Document:

Exhibit 4.3

 

FACE OF INITIAL NOTE

 

UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART,
TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF.

 

THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES
ACT’’), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET
FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT
IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF
THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
ISSUER OR ANY GUARANTOR THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR
PROVISION THERETO (IF AVAILABLE), (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE ISSUER OR ANY GUARANTOR SO REQUESTS), OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.

 

 

	
  No. G-1

  	
   

  	
  $465,000,000

  

 

11.25% Senior Note due 2015

 

CUSIP No. 836151 AA8

ISIN No: US836151AA85

 

Source
Interlink Companies, Inc., a Delaware corporation, promises to pay to CEDE &
CO., or registered assigns, the principal sum listed on the Schedule of
Increases or Decreases in Global Note attached hereto on July 15, 2015.

 

Interest
Payment Dates:  January 15 and July 15.

 

Record Dates:  January 1 and July 1.

 

 

Additional
provisions of this Note are set forth on the other side of this Note.

 

IN WITNESS
WHEREOF, the parties have caused this instrument to be duly executed.

 

	
   

  	
  SOURCE INTERLINK COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

Dated:

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

HSBC BANK USA, NATIONAL ASSOCIATION,

 

as Trustee, certifies that

this is one of the Notes

referred to in the Indenture.

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

 

REVERSE SIDE OF INITIAL NOTE

 

11.25% Senior Note due 2015

 

1.             Interest

 

(a)           Source Interlink
Companies, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the “Company”), promises to pay interest on the principal amount
of this Note at the rate per annum shown above until the principal hereof is
paid or duly provided for.  The Company
shall pay interest semiannually on January 15 and July 15 of each
year.  Interest on the Notes shall accrue
from the most recent date to which interest has been paid or duly provided for,
or, if no interest has been paid or duly provided for, from June 26, 2008.  Interest shall be computed on the basis of a
360-day year or twelve 30-day months.

 

(b)           Liquidated Damages.  The holder of this Note is entitled to the
benefits of an Exchange and Registration Rights Agreement, dated as of June 23,
2008, among the Company, each of the Company’s domestic subsidiaries that guarantee
the Company’s senior credit facilities, dated as of August 1, 2007, as
guarantors (the “Note Guarantors”), and the Initial Purchasers named
therein (the “Registration Agreement”). 
Capitalized terms used in this paragraph (b) but not defined herein
have the meanings assigned to them in the Registration Agreement. If any of the
Securities are not freely tradable and remain subject to restrictive legends by
the 366th calendar day after the Closing Date (the “Outside Date”) and
either: (1) the Company has not exchanged Exchange Notes for all Notes
validly tendered in accordance with the terms of an exchange offer on or prior
to 120 days after the Outside Date or (2) if applicable, a shelf registration
statement covering resales of the Notes has been declared effective and such
shelf registration statement ceases to be effective at any time during the
shelf registration period (subject to certain exceptions), then additional
interest shall accrue on the principal amount of the applicable series of Notes
at a rate of 0.25% per annum (which rate will be increased by an additional
0.25% per annum for each subsequent 90-day period that such additional interest
continues to accrue, provided that the rate at which such additional interest
accrues may in no event exceed 0.5% per annum) commencing on (x) 120 days
following the Outside Date, in the case of (1) above, or (y) the day
such shelf registration statement ceases to be effective, in the case of (2) above
(such increased interest, the “Additional Interest”); provided, however,
that upon the exchange of Exchange Notes for all Notes tendered (in the case of
clause (1) above), or upon the effectiveness of a shelf registration statement
that had ceased to remain effective (in the case of clause (2) above), Additional
Interest on such Notes as a result of such clause (or the relevant sub-clause
thereof), as the case may be, shall cease to accrue. The Additional Interest
shall be paid to holders in the same manner as interest payments on the Notes
on semi-annual payment dates which correspond to interest payment dates for the
Notes.  The Trustee shall have no responsibility
with respect to the determination of the amount of any such Liquidated Damages.

 

2.             Method of Payment

 

The Company
shall pay interest on the Notes (except defaulted interest) to the Persons who
are registered holders of Notes at the close of business on the January 1
or July 1 next preceding the interest payment date even if Notes are
canceled after the record date and on or before the interest payment date.  Holders must surrender Notes to a Paying
Agent to collect principal payments.  The
Company shall pay principal, premium, Liquidated Damages and interest in money
of the United States of America that at the time of payment is legal tender for
payment

 

 

of public and
private debts.  Payments in respect of
the Notes represented by a Global Note (including principal, premium, Liquidated
Damages and interest) shall be made by wire transfer of immediately available
funds to the accounts specified by The Depository Trust Company.  The Company shall make all payments in
respect of a certificated Note (including principal, premium and interest), by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on the Notes may also be made, in the case of a
Holder of at least $1,000,000 aggregate principal amount of Notes, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).

 

3.             Paying Agent and
Registrar

 

Initially, HSBC
Bank USA, National Association (the “Trustee”) shall act as Paying Agent
and Registrar.  The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically incorporated
Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

 

4.             Indenture

 

The Company
issued the Notes under an Indenture dated as of June 23, 2008 (the “Indenture”),
among the Company, the Note Guarantors and the Trustee.  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the
date of the Indenture (the “TIA”). 
Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture.  The
Notes are subject to all terms and provisions of the Indenture, and Holders are
referred to the Indenture and the TIA for a statement of such terms and
provisions.

