Document:

EXHIBIT 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and
entered into as of January 21, 2010, by and among World Heart Corporation,
a Delaware corporation (the “Company”), and the several purchasers signatory hereto (each an “Investor”
and collectively, the “Investors”).

 

This Agreement is made pursuant to the Securities
Purchase Agreement, dated as of January 21, 2010, between the Company and
each Purchaser (the “Purchase Agreement”).

 

The parties hereby agree as follows:

 

1.     Certain Definitions.

 

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

 

“Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close
under the applicable laws of, or are in fact closed in, the State of New York.

 

“Common Stock” means the Company’s Common
Stock, par value $0.001 per share, and any securities into which such shares
may hereinafter be reclassified.

 

“Filing Deadline” means, with respect to the Registration
Statement required to be filed pursuant to Section 2(a), the 60th calendar
day following the Closing Date, provided, however, that if the Filing Deadline
falls on a Saturday, Sunday or other day that the Commission is closed for
business, the Filing Deadline shall be extended to the next business day on
which the Commission is open for business.

 

“Investors” means, unless the context otherwise
indicates, the parties listed on the signature pages hereto as “Investors”
and any Affiliate or permitted transferee of any of them who is a subsequent
holder of the Registrable Securities.

 

“Liquidated Damages Amount” of each Investor is
$.001 multiplied by the number of Registrable Securities held by such Investor
from time to time.

 

“Prospectus” means (i) the prospectus
included in any Registration Statement, as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and by all
other amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus, and (ii) any
“free writing prospectus” as defined in Rule 405 under the 1933 Act.

 

“Register,” “registered” and “registration”
refer to a registration made by preparing and filing a Registration Statement
or similar document in compliance with the 1933 Act (as defined 

 

 

below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.

 

“Registrable Securities” means (i) the
shares of Common Stock acquired by the Investors pursuant to the Purchase
Agreement and (ii) any other securities issued or issuable with respect to
or in exchange for Registrable Securities; provided, that, a security shall
cease to be a Registrable Security upon (A) sale pursuant to a
Registration Statement or Rule 144 under the 1933 Act, or (B) such
security becoming eligible for sale without notice or restriction (including
without limitation any restriction relating to the availability of current
public information about the Company and any volume restrictions) by the
Investors pursuant to Rule 144.

 

“Registration Statement” means any registration
statement of the Company filed under the 1933 Act that covers the resale of any
of the Registrable Securities pursuant to the provisions of this Agreement,
amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.

 

“Required Investors” means (i) each
Investor holding 20% or more of the Registrable Securities and (ii) the
Investors holding a majority of the Registrable Securities.

 

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

 

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

 

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

 

2.     Registration.

 

(a)           Registration
Statements.

 

(i)            Promptly following
the closing of the purchase and sale of the securities contemplated by the
Purchase Agreement (the “Closing Date”) but no later than Filing Deadline, the
Company shall prepare and file with the SEC one Registration Statement on Form S-3
(or, if the Company is not then eligible to use Form S-3 to register the
resale of the Registrable Securities, on such form of registration statement as
is then available to effect a registration for resale of the Registrable
Securities), covering the resale of the Registrable Securities.  Subject to any SEC comments, such
Registration Statement shall include the plan of distribution attached hereto
as Exhibit A; provided, however, that no Investor shall be named as
an “underwriter” in the Registration Statement without the Investor’s prior
written consent.  Such Registration
Statement also shall cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional
shares of Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities.  Such Registration Statement shall not include
any shares of Common Stock or other securities for the account of any holder
other than the Investors without the prior written consent of the Required
Investors.  The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided 

 

 

in accordance with Section 3(c) to
the Investors and their counsel prior to its filing or other submission.  If a Registration Statement covering the
Registrable Securities is not filed with the SEC on or prior to the Filing
Deadline, the Company will make payments to each Investor, as liquidated
damages and not as a penalty, in an amount equal to such Investor’s Liquidated
Damages Amount for each 30-day period (or pro rata for any portion thereof)
following the Filing Deadline for which no Registration Statement is filed with
respect to such Registrable Securities. The amounts payable as liquidated
damages pursuant to this paragraph shall be paid monthly within three (3) Business
Days of the last day of each 30-day period following the Filing Deadline.  Such payments shall constitute the Investors’
exclusive monetary remedy for such events, but shall not affect the right of
the Investors to seek injunctive relief. 
Such payments shall be made to each Investor in cash.

 

(b)           Expenses.  The Company will pay all expenses associated
with each registration, including filing and printing fees, the Company’s
counsel and accounting fees and expenses, costs associated with clearing the
Registrable Securities for sale under applicable state securities laws, listing
fees, reasonable fees and expenses of counsel to the Investors not to exceed
$25,000 in the aggregate, and the Investors’ reasonable expenses in connection
with the registration, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold.

 

(c)           Effectiveness.

 

(i)            The Company shall
use commercially reasonable best efforts to have the Registration Statement
declared effective as soon as practicable. 
The Company shall notify the Investors by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24) hours, after
any Registration Statement is declared effective and shall simultaneously provide
the Investors with copies of any related Prospectus to be used in connection
with the sale or other disposition of the securities covered thereby.  If (A)(x) a Registration Statement
covering the Registrable Securities is not declared effective by the SEC prior
to the earliest of (i) five (5) Business Days after the SEC shall
have informed the Company that no review of the Registration Statement will be
made or that the SEC has no further comments on the Registration Statement or (ii) the
90th day after the Filing Deadline, or (B) after
a Registration Statement has been declared effective by the SEC, sales cannot
be made pursuant to such Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company’s failure to
update the Registration Statement), but excluding any Allowed Delay (as defined
below) or the inability of any Investor to sell the Registrable Securities
covered thereby due to market conditions, then the Company will make payments
to each Investor, as liquidated damages and not as a penalty, in an amount
equal to such Investor’s Liquidated Damages Amount for each 30- day period (or
pro rata for any portion thereof) following the date by which such Registration
Statement should have been effective (the “Blackout Period”).  Such payments shall constitute the Investors’
exclusive monetary remedy for such events, but shall not affect the right of
the Investors to seek injunctive relief. 
The amounts payable as liquidated damages pursuant to this paragraph
shall be paid monthly within three (3) Business Days of the last day of
each 30-day period following the commencement of the Blackout Period until the
termination of the Blackout Period.  Such
payments shall be made to each Investor in cash.

 

 

(ii)           For not more than
twenty (20) consecutive days, and for not more than an aggregate of forty-five
(45) days in any twelve (12) month period, the Company may suspend the use of
any Prospectus included in any Registration Statement contemplated by this Section in
the event that the Company determines in good faith that such suspension is
necessary (A) to delay the disclosure of material non-public information
concerning the Company, the disclosure of which at the time would be, in the
good faith opinion of the Company, materially detrimental to the Company or (B) to
amend or supplement the affected Registration Statement or the related
Prospectus so that such Registration Statement or Prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the case of the Prospectus in light of the circumstances under which they were
made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly
(a) notify each Investor in writing of the commencement of and the reasons
for an Allowed Delay, but shall not (without the prior written consent of an
Investor) disclose to such Investor any material non-public information giving
rise to an Allowed Delay, (b) advise the Investors in writing to cease all
sales under the Registration Statement until the end of the Allowed Delay and (c) use
commercially reasonable best efforts to terminate an Allowed Delay as promptly
as practicable.

 

(d)           Rule 415; Cutback  If at any time the SEC takes the position
that the offering of some or all of the Registrable Securities in a
Registration Statement is not eligible to be made on a delayed or continuous
basis under the provisions of Rule 415 under the 1933 Act or requires any
Investor to be named as an “underwriter”, the Company shall use its
commercially reasonable best efforts to persuade the SEC that the offering
contemplated by the Registration Statement is a valid secondary offering and
not an offering “by or on behalf of the issuer” as defined in Rule 415 and
that none of the Investors is an “underwriter”. 
The Investors shall have the right to participate or have their counsel
participate in any meetings or discussions with the SEC regarding the SEC’s
position and to comment or have their counsel comment on any written submission
made to the SEC with respect thereto.  No
such written submission shall be made to the SEC to which the Investors’
counsel reasonably objects.  In the event
that, despite the Company’s commercially reasonable best efforts and compliance
with the terms of this Section 2(d), the SEC refuses to alter its
position, the Company shall (i) remove from the Registration Statement
such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree
to such restrictions and limitations on the registration and resale of the
Registrable Securities as the SEC may require to assure the Company’s
compliance with the requirements of Rule 415 (collectively, the “SEC
Restrictions”); provided, however, that the Company shall not agree to name any
Investor as an “underwriter” in such Registration Statement without the prior
written consent of such Investor.  Any
cut-back imposed on the Investors pursuant to this Section 2(d) shall
be allocated among the Investors on a pro rata basis, unless the SEC
Restrictions otherwise require or provide. 
No liquidated damages shall accrue as to any Cut Back Shares until such
date as the Company is able to effect the registration of such Cut Back Shares
in accordance with any SEC Restrictions (such date, the “Restriction
Termination Date” of such Cut Back Shares). 
From and after the Restriction Termination Date applicable to any Cut
Back Shares, all of the provisions of this Section 2 (including the
liquidated damages provisions) shall again be applicable to such Cut Back
Shares; provided, however, that (i) the Filing Deadline for the
Registration Statement including such Cut Back Shares shall be ten (10) Business
Days after such Restriction Termination Date, and (ii) the date by which
the Company is required to obtain effectiveness with respect to such Cut Back
Shares under Section 2(c) shall 

 

 

be tolled for a period equal
to the number of days elapsed from the date the Registration Statement
initially including such Cut Back Shares was first filed with the SEC and the
Restriction Termination Date applicable to such Cut Back Shares.

