Document:

THIS LOAN AGREEMENT made as of the 28th day of January, 2003.

B E T W E E N :

               WORLD HEART CORPORATION
               (hereinafter called the "Borrower")

                                                               OF THE FIRST PART

               and

               EDWARDS LIFESCIENCES LLC
               (hereinafter called "Edwards") and
               SHERFAM INC. (hereinafter called "Sherfam" and together with
               Edwards, the "Lenders" and each a "Lender")

                                                              OF THE SECOND PART

               and

               WORLD HEART INC.
               (hereinafter called the "Guarantor")

                                                              OF THE THIRD PART

     WHEREAS the Borrower, the Guarantor,  Argosy Bridge Fund L.P.I.  ("Argosy")
and Sherfam  have entered into a senior loan  agreement  dated  January 28, 2003
(including as same may be amended,  supplemented,  revised, restated or replaced
from time to time, the "Senior Loan Agreement");

     WHEREAS the  Borrower,  the  Guarantor,  Argosy,  Sherfam and Edwards  have
entered into an  inter-creditor  agreement dated January 28, 2003 which sets out
the parties  respective  rights and priorities  with respect to the repayment of
the indebtedness owing to them and the security granted in connection therewith;

     WHEREAS the Lenders have agreed to loan to the Borrower the  principal  sum
of THREE MILLION DOLLARS  ($3,000,000)  (the  "Principal  Sum") on the terms and
conditions set forth in this Agreement;

     WHEREAS the Lenders have agreed that all obligations outstanding under this
Loan  Agreement to a Lender shall be pari passu to all  obligations  outstanding
under this Loan Agreement to the other;

     NOW THEREFORE  WITNESSETH that in consideration of the mutual covenants set
forth in this Agreement the parties hereto covenant and agree as follows:

1.  Interpretation:  Capitalized  terms  used  herein  shall  have the  meanings
ascribed  to them  herein  and the  following  terms  shall  have the  following
meanings:
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                                      -2-

"Business Day" means a day, other than a Saturday, Sunday or statutory holiday,
on which banks are open for the transaction of normal business in the City of
Ottawa, Ontario.

"Non Cash Accounting Entries" means:

     (a) adjustments to goodwill;

     (b) reserves against provincial tax credits receivable; and

     (c) the implicit value of the Warrants.

"Operating Loss" occurs when net income from operations, before foreign exchange
expense, interest expense, depreciation expense and amortization expense is less
than zero.

"Permitted Encumbrances" means the encumbrances described on Schedule "A".

"Potential Prior-Ranking Claims" means all amounts owing or required to be paid,
where the failure to pay any such amount could give rise to a claim pursuant to
any law, statute, regulation or otherwise, which ranks, or is capable of
ranking, in priority to the Lenders' security or otherwise in priority to any
claim by the Lenders for repayment of any amounts owing under this Agreement.

"Replacement Financing" means one or more financings in favour of the Borrower
whether by way of new debt or equity in an aggregate amount at least equal to
$7,000,000 but not including the Required Funding.

"Required Funding" means the loan of $7,000,000 provided to the Borrower under
the Senior Loan Agreement.

"Shareholders' Equity" means the sum of the value of the preferred shares of the
Borrower and the common shares of the Borrower.

2.  Establishment  of  Credit:  Subject  to the  terms  and  conditions  of this
Agreement, the Lenders hereby establish in favour of the Borrower a term loan in
an  aggregate  principal  amount of  $3,000,000,  comprised of  $2,000,000  from
Edwards and $1,000,000 from Sherfam (the "Loan"),  for the purposes of financing
the working  capital  requirements  of the  Borrower  and its  subsidiaries,  as
approved by the Lenders.  The first and only advance  under the Loan shall occur
on such date (the "Funding  Date") which shall be no later than January 31, 2003
or such other date as agreed to by the Lenders, failing which all obligations on
the part of the Lenders hereunder shall, at the Lenders' option, become null and
void. The Borrower may avail itself of the Loan by way of one advance.

3.   (a)  Term: The Loan shall be repaid in full upon the earlier of:

          (i)  July 31, 2003 ("Maturity Date");

          (ii) the completion of the Replacement Financing; and

         (iii) the occurrence of an Event of Default which is continuing.
<PAGE>

                                      -3-

     (b)  Prepayment:  Notwithstanding  the provisions of Subsection 3(a) above,
          the  Borrower  shall  have the right to prepay the Loan in full or any
          part thereof  together with all other  amounts owing  hereunder at any
          time. Any part or all of the Loan shall be available for prepayment on
          two (2) Business  Days' prior  written  notice to each of the Lenders;
          provided  that in the event the Loan is repaid  prior to the six month
          anniversary date of the Funding Date the Borrower shall pay to each of
          the  Lenders a  prepayment  fee equal to the amount of  interest  that
          would have  accrued on their pro rata  portion of the Loan  during the
          period commencing on the date of such prepayment and ending on the six
          month anniversary of the Funding Date.

     (c)  Withholding:

          (i)  Any and all payments made by the Borrower hereunder shall be made
               to Edwards in full, without set-off or counter claim and free and
               clear of and without  deduction or withholding for, or on account
               of, any and all present  and future  taxes under Part XIII of the
               Income Tax Act  (Canada).  If the  Borrower is required by law to
               deduct or  withhold  any such taxes from or in respect of any sum
               payable  hereunder  to  Edwards,  (i) the sum  payable  shall  be
               increased, as may be necessary, so that after making all required
               deductions   and   withholdings    (including    deductions   and
               withholdings  applicable  to  additional  sums payable under this
               Section  3(c))  Edwards,  as the case may be,  receives an amount
               equal  to the  sum  that  it  would  have  received  had no  such
               deductions or  withholdings  been made,  (ii) the Borrower  shall
               make such  deductions  or  withholdings,  and (iii) the  Borrower
               shall pay the full amount  deducted  or withheld to the  relevant
               taxing  authority in accordance with applicable  laws.  Within 30
               days  after  the date of any  payment  of taxes  withheld  by the
               Borrower  in respect of any  payment by the  Borrower to Edwards,
               the  Borrower  shall  furnish  to  Edwards,  the  original  or  a
               certified  copy  of a  receipt  issued  by  the  relevant  taxing
               authority  evidencing  payment  by the  Borrower  to such  taxing
               authority  of any taxes with  respect to any  payment  payable to
               Edwards.

          (ii) If  the  Edwards  receives  the  benefit  of a tax  credit  or an
               allowance  resulting  from a payment which includes an additional
               amount paid by the  Borrower  under this  Section  3(c),  Edwards
               shall pay to the  Borrower  such part of that  benefit  as in the
               opinion  Edwards will leave  Edwards  (after such  payment) in no
               less  favourable a position than Edwards would have been in if no
               additional  amount had been required to be paid (and no deduction
               had been required).

4.   (a)  Interest:  The Borrower shall pay interest to the Lenders collectively
          on the  amount  outstanding  under the Loan  from  time to time,  both
          before and after any or all of maturity,  judgment and default, at the
          rate of  eighteen  per cent  (18%) per  annum  (the  "Interest  Rate")
          calculated and  compounded  monthly (on the basis of the actual number
          of days  elapsed  over a year of 365 or 366, as the case may be),  and
          paid monthly in arrears on the first day of each and every month.  The
<PAGE>

                                      -4-

          Borrower  shall  make  interest  payments  separately  to  each of the
          Lenders based on their pro rata share of the Loan.

     (b)  Application  of  Funds:  Each of the  Lenders  shall  apply  any funds
          received  hereunder  from  time to  time,  in the  following  order of
          priority  (i)  towards  current  interest  owing to it,  (ii)  towards
          accrued  interest  owing to it, if any, (iii) toward fees owing to it,
          and (iv)  towards  principal,  in each case owing under the Loan until
          repaid in full.