 

The Notes are
senior unsecured obligations of the Company. 
This Note is one of the Additional Notes referred to in the Indenture.  The Notes include the Original Notes, the Additional
Notes and any Exchange Notes and Private Exchange Notes issued in exchange for
Initial Notes pursuant to the Indenture. 
The Original Notes, the Additional Notes, the Exchange Notes and the
Private Exchange Notes are treated as a single class of securities under the
Indenture.  The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, make certain Investments and other Restricted Payments, pay
dividends and other distributions, incur Indebtedness, enter into consensual
restrictions upon the payment of certain dividends and distributions by such Restricted
Subsidiaries, issue or sell shares of capital stock of such Restricted Subsidiaries,
enter into or permit certain transactions with Affiliates, sell assets and
enter into new lines of business.  The
Indenture also imposes limitations on the ability of the Company to consolidate
or merge with or into any other Person or convey, transfer or lease all or
substantially all of the property of the Company.

 

To guarantee
the due and punctual payment of the principal and interest on the Notes and all
other amounts payable by the Company under the Indenture and the Notes when and
as the same shall be due and payable, whether at maturity, by acceleration or
otherwise, according to the terms of the Notes and the Indenture, the Note
Guarantors have jointly and severally unconditionally guaranteed the Guaranteed
Obligations on a senior basis pursuant to the terms of the Indenture.

 

 

5.             Optional
Redemption

 

Except as set
forth below, the Notes shall not be redeemable at the option of the Company
prior to July 15, 2012.

 

At any time
prior to July 15, 2012, the Company may redeem the Notes, in whole or in
part, on not less than 30 nor more than 60 days’ prior notice mailed by
first-class mail to the registered address of each Holder (or otherwise in
accordance with the procedures of DTC), at a redemption price equal to 100% of
the principal amount of Notes redeemed plus the Applicable Premium as of, and
accrued and unpaid interest and Additional Interest, if any, to, the date of
redemption (the “Redemption Date”), subject to the rights of Holders on
the relevant record date to receive interest due on the relevant interest
payment date.

 

On or after July 15,
2012, the Notes shall be redeemable at the option of the Company, in whole or
in part, on not less than 30 nor more than 60 days’ prior notice, at the following
redemption prices (expressed as percentages of principal amount), plus accrued
and unpaid interest and Liquidated Damages thereon, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on July 15 of the years set forth below:

 

	
  Year

  	
   

  	
  Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2012

  	
   

  	
  105.625

  	
  %

  
	
  2013

  	
   

  	
  102.812

  	
  %

  
	
  2014 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In addition,
prior to July 15, 2011the Company may on one or more occasions, also
redeem up to a maximum of 35% of the original aggregate principal amount of the
Notes (calculated giving effect to any issuance of Additional Notes) with the
Net Cash Proceeds of one or more Equity Offerings by the Company to the extent
the Net Cash Proceeds thereof are contributed to the Company or used to
purchase Capital Stock (other than Disqualified Stock) of the Company from the
Company, at a redemption price equal to 111.25% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the
Notes (calculated giving effect to any issuance of Additional Notes) remains
outstanding.  Any such redemption shall
be made within 90 days of such Equity Offering upon not less than 30 nor more
than 60 days’ notice mailed to each holder of Notes being redeemed and
otherwise in accordance with the procedures set forth in the Indenture.

 

6.             Sinking Fund

 

The Notes are
not subject to any sinking fund.

 

7.             Notice of
Redemption

 

Notice of
redemption shall be mailed by first-class mail at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Notes to be redeemed
at his or 

 

 

her registered
address.  Notes in denominations larger
than $2,000 may be redeemed in part but only in whole multiples of $1,000.  If money sufficient to pay the redemption
price of and accrued and unpaid interest and Liquidated Damages, if any, on all
Notes (or portions thereof) to be redeemed on the Redemption Date is deposited
with the Paying Agent on or before the Redemption Date and certain other
conditions are satisfied, on and after such date interest ceases to accrue on
such Notes (or such portions thereof) called for redemption.

 

8.             Repurchase of
Notes at the Option of Holders upon Change of Control

 

Upon a Change
of Control, any Holder of Notes will have the right, subject to certain
conditions specified in the Indenture, to cause the Company to repurchase all
or any part of the Notes of such Holder at a purchase price equal to 101% of
the principal amount of the Notes to be repurchased plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of repurchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.

 

In accordance
with Section 4.06 of the Indenture, the Company will be required to offer
to purchase Notes upon the occurrence of certain events.

 

9.             [Reserved]

 

10.           Denominations;
Transfer; Exchange

 

The Notes are
in registered form without coupons in denominations of $2,000 and whole
multiples of $1,000.  A Holder may
transfer or exchange Notes in accordance with the Indenture.  Upon any transfer or exchange, the Registrar
and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes required by law or
permitted by the Indenture.  The
Registrar need not register the transfer of or exchange any Notes selected for
redemption (except, in the case of a Note to be redeemed in part, the portion
of the Note not to be redeemed) or to transfer or exchange any Notes for a
period of 15 days prior to the mailing of a notice of redemption of Notes to be
redeemed.

 

11.           Persons Deemed
Owners

 

Except as
provided in paragraph 2 hereof, the registered Holder of this Note may be
treated as the owner of it for all purposes.

 

12.           Unclaimed Money

 

If money for
the payment of principal or interest remains unclaimed for two years, the
Trustee or Paying Agent shall pay the money back to the Company at its written
request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to
the money must look only to the Company and not to the Trustee for payment.