 

(e)           Right to Piggyback Registration.

 

(i)            If at any time following the date of
this Agreement that any Registrable Securities remain outstanding (A) there
is not one or more effective Registration Statements covering all of the
Registrable Securities and (B) the Company proposes for any reason to
register any shares of Common Stock under the 1933 Act (other than pursuant to
a registration statement on Form S-4 or Form S-8 (or a similar or
successor form)) with respect to an offering of Common Stock by the Company for
its own account or for the account of any of its stockholders, it shall at each
such time promptly give written notice to the holders of the Registrable
Securities of its intention to do so (but in no event less than thirty (30)
days before the anticipated filing date) and, to the extent permitted under the
provisions of Rule 415 under the 1933 Act, include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within fifteen (15) days after receipt
of the Company’s notice (a “Piggyback Registration”).  Such notice shall offer the holders of the
Registrable Securities the opportunity to register such number of shares of
Registrable Securities as each such holder may request and shall indicate the
intended method of distribution of such Registrable Securities.

 

(ii)           Notwithstanding the foregoing, (A) if
such registration involves an underwritten public offering, the Investors must
sell their Registrable Securities to, if applicable, the underwriter(s) at
the same price and subject to the same underwriting discounts and commissions
that apply to the other securities sold in such offering (it being acknowledged
that the Company shall be responsible for other expenses as set forth in Section 2(b))
and subject to the Investors entering into customary underwriting documentation
for selling stockholders in an underwritten public offering, and (B) if,
at any time after giving written notice of its intention to register any
Registrable Securities pursuant to Section 2(e)(i) and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to cause such
registration statement to become effective under the 1933 Act, the Company
shall deliver written notice to the Investors and, thereupon, shall be relieved
of its obligation to register any Registrable Securities in connection with
such registration; provided, however, that nothing contained in this Section 2(e)(ii) shall
limit the Company’s liabilities and/or obligations under this Agreement,
including, without limitation, the obligation to pay liquidated damages under
this Section 2.

 

3.   Company
Obligations.  The Company will use
commercially reasonable best efforts to effect the registration of the
Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, as expeditiously as possible:

 

(a)           use commercially
reasonable best efforts to cause such Registration Statement to become
effective and to remain continuously effective for a period that will terminate
upon the earlier of (i) the date on which all Registrable Securities
covered by such Registration Statement as amended from time to time, have been
sold, and (ii) the date on which 

 

 

all Registrable Securities
covered by such Registration Statement may be sold without notice or
restriction pursuant to Rule 144, including, without limitation, any
restriction relating to the availability of current public information about
the Company and any volume restrictions (the “Effectiveness Period”), and
advise the Investors in writing when the Effectiveness Period has expired;

 

(b)           prepare and file
with the SEC such amendments and post-effective amendments to the Registration
Statement and the Prospectus as may be necessary to keep the Registration
Statement effective for the Effectiveness Period and to comply with the
provisions of the 1933 Act and the 1934 Act with respect to the distribution of
all of the Registrable Securities covered thereby;

 

(c)           provide copies to
and permit counsel designated by the Investors to review each Registration
Statement and all amendments and supplements thereto no fewer than seven (7) days
prior to their filing with the SEC and not file any document to which such
counsel reasonably objects;

 

(d)           furnish to the
Investors and their legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but
not later than two (2) Business Days after the filing date, receipt date
or sending date, as the case may be) one (1) copy of any Registration
Statement and any amendment thereto, each preliminary prospectus and Prospectus
and each amendment or supplement thereto, and each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment),
and (ii) such number of copies of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as each Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor that are covered by the
related Registration Statement;

 

(e)           use commercially
reasonable best efforts to (i) prevent the issuance of any stop order or
other suspension of effectiveness and, (ii) if such order is issued,
obtain the withdrawal of any such order at the earliest possible moment;

 

(f)            prior to any public
offering of Registrable Securities, use commercially reasonable best efforts to
register or qualify or cooperate with the Investors and their counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
requested by the Investors and do any and all other commercially reasonable
acts or things necessary or advisable to enable the distribution in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(f), (ii) subject itself to general
taxation in any jurisdiction where it would not otherwise be so subject but for
this Section 3(f), or (iii) file a general consent to service of
process in any such jurisdiction;

 

 

(g)           use commercially
reasonable best efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;

 

(h)           immediately notify
the Investors, at any time prior to the end of the Effectiveness Period, upon
discovery that, or upon the happening of any event as a result of which, the
Prospectus includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder a supplement
to or an amendment of such Prospectus as may be necessary so that such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and

 

(i)            otherwise use
commercially reasonable best efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, including, without
limitation, Rule 172 under the 1933 Act, file any final Prospectus,
including any supplement or amendment thereof, with the SEC pursuant to Rule 424
under the 1933 Act, promptly inform the Investors in writing if, at any time
during the Effectiveness Period, the Company does not satisfy the conditions
specified in Rule 172 and, as a result thereof, the Investors are required
to deliver a Prospectus in connection with any disposition of Registrable
Securities and take such other actions as may be reasonably necessary to
facilitate the registration of the Registrable Securities hereunder; and make
available to its security holders, as soon as reasonably practicable, but not
later than the Availability Date (as defined below), an earnings statement
covering a period of at least twelve (12) months, beginning after the effective
date of each Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the 1933 Act, including Rule 158
promulgated thereunder (for the purpose of this subsection 3(i), “Availability
Date” means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if
such fourth fiscal quarter is the last quarter of the Company’s fiscal year, “Availability
Date” means the 90th day after the end of such fourth fiscal quarter).

 

(j)            With a view to making available to
the Investors the benefits of Rule 144 (or its successor rule) and any
other rule or regulation of the SEC that may at any time permit the
Investors to sell shares of Common Stock to the public without registration,
the Company covenants and agrees to:  (i) make
and keep public information available, as those terms are understood and
defined in Rule 144, until the earlier of (A) six months after such
date as all of the Registrable Securities may be sold without restriction
(including without limitation any restriction relating to the availability of
current public information about the Company) by the holders thereof pursuant
to Rule 144 or any other rule of similar effect or (B) such date
as all of the Registrable Securities shall have been resold; (ii) file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1934 Act; and (iii) furnish to each Investor upon request,
as long as such Investor owns any Registrable Securities, (A) a written
statement by the Company that it has complied with the reporting requirements
of the 1934 Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, and (C) such other information as
may be reasonably requested in order to 

 

 

avail such Investor of any rule or
regulation of the SEC that permits the selling of any such Registrable
Securities without registration.

 

4.             [RESERVED]

 

5.     Obligations of the Investors.

 

(a)           Each Investor shall
furnish in writing to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect
the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably
request.  At least five (5) Business
Days prior to the first anticipated filing date of any Registration Statement,
the Company shall notify each Investor of the information the Company requires
from such Investor in connection with the filing of the Registration
Statement.  The Company shall be obligated
to include as a selling stockholder in such Registration Statement each
Investor that provides such information to the Company at least two (2) Business
Days prior to the first anticipated filing date of such Registration Statement
and the Company shall not be obligated to register the Registrable Securities
of any Investor that does not provide such information by such date.

 

(b)           Each Investor, by
its acceptance of the Registrable Securities agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities from such Registration Statement.

 

(c)           Each Investor agrees
that, upon receipt of any notice from the Company of either (i) the
commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the
happening of an event pursuant to Section 3(h) hereof, such Investor
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities, until the
Investor is advised by the Company that such dispositions may again be made.

 

6.     Indemnification.

 

(a)           Indemnification
by the Company.  The Company will
indemnify and hold harmless each Investor and its officers, directors, members,
employees and agents, successors and assigns, and each other person, if any,
who controls such Investor within the meaning of the 1933 Act, against any
losses, claims, damages, liabilities or expenses (including reasonable attorney’s
fees), joint or several, to which they may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities or expenses
(or actions in respect thereof) arise out of or are based upon: (i) any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, any preliminary Prospectus or final Prospectus, or
any amendment or supplement thereof, or the omission or alleged omission to
state a material fact required to be stated or necessary to make the statements
therein misleading; (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed 

 

 

in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under
the securities laws thereof (any such application, document or information
herein called a “Blue Sky Application”); (iii) the omission or alleged
omission to state in a Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not misleading; (iv) any
violation by the Company or its agents of any rule or regulation
promulgated under the 1933 Act applicable to the Company or its agents and
relating to action or inaction required of the Company in connection with such
registration; or (v) any failure to register or qualify the Registrable
Securities included in any such Registration Statement in any state where the
Company or its agents has affirmatively undertaken or agreed in writing that
the Company will undertake such registration or qualification on an Investor’s
behalf and will reimburse such Investor, and each such officer, director, member,
employee and agent, successors and assigns, and each such controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to
the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished by such
Investor or any such controlling person in writing specifically for use in such
Registration Statement or Prospectus.