5. Place and Time of Payment:  All payments of the Loan, interest and fees shall
be  paid  to  each  of the  Lenders  in  respect  of  each  Lender's  respective
contribution to the Loan at the addresses set out in Section 27(b) or such other
place as the Lenders may from time to time direct.  Payments to Edwards shall be
made by cheque and  deliverable to it at the address set out in Section 27(b) to
the  attention of Dan  Gallagher,  Assistant  Treasurer,  or such other means as
Edwards may direct.  Any payments  made on account of the Loan must be delivered
to, and received by, the Lenders by no later than one (1) p.m.  Toronto time for
same day credit.

6.  Administration  Fee: The Borrower  acknowledges  and agrees that the Lenders
have fully  earned a fee,  representing  compensation  to the  Lenders for their
efforts and  expenditures  of time by its officers,  agents and employees in the
review and study of the documentation pertaining to this transaction,  review of
financial  statements,  physical inspections and reviews, and for committing the
Loan, in the sum of ONE HUNDRED AND TWENTY THOUSAND  ($120,000) (the "Commitment
Fee"),  $80,000 of the  Commitment  Fee shall be  apportioned to Edwards and the
remaining  $40,000 of the Commitment  Fee shall be  apportioned to Sherfam.  The
unpaid balance of the Commitment Fee shall be paid on the Funding Date.

7. Advance:  The Lenders shall not be required to make an advance under the Loan
unless the following  conditions have been satisfied by the Borrower at or prior
to the time of such advance under the Loan:

     (a)  no Event of Default or  circumstance  or event which with the lapse of
          time  or  notice  or  both  would   constitute  an  Event  of  Default
          ("Default"), shall have occurred and be continuing;

     (b)  the  Borrower  shall have  delivered a request for funds not less than
          two (2)  Business  Days  prior to the date of the  requested  advance,
          which request shall provide that interest as provided for herein shall
          be  payable on the amount of the  advance  requested,  notwithstanding
          that  funds may not be  advanced  on the date  requested,  unless  the
          failure to advance is attributable to the Lenders;

     (c)  the Borrower  shall have, as security for the payment and  performance
          of the obligations  and liabilities of the Borrower  contained in this
          Agreement,  executed and delivered in form and content satisfactory to
          the Lenders and their counsel each of the following:

          (i)  a general  security  agreement from the Borrower  charging all of
               its right, title and interest in all of its property,  assets and
               undertaking subject only to Permitted Encumbrances;
<PAGE>

                                      -5-

          (ii) an  assignment  of  insurance  coverages  for the  assets  of the
               Borrower  satisfactory  to the Lenders with the Lenders  noted as
               additional insured and as loss payee;

         (iii) an assignment of all pending and registered,  present and future,
               patents,  trademarks  and  license  agreements  of  the  Borrower
               subject to Permitted Encumbrances (the "Borrower IP Security");

          (iv) a guarantee  ("Guarantee") of the obligations  arising  hereunder
               from the Guarantor;

          (v)  a general security  agreement from the Guarantor  charging all of
               its right, title and interest in all of its property,  assets and
               undertaking subject only to prior Permitted Encumbrances;

         (vi)  assignment of insurance coverages for the assets of the Guarantor
               satisfactory  to the Lenders with the Lenders noted as additional
               insured and as loss payee;

         (vii) an assignment of all pending and registered,  present and future,
               patents,  trademarks  and  license  agreements  of the  Guarantor
               subject to Permitted Encumbrances (the "Guarantor IP Security");

               (collectively, the "Security");

     (d)  the  Security or a notice,  caveat or financing  statement  shall have
          been  registered  or filed in all places  necessary  or  advisable  in
          connection  therewith  to  preserve,  perfect and protect the security
          interests  created  thereby  and all other  additional  documents  and
          opinions  incidental  thereto  shall have been provided to the Lenders
          and all action  required by the  Borrower,  the Guarantor or any other
          individual,   partnership,   corporation,   trust  or   unincorporated
          organization,  including a government agency or political  subdivision
          thereof  (collectively  "person")  to fully  perfect and  maintain the
          Security as a charge and assignment of and upon the properties secured
          thereby  shall have been  successfully  completed;  provided  that the
          Borrower  IP  Security  and the  Guarantor  IP  Security  need  not be
          registered  until  such  time  as the  Lenders  elect  in  their  sole
          discretion;

     (e)  the Lenders shall have received evidence satisfactory to them that the
          Borrower has not granted any security in  competition  with any of the
          Security, save and except for Permitted Encumbrances;

     (f)  the Borrower  shall have  executed and issued in favour of the Lenders
          1,320,000 common shares warrants (the "Warrants") of the Borrower,  of
          which 880,000  Warrants  shall be  apportioned  to Edwards and 440,000
          Warrants  shall be  apportioned  to  Sherfam,  in form  and  substance
          satisfactory  to each of them,  together with all necessary  approvals
          from the Toronto Stock Exchange approving the issuance and exercise of
          the  Warrants  shall  have  been  received.   Each  Warrant
<PAGE>

                                      -6-

          shall be exercisable in accordance  with its terms at a price of $1.60
          per share up to 5:00 p.m. on fifth anniversary date of this Agreement.

     (g)  the Lenders shall have  received  opinions of counsel for the Borrower
          and the Guarantor acceptable to the Lenders;

     (h)  receipt and approval by the Lenders of evidence  that the Borrower has
          filed all material tax returns and paid or made  provision for payment
          of  all  taxes  (including   interest  and  penalties)  and  Potential
          Prior-Ranking Claims when due;

     (i)  the Lenders  shall have  received and approved a detailed  schedule of
          fixed assets owned by each of the Borrower and the Guarantor;

     (j)  the  Lenders  shall have  received  and  approved  a current  accounts
          receivable listing for each of the Borrower and the Guarantor;

     (k)  the Lenders shall have received and approved the most recent available
          quarterly and monthly  financial  statements  for each of the Borrower
          and the Guarantor;

     (l)  in the opinion of the Lenders, acting reasonably,  no material adverse
          change in the business of the Borrower or any  associated,  affiliated
          or related company to the Borrower shall have occurred and there shall
          not have occurred since  September 30, 2002 any occurrence of national
          or international  consequence or any event,  action,  condition,  law,
          governmental action of any nature whatsoever,  which in the reasonable
          opinion of the Lenders, could materially adversely affect the business
          operations, assets or affairs of World Heart or any related company or
          enterprise; and

     (m)  the Lenders shall have received  evidence  satisfactory to it that the
          Required Funding has been received by the Borrower or will be received
          concurrently with the advance hereunder.

     The  Lenders  shall  have the sole  discretion  to waive (in  writing)  any
     condition set forth above for the advance of the Loan.

8. Covenants:  The Borrower and the Guarantor,  as the case may be, covenant and
agree with the Lenders  that until all amounts  advanced  under the Loan and all
interest,  fees and any other amounts owing under this Agreement or the Security
have been paid in full:

     (a)  not to,  without the express  written  consent of the  Lenders,  which
          consent may be unreasonably withheld,  further mortgage, charge, or in
          any  manner  encumber  or  grant  a  security  interest  in any of the
          collateral  secured by the  Security  save and  except  for  Permitted
          Encumbrances,  ordinary  course  equipment  leases and purchase  money
          security interests;

     (b)  not to incur or create any further  funded debt (other than in respect
          of  Permitted  Encumbrances)  which for  greater  certainty  shall not
          include  accounts  payable or debts incurred in the ordinary course of
          business, or provide any security by way of debenture, charge, pledge,
          specific  security  interest,  general  security
<PAGE>

                                      -7-

          agreement,   general  assignment  of  its  assets  or  undertaking  or
          otherwise  without  the prior  written  consent  and  approval  of the
          Lenders which the Lenders may arbitrarily withhold;

     (c)  to obey or cause to be obeyed the laws, rules, regulations and by-laws
          whether federal, provincial, state, regional or municipal which in any
          way relate to their assets or the use thereof;