 

13.           Discharge and
Defeasance

 

Subject to
certain conditions, the Company at any time may terminate some of or all its
obligations under the Notes and the Indenture if the Company deposits with the
Trustee 

 

 

money or U.S.
Government Obligations for the payment of principal and interest on the Notes
to redemption or maturity, as the case may be.

 

14.           Amendment, Waiver

 

The Indenture
may be amended, modified or waived in accordance with Sections 6.04, 9.01 and
9.02 of the Indenture.

 

15.           Defaults and
Remedies

 

If an Event of
Default (other than an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee, by notice in writing to the Company, or the Holders of
at least 25% in principal amount of the outstanding Notes, by notice in writing
to the Company and the Trustee, may declare the principal of and accrued but
unpaid interest on all the Notes to be due and payable.  If an Event of Default relating to certain
events of bankruptcy, insolvency or reorganization of the Company occurs, the
principal of and interest on all the Notes shall become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holders.  Under certain circumstances,
the Holders of a majority in principal amount of the outstanding Notes may
rescind any such acceleration with respect to the Notes and its consequences.

 

If an Event of
Default occurs and is continuing, the Trustee shall be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Holders unless such Holders have offered to the Trustee
reasonable indemnity or security against any loss, liability or expense and
certain other conditions are complied with. 
Except to enforce the right to receive payment of principal, premium (if
any) or interest when due, no Holder may pursue any remedy with respect to the
Indenture or the Notes unless (a) such Holder has previously given the
Trustee notice that an Event of Default is continuing, (b) Holders of at
least 25% in principal amount of the outstanding Notes have requested the
Trustee in writing to pursue the remedy, (c) such Holders have offered the
Trustee reasonable security or indemnity against any loss, liability or
expense, (d) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity and (e) the
Holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period.  Subject to certain restrictions,
the Holders of a majority in principal amount of the outstanding Notes are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust
or power conferred on the Trustee.  The
Trustee, however, may refuse to follow any direction that conflicts with law or
the Indenture or that the Trustee determines is unduly prejudicial to the
rights of any other Holder or that would involve the Trustee in personal
liability.  Prior to taking any action
under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.

 

16.           Trustee Dealings
with the Company

 

Subject to
certain limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with and collect obligations owed to it by the Company or
its Affiliates and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.

 

 

17.           No Recourse Against
Others

 

A director,
officer, employee or stockholder, as such, of the Company or any Note Guarantor
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.  By accepting
a Note, each Holder waives and releases all such liability.  The waiver and release are part of the
consideration for the issue of the Notes.

 

18.           Authentication

 

This Note
shall not be valid until an authorized officer or signatory of the Trustee (or
an authenticating agent) manually signs the certificate of authentication on
the other side of this Note.

 

19.           Abbreviations

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such as TEN
COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint
tenants with rights of survivorship and not as tenants in common), CUST (=custodian),
and U/G/M/A (=Uniform Gift to Minors Act).

 

20.           Governing Law

 

THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

21.           CUSIP and ISIN
Numbers

 

The Company
has caused CUSIP and ISIN numbers to be printed on the Notes and has directed
the Trustee to use CUSIP and ISIN numbers in notices of redemption as a convenience
to Holders.  No representation is made as
to the accuracy of such numbers either as printed on the Notes or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

THE COMPANY
WILL FURNISH TO ANY HOLDER OF NOTES UPON WRITTEN REQUEST AND WITHOUT CHARGE TO
THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS NOTE.

 

 

ASSIGNMENT FORM

 

To assign this
Note, fill in the form below:

 

I or we assign
and transfer this Note to

 

 

	
  (Print or type assignee’s name, address and
  zip code)

  

 

 

	
  (Insert assignee’s soc. sec. or tax I.D.
  No.)

  

 

	
  and
  irrevocably appoint 

  	
   

  	
  agent to
  transfer this Note on the books of the Company. The agent may 

  
	
  substitute
  another to act for him.

  

 

 

 

	
  Date:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  

 

 

	
  Sign exactly
  as your name appears on the other side of this Note.

  

 

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR 

REGISTRATION OF TRANSFER RESTRICTED SECURITIES

 

This
certificate relates to $                    
principal amount of Notes held in (check applicable space)
      book-entry or       definitive
form by the undersigned.

 

The
undersigned (check one box below);

 

o            has requested the Trustee by written order
to deliver in exchange for its beneficial interest in the Global Note held by
the Depositary a Note or Notes in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Note (or the portion thereof indicated above);

 

o            has requested the Trustee by written order
to exchange or register the transfer of a Note or Notes.

 

In connection
with any transfer of any of the Notes evidenced by this certificate occurring
prior to the expiration of the period referred to in Rule 144(k) under
the Securities Act, the undersigned confirms that such Notes are being
transferred in accordance with its terms:

 

CHECK ONE BOX
BELOW

 

	
  (1)

  	
  o

  	
   

  	
  to the Company; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
  o

  	
   

  	
  to the Registrar for registration in the name of the Holder, without
  transfer; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (3)

  	
  o

  	
   

  	
  pursuant to an effective registration statement under the Securities
  Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
  o

  	
   

  	
  inside the United States to a “qualified institutional buyer” (as
  defined in Rule 144A under the Securities Act of 1933) that purchases
  for its own account or for the account of a qualified institutional buyer to
  whom notice is given that such transfer is being made in reliance on
  Rule 144A, in each case pursuant to and in compliance with
  Rule 144A under the Securities Act of 1933; or

  
	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
  o

  	
   

  	
  outside the United States in an offshore transaction within the
  meaning of Regulation S under the Securities Act in compliance with
  Rule 904 under the Securities Act of 1933 and such Note shall be held
  immediately after the transfer through Euroclear and Clearstream until the
  expiration of the Restricted Period (as defined in the Indenture); or

  
	
   

  	
   

  	
   

  	
   

  
	
  (6)

  	
  o

  	
   

  	
  to an institutional “accredited investor” (as defined in
  Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
  1933) that has furnished to the Trustee a signed letter containing certain
  representations and agreements; or

  

 

 

	
  (7)

  	
  o

  	
   

  	
  pursuant to another available exemption from registration provided by
  Rule 144 under the Securities Act of 1933.