 

(b)           Indemnification
by the Investors.  Each Investor
agrees, severally but not jointly, to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors, officers,
employees, stockholders and each person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages, liabilities and
expense (including reasonable attorneys’ fees) resulting from any untrue
statement of a material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary Prospectus or
amendment or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing by such Investor
to the Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto. 
In no event shall the liability of an Investor be greater in amount than
the dollar amount of the proceeds (net of all expense paid by such Investor in
connection with any claim relating to this Section 6, the amount of any
damages such Investor has otherwise been required to pay by reason of such
untrue statement or omission and any underwriting discounts and commissions)
received by such Investor upon the sale of the Registrable Securities included
in the Registration Statement giving rise to such indemnification obligation.

 

(c)           Conduct of
Indemnification Proceedings.  Any
person entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party; provided that any person entitled to indemnification hereunder
shall have the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at
the expense of such person unless (a) the indemnifying party has agreed to
pay such fees or expenses, or (b) the indemnifying party shall have failed
to assume the defense of such claim and employ counsel reasonably satisfactory
to such person or (c) in the reasonable judgment of any such person, based
upon written advice of its counsel, a conflict of 

 

 

interest exists between such
person and the indemnifying party with respect to such claims (in which case,
if the person notifies the indemnifying party in writing that such person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such person); and provided, further, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation.  It is understood that the indemnifying party
shall not, in connection with any single proceeding in the same jurisdiction,
be liable for fees or expenses of more than one separate firm of attorneys at
any time for all indemnified parties.  No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such claim or litigation.

 

(d)           Contribution.  If for any reason the indemnification
provided for in the preceding paragraphs (a) and (b) is unavailable
to an indemnified party or insufficient to hold it harmless, other than as
expressly specified therein, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage, liability or expense in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.  No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation.  In no event shall the
contribution obligation of a holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expenses paid by such
holder in connection with any claim relating to this Section 6, the amount
of any damages such holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission and any
underwriter discounts and commissions) received by it upon the sale of the
Registrable Securities giving rise to such contribution obligation.

 

7.     Miscellaneous.

 

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

 

(b)           Notices.  All notices and other communications provided
for or permitted hereunder shall be made as set forth in the Purchase
Agreement.

 

(c)           Assignments and
Transfers by Investors.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the Investors and their respective successors and assigns.  An Investor may transfer or assign, in whole
or from time to time in part, to one or more persons its rights hereunder in
connection with the transfer of Registrable Securities by such Investor to such
person, provided that such Investor complies with all laws 

 

 

applicable thereto and
provides written notice of assignment to the Company promptly after such
assignment is effected.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

(k)           Governing Law;
Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York
located in New York County and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding
or judgment relating to or arising out of this Agreement and the transactions
contemplated hereby.  Service of process
in connection with any such suit, action or proceeding may be served on each
party hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement. 
Each of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of
venue in such court.  Each party hereto
irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.  EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

 

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

 

	
  The Company:

  	
  WORLD HEART CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Morgan R. Brown

  
	
   

  	
  Name:

  	
  Morgan R. Brown

  
	
   

  	
  Title:

  	
  Executive Vice-President
  and Chief Financial Officer

  

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  VENROCK ASSOCIATES V. L.P.

  
	
   

  	
  By: Venrock Management V, LLC

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
  VENROCK PARTNERS V, L.P.

  
	
   

  	
  By: Venrock Partners Management V, LLC

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
  VENROCK ENTREPRENEURS FUND V, L.P.

  
	
   

  	
  By: VEF Management V, LLC

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Stepp

  
	
   

  	
   

  	
  David L. Stepp

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  Venrock

  
	
   

  	
  3340 Hillview Avenue

  
	
   

  	
  Palo Alto, CA 94304

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  David L. Stepp

  
	
   

  	
   

  
	
   

  	
  Tel: 650-475-3734

  
	
   

  	
  Fax: 650-561-9180

  
	
   

  	
  Email: dstepp@venrock.com

  
				

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  Special Situations Fund III QP, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Austin Marxe

  
	
   

  	
   

  	
  Name: Austin Marxe

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o

  
	
   

  	
  Street: 527 Madison Avenue, Suite 2600

  
	
   

  	
  City/State/Zip: New York, NY 10022

  
	
   

  	
  Attention:

  	
  Marianne Kelly / Austin Marxe

  
	
   

  	
  Tel: 212-319-6670

  
	
   

  	
  Fax: 212-319-6677

  
	
   

  	
  Email:

  
				

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  Special Situations Cayman Fund, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Austin Marxe

  
	
   

  	
   

  	
  Name: Austin Marxe

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o

  
	
   

  	
  Street: 527 Madison Avenue, Suite 2600

  
	
   

  	
  City/State/Zip: New York, NY 10022

  
	
   

  	
  Attention:

  	
  Marianne Kelly / Austin Marxe

  
	
   

  	
  Tel: 212-319-6670

  
	
   

  	
  Fax: 212-319-6677

  
	
   

  	
  Email:

  
				

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  Special Situations Private Equity Fund,
  L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Austin Marxe

  
	
   

  	
   

  	
  Name: Austin Marxe

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o

  
	
   

  	
  Street: 527 Madison Avenue, Suite 2600

  
	
   

  	
  City/State/Zip: New York, NY 10022

  
	
   

  	
  Attention:

  	
  Marianne Kelly / Austin Marxe

  
	
   

  	
  Tel: 212-319-6670

  
	
   

  	
  Fax: 212-319-6677

  
	
   

  	
  Email:

  
				

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  Special Situations Life Sciences, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Austin Marxe

  
	
   

  	
   

  	
  Name: Austin Marxe

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o

  
	
   

  	
  Street: 527 Madison Avenue, Suite 2600

  
	
   

  	
  City/State/Zip: New York, NY 10022

  
	
   

  	
  Attention:

  	
  Marianne Kelly / Austin Marxe

  
	
   

  	
  Tel: 212-319-6670

  
	
   

  	
  Fax: 212-319-6677

  
	
   

  	
  Email:

  
				

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  NEW LEAF VENTURES II, L.P.

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By: New Leaf Venture Associates II, L.P.

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By: New Leaf Venture Management II, L.L.C.

  
	
   

  	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig L. Slutzkin

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Craig L. Slutzkin

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  New Leaf Ventures II, L.P.

  
	
   

  	
  c/o New Leaf Venture Partners, L.L.C.

  
	
   

  	
  Street: 7 Times Square, Suite 3502

  
	
   

  	
  City/State/Zip: New York, NY 10036

  
	
   

  	
  Attention: Craig Slutzkin

  
	
   

  	
  Tel: 646-871-6420

  
	
   

  	
  Fax: 646-871-6450

  
	
   

  	
  Email: Craig@nlvpartners.com

  
				

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  SRB Greenway Opportunity Fund, L.P.

  
	
   

  	
   

  
	
   

  	
  By: SRB Management L.P., General Partner

  
	
   

  	
   

  
	
   

  	
  By: BC Advisors, L.L.C., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven R. Becker

  
	
   

  	
  Name: Steven R. Becker, Member

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  SRB Greenway Opportunity Fund (QP), L.P.

  
	
   

  	
  300 Crescent Court,Suite 1111

  
	
   

  	
  Dallas, TX 75201

  
	
   

  	
  Tel: 214-756-6016

  
	
   

  	
  Fax: 214-756-6079

  
	
   

  	
  Attention: Steve Becker

  
	
   

  	
  Email:
  steve@greenwaycapital.com

  

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  SRB Greenway Opportunity Fund (QP), L.P.

  
	
   

  	
   

  
	
   

  	
  By: SRB Management L.P., General Partner

  
	
   

  	
   

  
	
   

  	
  By: BC Advisors, L.L.C., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven R. Becker

  
	
   

  	
  Name: Steven R. Becker, Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  SRB Greenway Opportunity Fund (QP), L.P.

  
	
   

  	
  300 Crescent Court,Suite 1111

  
	
   

  	
  Dallas, TX 75201

  
	
   

  	
  Tel: 214-756-6016

  
	
   

  	
  Fax: 214-756-6079

  
	
   

  	
  Attention: Steve Becker

  
	
   

  	
  Email:
  steve@greenwaycapital.com

  

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  IROQUOIS MASTER FUND LTD.

