Document:

Exhibit 4.4
                               PURCHASE AGREEMENT

          THIS PURCHASE AGREEMENT ("Agreement") is made as of the 15th day of
September, 2004 by and among World Heart Corporation, a corporation incorporated
under the laws of the Province of Ontario, Canada (the "Company"), and the
Investors set forth on the signature pages affixed hereto (each an "Investor"
and collectively the "Investors").

                                    Recitals

          A.  The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended; and

          B.  The Investors wish to purchase from the Company, and the Company
wishes to sell and issue to the Investors, upon the terms and conditions stated
in this Agreement, up to a minimum of US$12,000,000 and a maximum of
US$20,000,000 (the "Offering") unsecured convertible debentures ("Debentures")
and common share purchase warrants of the Company at a rate of one warrant for
each US$1.25 principal amount of Debentures (a "Warrant" or collectively, the
"Warrants"). The Debentures will be convertible, at the option of the holder,
into common shares at a rate, subject to adjustment, of US$1.25 principal amount
of Debentures per Common Share for a period of 60 months from the Closing Date.

          C.  The form of Debenture is attached to the Agreement as Exhibit A
and the form of the Warrant is attached to the Agreement as Exhibit B.

          D.  Contemporaneous with the sale of the Debentures and the Warrants,
the parties hereto will execute and deliver a Registration Rights Agreement, in
the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
pursuant to which the Company will agree to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and applicable state securities laws.

          In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

     1.   Definitions. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:

          "Affiliate" means, with respect to any Person, any other Person which
directly or indirectly Controls, is controlled by, or is under common control
with, such Person.

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

          "Common Stock" means the common shares of the Company, and any
securities into which the Common Stock may be reclassified.

          "Company's Knowledge" means the actual knowledge of the officers of
the Company, after due inquiry.

          "Confidential Information" means trade secrets, confidential
information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development
information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information).

          "Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

          "Debentures" has the meaning ascribed thereto in the recitals of this
Agreement.

          "Debenture Shares" means the Common Stock issuable upon the conversion
of the Debentures.

          "Dollars" or "$" means United States dollars.

          "Effective Date" means the date on which the initial Registration
Statement (as defined in the Registration Rights Agreement) is declared
effective by the SEC.

          "Effectiveness Deadline" means the date on which the initial
Registration Statement (as defined in the Registration Rights Agreement) is
required to be declared effective by the SEC under the terms of the Registration
Rights Agreement.

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

          "Interest" means the interest at the rate of 3% per annum (accrued but
not compounded) calculated on the outstanding principal amount of the
Debentures.

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          "Interest Shares" means the shares of Common Stock issuable upon the
conversion of the Interest under the terms and conditions set forth in the
Debentures.

          "Material Adverse Effect" means a material adverse effect on (i) the
assets, liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.

          "NASDAQ" means the NASDAQ National Market, its successors and assigns.

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

          "Purchase Price" means 100% of the principal amount of the Debentures.

          "Registration Rights Agreement" has the meaning set forth in the
recitals to this Agreement.

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

          "SEC Filings" has the meaning set forth in Section 4.6.

          "Securities" means the Debentures, the Debenture Shares, the Interest
Shares, Warrants and the Warrant Shares.

          "Subsidiary" has the meaning set forth in Section 4.1.

          "Transaction Documents" means this Agreement, the Registration Rights
Agreement, the Warrant Indenture, the Debentures and the Warrants.

          "TSX" means the Toronto Stock Exchange Inc., its successors and
assigns.

          "Warrant" has the meaning ascribed thereto in the recitals to this
Agreement.

          "Warrant Indenture" means the Warrant Indenture to be entered into by
the Company and CIBC Mellon Trust Company, as warrant agent, in substantially
the form of Exhibit D attached hereto.

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

          "1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.

<PAGE>

          "1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     2.   Purchase and Sale of the Debentures and Warrants. Subject to the terms
and conditions of this Agreement, on the Closing Date, each of the Investors
shall severally, and not jointly, purchase, and the Company shall sell and issue
to the Investors, the Debentures and Warrants in the respective principal
amounts and numbers set forth opposite the Investors' names on the signature
pages attached hereto in exchange for the Purchase Price as specified in Section
3 below.

     3.   Closing. Upon confirmation that the other conditions to closing
specified herein have been satisfied, the Company shall deliver to Lowenstein
Sandler PC, in trust, the Debentures and certificates representing the Warrants,
registered in such name or names as the Investors may designate, with
instructions that such Debentures and certificates are to be held for release to
the Investors only upon payment of the Purchase Price to the Company. Upon
receipt by Lowenstein Sandler PC of the Debentures and such certificates, each
Investor shall promptly cause a wire transfer in same day funds to be sent to
the account of the Company as instructed in writing by the Company, in an amount
representing such Investor's pro rata portion of the Purchase Price as set forth
on the signature pages to this Agreement. On the date (the "Closing Date") the
Company receives such funds and the Debentures and the certificates evidencing
the Warrants shall be released to the Investors (the "Closing"). The purchase
and sale of the Debentures and the Warrants shall take place at the offices of
Lowenstein Sandler PC, 1330 Avenue of the Americas, 21st Floor, New York, New
York, or at such other location and on such other date as the Company and the
Investors shall mutually agree.

     4.   Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith (collectively, the "Disclosure Schedules"):

          4.1 Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to carry on its business as now
conducted and to own its properties. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not and could not reasonably be expected to have a
Material Adverse Effect. The Company's subsidiaries are reflected on Schedule
4.1 hereto (the "Subsidiaries").

          4.2 Authorization. The Company has full power and authority and has
taken all requisite action on the part of the Company, its officers, directors
and shareholders necessary for (i) the authorization, execution and delivery of
the Transaction Documents, (ii) authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Securities. The
Transaction Documents constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy,

<PAGE>

insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors' rights generally.

          4.3 Capitalization. Schedule 4.3 sets forth (a) the authorized capital
stock of the Company on the date hereof; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company's stock plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities (other than the
Securities) exercisable for, or convertible into or exchangeable for any shares
of capital stock of the Company. All of the issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid, non-assessable and free of pre-emptive rights and were issued in
full compliance with applicable law and any rights of third parties. All of the
issued and outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid, non-assessable and free of
pre-emptive rights, were issued in full compliance with applicable law and any
rights of third parties and are owned by the Company, beneficially and of
record, subject to no lien, encumbrance or other adverse claim. No Person is
entitled to pre-emptive or similar statutory or contractual rights with respect
to any securities of the Company. Except as described on Schedule 4.3, there are
no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any of
its Subsidiaries is or may be obligated to issue any equity securities of any
kind and except as contemplated by this Agreement, neither the Company nor any
of its Subsidiaries is currently in negotiations for the issuance of any equity
securities of any kind. Except as described on Schedule 4.3 and except for the
Registration Rights Agreement, there are no voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among the Company and any of the securityholders of the Company
relating to the securities of the Company held by them. The Company has not
granted any Person the right to require the Company to register any securities
of the Company under the 1933 Act, whether on a demand basis or in connection
with the registration of securities of the Company for its own account or for
the account of any other Person.