     (d)  to allow the Lenders and their  authorized  representatives  access to
          the assets of the  Borrower  and the  Guarantor  from time to time and
          also access to the business and financial  records of the Borrower and
          the Guarantor at all reasonable times;

     (e)  to maintain full and complete up-to-date  accounting  records,  income
          statements,  appropriate cash management systems, controls and reports
          acceptable  to the  Lenders  and to provide  copies of same to Lenders
          upon  request.  In the event the  Borrower or the  Guarantor  fails to
          provide  proper  accounting,  as provided for herein,  the Lenders may
          hire as an agent of the Borrower or the  Guarantor  and at the expense
          of the Borrower, appropriate accountants or bookkeepers as the Lenders
          deems  necessary to prepare such  information and each of the Borrower
          and the Guarantor covenants to cooperate fully with any such parties;

     (f)  to provide to the Lenders:

          (i)  within 21 days of each month  end,  internally  prepared  monthly
               financial  statements of the Borrower and the Guarantor  together
               with an Officer's Certificate  substantially in the form attached
               hereto as Schedule "C";

          (ii) within 140 days of each fiscal year end of the  Borrower  and the
               Guarantor audited consolidated annual financial statements of the
               Borrower and the Guarantor audited by PricewaterhouseCoopers LLP;

         (iii) a detailed  operating  budget,  monthly reports,  profit and loss
               statement,  balance sheet and operating and variance  report upon
               request of the Lender;

     (g)  to  promptly  deliver to the  Lenders  all  material  and  information
          presented  to the Board of Directors of the Borrower and to permit the
          Lenders  to meet with the  management  of the  Borrower  at least once
          during  each  fiscal  quarter  of  the  Borrower  while  the  Loan  is
          outstanding;

     (h)  to promptly deliver to the Lenders regular progress reports on:

          (i) any and all efforts made by the Borrower  and/or the Guarantor to
               raise further debt and/or equity funds;

          (ii) updates with respect to all Federal Drug Administration  approval
               matters and like  approvals in the United  States  together  with
               copies  of any and all  materials  provided  from time to time to
               members  of the  Board  of  Directors  of the  Borrower  and  the
               Guarantor or their respective committees;
<PAGE>

                                      -8-

                  and such other reports as the Lenders may reasonably request
                  from time to time. The Borrower and the Guarantor and their
                  consultants shall cooperate fully in providing the above and
                  any other information requested by the Lenders;

     (i)  to ensure that each financial  statement provided to the Lenders shall
          be  prepared  in  accordance   with  generally   accepted   accounting
          principles  consistently  applied,  shall be correct and  complete and
          fairly  present the  financial  position of the person or entity which
          each  purports to reflect and, if such  statement is audited,  will be
          accompanied by a report of the auditor, acceptable to the Lenders;

     (j)  to  promptly  pay all  reasonable  legal  fees or other  out-of-pocket
          expenses incurred by the Lenders in connection with the Loan;

     (k)  save and except for a conversion of preferred  shares held by Edwards,
          not to effect  or allow to be  effected  a change  in the  Guarantor's
          corporate  structure  without the express prior written consent of the
          Lenders, which consent may not be unreasonably withheld;

     (l)  to pay out and discharge any and all liens,  charges and  encumbrances
          affecting the collateral  secured by the Security save and except only
          the Permitted Encumbrances;

     (m)  except as provided herein or in the ordinary  course of business,  not
          to  sell,  transfer,  convey  or  encumber  in any way the  collateral
          secured  by the  Security,  or any part  thereof,  without  the  prior
          written consent of the Lenders;

     (n)  to file all material tax returns which are to be filed by the Borrower
          and the  Guarantor  from time to time,  to pay or make  provision  for
          payment of all taxes (including  interest and penalties) and Potential
          Prior-Ranking  Claims when due, and to provide  adequate  reserves for
          the payment of any tax, the payment of which is being contested; and

     (o)  not to, without prior written consent of the Lenders:

          (i)  declare any dividends or distributions payable to shareholders of
               the Borrower;

          (ii) reduce the Borrower's  share capital by any means,  including but
               not limited to redeeming, purchasing or otherwise retiring any of
               its issued and outstanding shares;

         (iii) directly   or   indirectly   invest  in  or  lend  money  to  its
               shareholders,   directors,   officers   or  to  any   individual,
               partnership,  joint venture, trust,  incorporated organization or
               other  person,  which for  greater  certainty  shall not  include
               inter-company payments between the Borrower and Guarantor;

          (iv) directly or indirectly guarantee or otherwise provide for direct,
               indirect or on a contingent  basis,  the payment of any monies or
               the performance of any obligations by any third party; or
<PAGE>

                                      -9-

          (v)  increase the remuneration paid to Mr. Roderick Bryden or Dr. Tofy
               Mussivand  beyond their current  levels whether by way of salary,
               bonus or otherwise.

9. Representations and Warranties:  The Borrower and the Guarantor,  as the case
may be,  hereby  represent  and warrant (to the extent such  representation  and
warranty is applicable to it) to the Lenders that:

     (a)  each of this  Agreement  and the Security  has been duly  executed and
          delivered by or on behalf of the Borrower and the  Guarantor  and each
          of this Agreement,  the Security and the Warrants constitutes a legal,
          valid and binding obligation of the Borrower and the Guarantor, as the
          case may be, enforceable in accordance with its terms;

     (b)  each of the  Borrower  and the  Guarantor  has  and  will at all  time
          hereafter have title to the collateral  secured by the Security,  free
          and clear of any registered  restrictions,  mortgages,  charges, liens
          and other  encumbrances  subject  to prior  encumbrances  agreed to in
          writing by the Lenders;

     (c)  all  the  warranties  and  representations  of the  Borrower  and  the
          Guarantor  and  the  covenants  contained  in this  Section  9 of this
          Agreement  and in the  Security,  will be true as at the time they are
          made and will continue to be true and correct until the Loan is repaid
          in full, and all covenants and agreements  herein  contained have been
          observed and performed;

     (d)  none of the  Borrower or the  Guarantor  is in default in any material
          respect under, nor will the execution,  delivery or performance by the
          Borrower  and the  Guarantor  of the  Security,  the Warrants and this
          Agreement  conflict with or constitute a default under any  agreement,
          document or instrument to which any of them is a party or by which any
          of them may be  bound or under  any  valid  regulation,  order,  writ,
          injunction  or decree of any court or  governmental  authority  and no
          consent or approval of any such  authority  is required in  connection
          with the valid execution, delivery and performance by the Borrower and
          the Guarantor of this Agreement, the Security or the Warrants;

     (e)  each of the Borrower and the  Guarantor is duly  qualified to carry on
          its  business  and to own its  assets,  and has all  necessary  power,
          authority,  licenses and  approvals  required in  connection  with its
          business and undertaking;

     (f)  each of the  Borrower and the  Guarantor is in good  standing and is a
          valid,  subsisting  corporation  under  the laws of its  incorporating
          jurisdiction;

     (g)  the contents of the documents furnished to the Lenders by or on behalf
          of the  Borrower  and the  Guarantor  to induce it to lend the  monies
          hereby  provided for are true and correct and  accurately  set out all
          the facts required by the Lenders and contained therein;
<PAGE>

                                      -10-

     (h)  save and except for the proceedings  described in Schedule "B" hereto,
          there is no outstanding  judgment or award against the Borrower or the
          Guarantor,  there is no undisclosed material liability and there is no
          action,  suit,  proceeding  pending or threatened against or affecting
          the  Borrower  or the  Guarantor,  which  if  determined  against  the
          interests of the Borrower or the Guarantor, would result in a material
          and adverse change in or effect on its financial  position or business
          or  ability  to repay the  obligations  and  liabilities  owing to the
          Lenders hereunder and under the Loan;

     (i)  the Borrower and the  Guarantor  are in material  compliance  with all
          conditions,  ordinances,  codes,  regulations and laws of governmental
          departments, and all agencies having authority,  direction over or any
          interest in their respective assets;

     (j)  the  corporate  structure  provided  to the  Lenders  relating  to the
          parties hereto is true and correct and  accurately  sets out the facts
          required by the Lenders contained therein; and

     (k)  the  registrations  made in favour of Edwards  against the Borrower or
          Guarantor under the Personal  Property  Security Act (Ontario)  having
          reference  file numbers  889333938 and  889333947 and similar  filings
          with the Secretary of States of California and Delaware  relate solely
          to transfers of receivables  made by the Borrower to Edwards  pursuant
          to agreements,  copies of which have been delivered to the Lenders and
          are not in respect of any security  interests  granted by the Borrower
          in favour of Edwards.

