipt of such instructions from the Committee, the
                           Corporation shall, without transfer or issue tax to
                           the optionee or other person entitled to exercise the
                           stock appreciation rights, deliver to the person
                           exercising such right a certificate or certificates
                           for shares of the Corporation's Common Stock which
                           are issuable upon exercise of the stock appreciation
                           right or cash or a combination thereof as the case
                           may be. The date the Committee receives the written
                           notice of exercise hereunder is referred to herein as
                           the exercise date.

                  (2)      The exercise of a stock appreciation right shall
                           automatically result in the surrender and
                           cancellation of the related option right by the
                           grantee on a share-for-share basis to the extent
                           shares under such related option right are used to
                           calculate the shares or cash or combination thereof
                           to be received by such grantee upon the exercise of
                           such stock appreciation right. Shares covered by such
                           surrendered option rights shall not be available for
                           granting further options under this Plan.

                  (3)      The Committee may impose any other conditions it
                           prescribes upon the exercise of a stock appreciation
                           right, which conditions may include a condition that
                           the stock appreciation right may only be exercised in
                           accordance with rules and regulations adopted by the
                           Committee from time to time.

                  (4)      Upon the exercise of a stock appreciation right and
                           surrender and cancellation of the related option
                           right, the Corporation shall give to the person
                           surrendering the related option right an amount
                           equivalent to the

                                      -6-
<PAGE>

                           differential, in cash or shares of the Common Stock
                           or any combination thereof as determined in
                           accordance with subparagraph (b)(1) of this Section
                           11.

                  (5)      The shares to be issued upon the exercise of a stock
                           appreciation right may consist either in whole or in
                           part of shares of the Corporation's authorized but
                           unissued Common Stock or shares of the Corporation's
                           authorized and issued Common Stock reacquired by the
                           Corporation and held in its treasury. No fractional
                           share of Common Stock shall be issued and the
                           Committee shall determine whether cash shall be given
                           in lieu of such fractional share or whether such
                           fractional share shall be eliminated.

         (c)      Limitation on Payments. Notwithstanding any other provision of
                  this Plan, the Committee may from time to time determine,
                  including at the time of exercise, the maximum amount of cash
                  or stock which may be given upon exercise of any stock
                  appreciation right in any year; provided, however, that all
                  such amounts shall be paid in full no later than the end of
                  the year immediately following the year in which the optionee
                  exercised such stock appreciation rights. Any determination
                  under this paragraph may be changed by the Committee from time
                  to time provided that no such change shall require the holder
                  to return to the Company any amount theretofore received or to
                  extend the period within which the Company is required to make
                  full payment of the amount due as the result of the exercise
                  of the optionee's stock appreciation rights.

         (d)      Expiration or Termination of Stock Appreciation Rights.

                  (1)      Each stock appreciation right and all rights and
                           obligations thereunder shall expire on a date to be
                           determined by the Committee, such date, however, in
                           no event to be later than ten years from the date on
                           which the related option right was granted.

                  (2)      A stock appreciation right shall terminate and may no
                           longer be exercised upon the termination or exercise
                           of the related option right.

12.      FAIR MARKET VALUE

         For the purposes of this Plan and any option or stock appreciation
right granted hereunder, the fair market value of the Corporation's Common Stock
shall be determined as provided in this Section 12. If the Common Stock is
traded upon an established stock exchange or exchanges, the fair market value of
shares of Common Stock shall be determined to be the highest closing price of
the Common Stock on such stock exchange or exchanges on the day the stock
appreciation rights are exercised by the optionee; or if no sales of the
Corporation's Common Stock shall have been made on any stock exchange on that
day, on the next preceding day on which there was a sale of such stock;
provided, however, that during such time as the Corporation's Common Stock is
not listed upon an established stock exchange but is traded in the
over-the-counter market, the fair market value for such shares shall be (i) the
average of the high and low bid prices or (ii) if available, the average of the
high and low sales prices, based

                                      -7-
<PAGE>

upon actual transactions, of the Corporation's Common Stock in the
over-the-counter market, as reported by the National Association of Securities
Dealers Automated Quotation System, or its successor, on the day the stock
appreciation rights are exercised by the optionee. If the Common Stock is not
listed upon an established stock exchange or traded in the over-the-counter
market, the fair market value thereof shall be determined by the Committee
acting in good faith. Subject to the foregoing, the Board of Directors and the
Committee in determining the fair market value of the Common Stock shall have
full authority and discretion and shall be fully protected in doing so. Anything
contained herein to the contrary notwithstanding, if any method for determining
the fair market value of the Common Stock shall be determined by the Committee
to jeopardize the status of an option as an incentive stock option, the
Committee may utilize such valuation method as it deems necessary to protect the
status of the option as an incentive stock option.