          Schedule 4.3 sets forth a true and complete table setting forth the
pro forma capitalization of the Company on a fully diluted basis giving effect
to (i) the issuance of the Debentures and the Warrants, (ii) any adjustments in
other securities resulting from the issuance of the Debentures or the Warrants,
and (iii) the exercise or conversion of all outstanding securities. Except as
described on Schedule 4.3, the issuance and sale of the Debentures and the
Warrants hereunder will not obligate the Company to issue shares of Common Stock
or other securities to any other Person (other than the Investors) and will not
result in the adjustment of the exercise, conversion, exchange or reset price of
any outstanding security.

          The Company does not have outstanding shareholder purchase rights or
any similar arrangement in effect giving any Person the right to purchase any
equity interest in the Company upon the occurrence of certain events.

          4.4 Valid Issuance. The Debentures have been duly and validly
authorized. Upon the due conversion of the Debentures and Interest, the
Debenture Shares and the Interest Shares will be validly issued, fully paid and
non-assessable and shall be free and clear of all

<PAGE>

encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws. The
Warrants have been duly and validly authorized. Upon the due exercise of the
Warrants, the Warrant Shares will be validly issued, fully paid and
non-assessable free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws. The Company has reserved a sufficient number of
shares of Common Stock for issuance upon the conversion of the Debentures, the
Interest and upon the exercise of the Warrants, free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws.

          4.5 Consents. The execution, delivery and performance by the Company
of the Transaction Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than (i) approvals required to be
obtained by the TSX and NASDAQ, all of which shall be obtained and shall be in
full force and effect prior to the Closing, and (ii) filings that have been made
pursuant to applicable securities laws and post-sale filings pursuant to
applicable state, federal and provincial securities laws which the Company
undertakes to file within the applicable time periods. The Company has taken all
action necessary to exempt (i) the issuance and sale of the Debentures and
Warrants, (ii) the issuance of the Debenture Shares and the Interest Shares upon
the due conversion of the Debentures and the Interest, (iii) the issuance of the
Warrant Shares upon due exercise of the Warrants, and (iv) the other
transactions contemplated by the Transaction Documents from the provisions of
any anti-takeover, business combination or control share law or statute binding
on the Company or to which the Company or any of its assets and properties may
be subject or any provision of the Company's articles of incorporation, by-laws
or any shareholder rights agreement that is or could become applicable to the
Investors as a result of the transactions contemplated hereby, including without
limitation, the issuance of the Securities and the ownership, disposition or
voting of the Securities by the Investors or the exercise of any right granted
to the Investors pursuant to this Agreement or the other Transaction Documents.

          4.6 Delivery of SEC Filings; Business. The Company has provided the
Investors with copies of the Company's most recent Annual Report on Form 40-F
for the fiscal year ended December 31, 2003 (the "40-F"), and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 40-F and
prior to the date hereof (collectively, the "SEC Filings"). The SEC Filings are
the only filings required of the Company pursuant to the 1934 Act for such
period. The Company and its Subsidiaries are engaged only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate
description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole.

          4.7 Use of Proceeds. The proceeds of the sale of the Debentures and
the Warrants hereunder shall be used by the Company for funding ongoing
operations including the RELIANT Trial, manufacturing of the Novacor LVAS
products, sales and marketing efforts, research and development, restructuring
costs and general corporate purposes.

          4.8  No Material Adverse Change. Since December 31, 2003, except as
identified and described in the SEC Filings or as described on Schedule 4.8,
there has not been:
<PAGE>

               (i) any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the 40-F, except for changes in the ordinary
course of business which have not and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate;

              (ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;

             (iii) any material damage, destruction or loss, whether or not
covered by insurance to any assets or properties of the Company or its
Subsidiaries;

              (iv) any waiver, not in the ordinary course of business, by the
Company or any Subsidiary of a material right or of a material debt owed to it;

               (v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or a Subsidiary, except
in the ordinary course of business and which is not material to the assets,
properties, financial condition, operating results or business of the Company
and its Subsidiaries taken as a whole (as such business is presently conducted
and as it is proposed to be conducted);

              (vi) any change or amendment to the Company's articles of
incorporation or by-laws, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to which any of
their respective assets or properties is subject;

             (vii) any material labor difficulties or labor union organizing
activities with respect to employees of the Company or any Subsidiary;

            (viii) any transaction entered into by the Company or a
Subsidiary other than in the ordinary course of business;
<PAGE>

              (ix) the loss of the services of any key employee, or material
change in the composition or duties of the senior management of the Company or
any Subsidiary;

               (x) the loss or threatened loss of any customer which has had or
could reasonably be expected to have a Material Adverse Effect; or

              (xi) any other event or condition of any character that has had
or could reasonably be expected to have a Material Adverse Effect.

          4.9 SEC Filings; 1933 Act Registration Form
              ---------------------------------------
<PAGE>

              (a) At the time of filing thereof, the SEC Filings complied as to
form in all material respects with the requirements of the 1934 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

              (b) Each registration statement and any amendment thereto filed
by the Company since January 1, 2002 pursuant to the 1933 Act and the rules and
regulations thereunder, as of the date such statement or amendment became
effective, complied as to form in all material respects with the 1933 Act and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each prospectus filed pursuant to Rule 424(b) under
the 1933 Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

              (c) The Company is eligible to use Form F-3 or an appropriate
form under the 1933 Act to register the Registrable Securities (as such term is
defined in the Registration Rights Agreement) for sale by the Investors as
contemplated by the Registration Rights Agreement. The Company will provide
written notice to the Investors at least 15 days prior to the Company ceasing to
be eligible to use Form F-3.

          4.10 No Conflict, Breach, Violation or Default. The execution,
delivery and performance of the Transaction Documents by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under (i) the Company's Articles of Incorporation or the Company's Bylaws, both
as in effect on the date hereof (copies of which have been provided to the
Investors before the date hereof), or (ii)(a) any statute, rule, regulation or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company, any Subsidiary or any of their respective
assets or properties, or (b) any agreement or instrument to which the Company or
any Subsidiary is a party or by which the Company or a Subsidiary is bound or to
which any of their respective assets or properties is subject.

          4.11 Tax Matters. The Company and each Subsidiary has timely prepared
and filed all material tax returns required to have been filed by the Company or
such Subsidiary with all appropriate governmental agencies and timely paid all
taxes shown thereon or otherwise owed by it. The charges, accruals and reserves
on the books of the Company in respect of taxes for all fiscal periods are
adequate in all material respects, and there are no material unpaid assessments
against the Company or any Subsidiary nor, to the Company's Knowledge, any basis
for the assessment of any additional taxes, penalties or interest for any fiscal
period or audits by any federal, state, local or provincial taxing authority
except for any assessment which is not material to the Company and its
Subsidiaries, taken as a whole. All material taxes and other assessments and
levies that the Company or any Subsidiary is required to withhold or to collect
for payment have been duly withheld and collected and paid to the proper
governmental

<PAGE>

entity or third party when due. There are no tax liens or claims pending or, to
the Company's Knowledge, threatened against the Company or any Subsidiary or
any of their respective assets or property. Except as described on Schedule
4.11, there are no outstanding tax sharing agreements or other such arrangements
between the Company and any Subsidiary or other corporation or entity.