  

 

Unless one of
the boxes is checked, the Trustee will refuse to register any of the Notes
evidenced by this certificate in the name of any Person other than the
registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee may require, prior to registering any such
transfer of the Notes, such legal opinions, certifications and other
information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933.

 

 

	
   

  	
  Your Signature

  

 

 

Signature Guarantee:

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  Signature must be guaranteed by a participant in a Guarantee
  recognized signature guaranty medallion program or other signature guarantor
  acceptable to the Trustee

  	
   

  	
  Signature of Signature 

  Guarantee

  

 

TO BE COMPLETED BY PURCHASER IF (4) ABOVE
IS CHECKED.

 

The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned’s foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

 

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:  To be executed by an 
                   executive officer

  

 

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
NOTE

 

The initial
principal amount of this Global Note is $465,000,000.  The following increases or decreases in this
Global Note have been made:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Principal amount of

  	
   

  	
  Signature of

  	
   

  
	
   

  	
   

  	
  Amount of decrease 

  	
   

  	
  Amount of increase in

  	
   

  	
  this Global Note

  	
   

  	
  authorized signatory

  	
   

  
	
  Date of

  	
   

  	
  in Principal Amount 

  	
   

  	
  Principal Amount of

  	
   

  	
  following such

  	
   

  	
  of Trustee or

  	
   

  
	
  Notes Exchange

  	
   

  	
  of this Global Note

  	
   

  	
  this Global Note

  	
   

  	
  decrease or increase

  	
   

  	
  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

IF YOU WANT TO
ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06
(ASSET DISPOSITION) OR 4.08 (CHANGE OF CONTROL) OF THE INDENTURE, CHECK THE
BOX:

 

	
  ASSET
  DISPOSITION

  	
  o

  	
  CHANGE OF
  CONTROL

  	
  o

  	
   

  

 

IF YOU WANT TO
ELECT TO HAVE ONLY PART OF THIS NOTE PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06
OR 4.08 OF THE INDENTURE, STATE THE AMOUNT ($2,000 OR ANY INTEGRAL MULTIPLE OF
$1,000);

 

$

 

	
  DATE:

  	
   

  	
   

  	
  YOUR
  SIGNATURE:

  	
   

  
	
  (SIGN
  EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THIS NOTE)

  

 

 

	
  SIGNATURE
  GUARANTEE:

  	
   

  
	
   

  	
  SIGNATURE
  MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTY
  MEDALLION PROGRAM OR OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEEExhibit 10.1

 

CONSULTING
AGREEMENT

 

THIS
AGREEMENT made as of June 19, 2008

 

BETWEEN:

 

WORLD HEART INC.

7799 Pardee Lane – Oakland, CA 
94621

(Hereinafter referred to as “WorldHeart” or the “Corporation”)

 

OF THE FIRST PART,

 

and

 

Pellone
Enterprises Incorporated

(Hereinafter referred to as the “Consultant”)

 

OF THE SECOND PART

 

WHEREAS WorldHeart
carries on a business consisting principally of the research, development and
commercialization of medical devices (the “Business”);

 

AND
WHEREAS WorldHeart is desirous of retaining the Consultant to
provide consulting services in connection with the Business, on the terms and
subject to the conditions herein set out;

 

AND
WHEREAS the Consultant is desirous of providing such services
to WorldHeart, on the terms and subject to the conditions herein set out;

 

NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the respective covenants and agreements of the parties contained herein, it is
agreed as follows:

 

ARTICLE ONE -
CONSULTING SERVICES

 

1.1            Services.      WorldHeart hereby agrees to retain the
Consultant to provide WorldHeart with consulting services consisting of the
review of specifications and other materials for the purpose of providing
written feedback as specified in Appendix A, and such other consulting services
as WorldHeart and the Consultant may from time to time agree upon (the “Services”),
and the Consultant hereby agrees to provide the Services to WorldHeart.

 

1.2            Term of Agreement.      This Agreement shall
remain in full force and effect from July 2, 2008 until the earlier to
occur of such time as the Services are completed as prescribed by Appendix A or
the End Date specified by Appendix A (the “Term”), subject
to earlier termination as provided in Article Four hereof, with the Term
being capable of extension by mutual written agreement of the parties hereto.

 

1.3            Provision of Services.      It is agreed and acknowledged that the
Consultant may from time to time provide services to other persons, firms and
corporations, provided that the Consultant shall at no time during the Term
provide services to any competitor of the Corporation that is not an Affiliate
(for this purpose, “Affiliate” shall mean any person, firm or corporation that
is affiliated with WorldHeart 

 

1

 

within the meaning of the Business Corporations Act
(Ontario) and World Heart Corporation).

 

1.4            Remuneration.      In consideration for the Services
rendered by the Consultant hereunder, the Corporation shall pay to the Consultant
the consulting fee prescribed in Appendix A. 
The consulting fee shall be paid at the completion of predetermined
milestones as established in Appendix A.