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joshua Silverman

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Joshua Silverman

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  Street: 641 Lexington Avenue, 26th
  Floor

  
	
   

  	
   

  
	
   

  	
  City/State/Zip: New York, NY 10022

  
	
   

  	
   

  
	
   

  	
  Attention: Joshua Silverman

  
	
   

  	
   

  
	
   

  	
  Tel: 212-974-3070

  
	
   

  	
   

  
	
   

  	
  Fax: 212-207-3452

  
	
   

  	
   

  
	
   

  	
  Email:JSilverman@icfund.com

  

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  COUGAR TRADING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Emanuel E. Geduld

  
	
   

  	
  Name:

  	
   Emanuel E. Geduld

  
	
   

  	
  Title:

  	
  Sr. Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o
  Carl J. Bennett

  
	
   

  	
  Cougar Trading LLC

  
	
   

  	
  Street: 1370 Avenue of the Americas

  
	
   

  	
  City/State/Zip: New York, NY 10019

  
	
   

  	
   

  
	
   

  	
  Attention: Carl J. Bennet

  
	
   

  	
  Tel: 212-702-0690

  
	
   

  	
  Fax: 212-319-8066

  
	
   

  	
  Email:
  cbennet@cougartrading.com

  

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  RICHARD H. & CATHERINE F. OSGOOD

  
	
   

  	
  TTEES FOR THE OSGOOD FAMILY

  
	
   

  	
  TRUST UAD 4/14/2000

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard H. Osgood

  
	
   

  	
  Name:

  	
  Richard H. Osgood

  
	
   

  	
  Title:

  	
  Richard H. Osgood, Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  Street: One Bush Street #1700

  
	
   

  	
  City/State/Zip: San Francisco, CA 94104

  
	
   

  	
   

  
	
   

  	
  Attention: Richard H. Osgood

  
	
   

  	
  Tel: 415-274-6833

  
	
   

  	
  Fax: 415-274-6887

  
	
   

  	
  Email: rick.osgood@wedbush.com

  

 

 

	
   

  	
  NAME OF INVESTING ENTITY/ INDIVIDUAL

  
	
   

  	
   

  
	
   

  	
  SOLAR GROUP S.A.

  
	
   

  	
   

  
	
   

  	
  AUTHORIZED SIGNATORY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Evelyn Todd

  
	
   

  	
  Name:

  	
  Evelyn Todd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o: Secretary

  
	
   

  	
  Street: 14 Camden North Road

  
	
   

  	
  City/State/Zip: Paget, Bermuda DV-03

  
	
   

  	
   

  
	
   

  	
  Attention: Evelyn Todd

  
	
   

  	
  Tel: 441-234-2326

  
	
   

  	
  Fax: 419-844-8142

  
	
   

  	
  Email:
  jjtod@northrock.bm

  

 

 

Exhibit A

 

Plan of Distribution

 

The selling stockholders, which as used
herein includes donees, pledgees, transferees or other successors-in-interest
selling shares of common stock or interests in shares of common stock received
after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell,
transfer or otherwise dispose of any or all of their shares of common stock or
interests in shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions.  These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the prevailing
market price, at varying prices determined at the time of sale, or at
negotiated prices.

 

The selling stockholders may use any one or
more of the following methods when disposing of shares or interests therein:

 

·  ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;

 

·  block
trades in which the broker-dealer will attempt to sell the shares as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction;

 

·  purchases by a broker-dealer
as principal and resale by the broker-dealer for its account;

 

·  an exchange or
over-the-counter distribution in accordance with the rules of the
applicable exchange or other market;

 

·  privately negotiated
transactions;

 

·  short sales effected after
the date the registration statement of which this Prospectus is a part is
declared effective by the SEC;

 

·  through the writing or
settlement of options or other hedging transactions, whether through an options
exchange or otherwise;

 

·  broker-dealers may agree
with the selling stockholders to sell a specified number of such shares at a
stipulated price per share;

 

·  a combination of any such
methods of sale; and

 

·  any other method permitted
by applicable law.

 

The selling stockholders may, from time to
time, pledge or grant a security interest in some or all of the shares of
common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the
shares of

 

1

 

common stock, from time to time, under this prospectus, or under an
amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus.  The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

 

In connection with the sale of our common
stock or interests therein, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the common stock in the course of hedging the
positions they assume.  The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).

 

The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock
less discounts or commissions, if any.  Each
of the selling stockholders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of common stock to be made directly or through agents.  We will not receive any of the proceeds from
this offering.  Upon any exercise of the
warrants by payment of cash, however, we will receive the exercise price of the
warrants.

 

The selling stockholders also may resell all
or a portion of the shares in open market transactions in reliance upon Rule 144
under the Securities Act of 1933, provided that they meet the criteria and
conform to the requirements of that rule.

 

The selling stockholders and any underwriters,
broker-dealers or agents that participate in the sale of the common stock or interests
therein may be “underwriters” within the meaning of Section 2(11) of the
Securities Act.  Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act.  Selling stockholders who are “underwriters”
within the meaning of Section 2(11) of the Securities Act will be subject
to the prospectus delivery requirements of the Securities Act.

 

To the extent required, the shares of our
common stock to be sold, the names of the selling stockholders, the respective
purchase prices and public offering prices, the names of any agents, dealer or
underwriter, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement that
includes this prospectus.

 

In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. 
In

 

2

 

addition, in some
states the common stock may not be sold unless it has been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.

 

We have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates.  In addition, to the extent applicable we will
make copies of this prospectus (as it may be supplemented or amended from time
to time) available to the selling stockholders for the purpose of satisfying
the prospectus delivery requirements of the Securities Act.  The selling stockholders may indemnify any
broker-dealer that participates in transactions involving the sale of the
shares against certain liabilities, including liabilities arising under the
Securities Act.

 

We have agreed to indemnify the selling stockholders against
liabilities, including liabilities under the Securities Act and state
securities laws, relating to the registration of the shares offered by this
prospectus.

 

We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus
have been disposed of pursuant to and in accordance with the registration
statement or (2) the date on which the shares may be sold without
restriction pursuant to Rule 144 of the Securities Act.

 

3exhibit_10-1.htm

     

    EXHIBIT
10.1

     

    

      AMENDED
AND RESTATED CONTRACT OF EMPLOYMENT (“AGREEMENT”) EFFECTIVE AS OF THE 1st DAY
OF JANUARY 2010 (“EFFECTIVE DATE”).

      

      

      

      
        	
                BETWEEN:

              	
                TALEO (CANADA) INC.,
      having a place of business at 330  St-Vallier St. East, Suite
      400, in the City and District of Quebec, Province of Quebec, G1K
      9C5,

              

      

                     

                       (hereinafter
referred to as “Taleo”)

      

      

      AND:                                           Guy Gauvin

                      

                        (hereinafter
referred to as the “Executive”)

      

      

      PRÉAMBULE

      

      WHEREAS
Taleo is actively involved in the area of the development of
software;

       

      

       

      WHEREAS
the detailed research of Taleo regarding the resolution of management problems
involving recruitment has resulted in the creation and development of a certain
software;

       

      

       

      WHEREAS
the certain software of Taleo expresses itself through the data programs and
technical documentation regarding the system;

       

      

       

      WHEREAS
Taleo possesses a certain technical expertise which is unique and innovative to
Taleo and as such is confidential in nature;

       

      

       

      WHEREAS
it is of paramount importance to Taleo that the Executive holds in the strictest
of confidence any and/or all confidential information which he may acquire
during his employment with Taleo;

       

      

       

      WHEREAS Taleo wishes to employ
the Executive;

      

      WHEREAS the Executive wishes
to be employed by Taleo.

      

      

      

      

      

       

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

       

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      WHEREFORE
THE PARTIES COVENANT AND AGREE AS FOLLOWS:

      

      SECTION 1 – INTERPRETATION;
TERM.

      

      
        	
                1.1  

              	
                The
      division of this Contract of employment into articles and sections, and
      the use of section titles is for convenience of reference only and shall
      not affect the interpretation or construction of this
      agreement.

              

      

      

      
        	
                1.2  

              	
                This
      agreement amends and restates the Contract of Employment between Taleo
      (Canada) Inc. and Guy Gauvin with an effective date of March 8, 2006. The
      term of this Agreement shall be four (4) years from the Effective Date of
      this Agreement (i.e. January 1, 2010).  The parties agree to
      engage in a good faith review and renewal evaluation of this Agreement at
      the third anniversary of the Effective Date. If at the time of expiration
      of this Agreement the Company is engaged in discussions that may involve a
      Change in Control, as defined below, the term if this agreement shall be
      automatically extended by eighteen (18) months from the original date of
      expiration.

              

      

      

      

      SECTION 2 – TERMS OF
EMPLOYMENT

      

      
        	
                2.1  

              	
                Subject
      to the terms and conditions of this Contract of Employment, Taleo agrees
      to employ the Executive in the position of Executive Vice President,
      Global Services.  The Executive will report to Taleo’s Chief
      Executive Offer.  Executive will assume and discharge such
      responsibilities as are commensurate with such position and as the CEO may
      direct from time to time.

              

      

      

      
        	
                2.2  

              	
                In
      addition, the Executive shall provide such reasonable services as may,
      from time to time, be determined by his/her manager or such other person
      as Taleo may designate, and shall provide updates on his/her activities on
      a regular and timely basis or as
requested.