          4.12 Title to Properties. Except as disclosed in the SEC Filings or as
described on Schedule 4.12, the Company and each Subsidiary has good and
marketable title to all real properties and all other properties and assets
owned by it, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use made or
currently planned to be made thereof by them; and except as disclosed in the SEC
Filings, the Company and each Subsidiary holds any leased real or personal
property under valid and enforceable leases with no exceptions that would
materially interfere with the use made or currently planned to be made thereof
by them.

          4.13 Certificates, Authorities and Permits. The Company and each
Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

          4.14 No Labor Disputes. No material labor dispute with the employees
of the Company or any Subsidiary exists or, to the Company's
Knowledge, is imminent.

          4.15 Intellectual Property.
               ---------------------

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

              (b) All of the licenses and sublicenses and consent, royalty or
other agreements concerning Intellectual Property which are material to the
conduct of the Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted to which the
Company or any Subsidiary is a party or by which any of their assets are bound
(other than generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, "License Agreements") are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company's Knowledge, the other parties thereto,

<PAGE>

enforceable in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally, and there exists no event or
condition which will result in a material violation or breach of or constitute
(with or without due notice or lapse of time or both) a default by the Company
or any of its Subsidiaries under any such License Agreement.

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

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

              (e) The consummation of the transactions contemplated hereby will
not result in the alteration, loss, impairment of or restriction on the
Company's or any of its Subsidiaries' ownership or right to use any of the
Intellectual Property or Confidential Information which is material to the
conduct of the Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted.

              (f) To the Company's Knowledge, as currently used all software
owned by the Company or any of its Subsidiaries and all software licensed from
third parties by the Company or any of its Subsidiaries, (i) is free from any
material defect, bug, virus, or programming, design or documentation error; (ii)
operates and runs in a reasonable and efficient business manner; and (iii)
conforms in all material respects to the specifications and purposes thereof.

<PAGE>

              (g) The Company and its Subsidiaries have taken reasonable steps
to protect the Company's and its Subsidiaries' rights in their Intellectual
Property and Confidential Information. Each employee, consultant and contractor
who has had access to Confidential Information which is material to the conduct
of the Company's and each of its Subsidiaries' respective businesses as
currently conducted or as currently proposed to be conducted has either (i)
executed an agreement to maintain the confidentiality of such Confidential
Information; (ii) executed appropriate agreements that are substantially
consistent with the Company's standard forms thereof or (iii) undertaken similar
safeguards to protect and preserve the confidentiality of all Confidential
Information. Except under confidentiality obligations, to the Company's
Knowledge there has been no material disclosure of any of the Company's or its
Subsidiaries' Confidential Information to any third party.

          4.16 Environmental Matters. Neither the Company nor any Subsidiary is
in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "Environmental Laws"), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, and is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and to the Company's Knowledge there is no pending or threatened
investigation that might lead to such a claim.

          4.17 Litigation. Except as described on Schedule 4.17, there are no
pending actions, suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties; and to the Company's Knowledge,
no such actions, suits or proceedings are threatened or contemplated.

          4.18 Financial Statements. The financial statements included in each
SEC Filing present fairly, in all material respects, the consolidated financial
position of the Company as of the dates shown and its consolidated results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with Canadian generally accepted accounting
principles applied on a consistent basis (except as may be disclosed therein or
in the notes thereto). Except as set forth in the financial statements of the
Company included in the SEC Filings filed prior to the date hereof or as
described on Schedule 4.18, neither the Company nor any of its Subsidiaries has
incurred any liabilities, contingent or otherwise, except those incurred in the
ordinary course of business, consistent (as to amount and nature) with past
practices since the date of such financial statements, none of which,
individually or in the aggregate, have had or could reasonably be expected to
have a Material Adverse Effect.

          4.19 Insurance Coverage. The Company 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 Company and each Subsidiary, and the Company reasonably believes
such insurance coverage to be adequate against all

<PAGE>

liabilities, claims and risks against which it is customary for comparably
situated companies to insure.

          4.20 Compliance with TSX and NASDAQ Continued Listing Requirements.
The Company is in compliance with applicable TSX and NASDAQ continued listing
requirements. There are no proceedings pending or, to the Company's Knowledge,
threatened against the Company relating to the continued listing of the
Company's Common Stock on the TSX or on NASDAQ and the Company has not received
any notice of, nor to the Company's Knowledge is there any basis for, the
delisting of the Common Stock from the TSX or NASDAQ.

          4.21 Brokers and Finders. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company, other than as
described in Schedule 4.21.

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

          4.23 No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.

          4.24 Private Placement. The offer and sale of the Securities to the
Investors as contemplated hereby is exempt from the registration requirements of
the 1933 Act. The offer and sale of the Debentures as contemplated hereby is
exempt from the requirements of the Trust Indenture Act of 1939, as amended.

          4.25 Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective current or
former shareholders, directors, officers, employees, agents or other Persons
acting on behalf of the Company or any Subsidiary, has on behalf of the Company
or any Subsidiary or in connection with their respective businesses: (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.
<PAGE>

          4.26 Transactions with Affiliates. Except as disclosed in SEC Filings
made on or prior to the date hereof or as disclosed on Schedule 4.26, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than as holders of stock options
and/or warrants, and for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

          4.27 Internal Controls. The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

          4.28 Disclosures. Neither the Company nor any Person acting on its
behalf has provided the Investors or their agents or counsel with any
information that constitutes or might constitute material, non-public
information. The written materials delivered to the Investors in connection with
the transactions contemplated by the Transaction Documents do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.

     5.   Representations, Warranties and Covenants of the Investors. Each of
the Investors hereby severally, and not jointly, represents and warrants to, and
covenants with, the Company that:

          5.1 Organization and Existence. The Investor is a validly existing
corporation, limited partnership or limited liability company and has all
requisite corporate, partnership or limited liability company power and
authority to invest in the Securities pursuant to this Agreement.

          5.2 Authorization. The execution, delivery and performance by the
Investor of the Transaction Documents to which such Investor is a party have
been duly authorized and will each constitute the valid and legally binding
obligation of the Investor, enforceable against the Investor in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors' rights generally.

          5.3 Purchase Entirely for Own Account. The Securities to be received
by the Investor hereunder will be acquired for the Investor's own account, not
as nominee or agent, and
<PAGE>

not with a view to the resale or distribution of any part thereof in violation
of the 1933 Act, and the Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same in violation of the
1933 Act. The Investor is not a registered broker dealer or an entity engaged in
the business of being a broker dealer.

          5.4 Investment Experience. The Investor acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.

          5.5 Disclosure of Information. The Investor has had an opportunity to
receive all additional information related to the Company requested by it and to
ask questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the Securities. The
Investor acknowledges receipt of copies of the SEC Filings. Neither such
inquiries nor any other due diligence investigation conducted by the Investor
shall modify, amend or affect the Investor's right to rely on the Company's
representations and warranties contained in this Agreement.