 

1.5            Expenses.      The Consultant shall be reimbursed from
time to time for all pre-approved out of pocket expenses, including travel
costs of up to 1 day travel per site, actually and properly incurred by the
Consultant in connection with providing the Services hereunder.  The Consultant shall furnish receipts,
statements and vouchers to the Corporation for all such expenses.

 

ARTICLE TWO – CERTAIN AGREEMENTS

 

2.1            Services to be Rendered Personally.     The Consultant shall provide the Services
personally except as otherwise expressly agreed to in advance in writing by the
Corporation and the Consultant.

 

2.2            Provision of Amenities.    WorldHeart shall not provide, for the use
of the Consultant, any equipment, tools or amenities.

 

2.3            Business Insurance.    Consultant will maintain adequate insurance
to protect the Corporation from the following: (a) claims under worker’s
compensation and state disability acts; (b) claims for damages because of
bodily injury, sickness, disease or death which arise out of any negligent act
or omission of Consultant; and (c) claims for damages because of injury to
or destruction of tangible or intangible property, including loss of use
resulting there from, which arise out of any negligent act or omission of
Consultant.

 

Without limiting the
foregoing, Consultant shall maintain the following minimum insurance coverage:

 

A.           Commercial
General Liability Coverage:

·                  $1,000,000
each occurrence for Bodily Injury, Property Damage

·                  $2,000,000
General Aggregate per location / per project

·                  $2,000,000
Products / Completed Operations Aggregate

·                  $1,000,000
Personal Injury coverage

 

The Consultant’s
Commercial General Liability policy shall be endorsed to include World Heart,
Inc as an additional insured.

 

Where applicable and
depending upon the scope of the work described in the agreement, World Heart, Inc.
may require the Consultant to provide the following insurance coverage:

 

B.             Workers
Compensation & Employers Liability Coverage

A.           Statutory
Workers Compensation Coverage

B.             Employer’s
Liability Coverage for the following limits:

·                  $100,000
each accident – Bodily Injury by Accident

·                  $100,000
each employee – Bodily injury by Disease

·                  $100,000
policy limit – Bodily Injury by Disease

 

C.             Errors
and Omissions or Professional Liability

·                  $1,000,000
Each Claim / Aggregate covering negligent acts errors or omissions for claims
arising from the Consultants scope of activities as specified in the Agreement

 

D.            Automobile Liability Coverage with limits of coverage
of $300,000 each accident for bodily injury or property damage

 

2

 

Prior to
commencing work under this agreement, Consultant shall deliver to the
Corporation certificates of insurance evidencing the insurance required under
this Agreement.  The certificate shall
include an additional insured endorsement as respects Commercial General
Liability coverage and specify 30 days notice of cancellation.

 

In the
event that the Consultant does not obtain the foregoing insurance coverage,
WorldHeart may in its sole discretion obtain coverage on behalf of the
Consultant. Consultant understands and agrees that Consultant shall be
responsible for all costs of insurance coverage obtained by WorldHeart on
Consultant’s behalf as established in Appendix A.

 

2.4 Due Organizations.     The Consultant is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.

 

2.5            No Conflicting Obligations.  The Consultant represents and agrees that the
Consultant is not subject to any contract or agreement (written or oral), law,
judgment, order or decree of any kind, any agreement or other obligation to
keep confidential the proprietary information of any of the Consultant’s
current or former clients or employers or any other third party or any restrictive
agreement or covenant of any character that restricts the Consultant’s ability
to perform the Services, or that conflicts with, or would or may be breached by
the performance of the Services or the execution and performance of this
Agreement.  The Consultant represents and
agrees that the Consultant shall not use in the performance of the Services any
trade secrets, confidential information, other proprietary information or
intellectual property rights of any of the Consultant’s current or former clients
or employers or any other third party. 
The Consultant represents and agrees that in the performance of any
Services involving the creation of Developments (as hereinafter defined) the
Consultant shall not infringe or misappropriate the intellectual property
rights of any third party.

 

ARTICLE
THREE – CONFIDENTIALITY AND CERTAIN OTHER COVENANTS

 

3.1            Confidential
Information and Trade Secrets. 
“Confidential Information” shall include, but not be
limited to, Developments, any products (including, without limitation, any and
all versions of products and related documentation) owned or marketed by
WorldHeart; all discoveries, concepts, ideas, production methods, techniques,
systems, devices, designs and drawings, know-how, computer programs,
algorithms, data bases, formulae, processes, compositions, ingredients,
research, inventions, improvements, modifications, and enhancements of
WorldHeart; business matters and information regarding WorldHeart’s business
operations, methods and practices, such as marketing strategies, product
pricing, margins, staff remuneration, information regarding WorldHeart’s
financial affairs, plans, books, customers and customer requirements, products,
prices, costs, discounts, sales, inventories and properties of WorldHeart; the
names of WorldHeart’s clients, customers and suppliers, and the nature of
WorldHeart’s relationships with such clients, customers and suppliers;
technical and business information of or regarding WorldHeart’s clients or
customers obtained in order for WorldHeart to provide such clients or customers
with WorldHeart’s products and services, including, without limitation,
information regarding product requirements and the business operations, methods
and practices and product plans of such clients and customers; and any other
proprietary information in the possession or control of WorldHeart, or any
other knowledge or information concerning WorldHeart, that Consultant learns in
the course of performing the Services or from WorldHeart, its directors,
officers, or employees.  “Trade Secrets”
include, but shall not be limited to, all Confidential Information on which
WorldHeart has spent money, time or effort to develop and which WorldHeart
desires to keep confidential, without regard to whether such ideas and information
are novel, inventive or patentable or may have been anticipated, and trade
secrets as defined under the laws of any applicable jurisdiction.  As used in this Article Three, “WorldHeart”
shall mean World Heart Corporation and each of its direct and indirect parents,
subsidiaries and affiliates.