              

      

      

      
        	
                2.3  

              	
                During
      the term of employment, the Executive will devote his/her full time, skill
      and attention to his/her duties and responsibilities and shall perform
      faithfully and diligently.

              

      

      

      
        	
                2.4  

              	
                During
      the term of employment with Taleo, the Executive will not engage in any
      other employment, occupation, consulting, or other business activity
      directly related to the business in which Taleo is now involved or becomes
      involved during the term of employment nor will the Executive engage in
      any other activities that conflict with his/her obligations to
      Taleo.

              

      

      

      
        	
                2.5  

              	
                The
      term of employment between Taleo and the Executive in the position of
      Executive Vice President, Global Services shall be for an indeterminate
      period of time beginning January 1,
2005.

              

      

      

      
        	
                2.6  

              	
                The
      Executive may be required to engage in such travel (within Canada and/or
      abroad) as may be necessary to adequately perform his/her duties outlined
      herein.

              

      

      

       

      SECTION 3 – COMPENSATION AND
OTHER BENEFITS

       

      
        	
                3.1  

              	
                Base
      Salary.  Taleo shall pay Executive an annual salary of $227,500.00
      CAD as compensation for Executive’s services (the “Base
      Salary”).  The Base Salary will be paid periodically in
      accordance with the Taleo’s normal payroll practices (but no less
      frequently than once per month) and be subject to the usual, required
      withholding.  Executive’s Base Salary will be subject to
      periodic review and adjustment (subject to Section 6.8(ii) and the other
      provisions of this Agreement), and such adjustments will be made based
      upon the Company’s standard practices or the discretion of the Company’s
      Board of Directors.  Adjustments to Base Salary shall be
      incorporated into this Agreement upon the effective date of the adjusted
      Base Salary.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                3.2  

              	
                Bonus.  Executive’s
      annual target for the aggregate amount of annual and quarterly bonuses
      will be $227,500.00
      CAD (“Target Bonus”).  Allocation, eligibility and payment of
      Target Bonus will be based upon achievement of quarterly or yearly
      performance goals approved by the Chief Executive
      Officer.  Executive will have the opportunity to discuss the
      nature of such performance goals with the Chief Executive Officer prior to
      such performance goals being approved by the Chief Executive
      Officer.  Target Bonus amounts will not be earned unless
      Executive remains employed through the relevant quarter (for quarterly
      bonus payments) and through the end of the fiscal year (for annual bonus
      payments).  Bonus payments, if any, will be made no later than
      the 15th
      day of the third month following the later of (i) the end of the Company’s
      fiscal year in which such bonus is earned, or (ii) the end of the calendar
      year in which such bonus is earned. Executive’s Target Bonus will be
      subject to periodic review and adjustment (subject to Section 6.8(ii) and
      the other provisions of this Agreement), and such adjustments will be made
      based upon the Company’s standard practices or the discretion of the
      Company’s Board of Directors. Adjustments to Target Bonus shall be
      incorporated into this Agreement upon the effective date of the adjusted
      Target Bonus.

              

      

       

      
        	
                3.3  

              	
                Taleo
      shall be responsible for directly making all payroll deductions as source
      which may be due to the appropriate government authorities as well as
      those deductions related to internal benefits
  programs.

              

      

       

      
        	
                3.4  

              	
                The
      Executive agrees and authorizes Taleo to make the necessary deductions
      from his compensation or any other amount which may be owing in the case
      of an over payment made to the
Executive.

              

      

       

       
 

       

      
        	
                3.5

              	
                Upon
      hiring the Executive will be eligible to receive medical and fringe
      benefits including: life
      insurance, disability insurance (short term and long term), healthcare
      coverage, dental coverage, home internet access (cable modem or high speed
      access) in line with Taleo programs that may be changed from time
      to time.  Complete details of Taleo benefit plans will be
      reviewed with the Executive upon commencement of
      employment.  Taleo reserves the right to change its benefits
      programs at any time.

              

      

       

      
        	
                3.6

              	
                Upon
      presentation of appropriate receipts and manager approval, Taleo shall
      reimburse the Executive for all ordinary and necessary business expenses
      as have been reasonably and necessarily incurred, according to the Taleo’s
      expense reimbursement policy.

              

      

      

      

      SECTION 4
– VACATION

      

      
        	
                4.1  

              	
                      The
      Executive shall be entitled to vacation in accordance with Taleo’s
      Canadian Annual Vacation Policy but not in any event less than four (4)
      weeks of paid annual vacation.

              

      

      

      
        	
                4.2  

              	
                      It
      is understood and agreed that the Executive must receive prior approval
      from Taleo with respect to the scheduling of vacation according to the
      Annual Vacation Policy.

              

      

      

      
        	
                4.3  

              	
                     The
      Executive will be entitled to paid days off for the statutory holidays
      established by provincial legislation in accordance with provincial
      law.

              

      

      

      

      SECTION 5 – ABSENCES &
HOURS OF WORK

       

      
        	
                5.1

              	
                The
      minimum work expectation is 40 hours per week.

              

      

       

      
        	
                5.2

              	
                It
      is understood and agreed upon between Taleo and the Executive that the
      Executive shall not be entitled to receive any remuneration whatsoever for
      hours worked in excess 40 hours and that such work may be expected and
      obligatory.

              

      

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SECTION 6 - TERMINATION OF
EMPLOYMENT

      

      
        	
                6.1  

              	
                If
      Taleo or a successor corporation terminates Executive’s employment for any
      reason other than Cause (as defined below) or if Executive resigns for
      Good Reason (as defined below) and either such event did not
      takes place within sixty (60) days prior to or eighteen (18) months
      following a Change in Control (as defined below), then Company or the
      successor corporation will pay
Executive:

              

      

      

      6.1.1 for any
bonus period partially completed at the time of Executive’s termination or
resignation, a lump sum equal to the daily prorated amount of Executive’s
then-current quarterly bonus (if any) and annual bonus, less any applicable
state and federal required withholding amounts and other lawful
deductions;

      

      6.1.2 an
additional lump sum equal to one hundred percent (100%) of Executive’s Base
Salary at the rate in effect at the time of Executive’s resignation or
termination of employment, less any applicable state and federal required
withholding amounts and other lawful deductions; and

      

      6.1.3 reimbursement
costs for any applicable premiums Executive pays for coverage for Executive and
Executive’s eligible dependents for substantially the same health insurance
coverage as provided by the Taleo plan for a period of 12 months following the
termination of Executive’s employment, or the date when Executive becomes
eligible for substantially equivalent health insurance coverage in connection
with new employment or self-employment.

      

      
        	
                6.2  

              	
                If
      Company or a successor corporation terminates Executive’s employment for
      any reason other than Cause (as defined below) or if Executive resigns for
      Good Reason (as defined below) and either such event takes place within
      sixty (60) days prior to or eighteen (18) months following a Change in
      Control (as defined below), then Company or the successor corporation will
      pay Executive:

              

      

      

      6.2.1 for any
bonus period partially completed at the time of Executive’s termination or
resignation, a lump sum equal to the daily prorated amount of Executive’s
then-current quarterly bonus (if any) and annual bonus, less any applicable
state and federal required withholding amounts and other lawful
deductions;

      

      6.2.2 an
additional lump sum equal to one hundred percent (100%) of Executive’s Base
Salary at the rate in effect at the time of Executive’s resignation or
termination of employment, less any applicable state and federal required
withholding amounts and other lawful deductions;

      

      6.2.3 an
additional lump sum equal to one hundred percent (100%) of Executive’s
then-current Target Bonus, less any applicable state and federal required
withholding amounts and other lawful deductions; and

      

      6.2.4 reimbursement
costs for any applicable premiums Executive pays for coverage for Executive and
Executive’s eligible dependents for substantially the same health insurance
coverage as provided by the Taleo plan for a period of 12 months following the
termination of Executive’s employment, or the date when Executive becomes
eligible for substantially equivalent health insurance coverage in connection
with new employment or self-employment.

      

      
        	
                6.3  

              	
                All
      benefits set forth in Sections 6.1 and 6.2 are collectively referred to as
      “Severance.”  In the event Executive is entitled to Severance
      under Section 6.2, Executive will not longer be entitled to Severance
      under Section 6.1.  Subject to Section 6.13 and to any required
      six (6) month delay pursuant to Appendix A, if
      applicable, Severance payments, other than reimbursement of health
      insurance premiums, shall be made by Taleo in one lump sum and shall be
      paid within thirty (30) days of any such termination of
      employment.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      In
addition to Severance, in the event that Company or a successor corporation
terminates Executive’s employment for any reason other than Cause (as defined
below) or if Executive resigns for Good Reason (as defined below) and either
such event did not take
place within sixty (60) days prior to or eighteen (18) months following a Change
in Control (as defined below), then (i) Executive will receive immediate vesting
with respect to the number of unvested stock options and stock appreciation
rights that would have vested in accordance with Executive’s then-current stock
option grants and stock appreciation rights had Executive remained employed for
an additional 6 months, (ii) the Company’s right of repurchase shall immediately
lapse with respect to Executive’s then-current restricted stock grants for which
the Company’s right of repurchase would otherwise have lapsed within 6 months
from the date of such termination or resignation of employment, and (iii) the
Executive will receiving immediate vesting with respect to Executive's
outstanding restricted stock units, performance shares and other equity
compensation that would have vested had Executive remained employed for an
additional 6 months.  If an award vests in whole or in part on the
achievement of performance metrics that have not been achieved at the time of
the Executive’s termination or resignation, vesting of such awards shall not be
accelerated. In
the event of Executive’s termination of employment as described in this Section
6.4, the Executive’s then vested stock options shall be exercisable for 3 months
after Executive’s date of termination.  Notwithstanding the foregoing,
in no case shall any option be exercisable after the expiration of its
term.