          5.6 Restricted Securities. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. The Investor also
understands that the Debentures and the Warrants have not been and will not be
registered under the 1933 Act or any applicable state securities laws and that
the offer and sale of the Debentures and the Warrants to it is being made in
reliance on an exemption from registration contained in the 1933 Act and
applicable state securities laws based upon the representations of the Investor
contained herein.

          The Investor, by purchasing the Securities, agrees for the benefit of
the Company that if it decides to offer, sell, pledge or otherwise transfer any
of the Securities, such Securities may be offered, sold, pledged or otherwise
transferred only (a) to the Company, (b) outside the United States in accordance
with Rule 903 or Rule 904 of Regulation S under the 1933 Act, if applicable (c)
inside the United States (1) pursuant to the exemption from the registration
requirements under the 1933 Act provided by rule 144 thereunder, if available,
and in accordance with applicable state securities law or (2) in a transaction
that does not otherwise require registration under the 1933 Act or any
applicable state securities law, provided the holder has furnished to the
Company an opinion of counsel of recognized standing to that effect in form and
substance reasonably satisfactory to the Company or (3) pursuant to a
registration statement pursuant to the 1933 Act.

          5.7 Legends. It is understood that, except as provided below,
certificates evidencing such Securities may bear the following or any similar
legend:

               (a) THE SECURITIES REPRESENTED HEREBY (AND THE SECURITIES ISSUED
UPON CONVERSION OR EXERCISE HEREOF) HAVE NOT BEEN
<PAGE>

REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 903 or 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, IF
APPLICABLE (C) INSIDE THE UNITED STATES (1) PURSUANT TO THE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAW
OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE REGISTRATION UNDER THE
U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW, PROVIDED THE HOLDER
HAS FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO
THAT EFFECT IN FORM AND SUBSTANCE, REASONABLY SATISFACTORY TO THE COMPANY, OR
(3) PURSUANT TO A REGISTRATION STATEMENT PURSUANT TO THE U.S. SECURITIES ACT.

               (b) THE HOLDER, BY ITS ACCEPTANCE OF THIS SECURITY, REPRESENTS,
ACKNOWLEDGES, AND AGREES THAT IT WILL NOT AND WILL NOT BE ENTITLED TO, DIRECTLY
OR INDIRECTLY, SELL OR TRANSFER THE SECURITIES INTO CANADA OR TO RESIDENTS OF
CANADA, EXPECT IN COMPLIANCE WITH APPLICABLE CANADIAN SECURITIES LAWS. NO SALE
OR TRANSFER INTO CANADA OR TO A CANADIAN RESIDENT WILL BE REGISTERED BY WORLD
HEART CORPORATION'S TRANSFER AGENT AND ANY ATTEMPT TO EFFECT SUCH A TRANSFER IS
INVALID UNLESS MADE IN COMPLIANCE WITH THE ABOVE-NOTED RESTRICTIONS. UNLESS
PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE [FOUR MONTHS PLUS ONE DAY FROM THE DATE OF
ISSUANCE].

               (c) THE COMMON SHARES UNDERLYING THE WARRANTS OR THE DEBENTURES
REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE;
HOWEVER, THE SAID SECURITIES CAN NOT BE TRADED THROUGH THE FACILITIES OF SUCH
EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON THE TORONTO STOCK EXCHANGE.

               (d) If required by the authorities of any state in connection
with the issuance of sale of the Securities, the legend required by such state
authority.

               (e) Upon the earlier of (i) registration for resale pursuant to
the Registration Rights Agreement and receipt by the Company of the Investor's
written confirmation that such Securities will not be disposed of except in
compliance with the prospectus delivery requirements of the 1933 Act or (ii)
Rule 144(k) becoming available the
<PAGE>

Company shall, upon an Investor's written request, promptly cause certificates
evidencing the Securities to be replaced with certificates which do not the
restrictive legend set forth in paragraph (a) above and Debenture Shares and
Warrant Shares subsequently issued upon the due conversion of the Debentures or
the due exercise of the Warrants, respectively, to not bear the restrictive
legends under Section 5.7(a) provided the provisions of either clause (i) or
clause (ii) above, as applicable, are satisfied with respect to such Debenture
Shares and Warrant Shares. From and after the anniversary of four months and one
day of the Closing, the Company shall, upon an Investor's written request,
promptly cause certificates evidencing the Securities to be replaced with
certificates which do not the restrictive legend set forth in paragraphs (b)
and (c) above and Debenture Shares and Warrant Shares subsequently issued upon
due conversion of the Debentures or due exercise of the Warrants, respectively,
to not bear such the restrictive legends under Sections 5.7(b) and 5.7(c).
Whenever the Company is required to cause unlegended certificates to replace
previously issued legended certificates, if unlegended certificates are not
delivered to an Investor within three (3) Business Days of submission by that
Investor of legended certificate(s) to the Company's transfer agent together
with a representation letter in customary form, the Company shall be solely
responsible for, and shall indemnify the Investor from and against, any and all
Losses (as defined in Section 8.2) (including any Losses resulting from any
buy-in effected by or for the Investor's account) incurred by that Investor as a
result of such delay, and will pay or reimburse such Investor for such Losses
upon demand.

          5.8 Notation on Records. The Investor consents to the Company making a
notation on its records or giving instructions to any transfer agent of the
Securities in order to implement the restrictions on transfer set forth and
described herein.

          5.9 Accredited Investor. The Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.

          5.10 Prohibited Transactions. During the last thirty (30) days prior
to the date hereof, neither such Investor nor any Affiliate of such Investor
which (x) had knowledge of the transactions contemplated hereby, (y) has or
shares discretion relating to such Investor's investments or trading or
information concerning such Investor's investments, including in respect of the
Securities, or (z) is subject to such Investor's review or input concerning such
Affiliate's investments or trading (collectively, "Trading Affiliates") has,
directly or indirectly, effected or agreed to effect any short sale, whether or
not against the box, established any "put equivalent position" (as defined in
Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any
other right (including, without limitation, any put or call option) with respect
to the Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Securities (each, a "Prohibited
Transaction"). Prior to the earliest to occur of (i) the termination of this
Agreement, (ii) the Effective Date or (iii) the Effectiveness Deadline, such
Investor shall not, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in a Prohibited Transaction. Such Investor acknowledges
that the representations, warranties and covenants contained in this Section
5.10 are being made for the benefit of the Investors as well as the Company and
that each of the other Investors shall have an independent right to assert any
claims against such Investor arising out of any breach or violation of the
provisions of this Section 5.10.
<PAGE>

          5.11 Toronto Stock Exchange. The Investor has completed and duly
signed a copy of the Private Placement Questionnaire and Undertaking required
by the TSX attached hereto as Exhibit E_;

          5.12 No General Solicitation or General Advertising. The Investor did
not learn of the investment in the Securities as a result of any general
solicitation or general advertising (as those terms are used in Regulation D
under the 1933 Act).

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

          5.14 Foreign Issuer. The Investor understands and acknowledges that
the Company is not obligated to remain a "foreign issuer" within the meaning of
Regulation S under the 1933 Act.