10. Default:  Each of the following  events shall constitute an event of default
("Event of Default") under this Agreement:

     (a)  (i)  if the Borrower defaults in payment of

               (1)  any principal  payment due from time to time under the Loan;
                    or

               (2)  interest on the principal amount due from time to time under
                    the Loan; or

               (3)  any  fee,  or any  other  sum  due  under  the  Loan  or the
                    Security; and

          (ii) any such  default  is not  remedied  within  ten (10) days of its
               occurrence;

     (b)  if  any  representation  or  warranty  made  by  the  Borrower  or the
          Guarantor and contained in this Agreement or the Security or otherwise
          in writing in connection  herewith or therewith shall be untrue on the
          date as of which made,  on the Funding  Date, or any date prior to the
          date the Loan is repaid;

     (c)  if the Borrower or the Guarantor  shall fail to perform or observe any
          covenant, condition or provision to be performed or observed by either
          of them  under  the  terms  of this  Agreement,  the  Security  or the
          Warrants or any other agreement in writing in connection  therewith or
          herewith  and such  default  is not  remedied  within  ten  (10)  days
          following receipt of written notice from the Lenders;
<PAGE>

                                      -11-

     (d)  if  any  material  order,  approval,  consent,  exemption,  permit  or
          authorization  having  been made or  granted  to the  Borrower  or the
          Guarantor shall be revoked, rescinded,  suspended or otherwise limited
          in effect,  the result of which would cause a material  adverse effect
          on  the  financial  position  or  operations  of the  Borrower  or the
          Guarantor;

     (e)  if Mr. Roderick Bryden or Dr. Tofy Mussivand cease to hold directly or
          indirectly  any of  their  direct  or  indirect  shareholdings  in the
          Borrower  or shall  otherwise  dispose  of or  encumber  any rights or
          interest in such shares;  provided that the pledges of any such shares
          made  prior to the date  hereof  shall be  permitted  to exist but any
          enforcement  of such  pledges  will  result  in a default  under  this
          Section 10(e);

     (f)  if the Shareholders'  Equity  (determined  before Non-Cash  Accounting
          Entries) is less than  $6,000,000  and such  shortfall  occurs in each
          month for any consecutive two month period;

     (g)  if revenues  (determined  before Non-Cash  Accounting  Entries) of the
          Borrower on a consolidated  basis are less than $600,000 for any given
          month or, on a rolling  three month basis  starting in March 2003,  is
          less than $2.5 million for the relevant rolling three month period;

     (h)  if the Borrower has an Operating Loss in excess of $2,500,000 for each
          month during any consecutive two month period;

     (i)  if any  insurance  policies  to be  provided  by the  Borrower  or the
          Guarantor  pursuant hereto shall be or become cancelled or invalidated
          or altered in any material  respect for any reason  before such policy
          is replaced with another  policy which  complies  with the  provisions
          hereof;

     (j)  if an  encumbrancer  shall  commence an action to enforce its security
          against the collateral  secured under the Security or take  possession
          of or  appoint a  receiver,  trustee,  conservator  or  liquidator  in
          respect  of  the   collateral   secured  under  the  Security  or  any
          substantial part thereof or if a distress, execution,  attachment, tax
          levy  or any  similar  process  be  levied  or  enforced  against  the
          collateral  secured  under the  Security  and remain  unsatisfied  for
          thirty (30) days or such shorter period as would permit the collateral
          secured under the Security or such part thereof to be sold thereunder;

     (k)  if  the  Borrower  or  the  Guarantor  suspends  or  discontinues  its
          business,  or if the Borrower or the Guarantor shall become  insolvent
          (however  such  insolvency  may be evidenced) or bankrupt or commit an
          act of bankruptcy or shall make an assignment  for the benefit of or a
          composition with creditors, or shall be unable or admit in writing its
          inability  to  pay  its  debts  as  they  mature,  or  if  bankruptcy,
          reorganization,  arrangement,  insolvency or similar  proceedings  for
          relief of financially  distressed  debtors shall be instituted against
          the Borrower or the  Guarantor,  or if the  Borrower or the  Guarantor
          shall petition for or there shall be appointed for the Borrower or the
          Guarantor,  or for a substantial part of the assets
<PAGE>

                                      -12-

          of the Borrower or the Guarantor,  receiver or  liquidator,  or if the
          Borrower  or the  Guarantor  shall take any action for the  purpose of
          effecting any of the foregoing;

     (l)  if the  Borrower  or  the  Guarantor  is in  default  of  any  secured
          indebtedness  in excess of the  aggregate  amount of $500,000 and such
          default  shall  continue  for more than any period of grace  specified
          with respect to such  indebtedness or if there is any other unremedied
          default under any encumbrance in respect of the assets of the Borrower
          or the  Guarantor,  or if there is any  unremedied  default  under any
          encumbrance of the Borrower or the Guarantor which could result in the
          encumbrancer  accelerating  the  payment  of  debt or  exercising  its
          remedies under its security;

     (m)  if any adverse  change  occurs in the  information  supplied or in the
          financial  stability  of  the  Borrower,   the  Guarantor  and/or  the
          collateral  given as security for the Loan, or the  enforceability  of
          the  Lender's  Security,  or have a material  adverse  impact upon the
          value of the  Lender's  Security at any time,  or should  there be any
          action,  suits or  pending  proceedings  which in the  opinion  of the
          Lender,  acting reasonably,  may have a material adverse impact on the
          Borrower or the Guarantor or if any event shall have occurred which in
          the opinion of the Lender, acting reasonably, materially and adversely
          effects the  financial  position or  operations of the Borrower or the
          Guarantor;

     (n)  if at any time the  shares  of the  Borrower  are  subject  to a cease
          trading order for a period of 7  consecutive  days on which trading is
          conducted on the Toronto Stock Exchange other than for a cease trading
          for technical  reasons  relating solely to the Toronto Stock Exchange;
          or

     (o)  if the  Borrower is in default of any of its other  obligations  under
          this  Agreement  or the  Security  and  such  default  shall  continue
          unremedied for thirty (30) days.

11.  Remedies:  If any  amount  shall  become due and  payable  by the  Borrower
hereunder or under the Security,  whether by demand,  default or otherwise,  and
shall not be paid when due or if any Event of Default shall have occurred and be
continuing, then and in each such event any one or more of the following actions
may be taken:

     (a)  either of the Lenders may make  demand for  repayment  of the Loan and
          the Loan  shall  thereupon  become  due and  payable  in full  without
          further  demand,  protest or other notice of any kind to the Borrower,
          all of which are hereby expressly waived;

     (b)  either of the Lenders may realize upon any and all security granted to
          it and may  commence  such legal  actions or  proceedings  against the
          Borrower or the  Guarantor or against its or their  property or assets
          as may be permitted  hereby,  by the Security or by any one or more of
          them;  or at law or in equity,  all as in its sole  discretion  as the
          Lenders or any one of them deems  expedient;  and the Borrower and the
          Guarantor  acknowledge  that the Lenders'  remedies are cumulative and
          not exclusive;
<PAGE>

                                      -13-

     (c)  the  security  constituted  by the Security and each and every part of
          them shall forthwith be and become enforceable by the Lenders; and

     (d)  each of the Lenders shall have the right, but shall not be obliged:

          (i)  to pay  (either  out of the monies to be  advanced  hereunder  or
               otherwise  if the full amount to be advanced  hereunder  has been
               advanced)  any sums of money  required  to be paid  hereunder  or
               under  the  Security  by  all or any  of  the  Borrower  and  the
               Guarantor  and providing  that any monies so advanced  shall bear
               interest at the Interest Rate; and

          (ii) to perform any covenant,  agreement or obligation of the Borrower
               or the Guarantor hereunder or under the Security.