      

      
        	
                6.4  

              	
                In
      addition to Severance, in the event that Company or a successor
      corporation terminates Executive’s employment for any reason other than
      Cause (as defined below) or if Executive resigns for Good Reason (as
      defined below) and either such event takes place within sixty (60) days
      prior to or eighteen (18) months following a Change in Control (as defined
      below), Executive will receive immediate vesting with respect to all
      unvested stock options and stock appreciation rights that are held by
      Executive, the Company’s right of repurchase shall lapse entirely with
      respect to restricted stock grants from the Company to Executive, and the
      vesting of all Executive's outstanding restricted stock units, performance
      shares and other equity compensation shall immediately vest in full;
      provided, however, if the award vests in whole or in part on the
      achievement of performance metrics, such metrics shall be deemed achieved
      at 100% of target levels (unless otherwise provided in the applicable
      award agreement).  In the event of Executive’s termination of
      employment as described in this Section 6.5, the Executive’s then
      outstanding stock options shall be exercisable for 3 months after
      Executive’s date of termination.  Notwithstanding the foregoing,
      in no case shall any option be exercisable after the expiration of its
      term.

              

      

      

      
        	
                6.5  

              	
                To
      the extent the terms of Executive's option agreement
      provide for terms more favorable than the ones set forth in
      this Agreement, the terms of the option agreement shall
      prevail.

              

      

      

      
        	
                6.6  

              	
                For
      purposes of this Section 6, “Cause” means (i) any act of
      personal dishonesty taken by Executive in connection with Executive’s
      employment responsibilities, (ii) Executive’s conviction of a felony,
      (iii) any act by Executive that constitutes material misconduct, (iv)
      repeated failures to follow the lawful, reasonable instructions of the
      Chief Executive Officer, or (v) substantial violations of employment
      or fiduciary duties, responsibilities or obligations to
    Taleo.

              

      

      

      
        	
                6.7  

              	
                For
      purposes of this Section 6, “Good Reason” means (i) without
      Executive’s consent, a significant reduction of Executive’s duties,
      position or responsibilities relative to Executive’s duties, position or
      responsibilities in effect immediately prior to such reduction, other than
      a reduction where Executive are asked to assume substantially similar
      duties and responsibilities in a division of a larger entity after a
      Change in Control; (ii) without Executive’s consent, a reduction of
      Executive’s Base Salary or Target Bonus other than a one-time reduction
      that does not exceed twenty percent (20%) and that is also applied to
      substantially all of Taleo’s senior executives; (iii) without Executive’s
      consent, Executive’s relocation to a facility or a location greater than
      75 miles from Quebec, QC; or (iv) the failure of a successor entity after
      a Change in Control to assume this Agreement.  If Executive does
      not notify Taleo in writing that Executive believes a significant
      reduction of Executive’s duties, position or responsibilities has occurred
      pursuant to this Section 6 within thirty days of the event or occurrence
      that Executive believes to have resulted in such a significant reduction,
      then such reduction shall be deemed for purposes of this Agreement as not
      constituting Good Reason, as that terms is used in this Section
      6.  Disagreement as to the allocation, eligibility and payment
      of Target Bonus to be set forth in a Target Bonus Schedule shall not be a
      basis for Good Reason
resignation.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      For
purposes of this Section 6, “Change in Control” means the occurrence of any
of the following events: (i) any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined
in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the
Taleo representing fifty percent (50%) or more of the total voting power
represented by the Taleo’s then outstanding voting securities and such change in
ownership results in broad management changes at Taleo; or (ii) the consummation
of the sale or disposition by Taleo of all or substantially all of Taleo’s
assets; or (iii) the consummation of a merger or consolidation of Taleo with any
other corporation, other than a merger or consolidation which would result in
the voting securities of Taleo outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) more than fifty percent (50%)
of the total voting power represented by the voting securities of Taleo or such
surviving entity or its parent outstanding immediately after such merger or
consolidation.

      

      
        	
                6.8  

              	
                Notwithstanding
      the above, Taleo’s Chief Executive Officer reserves the right to make
      reasonable organizational structure changes reasonably commensurate with
      the position of Chief Executive Officer.  Such changes may
      include the shifting or reassignment of divisional, geographic or team
      responsibilities among members of the executive team.  Such
      changes are within the reasonable discretion of the Chief Executive
      Officer and shall not constitute Good Reason, as that term is used in this
      Section 6.

              

      

      

      
        	
                6.9  

              	
                Termination
      due to Death or Disability.  If Executive’s employment
      terminates by reason of death or Disability, then (i) Executive will
      be entitled to receive benefits only in accordance with the Taleo’s then
      applicable plans, policies, and arrangements, and (ii) Executive’s
      outstanding equity awards will terminate in accordance with the terms and
      conditions of the applicable award
agreement(s).

              

      

      

      
        	
                6.10  

              	
                Sole
      Right to Severance.  This Agreement is intended to represent
      Executive’s sole entitlement to severance payments and benefits in
      connection with the termination of Executive’s employment.  To
      the extent Executive receives severance or similar payments and/or
      benefits under any other Taleo plan, program, agreement, policy, practice,
      or the like, severance payments and benefits due to Executive under this
      Agreement will be correspondingly reduced (and
  vice-versa).

              

      

      

      
        	
                6.11  

              	
                Separation Agreement
      and Release of Claims.  The receipt of any severance
      pursuant to this Agreement will be subject to Executive signing and not
      revoking a separation agreement and release of claims (the “Release”) in a
      form reasonably acceptable to Taleo which becomes effective within sixty
      (60) days following Executive’s employment termination date or such
      earlier date as required by the Release (such deadline, the “Release
      Deadline”).  The Release will provide (among other things) that
      Executive will not disparage Taleo, its directors, or its executive
      officers, and will contain No-Inducement, No-Solicit and Non-Compete terms
      consistent with Section 6.14 of this Agreement.  No Severance
      pursuant to this Agreement will be paid or provided until the Release
      becomes effective.  Notwithstanding any timing of payment
      provision in Section 6, in the event Severance payments provided
      under Section 6.1 or Section 6.2 would be considered Deferred
      Payments (as defined Appendix A
      below), then the following timing of payments will apply to such Deferred
      Payments, in each case subject to any delay in payment required by the
      provisions of Appendix A (and
      provided the Release becomes
effective):

              

      

      

      6.11.1 If the
Release Deadline is on or before December 10 of the calendar year in which
Executive’s “separation from service” (within the meaning of Section 409A
of the U.S. Internal Revenue Code of 1986, as amended, and any final
regulations and official guidance promulgated thereunder (together,
“Section 409A”)) occurs, any portion of the severance payments or benefits
provided under Section 6.1 or Section 6.2 that would be considered Deferred
Payments will be paid to Executive on or before December 31 of that calendar
year or such later time as required by (A) the payment schedule applicable to
each payment or benefit as set forth in Section 6, or (B) if
applicable, Appendix A
of this Agreement; and

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      If the
Release Deadline is after December 10 of the calendar year in which Executive’s
“separation from service” (within the meaning of Section 409A) occurs, any
portion of the severance payments or benefits provided under Section 6.1 or
Section 6.2 that would be considered Deferred Payments will be paid on the
first payroll date to occur during the calendar year following the calendar year
in which such separation of service occurs or such later time as required by
(A) the payment schedule applicable to each payment or benefit as set forth
in Section 6, (B) the Release Deadline, or (C) if applicable, Appendix A of this
Agreement.