          5.15 Securities Filings. Each Investor will provide to the Company
upon its reasonable request from time to time such information about the
Investor and its ownership of the Company's securities as the Company is
required to include in its proxy statement, annual report or current reports
filed with the SEC or its information circular, annual information form or
material change reports filed with TSX or Canadian securities regulators."

     6.   Conditions to Closing.
          ---------------------

          6.1 Conditions to the Investors' Obligations. The obligation of the
Investors to purchase the Debentures and the Warrants at the Closing is subject
to the fulfillment to the Investors' satisfaction, on or prior to the Closing
Date, of the following conditions, any of which may be waived by the Investors
agreeing hereunder to purchase a majority of the Debentures and the Warrants
(the "Required Investors"):

              (a) The representations and warranties made by the Company in
Section 4 hereof qualified as to materiality shall be true and correct at all
times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date, and, the representations and warranties made by the Company in Section 4
hereof not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Closing Date.
<PAGE>

              (b) The Company shall have obtained in a timely fashion any and
all consents, permits, approvals, registrations and waivers (including, without
limitation, any required approval of the TSX and NASDAQ) necessary or
appropriate for consummation of the purchase and sale of the Securities and the
consummation of the other transactions contemplated hereby, all of which shall
be in full force and effect.

              (c) The Company shall have entered into one or more subscription
agreements with investors located in Canada that contain terms no more
favourable to the subscriber than the terms of this Agreement (the "Other
Agreements").

              (d) The Company shall have received gross proceeds from the sale
of the Debentures and the Warrants as contemplated hereby and under the Other
Agreements of at least US$12 million.

              (e) The Company shall have executed and delivered the
Registration Rights Agreement and the Company and the warrant agent shall have
executed and delivered the Warrant Indenture.

              (f) No judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or in the other Transaction Documents.

              (g) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (b), (c), (d) and (j) of this Section
6.1.

              (h) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Secretary, dated as of the Closing Date, certifying
the resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the Securities, certifying the current versions of the
articles of incorporation and bylaws of the Company and certifying as to the
signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company.

              (i) The Investors shall have received opinions from White & Case
LLP and McCarthy Tetrault LLP, the Company's counsel, dated as of the Closing
Date, in form and substance reasonably acceptable to the Investors and
addressing such legal matters as the Investors may reasonably request.

              (j) No stop order or suspension of trading shall have been
imposed by the TSX or NASDAQ, the SEC or any other governmental regulatory body
with respect to public trading in the Common Stock.
<PAGE>

          6.2 Conditions to Obligations of the Company. The Company's obligation
to sell and issue the Debentures and the Warrants at the Closing is subject to
the fulfillment to the satisfaction of the Company on or prior to the Closing
Date of the following conditions, any of which may be waived by the Company:

               (a) The representations and warranties made by the Investors in
Section 5 hereof, other than the representations and warranties contained in
Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.10 (the "Investment
Representations"), shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date. The
Investment Representations shall be true and correct in all respects when made,
and shall be true and correct in all respects on the Closing Date with the same
force and effect as if they had been made on and as of said date. The Investors
shall have performed in all material respects all obligations and conditions
herein required to be performed or observed by them on or prior to the Closing
Date.

               (b) The Investors shall have delivered the Purchase Price to the
Company.

               (c) The Investors shall have executed and delivered the
Registration Rights Agreement.

               (d) The Company shall have obtained in a timely fashion any and
all consents, permits, approvals, registrations and waivers (including, without
limitation, any required approval of the TSX and NASDAQ) necessary or
appropriate for consummation of the purchase and sale of the Securities and the
consummation of the other transactions contemplated hereby, all of which shall
be in full force and effect.

          6.3 Termination of Obligations to Effect Closing; Effects.
              -----------------------------------------------------

              (a) The obligations of the Company, on the one hand, and the
Investors, on the other hand, to effect the Closing shall terminate as follows:

                  (i) Upon the mutual written consent of the Company and the
Required Investors;

                  (ii) By the Company if any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment, and shall not have been
waived by the Company;

                  (iii) By the Required Investors if any of the conditions set
forth in Section 6.1 shall have become incapable of fulfillment, and shall not
have been waived by the Required Investors; or

                  (iv) By the Required Investors if the Closing has not
occurred on or prior to October 31, 2004;
<PAGE>

provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party's seeking to
terminate its obligation to effect the Closing.

              (b) In the event of termination by the Company or the Required
Investors of their obligations to effect the Closing pursuant to this Section
6.3, written notice thereof shall forthwith be given to the other parties hereto
and the obligation of all parties to effect the Closing shall be terminated,
without further action by any party. Nothing in this Section 6.3 shall be deemed
to release any party from any liability for any breach by such party of the
terms and provisions of this Agreement or the other Transaction Documents or to
impair the right of any party to compel specific performance by any other party
of its obligations under this Agreement or the other Transaction Documents.

     7.   Covenants and Agreements of the Company.
          ---------------------------------------

          7.1 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of providing for the conversion of the Debentures
and the exercise of the Warrants, such number of shares of Common Stock as shall
from time to time equal the number of shares sufficient to permit the conversion
of the Debentures and the exercise of the Warrants issued pursuant to this
Agreement in accordance with their respective terms.

          7.2 Reports. The Company will furnish to such Investors and/or their
assignees such information relating to the Company and its Subsidiaries as from
time to time may reasonably be requested by such Investors and/or their
assignees; provided, however, that the Company shall not disclose material
nonpublic information to the Investors, or to advisors to or representatives of
the Investors, unless prior to disclosure of such information the Company
identifies such information as being material non-public information and
provides the Investors, such advisors and representatives with the opportunity
to accept or refuse to accept such material nonpublic information for review and
any Investor wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect thereto.

          7.3 No Conflicting Agreements. The Company will not take any action,
enter into any agreement or make any commitment that would conflict or interfere
in any material respect with the obligations to the Investors under the
Transaction Documents.

          7.4 Insurance. The Company shall not materially reduce the insurance
coverages described in Section 4.19.

          7.5 Compliance with Laws. The Company will comply in all material
respects with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.
<PAGE>

          7.6 Listing of Underlying Shares and Related Matters. Promptly
following the date hereof, the Company shall take all necessary action to cause
the Debenture Shares and the Warrant Shares to be listed, subject to issuance,
on the TSX and NASDAQ no later than the Closing Date. Further, if the Company
applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it shall include in such application the
Debenture Shares and the Warrant Shares and will take such other action as is
necessary to cause such Common Stock to be so listed. The Company will use
commercially reasonable efforts to continue the listing and trading of its
Common Stock on the TSX and NASDAQ and, in accordance, therewith, will use
commercially reasonable efforts to comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of such market
or exchange, as applicable.

          7.7 Termination of Covenants. The provisions of Sections 7.2 through
7.5 shall terminate and be of no further force and effect upon the earlier of
(i) mutual consent of the Company and the Required Investors or (ii) the date on
which the Company's obligations under the Registration Rights Agreement to
register or maintain the effectiveness of any registration covering the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) shall terminate.

     8.   Survival and Indemnification.
          ----------------------------

          8.1 Survival. All representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements as of the date hereof and shall survive the
execution and delivery of this Agreement for a period of two (2) years from the
date of this Agreement; provided, however, that the provisions contained in
Section 7 hereof shall survive in accordance therewith.