12.  Set-off:  Each of the Lenders is authorized (but not obligated) at any time
or from  time to time  (upon  the  occurrence  of an Event of  Default  which is
continuing  and has not been waived) to set off and apply any and all amounts at
any time held by or owing by such  Lender to or for the credit of the account of
the Borrower  against and on account of the  obligations  and liabilities of the
Borrower under this Agreement  irrespective  of currency and although any of the
obligations and liabilities of any of them are matured or contingent.

13. Assignment:  None of the Borrower or the Guarantor shall assign any of their
rights or obligations  under this  Agreement or any of the Security  without the
prior written consent of the Lenders, which consent may be arbitrarily withheld.

14. Syndication: The Lenders' rights and obligations under this Agreement may be
assigned by way of  syndication  or otherwise,  providing that the Lenders shall
not be released from its obligations to the Borrower hereunder,  save and except
that any Lender may,  following  an Event of Default,  assign all its rights and
obligations to any person. In connection with any assignment by the Lenders, the
Borrower  and the  Guarantor  agree to execute  estoppel  certificates  or other
acknowledgments as required by the Lenders,  and agree that the Lenders may make
available to the assignee such  documentation  and  information  relating to the
Borrower  and the  Guarantor  and  the  Loan as may be  reasonably  required  in
connection therewith.

15. No Waiver  of  Breach:  No  failure  of the  Lenders  to pursue  any  remedy
resulting from a breach of this Agreement or any document or agreement delivered
pursuant  hereto by the Borrower or the Guarantor shall be construed as a waiver
of that breach by the Lenders or as a waiver of any  subsequent or other breach,
and no exercise of any right  hereunder  shall preclude the exercise of any such
right on any subsequent occasion.

16. Further Assurances: The Borrower and the Guarantor shall execute and deliver
to the Lenders such  additional  documents  and shall  provide  such  additional
information as the Lenders may reasonably require to carry out the terms of this
Agreement.

17.  Governing Law: The parties agree that this Agreement  shall be conclusively
deemed to be a contract  made under,  and shall for all  purposes be governed by
and  construed in accordance  with,  the laws of the Province of Ontario and the
federal laws of Canada applicable therein.
<PAGE>

                                      -14-

18. Amendment and Waiver:  No provision of this Agreement or the Security or any
of the  documents  collateral  hereto or thereto  may be  changed,  modified  or
amended  other than by an  agreement  in writing  signed by each of the  parties
hereto or thereto.

19. No Joint  Venture:  This  Agreement  does not and shall not be  construed to
create any joint venture or partnership or agency  whatsoever.  All decisions in
respect of the  administration  of the Loan shall be made jointly by the Lenders
save and except (i) all matters  relating to the payment of principal,  interest
and fees owed to a  particular  Lender;  and (ii) all  matters  relating  to the
determination  of and remedies  available and exercised  pursuant to an Event of
Default, which, in each case, may be made severally, by each Lender.

20. Interest:  Notwithstanding  any term or condition of this Agreement,  in the
event that interest payable in respect of the Loan exceeds the maximum amount of
interest  payable by law, then the amount of the interest  payable in respect of
the Loan shall be  automatically  reduced to be the  maximum  amount of interest
permitted  by law and  the  Lenders'  right  to  receive  payments  shall  be so
automatically reduced.

21.  Severability:  Any  provision  of this  Agreement  which 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. Any such prohibition or  unenforceability  in any
jurisdiction shall not invalidate or render unenforceable such provisions in any
other jurisdiction.

22. No  Obligation  to  Advance:  Neither  the  execution  nor  delivery of this
Agreement,  in and of itself,  shall obligate the Lenders to make any advance to
the Borrower hereunder.

23.  Survival and Non-Merger:  All  representations,  warranties,  covenants and
agreements  made in this  Agreement or otherwise in writing in  connection  with
this  Agreement  by the Borrower  and the  Guarantor,  as the case may be, shall
remain  binding on each of the Borrower and the  Guarantor  notwithstanding  the
advance of the Loan.  The  covenant of the  Borrower to pay interest at the rate
provided  herein shall not merge in any judgment in respect of any obligation of
the Borrower under this  Agreement,  and any judgment shall bear interest at the
same rate.

24.  Conflict:  In the  event  of a  conflict  between  the  provisions  of this
Agreement and the  provisions of the Security the  provisions of this  Agreement
shall prevail.

25.  Currency:  All amounts set forth in this Agreement are in Canadian  dollars
unless otherwise indicated.

26. Time of Essence: Time shall be of the essence of this Agreement.
<PAGE>

                                      -15-

27. Notices: Any notice or other communication which may be or is required to be
given or made  pursuant to this  Agreement  shall,  unless  otherwise  expressly
provided  herein,  be in writing,  and shall be personally  delivered or sent by
telecopy to either party at its address set forth below:

     (a)  if to the Borrower and the Guarantor at:

          1 Laser Street
          Ottawa, Ontario  K2E 7V1

          Attention:  Chief Financial Officer
          Fax No.:    613-226-4744

     (b)  if to the Lenders, at:

          Edwards Lifesciences LLC
          One Edwards Way
          Irvine, California 92614

          Attention:  Jack Westhart
          Fax No:    (949) 250-2701

          - and -

          Sherfam Inc.
          150 Signet Drive
          Weston, Ontario
          M9L 1T9

          Attention:  Meyer F. Florence, President
          Fax No:    (416) 401-3812

Either  party may change its  address  for  service  by  delivering  a notice in
accordance  with the foregoing  provisions  to the other party hereto.  All such
notices,  requests,  demands or other  communications  shall be  effective  when
delivered or sent by facsimile, receipt confirmed.

28.  Confidentiality:  The Lenders,  the Borrower and the  Guarantor  shall keep
confidential the existence and contents of this Agreement and all  documentation
executed  and  delivered  in  connection  therewith  and the Lenders  shall keep
confidential  all  information,  documents  and  materials  provided  to  it  in
connection  with the business and  operations  of the Borrower and the Guarantor
except as required  under  applicable  securities  law,  except for  information
required  to be given to their  professional  advisors in  connection  with this
transaction,  except as the Lenders  may be legally  compelled  to disclose  and
except for  information  which has become  generally  available  to the  public.
Provided   always  that  the  Lenders  may  disclose,   to  proposed   syndicate
participants and assigns contemplated by Section 14 hereof, this Agreement,  the
documents  delivered in  connection  therewith  and  information  regarding  the
Borrower and the Guarantor  provided to the Lenders as the Lenders may determine
to be necessary for its purposes outlined in Section 13 hereof provided that the
recipients  thereof execute an acknowledgement to the Borrower and the Guarantor
to be bound by the terms of this Section 28 with respect to all such materials.
<PAGE>

                                      -16-

29.  Indemnity:  The Borrower and the Guarantor agree to indemnify and hold each
of the Lenders and their respective  officers,  directors,  employees,  counsel,
agents and attorneys in fact (each, an "Indemnified  Person")  harmless from and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits, costs,  charges,  expenses and disbursements of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loan) be imposed on,  incurred by or asserted  against any such
person in any way  relating to or arising out of this  Agreement or any document
contemplated by or referred to herein, or the transactions  contemplated hereby,
or any action  taken or omitted by any such person under or in  connection  with
any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any insolvency proceeding or appellate proceeding) related
to or  arising  out of this  Agreement  or the  Loan or the use of the  proceeds
thereof,  whether  or not any  Indemnified  Person is a party  thereto  (all the
foregoing, collectively, the "Indemnified Liabilities");  provided, that neither
the  Borrower  nor the  Guarantor  shall have any  obligation  hereunder  to any
Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross  negligence  or wilful  misconduct  of such  Indemnified  Person.  The
agreements  in this  Section  shall  survive  payment  of all other  obligations
hereunder.