      

      
        	
                6.12  

              	
                Non-solicitation
      and other terms in separation agreement.  In the event of a
      termination of Executive’s employment that otherwise would entitle
      Executive to the receipt of Severance pursuant to Section 6, Executive
      agrees that as a condition to receipt of Severance, during the 12-month
      period following termination of employment, Executive, directly or
      indirectly, whether as employee, owner, sole proprietor, partner,
      director, founder or otherwise, will (i) not hire, solicit, induce,
      or influence any person to modify Executive’s employment or consulting
      relationship with the Taleo (the “No-Inducement”), and (ii) not
      solicit, divert or take away or attempt to solicit, divert or take away
      the business of any customer or prospective customer of the Taleo (the
      “No-Solicit”).  If Executive breaches the No-Inducement or
      No-Solicit, all payments and benefits to which Executive otherwise may be
      entitled pursuant to Section 6 will cease immediately and shall be repaid
      to Taleo.  Executive acknowledges that the time, geographic and
      scope limitations of Execuitve’s obligations under this section that are
      to be reflected in a separation agreement are reasonable, especially in
      light of the Taleo’s desire to protect its Confidential Information and
      the Severance and other benefits set forth herein, and that Executive will
      not be precluded from gainful employment as a result of the obligations of
      this section.  In the event the provisions of this section are
      deemed to exceed the time, geographic or scope limitations permitted by
      applicable law, then such provisions shall be reformed to the maximum
      time, geographic or scope limitations, as the case may be, then permitted
      by such law.  The covenants contained in this section shall be
      construed as a series of separate covenants, one for each city, town,
      suburb and state within the geographical area.  For purposes of
      this section, “geographical area” shall mean (i) all cities, towns and
      suburbs in Executive’s state or province or territory of residence; (ii)
      all other states/provinces in the United States of America or
      Canada  from which the Company derived revenue at any time
      during the two-year period prior to the date of the termination of
      Executive’s relationship with the Company, and (iii) all other provinces,
      states, cities or other political subdivision of each country from which
      the Company derived revenue at any time during the two-year period prior
      to the date of the termination of Executive’s relationship with the
      Company.

              

      

      

      

      SECTION 7 – NONDISCLOSURE,
NON-USE & IP ASSIGNMENT

      

      
        	
                7.1  

              	
                Confidentiality.
      The Executive will not, at any time, whether during or subsequent to
      his/her employment hereunder, directly or indirectly, disclose or furnish
      to any other person, firm or corporation, or use on behalf of
      himself/herself or any other person, firm or corporation, any confidential
      or proprietary information acquired by the Executive in the course of
      his/her employment with Taleo, including, without limiting the generality
      of the foregoing, product design, product roadmaps, future product plans,
      contractual details relating to current Taleo clients, buying habits of
      present and prospective clients of Taleo, pricing and sales policy,
      techniques and concepts, the names of customers or prospective customers
      of Taleo or of any person, firm or corporation who or which have or shall
      have treated or dealt with Taleo or any of its subsidiaries or affiliated
      companies, any other information acquired by the Executive regarding the
      methods of conducting the business of Taleo and any of its subsidiaries
      and/or affiliates, any information regarding the company's methods of
      research and development, of obtaining business, of manufacturing, of
      providing or advertising products or services, or of obtaining customers,
      trade secrets and other confidential information concerning the business
      operations of Taleo or any company and/or entity affiliated with Taleo,
      except to the extent that such information is already generally known in
      the public domain.

              

      

      

      
        	
                7.2  

              	
                Former
      Employer Information.  Executive agrees, during employment with
      Taleo, not to improperly use or disclose any proprietary information or
      trade secrets of any former or concurrent employer or other person or
      entity and that Executive will not bring onto the premises of Taleo any
      unpublished document or proprietary information belonging to any such
      employer, person or entity unless consented to in writing by such
      employer, person or entity.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Third
Party Information.  Executive recognizes that Taleo has received and
in the future will receive from third parties their confidential or proprietary
information subject to a duty on Taleo’s part to maintain the confidentiality of
such information and to use it only for certain limited
purposes.  Executive agrees to hold all such confidential or
proprietary information in the strictest confidence and not to disclose it to
any person, firm or corporation or to use it except as necessary in carrying out
work for the Taleo consistent with Taleo’s agreement with such third
party.

      

      
        	
                7.3  

              	
                Assignment
      of Inventions.     Executive agrees to promptly
      make full written disclosure to Taleo, will hold in trust for the sole
      right and benefit of the Taleo and hereby assigns to the Taleo, or its
      designee, all right, title and interest in and to any and all inventions,
      original works of authorship, developments, concepts, improvements, or
      trade secrets, whether or not patentable or registrable under copyright or
      similar laws, which Executive may solely or jointly conceive or develop or
      reduce to practice, or cause to be conceived or developed or reduced to
      practice, during the period of time Executive is in the employ of Taleo
      (collectively referred to as “Inventions”).  Executive further
      acknowledges that all original works of authorship which are made by
      Executive (solely or jointly with others) within the scope of and during
      the period of Executive’s employment with Taleo and which are protectible
      by copyright are “works made for hire” as that term is defined in the
      relevant copyright act.

              

      

      

      
        	
                7.4  

              	
                Inventions
      Retained and Licensed.   Executive has attached hereto, as
      Schedule A, a list of all inventions, original works of authorship,
      developments, improvements, and trade secrets which were made by me prior
      to my employment with Taleo (collectively referred to as “Prior
      Inventions”), which belong to Executive, which relate to Taleo’s proposed
      business, products or research and development, and which are not assigned
      to Taleo hereunder; or, if no such list is attached, Executive represents
      that there are no such Prior Inventions.  If in the course of
      Executive’s employment with Taleo, Executive incorporates into a Taleo
      product, process or machine a Prior Invention owned by Emoloyee or in
      which Executive has an interest, Taleo is hereby granted and shall have a
      nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to
      make, have made, modify, use, and sell such Prior Invention as part of or
      in connection with such product, process or
  machine.

              

      

      

      
        	
                7.5  

              	
                Maintenance
      of Records.   Executive agrees to keep and maintain
      adequate and current written records of all Inventions made by Executive
      (solely or jointly with others) during the term of my employment with
      Taleo.  The records will be in the form of notes, sketches,
      drawings, and any other format that may be specified by
      Taleo.  The records will be available to and remain the sole
      property of Taleo at all times.

              

      

      

      
        	
                7.6  

              	
                Patent
      and Copyright Registrations.   Executive agrees to assist
      Taleo, or its designee, at Taleo’s expense, in every proper way to secure
      Taleo’s rights in the Inventions and any copyrights, patents, mask work
      rights or other intellectual property rights relating thereto in any and
      all countries, including the disclosure to Taleo of all pertinent
      information and data with respect thereto, the execution of all
      applications, specifications, oaths, assignments and all other instruments
      which Taleo shall deem necessary in order to apply for and obtain such
      rights and in order to assign and convey to Taleo, its successors,
      assigns, and nominees the sole and exclusive rights, title and interest in
      and to such Inventions, and any copyrights, patents, mask work rights or
      other intellectual property rights relating thereto.  Executive
      further agrees that Executive’s obligation to execute or cause to be
      executed, when it is in Executive’s power to do so, any such instrument or
      papers shall continue after the termination of this
      Agreement.  If Taleo is unable because of Executive’s mental or
      physical incapacity or for any other reason to secure Executive’s
      signature to apply for or to pursue any application for any Canadian or
      foreign patents or copyright registrations covering Inventions or original
      works of authorship assigned to Taleo as above, then Executive hereby
      irrevocably designate and appoint Taleo and its duly authorized officers
      and agents as Executive’s agent and attorney in fact, to act for and in
      Executive’s behalf and stead to execute and file any such applications and
      to do all other lawfully permitted acts to further the prosecution and
      issuance of letters patent or copyright registrations thereon with the
      same legal force and effect as if executed by
  Executive.

              

      

      

      
        	
                7.7  

              	
                Return
      of Taleo Documents.  Executive agrees that, at the time of
      leaving the employ of Taleo, Executive will deliver to Taleo (and will not
      keep in my possession, recreate or deliver to anyone else) any and all
      devices, records, data, notes, reports, proposals, lists, correspondence,
      specifications, drawings blueprints, sketches, materials, equipment, other
      documents or property, or reproductions of any aforementioned items
      developed by me pursuant to Executive’s employment with Taleo or otherwise
      belonging to Taleo, its successors or
assigns.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                7.8  

              	 

      

      

      SECTION 8 – GENERAL
PROVISIONS

      

      
        	
                8.1

              	
                The
      Executive authorizes Taleo to deduct from any payment due to the Executive
      at any time, including a termination payment, any amounts owed to Taleo by
      reason of purchases, advances, loans or in recompense for damage to or
      loss of Taleo's property or in recompense for damage to Taleo as a result
      of the Executive's breach of any term of the present Contract of
      Employment, save only that this provision shall be applied so as not to
      conflict with any applicable
legislation.

              

      

      

      
        	
                8.2

              	
                The
      provisions of this Contract of Employment shall be governed and
      interpreted in accordance with the
      laws                                       of
      the Province of Quebec.

              

      

      

      
        	
                8.3

              	
                The
      waiver by Taleo of any breach of any provision of this Contract of
      Employment by the Executive shall not operate or be construed as a waiver
      of any subsequent breach by the
Executive.

              

      

      

      
        	
                8.4

              	
                This
      Contract of Employment constitutes the entire agreement between the
      parties with respect to the employment of the Executive and any and/or all
      previous agreements, written or oral, express or implied between the
      parties or on their behalf relating to the employment of the Executive by
      Taleo are terminated and cancelled and each of the parties releases and
      forever discharges the other of and from all manner of actions, causes of
      action, claims and demands whatsoever under or in respect of any such
      agreement. With respect to stock options, awards of restricted stock or
      restricted stock units or other forms of compensatory equity granted on or
      after the date hereof, the acceleration of vesting provisions provided
      herein will apply to such awards except to the extent otherwise explicitly
      provided in the applicable equity award
  agreement.