 

3

 

3.2            Developments
“Developments” shall include all inventions, devices, discoveries, concepts,
ideas, works, works in progress, algorithms, formulae, know-how, processes,
techniques, programs, methods, compositions, articles, machines, systems,
enhancements, modifications, and improvements, whether or not patentable,
copyrightable or protectable as trade secrets, developed, created, conceived,
generated or reduced to practice by the Consultant alone or jointly with
others, which relate to the activities of WorldHeart during the engagement by
WorldHeart of the Consultant or which relate to or result from the Services or
tasks performed by the Consultant under this Agreement or which result from the
use of the premises or property (including equipment, supplies, or other
Confidential Information) owned, leased or licensed by WorldHeart, regardless
of when the Development occurred.

 

3.3            Treatment
of  Confidential Information.     At all times, during and after the Term in
perpetuity, the Consultant (a) shall not disclose Confidential
Information; (b) shall take reasonable precautions to prevent unauthorized
disclosure of Confidential Information, including, but not limited to, blocking
access to Confidential Information by any person other than individuals
authorized by WorldHeart or WorldHeart employees reasonably required to perform
the Services; (c) shall not copy or reproduce, in digital or non-digital
form, any tangible expression of Confidential Information except as may be
reasonably necessary to perform the Services; (d) shall not, without the
prior written consent of WorldHeart, use any Confidential Information in any
manner, including, but not limited to, creating, maintaining, marketing,
patenting or otherwise protecting, or aiding in the creation, maintenance,
marketing, patenting or otherwise protecting any product which is competitive
with any product owned or marketed by WorldHeart, except as reasonably required
to perform the Services.

 

3.4            Ownership of Confidential Information; Developments.  The Consultant agrees to make full disclosure
to WorldHeart of each Development promptly after its creation.  WorldHeart shall be the exclusive owner of
all right, title, and interest in and to each Development throughout the world,
including, without limitation, all Trade Secrets, patent rights, copyrights,
moral and economic rights of authors and inventors (however denominated), and
all other intellectual property rights (including rights of renewal and
extension) therein (together with any goodwill associated therewith, “Intellectual
Property”).  The Consultant shall not
acquire any right, title or interest in or to any Development.  To the extent that the Consultant retains any
right, title or interest in or to any Developments, notwithstanding the
provisions of this Section 3.4, the Consultant hereby irrevocably and
perpetually assigns to WorldHeart all right, title and interest in and to such
Developments (and all Intellectual Property embodied therein), which assignment
shall not lapse under the laws of any applicable jurisdiction.  The Consultant shall cooperate fully at all
times during and subsequent to the Term to effectuate this assignment,
including but not limited to (a) executing any documents that WorldHeart
deems reasonably necessary for transfer and assignment, (b) doing such
acts and other things reasonably requested by WorldHeart to confirm such
transfer and assignment, including, but not limited to, obtaining patents or
copyrights, and (c) doing such acts and other things reasonably requested
by WorldHeart to register and renew copyrights. 
The Consultant’s obligations set forth in this Section 3.4 shall
survive the expiration or termination of the Term.  If applicable, the Consultant hereby waives in
whole the Consultant’s right to the integrity of the Developments or any other
moral right, including, without limitation, the right to restrain or claim
damages for any distortion, mutilation or other modification of the
Developments in any context and in connection with any product, service, cause
or institution.

 

3.5            Return of Property.     Upon the request of WorldHeart, and, in
any event, upon the expiration or termination of the Term, the Consultant shall
immediately return to WorldHeart all materials acquired in the course of
providing Services to WorldHeart, including, but not limited to, (a) any
tangible expression that contains Confidential Information, or any copy or
reproduction, in digital form or otherwise, of such an expression, (b) all
Developments and (c) any other property of WorldHeart.

 

4

 

3.6            Non-solicitation.  The Consultant shall not,
during the Term and for a period of two (2) years immediately following
the termination of the Term, or any extension of it, for any reason, either
directly or indirectly:  (a) call
on, solicit, or take away any of WorldHeart’s customers or potential customers
about whom the Consultant became aware as a result of the Consultant’s services
to WorldHeart, either for the Consultant or for any other person or entity, or
in any way request, suggest or advise any such customer to withdraw or cancel
any of their business with WorldHeart or refuse to continue to do business with
WorldHeart; or (b) solicit or take away or attempt to solicit or take away
any of WorldHeart’s employees or contractors either for the Consultant or for
any other person or entity.

 

3.7            Non-disparagement.  The Consultant agrees that the Consultant shall
not (except as required by law) directly or indirectly make any statement or
release any information, or encourage others to make any statement or release
any information that: (a) embarrasses or criticizes WorldHeart, or (b) in
any way adversely affects or otherwise maligns the business or reputation of
WorldHeart.

 

3.8            Irreparable
Harm.  In the event
of the breach or threatened breach of this Article Three by the
Consultant, the Consultant acknowledges that WorldHeart would have no adequate
remedy at law and, in the event of such breach, WorldHeart would be irreparably
harmed and shall, therefore, be entitled to injunctions, both preliminary and
final, enjoining and restraining such breach or threatened breach.  Such remedies shall be in addition to all
other remedies available at law or in equity including WorldHeart’s right to
receive from the Consultant any and all damages that may be sustained as a
result of the Consultant’s breach of contract. 
The Consultant waives any requirement for the securing or posting of any
bond in connection with such remedies.