30. Interpretation:  This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective  successors and permitted  assigns.
The section and other  headings  set forth in this  Agreement  are  inserted for
convenience and reference only and shall in no way define or limit the intent or
interpretation of any of the provisions hereof. This Agreement shall be read and
construed  with all the  changes  of gender  and  number of the party or parties
referred to in each case as required by the  context.  The terms and  conditions
set forth on any Schedules  referred to or attached to this Agreement are deemed
to be included in this  Agreement  and form a part hereof.  31.  Successors  and
Assigns: All covenants,  agreements,  representations and warranties made herein
or in any certificate  delivered in connection  herewith shall bind and enure to
the benefit of the  successors  and  permitted  assigns of the  Borrower and the
Guarantor and the successors and assigns of the Lenders.

32. Counterparts:  This Agreement may be executed in several counterparts,  each
of  which  when  so  executed  shall  be  deemed  to be  an  original  and  such
counterparts together shall constitute one and the same instrument.
<PAGE>

     IN WITNESS  WHEREOF the parties have executed this Loan Agreement as of the
day and year first above written.

                                        WORLD HEART CORPORATION

                                        Per: /s/Ian Malone
                                            -----------------------------------
                                            Name:   Ian W. Malone
                                            Title:  VP Finance and CFO

                                        EDWARDS LIFESCIENCES LLC

                                        Per: /s/Jay Wertheim
                                            -----------------------------------
                                            Name:   Jay Wertheim
                                            Title:  Vice President and General
                                                    Counsel

                                        SHERFAM INC.

                                        Per: /s/Meyer Florence
                                            -----------------------------------
                                            Name:   Meyer F. Florence
                                            Title:  President

                                        WORLD HEART INC.

                                        Per: /s/Ian Malone
                                            -----------------------------------
                                            Name:   Ian W. Malone
                                            Title:  Vice PresidentGUARANTEE

                               (WORLD HEART INC.)

TO:  Argosy Bridge Fund L.P.I. and Sherfam Inc. (together, the "Lenders")

     WHEREAS the Lenders and World Heart  Corporation  (the  "Debtor") and World
Heart Inc.  (the  "Guarantor")  have entered into a loan  agreement  dated as of
January  28, 2003  (including  as same may be  amended,  supplemented,  revised,
restated or replaced from time to time, the "Loan Agreement").

     IN CONSIDERATION of the Lenders extending loans to the Debtor and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Guarantor,  the Guarantor hereby unconditionally  guarantees
payment to the Lenders of all  obligations,  indebtedness and liabilities of any
kind, present and future, direct or indirect, absolute or contingent, matured or
not, joint or several,  of the Debtor to the Lender under the Loan Agreement and
the Security ("Guaranteed Obligations") whether as principal or surety, together
with all  reasonable  costs  and  expenses  (including  reasonable  legal  fees)
incurred by the Lenders,  any receiver,  receiver  manager,  representatives  or
agent in the  enforcing  or  endeavouring  to collect any of such  indebtedness,
obligations or liabilities,  and interest thereon or enforcing any of its rights
hereunder;   (all  of  which  present  and  future  indebtedness,   obligations,
liabilities,  costs,  expenses and interest arising under the Loan Agreement and
Security  are  herein  collectively  referred  to as the  "Indebtedness"  by the
Debtor).

     AND IT IS AGREED THAT:

1.   The Guarantor  hereby  affirms that the Guarantor is a primary  obligor and
     that this Guarantee is not merely a guaranty of  collection,  is continuing
     in nature and applies to all Guaranteed  Obligations,  whether existing now
     or in the  future,  including  Guaranteed  Obligations  arising or accruing
     before or after  bankruptcy  of Debtor.  The  Guarantor  agrees to make all
     payments under this  Guarantee  upon demand by the Lenders.  Each and every
     default in payment of the  Indebtedness  by the Debtor shall give rise to a
     separate  cause of action  hereunder  and  separate  suits  may be  brought
     hereunder as each cause of action  arises.  In the event of such a default,
     the Lenders shall have the right to proceed first and directly  against the
     Guarantor under this Guarantee without  proceeding against any other person
     or entity or exhausting  any other  remedies which it may have, and without
     resorting  to any  security  of the  Debtor  held by it.  Furthermore,  the
     Guaranteed Obligations are independent of the obligations and duties of the
     Debtor  under the Loan  Agreement  and a separate  action or actions may be
     brought and prosecuted against the Guarantor  hereunder,  whether or not an
     action is brought  against the Debtor under the Loan Agreement or any other
     person,  whether or not the Debtor or the  Guarantor or any other person or
     entity may be joined in any such action or  actions,  and whether or not an
     action or actions may be brought  against the Guarantor or any other person
     or entity.

2.   No change in the name, objects, capital stock or constitution of the Debtor
     or the  Guarantor  shall in any way release,  discharge,  limit,  lessen or
     otherwise  affect the  liability of the  Guarantor,  either with respect to
     transactions  occurring  before or after any such  change,  and the Lenders
     shall not be concerned to see or inquire into the powers of
<PAGE>

                                      -2-

     the Debtor, the Guarantor, or any of their directors or other agents acting
     on behalf of the  Debtor or the  Guarantor,  or any of their  directors  or
     other  agents  acting or  purporting  to act on their  behalf,  and moneys,
     advances, renewals or credits in fact borrowed or obtained from the Lenders
     in  professed  exercise of such powers  shall be deemed to form part of the
     Indebtedness  notwithstanding  that such  borrowing or obtaining of moneys,
     advances,  renewals  or  credits  shall be in excess  of the  powers of the
     Debtor,  the Guarantor or their  directors or other agents  aforesaid,  the
     Debtor  shall not be a legal or  suable  entity  or there  shall  exist any
     irregularity,  defect or  informality in the borrowing or obtaining of such
     moneys,  advances,  renewals or  credits,  the whole  whether  known to the
     Lenders or not.

3.   The  Guarantor  hereby waives  protest,  promptness,  diligence,  notice of
     acceptance,  demand for  payment  and  notice of default or non  payment in
     respect of the Loan Agreement and the Guarantor waives all other notices of
     every  kind  and  description  with  respect  to  any  indebtedness  now or
     hereafter  provided by any  statute or rule of law.  The  Guarantor  hereby
     waives any requirement that the Lenders protect,  secure, perfect or insure
     any security  interest or lien or any property  subject  thereto or exhaust
     any right or take any action  against  the  Debtor,  or  against  any other
     guarantor or any other  person,  entity or any  collateral.  The  Guarantor
     hereby  waives,  to the fullest  extent  permitted by  applicable  law, the
     benefit of any  statute  of  limitations  which may  affect  its  liability
     hereunder  or the  enforcement  hereof.  Any payment by the Debtor or other
     circumstance  that  operates to toll any statute of  limitations  as to the
     Debtor  shall not  operate  to toll the  statute of  limitations  as to the
     Guarantor.

4.   The Lenders  shall not be bound to seek or exhaust their  recourse  against
     the Debtor or any other persons or to realize on any securities it may hold
     in respect of the  Indebtedness  before being  entitled to payment from the
     Guarantor under this Guarantee.

5.   All  monies  received  by a Lender in respect  of the  Indebtedness  may be
     applied on such part or parts of the Indebtedness as the Lender may see fit
     and  the  Lender  shall  at  all  times  and  from  time  to  time,  in any
     circumstance  where the Lender would otherwise be required to return to the
     Guarantor any monies paid to the Lender by the Guarantor, have the right to
     change any  appropriation  of any moneys  received by it and to reapply the
     same on any other part or parts of the  Indebtedness  as the Lender may see
     fit, notwithstanding any previous application by whomsoever made.