          8.2 Indemnification. The Company agrees to indemnify and hold harmless
each Investor and its Affiliates and their respective directors, officers,
employees and agents from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement hereof) (collectively, "Losses") to which such
Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of the Company
under the Transaction Documents, and will reimburse any such Person for all such
amounts as they are incurred by such Person.

          8.3 Conduct of Indemnification Proceedings. Promptly after receipt by
any Person (the "Indemnified Person") of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially
<PAGE>

prejudiced by such failure to notify. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless: (i)
the Company and the Indemnified Person shall have mutually agreed to the
retention of such counsel; or (ii) in the reasonable judgment of counsel to such
Indemnified Person representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
but if settled with such consent, or if there be a final judgment for the
plaintiff, the Company shall indemnify and hold harmless such Indemnified Person
from and against any loss or liability (to the extent stated above) by reason of
such settlement or judgment. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, the
Company shall not effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.

     9.   Miscellaneous.
          -------------

          9.1 Successors and Assigns. This Agreement may not be assigned by a
party hereto without the prior written consent of the Company or the Required
Investors, as applicable, provided, however, that an Investor may assign its
rights and delegate its duties hereunder in whole or in part to an Affiliate or
to a third party acquiring some or all of its Securities in a private
transaction without the prior written consent of the Company or the other
Investors, after notice duly given by such Investor to the Company and the other
Investors, provided, that no such assignment or obligation shall affect the
obligations of such Investor hereunder. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

          9.2 Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.

          9.3 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

          9.4 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall
<PAGE>

be deemed given upon receipt of confirmation of complete transmittal, (iii) if
given by mail, then such notice shall be deemed given upon the earlier of (A)
receipt of such notice by the recipient or (B) three days after such notice is
deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall be
deemed given one day after delivery to such carrier. All notices shall be
addressed to the party to be notified at the address as follows, or at such
other address as such party may designate by ten days' advance written notice to
the other party:

                  If to the Company:

                            1 Laser Street
                            Ottawa, Ontario Canada
                            K2E 7V1
                            Attention:  Chief Financial Officer
                            Fax:  (613) 226-4744

                  With a copy to:

                            McCarthy Tetrault LLP
                            Suite 1400
                            40 Elgin Street
                            Ottawa, Ontario
                            K1P 5K6
                            Attention:  Virginia K. Schweitzer, Esq.
                            Fax:  (613) 563-9386

                  If to the Investors:

to the addresses set forth on the signature pages hereto.

          9.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay the
reasonable fees and expenses of counsel to the Investors, not to exceed a total
aggregate amount of $25,000 for all Investors. Such expenses shall be paid not
later than the Closing. The Company shall reimburse the Investors upon demand
for all reasonable out-of-pocket expenses incurred by the Investors, including
without limitation reimbursement of attorneys' fees and disbursements, in
connection with any amendment, modification or waiver of this Agreement or the
other Transaction Documents. In the event that legal proceedings are commenced
by any party to this Agreement against another party to this Agreement in
connection with this Agreement or the other Transaction Documents, the party or
parties which do not prevail in such proceedings shall severally, but not
jointly, pay their pro rata share of the reasonable attorneys' fees and other
reasonable out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings.

          9.6 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the

<PAGE>

Company and the Required Investors. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Securities purchased under this Agreement at the time outstanding, each future
holder of all such securities, and the Company.

          9.7 Publicity. No public release or announcement concerning the
transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or
announcement by the Investors), or Special Situations Fund III, L.P. ("SSF") (in
the case of a release or announcement by the Company) (which consents shall not
be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities
exchange or securities market, in which case the Company or the Investors, as
the case may be, shall allow SSF or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance.

          9.8 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.

          9.9 Entire Agreement. This Agreement, including the Exhibits and the
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.

          9.10 Further Assurances. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

          9.11 Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL.
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of New York without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and
<PAGE>

irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. EACH OF THE PARTIES
HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.

          9.12 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.

                            [signature page follows]

<PAGE>
          IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.

The Company:                WORLD HEART CORPORATION

                            By:
                               ----------------------
                            Name:
                            Title:
<PAGE>

The Investor:

                            By:
                               ----------------------
                            Name:
                            Title:

Aggregate Purchase Price:  US$___________________________________

Address for Notice:
                                                ------------------------------

                                                ------------------------------

                                                ------------------------------

                                                with a copy to, if any:

                                                --------------------------------

                                                --------------------------------

                                                --------------------------------

                                                --------------------------------Exhibit 4.5

                                                                  EXECUTION COPY

                          RESEARCH CAPITAL CORPORATION

                                AGENCY AGREEMENT

September 15, 2004

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

Attention:  Jal Jassawalla, President and Chief Executive Officer

Dear Sirs:

Re:  Private Placement of Debentures and Common Share Purchase Warrants

     Research Capital Corporation (the "Agent") understands that World Heart
Corporation (the "Corporation") desires to issue and sell to purchasers in the
United States and Canada a minimum of US$12,000,000 and a maximum of
US$20,000,000 (the "Offering") of which up to a maximum of US$8,000,000 will be
sold to Purchasers (as defined below) in Canada and Europe (the "Canadian
Offering") of unsecured convertible debentures maturing 60 months from the
Closing Date (subject to earlier redemption as permitted), bearing interest at
the rate of 3% per annum ("Debentures") and common share purchase warrants of
the Corporation at the rate of one warrant for each US$1.25 principal amount of
Debentures (each, a "Warrant" and, collectively, the "Warrants"). The Debentures
shall be convertible into common shares of the Corporation ("Common Shares") at
the rate of US$1.25 principal amount of Debentures per Common Share at any time
and from time to time, in whole or in part, in minimum increments of US$100,000
until the earlier of 5:00 p.m. (Ottawa Time) on the date specified for
redemption and the date which is 60 months from the Closing Date. Each Warrant
will entitle the holder to purchase one Common Share (a "Warrant Share"), at a
price of US$1.55 per common share for a period of 60 months from the Closing
Date.

     The minimum principal amount of Debentures which may be purchased by a
Purchaser shall be US$500,000.