 

ARTICLE
FOUR - TERMINATION

 

4.1            Termination of
Agreement.   
WorldHeart may terminate this Agreement and the Term by giving the
Consultant sixty (60) days’ written notice. 
The Consultant may terminate this Agreement and the Term by giving
WorldHeart [sixty (60) days’] written notice. 
This Agreement also may be terminated prior to the expiration of the
Term in the event of the Consultant’s death or disability.  For purposes of this Agreement, the
Consultant shall be considered disabled if the Consultant becomes incapacitated
by reason of sickness, accident or other physical or mental disability and
shall, in good faith opinion of WorldHeart, thereby be unable to perform the
Consultant’s duties hereunder.  The
Consultant shall only be entitled to the consulting fee, or applicable portion
thereof, in respect of the milestones set forth in Appendix A that are
completed, or, as applicable, partially completed, through the date of
termination of the Term, as determined by WorldHeart.  The obligations of the Corporation and the
Consultant shall terminate upon termination of this Agreement or termination or
expiration of the Term; provided,
however, that the obligations of
the Consultant pursuant to Article Three and Section 5.3 hereof shall
survive the termination or expiration of this Agreement.  Without limiting the foregoing, the
Consultant acknowledges and agrees that all of the Consultant’s rights to any
consulting fee (other than consulting fee earned through the date of
termination of the Services as determined pursuant to this Section 4.1),
shall cease upon expiration of the Term or termination of the Services or this
Agreement.

 

ARTICLE
FIVE – CAPACITY; INDEMNIFICATION

 

5.1            Capacity of Consultant.    It is acknowledged by the parties hereto
that the Corporation is retaining the Consultant in the capacity of independent
contractor and not as an employee of the Corporation.  The Consultant and the Corporation
acknowledge and agree that this Agreement does not create a partnership, joint
venture, agency or employer/employee relationship between them or their
affiliates for any purpose, including, without limitation, any employee benefit
plans or arrangements or fringe benefit plans or programs or payroll practices
or employment tax obligations applicable to 

 

5

 

employees
of the Corporation or its subsidiaries or affiliates.  Accordingly, the Corporation shall not
supervise, control or direct the manner or means by which the Consultant
performs the services hereunder, and the Consultant shall have no authority to
act for or on behalf of the Corporation or to contractually bind the
Corporation without the Corporation’s express written consent.

 

5.2            No Corporation Employee Benefits or Insurance; Taxes.    The Consultant and the Corporation agree
that the Consultant shall not be entitled to participate in any employee
benefit plans or arrangements or fringe benefit plans or programs or payroll
practices maintained or contributed to by the Corporation or its subsidiaries
or affiliates for their employees.  The
Consultant acknowledges and agrees that the Consultant voluntarily waives the
right to participate in such plans, arrangements, programs and practices, and that
such waiver shall continue in full force and effect even if the Consultant is
retroactively deemed to be an employee of the Corporation or any of its
subsidiaries or affiliates by a court of competent jurisdiction or regulatory
authority.  The Corporation shall not
carry any workers’ compensation, general liability, or health or accident
insurance to cover the Consultant nor pay any amounts on account of the
Consultant for purposes of Social Security or social insurance, unemployment
insurance or federal, state or local withholding, employment or income taxes
and shall not provide any other contributions or benefits on account of the
Consultant which might be required or customary in connection with an
employer-employee relationship.  The
Consultant shall be responsible for all source deductions, pension,
unemployment insurance and other taxes or levies and other obligations referred
in the immediately preceding sentence. 
The Consultant shall remit and otherwise satisfy in full when due all
such source deductions and other taxes, levies and obligations required by law.

 

5.3            Indemnification.    The Consultant agrees to indemnify and hold
harmless the Corporation and its subsidiaries and affiliates, and their
respective directors, officers and employees, from and against any losses,
taxes, penalties, interest, liabilities, costs, claims, damages and expenses
(including, without limitation, reasonable attorneys’ fees and disbursements)
to which the Corporation, or any such subsidiary, affiliate, director, officer
or employee, shall be subject, or for which any of them shall be liable,
arising out of or relating to (i) the Consultant’s breach of this
Agreement, including, without limitation, any breach of the Consultant’s
representations, warranties and covenants contained in this Agreement; (ii) any
action or omission to act by the Consultant or any partner, employee, agent,
affiliate or representative of the Consultant in connection with the
performance of the Services and the Consultant’s obligations under this
Agreement; (iii) any amounts which the Internal Revenue Service and/or any
state or local tax authority claims should have been withheld by the
Corporation from monies paid to the Consultant in accordance with this
Agreement or otherwise paid on account of the Consultant; or (iv) reclassification
of the Consultant as an employee of the Corporation or its subsidiaries or
affiliates or a determination that the Corporation or any such subsidiary or
affiliate shall be considered the employer of the Consultant for any purpose.

 

6

 

ARTICLE
SIX - GENERAL CONTRACT PROVISIONS

 

6.1          Notices.    
All notices, requests, demands or other communications (collectively, “Notices”)
by the terms hereof required or permitted to be given by one party to any other
party, or to any other person shall be given in writing by personal delivery or
by registered mail, postage prepaid, or by facsimile transmission to such other
party as follows:

 

	
  (a) To WorldHeart
  at:

  	
   

  	
  World Heart Inc.