6.   All dividends, compositions and moneys received by a Lender from the Debtor
     or the  Guarantor  or from any  other  person or  estate  capable  of being
     applied by the Lender in  reduction of the  Indebtedness  shall be regarded
     for all purposes as payments in gross, and, subject to the aforesaid,  each
     Lender  shall be entitled to prove  against the estate of the Debtor or the
     Guarantor  upon any insolvency or winding-up in respect of the whole of the
     Indebtedness,  and the Guarantor  shall not have any right to be subrogated
     to the Lenders in respect of any such proof  until the  Lenders  shall have
     received from such estate payment in full of their claim with interest.

7.   This  Guarantee will not be diminished or affected on account of any act or
     failure to act on the part of the Lenders which would  prevent  subrogation
     from  operating in favour of the  Guarantor.  The Guarantor  agrees that it
     shall  not have and  hereby  waives  any  rights
<PAGE>

                                      -3-

     of subrogation  under the Guarantee until such time as all  Indebtedness is
     paid in full to the  Lenders.  All monies  received by the  Guarantor  as a
     result of any such  subrogation  shall be received in trust for the Lenders
     until payment and satisfaction of the Indebtedness in full.

8.   The Lenders,  without  exonerating in whole or in part the  Guarantor,  may
     grant time, renewals, extensions,  indulgences, releases and discharges to,
     may take security  from and give the same and any or all existing  security
     up  to,  may  abstain  from  taking  security  from  or  from   perfecting,
     registering,  renewing or realizing upon security of and may otherwise deal
     with the  Debtor or the  Guarantor  and all other  persons  (including  the
     Guarantor and any other guarantor) and security as the Lenders may see fit.

9.   Without  in any  manner  limiting  the  generality  of the  foregoing,  the
     Guarantor  agrees that the Lenders may,  from time to time,  consent to any
     action or non-action of the Debtor or the Guarantor  which,  in the absence
     of such  consent,  violates  or may  violate any  agreement  or  agreements
     between the Debtor or the Guarantor and the Lenders  relating to any of the
     Indebtedness, with or without consideration on such terms and conditions as
     may be  acceptable  to  the  Lenders,  without  in  any  manner  affecting,
     releasing  or  impairing  the  liability or  obligations  of the  Guarantor
     hereunder.

10.  This shall be a continuing,  absolute and unconditional Guarantee and shall
     cover  all  the  Indebtedness,   shall  not  be  subject  to  any  set-off,
     counterclaim,  reduction or diminution of an obligation,  or any defence of
     any kind or nature (other than the payment of the  Indebtedness)  which the
     Guarantor  may have or assert  against  the  Lenders and shall apply to and
     secure any ultimate balance owing to the Lenders,  notwithstanding that any
     other security for the repayment of the Indebtedness or for the obligations
     of the  Guarantor  to the  Lenders  may no longer be  enforceable,  but the
     Lenders shall not be obliged to exhaust its recourse  against the Debtor or
     other  persons or the  securities  they may hold before  being  entitled to
     payment from the  Guarantor  of all of the  Indebtedness.  The  Guarantor's
     liability hereunder shall in no way be limited or impaired by any or all of
     the following: (i) the failure of the Lenders to exercise or to exhaust any
     right or remedy or take any action  against the Debtor;  (ii) any change in
     the time,  manner or place of payment or performance,  of all or any of the
     obligations  of the Debtor under the Loan  Agreement or any  extensions  of
     time for payment or performance,  whether in whole or in part, of the terms
     of the Loan  Agreement on the part of the Lenders to be paid,  performed or
     observed, as applicable;  (iii) any failure or delay of the to exercise, or
     any lack of  diligence in  exercising,  any right or remedy with respect to
     the Loan  Agreement or this  Guarantee;  (iv) any dealings or  transactions
     between the Lenders and the Debtor, whether or not the Guarantor shall be a
     party to or cognizant of the same, other than the payment of the Guaranteed
     Obligations; (v) any financial decline, bankruptcy,  insolvency, assignment
     for the benefit of creditors,  receivership,  trusteeship or dissolution of
     or affecting the Debtor;  (vi) any other guaranty now or hereafter executed
     by the  Guarantor  or any  other  guarantor  or the  release  of any  other
     guarantor  from or failure of any other Person to assume  liability for the
     payment,  performance or observance of the Guaranteed Obligations or any of
     the terms of the Loan Agreement,  or any other agreement on the part of the
     Lenders to be paid,  performed  or observed  whether by operation of law or
     otherwise;  (vii) any rights,  powers or privileges  the Lenders may now or
     hereafter  have  against  any  Person  or  collateral  in  respect  of  the
     Guaranteed Obligations;(viii) the failure
<PAGE>

                                      -4-

     to give the  Guarantor  any notices  whatsoever  (the  Guarantor  expressly
     agreeing  that  upon  the  Debtor's   failure  to  perform  the  Guaranteed
     Obligations,  the  Guarantor  shall  perform  such  Guaranteed  Obligations
     immediately  upon request from the  Lenders);  (ix) any other  circumstance
     which might in any manner or to any extent  constitute a defense  available
     to the  Guarantor,  or vary the risk of the Guarantor,  or might  otherwise
     constitute a legal or equitable  discharge or defense available to a surety
     or guarantor,  whether similar or dissimilar to the foregoing;  (x) any and
     all  notice  of the  creation,  renewal  or  extension  of  the  Guaranteed
     Obligations; (xi) any change, restructuring or termination of the structure
     or  existence  of the Debtor;  and (xii) the  invalidity,  irregularity  or
     unenforceability,  in  whole  or in  part,  of this  Guarantee  or the Loan
     Agreement,  and, in any such case,  whether  with or without  notice to the
     Guarantor and with or without consideration.

11.  Notwithstanding  the provisions of any statute relating to interest payable
     by debtors,  this Guarantee  shall remain in full force and effect whatever
     the rate of interest  received or demanded by the Lenders.  No  invalidity,
     irregularity  or  unenforceability  (by reason of any bankruptcy or similar
     law, any law or order of any  government  or agency  thereof  purporting to
     reduce,  amend or otherwise  affect the  Indebtedness  or any  liability or
     obligation of the Guarantor to the Lenders) of the  Indebtedness  or of any
     liabilities  or  obligations  of the  Guarantor  to the  Lenders  or of any
     security  therefor shall affect,  impair or be a defence to this Guarantee.
     If one or more of the provisions contained herein shall be invalid, illegal
     or unenforceable in any respect, the validity,  legality and enforceability
     of the  remaining  provisions  contained  herein  shall  not in any  way be
     affected or impaired thereby.

12.  The  Guarantor  shall  at all  times  and from  time to time  do,  execute,
     acknowledge  and deliver or cause to be done,  executed,  acknowledged  and
     delivered  all  and  singular  every  such  further  act,  deed,  transfer,
     assignment,   assurance,   document  and  instrument  as  the  Lenders  may
     reasonably  require for the better  accomplishing  and effectuating of this
     Guarantee and the  provisions  contained  herein,  and every officer of the
     Lenders and each of them are irrevocably appointed attorney or attorneys of
     the Guarantor from and after any demand for payment having been made by the
     Lenders upon the Guarantor hereunder which has not been remedied or waived,
     to  execute  in the name and on behalf of the  Guarantor  any  document  or
     instrument for the said purpose.

13.  This Guarantee shall continue to be effective or be reinstated (as the case
     may be) if at any time payment by the Debtor or the Guarantor of all or any
     part of the Indebtedness or the obligations of the Guarantor to the Lenders
     is  rescinded  or must  otherwise  be  returned  by the  Lenders  upon  the
     insolvency,  bankruptcy or reorganization of the Debtor or the Guarantor or
     otherwise, all as though such payment to the Lenders had not been made.