     The form of agreement between the Corporation and each Purchaser providing
for the subscription by each Purchaser of Debentures (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:

<PAGE>
                                      - 2 -

     "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;

     "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 TSX;

     "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;

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

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

     "Closing" means the closing of the Canadian Offering of the Debentures on
     the Closing Date;

     "Closing Date(s)" means September 15, 2004 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;

<PAGE>
                                      - 3 -

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

     "Corporation's Counsel" means McCarthy Tetrault LLP;

     "Debenture Shares" means the Common Shares issuable upon conversion of the
     Debentures;

     "Debentures" means the unsecured convertible debentures of the Corporation,
     denominated in United States dollars, as described in the Subscription
     Agreement;

     "Designated Provinces" means British Columbia and Ontario;

     "Financial Information" means:

     (a)  the audited consolidated financial statements of the Corporation for
          the period ending December 31, 2003 consisting of the audited
          consolidated balance sheets, 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, 2004 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 Debentures to Purchasers pursuant to the Canadian 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;

     "Interest" means the interest at the rate of 3% per annum (accrued daily
     but not compounded) calculated on the outstanding principal amount of the
     Debentures;

     "Interest Shares" means the Common Shares issuable upon the conversion of
     the Interest under the terms and conditions set forth in the Debentures;

<PAGE>
                                      - 4 -

     "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 would reasonably be expected to have a
     significant effect on the market price or value of any of the Corporation's
     securities;

     "Minimum Offering" has the meaning ascribed to such term in Section 2.1;

     "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;

     "NASDAQ" means the NASDAQ National Market System, its successors and
     assigns;

     "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 Debentures, the
     Warrants, the Debenture Shares and the 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(k);

<PAGE>
                                     - 5 -

     "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 Debentures and the Warrants 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 TSX and NASDAQ 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 Debentures and
     Warrants pursuant to the Canadian Offering;

     "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;

     "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;

     "Subscription Agreements" means, collectively, the subscription agreements
     entered into between the Purchasers and the Corporation in respect of the
     purchase of Debentures and Warrants, 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 NASDAQ is open for trading and at
     least one board lot of the Common Shares has traded on NASDAQ;

     "Trading Condition" has the meaning ascribed to such term in Section 2.1;

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

     "TSX" means the Toronto Stock Exchange, its successors and assigns;

<PAGE>
                                     - 6 -

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

     "Underlying Securities" means the Debenture Shares issuable on the
     conversion of the Debentures and the Warrant Shares issuable on the
     exercise of the Warrants, as applicable;

     "U.S. Offering" means the United States offering concurrently being
     conducted pursuant to the terms of an engagement letter dated August 26,
     2004 pursuant to which the Corporation appointed Roth Capital Partners as
     exclusive placement agent for a United States offering of up to
     US$20,000,000;

     "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 US$1.55 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 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.

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)
     Schedule 7.1(h)
     Schedule 7.1(k)

<PAGE>
                                     - 7 -

     Schedule 7.1(n)
     Schedule 7.1(o)
     Schedule 7.1(q)
     Schedule 7.1(z)
     Schedule 7.1(l)
     Schedule 7.1(mm)
     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 in the Designated Provinces and Europe a maximum of US $8,000,000
principal amount of Debentures at par, and to use its commercially reasonable
best efforts to solicit and procure Purchasers of the Debentures on behalf of
the Corporation. Purchasers of Debentures will be entitled to receive Warrants
at the rate of one Warrant per US $1.25 principal amount of Debentures. The
Debentures shall be convertible at any time and from time to time, in whole or
in part in minimum increments of US$100,000, until the earlier of 5:00 p.m.
(Ottawa Time) on the date specified for redemption and the date which is 60
months from the Closing Date into Common Shares at the rate of one Common Share
per US$1.25 principal amount of Debentures. The Interest (as herein defined)
attributable to the principal amount of the Debenture converted shall
automatically be converted into Common Shares at a conversion price to be
determined based on the five day weighted trading average of the Common Shares
on NASDAQ ending on the trading day immediately prior to the date of conversion.
The Debentures shall bear Interest at the rate of 3% per annum commencing on the
issue date. Interest shall accrue daily and be payable on redemption or maturity
to the extent the Interest has not been converted as provided for above.
Interest shall not be paid on accrued interest. The Debentures shall mature on
the date which is 60 months from the Closing Date and shall be redeemable by the
Corporation at any time should the Common Shares trade at or above US$3.00
(subject to adjustment in accordance with the Debentures) for 20 consecutive
Trading Days. No more than 20% of the aggregate principal amount of the
Debentures then held by the debentureholders plus accrued interest attributable
thereto may be redeemed in any three month period. The definitive terms and
conditions of the Debentures will be set forth in the Debenture Certificates.
The Purchaser shall receive one Common Share purchase warrant (a "Warrant") per
US$1.25 principal amount of Debentures purchased, each Warrant entitling the
holder at any time until 5:00 p.m. (Ottawa Time) on the date which is 60 months
from the Closing Date to purchase one Common Share (a "Warrant Share") for a
purchase price of US$1.55 per Common Share (subject to adjustment in accordance
with the Warrant Indenture). The definitive terms and conditions of the Warrants
will be set forth in the Warrant Certificates and in the Warrant Indenture. The
Warrants shall be callable by the Corporation for cash exercise only at any time
should the Common Shares trade at or above US$4.50 for 20 consecutive Trading
Days (prior to any share splits), however, the Corporation may only call-in a
maximum of 20% of the total outstanding Warrants during any three month period.

<PAGE>
                                     - 8 -

The Agent acknowledges that the Canadian Offering shall be done concurrently
with the U.S. Offering and that the minimum offering shall be US$12,000,000 (the
"Minimum Offering") and the aggregate maximum principal amount of Debentures to
be sold pursuant to the Offering shall be US $20,000,000.

If the amount raised between Roth Capital Partners pursuant to the U.S. Offering
and the Agent pursuant to the Canadian Offering exceeds $US 8 million in the
aggregate, then the Agent shall be protected with respect to its book of
Purchasers up to an aggregate amount of $US 4 million.

2.2  It is understood and agreed by the parties that the Agent shall act as
agent only and at no time shall the Agent have any obligation whatsoever to
purchase any Debentures. 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 Debentures may
be accepted or rejected, in whole or in part, by the Corporation acting
reasonably.

2.4  The Corporation agrees that the Debentures shall be offered for sale solely
through the Agent in accordance with this Agreement, except those Debentures
offered for sale in a Designated Province through members of the Selling Group
acting as sub-agents qualified to trade in Debentures 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 Debentures
in such a manner as to require registration of the Debentures, or the filing of
a prospectus with respect to the Debentures, 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 Debentures 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 or Europe shall
purchase Debentures under one or more Private Placement Exemptions or other
applicable exemptions so that the purchases of the Debentures 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 Debentures to the Purchasers, including,
without limitation, by filing within the periods stipulated under Applicable
Securities Laws, and at the

<PAGE>
                                     - 9 -

Corporation's expense, all private placement forms required to be filed by the
Corporation and the Purchasers, respectively, in connection with the Canadian
Offering and paying all filing fees required to be paid in connection therewith
so that the distribution of the Debentures 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 Canadian 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 Debentures.

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 Debentures 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
Debentures 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 Debentures 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 Debentures; and (v) not make any
representations or warranties with respect to the Corporation or the Debentures,
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 Debentures, acting as financial advisor to the Corporation in
respect of the sale of the Debentures, 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 6% of the amount of the Gross Proceeds and (b)
Common Share purchase warrants (the "Agent's Warrants") exercisable at any time
up to 60 months following the Closing Date entitling the Agent to purchase, at a
price of US $1.55 per Common Share (the "Agent's Warrant Shares"), that number
of Common Shares equal to 12% of the principal amount of the Debentures divided
by US $1.25 sold pursuant to the Canadian Offering. The issuance of Agent's
Warrants shall be subject to receipt of the necessary regulatory approvals.