  
	
   

  	
   

  	
  7799 Pardee Lane

  
	
   

  	
   

  	
  Oakland, CA 94621

  
	
   

  	
   

  	
  Telephone: (510)
  563-5000

  
	
   

  	
   

  	
  Facsimile: (510)
  563-5003

  
	
   

  	
   

  	
  Attention: Monica
  Lippis

  
	
   

  	
   

  	
   

  
	
  (b) To the
  Consultant at:

  	
   

  	
  312 San Mateo Drive

  
	
   

  	
   

  	
  (b) To the
  Consultant at:

  
	
   

  	
   

  	
  Menlo Park, CA 94025

  
	
   

  	
   

  	
  Telephone: (650)
  328-0417

  
	
   

  	
   

  	
  Facsimile: none

  

 

or at such other address
as may be provide to the other party hereto, in writing, from time to time.

 

All such notices shall be
deemed to have been received when delivered or transmitted, or, if mailed, 48
hours after 12:01 a.m. on the day following the day of the mailing
thereof.  If any Notice shall have been
mailed and if regular mail service shall be interrupted by strikes and other
irregularities, such Notice shall be deemed to have been received 48 hours
after 12:01 a.m. on the day following the resumption of normal mail
service, provided that during the period that regular mail service shall be
interrupted all Notices shall be given by personal delivery, courier or by
facsimile transmission.

 

6.2          Counterparts. 
This Agreement may be executed in several counterparts, each of which so
executed shall be deemed to be an original and such counterparts together shall
be but one and the same instrument.

 

6.3          Time of the Essence.    
Time shall be of the essence of this Agreement and of every part hereof
and no extension or variation of this Agreement shall operate as a waiver of
this provision.

 

6.4          Entire Agreement.    
This Agreement constitutes the entire agreement between the parties with
respect to all of the matters herein, and its execution has not been induced
by, nor do any of the parties rely upon or regard as material, any
representations or writings whatever not incorporated herein and made a part
hereof and may not be amended or modified in any respect except by written
instrument signed by the parties hereto. 
Any Appendices referred to herein are incorporated herein by reference
and form part of this Agreement.

 

6.5          Successors
and Assigns; Binding Effect.   
The Services are of a unique and specialized nature, to be rendered by
the Consultant as described in Articles One and Two hereof in reliance upon the
Consultant’s unique knowledge and experience. 
Consequently, this Agreement and all rights and obligations hereunder
are personal to the Consultant, and the Consultant shall not assign the
Consultant’s interest in, or delegate the Consultant’s duties under, this
Agreement, except with the express prior written consent of the Corporation,
and any purported assignment in violation hereof shall not be valid or binding
on the Corporation.  Notwithstanding any
other provisions of this Agreement to the contrary, the Corporation may assign
this Agreement to any person without the consent of the Consultant.  This Agreement shall inure to the benefit of
and be binding upon the parties and their respective legal personal
representatives, heirs, executors, administrators, successors or permitted
assignees.

 

7

 

6.6          Currency.    
Unless otherwise provided for herein, all monetary amounts referred to
herein shall refer to the lawful money of the United States.

 

6.7          Headings for Convenience
Only.     The division of this Agreement into
articles and sections is for convenience of reference only and shall not affect
the interpretation or construction of this Agreement.

 

6.8          Governing Law.    
This Agreement shall be governed by and construed in accordance with the
laws of the State of [California] and the federal laws of the United States
applicable therein and each of the parties hereto agrees irrevocably to conform
to the non-exclusive jurisdiction of the Courts of such State.

 

6.10        Severability.    
If any Article, Section or any portion of any Section of this
Agreement is determined to be unenforceable or invalid for any reason
whatsoever that unenforceability or invalidity shall not affect the
enforceability or validity of the remaining portions of this Agreement and such
unenforceable or invalid Article, Section or portion thereof shall be
severed from the remainder of this Agreement.

 

6.11        Execution of Agreement -
Transmission by Facsimile.     The
parties agree that this Agreement may be transmitted by facsimile or such
similar device and that the reproduction of signatures by facsimile or such
similar device will be treated as binding as if originals and each party hereto
undertakes to provide each and every other party hereto with a copy of this
Agreement bearing original signatures forthwith upon demand.

 

8

 

IN
WITNESS WHEREOF
the parties have duly executed this Consulting Agreement this Nineteenth day of
June, 2008.

 

 

	
   

  	
    Name of Consultant

  
	
   

  	
   

  
	
   

  	
  /s/ David Pellone

  
	
   

  	
  Pellone Enterprises
  Incorporated

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  68-0326140

  	
   

  
	
   

  	
  Taxpayer Identification
  Number

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WORLD HEART INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Jal S. Jassawalla

  
	
   

  	
   

  	
  Jal S. Jassawalla

  
	
   

  	
   

  	
  CEO & President

  
				

 

9

 

APPENDIX A

To
the

Consulting
Agreement

Between

World
Heart Inc.

and

Pellone
Enterprises Incorporated

 

Description
of Services:  Management of financial
staff and related financial expertise to meet SEC reporting requirements and
other funding documentation as needed; it includes agreeing to be the legally
acting CFO and signing in that capacity.

 

End Date:  9/30/08

 

Consulting fee: $150.00
per hour

 

Other
conditions/arrangements:  Invoices weekly
and paid within 10 day

 

The total consulting fee
shall not exceed $50,000.00 but any balance of that amount not paid prior to
the End Date shall be paid to Consultant if this Agreement is terminated
pursuant to paragraph 4.1 and without cause.

 

1

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