14.  The Lenders  may assign,  transfer  and  deliver to any  transferee  of the
     Indebtedness  or any part  thereof the  liability  and  obligations  of the
     Guarantor  under this  Guarantee and any security  documents or instruments
     held by the  Lenders  in respect of the  Guarantee,  provided  that no such
     assignment,  transfer or delivery  shall  release the  Guarantor  from said
     liability.  Such  transferee  shall be vested with all powers and rights of
     the Lenders hereunder and under such security documents or instruments, but
     the Lenders  shall  retain all rights and powers  with  respect to any such
     security   documents  or  instruments  not  so  assigned,   transferred  or
     delivered.
<PAGE>

                                      -5-

15.  This  Guarantee  shall be binding upon the Guarantor and its successors and
     permitted  assigns  provided  that the  Guarantor may not assign any of its
     rights or obligations  hereunder  without the prior written  consent of the
     Lenders and shall  enure to the  benefit of the Lenders and its  successors
     and assigns.

16.  The Guarantor  acknowledges  that this Guarantee has been delivered free of
     any conditions and that no representations  have been made to the Guarantor
     affecting the liability of the Guarantor  under this  Guarantee save as may
     be  specifically  embodied  herein and  agrees  that this  Guarantee  is in
     addition to and not in  substitution  for any other guarantee held or which
     may  hereafter  be held by the Lenders.  The rights,  remedies and benefits
     herein are  cumulative  and not in  substitution  for or  exclusive  of any
     rights, remedies or benefits which the Lenders may otherwise have.

17.  Any account  settled or stated  between the Debtor and the Lenders shall be
     accepted by the Guarantor as conclusive  evidence,  absent  manifest error,
     that the amount  thereby  appearing  due by the Debtor to the Lenders is so
     due and if no such account has been so settled  immediately  before  demand
     for payment under this  Guarantee,  any account stated by the Lenders shall
     be accepted by the Guarantor as conclusive  evidence of the amount which at
     the date of the  account  so  settled or stated is due by the Debtor to the
     Lenders.

18.  If demand for, or  acceleration  of the time for,  payment by the Debtor of
     any   Indebtedness   is  stayed   upon  the   insolvency,   bankruptcy   or
     reorganization of the Debtor, the Indebtedness  otherwise subject to demand
     for payment or acceleration  shall  nonetheless be payable by the Guarantor
     hereunder forthwith on demand by the Lenders.

19.  This Guarantee shall be construed in accordance with and be governed by the
     laws of the State of New York  applicable  therein  and for the  purpose of
     legal proceedings,  this Guarantee shall be deemed to have been made in the
     State of New York  and to be  performed  there,  and the  state or  federal
     Courts  located in the State of New York shall have  jurisdiction  over all
     disputes  which may arise under this  Guarantee  and the  Guarantor  hereby
     irrevocably and unconditionally  submits to the non-exclusive  jurisdiction
     of such Courts.  The Guarantor and Lenders hereby irrevocably waive, to the
     fullest  extent  possible,   the  defence  of  an  inconvenient  forum  and
     irrevocably  agrees to be bound by any final  judgement of any court of the
     State of New York.  The Guarantor and the Lenders agree that a judgement or
     order of any such  court  may be  enforced  in other  jurisdictions  in any
     manner provided by law.

20.  All  payments  made  by the  Guarantor  to the  Lenders  pursuant  to  this
     Guarantee  shall be made free and  clear of and  without  deduction  for or
     withholding  of any and all  present  and future  taxes,  levies,  imposts,
     deductions,  stamp taxes, charges and withholdings with respect thereto. If
     any such amount is deducted  or withheld  from any payment to the  Lenders,
     then the Guarantor shall promptly remit to the Lenders,  in the currency in
     which such payment is to be made,  the equivalent of the amount so deducted
     or withheld together with relevant receipts addressed to the Lenders.

21.  With  respect  to any  portion  of the  Indebtedness  which is payable in a
     currency other than Canadian currency (the "Foreign Currency  Obligation or
     Foreign Currency"), the following provisions shall apply:
<PAGE>

                                      -6-

     (a)  Payment  hereunder  with  respect to the Foreign  Currency  Obligation
          shall be made in  immediately  available  funds in lawful money of the
          jurisdiction in the currency of which the Foreign Currency  obligation
          is payable (the "Foreign Currency") in such form as shall be customary
          at the time of payment for  settlement  of  international  payments in
          Ottawa,  Ontario without set-off or counterclaim and free and clear of
          and  without  deduction  for any and all  present  and  future  taxes,
          levies,  imposts,  stamp taxes,  reductions,  charges and withholdings
          with respect thereto.

     (b)  The Guarantor  shall hold the Lenders  harmless from any loss incurred
          by the  Lenders  arising  from any  change  in the  value of  Canadian
          currency  in relation  to the  Foreign  Currency  between the date the
          Foreign  Currency  Obligation  becomes  due  and the  date of  Payment
          thereof.

     (c)  If for the purpose of obtaining  judgment in any court it is necessary
          to convert a sum due  hereunder in the Foreign  Currency into Canadian
          funds ("Canadian dollars"), the rate of exchange used shall be that at
          which in accordance  with normal banking  procedures the Lenders could
          purchase the Foreign  Currency with  Canadian  dollars on the business
          day preceding that on which final judgment is given.

     (d)  The  obligation  of the  Guarantor in respect of any Foreign  Currency
          Obligation due by it to the Lenders  hereunder shall,  notwithstanding
          any judgment in Canadian  dollars,  be  discharged  only to the extent
          that on the business day  following  receipt by the Lenders of any sum
          adjudged  to be so  due  in  Canadian  dollars,  the  Lenders  may  in
          accordance  with  normal  banking  procedures   purchase  the  Foreign
          Currency  with the  Canadian  dollars;  if the  amount of the  Foreign
          Currency  so  purchased  is less  than the sum  originally  due to the
          Lenders in the Foreign  Currency,  the Guarantor agrees, as a separate
          obligation and  notwithstanding  any such  judgment,  to indemnify the
          Lenders  against  such  loss  and if the  Foreign  Currency  purchased
          exceeds the sum originally due to the Lenders in the Foreign Currency,
          the  Lenders  agrees  to remit  such  excess to the  Guarantor  as the
          Guarantor may be entitled thereto.

22.  All  notices,  requests and demands  hereunder  shall be in writing and (a)
     made to the Lenders at its address set forth below and to the  Guarantor at
     its office set forth  below,  or to such other  address as either party may
     designate by written notice to the other in accordance with this provision,
     and (b)  deemed  to have  been  given  or made:  if  delivered  in  person,
     immediately upon delivery; if by facsimile  transmission,  immediately upon
     sending and upon confirmation of receipts;  and if by nationally recognized
     overnight  courier service with instructions to deliver within the next two
     (2) business days, on two (2) business days after sending:
<PAGE>

                                      -7-

         For the Guarantor:

                  World Heart Inc.
                  c/o 1 Laser Street
                  Ottawa, Ontario  K2E 7V1

                  Attention:  Vice President
                  Telefax:  (613) 226-4744

         For the Lenders:

                  Argosy Bridge Fund L.P.I.
                  141 Adelaide Street West
                  Suite 760
                  Toronto, Ontario  M5H 3L5

                  Attention:  Mr. Michael Boyd
                  Fax No:  (416) 367-3895

         For the Sherfam:

                  Sherfam Inc.
                  150 Signet Drive
                  Weston, Ontario  M9L 1T9

                  Attention:  Mr. Meyer F. Florence
                  Fax No:  (416) 401-3812

23.  Time shall be of the essence of all provisions of this Guarantee.
<PAGE>

     AS WITNESS the hand and seal of the Guarantor at Ottawa, as of the 28th day
of January, 2003.

                                     WORLD HEART INC.

                                     Per: /s/Ian Malone
                                         ---------------------------------------
                                         Name  Ian W. Malone
                                         Title Vice President

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