5.2  The parties confirm that in the event the Agent appoints other registered
dealers as sub-agents to assist in the Canadian Offering, then such sub-agents
shall be entitled in place of the

<PAGE>
                                     - 10 -

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.   [Intentionally Deleted]

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 Debentures shall be used by the
          Corporation 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 Debentures 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 TSX and NASDAQ 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 Debenture Shares issuable on the conversion of the Debenture, the
          Common Shares issuable on the conversion of the Interest and the
          Warrant Shares and the Agent's Warrant Shares issuable on the exercise
          of the Warrants and the Agent's Warrants, as the case may be, will be
          listed and posted for trading on the TSX and NASDAQ upon their issue;

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

<PAGE>
                                     - 11 -

     (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)  Schedule 7.1(h) sets forth each of the Corporation's Subsidiaries.
          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 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, an unlimited number of preferred shares issuable in series, of
          which, as of

<PAGE>
                                     - 12 -

          September 14, 2004, 15,273,736 Common 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 31, 2003:

          (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)there has 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, 2004, 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 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

<PAGE>
                                     - 13 -

          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 Debentures, the Warrants, 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 Debentures, and the
          certificates representing the Warrants by the Corporation, the
          performance and compliance with the terms of this Agreement, the
          Subscription Agreements, the Debentures, and the Warrants, the offer
          and sale of the Debentures and the Warrants and the issuance of 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,
          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 issued and outstanding Common Shares are listed and posted for
          trading on the TSX and NASDAQ, the Corporation is not in default or
          breach of any of the rules, policies or by-laws of the TSX or NASDAQ,
          no order ceasing or suspending trading in any securities of the
          Corporation or prohibiting the sale of the Debentures, the Warrants,
          the issuance of the Agent's Warrants or the

<PAGE>
                                     - 14 -

          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;

     (v)  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 Debentures, the Warrants,
          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 TSX and NASDAQ (subject
          only to the usual filing requirements), which consent and approval
          shall have been obtained prior to the Time of Closing;

     (w)  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;

     (x)  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;

     (y)  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;

     (z)  except as set out in Schedule 7.1(z) 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
<PAGE>
                                     - 15 -

          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;

     (aa) 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;

     (bb) 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 TSX 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;

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

     (dd) by the Closing Time, the Debentures, the Warrants and the Agent's
          Warrants will be created and issued and the Debenture Shares, the
          Interest Shares, the Warrant Shares and the Agent's Warrant Shares
          will be allotted and reserved for issue upon the conversion of the
          Debentures or the exercise of the Warrants or the Agent's Warrants, as
          the case may be, and, when issued upon the conversion of the
          Debentures, the conversion of the Interest or the exercise of the
          Warrants, as the case may be, in accordance with their respective
          terms, will be fully paid and non-assessable Common Shares of the
          Corporation;

     (ee) the offering and sale of the Debentures, 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

<PAGE>
                                     - 16 -

          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;

     (ff) this Agreement, the Subscription Agreements, the Debentures, 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 Debentures and the Warrants (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 TSX and NASDAQ, 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;

     (gg) the Corporation has the power and authority to issue the Debentures
          and the Warrants, and at the Time of Closing,

          (i)  the Debentures will be duly and validly authorized and created
               upon receipt of the purchase price for the Debentures, 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 Debentures, will be
               duly and validly issued and outstanding and will constitute valid
               and binding obligations of the Corporation in accordance with
               their terms; and

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

     (hh) 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

<PAGE>
                                     - 17 -

          (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;

     (ii) 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;

     (jj) 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;

     (kk) 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;

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

          (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;

          (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

<PAGE>
                                     - 18 -

          (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;

     (mm) 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 (mm) or which, to the
          knowledge of the Corporation, has been incurred by the Corporation or
          its Subsidiaries since June 30, 2004 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;

     (nn) 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

     (oo) any press release relating to the Canadian 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.

8.   Conditions to Purchase Obligation

8.1  The obligations of the Purchaser to complete the purchase of the Debentures
shall be conditional upon accepted subscriptions or purchase agreements by the
Corporation for an amount not less than the Minimum Offering. In addition, the
following are conditions of the Purchasers' obligations to close the purchase of
the Debentures 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:
<PAGE>
                                     - 19 -

     (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 shareholders of the Corporation, the Securities Commissions and
          the TSX and NASDAQ, required to be made or obtained by the Corporation
          in connection with the Canadian 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 Debenture Shares, the Interest Shares, the Warrant Shares and the
          Agent's Warrant Shares shall have been accepted for and/or reserved
          for listing by the TSX and NASDAQ, subject to the usual conditions and
          payment of the applicable additional listing fees to the TSX and
          NASDAQ

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

     (d)  as at the Closing Date, the Corporation will deliver a certificate
          addressed to the Agent and to the Purchasers, signed by either its
          Chief Executive Officer or Chief Financial 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, 2004, which has not been generally disclosed;

          (ii) since June 30, 2004, 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;

          (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 Debentures, the Warrants, the Agent's
               Warrants and the Underlying Securities) has been issued or made
               by any stock exchange, securities

<PAGE>
                                     - 20 -

               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 Debentures, the Warrants, the
               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.

     (e)  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;

     (f)  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

     (g)  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.
<PAGE>
                                     - 21 -

9.   Closing

9.1  The Canadian Offering will be completed on the Closing Date at the offices
of Fraser Milner Casgrain LLP, 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 Debentures, the 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 11.2).

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
obligations of the Purchasers) under this Agreement to purchase the Debentures,
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 Debentures, the 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

<PAGE>
                                     - 22 -

          Commission, the TSX or NASDAQ 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 TSX or NASDAQ, 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
          Debentures 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
          Debentures or Common Shares;

     (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 Debentures 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 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, 11.2, 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

<PAGE>
                                     - 23 -

including, without limitation, any act of the Agent related to the Canadian
Offering of the Debentures 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, 11.2, 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 11.2 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 30, 2004, 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, 11.2 and 13 of this Agreement.

11.  Expenses

11.1 The Corporation shall pay all costs and expenses incurred in connection
with the Canadian 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 Canadian
Offering including all ancillary work completed prior to the execution of the
Letter Agreement 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 Canadian 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 portion of the Advance will be
returned to the Corporation upon the termination of this Agreement.
<PAGE>
                                     - 24 -

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
Canadian 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 Debentures or the distribution of the
          Debentures, 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 Canadian
          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 11.2 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>
                                     - 25 -

     (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>
                                     - 26 -

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 11.2 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 Debentures and shall continue in full force and effect for the
benefit of the Purchasers for a period of twelve months following the

<PAGE>
                                     - 27 -

Closing 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 11.2 or Section 13, as applicable
of this Agreement.

16.  Restrictions on Offerings

16.1 Other than in connection with the Canadian 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>
                                     - 28 -

          Attention:  Jal Jassawalla
          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: Rob Wilson
          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 Canadian Offering, including the Letter
Agreement dated August 25, 2004.
<PAGE>
                                     - 29 -

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>
                                     - 30 -

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/ Robert Wilson
     -------------------------------------------
     Name:     Robert Wilson
     Title:    Vice President, 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/ Jal Jassawalla
     -------------------------------------------
     Name:     Jal Jassawalla
     Title:    President and Chief Executive Officer

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