13.      TAX WITHHOLDING

         The Corporation or its Affiliates, as appropriate, shall have the right
to deduct from all cash payments any federal, state or local taxes imposed on
the recipient and required by law to be withheld with respect to such cash
payment. In the case of stock appreciation rights redeemed in Common Stock, or
in the case of Common Stock distributed pursuant to exercise of a stock option
granted hereunder, the person receiving such Common Stock may be required to pay
to the Corporation or its Affiliates, as appropriate, the amount of any such
taxes imposed on the recipient and which the Corporation or its Affiliates is
required to withhold with respect to such Common Stock. In the event the cash
portion of a stock appreciation right is insufficient to cover the required
withholding, the optionee may be required to pay to the Corporation or its
Affiliates, as appropriate, the amount of such taxes.

14.      RIGHTS AS A STOCKHOLDER

         An optionee or a transferee of an option shall have no rights as a
stockholder with respect to any shares covered by his or her option until the
date of the issuance of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions of other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 10(a) hereof.

15.      MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS

         Subject to the terms and conditions and within the limitations of this
Plan, the Board of Directors or the Committee may modify, extend or renew
outstanding options granted under this Plan, or accept the surrender of
outstanding options (to the extent not theretofore exercised) and authorize the
granting of new options in substitutions therefor (to the extent not theretofore
exercised). The Board of Directors or the Committee shall not, however, modify
any outstanding incentive stock options so as to specify a lower price or accept
the surrender of outstanding options and authorize the granting of new incentive
stock options in substitution therefor specifying a lower price. Notwithstanding
the foregoing however, no modification of an option shall, without the consent
of the optionee, alter or impair any rights or obligations under any option
theretofore granted under this Plan.

                                      -8-
<PAGE>

16.      INVESTMENT PURPOSE

         Each option under this Plan shall be granted on the condition that the
purchases of Common Stock thereunder shall be for investment purposes, and not
with a view to resale or distribution except that in the event the Common Stock
subject to such option is registered under the Securities Act of 1933, as
amended, or in the event a resale of the Common Stock without such registration
would otherwise be permissible, such conditions shall be inoperative if in the
opinion of counsel for the Corporation such condition is not required under the
Securities Act of 1933 or any other applicable law, regulation, or rule of any
governmental agency.

17.      OTHER PROVISIONS

         The option agreements authorized under this Plan shall contain such
other provisions which are not inconsistent with this Plan and which the
Committee or the Board of Directors of the Corporation shall deem advisable. Any
incentive stock option agreement shall contain such provisions as shall be
necessary in order that such option will be an "incentive stock option" as
defined in Section 422 of the Code, or to conform to any change in the law.

18.      TERM OF PLAN

         Options may be granted pursuant to this Plan from time to time within a
period of ten years from the date this Plan is adopted by the Board of
Directors, or the date this Plan is approved by the stockholders of the
Corporation, whichever is earlier.

19.      INDEMNIFICATION OF COMMITTEE

         In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with this Plan or any option granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding that such Committee member is liable for negligence or
misconduct in the performance of his or her duties; provided that within 60 days
after institution of any such action, suit or proceeding a Committee member
shall in writing offer the Corporation the opportunity, at its own expense, to
handle and defend the same.

20.      AMENDMENT OF THIS PLAN

         The Board of Directors of the Corporation may, insofar as permitted by
law, from time to time, with respect to any shares at the time not subject to
options, suspend or discontinue this Plan or revise or amend it in any respect
whatsoever without further approval of the stockholders of the Corporation,
except that, without approval of the stockholders within twelve months before or
after the date of such amendment's adoption, no such revision or amendment shall
change the number of shares subject to this Plan, change the designation of the
class of employees eligible to receive options, decrease the price at which
options may be granted,

                                      -9-
<PAGE>

increase the maximum term of options as provided herein or remove the
administration of this Plan from the Committee. Furthermore, this Plan may not,
without the approval of the stockholders, be amended in any manner that will
cause incentive stock options issued under it to fail to meet the requirements
of incentive stock options as set forth in Section 422 of the Code.

21.      APPROVAL OF STOCKHOLDERS

         This Plan originally became effective upon adoption by the Board of
Directors on July 2, 2001 and approval by the holders of a majority of the
outstanding shares of Common Stock of the Corporation on December 11, 2001.
Options were allowed to be granted hereunder prior to stockholder approval. No
shareholder approval is required of this Amended and Restated 2001 Stock Option
Plan.

22.      NON-EXCLUSIVITY OF PLAN

         Neither the adoption of this Plan by the Board of Directors, nor the
submission of this Plan to the stockholders of the Corporation for approval,
shall be construed as creating any limitation on the power of the Board of
Directors to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under this Plan, and such arrangements may be either applicable generally or
only in specific cases.

         IN WITNESS WHEREOF, this Amended and Restated 2001 Stock Option Plan
has been adopted by the Board of Directors as of the 18th day of July, 2003.

                                             LOWRANCE ELECTRONICS, INC.

                                             By:________________________________
                                                 Darrell J. Lowrance, President

ATTEST:

_________________________________
 H. Wayne Cooper, Secretary

                                      -10-

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