              

      

      

      
        	
                8.5

              	
                Any
      modification to this Contract of Employment must be in writing and signed
      by the parties, or it shall have no effect and shall be
    void.

              

      

      

      
        	
                8.6

              	
                In
      the event that any provision in this Contract of Employment shall be
      deemed void or invalid by a Court of competent jurisdiction, the remaining
      provisions shall be and remain in full force and
  effect.

              

      

      

      
        	
                8.7  

              	
                The
      rights which accrue to Taleo under this Contract of Employment shall pass
      to its successors or assigns. The rights of the Executive under this
      Contract of Employment are not assignable or transferable in any
      manner.

              

      

      

      
        	
                8.8  

              	
                Indemnification
      and Insurance.  Executive will be covered under the Taleo’s
      insurance policies and, subject to applicable law, will be provided
      indemnification to the maximum extent permitted by the Taleo’s bylaws,
      Certificate of Incorporation, and standard form of Indemnification
      Agreement, with such insurance coverage and indemnification to be in
      accordance with the Taleo’s standard practices for senior executive
      officers but on terms no less favorable than provided to any other Taleo
      senior executive officer or
director.

              

      

      

      

      
        	
                8.9  

              	
                The
      Executive acknowledges that he has read and understands this Contract of
      Employment, and further acknowledges that he has had the opportunity to
      obtain independent legal advice with respect to
  it.

              

      

      

      
        	
                8.10  

              	
                This
      Agreement may be executed in counterparts and may be exchanged by
      facsimile or electronically scanned and emailed copy.  Each such
      counterpart shall be deemed to be an original and all such counterparts
      together shall constitute one and the same
  Agreement.

              

      

      

      
        	
                8.11  

              	
                The
      parties hereto have requested that this Contract of Employment be drafted
      in the English language.
      Les               parties
      aux présentes ont demandé à ce que le présent Contrat d'Emploi soit rédigé
      en anglais.

              

      

      

      

      

      

      IN
WITNESS WHEREOF, THE PARTIES HERETO HAVE SIGNED THIS AGREEMENT
THIS    18th DAY OF
_January 2010.

      

        
          	
                  /s/
      Michael Gregoire

                	 
      	
                  /s/
      Guy Gauvin

                
	
                  Taleo
      (CANADA) INC.

                	 
      	
                  Guy
      Gauvin

                
	
                  Signature
      of Authorized Representative

                	 
      	 
      

        

       

      

       

      

       

      

       

      [SIGNATURE
PAGE TO GUY GAUVIN EMPLOYMENT AGREEMENT]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Schedule
A

      

      

      List
of Prior Inventions, Designs and Original Works of Authorship

       

      

       

      Title                               Date                     Identifying
Number of Brief Description

      
        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        __ü_ No invention or
improvements

         

        ____
Additional sheets attached

         

        

        
 

        
          
            	
                    Signature
      of Executive:

                  	
                    /s/
      Guy Gauvin

                  
	 
      	 
      
	
                    Printed
      Name of Executive:

                  	
                    Guy
      Gauvin

                  
	 
      	 
      
	
                    Date:

                  	
                    January
      12th
      2010

                  

          

    

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Appendix
A

       

      Notwithstanding
anything to the contrary set forth in the Agreement, in the event that Executive
becomes subject to U.S. taxation such that Executive becomes or may become
subject to Section 409A of the U.S. Internal Revenue Code of 1986, as amended,
and any final regulations and official guidance promulgated thereunder
(together, “Section 409A”), the following terms and conditions shall apply
to this Agreement.  For the avoidance of doubt, this Appendix A shall
not become effective so long as Executive is not subject to U.S. taxation or
otherwise is exempt from the requirements of Section 409A.  Reference
to any Section of the Agreement referenced in this Appendix A shall be in
reference to such Section as amended herein.

      

      The
following sections are added as Sections 8.12 and 8.13 of the Agreement,
immediately following Section 8.11:

      

       

      “8.12           Section
409A.

      

       

      
        	
                 
      

              	
                (a)

              	
                Notwithstanding
      anything to the contrary in this Agreement, no severance payments or
      benefits payable to Executive, if any, pursuant to this Agreement that,
      when considered together with any other severance payments or separation
      benefits, is considered deferred compensation under Section 409A
      (together, the “Deferred Payments”) will be payable until Executive has a
      “separation from service” within the meaning of Section
      409A.  Similarly, no severance payable to Executive, if any,
      pursuant to this Agreement that otherwise would be exempt from Section
      409A pursuant to U.S. Treasury Regulation Section 1.409A-1(b)(9) will
      be payable until Executive has a “separation from service” within the
      meaning of Section 409A.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Further,
      if Executive is a “specified employee” within the meaning of
      Section 409A at the time of Executive’s separation from service
      (other than due to death), any Deferred Payments that otherwise are
      payable within the first six (6) months following Executive’s separation
      from service will become payable on the first payroll date that occurs on
      or after the date six (6) months and one (1) day following the date of
      Executive’s separation from service.  All subsequent Deferred
      Payments, if any, will be payable in accordance with the payment schedule
      applicable to each payment or benefit.  Notwithstanding anything
      herein to the contrary, in the event of Executive’s death following
      Executive’s separation from service but prior to the six (6) month
      anniversary of Executive’s separation from service (or any later delay
      date), then any payments delayed in accordance with this paragraph will be
      payable in a lump sum as soon as administratively practicable after the
      date of Executive’s death and all other Deferred Payments will be payable
      in accordance with the payment schedule applicable to each payment or
      benefit.  Each payment and benefit payable under the Agreement
      is intended to constitute a separate payment for purposes of Section
      1.409A-2(b)(2) of the U.S. Treasury
Regulations.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Any
      severance payment that satisfies the requirements of the “short-term
      deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury
      Regulations shall not constitute Deferred Payments for purposes of the
      Agreement.  Any severance payment that qualifies as a payment
      made as a result of an involuntary separation from service pursuant to
      Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not
      exceed the Section 409A Limit shall not constitute Deferred Payments for
      purposes of the Agreement.  For purposes of this subsection (c),
      “Section 409A Limit” will mean the lesser of two (2) times: (i)
      Executive’s annualized compensation based upon the annual rate of pay paid
      to Executive during Taleo’s taxable year preceding Taleo’s taxable year of
      Executive’s separation from service as determined under Treasury
      Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue
      Service guidance issued with respect thereto; or (ii) the maximum amount
      that may be taken into account under a qualified plan pursuant to Section
      401(a)(17) of the Code for the year in which Executive’s employment is
      terminated.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (d)

              	
                The
      foregoing provisions are intended to comply with the requirements of
      Section 409A so that none of the severance payments and benefits to be
      provided under the Agreement will be subject to the additional tax imposed
      under Section 409A, and any ambiguities herein will be interpreted to so
      comply.  Executive and Taleo agree to work together in good
      faith to consider amendments to the Agreement and to take such reasonable
      actions which are necessary, appropriate or desirable to avoid imposition
      of any additional tax or income recognition prior to actual payment to
      Executive under Section 409A.

              

      

       

      

      
        	
                8.13  

              	
                Parachutes Payments
      Under U.S. Tax Code.  Notwithstanding any other
      provisions of this Agreement to the contrary, in the event that any
      payments or benefits received or to be received by Executive in connection
      with Executive’s employment with Company (or termination thereof) would
      subject Executive to the excise tax imposed under Section 4999 of the U.S.
      Internal Revenue Code of 1986, as amended (the “Excise Tax”), and if the
      net-after tax amount (taking into account all applicable taxes payable by
      Executive, including without limitation any Excise Tax) that Executive
      would receive with respect to such payments or benefits is less than the
      net-after tax amount Executive would receive if the amount of such
      payments and benefits were reduced to the maximum amount which could
      otherwise be payable to Executive without the imposition of the Excise
      Tax, then, and only the extent necessary to eliminate the imposition of
      the Excise Tax, such payments and benefits shall be so reduced. Any
      reduction in payments and/or benefits required by this Section 8.13 will
      occur in the following order: (a) reduction of cash payments; (b)
      reduction of vesting acceleration of equity awards; and (c) reduction of
      other benefits paid or provided to Executive.  In the event that
      acceleration of vesting of equity awards is to be reduced, such
      acceleration of vesting will be cancelled in the reverse order of the date
      of grant for Executive’s equity awards.  If two or more equity awards
      are granted on the same date, each award will be reduced on a pro-rata
      basis. In no event shall the Executive have any discretion with respect to
      the ordering of payment reductions.

              

      

      

      Unless
the Company and Executive otherwise agree in writing, any determination required
under this Section 8.13 will be made in writing by a nationally recognized
certified public accounting firm selected by the Company, the Company’s legal
counsel or such other person or entity to which the parties mutually agree (the
“Accountants”), whose determination will be conclusive and binding upon
Executive and the Company for all purposes.

      

      For
purposes of making the calculations required by this Section 8.13, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the U.S. Internal
Revenue Code.  The Company and Executive will furnish to the Accountants
such information and documents as the Accountants may reasonably request in
order to make a determination under this Section 8.13.  The Company will
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 8.13.”

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